The Government Accountability Office recommended that the Department of Labor resume compliance audits of federal contractors and conduct strategic workforce planning in a new report. The agency made eight recommendations to address gaps in monitoring disability employment obligations.

The Department of Labor suspended audits of federal contractors in January 2025. This suspension occurred as the agency reduced the Office of Federal Contract Compliance Programs’ workforce in response to changes in its activities.

From fiscal years 2017 through 2025, 532 audits found violations of Section 503 of the Rehabilitation Act of 1973. The Office of Federal Contract Compliance Programs within the Department of Labor oversees contractors’ compliance with this statute.

Section 503 of the Rehabilitation Act of 1973 requires certain federal contractors to take proactive steps to employ people with disabilities. Federal contractors with $50,000 or more in contracts and at least 50 employees must maintain written affirmative action programs under these rules. Primary source: congress.gov

In fiscal year 2025, the federal government spent approximately $793 billion on contracts with federal contractors. These contractors employ over 1 million U.S. workers.

Selected stakeholders identified challenges in conducting outreach to and recruiting people with disabilities, retaining and advancing people with disabilities, and demonstrating compliance with Section 503. Stakeholders stated that the Department of Labor could provide additional guidance, such as information on reasonable accommodations and a list of best practices, to help contractors comply with Section 503.

What's New

The Government Accountability Office (GAO) recommended in 2020 that the Office of Personnel Management (OPM) track and report disability employee retention data, but OPM did not adopt this recommendation, leaving gaps in assessing long-term compliance with Section 503 of the Rehabilitation Act. The Government Accountability Office (GAO) recommended that the Department of Labor (DOL) develop a contractor selection process that reflects contractor noncompliance risk, as outlined in GAO-16-750. Primary sources: simon.house.gov, congress.gov

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) suspended all investigative enforcement under E.O. 11246 in January 2025, but retained limited oversight for Section 503 and VEVRAA compliance after a 2025 memo from then-Secretary Lori Chavez-DeRemer lifted the abeyance for those programs. The GAO criticized the Department of Labor's 2025 workforce reductions for lacking strategic planning, noting that the agency's compliance with Section 503 and VEVRAA could be undermined without adequate staffing and resources for audits. Primary source: congress.gov

Section 503 of the Rehabilitation Act requires federal contractors with $50,000+ contracts and 50+ employees to maintain written affirmative action programs. In response to GAO recommendations, the DOL agreed to improve its oversight of federal contractor compliance, including developing clearer guidance for contractors on their obligations under Section 503 of the Rehabilitation Act. Primary source: congress.gov

Why It Matters

The scale of federal contracting involves substantial economic activity and employment. In fiscal year 2025, the federal government spent approximately $793 billion on contracts with federal contractors, who employ over 1 million U.S. workers.

The Office of Federal Contract Compliance Programs (OFCCP) was created in 1965 under the U.S. Department of Labor to enforce equal employment opportunity laws, including E.O. 11246, which required federal contractors to implement affirmative action programs for protected classes. Previous reports have noted ongoing issues; the GAO's 2020 report identified challenges faced by federal contractors in complying with Section 503, including difficulties in recruiting, retaining, and providing reasonable accommodations for employees with disabilities, which remain unresolved. In 2016, the GAO recommended that OFCCP develop a mechanism to monitor contractors’ compliance with affirmative action plan (AAP) requirements, which was part of its broader recommendations to improve oversight of federal contractor nondiscrimination compliance. Primary source: congress.gov