OFCCP Updates Audit Scheduling Letter and Itemized Listing for Federal Contractors

August 28, 2023

On Aug. 25, 2023, the Office of Federal Contract Compliance Programs (OFCCP) announced that the federal Office of Management and Budget had approved a new version of OFCCP’s scheduling letter and itemized listing. Such forms are the documents OFCCP sends to federal contractors and subcontractors when initiating a “review” (i.e., audit) of a contractor’s compliance with Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans Readjustment Assistance Act of 1974.

Last revised in 2020, the newly approved materials significantly expand the base documents and information requested as part of the start of a compliance review — and the burden in timely responding.

When Will OFCCP Begin Using the New Forms?

OFCCP will begin using the updated scheduling letter and itemized listing for supply and service compliance evaluations scheduled on or after Aug. 24, 2023.

Will Contractors Have Added Time to Respond Given the Added Burden?

No. Per OFCCP, “OFCCP may initiate enforcement proceedings if the contractor does not submit the [affirmative action plans (AAPs)] and Itemized Listing information within 30 calendar days and did not receive an extension.” Extensions, however, are granted only in limited “extraordinary circumstances.” Per OFCCP guidance, examples include: extended medical absences of key personnel; localized or company-specific disasters affecting records retrieval such as a flood, fire or computer virus; unexpected military service absence of key personnel; and unexpected turnover or departure of key affirmative action officials.

Will OFCCP Still Send the Audit Forms by Certified Mail?

No. OFCCP will send the scheduling letter and itemized listing to contractors by email with a read receipt requested to begin a compliance review. Per OFCCP, “[c]ontractors will not receive a hard copy … in addition to the emailed letter.”

Further, OFCCP “encourages” contractors to submit their audit response AAPs and itemized listing information electronically using a secure file sharing system (Kiteworks), but “[c]ontractors also have the option to submit the information by mail.”

What’s Changed With the New Forms?

At a high level, and by no means all-inclusive, the top five key changes adopted in OFCCP’s new scheduling letter and itemized listing are as follows.

Big Change No. 1 – Broader Audit Scope

  • The new scheduling letter requires submission of all AAPs for “campus-like” settings in the same city, even if technically a different AAP “establishment.”
  • Per the new forms, “[i]f you are a post-secondary institution or Federal contractor with a campus-like setting that maintains multiple AAPs, you must submit the information requested in this scheduling letter for all AAPs developed for campuses, schools, programs, buildings, departments, or other parts of your institution, or company located in [city and state only].”

2. Big Change No. 2 – More Recruitment/Outreach Information

  • The new scheduling letter and itemized listing require submission of a list of all “action-oriented programs” designed to correct problem areas along with documents regarding outreach and related criteria used to evaluate the effectiveness “of each effort.”
  • Per the new forms, contractors must “provide documentation demonstrating the development and execution of action-oriented programs designed to correct any problem areas identified pursuant to 41 CFR § 60-2.17(b). The documentation should cover action-oriented programs addressing problems areas identified for the immediately preceding AAP year.”
  • Also, contractors must provide “[d]ocumentation of appropriate outreach and positive recruitment activities reasonably designed to effectively recruit” qualified individuals with disabilities and qualified protected veterans, along with “assessment of the effectiveness of these efforts.” This includes “the criteria used to evaluate the effectiveness of each effort, and whether you found each effort to be effective. The documentation should also indicate whether you believe the totality of your efforts were effective. In the event the totality of your efforts were not effective in identifying and recruiting qualified protected veterans, provide detailed documentation describing your actions in implementing and identifying alternative efforts.”

3. Big Change No. 3 – Compensation Information Expansion

  • The new scheduling letter and itemized listing expand compensation data production to require that contractors provide specified information as of not one but two “snapshot” dates.
  • The new forms also require upfront production of (a) data regarding the “factors” used to determine employee compensation, and (b) policies regarding compensation practices.
  • Per the new forms, contractors must provide “[e]mployee level compensation data for all employees (including but not limited to full-time, part-time, contract, per diem or day labor, and temporary employees) as of (1) the date of the organizational display or workforce analysis and (2) as of the date of the prior year’s organizational display or workforce analysis. For each snapshot, provide a single file that contains for each employee, at a minimum, employee name or numerical ID, gender, race/ethnicity, hire date, job title, EEO-1 Category and job group. If the requested data is maintained in an accessible electronic format, please provide it electronically.”
  • Contractors must also “[p]rovide relevant data on the factors used to determine employee compensation such as education, experience, time in current position, duty location, geographical differentials, performance ratings, department or function, job families and/or subfamilies, and salary level/band/range/grade.”
  • Further, contactors must “[p]rovide documentation and policies related to the contractor’s compensation practices, including those that explain the factors and reasoning used to determine compensation (e.g., policies, guidance, or trainings regarding initial compensation decisions, compensation adjustments, the use of salary history in setting pay, job architecture, salary calibration, salary benchmarking, compensation review and approval, etc.).”
  • The new forms also state that “if the contractor does not maintain any of these items” (i.e., the listed compensation factors, documentation and policies), it must “notate that in your submission.”

4. Big Change No. 4 – Annual Compensation Analysis Documentation

  • The new scheduling letter and itemized listing echo and bolster OFCCP’s highly controversial Directive 2022-01 Revision 1 regarding a contractor’s annual “in-depth analyses” of “[c]ompensation system(s)” per 41 C.F.R. § 60-2.17(b)(3) to now require production of detailed “[d]ocumentation that the contractor has satisfied its obligation.”
  • Per the new forms, such documentation must demonstrate “at least the following:
  1. When the compensation analysis was completed;
  2. The number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;
  3. Which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);
  4. That compensation was analyzed by gender, race, and ethnicity; and
  5. The method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).”

5. Big Change No. 5 – Artificial Intelligence and Other Technology-Based Selection

  • The new scheduling letter and itemized listing now require upfront submission of documents and information regarding technology-based selection procedures and other recruiting, screening and hiring tools.
  • Per the new forms, contractors must “identify and provide information and documentation of policies, practices, or systems used to recruit, screen, and hire, including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.”
  • Note: This is consistent with OFCCP’s and the U.S. Equal Employment Opportunity Commission’s ongoing, expanded initiatives that target automated employment selection tools, resume matching algorithms, artificial intelligence, machine learning and other developing technology systems used in hiring, promotion, termination and other employment decisions.

Where Can I Learn More?

To review the new scheduling letter and itemized listing or to consult the OFCCP’s guidance regarding the forms, please follow the links below.

  • Updated Scheduling Letter and Itemized Listing
  • Frequently Asked Questions

In addition:

  • To learn more, register for McGuireWoods’  Sept. 14 complimentary webinar discussing OFCCP’s new scheduling letter, predetermination notice rule and other enforcement trends.
  • McGuireWoods will be issuing added legal alert guidance on the new scheduling letter and itemized listing at a later date. Please subscribe to receive such alerts if you or others on your team have not already done so.

All federal contractors and subcontractors would be wise to (a) review the new compliance review “kickoff” forms, and (b) evaluate their ability to provide the requested information if unfortunate enough to be audited by OFCCP.

Further, should you have any questions about the new scheduling letter and itemized listing or need assistance in responding to the same, please contact the authors, your McGuireWoods contact or a member of the firm’s affirmative action, labor and employment, and federal contracting teams.