United States General Accounting Office

GAO Report to Congressional Requesters

September 1995 EQUAL EMPLOYMENT

OPPORTUNITY

DOL Contract Compliance

Reviews Could Better

Target Federal

Contractors

GAO/HEHS-95-177

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

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

contractors1

 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.

Page 1 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Results in Brief 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 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,

Page 2 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

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).

Page 3 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

OFCCP’s Enforcement

Strategy Focuses on

Compliance Reviews

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

11% • Complaint Investigations

10% • Enforcement Support

79%•

Compliance Reviews

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

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

Page 4 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

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).

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.

Page 5 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Figure 2: General Steps of a Compliance Review

Select Contractor

for

Review

Conduct

Desk

Audit

Review

Completed

Contractor

Allowed to

Respond

Y

Y

Y

Y

N

N

N

N

Recommend

Enforcement

Continue

Review

Conduct

On-Site

Review

Identified

Violations

?

Resolved

Violations

?

Identified

Violations

?

Resolved

Violations

?

Recommend

Enforcement

Issue Conciliation

Agreement

or

Letter of

Commitment

Contractor

Allowed to

Respond

Review

Completed

(Figure notes on next page)

Page 6 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Source: OFCCP’s Federal Contract Compliance Manual.

Contractor Violations

Identified and Resolved in

Most Reviews

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.

Page 7 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Table 1: Resolution of Compliance

Review Violations in Fiscal Year 1994

Compliance reviews

Number of actions

taken

Completed reviews 4,179

Reviews resulting in identified violations 3,094

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 beneficiaries $14.4 million, about

11,000 people

Cases referred for enforcement 75

Contractors debarred 5

Source: OFCCP data.

Complaint Investigations

and Compliance Support

Also Provided

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.

Page 8 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

OFCCP’s Decreasing

Resources Coincided

With a Decrease in

Number of Reviews

and Investigations

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 Authorized budget (in thousands)

Fiscal year Nominal dollars

Real 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.

Page 9 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Figure 3: OFCCP’s Staff Level Dropped

Between Fiscal Years 1989 and 1994 Number of Employees

0

100

200

300

400

500

600

700

800

900

1000

1100

1989 1990 1991 1992 1993 1994

Fiscal Year

Authorized Total Staff Level

Actual Total Staff Level

Authorized Number of Compliance Officers

Actual Number of Compliance Officers

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

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.

Page 10 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

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

Number of Completed Actions

0

1000

2000

3000

4000

5000

6000

7000

1989 1990 1991 1992 1993 1994

Fiscal Year

Compliance Reviews

Complaint Investigations

Note: Data points for this figure are presented in appendix II.

Source: OFCCP data.

OFCCP’s Use of

Aggregated Data

Could Overlook

Discrimination

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

Page 11 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

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.

Conclusions 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.

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.

Page 12 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
B-262102 

Recommendation 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 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.

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

Page 13 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Contents

Letter 1

Appendix I 

Legal Authorities for

Office of Federal

Contract Compliance

Programs

16

Appendix II 

Data Points for

Figures in Letter

17

Appendix III 

Details on Selecting

Contractors for

Compliance Reviews

18

OFCCP Reviews Two Types of Contractors 18

Compliance Review Data and Selection Procedures Vary by Type

of Contractor

18

Appendix IV 

Comments From the

Department of Labor

21

Appendix V 

GAO Contacts and

Staff

Acknowledgments

22

Tables Table 1: Resolution of Compliance Review Violations in Fiscal

Year 1994

8

Table 2: OFCCP’s Budget Decreased in Inflation-Adjusted Dollars 9

Table II.1: Data Points for Figure 1—Compliance Reviews

Composed Majority of OFCCP’s Activities in Fiscal Year 1994

17

Table II.2: Data for Figure 3—OFCCP’s Staff Levels Dropped

Between Fiscal Years 1989 and 1994

17

Page 14 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Contents

Table II.3: Data for Figure 4—OFCCP’s Enforcement Activities

Declined Between Fiscal Years 1989 and 1994

17

Table III.1: Average Resources Used and Number of Employees

Reviewed During Each Type of Compliance Review, Fiscal Year

1994

18

Figures Figure 1: Compliance Reviews Composed Majority of OFCCP’s

Activities in Fiscal Year 1994

4

Figure 2: General Steps of a Compliance Review 6

Figure 3: OFCCP’s Staff Level Dropped Between Fiscal Years

1989 and 1994

10

Figure 4: OFCCP’s Enforcement Activities Declined Between

Fiscal Years 1989 and 1994

11

Abbreviations

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

Page 15 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix I 

Legal Authorities for Office of Federal

Contract Compliance Programs

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.

Page 16 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix II 

Data Points for Figures in Letter

Table II.1: Data Points for Figure

1—Compliance Reviews Composed

Majority of OFCCP’s Activities in

Fiscal Year 1994

Enforcement activity

Number of

enforcement 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

Authorized levels (FTEs) Actual level

Fiscal year Total staff

Compliance

officers Total staff

Compliance

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 Fiscal year

Number of compliance

reviews

Number of complaint

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

Page 17 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix III 

Details on Selecting Contractors for

Compliance Reviews

OFCCP Reviews Two

Types of Contractors

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

Compliance review

Supply and service

contractor

Construction

contractor

Average number of hours to

complete 146 53

Average number of

employees reviewed 602 65

Compliance Review

Data and Selection

Procedures Vary by

Type of Contractor

Data Used in Selecting

Supply and Service

Contractors for Review

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.

Page 18 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix III 

Details on Selecting Contractors for

Compliance Reviews

Most Reviews Are to Be of

“Flagged” Supply and

Service Contractors

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

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.

Page 19 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix III 

Details on Selecting Contractors for

Compliance Reviews

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

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.

Page 20 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix IV 

Comments From the Department of Labor

Page 21 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
Appendix V 

GAO Contacts and Staff Acknowledgments

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.

(205291) Page 22 GAO/HEHS-95-177 OFCCP’s Enforcement Activities
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