On Feb 12, 2018, the White House released its proposed 2019 Budget for the United States Government. It requests $9.4 billion for the Department of Labor—a $2.6 billion (21%) decrease from the 2017 enacted level.
Included in this document is the FY2019 Congressional Budget Justification for the Office of Federal Contract Compliance Programs (OFCCP). Its proposed budget of $91.1 million and 450 full-time employees is a reduction from the $104.5 million enacted for FY2017 and the $103.8 million still in review for FY2018.
While the budget itself must yet survive Congressional review, debate, and approval before being enacted, a review of the OFCCP justification document reveals important implications for all U.S federal contractors—and particularly those in financial services, information technology, and construction.
Uncovering Clues to OFCCP’s Focus in 2019
According to the proposed budget, the OFCCP will focus on several key priorities:
- Streamlining high-impact systemic compliance evaluations covered under Executive Order 11246, Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act to make efficient use of OFCCP resources and minimize the burden on complying employers
- Significantly expanding contractor compliance assistance and contractor training and education, with the goal of making it easier to meet their obligations and access a diverse pool of qualified talent for available jobs
- Providing meaningful incentives to encourage voluntary compliance and contractor recognition programs that highlight best practices related to achieving compliance
- Improving organizational efficiency and effectiveness by modernizing the agency’s operational model, aligning staff workload with federal contractor locations, and establishing Skilled Regional Centers to address large, complex, and industry-specialized compliance evaluations.
- Continuing to emphasize large federal and federally-assisted mega-construction projects that have the potential to employ large numbers of diverse workers.
Of particular note is the indication by OFCCP that it plans to focus the attention of these new Skilled Regional Centers on financial services and information technology companies.
Focus on Efficiency Means Fewer but More Intense Audits
Given the reduction in both funding and FTEs, if the proposed budget survives the resolution process and is authorized by Congress, OFCCP will likely have fewer compliance officers, and some offices may close or be consolidated.
A greater focus on efficiency and closer examination of fewer selected federal contractors means increased scrutiny of those Affirmative Action Plans (AAPs) that are selected for audits and investigations.
Three Things Contractors Should Do Today
Ultimately, the impact will be felt most keenly by contractors who are selected for an audit. OFCCP will continue its aggressive review of their records and timeliness of submission.
Given the proven business value of a diverse workforce, all US federal contractors should undertake measures to ensure their Affirmative Action Programs are achieving goals for diversity and compliance.
But in light of OFCCP’s future direction, financial services, IT, and construction contractors in particular are advised to
- Ensure AAPs are completed on time
- Retain records associated with AAPs for the required amount of time
- Lead internal reviews of the effectiveness of their Affirmative Action Programs.
By taking proactive steps today, your diversity and compliance team can ensure your program and your AAPs are strong enough to withstand the increased intensity of OFCCP audits in 2019.