New requirements under the OFCCP means that megaprojects that are wholly or partially funded with government payments (those projects over $35 million and lasting at least a year) can expect greater compliance attention. The launch of the new program comes under the Biden Administratio, Infrastructure Investment and J obs Act. Contractors must comply by new requriements to be employed on these projects. Contractors need to be more diligent as the chance of being audited will spike. Owners, also should prepare to be audited or risk losing federal funding.
Under the new OFCCP requirements, construction contractors need to focus on several key areas:
- Equal Employment Opportunity (EEO) Compliance: Contractors must ensure that their employment practices do not discriminate based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or veteran status.
- Affirmative Action Plans (AAP): Contractors with federal contracts exceeding certain dollar thresholds are required to develop and maintain written AAPs. These plans outline the contractor’s affirmative action efforts to recruit, hire, promote, and retain protected veterans and individuals with disabilities.
- Outreach and Recruitment Efforts: Contractors must actively engage in outreach and recruitment efforts to attract and retain qualified individuals from underrepresented groups, including women, minorities, veterans, and individuals with disabilities.
- Data Collection and Recordkeeping: Contractors must collect and maintain data on their workforce demographics, applicant flow, and hiring practices to demonstrate compliance with EEO requirements. This includes keeping records of job postings, applications, interviews, hires, promotions, and terminations.
- Training and Education: Contractors should provide training and education to employees and managers on EEO laws, policies, and practices to promote awareness and compliance throughout the organization.
- Accessibility: Contractors should ensure that their facilities, programs, and services are accessible to individuals with disabilities, as required by the Americans with Disabilities Act (ADA) and other relevant laws and regulations.
- Monitoring and Reporting: Contractors must monitor their compliance with OFCCP requirements and report on their affirmative action efforts as requested by the OFCCP during compliance evaluations or audits. Owners shoudl request copies of these reports and conduct audit steps to ensure report accuracy.
By focusing on these areas, construction contractors can demonstrate their commitment to promoting equal employment opportunity and affirmative action in their workforce and comply with the new OFCCP requirements.
Projects that may be under scrutiny with the new requirements should consider doing construction audits even before OFCCP steps in. This will help ensure compliance and allow any areas of non-compliance to be remediated before the OFCCP comes in. At a minimum a Minority and Women Business Enterprise (MWBE) audit should be performed to ensure compliance with EEO and AAP. The audit should emphasize importance for women owned business. veteran owned businesses, handicapped owned businesses, etc. The steps of an effective MWBE audit are:
- Introduction and Scope Definition:
- Define the purpose and objectives of the MWBE audit.
- Clarify the scope of the audit, including the geographical locations, business units, and types of contracts or transactions to be covered.
- Risk Assessment:
- Identify potential risks associated with MWBE compliance, such as non-compliance with regulations, inaccurate reporting, or fraudulent activity.
- Assess the significance of these risks based on factors like the size of contracts, the nature of the business, and regulatory requirements.
- Audit Procedures:
- Develop audit procedures to address identified risks and achieve audit objectives.
- Determine the sampling methodology for selecting MWBE contracts or transactions to be audited.
- Plan for interviews with key personnel responsible for MWBE compliance, procurement, and contract management.
- Data Collection and Analysis:
- Gather relevant data and documentation related to MWBE contracts, transactions, and compliance efforts.
- Analyze the data to identify any discrepancies, trends, or irregularities that may indicate non-compliance or areas for improvement.
- Compliance Review:
- Evaluate compliance with MWBE regulations, policies, and contractual requirements.
- Verify the accuracy and completeness of MWBE reporting and documentation.
- Review subcontracting practices to ensure MWBE participation goals are being met.
- Testing and Documentation:
- Perform testing procedures to validate the effectiveness of internal controls related to MWBE compliance.
- Document audit findings, including any instances of non-compliance, deficiencies in controls, or opportunities for improvement.
- Reporting:
- Prepare a comprehensive audit report detailing the audit scope, objectives, methodology, findings, and recommendations.
- Present audit findings and recommendations to management, highlighting areas of non-compliance and suggesting corrective actions.
- Discuss the implications of non-compliance and the potential risks to the organization.
- Follow-up and Monitoring:
- Monitor the implementation of audit recommendations and corrective actions by management.
- Conduct follow-up reviews to ensure identified issues have been addressed and corrective measures have been effectively implemented.
- Provide ongoing support and guidance to management to enhance MWBE compliance efforts.
- Closure:
- Conclude the audit process and obtain management’s acknowledgment of the audit findings and actions taken.
- Archive audit documentation in accordance with organizational policies and regulatory requirements.
This audit plan provides a structured approach to assessing MWBE compliance, identifying areas of improvement, and ensuring adherence to regulatory requirements and organizational policies. It can be tailored to suit the specific needs and objectives of the organization undergoing the audit.
More information can be found through the OFFCP website – Mega Construction Project Program | U.S. Department of Labor (dol.gov). If you need a construction audit done or wish to have a QAR done of any audits they perform may contact Auspicium for more information.