Office of Federal Contract Compliance Programs (OFCCP)

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OFCCP Directive

Transmittal Number: 230
DATE: September 22, 1998
OFCCP ORDER NO.: FCCM NOTICE CH 2

1. SUBJECT: Evaluation procedures: compliance review, focused review, off-site review of records and compliance checks.
   
2. PURPOSE: To revise the Federal Contract Compliance Manual (FCCM) to include guidance on some of the compliance evaluation procedures authorized under 41 CFR 60-1.20(a), 60-250.60(a), and compliance reviews under 60-741.60.
   
3. BACKGROUND: The regulations implementing Executive Order 11246 at 41 CFR 60-1.20 authorize OFCCP to conduct compliance evaluations to determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure equal employment opportunity. A final rule revising the regulation implementing the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), 38 U.S.C. 4212, published on November 4 1998, also adopts the compliance evaluation approach (63 FR 59630). The VEVRAA compliance evaluation procedures, which are found at 41 CFR 60-250.60, are effective January 4, 1999. The regulation implementing Section 503 at 41 CFR 60-471 do not yet specify the compliance evaluation approach found in 60-1.20 and 60-250.60. However, in the near future OFCCP intends to revise the Section 503 regulation to include the compliance evaluation approach, thereby conforming the provisions contained in the Section 503 regulations to 41 CFR 60-1.20 and 60-250.60.
   The regulations at 41 CFR 60-1.20 and 60-250.60 provide that a compliance evaluation may consist of any one or a combination of the following investigative procedures: a compliance review; an off-site review of records; a compliance check; and a focused review.
   Procedures for the compliance check evaluation method are set forth in Section 2T. Included in this attachment is a one-page revision to the compliance check procedures issued September 10, 1998. The documentation collected when conducting a compliance check is requested under 41 CFR 60-1.12 and not under 60-250 or 60-741. Therefore this page contains technical corrections to reflect this.
   The regulations implementing Section 503 at 41 CR 60-741.60 authorize OFCCP to conduct compliance reviews to determine whether the contractor is complying with its nondiscrimination and affirmative action obligations. Section 60-741.60 provides that the compliance review shall consist of a comprehensive analysis and evaluation of all relevant hiring and employment practices. The regulations implementing Section 503, however, do not contain rigid requirements regarding the scope and content of a compliance review.
   The current regulations at 41 CFR 60-741.60 do not require OFCCP to conduct a complete onsite review of every contractor selected for a compliance review. Thus, a compliance review under Section 503 could be completed without an onsite review, if a determination can be made about the contractor's compliance based upon a analysis and evaluation of the documentation submitted for the desk audit. Likewise, if an onsite review is required in order to evaluate the contractor's compliance with the nondiscrimination and affirmative action requirements of Section 503, that onsite review could focus on one or two issues.
   Although the current terminology in the Section 503 regulations differs from that used in the Executive Order and 38 U.S.C. 4212 regulations, parallel procedures will be used to evaluate contractor compliance under all three laws enforced by OFCCP.
   All compliance evaluation, except compliance checks, will begin with the scheduling of a compliance review. In most cases, the results of the desk audit will determine whether an onsite review is warranted.
   A compliance review may: 1) close after the desk audit 2) continue with an onsite review that is focused on one or two issues, and/or 3) continue with an onsite review that involves an examination of several issues.
   A small percentage of those contractors whose evaluations would normally close at the audit stage will be scheduled for complete compliance reviews. These contractors will be identified at the district office level in accordance with neutral section procedures distributed under separate cover. The reason for conducting these neutrally selected, complete compliance reviews is to help ensure the integrity of the program by allowing OFCCP to verify the accuracy of information submitted by contractors.
4. COMPLIANCE REVIEW INFORMATION SYSTEM (CRIS)PROCEDURES: The Compliance Review Information System (CRIS) is being revised to allow the agency to track the four investigative procedures used to evaluate contractor compliance. Further CRIS instructions will be issued under separate cover.
5. INSTRUCTIONS: Insert the attached procedures in Chapter 2 in the FCCM.
6. OBSOLETE DATA: Page 2-79 issued September 10, 1998.
7. ATTACHMENT: Pages 2-66c to 2-66j and 2-79 to 2-82.
8. DISTRIBUTION: A, B (both hard copy and electronically; C (hard copy only).
9. EXPIRATION DATE: This Notice expires when implemented and may be discarded or retained for reference, at your option.

(Signed) Shirley Wilcher
SHIRLEY J. WILCHERDATE
Deputy Assistant Secretary for Federal Contract Compliance

September 22, 1998

2SNOTICE OF ONSITE REVIEW. . . . . 64

2S00TELEPHONE NOTICE . . . . . . . . . . . . . 64
2S01WRITTEN CONFIRMATION OF ONSITE . . . . . . 65

2TCOMPLIANCE EVALUATION PROCEDURES - COMPLIANCE CHECK. . . . . . 66

2T00GUIDELINES . . . . . . . . . . . . . . . . 66a
2T01CLOSURE - COMPLIANCE CHECK . . . . . . .66c

2UINVESTIGATIVE PROCEDURES: COMPLIANCE REVIEW, FOCUSED REVIEW, OFF-SITE REVIEW OF RECORDS. . . . . 66c

2U00 — GUIDELINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66e

2U01 — CLOSING THE COMPLIANCE REVIEW AFTER THE DESK AUDIT . . . . 66f

2U01a — DOCUMENTS FOR CLOSING REVIEW AFTER THE DESK AUDIT . . . . 66g

2U02 — CLOSING THE COMPLIANCE REVIEW AFTER COMPLETION OF A FOCUSED ONSITE REVIEW . . 66g,h

2U02a — DOCUMENTS FOR CLOSING REVIEW AFTER FOCUSED ONSITE REVIEW . . . . 66h,i

2U03 — CLOSING THE COMPLIANCE REVIEW AFTER A COMPLETE ONSITE REVIEW . . . 66i

2U04 — SCRR PAGES TO BE COMPLETED . . . . . . . . . . . . . . . . . 66i

2-1 — CASE CHRONOLOGY LOG (CC-53) . . . . . . . . . . . . . . . . . . . . . . . . .67

2-2 — SCHEDULING LETTER REQUESTING AAP AND SUPPORT DATA . .68a

2-2a — ITEMIZED LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

2-3 — STANDARD INQUIRY LETTERS FOR REQUESTING COMPLAINT DATA FROM EEOC,
STATE AND LOCAL FEPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

2-4 — COMPLIANCE CHECK SCHEDULING LETTER . . . . . . . . . . . . . . 72

2-4a — HIGHLIGHTS OF THE REGULATORY REQUIREMENTS FOR FEDERAL CONTRACTORS . . 74

2-5 — CLOSURE LETTER FOR COMPLIANCE CHECK . . . . . . . . . . . . . . 75

2-6 — MAINTENANCE OF DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

2-7 — COMPLIANCE CHECK CONTROL SHEET . . . . . . . . . . . . . . . . . . . 79

2-8 — CLOSURE LETTER FOR NO APPARENT VIOLATIONS OR TECHNICAL VIOLATIONS . 80

2-9 — CLOSURE LETTER FOR SUBSTANTIVE VIOLATIONS . . . . . . . . .82

2A-1 — STANDARD COMPLIANCE REVIEW REPORT (SCRR) FORM . . . . . . . . . . . . 2A-1-1

2A-2 — SCRR INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2A-2-1

2B — SOURCES FOR OBTAINING AVAILABILITY STATISTICS FOR USE IN PREPARING
AFFIRMATIVE ACTION PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2B-1

INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2C-1

2T01 CLOSURE — COMPLIANCE CHECK

(a) Maintenance of Data: Figure 2-6 specifies the materials to be maintained in the Compliance Check folder.

(b) A hard copy of the Compliance Check Control Sheet (Figure 2-7) will be retained in the compliance check folder, and the electronic version will be completed as well.

(c) All compliance checks will be closed with a closure letter (Figure 2-5). The letter specifies the finding of the compliance check, i.e. whether the contractor made available for inspection all the data requested in the scheduling letter. Contractors that fail to allow access will be selected for another form of compliance evaluation, with written notification. Their failure to respond to future requests for data pertaining to the Affirmative Action Program will normally result in enforcement proceedings. However, the compliance check will be closed. (Reference the scheduling letter Figure 2-4, and the closure letter, Figure 2-5).

2U INVESTIGATIVE PROCEDURES: COMPLIANCE REVIEW, FOCUSED REVIEW, OFF-SITE REVIEW OF RECORDS

The regulations implementing Executive Order 11246 at 60-1.20 authorize OFCCP to conduct compliance evaluations to determine whether the contractor maintains nondiscriminatory hiring and employment practices, and is taking affirmative action to ensure that applicants and employees are treated, during all aspects of employment, without regard to race, color, religion, sex, or national origin. A final rule published on November 4, 1998, to revise the regulations implementing the affirmative action provisions of 38 U.S.C. 4212, also adopts the compliance evaluation approach for determining whether the contractor is complying with its obligation to take affirmative action to employ and advance in employment certain protected veterans. The VEVRAA compliance evaluation regulations, which are found at 41 CFR 60-250.60, are effective January 4, 1999. The regulations implementing Section 503 at 41

CFR 60-741.60 do not yet specify the compliance evaluation approach found in 60-1.20 and 60-250.60. However, in the near future OFCCP intends to revise the Section 503 regulations to include the compliance evaluation approach, thereby conforming the provisions contained in the Section 503 regulations to 41 CFR 60-1.20 and 60-250.60.

The regulations at 41 CFR 60-1.20 and 60-250.60 provide that a compliance evaluation may consist of any one or a combination of the following investigative procedures: a compliance review; an off-site review of records; a compliance check; and a focused review. Procedures for the compliance check evaluation method are outlined in section 2T.

The regulations implementing Section 503 at 41 CFR 60-741.60 authorize OFCCP to conduct compliance reviews to determine contractor compliance with the nondiscrimination and affirmative action requirements for individuals with disabilities. Section 60-741.60 provides that the compliance review shall consist of a comprehensive analysis and evaluation of all relevant hiring and employment practices. The Section 503 regulations, however, do not contain rigid requirements regarding the scope and content of a compliance review.

The current regulations at 60-741.60 do not require a complete on-site review of every contractor selected for compliance review. Thus, a compliance review may be completed without an onsite review, if a determination can be made about the contractor's compliance with the requirements of Section 503 based upon an analysis and evaluation of the documentation submitted for the desk audit. Likewise, if an onsite review is required in order to evaluate the contractor's compliance with the nondiscrimination and affirmative action requirements of Section 503, that onsite review may focus on one or two issues.

Although the current terminology in the Section 503 regulations differs from that used in the Executive Order and 38 U.S.C. 4212 regulations, parallel procedures will be used to evaluate contractor compliance under all three laws enforced by OFCCP.

All compliance evaluations, except compliance checks, will begin with the scheduling of a compliance review. A compliance review may proceed in three stages: the desk audit, onsite review, and offsite analysis. However, the regulations do not require all three stages to be performed. In most cases, the results of the desk audit will determine whether an onsite review is necessary. A compliance review may: 1) close after the desk audit, 2) continue with an onsite review that is focused on one or more issues, and/or 3) continue with an onsite review that involves an examination of a variety of issues.

A small percentage of those contractors whose evaluations would normally close at the desk audit stage will be scheduled for complete compliance reviews. These contractors will be identified at the district office level in accordance with neutral selection procedures distributed under separate cover. The reason for conducting these neutrally selected, complete compliance reviews is to help ensure the integrity of the program by allowing OFCCP to verify the accuracy of information submitted by contractors.

2U00 GUIDELINES

The established procedures for conducting a full-scale compliance review outlined in chapters 2 and 3 of the FCCM will be followed.

A scheduling letter (Figure 2-2) will be sent to the contractor. Additionally, the CO will telephone the contractor to inform that it has been scheduled for a compliance review. As appropriate, the CO should also state that an onsite visit may or may not be necessary to complete the evaluation process.

The CO should inform the contractor that additional requests for materials might be made following the initial submission of the AAP and supporting documentation.

Except where the contractor has been neutrally selected to undergo a complete compliance review through procedures distributed under separate cover, the results of the desk audit generally will determine whether an onsite review will be required.

2U01 CLOSING THE COMPLIANCE REVIEW AFTER THE DESK AUDIT

If the desk audit is completed with no outstanding questions, the evaluation process may be closed at the desk audit stage.

If the CO determines the Executive Order AAP does not meet one or more of the standards for reasonableness (referencing Chapter 2 of the FCCM), the desk audit should be suspended and a show cause notice issued (reference Chapter 8 of the FCCM).

In order to close the compliance review after the desk audit, the CO must ensure that no outstanding substantive issues exist. In order to accomplish this, the CO/DD may need to send a follow-up letter to request additional materials for review during the desk audit. For example, the CO may need to ask for information on protected veterans to address the extent of affirmative action efforts on their behalf, or substantive documentation of good faith efforts for job groups where goals have been established, or an employee roster in order to conduct appropriate compensation analyses.

The CO must proceed with an onsite review that is either focused or complete, if: 1) sufficient data has not been provided to conclude the review at the desk audit (e.g. adequate information on compensation or good faith efforts has not been provided); 2) there are indicators of problems that merit an onsite investigation, and the problems cannot be addressed through a document submission; or 3) the contractor has been identified for a complete compliance review in accordance with neutral selection procedures distributed under separate cover.

2U01a DOCUMENTS FOR CLOSING REVIEW AFTER THE DESK AUDIT,

Following are the possibilities for closure after the desk audit stage of the compliance review has been completed:

A finding of no apparent violations leads to issuance of a closure letter (reference Figure A2-1).

A finding of technical violations (formerly incorporated in LOC) but no indicators of potential discrimination or lack of good faith effort, leads to issuance of a closure letter, referencing the violations and their remedies (reference Figure A2-1).

A finding of substantive violations that are resolved during the desk audit stage leads to issuance of notice of violations, resolution of issues through a conciliation agreement, and issuance of a closure letter (reference Figure A2-2).

For example, a contractor has not provided adequate documentation regarding good faith efforts in a job group where goals have been established and placement opportunities have occurred. The contractor then informs the CO that no additional documentation exists. All other issues have been resolved during the desk audit. So, if the CO is satisfied that there are no potential discrimination indicators, the lack of good faith efforts should be identified as a violation and remedied in a Conciliation Agreement without the need for an onsite visit.

2U02 CLOSING THE COMPLIANCE REVIEW AFTER COMPLETION OF A FOCUSED ONSITE REVIEW

If the CO determines that an onsite review is required to address one or two issues that could not be resolved at the desk audit, the evaluation may continue with a focused onsite review.

A focused onsite review should be conducted if problem areas are identified in personnel activity, compensation, or unresolved good faith effort issues. The onsite visit to the facility should be scheduled, and the areas identified as potential problems should be investigated at the onsite.

For example, if adverse impact is identified in any job group during the desk audit, but the rest of the desk audit identifies no or few concerns, a focused review should be pursued to investigate the adverse impact issue.

The onsite visit to the facility should be scheduled in accordance with established procedures as described in Chapter 3 of the FCCM. The CO should contact the contractor by telephone and schedule onsite dates. Those dates should be verified through an onsite confirmation letter that also specifies the records that must be ready for inspection when the CO arrives onsite.

Please note that all onsite visits (other than a compliance check) should include an inspection of the I-9 forms, a check for FMLA compliance in accordance with established procedures, and collection of the VETS-100 report. Also, if additional problem areas are identified through interviews or records review, the CO/DD may decide that a complete onsite review is necessary.

2U02a DOCUMENTS FOR CLOSING REVIEW AFTER FOCUSED ONSITE REVIEW

Following are the possibilities for closing the compliance review after a focused onsite review has been completed: A finding of no apparent violation leads to issuance of a closure letter (reference Figure 2-8).

A finding of technical violations(formerly incorporated in LOC) leads to issuance of a closure letter, referencing the violations and their remedies (reference Figure 2-8).

A finding of substantive violations leads to issuance of a notice of violations, resolution of issues in a conciliation agreement, and issuance of a closure letter (reference Figure 2-9).

2U03 CLOSING THE COMPLIANCE REVIEW AFTER A COMPLETE ONSITE REVIEW

If the CO determines that an onsite review is required to address a variety of issues, (e.g. adverse impact issues, good faith effort and AAP problems that have not been resolved) then a complete onsite review will be conducted, following the applicable established procedures as described in sections 2R and 2S and Chapter 3 of the FCCM.

2U04 SCRR PAGES TO BE COMPLETED

The CO should complete a SCRR for every compliance review. The stage at which the compliance review is closed will determine what sections of the SCRR can be completed. In some evaluations, the CO may not be able to complete certain sections of the SCRR. For example, if going onsite is unnecessary in a particular compliance evaluation, the CO may not be able to address the sections of the SCRR which ask: whether the contractor has invited employees to self-identify as protected veterans (Item 1 on page 13a); whether the contractor has listed all suitable employment openings with the state employment service (Item 4 on page 13a); and/or the summary of potential discrimination problems (page 17b). However, the CO should always complete as much of the SCRR as possible, based on how far the compliance review proceeds.

Figure 2-7:

COMPLIANCE CHECK CONTROL SHEET (continued)

CO Recommendation for Closure:

• If items missing, leave blank.
• If prior year report missing (unless contractor was not covered in prior year), check under column #1.
• If job listings information missing, check under column #2.
• If accommodations information missing, check under column #3.
• If contractor refuses to grant access, check appropriate space.

(Checking one of the above spaces will place the contractor into a pool for further evaluation.)

(Checking the space above will indicate the contractor will be selected for another compliance evaluation method.)

Need for Technical Assistance indicated: _____ Yes _____ No

Additional Pertinent Information:

Date Closure Letter Issued to Contractor:

Hours

Figure 2-8:

(Name of CEO)
(Title of CEO)
(Establishment Name)
(Street Address)
(City, State, Zip Code)

Dear (Name of Contractor Official):

Our recent evaluation of your equal employment opportunity policies and practices at (Name and Location of the Establishment reviewed) has been completed.

[Select either Paragraph 2 or Paragraphs 3 and 4]

(2) During the compliance review process we found no apparent violations of Executive Order 11246, as amended, Section 503 of the Rehabilitation Act of 1973, as amended, or the Vietnam Era Veterans' Readjustment Assistance Act of 1974, as amended (38 U.S.C. 4212). This determination may be modified by the Regional Director, or by the Deputy Assistant Secretary for Federal Contract Compliance, within 45 days of the issuance of this letter.

[OR]

(3) and (4) During the compliance review process we identified and resolved the following violation(s): [identify the technical violation(s) resolved during the compliance evaluation, including the appropriate regulatory citation and specific remedy]. It is understood that this/these problem area(s) will not recur.