February 29, 2016

Reading Between the [Budgetary] Lines – What’s in store for FY 2017?

Since the release of OFCCP’s FY 2017 budget justification on February 8, 2016, the federal contractor community has been buzzing, as OFCCP’s requests shed light on the agency’s enforcement priorities for the near future. Given the current political landscape, it is very unlikely that the budget increase desired by OFCCP will be granted by Congress. However, insights into OFCCP’s strategy and the potential implications still can be gleaned from the report.

First, the unusual exchange between the House and Senate Appropriations Committee and OFCCP is fascinating. Essentially, Congress alleged that OFCCP has been eschewing anecdotal evidence and using debarment threats to induce contractors’ compliance. OFCCP refutes those allegations, stating that statistical evidence alone will not result in enforcement procedures against a contractor, and that violation notices will be issued “only where there is an ample evidentiary record” of discrimination.

Hiring and pay discrimination will remain OFCCP’s main focus for FY2017. OFCCP has eliminated numerical targets for completing reviews during the year, instead setting a goal to ensure that 95% of their cases will not have any major investigatory deficiencies. Although enforcement on construction projects is highlighted as a priority in FY2017, updating the construction AAP regulations is notably absent. This confirms that OFCCP will not publish a new rulemaking notice for those regulations before the end of the current administration’s term.

The most interesting revelation is OFCCP’s plan to open Skilled Regional Centers in San Francisco and New York to provide the Pacific and Northeast regions, respectively, with highly trained compliance officers who are able to tackle more complex compliance reviews in specific industries. One of OFCCP’s stated reasons for this move is saving costs by closing some “brick-and-mortar field offices.” Along with the overall reduction in staff during the last few years, this plan could create morale challenges within the agency. The timing of the plan is curious: instituting a fundamental organizational transformation amid the final months of a presidential election year only gives the current administration 3-4 months to enact change. Whether intentional or not, this plan could leave numerous organizational challenges for the next administration to inherit in 2017.

By Fred Satterwhite, Principal Consultant and Jeff Henderson, Associate Consultant at DCI Consulting Group

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