Everything Old is New Again -- Nondisplacement of Qualified Workers

Don't throw the past away
You might need it some rainy day
Dreams can come true again
When everything old is new again

Peter Allen, Everything Old Is New Again

On November 18, 2021, President Joe Biden signed an Executive Order (“EO”) on the Nondisplacement of Qualified Workers Under Service Contracts. As the title of the EO suggests, the purpose is to prevent qualified workers from being replaced when a new contractor is awarded a successor contract. The EO lists many benefits to the government such as fewer disruptions in the procurement of services, increased physical and informational security, and the benefit of an experienced and well-trained work force, and call for new regulations in 180 days to implement the requirement. 

To effectuate these benefits, the EO imposes certain obligations on both the agency overseeing the procurement and the contractor who is awarded the contract. The first is that each agency shall ensure that each service contract and subcontract includes the Nondisplacement of Qualified Workers clause. This clause requires the contractor to do certain things upon being awarded a service contract. Among other things, here are the bones of the EO:    

(1)   The contractor must grant qualified employees employed under the predecessor contract a right of first refusal to continue employment under the new contract. 

(2)   The contractor will determine the number of employees necessary to perform on the contract and may choose to employ more or fewer people than employed on the predecessor contract.

(3)   No contractor or subcontractor may offer employment under the successor contract without complying with the other provisions of the clause. 

(4)   The contractor will make an express offer of employment to the employees qualified under the clause. 

(5)   The contractor will send a certified list of service employees working under the contract within the last month of contract performance to the Contracting Officer. This list will also state anniversary dates of the employee’s employment and possible predecessor dates. The Contracting Officer will furnish the list to the successor contractor. 

(6)   The contractor will ensure that any subcontractor working on the contract is in compliance with the EO.

(7)   The Contracting officer will evaluate whether each successor contract would benefit from being performed in the same locality. If they determine it would, then they will include a requirement or preference for the successor contract to be performed in the same locality or localities. 

This last requirement is something new. It expands the EO. Usually, nondisplacement only kicked in when the work was done at the federal facility so everyone bidding had to work in that same locality. Now, the Contracting Officer can impose a locality requirement and thus the nondisplacement rule will apply. 

The rest of the EO is largely a rerun of both the prior Clinton-era and Obama-era nondisplacement EOs. President Clinton implemented a nondisplacement requirement but President George W. Bush revoked it. Similarly, President Obama implemented a nondisplacement requirement and President Trump, after some delay and vacillation, revoked it. President Biden has turned the clock back yet again. Yes, we have been down this road before. Each turn of the political wheel results in a now predicable political initiative, which is no way to run a government. 

Fortunately, however, the nondisplacement requirement is not that important, since most successor contractors hire the predecessors work force. That is because those workers have the experience and if the successor didn’t propose to hire them, the successor might find its own capacities questioned either during the bidding stage or the performance stage. So, what is all the fuss about? I seem to remember some statistic like 98% of all the predecessor works are hired when the work is performed at the same government site regardless of whether the nondisplacement requirement is in place. 

If so, why do we need this EO? Well, the unions want a provision that protects workers who engage in union organizing and other protected activities from retaliation by the successor contractor. The successor contractor can be a different and unrelated corporate entity and thus isn’t required to hire the union organizers and enter into a new employment relationship. The nondisplacement rules thus step in to protect those workers. Same for whistle blowers and same for poorly performing workers, albeit the regulation offers some defenses to discharging poor performers. But I once had a case where a worker brought a gun to work and allegedly accidentally discharged it in the bathroom (shooting the toilet). DOL insisted upon that successor hiring the predecessor’s worker under then existing vague nondisplacement rules. Apparently, that was not poor enough performance for DOL…. Go figure. 

These requirements are backed up by the Secretary of Labor and the DOL’s ability to sanction or debar government contractors from being awarded contracting opportunities. The EO does not apply to service workers who are exempt from the requirements of the Service Contract Act. Additionally, this EO does not apply to contracts under the simplified acquisition threshold ($250,000) or to employees who were hired to work both under federal contracts, and non-federal contracts as part of the same job. This is a difference between this EO and some of the federal vaccine mandates imposed by the Biden Administration. Finally, the contracting agency may grant an exception from parts of this EO if certain conditions are met. 

The Secretary of Labor has 180 days to issue a final rule regarding the implementation of the Executive Order, then the FAR Council has 60 days to issue final regulations. Presumably, those regulations will look much like the past regulations. The EO itself is ostensibly effective immediately, but it will only apply to contracts entered into after the final regulations regarding this Order are issued by the FAR Council.

For more information regarding the Executive Order, or to view it for yourself see the White House website here: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/11/18/executive-order-on-nondisplacement-of-qualified-workers-under-service-contracts/.