By: Bill Osterndorf
The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) continues to focus on the affirmative action initiatives of construction companies. The agency’s latest action in this regard was the release on June 5, 2023, of a Corporate Scheduling Announcement List (CSAL)1 that includes 250 companies involved in construction work. This CSAL is the second construction-related CSAL in 2023 and follows a March 2023 CSAL focused on 12 mega construction projects.
OFCCP had shown relatively little interest in construction companies during the 2010’s. The agency routinely conducted 1,000 or more compliance reviews of non-construction companies every year. In comparison, the agency completed a total of 12 compliance reviews of construction employers during federal fiscal year 2019 and 2 compliance reviews during federal fiscal year 2020. While there were more construction reviews earlier in the 2010’s, that number of reviews did not come close to matching the number of non-construction reviews.
A Timeline for OFCCP’s Renewed Interest in Construction
OFCCP’s renewed interest in construction began in 2019 with the release of a Technical Assistance Guide for construction companies. The agency became more focused on the construction industry after the release of a report by the Department of Labor’s Office of Inspector General in March 2020. This report criticized several aspects of OFCCP’s approach to conducting compliance reviews of construction companies.
Since then, the agency has taken the following actions:
- In April of 2020, OFCCP received approval from the Office of Management and Budget (OMB) for new scheduling letters that allow the agency to conduct “compliance checks” of construction companies.2
- In September of 2020, OFCCP released a CSAL that contained 200 locations for review. The companies on this CSAL were scheduled for compliance checks.
- In June of 2021, OFCCP released a budget justification for fiscal year 2022 that included a commitment to “reinvigorating construction enforcement.”
- In July of 2021, OFCCP received approval from OMB for a revised scheduling letter to be used when the agency conducts full compliance reviews of construction companies.
- In September of 2021, OFCCP released a CSAL that contained 400 locations for review. The companies on this CSAL were scheduled for full compliance reviews using the agency’s revised scheduling letter.
- In August of 2022, OFCCP debuted a new version of the notification site that construction companies must use to inform the agency of subcontract awards.
- In March of 2023, OFCCP announced the agency’s Mega Construction Project Program. This program will focus on construction projects valued at $35 million or more.
- Also in March of 2023, OFCCP released a CSAL that includes 12 projects that will be subject to review under the Mega Construction Project Program.
- In June of 2023, OFCCP released a CSAL that contains 250 locations for review. Unlike the September 2020 and July 2021 CSALs, there are no companies that appear more than once among the list of 250 locations that will be undergoing reviews.
Revised Scheduling Letter Changes the Nature of Construction Compliance Reviews
The revised scheduling letter that is now being used for full compliance reviews of construction companies has changed the nature of these reviews. Both OFCCP and construction companies have been required to learn new procedures and requirements associated with this revised scheduling letter. OFCCP will likely apply some of the lessons the agency has learned after reviews associated with the September 2021 CSAL to upcoming reviews.
In the past, much of what occurred during a compliance review of a construction company occurred at one or more work sites. OFCCP would ask for records to be made available at the work site and would check for implementation of various regulatory requirements on those work sites. With the advent of the revised scheduling letter, OFCCP now collects a significant amount of information prior to coming to a work site. The scheduling letter asks construction companies to supply the following, among other items, at the start of a compliance review:
- Payroll data on all construction trade employees in the relevant geographical area under review
- Personnel activity data on applicants, hires, promotions, layoffs, recalls, and terminations for construction trade positions in the relevant geographical area
- Records of notices to subcontractors about their EEO obligations
- If required, the company’s affirmative action plan for protected veterans3
- If required, the company’s affirmative action plan for individuals with disabilities
The revised scheduling letter causes a construction compliance review to be much more like a non-construction compliance review. For example, analyses of pay data and personnel activity information are completed before a visit is made to a work site. While OFCCP generally conducts part of a construction compliance review at one or more work sites, the agency will have had an opportunity to assess the company’s affirmative action initiatives prior to that visit.
There are two very important ways in which the construction scheduling letter is different than the non-construction scheduling letter. First, the scheduling letter for non-construction employers asks for data and other information based on the start date of the company’s current affirmative action plans. The construction scheduling letter asks for data and other information associated with Executive Order 11246 for the 12-month period prior to the data the letter was received. This is complicated by the fact that the construction scheduling letter asks for the current affirmative action plans regarding protected veterans and individuals with disabilities. These affirmative action plans (AAPs) are based on a start date defined by the employer. For example, the AAPs may have a start date of January 1, and would cover personnel activity for the prior calendar year. If a construction company receives a scheduling letter in August and its VEVRAA/Section 503 AAPs have a start date of January 1, the reporting periods for the Executive Order data and the VEVRAA/Section 503 data would not coincide.
Second, while a non-construction compliance review covers a specific establishment or functional unit, the construction scheduling letter requests information for all projects (including non-federal projects) in a geographic area. The contractor under review may not have a physical location in the geographic area under review.
Should All Companies on the June 2023 Undergo Construction Reviews?
OFCCP provided information on the methodology the agency used to determine which companies should be included on the June 2023 CSAL. The agency stated that the CSAL was initially developed by using a list from USASpending.gov. That list included companies with federal construction contracts over $10,000. The list was supplemented by a list of federally-assisted construction contracts over $10,000 provided by the U.S. Department of Transportation. OFCCP then used a number of other criteria to determine the companies that are on the June 2023 CSAL.
It appears that OFCCP selected companies for the June 2023 CSAL by using North American Industry Classification System (NAICS) codes associated with construction contracts.4 However, in some cases, the NAICS code is at odds with other information that more clearly defines the work being done under the contract. There are companies that are primarily involved in manufacturing, equipment servicing, and other activities outside of construction that are found on June 2023 CSAL.
OFCCP has issued a Frequently Asked Question (FAQ) about companies scheduled for construction compliance reviews that are not typically involved in construction work. This FAQ reads as follows:
My company traditionally performs work under non-construction, or supply & service contracts. If my company also performs work under a construction contract, and my company is scheduled for a review under said construction contract, will OFCCP administratively close the construction compliance review?
No. O3FCCP [sic] will no longer administratively close the construction compliance reviews in this instance.
Contractors and subcontractors with a covered construction contract are required to fulfill all applicable obligations under 41 CFR part 60-4 as to its workers that are engaged in on-site construction work and functions incidental to the actual construction (e.g., supervision or inspection of construction work), and including those construction employees who work on a non-Federal or non-federally assisted construction site. Thus, a company that holds a covered non-construction (supply and service) contract and a covered construction contract may be scheduled and reviewed by OFCCP under 41 CFR part 60-2 or 41 CFR part 60-4, depending on the establishment or worksite that is scheduled.
This was a surprising response by OFCCP because the agency has traditionally treated construction and non-construction contracts and contractors as distinct from each other. It is also surprising considering the very different regulatory requirements that OFCCP has for construction and non-construction companies.
Other Potential Issues with the June 2023 CSAL
The September 2020 and September 2021 CSALs included a number of general contractors. These general contractors may have a very small number of (or no) construction trade employees. OFCCP’s regulations for construction companies, especially those under Executive Order 11246, are very much focused on construction trades employees. For example, the Executive Order regulations establish participation goals for women and minorities working in construction trades positions. There are no such goals for office or supervisory employees. Reviews associated with the September 2020 and September 2021 CSALs that involved general contractors at time left OFCCP with little to examine because of the absence of construction trades employees. This issue is likely to surface again with some of the construction companies that are on the June 2023 CSAL.
For non-construction companies, OFCCP typically does not select locations that have fewer than 50 employees. The methodology used to create the June 2023 CSAL did not consider the number of employees at companies scheduled to undergo review. This may mean that the June 2023 CSAL contains companies with a very small number of trades employees in the geographic area of the audit.
Actions to Take
Companies that are on the June 2023 CSAL should take a number of actions. These include the following:
- Determine why OFCCP has selected the company for a construction compliance review and determine whether the company was improperly selected.
- Review the scheduling letter used for construction compliance reviews and determine what regulatory obligations may need attention.
DCI has a variety of resources for construction companies and is ready to assist construction companies that need to prepare for a compliance review. We encourage you to contact us if your company is on the June 2023 CSAL.
References
1 A Corporate Scheduling Announcement List does not formally open a compliance review. Instead, a CSAL is a courtesy announcement by OFCCP informing federal contractors and subcontractors they will be undergoing review. A compliance review formally opens when an employer receives a scheduling letter from OFCCP. A scheduling letter tells the employer that a review will be occurring and gives the employer a defined timeframe to submit information to OFCCP. Scheduling letters for full compliance reviews include an itemized listing that defines specific information that must be sent to OFCCP.
2 Compliance checks are a truncated compliance review that examines a limited number of regulatory requirements. Compliance checks for construction companies require the submission of certain personnel records on construction trades employees, payroll records for construction trades employees working in the geographic area under review, and examples of job posting and accommodation requests. Certain construction companies must also submit their affirmative action program for protected veterans and individuals with disabilities.
3 The affirmative action plans for protected veterans and individuals with disabilities must only be submitted if a construction company is involved in direct work for the federal government. Construction companies doing federally-assisted work have no obligations under the affirmative action laws for protected veterans and individuals with disabilities. “Federally-assisted work” would include projects such as road construction where a state Department of Transportation is responsible for the project, but funding is provided in part by the federal government.
4 Companies that are part of the June 2023 CSAL appear to have contracts with a NAICS code begin with “23.” NAICS codes beginning with “23” are associated with construction.
