Oct 12, 2016 - 9:00am

Are Massive Document Demands of Federal Contractors Necessary?

Former Director, Labor Policy

Rooting out discrimination in the workplace is a worthwhile service. But is the federal agency that oversees government contractors doing a good job?

A new report from the Government Accountability Office (GAO) questions its efficacy. 

The Office of Federal Contract Compliance Programs (OFCCP) inside the Labor Department (DOL) enforces federal contractors’ nondiscrimination obligations.  While the OFCCP might not be well known, to those contractors who endure OFCCP’s invasive and burdensome investigations, the office is anything but a shrinking violet. 

The GAO report reveals some facts about these investigations that most federal contractors already know but which might come as a surprise to the current administration.

First, over the last six years, OFCCP investigations resulted in findings of discrimination in a whopping 2% of cases, meaning the overwhelming majority of federal contractors are playing by the rules. 

Second, over the last few years, compliance assistance for federal contractors has decreased by 30%, meaning OFCCP seems to be more interested in suing employers rather than helping them comply with a complex web of executive orders, regulations and agency directives. 

As detailed in the GAO report, OFCCP investigations can last for months or years.  During these investigations contractors often endure numerous on-site visits from OFCCP officials, and must fulfill time-consuming demands for documents and data:

Some contractors and industry groups we spoke with noted concerns with the resources devoted to lengthy and expansive compliance evaluations. For example, one contractor told us an ongoing yearlong evaluation was consuming a great deal of company resources and was uncertain as to when OFCCP would close the evaluation. [page 27]

What often happens is that multiple OFCCP enforcement officials come to the office or work site (often with little notice to the employer) and ask for recruiting, hiring and other demographic data. Employees will get pulled from their regular work duties to collect the data and be interviewed by the investigators. Obviously, these in-person investigations are very disruptive to the contractors business.  And if the investigators can’t find the evidence they need to prove discrimination, they will continue to demand more information, and the contractor must continue to provide it. In essence the contractor is at OFCCP’s beck and call until the agency determines that the investigation is finished.

Contractors of all sizes feel OFCCP’s pinch:

One industry group official said its members struggle with managing a compliance program with hundreds of locations, tens of thousands of employees, and multiple OFCCP evaluations each year. Another industry group official spoke of the burden for a small company, which may have only one person devoted to human resources management as a small part of their overall responsibilities. [page 32]

Dealing with these investigations isn’t cheap. The GAO notes consultants specializing in OFCCP compliance run to as much as $400 per hour, and lawyers covering this area of the law cost up to $700 per hour.

Even though only a tiny fraction (2%) of investigations lead to discrimination findings, the costs of investigations pile up and take away from contractors focusing on their mission: offering cost-effective services to the federal government (i.e. taxpayer).

Over the years we’ve received feedback from U.S. Chamber members who have been on the wrong end of an OFCCP investigation.  For example, during one investigation an OFCCP enforcement official reportedly told one contractor that “OFCCP can ask for anything we want.” 

Another OFCCP official was said to tell a contractor that it was welcome to bring a matter before an administrative law judge, “but the judge works for us.”  Most people would be shocked to discover that many federal regulatory agencies like OFCCP encompass all three parts of our justice system--prosecutor, judge, and jury.

This puts contractors in a bind. Because OFCCP has the ultimate power to cancel or terminate a particular government contract and debar a contractor from future opportunities, it has great leverage during these investigations to bring contractors to heel. 

Indeed, the threat of such a penalty is so severe that it creates a powerful incentive for contractors to settle any dispute with OFCCP, no matter how frivolous an allegation may be or how egregiously agency staff has acted.

The GAO report reveals that OFCCP should spend less time inundating law-abiding contractors with document requests and more time helping contractors who understandably have questions about their compliance obligations.  

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About the Author

About the Author

Former Director, Labor Policy