Labor & Employment Alert: OFCCP Issues Active Case Enforcement Directive

OFCCP Mandates Full Desk Audits In Every Compliance Evaluation

Recently, the Department of Labor's Office of Federal Contract Compliance Programs ("OFCCP") issued Directive 295 (OFCCP Order No. 295 ADM Notice/Other (Dec. 16, 2010)), which sets out new procedures for conducting compliance reviews of supply and service federal government contractors. The new procedures are known as Active Case Enforcement ("ACE"). ACE applies only to supply and service contractors, not construction contractors.

The directive replaces a 2003 directive that processed compliance evaluations under an Active Case Management procedure. The OFCCP's stated reason for rescinding the prior process is that "it did not allow OFCCP to effectively use all of its investigative tools." OFCCP Order No. 295, at 1

Effective January 1, 2011, all supply and service compliance evaluations scheduled from the Federal Contractor Selection System ("FCSS") will be processed using the new ACE procedures. One of the major differences under these procedures is that the agency's review process will begin with a full desk audit. This audit is supposed to analyze the target company's affirmative action program to ensure compliance with Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans' Readjustment Assistance Act. The desk audit will, among other things, seek to determine if there is adverse impact in hiring, promotions, terminations, and compensation, and assess the acceptability of each program. By contrast, under the 2003 directive, the agency conducted a full desk audit only if indicators of discrimination were found during an abbreviated desk audit, or in every 25th compliance review.

The ACE Procedures

The OFCCP generally selects companies for compliance evaluation through the FCSS, a selection system that purportedly uses "administratively neutral selection criteria." OFCCP Order No. 295, at 4. There appear to be no changes to this selection system under the new directive.

Once identified by the FCSS, the OFCCP uses a second selection, pursuant to neutral selection criteria, to determine which type of four possible investigative procedures to conduct: (1) compliance review; (2) offsite records review; (3) compliance check; or (4) focused review. In addition, to assist with "quality control", every 25th federal government contractor will be selected for a full compliance review, usually in the form of a desk audit, an onsite OFCCP compliance officer visit, and possibly an offsite analysis.

Whenever an onsite review is conducted, the agency also will be reviewing the contractor's compliance with Executive Order 13496, which requires notification to employees of their rights under the National Labor Relations Act.

A contractor that has undergone a compliance evaluation is exempt from FCSS scheduling from undergoing another evaluation for 24 months after the date of closure of the compliance investigation.

Increased Coordination With Other Agencies

The OFCCP also hopes to promote greater coordination with other federal and state agencies. When the OFCCP now selects a contractor for review, the agency will also contact the Equal Employment Opportunity Commission and the state or local fair employment practice agency to determine the nature of any existing complaints. During a full desk audit and compliance evaluation, the OFCCP will also now review the contractor's recent compliance history to determine if there are any "patterns of non-compliance."

The Practical Impact of ACE

The new ACE procedures will subject supply and service federal government contractors to increased scrutiny by the OFCCP. What used to be fairly routine audits by the OFCCP will now likely be significantly more rigorous, coupled with more onsite reviews than before. Since a full desk audit will be the first step of the new records review process, it is more important than ever for federal government contractors to ensure that any affirmative action program and supporting documentation are complete and accurate prior to submission to the OFCCP. Impacted companies may also want to consider conducting internal audits, appropriately protected by any applicable privilege or protection, to make sure affirmative action plans are up to date and to identify any pay differences that could raise questions of discrimination.

Lawyer Contacts

For further information, please contact your principal firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at

Alison B. Marshall

Eric S. Dreiband

Terri L. Chase
New York

Michael J. Gray

Brian M. Jorgensen

Mark D. Temple

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