DOL Revives Proposal for Federal Contractors to Retain Qualified Workers Under Service Contracts

On July 15, 2022, the Department of Labor (DOL) published a proposed rule to implement Executive Order 14055, Nondisplacement of Qualified Workers Under Service Contracts, signed on November 18, 2021. The rule establishes that federal service contracts which succeed contracts for the same or similar services include a nondisplacement clause. The clause requires the contractor and its subcontractors to offer qualified employees employed under the prior contract a right of first refusal of employment under the new contract. A similar Executive Order 13495 was issued in 2009 and rescinded by Executive Order 13897 in 2021. The proposed rule would apply to prime contracts that exceed the simplified acquisition threshold of $250,000. Unlike the previous Executive Order 13495, the Department proposes that all subcontracts for services, regardless of size, be covered if their prime contract is covered. The Department is seeking comments from the public on the potential impact, including any unintended consequences, of covering subcontracts below this threshold. The Department is also seeking comment on whether the agency should instead adopt the prior rule’s exemption of subcontracts under the simplified acquisition threshold from coverage. DOL estimates that it will take small entities that are contractors or subcontractors two hours or $125 to read and implement this proposed rule.

Comments are due by August 15, 2022.