A Burden Lifted - Hiring of Incumbent Workforce By Follow On Contractor - It Is Again Your Decision Who You Hire
by Richard Raleigh and Chris Lockwood

"The Federal Government's procurement interests in economy and efficiency are served when the successor contractor hires the predecessor's employees."  Or so began the Obama Era Executive Order, "Nondisplacement of Qualified Workers Under Service Contracts," Executive Order 13495, 74 FR 6103 (Jan. 30, 2009).  The order required successor contractors to offer jobs to essentially all the incumbent workforce.  But, on Halloween, President Trump signed Executive Order 13897, "Improving Federal Contractor Operations by Revoking Executive Order 13495" Exec. Order No. 13897, 84 FR 59709, 2019 WL 5694266 (October 31, 2019), which revoked the prior order.  The old Executive Order required follow-on contractors to offer jobs to many “qualified” service employees when succeeding an incumbent government contractor providing the same or similar services at the same place.  The new EO directs the DOL to immediately terminate investigations and compliance actions based on the old order and withdraw rules and accompanying guidance implementing the old order.

Since President Obama signed EO 13495 in January 2009, its requirements, essentially giving a right of first refusal to non-managerial employees of the prior incumbent contractor, received criticism from government contractors.  The requirement was seen as unnecessary, since most contractors do hire the incumbent's employees when a contract changes hands.  But in cases where the new contractor feels another employee would be better, the old EO effectively precluded that business decision being from carried out, creating inefficiencies and possibly increasing costs.  The DOL investigated and pursued alleged violations with vigor.  Ultimately, this administration decided to take steps to address the situation.

The decision is again in the hands of the government contractor.  They can decide who best to fill the positions when they take over a contract.  We expect contractors to continue to keep most of the incumbent workforce - as was the case before EO 13495.  But it is not a requirement now; and our clients in the federal government contracting industry can use their business judgment when deciding issues related to the new workforce when the contract transitions over.

So, what do you need to do?  Review solicitations out now and review your new awards to ensure the contracts and proposed contracts do not include language from EO 13495 or the implementing clauses.  Look for 52.222-17 Nondisplacement of Qualified Workers.  Remind the agency of this new Executive Order (13897), and request they remove the implementing clauses.  In the right situation, you may consider taking exceptions in appropriate cases and use EO 13897 as the basis for doing so.