Nondisplacement of Qualified Workers Under Service Contracts: One of President Obama’s First Executive Orders Finally Gets Teeth
January 11, 2013
By: Eric Whytsell
As we reported previously, one of the first Executive Orders issued after President Obama took office in 2009 related to a contractor’s or subcontractor’s ability to hire new employees when a contract to provide services to the Federal Government expires and a new contract for the same services is awarded to a different contractor. Executive Order 13495, Nondisplacement of Qualified Workers under Service Contracts, essentially requires that certain service contractors and subcontractors offer a right of first refusal of employment to most employees employed under a predecessor contract but losing their job as a result of the award of the successor contract. Beginning this month, the Order’s requirements will finally be mandatory.
The Executive Order directed the Secretary of Labor to develop implementing regulations in consultation with the Federal Acquisition Regulatory Council (FARC). That process took nearly two years; the Department of Labor’s final rule was not published until August 29, 2011. However, despite the fact that some agencies have chosen to use the contract clause set forth in Section 5 of the Executive Order, even the arrival of the DOL rule did not make the use of such a clause mandatory in federal solicitations and contracts. That is because the Order took the unusual step of making clear that, while it became effective immediately, it only applies to solicitations issued on or after the effective date of the FARC’s (not DOL’s) final rule directing the inclusion of the Section 5 contract clause in solicitations and contracts for services subject to the Order. The DOL rule echoed the Executive Order on this point and promised to post a notice in the Federal Register announcing the effective date once is was determined.
On December 21, 2012, the FARC issued its final rule, which has an effective date of January 18, 2013, and DOL released the promised notice, making clear that the effective date for the DOL final rule published in 2011 is also January 18, 2013.
The FARC final rule revises FAR Part 22 and adds a new Subpart 22.12 and a new clause 52.222-17 that expands upon the original clause contained in the Executive Order. Contracting officers are expected to work with existing service contractors and bilaterally modify contracts, to the extent feasible, to add the new clause.
In an attempt to achieve consistency between the DOL and FAR approaches, both the new FAR Subpart and the new clause contain numerous citations to the DOL final rule. Only time will tell whether the FARC’s efforts in this regard have been successful. But one thing is certain: once the Executive Order’s requirements are actually required, contractors and agencies will finally be forced to stop worrying about how the rules will operate and start trying to make them work.
Eric Whytsell is the attorney responsible for the content of this article.