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Awardee MUST Hire Incumbent’s Personnel
March 23, 2010 at 12:53 pm #95713
Proposed FAR Clause in FedReg to implement the 2009 Presidential Order: What does everyone think???
Nondisplacement of Qualified Workers
(a) Consistent with the efficient performance of this contract,
the contractor and its subcontractors shall, except as otherwise
provided herein, in good faith offer those employees (other than
managerial and supervisory employees) employed under the predecessor
contract whose employment will be terminated as a result of award of
this contract or the expiration of the contract under which the
employees were hired, a right of first refusal of employment under
this contract in positions for which employees are qualified. The
contractor and its subcontractors shall determine the number of
employees necessary for efficient performance of this contract and
may elect to employ fewer employees than the predecessor contractor
employed in connection with performance of the work. Except as
provided in paragraph (b) there shall be no employment opening under
this contract, and the contractor and any subcontractors shall not
offer employment under this contract, to any person prior to having
complied fully with this obligation. The contractor and its
subcontractors shall make an express offer of employment to each
employee as provided herein and shall state the time within which
the employee must accept such offer, but in no case shall the period
within which the employee must accept the offer of employment be
less than 10 days.
(b) Notwithstanding the obligation under paragraph (a) above,
the contractor and any subcontractors (1) May employ under this
contract any employee who has worked for the contractor or
subcontractor for at least three months immediately preceding the
commencement of this contract and who would otherwise face lay-off
or discharge, (2) are not required to offer a right of first refusal
to any employee(s) of the predecessor contractor who are not service
employees within the meaning of the Service Contract Act of 1965, as
amended, 41 U.S.C. 357(b), and (3) are not required to offer a right
of first refusal to any employee(s) of the predecessor contractor
whom the contractor or any of its subcontractors reasonably
believes, based on the particular employee’s past performance, has
failed to perform suitably on the job.
(c) In accordance with Federal Acquisition Regulation 52.222-
41(n), the contractor shall, not less than 10 days before completion
of this contract, furnish the Contracting Officer a certified list
of the names of all service employees working under this contract
and its subcontracts during the last month of contract performance.
The list shall also contain anniversary dates of employment of each
service employee under this contract and its predecessor contracts
either with the current or predecessor contractors or their
subcontractors. The Contracting Officer will provide the list to the
successor contractor, and the list shall be provided on request, to
employees or their representatives.
(d) If it is determined, pursuant to regulations issued by the
Secretary of Labor (Secretary), that the contractor or its
subcontractors are not in compliance with the requirements of this
clause or any regulation or order of the Secretary, appropriate
sanctions may be imposed and remedies invoked against the contractor
or its subcontractors, as provided in Executive Order 13495, the
regulations, and relevant orders of the Secretary, or as otherwise
provided by law.
(e) In every subcontract entered into in order to perform
services under this contract, the contractor will include provisions
that ensure that each subcontractor will honor the requirements of
paragraphs (a) through (b) with respect to the employees of a
predecessor subcontractor or subcontractors working under this
contract, as well as of a predecessor contractor and its
subcontractors. The subcontract shall also include provisions to
ensure that the subcontractor will provide the contractor with the
information about the employees of the subcontractor needed by the
contractor to comply with paragraph (c), above. The contractor will
take such action with respect to any such subcontract as may be
directed by the Secretary as a means of enforcing such provisions,
including the imposition of sanctions for noncompliance: Provided,
however, that if the contractor, as a result of such direction,
becomes involved in litigation with a subcontractor, or is
threatened with such involvement, the contractor may request that
the United States enter into such litigation to protect the
interests of the United States.
(f) The Contracting Officer shall withhold or cause to be
withheld from the prime contractor under this or any other
Government contract with the same prime contractor such sums as an
authorized official of the Department of Labor requests, upon a
determination by the Administrator, the Administrative Law Judge, or
the Administrative Review Board that there has been a failure to
comply with the terms of this clause and that wages lost as a result
of the violations are due to employees or that other monetary relief
is appropriate. If the Contracting Officer or the Administrator,
upon final order of the Secretary, finds that the contractor has
failed to provide a list of the names of employees working under the
contract, the Contracting Officer may in his or her discretion, or
upon request by the Administrator, take such action as may be
necessary to cause the suspension of the payment of contract funds
until such time as the list is provided to the Contracting Officer.
(g) The contractor and subcontractor shall maintain the
following records (regardless of format, e.g., paper or electronic,
provided the records meet the requirements and purposes of this
subpart and are fully accessible) of its compliance with this clause
for not less than a period of three years from the date the records
(1) Copies of any written offers of employment or a
contemporaneous written record of any oral offers of employment,
including the date, location, and attendance roster of any employee
meeting(s) at which the offers were extended, a summary of each
meeting, a copy of any written notice that may have been
distributed, and the names of the employees from the predecessor
contract to whom an offer was made.
(2) A copy of any record that forms the basis for any exclusion
or exemption claimed under this part.
(3) A copy of the employee list provided to or received from the
(4) An entry on the pay records of the amount of any retroactive
payment of wages or compensation under the supervision of the
Administrator of the Wage and Hour Division to each employee, the
period covered by such payment, and the date of payment, and a copy
of any receipt form provided by or authorized by the Wage and Hour
Division. The contractor shall also deliver a copy of the receipt to
the employee and file the original, as evidence of payment by the
contractor and receipt by the employee, with the Administrator or an
authorized representative within 10 days after payment is made.
(h) The contractor shall cooperate in any review or
investigation by the contracting agency or the Department of Labor
into possible violations of the provisions of this clause and shall
make records requested by such official(s) available for inspection,
copying, or transcription upon request.
(i) Disputes concerning the requirements of this clause shall
not be subject to the general disputes clause of this contract. Such
disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR part 9. Disputes within the
meaning of this clause include disputes between or among any of the
following: The contractor, the contracting agency, the U.S.
Department of Labor, and the employees under the contract or its
Appendix B to Part 9–Notice to Service Contract Employees
The contract for (insert type of service) services currently
performed by (insert name of predecessor contractor) has been
awarded to a successor contractor, (insert name of successor
contractor). The successor contractor’s first date of performance on
the contract will be (insert first date of successor contractor’s
performance). If the work is to be performed at the same location, a
successor contractor is generally required to offer employment to
the employees who worked on the contract during the last 30 days of
the predecessor performance, except in the following situations:
Employees who will not face layoff or discharge by the new
contract award are not entitled to an offer of employment.
Managerial, supervisory, or non-service employees on the current
contract are not entitled to an offer of employment.
The successor contractor may reduce the size of the current work
force; therefore, only a portion of the existing work force may
receive employment offers. However, the successor contractor must
offer employment to the displaced employees if any openings occur
during the first 90 days of performance on the successor contract.
The successor contractor may employ its current employee on the
successor contract before offering employment to the predecessor
contract’s employees only if the successor contractor’s current
employee has worked for the successor contractor for at least three
months immediately preceding the first date of performance on the
successor contract and would otherwise face layoff or discharge if
not employed under the new contract.
Where the successor contractor has reason to believe, based on
credible information from a knowledgeable source, that an employee’s
job performance has been unsuitable, the employee is not entitled to
an offer of employment on the successor contract.
An employee hired to work under a predecessor’s Federal service
contract and one or more nonfederal service contracts as part of a
single job is not entitled to an offer of employment on the
successor contract, provided that the employee was not deployed in a
manner that was designed to avoid the purposes of this part.
Time limit to accept offer: If you are offered employment on the
new contract, you will have at least 10 days to accept the offer.
Complaints: Any employee or authorized employee representative
who believes that he or she is entitled to an offer of employment
with the successor contractor and who has not received an offer, may
file a complaint with (insert Contracting Officer or representative
name, address and telephone number). Any complaint must be filed
with the contracting agency within 120 days of the alleged
violation. The Contracting Officer will inform the parties of their
rights and obligations regarding the nondisplacement of employees
and, forward a report to the U.S. Department of Labor, Wage and Hour
Division within 30 days. The employee may also file the complaint
directly with the Administrator, Wage and Hour Division, U.S.
Department of Labor, Washington, DC 20210, if the complainant has
not been able timely to file the complaint with the Contracting
Officer or received a copy of the information to be forwarded to the
Wage and Hour Division within 30 days of the original filing. The
complaint must be filed with the Wage and Hour Division within 180
days of the alleged violation.
For additional information: 1-866-4US-WAGE (1-866-487-9243) TTY:
March 23, 2010 at 3:11 pm #95731
March 23, 2010 at 3:56 pm #95729
Do you happen to have the reference to where this is located in the Federal Register?
March 23, 2010 at 4:13 pm #95727
March 23, 2010 at 8:31 pm #95725
Tina M Borger, CPPOParticipant
I’ve seen, and even used, simliar clauses in state and local contracts. But is this a case where public policy hurts the business deal? How do you hold a contractor responsible for performance when you dictate personnel decisons? How much extra will this policy cost all taxpayers while helping a small portion of them. It’s a tough call…..
March 24, 2010 at 6:23 pm #95723
My vote: Don’t implement this proposal into the FAR as policy. Rather, keep it on hand as a possible provision or clause to implement in special scenarios as the requirements dictate.
What if another contractor is desired because the current contractor’s personnel stink? That could defeat the entire purpose of switching to another contractor in that case. Poor performing personnel will be kept in place — not desireable.
At the same time, keeping the same personnel in place may allow for an easy transition.
March 24, 2010 at 6:47 pm #95721
Sterling, good point. The usage of this clause could certainly be left up to the discretion of the CO. I saw online that very similar verbiage to this made its way into the FAR under Pres. Clinton, first as an executive order (as this was by Pres. Obama in Jan 2009). Pres. Bush repealed it when he took office. However, if you can find the Clinton-era clause, the Obama-era clause is a lot more detailed, and has an obvious heavy hand of influence from the unions in it.
BTW, if anyone can find 29 CFR Part 9 (under which it states that disputes under this clause will be subject), please post a link here. From what I can tell, Part 9 doesn’t exist anymore.
March 26, 2010 at 11:37 pm #95719
I would think this would stand a lot of services re-competes on their heads and create a lot of additional work for an already stretched government acquisition workforce. RFPs would have to be re-tooled since you probably don’t want to ask each bidder to propose key and representative personnel if you are going to require them to hire the “qualified” incumbent staff.
Section M evaluation criteria would also probably need to change to reflect “ability to manage a similar contract” and to exclude “personnel.” Also, wonder if this makes it too easy to “throw out” the incumbent and, on the other hand, too easy to make it so “average” contractor staff continue to be employed as opposed to being able to do some periodic refresh. Probably this would result in more “lowest cost bidder” wins competitions.
Also, not really sure this is desirable since you can’t legally prevent a losing incumbent company from transferring their best staff to another contract leaving the “average” personnel on the contract.
All in all – a well intentioned idea that would probably create a lot of turmoil and confusion.
March 31, 2010 at 2:31 am #95717
Harold (Hal) Good, CPPOParticipant
I am a bit late in joining this discussion but….I have utilized a similar clause a number of times in privatizations where local government employees were affected. Those involved operating personnel for a waste water treatment plant, convention center operations, parks and golf course maintenance and janitorial services. All of those transitions went surprisingly well with a fall out of less than 10% over the first six months. However, when the same clause was used in changing contractors for janitorial services and security services, there were significant problems. The new contractor was saddled with some under performers which took significant effort to weed out. I would be reluctant to voluntarily use the clause when switching contractors based on experience.
April 8, 2010 at 1:12 am #95715
As noted in the above-comments, it does not seem logical to have this as part of FAR policy. It would seem that it does have its place, but is not universally applicable.
If a contractor is not able to manage personnel it would seem next to impossible to hold them accountable for performance. In addition, I agree that the inability to manage personnel would keep “underperforming” employees on board and end up costing tax payers in the long run.
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