Déjà Vu, All Over Again - Nondisplacement of Qualified Workers of Federal Contracts

As those who follow our e-blasts may remember, back in September 2011 we explained the Department of Labor (DOL) implementation of President Obama’s Executive Order 13495, requiring follow-on contractors to retain the workforce of the previous contractor when the next contract intended to provide the same or similar services at the same location. The objective was two-fold; one stated objective was to reduce disruption of the services provided to a federal agency by providing the same experienced and trained workforce, and one implied objective was to provide those trained employees with the expectation of continued employment.

On May 3, 2012, the Federal Acquisition Regulatory (FAR) Council issued its own proposed rule, applying the Executive Order to all service contracts above the Simplified Acquisition Threshold. Although there were differences between the FAR Council’s and DOL’s regulations, they substantively overlapped.

On Oct. 31, 2019, President Trump issued Executive Order 13897, repealing the previous Executive Order. Both the FAR Council and the DOL removed their old regulations and implemented new regulations allowing successor contractors more control in structuring their own workforce for follow-on contracts. That is, while they could offer positions to incumbent contractor employees, they were not obligated to do so.

On Nov. 18, 2021, the Biden-Harris administration issued a new Executive Order, once again requiring follow-on contractors to retain qualified workers, employed by predecessor contractors, who perform work that is protected by the 1965 Services Contract Act. The latest Executive Order expressly revokes Executive Order 13897 (2019) and identifies that Executive Order 13495 (2011) remains rescinded. However, the new Executive Order echoes the Obama-era policy: economy and efficiency through carryover of a well-trained workforce already familiar with the federal government’s requirements, reducing turnover, and keeping skilled workers in their jobs.

This Executive Order provides:

  • It only applies to positions subject to the Service Contract Act of 1965.
  • Contractors/subcontractors are to offer the right of first refusal of employment to those qualified service employees who would be terminated when an existing contract ends.
  • Current employees must be given at least 10 business days to accept an offer of employment.
  • Contractors/subcontractors are not obligated to pay relocation costs to accept an offer to continue with the successor contractor/subcontractors.
  • No later than the date a solicitation is issued, an agency may take exception to this requirement if complying with this requirement would:
    • Hinder the government’s ability to achieve economy and efficiency;
    • Substantially reduce the number of potential bidders so as to frustrate competition; or 
    • Not be ‘reasonably tailored’ to meet the agency’s needs.
  • Agencies taking exception to this requirement must publish their decision when they take an exception to this requirement and notify the existing contractor/subcontractors’ employees (or their collective bargaining representatives).

The DOL has 180 days to issue regulations implementing the latest Executive Order; the FAR Council has 60 days thereafter to issue its own implementing regulations. It remains to be seen whether the FAR Council and DOL will dust off their previous regulations or begin anew.

Taft's Government Contracts group will continue to monitor this situation. Stay tuned for further developments.

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