Just one month after its decision in United Space Alliance, the District Court for the District of Columbia has again addressed the question of limits on OFCCP’s audit rights. In Bank of America N.A. v. Solis, No. 09-2009 (D.D.C. Dec. 13, 2011) [pdf], United States Magistrate Judge Deborah A. Robinson issued a report and recommendation adopting the Fourth Amendment’s prohibition against unreasonable search and seizure as a limit on OFCCP’s ability to select contractors for audit.

The case started in 2004 when OFCCP sent a letter advising Bank of America that it had been selected for audit. The letter requested the bank to produce its affirmative action plans and other documents within thirty days. In its initial response, the bank asked for information about the process that resulted in its selection for audit and for an extension of the 30-day deadline. After OFCCP explained that it followed its standard selection procedures, the bank produced the requested information. As in United Space Alliance, OFCCP then identified indicators of bias in the initial data and requested more information, but the bank refused to provide it. The Department of Labor Administrative Review Board then found the bank in violation of Executive Order 11246.

In its district court action, Bank of America challenged all aspects of OFCCP’s investigation, including the criteria used to select the bank for audit. In response to the bank’s Fourth Amendment claims, OFCCP argued that selecting the bank for a “desk audit” was not subject to the Fourth Amendment because it did not involve entry onto private property. In OFCCP’s view, a desk audit is simply a request for documents that contractors are required to maintain and provide on request.

Magistrate Robinson rejected OFCCP’s argument. She concluded that OFCCP was required to show that the request for audit data was “within the authority of the agency, . . . not too indefinite, and . . . reasonably relevant.” This is known as the “Oklahoma Press” standard. But the court applied a different standard to the initial decision to select a contractor for audit. Magistrate Judge Robinson’s decision concludes that the initial selection must be based on “(1) specific evidence of an existing violation, (2) reasonable legislative or administrative standards that have been met with respect to that particular contractor or (3) an administrative plan containing specific neutral criteria.” This is known as the “Beverly Enterprises” standard.

According to Magistrate Judge Robinson, OFCCP’s initial selection decision was unlawful because OFCCP failed to demonstrate that the bank had been selected in accordance with neutral selection criteria. As to Bank of America, however, Judge Robinson’s decision will be largely academic. As a result of the bank’s voluntary production of data in response to OFCCP’s request, she concluded that the bank had waived its Fourth Amendment rights.

Unless it is rejected by the District Court or the D.C. Circuit, Magistrate Judge Robinson’s opinion establishes that OFCCP’s selection of a contractor for audit must conform to Fourth Amendment standards. If challenged by the contractor, it is OFCCP’s burden to establish that the contractor’s selection was based on specific evidence of an existing violation or on specific neutral criteria. As a practical matter, a contractor who suspects it was not properly selected for audit should consider refusing to provide even initial documents because failing to do so will waive the argument. Of course, refusing to comply with an audit request will affect the contractor’s relationship with OFCCP and should be made only after consultation with counsel.