Quick Hit:  Office of Federal Contractor Compliance Programs (“OFCCP”) has issued Directive 2019-01(the “Directive”), which rescinds Directive 2011-01 which established OFCCP’s now-defunct Active Case Enforcement or “ACE” policy.  Through ACE, OFCCP conducted fewer but more intensive compliance evaluations of government contractors.  In issuing the Directive, OFCCP is formally ending ACE, while adopting an approach it contends keeps the better components of ACE while allowing OFCCP to conduct more compliance evaluations in a more efficient manner.

Key Takeaway:  ACE has never been viewed positively by contractors, and with the new Directive OFCCP has signaled that it too is done with at least some portions of ACE.  The Directive is consistent with OFCCP’s recent statements about bringing a practical and efficient approach to compliance evaluations.  OFCCP has long lamented that very few of all compliance evaluations end with a notice of violations.  Accordingly, it is not surprising that OFCCP has elected to streamline its compliance evaluation processes.  Doing so should permit OFCCP conduct more compliance evaluations and focus its attention on truly problematic contractors, while not wasting its limited resources on compliant contractors.  Hopefully contractors experiencing compliance evaluations will experience more stream-lined, less costly and less burdensome compliance evaluations as a result of the Directive.

However, contractors should not take the Directive to mean that OFCCP compliance evaluations will now be just a “rubber stamp.”  The Directive makes clear that elements of ACE still live on in the 2014 amendments to the Federal Contractor Compliance Manual (“FCCM”) and other OFCCP directives.  And with the Directive, OFCCP has expressly stated it expects to conduct more compliance evaluations.  From what we can tell at this time, conscientious contractors should probably face shorter, less painful audits, whereas contractors that neglect their OFCCP obligations will face compliance evaluations that look a lot like ACE.

More Detail:

On November 30, 2018, OFCCP issued the Directive, which rescinds the former ACE Directive 2011-01 (the “ACE Directive”).  As the Directive notes, the ACE was introduced in 2010 to replace OFCCP’s Active Case Management (“ACM”) policy, “which focused enforcement efforts on cases with indicators of systemic discrimination under the Executive Order, through abbreviated and generally shorter desk audits.”  Under the ACE Directive, OFCCP was required to conduct “full OFCCP desk audits under all three legal authorities” (Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”).  “As a quality control measure, the ACE directive increased the frequency of a mandatory onsite review, from every 50th scheduled contractor establishment to every 25th establishment.”  A side effect of the ACE was that the “overall processing time [of compliance evaluations] increased.”

The Directive explains that the OFCCP “has embedded valuable components of ACE and the prior Active Case Management (“ACM”) policy into its standard operating policies and procedures and updated the FCCM.”  Further, the Directive explains that the “OFCCP began posting its [Supply and Service] scheduling list methodology on its website” and “proactively discloses how it neutrally selects contractor establishments for a compliance evaluation, including the frequency of mandatory onsite reviews for quality control purposes.”  According to the Directive, the OFCCP has also “established procedures to shorten the time to complete a full desk audit and encouraged a collaborative approach during conciliation to resolve issues more quickly.”  The OFCCP also recently announced “efforts to monitor compliance through AAP verification and compliance checks,” which, according to the Directive, further supports the basis to rescind the ACE Directive.

As such, OFCCP is retaining certain elements of ACE, but streamlining the process.  No longer will every compliance evaluation include a full desk audit; nor will there be a mandated formula for determining onsite reviews.  To be clear, the Directive anticipates more compliance evaluations – not fewer – but that the compliance evaluations will be more efficient.  As the Directive puts it, “OFCCP is maximizing its resources by proceeding with the most effective aspects of ACM and ACE,” negating “the need for the ACE directive as a freestanding guidance document.”