A recent ruling in a case between Google and the Office of Federal Contract Compliance Programs (OFCCP) shows some of the downside risks of doing business with the federal government. In Google’s case, it had the resources and the ability to push back a bit against the agency’s findings. However, the case demonstrates why federal contractors need to have clear employment practices in place and understand that the government has broad powers to request and inspect contractors’ records. Sometimes, as in this case, the cost to comply with OFCCP’s requests can exceed the amount paid by the government to the contractor.
As a federal contractor, Google agreed when entering into its contract to abide by Executive Order No. 11246. The EO allows the government to inspect Google’s books and records relevant to any matter under investigation. The OFCCP can initiate its audits either via a complaint or through neutral criteria. Google’s audit was not the result of a complaint; indeed, there was no evidence of discrimination when the OFCCP initiated its audit. Nevertheless, the government requested scores of records.
The case quickly expanded into what would have been a logistical nightmare for most contractors. However, Google is not just any contractor, and was able to produce the bulk of the requested records. To offer an idea of the magnitude of the government’s audit, Google produced nearly 1.3 million data points about its hiring process, 400,000-500,000 data points about its compensation, and 740,000 pages of documents. This cost Google approximately $500,000, which has to be examined in context with the mere $600,000 Google was paid pursuant to its contract with the government. Google pushed back against further requests, and was able to convince the Department of Labor’s administrative law judge that at least some of the government’s additional requests were overbroad.
While this post was initially meant to discuss Google’s arguments against further production, I think it better serves as a reminder to government contractors to maintain clear, accurate and accessible employment records. One never knows when the government is going to come calling to take a look at those records. If the records are unclear or, even worse, inaccurate, the costs to deal with the government’s audit can easily surpass the benefits of doing business with the government in the first place.