Equal Employment Opportunity: DOL Contract Compliance Reviews Could
Better Target Federal Contractors (Letter Report, 09/28/95,
GAO/HEHS-95-177).
Pursuant to a congressional request, GAO provided information on the
Department of Labor's Office of Federal Contract Compliance Programs'
(OFCCP) oversight of federal contractors' equal employment opportunity
(EEO) practices, focusing on: (1) OFCCP fulfillment of its mission and
responsibilities; (2) changes in OFCCP resources in recent years; and
(3) whether the OFCCP selection procedure for contractor reviews could
mask discrimination against specific minority groups.
GAO found that: (1) OFCCP uses compliance reviews which compare the
racial and gender composition of the contractor's workforce with those
of similar federal contractors to ensure that federal contractors use
nondiscriminatory employment practices; (2) when OFCCP identifies EEO
violations during its compliance reviews, it resolves the violations by
working with the contractors rather than imposing sanctions on the
contractors; (3) OFCCP recommends enforcement proceedings only if the
contractor does not correct its EEO violation; (4) OFCCP uses 11 percent
and 10 percent, respectively, of its enforcement resources for complaint
investigations and compliance support; (5) from 1989 to 1994, OFCCP
financial and staff resources decreased 9 percent and 15 percent,
respectively, and the number of compliance reviews completed decreased
by 33 percent; (6) although OFCCP aggregates data on all minority
employees in a given contractor's workforce during the initial selection
stage of compliance reviews, it may overlook a contractor's
discriminatory practices against one or more particular minority groups;
and (7) OFCCP uses aggregate data to identify contractors for compliance
reviews because the data produces a large enough number of observations
for a statistically valid analysis.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-95-177
TITLE: Equal Employment Opportunity: DOL Contract Compliance
Reviews Could Better Target Federal Contractors
DATE: 09/28/95
SUBJECT: Employment discrimination
Fair employment programs
Statistical methods
Contractor personnel
Contract monitoring
Minorities
Compliance
Law enforcement
Reductions in force
Budget cuts
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Cover
================================================================ COVER
Report to Congressional Requesters
September 1995
EQUAL EMPLOYMENT OPPORTUNITY - DOL
CONTRACT COMPLIANCE REVIEWS COULD
BETTER TARGET FEDERAL CONTRACTORS
GAO/HEHS-95-177
OFCCP's Enforcement Activities
(205291)
Abbreviations
=============================================================== ABBREV
CMR - corporate management review
DOL - Department of Labor
EEDS - Equal Employment Data System
EEOC - Equal Employment Opportunity Commission
FMLA - Family and Medical Leave Act of 1993
FTE - full-time equivalent
IRCA - Immigration Reform and Control Act of 1986
MOU - memorandum of understanding
OFCCP - Office of Federal Contract Compliance Programs
Letter
=============================================================== LETTER
B-262102
September 28, 1995
The Honorable Major R. Owens
House of Representatives
The Honorable Julian C. Dixon
House of Representatives
Women and minorities, comprising more than half of the U.S.
workforce, continue to face instances of discrimination in the
workplace, such as limited opportunities for hiring and promotion.
One strategy for combating such discrimination has been to focus on
the employment practices of the tens of thousands of contractors who
do business with the federal government each year.
While several federal agencies promote equal opportunity in the
workplace, the Office of Federal Contract Compliance Programs (OFCCP)
in the Department of Labor (DOL) is charged with ensuring that
federal contractors, subcontractors, and federally assisted
construction contractors\1 actively seek to provide equal opportunity
in their employment practices. With almost 200,000 federal contracts
and federally assisted construction projects currently under its
purview, OFCCP is responsible for ensuring that the businesses
holding these contracts are taking affirmative action to ensure equal
employment opportunity and are not discriminating on the basis of
race, sex, color, religion, national origin, disability, or status as
a special disabled or Vietnam era veteran.
Because of your concerns about how the federal government structures
the enforcement of equal opportunity laws, you asked us to provide
information on (1) how OFCCP fulfills its mission and
responsibilities; (2) how OFCCP's resources have changed in recent
years; and (3) whether the procedure OFCCP uses to select contractors
for review, which entails aggregating data on racial minorities,
could mask discrimination against specific minority groups.
To do our work, we interviewed OFCCP officials in the national office
and reviewed the agency's policies, procedures, and other relevant
documents. We did our work between September 1994 and July 1995 in
accordance with generally accepted government auditing standards.
--------------------
\1 Federally assisted construction contractors work on construction
projects that are sponsored by another entity, such as a state
government, but are financed in whole or in part with federal funds.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
To fulfill its mission and responsibilities to identify and resolve
instances of discriminatory employment practices by federal
contractors, OFCCP uses compliance reviews as its main enforcement
strategy. During these reviews, OFCCP compares the sex and racial
composition of the contractor's workforce with that of the workforces
of similar federal contractors in the area; OFCCP also reviews the
contractor's employment policies and practices. In fiscal year 1994,
OFCCP devoted about 80 percent of its enforcement hours to compliance
reviews, completing about 4,000 such reviews.
OFCCP's financial and staff resources have declined over the past
several years. From fiscal year 1989 to fiscal year 1994, OFCCP's
budget decreased by 9 percent in inflation-adjusted dollars, and its
authorized staff level decreased by 15 percent. As OFCCP's resources
have decreased, so too has the number of compliance reviews it
conducts; from fiscal year 1989 to fiscal year 1994, the number of
completed reviews dropped by 33 percent.
One of the procedures OFCCP uses to select contractors for review
raises concerns about its ability to effectively target potential
violators. OFCCP receives data on the sex and individual racial
groups that compose the contractor's workforce, yet OFCCP aggregates
the data on all minority employees in a given company before
completing its initial analysis. This practice could cause OFCCP to
overlook companies that discriminate against one or more particular
minority groups.
BACKGROUND
------------------------------------------------------------ Letter :2
In 1941, President Roosevelt ordered all federal agencies to include
in their wartime contracts a provision prohibiting contractors from
discriminating against any worker because of race, color, creed, or
national origin. President Johnson expanded this principle in 1965
when he issued Executive Order 11246, which required federal
contractors and subcontractors, and federally assisted construction
contractors, to refrain from discrimination and to take affirmative
action to provide equal employment opportunity to all employees and
job applicants, regardless of race, color, religion, sex, or national
origin. In the early 1970s, equal employment responsibilities were
expanded by statute to persons with disabilities and certain disabled
and Vietnam era veterans. (See app. I for more information on the
legal authorities for OFCCP.)
Established in 1966, OFCCP has seen its role evolve over time.
Initially, OFCCP served as a policy-making body; using a small
nationwide staff, it concentrated primarily on coordinating and
monitoring enforcement, while the actual day-to-day enforcement
responsibilities were scattered among other federal agencies. In
1978, enforcement responsibilities were transferred from the various
federal agencies to OFCCP in order to consolidate activities and
improve the efficiency and effectiveness of the investigations.
Since then, OFCCP has been primarily responsible for ensuring the
compliance of federal contractors, subcontractors, and federally
assisted construction contractors with their affirmative action and
equal opportunity responsibilities.
Today, OFCCP operates with a budget of about $59 million and is
authorized for 825 full-time-equivalent (FTE) staff positions.
OFCCP's national office in Washington, D.C., directs the nationwide
enforcement of equal employment opportunity laws and regulations
among federal contractors. Field staff in OFCCP's 10 regional
offices and 57 district and area offices conduct the actual
enforcement activities. These include reviewing federal contractors'
compliance with the applicable laws and regulations, conducting
investigations of individual complaints, and providing technical
support to federal contractors.
While OFCCP monitors the employment practices of federal contractors,
OFCCP is actually one of several federal agencies responsible for
enforcing equal opportunity laws and regulations. The Equal
Employment Opportunity Commission (EEOC), under title VII of the
Civil Rights Act of 1964, as amended, investigates charges of
employment discrimination because of race, color, religion, sex, or
national origin. EEOC also is responsible for investigating
discrimination charges in employment based on age, unequal pay, and
physical and mental disabilities. There is some overlap in
activities of these agencies, and EEOC and OFCCP operate under a
memorandum of understanding (MOU) and coordination regulations to
minimize any duplication of effort. For example, under the MOU,
individual complaints to OFCCP alleging discrimination under title
VII are referred to EEOC. Under the coordination regulations, OFCCP
acts as EEOC's agent in investigating charges of discrimination
brought by certain persons with disabilities.\2
--------------------
\2 The similar activities of OFCCP and EEOC have come to the
attention of the 104th Congress in its effort to streamline
government and to achieve cost savings. One of these efforts, which
is part of a broader plan to merge the Departments of Education and
Labor and EEOC, would place OFCCP's and EEOC's activities, as well as
other programs responsible for enforcing equal employment opportunity
laws, with an under secretary for civil rights. However, no
legislation mandating such changes has been introduced to date. See
Federal Reorganization: Congressional Proposal to Merge Education,
Labor, and EEOC (GAO/HEHS-95-140, June 7, 1995).
OFCCP'S ENFORCEMENT STRATEGY
FOCUSES ON COMPLIANCE REVIEWS
------------------------------------------------------------ Letter :3
In carrying out its mission and responsibilities, OFCCP focuses most
of its resources on compliance reviews (see fig. 1). Through this
mechanism, which includes a desk audit and a site visit in most
cases, OFCCP analyzes a contractor's hiring and employment practices.
OFCCP seeks to determine if these practices comply with laws that it
enforces. In most of its reviews OFCCP identifies violations, many
of which are considered major. Regardless of the exact nature of the
violation, OFCCP's policy is to work with the contractor to resolve
the case rather than to impose sanctions, such as canceling the
federal contract. In addition to compliance reviews, OFCCP conducts
complaint investigations and provides compliance support, such as
technical assistance to help federal contractors understand the
regulatory requirements and review process.
Figure 1: Compliance Reviews
Composed Majority of OFCCP's
Activities in Fiscal Year 1994
(See figure in printed
edition.)
Note: Data points for this figure are presented in appendix II.
Source: GAO analysis of OFCCP data.
DESK AUDITS AND SITE VISITS
INCLUDED IN MOST COMPLIANCE
REVIEWS
---------------------------------------------------------- Letter :3.1
A compliance review, which often takes between 3 and 6 months to
complete, usually consists of two phases: a desk audit and a site
visit. The desk audit is a systematic review of documents and
materials that the contractor under review provides, explaining its
efforts to ensure equal employment opportunities. As part of the
desk audit, compliance officers compare the representation of women
and individual minority groups in the contractor's workforce with
that of the workforces of similar federal contractors in the area,
and examine the contractor's affirmative action plan. Next, OFCCP
usually conducts an on-site review at the contractor's
establishment.\3 During this phase, compliance officers investigate
potential violations identified in the desk audit, verify the
contractor's activities to implement its affirmative action program,
and obtain information needed to work with the contractor to resolve
any violations. Activities include inspecting the contractor's
facilities and reviewing its personnel files (see fig. 2).
Figure 2: General Steps of a
Compliance Review
(See figure in printed
edition.)
Source: OFCCP's Federal Contract Compliance Manual.
--------------------
\3 An on-site review may not be required when (1) the material
submitted by the contractor does not demonstrate a reasonable effort
to meet the requirements for an affirmative action program; or (2)
the affirmative action program is determined to be acceptable at the
desk audit, an on-site review has been conducted in the preceding 2
years, or the circumstances existing during the previous on-site
review have not changed substantially.
CONTRACTOR VIOLATIONS
IDENTIFIED AND RESOLVED IN
MOST REVIEWS
---------------------------------------------------------- Letter :3.2
Compliance reviews tend to uncover violations in the vast majority of
cases. OFCCP identified violations in 74 percent of its completed
compliance reviews in fiscal year 1994 (see table 1), and OFCCP
classified these violations as either major or minor. In 73 percent
of the reviews in which violations were identified, OFCCP resolved
them with conciliation agreements. Conciliation agreements are used
for major violations. Many conciliation agreements address
violations such as a contractor's failure to complete a workforce
utilization analysis or to correct for problems with its past
performances. Some agreements do address outright discrimination,
such as one case in which a compliance review uncovered a pattern of
discrimination against African American applicants who had been
denied jobs at a facility.
In addition to the actual conciliation agreement, OFCCP may require
the contractor to provide financial compensation to the individual
victims of discrimination. For example, in fiscal year 1994, OFCCP
reached 553 financial agreements valued at $39.6 million, and, in the
case of the discrimination previously cited, the company agreed to
pay over $630,000 in back wages to the 32 qualified applicants who
had been denied jobs. OFCCP resolved the remaining compliance
reviews with letters of commitment, which are used for minor
violations such as the need to make technical corrections to a
contractor's affirmative action plan.
While OFCCP emphasizes bringing contractors into compliance with the
employment laws rather than penalizing them for not complying, OFCCP
may recommend enforcement proceedings--that is, legal actions--if a
contractor fails to resolve discrimination or affirmative action
violations. Seventy-five cases were referred for enforcement in
fiscal year 1994, and in one such case OFCCP found that a contractor
discriminated in compensating a class of minorities and women. The
contractor refused to conciliate, and OFCCP then recommended the case
for enforcement.
After an administrative hearing, the Secretary of Labor may order
that a contract be suspended or cancelled, and the contractor may be
debarred from doing business with the federal government.
Debarments, however, are rare, with five contractors debarred in
fiscal year 1994. In two of these cases, the contractors did not
honor their conciliation agreements by failing to recruit and hire
women, and by filing false reports.
Table 1
Resolution of Compliance Review
Violations in Fiscal Year 1994
Number of
Compliance reviews actions taken
---------------------------------------- ----------------
Completed reviews 4,179
Reviews resulting in identified 3,094
violations
Resolved with letter of commitment 784
Resolved with conciliation agreement 2,262
Financial agreements reached and value 553 agreements,
$39.6 million
Amount of back pay and number of $14.4 million,
beneficiaries about 11,000
people
Cases referred for enforcement 75
Contractors debarred 5
----------------------------------------------------------
Source: OFCCP data.
COMPLAINT INVESTIGATIONS AND
COMPLIANCE SUPPORT ALSO
PROVIDED
---------------------------------------------------------- Letter :3.3
Enforcement resources not devoted to compliance reviews are used for
complaint investigations and other support activities. OFCCP
dedicates about 11 percent of its enforcement hours to investigating
specific complaints of employment discrimination. OFCCP investigates
cases involving groups of people or patterns of discrimination, as
well as individual or group complaints filed under the disability and
veterans' laws. In fiscal year 1994, OFCCP completed 802 complaint
investigations and found violations in 19 percent of the cases.
OFCCP devoted the remainder of its enforcement resources--about 10
percent--to various support activities. Staff give technical
assistance, such as advising contractors on how to meet their equal
employment opportunity obligations. OFCCP provides this assistance
by answering individual questions and sponsoring seminars on OFCCP
policies and regulations. OFCCP staff also spend time supporting
litigation efforts and completing other activities, such as (1)
linking contractors to specific community recruitment and training
resources that can help fill workforce deficiencies and (2) reviewing
periodic progress reports required by agreements reached during
compliance reviews.
OFCCP'S DECREASING RESOURCES
COINCIDED WITH A DECREASE IN
NUMBER OF REVIEWS AND
INVESTIGATIONS
------------------------------------------------------------ Letter :4
In fiscal year 1989, OFCCP's staff size was larger than it had been
since the early 1980s, and the agency completed a record number of
compliance reviews. By fiscal year 1994, OFCCP's budget had
decreased by 9 percent in real dollars (see table 2).
Table 2
OFCCP's Budget Decreased in Inflation-
Adjusted Dollars
Real dollars
Fiscal year Nominal dollars (based on 1994)
------------------ ------------------ ------------------
1989 $51,863 $61,963
1990 53,045 60,142
1991 52,584 57,219
1992 54,655 57,714
1993 55,695 57,123
1994 56,306 56,306
----------------------------------------------------------
Source: OFCCP data and GAO analysis.
As OFCCP's budget decreased in real terms, so did the size of its
staff. From fiscal year 1989 to fiscal year 1994, OFCCP's total FTE
staff decreased by 15 percent, from 970 to 820 (see fig. 3).
Moreover, the actual number of compliance officers working at OFCCP
decreased by 33 percent and has been below the authorized level since
fiscal year 1990, primarily because of attrition and hiring freezes.
Figure 3: OFCCP's Staff Level
Dropped Between Fiscal Years
1989 and 1994
(See figure in printed
edition.)
Note: Data points for this figure are presented in appendix II.
Source: OFCCP data.
During this time the number of completed compliance reviews decreased
by 33 percent, from 6,232 to 4,179. OFCCP officials explained that
part of this decline was due to the decrease in OFCCP's funding and
staff levels, as well as a changing emphasis from reviewing a single
establishment to undertaking more labor intensive lengthy reviews
such as corporate management reviews and construction mega-project
reviews.\4
The number of complaint investigations, in which OFCCP reacts to
specific complaints filed by a person or persons, also decreased by
39 percent during this period. This drop, from 1,321 to 802 (see
fig. 4), was due in large part to a reduction in the number of
complaints actually received by OFCCP, according to OFCCP officials.
Figure 4: OFCCP's Enforcement
Activities Declined Between
Fiscal Years 1989 and 1994
(See figure in printed
edition.)
Note: Data points for this figure are presented in appendix II.
Source: OFCCP data.
--------------------
\4 Corporate management reviews (CMR), also called "glass ceiling
reviews," include all aspects of a standard compliance review but
give special attention to developmental and selection processes and
practices for advancement into mid- and upper-level corporate
management positions. A construction mega-project review examines
all the various contractors working on a major construction project.
These are multimillion-dollar construction projects expected to take
at least 1 year and have major economic and employment impacts on
communities. Such projects include the construction of federal
buildings, courthouses, and airports.
OFCCP'S USE OF AGGREGATED DATA
COULD OVERLOOK DISCRIMINATION
------------------------------------------------------------ Letter :5
One of the procedures OFCCP uses to initially identify contractors
for compliance reviews may not lead to appropriate targeting of
contractors. Because OFCCP aggregates data pertaining to all
minority groups in a company during its initial selection stages,
rather than focusing on data pertaining to each minority group
separately, it could overlook companies that discriminate against one
or more particular minority groups.
Contractors are required to report on the race, ethnicity, and sex of
their workforce in each of nine occupational categories. OFCCP then
uses these data as part of its process to determine which contractors
should be targeted for compliance reviews. This includes comparing
the percentage of all minorities and the percentage of women in a
contractor's workforce to that of all other federal contractors in
similar industries and geographic areas.\5
In completing these comparisons, OFCCP combines the data pertaining
to all minorities because, according to OFCCP officials, the
aggregated data provide a large enough number of observations for a
statistically valid analysis.
Aggregated data may conceal possible discrimination against specific
minority groups. For example, if 30 percent of a contractor's
workforce is composed of minorities, and this percentage mirrors the
average minority employment for all similar federal contractors in
the area, then the contractor is not as likely to be targeted for
review. However, assume that all 30 percent of the contractor's
minority workforce are Hispanic when the workforces of similar
federal contractors in the area are 15 percent Hispanic and 15
percent African American. While this imbalance in the racial
composition of the contractor's workforce indicates that the
contractor may be discriminating against African Americans, under
OFCCP's current practice of aggregating the data, the contractor may
not be identified for a compliance review.\6 OFCCP officials
acknowledge that this type of discrimination could occur and that
some areas have large enough minority populations for statistically
valid analyses. In commenting on a draft of this report, a DOL
official stated that OFCCP will test the feasibility of using
disaggregated data in identifying contractors for compliance reviews.
--------------------
\5 For more detail on the data and procedures OFCCP uses to select
contractors for review, see appendix III.
\6 This is a hypothetical example and is not based on an analysis of
the actual data.
CONCLUSIONS
------------------------------------------------------------ Letter :6
Compliance reviews--the cornerstone of OFCCP's enforcement
strategy--have been successful in identifying violations in nearly
three-quarters of the cases. However, the number of such reviews has
decreased, as have the agency's resources. At the same time, OFCCP
has continued its practice of aggregating data when initially
selecting contractors for compliance reviews, which may be
inappropriate. Although firms report data by individual racial
groups, OFCCP aggregates the data before making its selections,
thereby losing an opportunity to target firms that may discriminate
against particular racial groups.
RECOMMENDATION
------------------------------------------------------------ Letter :7
In order to reduce the likelihood of overlooking contractors that may
discriminate against particular racial groups, we recommend that, in
targeting contractors for review, OFCCP use existing data on
individual minority groups in geographic areas where the minority
populations are large enough so that statistically valid analyses can
be completed.
AGENCY COMMENTS
------------------------------------------------------------ Letter :8
In reviewing a draft of this report, DOL and OFCCP officials
concurred with our recommendation and said they planned to test its
feasibility as part of OFCCP's fiscal year 1996 efforts to revise its
selection procedures. A copy of DOL's written comments on this
report is in appendix IV. OFCCP also provided oral suggestions to
clarify certain technical issues, which we incorporated as
appropriate.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Secretary of Labor and
the Director of OFCCP, and will make copies available to others on
request.
Please contact Wayne B. Upshaw, Assistant Director, or me on (202)
512-7014 if you or your staff have any questions about this report.
Major contributors to this report are listed in appendix V.
Cornelia M. Blanchette
Associate Director
Education and Employment Issues
LEGAL AUTHORITIES FOR OFFICE OF
FEDERAL CONTRACT COMPLIANCE
PROGRAMS
=========================================================== Appendix I
Executive Order 11246: This order, issued in 1965, prohibits
discrimination in hiring or employment opportunities on the basis of
race, color, religion, sex, and national origin. It applies to all
contractors and subcontractors holding any federal contracts, or
federally assisted contracts exceeding $10,000 annually. In
addition, the rules implementing the executive order require
contractors and subcontractors with federal contracts of $50,000 or
more and 50 or more employees to develop a written affirmative action
program that identifies any problem areas in minority employment and
provides in detail for specific steps to guarantee equal employment
opportunity keyed to the problems.
Section 503 of the Rehabilitation Act of 1973: This statute requires
government contractors to take affirmative action to employ and
advance in employment qualified persons with disabilities. It
applies to firms with federal contracts of $10,000 or more annually.
Vietnam Era Veterans' Readjustment Assistance Act of 1974 (38 U.S.C.
4212): The affirmative action provision of this statute requires
federal contractors and subcontractors to undertake affirmative
action for qualified special disabled veterans and Vietnam era
veterans. It applies to all federal contracts of $10,000 or more
annually.
Equal Employment Opportunity in Apprenticeship and Training (29
C.F.R. Part 30): This federal regulation requires equal employment
opportunity and affirmative action in apprenticeship programs. It
applies to all apprenticeship programs registered with the Department
of Labor or with recognized state apprenticeship organizations.
In addition, during the course of compliance reviews and complaint
investigations, OFCCP checks for compliance with certain aspects of
the Immigration Reform and Control Act of 1986 (IRCA) and the Family
and Medical Leave Act of 1993 (FMLA). IRCA requires all employers to
maintain a verification form pertaining to the citizenship and/or
immigration status of new employees. OFCCP examines these records
and reports its findings to the Immigration and Naturalization
Service. FMLA requires employers to permit employees to take unpaid
leave for certain family and medical reasons. Generally, any
employee who takes this leave is entitled, upon return, to be
restored to the same or an equivalent position without loss of
benefits. OFCCP checks for compliance with this act and reports any
apparent violations to the Wage and Hour Division of the Department
of Labor.
DATA POINTS FOR FIGURES IN LETTER
========================================================== Appendix II
Table II.1
Data Points for Figure 1--Compliance
Reviews Composed Majority of OFCCP's
Activities in Fiscal Year 1994
Number of
enforcement
Enforcement activity hours
------------------------------------------ --------------
Compliance reviews 482,731
Complaint investigations 66,841
Enforcement support 63,265
----------------------------------------------------------
Table II.2
Data for Figure 3--OFCCP's Staff Levels
Dropped Between Fiscal Years 1989 and
1994
Fiscal Total Compliance Total Compliance
year staff officers staff officers
---------- -------- ------------ -------- ------------
1989 970 585 1,031 587
1990 969 585 950 527
1991 918 585 874 481
1992 856 513 841 444
1993 842 505 816 425
1994 829 498 778 394
----------------------------------------------------------
Table II.3
Data for Figure 4--OFCCP's Enforcement
Activities Declined Between Fiscal Years
1989 and 1994
Number of compliance Number of complaint
Fiscal year reviews investigations
-------------- -------------------- --------------------
1989 6,232 1,321
1990 6,033 1,295
1991 5,379 1,278
1992 4,953 1,157
1993 4,455 979
1994 4,179 802
----------------------------------------------------------
DETAILS ON SELECTING CONTRACTORS
FOR COMPLIANCE REVIEWS
========================================================= Appendix III
OFCCP REVIEWS TWO TYPES OF
CONTRACTORS
------------------------------------------------------- Appendix III:1
OFCCP divides federal contractors into two types: supply and service
contractors, and contractors working on federally funded or federally
assisted construction projects. Because of the differing nature of
the businesses and the amount of time people are employed, OFCCP uses
different data and selection criteria when selecting contractors for
reviews. Once the contractor is selected, the compliance review
procedures are similar, although, on average, supply and service
contractor reviews require almost 3 times as many hours to complete
as construction contractor reviews and cover almost 10 times as many
workers (see table III.1).
Table III.1
Average Resources Used and Number of
Employees Reviewed During Each Type of
Compliance Review, Fiscal Year 1994
Supply and service Construction
Compliance review contractor contractor
------------------ ------------------ ------------------
Average number of 146 53
hours to complete
Average number of 602 65
employees
reviewed
----------------------------------------------------------
COMPLIANCE REVIEW DATA AND
SELECTION PROCEDURES VARY BY
TYPE OF CONTRACTOR
------------------------------------------------------- Appendix III:2
DATA USED IN SELECTING
SUPPLY AND SERVICE
CONTRACTORS FOR REVIEW
----------------------------------------------------- Appendix III:2.1
OFCCP's Equal Employment Data System (EEDS) serves as the basis for
selecting supply and service contractors for review. EEDS is
developed from the information submitted to a joint reporting
committee, which is composed of OFCCP and Equal Employment
Opportunity Commission representatives, via the Employer Information
Report (EEO-1). This report includes information on the race,
ethnicity, and sex of employees in each of nine job categories and is
to be filed annually by September 30. Federal regulations require
most contractors and subcontractors with 50 or more employees and a
federal contract worth more than $50,000 to file the EEO-1 form. Any
establishment that serves as a depository of government funds or is a
financial institution that is an issuing and paying agent for U.S.
savings bonds is required to file. Also, all private sector
employers with 100 or more employees are required to file regardless
of whether they hold federal contracts.
MOST REVIEWS ARE TO BE OF
"FLAGGED" SUPPLY AND SERVICE
CONTRACTORS
----------------------------------------------------- Appendix III:2.2
OFCCP policy directs that approximately 84 percent of the
establishments selected for review be from a rank listing of
"flagged" contractors. Using the information in EEDS, OFCCP ranks
contractor establishments on the basis of each contractor's "average
utilization value" of minorities and women, with separate values
calculated for each. The average utilization rate is derived by
first comparing the contractor's percentage of minorities (or women)
employed in each of the nine occupational categories to the average
employment of minorities (or women) for all federal contractors in
the specified industry and geographic area. These nine values are
then averaged to arrive at one number that is used as the average
utilization value. Contractors are then ranked on the basis of their
minority or female utilization value, whichever is lower. In
addition, the EEDS produces a "concentration index" that is used to
examine how minorities and women are distributed throughout a
contractor's workforce. In developing this index, more weight is
given to those occupational categories that receive higher wages.
Using these two calculations, establishments are then flagged by EEDS
as appropriate candidates for further OFCCP review. A contractor is
flagged when the establishment's utilization rate is less than 80
percent of the industry average of either minorities or women, and
there is a relatively high concentration of either minorities or
women in lower wage occupations. Each district office then receives
a listing of flagged establishments in its jurisdiction, which are
then examined to determine if they are eligible to be reviewed.
Contractors are eligible for review if they have not been reviewed in
the past 2 years, are not under a court order resulting from equal
employment opportunity legislation, and hold a current federal
contract.
SELECTION PROCEDURES INCLUDE
DISTRICT DIRECTORS'
DISCRETION AND RANDOM SAMPLE
----------------------------------------------------- Appendix III:2.3
OFCCP policy also directs that about 15 percent of the contractors
reviewed are to be chosen at the discretion of OFCCP district
directors. In making these discretionary selections, directors are
to consider complaints and community concerns about employers, awards
of large federal contracts that may increase employment
opportunities, establishments that do not file required reports,
expansion of employment in an industry or at specific locations, and
significant reductions in employment that impact minorities or women.
OFCCP does not compile statistics on the specific reasons for
selecting contractors for review under the district directors'
discretion.
The remaining 1 percent of compliance reviews target a randomly
selected sample from EEDS. District offices are required to review
the randomly selected contractor establishments with more than 100
employees unless the establishment is under a court order resulting
from equal employment opportunity litigation; has been reviewed in
the last 2 years; or cannot be reviewed for some reason, such as it
is no longer in business.
DIFFERENT DATA AND SELECTION
PROCEDURES FOR CONSTRUCTION
CONTRACTORS
----------------------------------------------------- Appendix III:2.4
Because of the fluctuating and temporary nature of the construction
industry, the Department of Labor has historically treated
construction contractors separately from supply and service
contractors. While those construction contractors that meet the
EEO-1 filing requirements should file reports that would be contained
in EEDS, the EEDS information is not used in selecting construction
contractors for compliance reviews. Instead, OFCCP relies on other
sources for information.
OFCCP's national office purchases listings of active construction
projects in each district and area office's jurisdiction. These
listings summarize information on publicly funded construction
projects compiled by F.W. Dodge, a private company that publishes
construction industry information. They include the contract value
and the type of construction project but not the name of the
contractor or any information concerning the contractor's employees.
The district directors select "likely candidates" from this list. A
district director then orders a profile sheet for each project, and
this sheet includes owner and general contractor information. OFCCP
staff then contact the prime contractor to obtain the names,
addresses, and size of the major subcontractors, including the number
of personnel and the value of the subcontracts. In selecting
construction contractors for review, a district director gives first
priority to contractors that have not been reviewed for the longest
time, have received substantial federal or federally assisted
contracts resulting in large workforces, and employ fewer minorities
or women than would reasonably be expected.
(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
LABOR
========================================================= Appendix III
GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
=========================================================== Appendix V
GAO CONTACTS
Wayne B. Upshaw, Assistant Director, (202) 512-7006
Jill W. Schamberger, Evaluator-in-Charge, (202) 512-7045
ACKNOWLEDGMENTS
In addition to those named, the following individuals contributed to
this report: Larry Horinko and Robert Sampson did the initial audit
work; Nancy Kintner-Meyer assisted with augmenting the audit work and
analysis; and Timothy Silva and James Spaulding reviewed and
commented on early drafts of the report.