Federal Service Contractors Should Start Preparing Now for New Biden Executive Order “Nondisplacement of Qualified Workers Under Service Contracts”

By means of a brand new Executive Order, President Biden has revived and revamped the Obama-era requirement that successor contractors with Service Contract Act contracts rent their predecessor’s employees

Historical past

In 2009, President Obama issued Executive Order 3495, “Nondisplacement of Qualified Workers under Service Contracts,” which supplied safety within the type of a proper of first refusal for continued employment to certified service staff when a authorities contract was changed with a brand new contract and a successor contractor on the identical location. EO 13495 and its implementing laws utilized to any contract or subcontract for providers entered into by the federal authorities or its contractors lined by the McNamara-O’Hara Service Contract Act (SCA). EO 13495  required that certified staff, i.e., non-exempt staff lined by the SCA’s necessities on a lined contract who stood to lose their jobs as a result of of the completion or expiration of a contract be given a proper of first refusal for employment with the successor contractor.

Usually, the successor contractor was prohibited from hiring any new workers below the successor contract till certified staff performing the prior contract had been supplied the chance to just accept a job with the successor. EO 13495 utilized solely to successor contracts for the efficiency of the identical or related providers on the identical location. In October 2019, President Trump revoked EO 13495 on October 31, 2019 by way of Executive Order 13897.

Biden Executive Order

The brand new Biden Executive Order is similar to Executive Order 13495, however consists of inside the textual content of the Order an implementation clause that contracting businesses could use pending issuance of closing implementing laws by the Division of Labor (DOL) inside 180 days of November 18, and an modification of the Federal Acquisition Regulation by the FAR Council inside 60 days of the DOL’s closing rule.

Key Necessities Embrace:

  1. Coated successor contractors and subcontractors should supply employment on a “first right of refusal” foundation to service workers employed below the predecessor contract whose employment would in any other case be terminated on the finish of the contract;

  2. The supply of employment should be for positions for which the staff “are qualified.” Employers usually are not required to supply a proper of first refusal to any worker(s) of the predecessor contractor for whom the contractor or any of its subcontractors fairly believes, based mostly on dependable proof of the actual workers’ previous efficiency, that there could be simply trigger to discharge the worker(s) if employed by the contractor or any subcontractors`  

  3. Successor contractors will probably be required to make a written supply of employment to all lined incumbent workers to the extent there’s a place out there, and the incumbent workers can have no less than 10 enterprise days to just accept the supply; and

  4. Predecessor contractors and subcontractors should present a listing of service workers, with their anniversary dates, to the contracting company no less than 30 days previous to the contract completion date.


The necessities shall not apply to:

  • Contracts below the simplified acquisition threshold as outlined in 41 U.S.C. 134 (presently $250K); or

  • Staff who had been employed to work below a Federal service contract and a number of nonfederal service contracts as half of a single job, supplied that the staff weren’t deployed in a way that was designed to keep away from the needs of this order.

As well as, below sure restricted circumstances, businesses can apply for an exemption from the necessities for particular contracts. 

Efficient Date  

The Executive Order is efficient instantly and can apply to solicitations issued on or after the efficient date of the ultimate laws issued by the FAR Council. For solicitations issued between the date of the Executive Order and the FAR Council’s issuance of closing laws or solicitations which have already been issued and are excellent as of the date of this order, businesses are strongly inspired, to the extent permitted by regulation, to incorporate within the related solicitation the contract clause within the Executive Order.

Violations Can Consequence In:

  1. An order to rent the predecessor contractor/subcontractor’s workers;

  2. Cost of misplaced wages and advantages;

  3. Debarment for as much as three years for failure to adjust to the DOL’s orders for hiring and different aid or for willful violations of the Executive Order.

Getting Prepared Now

Though we await additional particulars within the rulemaking course of, federal contractors with contracts/subcontract lined by the Service Contract Act, or such contracting alternatives ought to:

  • Be looking out for businesses modifying contracts and new solicitations with the necessities previous to the issuance of DOL and FAR Council laws;

  • Think about union successorship points below which successful a follow-on contract could require contractors to cut price with and rent a union workforce; and

  • Think about collaborating within the discover and rulemaking course of.

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