President Biden issued an executive order that requires employers with federal service contracts to give priority for jobs to employees who worked on the previous service contract under a predecessor.
The order requires federal agencies to insert a clause in re-issued service contracts to give a prior contractor’s employees a right of first refusal to maintain their employment under the re-issued contract. Thus, per the EO, when a service contract expires, and a follow-on contract is awarded “for the same or similar services,” the new contractor employer would be required to offer employees under the previous contract a chance to continue employment on the new contract.
According to the EO, “the Federal Government’s procurement interests in economy and efficiency are best served when the successor contractor or subcontractor hires the predecessor’s employees…[This] reduces disruption in the delivery of services during the period of transition between contracts, maintains physical and information security, and provides the Federal Government’s personnel, facilities, and requirements.”
Other requirements under the EO include:
- Contractors must determine the number of employees necessary for “efficient performance” of the new contract and can elect to employ more or fewer employees than the predecessor contractor solely on the basis of that determination.
- Contractors must provide an express offer of employment to each predecessor employee, and must give at least 10 days to the employee to decide.
- Contractors are prohibited from offering employment to anyone else until they have complied with the above provisions.
- The predecessor contractor is required to provide a list of its employees to the contracting officer, who in turn provides it to the successor contractor.
The Department of Labor will issue implementing rules and regulations for the EO by spring 2022. Noncompliant contractor employers could be forced to provide back pay or offer the employee at issue a job, and/or be ineligible for federal contracts for a period of up to 3 years.
Outlook: The EO is a reprise of a similar order signed by President Obama and rescinded by President Trump. It potentially delays implementation of contracts by successor employers and is a boon for unions, who will see their member workers guaranteed job security from contract to contract while allowing the union to cultivate relationships with a wider pool of employees under each successor employer. Between this EO and the federal contractor vaccine mandate, the Biden administration has imposed a number of new compliance burdens on federal contractors—with substantially more looming pending the release of the White House Labor Task Force Report.
