New Labor rule would constrict contractors' hiring options

Federal service contractors replacing a previous contractor for similar or identical work could be required to offer jobs to some of the previous contractor’s employees, under a new Labor Department proposed rule.

The proposed rule would implement President Obama’s Jan. 30, 2009, Executive Order on Nondisplacement of Qualified Workers Under Service Contracts.

The order and regulations are meant to address situations in which a federal service contract ends and work is taken over by another contractor. The executive order states that the federal government’s interests are better served when the successor contractor hires the predecessor’s employees, in order to reduce disruptions to services. Such a pattern generally is followed, but in some cases contractors bring in a new workforce.

The rule, which was published in the Federal Register on March 19, is being opposed by the Professional Services Council, a trade organization representing contractors, which alleges that it unfairly denies the incoming contractors the flexibility they need to fulfill their duties.

Under the proposed rule, qualified employees of the predecessor contractor, under certain conditions, would have the right of first refusal for jobs to be filled in the successor contract.

However, the Professional Services Council claims that the proposed requirement is too inflexible.

“While the 2009 Executive Order implied some reasonable hiring flexibility, the proposed rule eviscerates those flexibilities and effectively places the government in charge of selecting and managing a contractor’s workforce,” said Stan Soloway, council president.

“Most contractors retain incumbent employees because it is more efficient and effective to do so,” Soloway said. “At the same time, because the contractor ultimately holds the responsibility to perform under a contract, the contractor must have the ability and right to make their own, fair determinations of which employees best meet its contract needs. The proposed rule does precisely the opposite.”

The council also raises objections to stipulations in the proposed rule about giving employee personnel performance evaluations to the successor contractor to aid in determining whether the employee is qualified. Soloway described this as a “highly unusual” practice that raises privacy and liability issues.

The council also contends that the proposed rule could make immediate implementation of a contract more difficult and creates problems for bidding and contract execution.