[Federal Register Volume 60, Number 60 (Wednesday, March 29, 1995)]
[Proposed Rules]
[Pages 16354-16356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7732]




[[Page 16353]]

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Part IV





Department of Labor





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29 CFR Part 270



Permanent Replacement of Lawfully Striking Employees by Federal 
Contractors; Proposed Rule

  Federal Register / Vol. 60, No. 60 / Wednesday, March 29, 1995 / 
Proposed Rules   
[[Page 16354]] 

DEPARTMENT OF LABOR

29 CFR Part 270

RIN 1294-AA13


Office of the American Workplace; Permanent Replacement of 
Lawfully Striking Employees by Federal Contractors

AGENCY: Office of the American Workplace, Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This notice of proposed rulemaking sets forth proposed 
regulations for implementing Executive Order 12954, which was signed by 
President Clinton on March 8, 1995 and became effective on that date, 
and was published in the Federal Register on March 10, 1995. Executive 
Order 12954 provides that in procuring goods and services, in order to 
ensure the economical and efficient administration and completion of 
contracts, federal contracting agencies shall not contract with 
employers that permanently replace lawfully striking employees.

DATES: Interested parties may submit written comments on this proposal 
by April 28, 1995.

ADDRESSES: Written comments should be submitted to the Office of the 
American Workplace, U.S. Department of Labor, 200 Constitution Avenue 
NW., Room S-2203, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Charles L. Smith, Special Assistant to 
the Deputy Secretary, Office of the American Workplace, U.S. Department 
of Labor, 200 Constitution Avenue NW., Room S-2203, Washington, DC 
20210, (202) 219-6045. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: On March 8, 1995, President Clinton signed 
Executive Order 12954, ``Ensuring the Economical and Efficient 
Administration and Completion of Federal Government Contracts.'' In the 
Order, the President makes the finding that economy and efficiency in 
procurement are generally advanced by contracting with employers that 
do not permanently replace lawfully striking employees. That is, the 
permanent replacement of strikers can adversely affect a contractor's 
ability to reliably provide high quality goods and services, thereby 
adversely affecting the Federal Government's economy, efficiency, and 
cost of operations. The Order then states that ``[i]t is the policy of 
the executive branch in procuring goods and services that, to ensure 
the economical and efficient administration and completion of Federal 
Government contracts, contracting agencies shall not contract with 
employers that permanently replace lawfully striking employees.'' The 
Order further states that all discretion under the Order is to be 
exercised in accordance with this policy.
    The Order then establishes a flexible mechanism, based on case-by-
case determinations, designed to ensure economy and efficiency in 
government procurement involving contractors that have permanently 
replaced lawfully striking employees. Under the Order, the Secretary of 
Labor is authorized to conduct investigations, either on the basis of a 
complaint or on his or her own initiative, and to hold hearings as he 
or she deems advisable in order to determine whether an organizational 
unit of a federal contractor has permanently replaced lawfully striking 
employees.
    If the Secretary finds that an organizational unit of a federal 
contractor has permanently replaced lawfully striking employees, he or 
she may exercise either or both of two options. First, he or she may 
find that existing contracts should be terminated for convenience; the 
head of the contracting agency may object to that finding in writing 
and the termination for convenience shall not be issued.
    Second, the Secretary may find that it is appropriate to debar the 
employer from future contracts and renewal of existing contracts until 
the labor dispute is resolved. However, a contracting agency may enter 
into a contract with the employer if there is a compelling reason to do 
so.
    The Secretary has delegated his authority under the Order to the 
Assistant Secretary for the American Workplace in Secretary's Order No. 
2-95, signed on March 8, 1995, and published in the Federal Register on 
March 13, 1995, 60 FR 13602.

Administrative Notices

A. Executive Order 12866

    The Department of Labor has determined that this rule is a 
significant regulatory action as defined in section 3(f) of Executive 
Order 12866. The Department is issuing this rule in conformance with 
that Executive Order. The Department has determined that the potential 
benefits of this regulatory action outweigh the potential costs, and 
that the rule promotes the President's priorities. This rule does not 
meet the criteria of section 3(f)(1) of Executive Order 12866 and, 
therefore, the information in section 6(a)(3)(C) of that Executive 
Order is not required. This rule has been reviewed by the Office of 
Management and Budget.

B. Regulatory Flexibility Act

    The Agency Head has certified that this rule is not expected to 
have a significant impact on a substantial number of small entities as 
defined in the Regulatory Flexibility Act.

C. Paperwork Reduction Act

    This rule contains no information collection requirements for 
purposes of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et 
seq.).

List of Subjects in 29 CFR Part 270

    Administrative practice and procedure; Government contracts; 
Federal contractors and subcontractors.

    Signed at Washington, D.C., this 24th day of March, 1995.
Charles L. Smith,
Special Assistant to the Deputy Secretary.

    Accordingly, it is proposed to amend 29 CFR Chapter II by adding a 
new Part 270 as set forth below.

PART 270--OBLIGATIONS OF FEDERAL CONTRACTING AGENCIES: PERMANENT 
REPLACEMENT OF LAWFULLY STRIKING EMPLOYEES

Subpart A--Preliminary Matters

Sec.
270.1  Definitions.
270.2  Statement of policy.

Subpart B--Enforcement

270.10  Complaints.
270.11  Investigations.
270.12  Findings by the Assistant Secretary.
270.13  Hearings.
270.14  Termination of contract for convenience.
270.15  Debarment.
270.16  Determination of resolution of labor dispute.

Subpart C--Ancillary Matters

270.20  Cooperation with the Assistant Secretary.
270.21  Rulings and interpretations.
270.22  Delegation of authority by the Secretary.
270.23  General.

    Authority: Executive Order No. 12954, 60 FR 13023, March 10, 
1995; Secretary's Order No. 2-95, 60 FR 13602, March 13, 1995.

Subpart A--Preliminary Matters


Sec. 270.1  Definitions.

    (a) Affiliates means business concerns, organizations, or 
individuals among which, directly or indirectly, either one controls or 
has the power to control the other, or a third party controls or has 
the power to control both. Indicia of control include, but are not 
limited to, interlocking management [[Page 16355]] or ownership, 
identity of interest among family members, shared facilities and 
equipment, common use of employees, or a business entity organized 
following the debarment, suspension, or proposed debarment of a 
contractor which has the same or similar management, ownership, or 
principal employees as the contractor that was debarred, suspended, or 
proposed for debarment.
    (b) Assistant Secretary means the Assistant Secretary of Labor for 
the American Workplace.
    (c) Contract means a mutually binding agreement between the 
Government as a buyer, represented by a contracting agency, and a 
seller, where the seller agrees to furnish supplies or services 
(including construction) and the Government agrees to pay for them. It 
includes job orders or task orders issued under basic ordering 
agreements; letter contracts; orders, such as purchase orders under 
which the contract becomes effective by written acceptance or 
performance; and bilateral modifications to a contract, which increase 
the supplies or services to be delivered under the contract. For 
purposes of this part a contract is limited to agreements in which the 
Government agrees to pay an amount in excess of the Simplified 
Acquisition Threshold of $100,000 specified in section 4(11) of the 
Office of Federal Procurement Policy Act, 41 U.S.C. 403(11). The term 
``contract'' does not include agreements in which the parties stand in 
the relationship of employer and employee.
    (d) Contracting agency means any executive department or 
independent establishment in the executive branch of the Government, 
including any wholly owned Government corporation.
    (e) Contractor means a prime contractor.
    (f) Department means the U.S. Department of Labor.
    (g) Deputy Assistant Secretary means the Deputy Assistant Secretary 
for Labor-Management Programs, Office of the American Workplace, U.S. 
Department of Labor.
    (h) Employee includes any employee of an employer, and includes any 
individual whose work has ceased as a consequence of, or in connection 
with, any current labor dispute or because of any unfair labor 
practice, but does not include any individual having the status of an 
independent contractor or any individual employed as a supervisor.
    (i) Government means the government of the United States of 
America.
    (j) Labor dispute includes any controversy concerning terms, 
tenure, or conditions of employment, or concerning the association or 
representation of persons in negotiating, fixing, maintaining, 
changing, or seeking to arrange terms or conditions of employment, 
regardless of whether the disputants stand in the proximate relation of 
employer and employee.
    (k) Lawfully striking employee means an employee who is engaged in 
a strike that has not been finally adjudicated to be unlawful under any 
applicable federal, state, or local law.
    (l) Order means Executive Order 12954, dated March 8, 1995 (60 FR 
13023, March 10, 1995).
    (m) Organizational unit of a federal contractor includes:
    (1) A division or other organizational element of a person that is 
responsible as the prime contractor for performing a contract, and (2) 
Any other affiliate of the person that could provide the goods or 
services required to be provided under the contract.
    (n) Permanently replaced, when used in connection with a lawfully 
striking employee, means that during a lawful strike the employer has 
placed an individual in the lawfully striking employee's position, and 
the striking employee does not have an unconditional right to 
reinstatement.
    (o) Person means any natural person, corporation, partnership or 
joint venture, unincorporated association, state or local government, 
and any agency, instrumentality, or subdivision of such a government.
    (p) Prime contractor means any person holding a contract with a 
contracting agency.
    (q) Secretary means the Secretary of Labor, U.S. Department of 
Labor, or his or her designee.


Sec. 270.2  Statement of Policy.

    (a) It is the policy of the Executive Branch of the Federal 
Government that in procuring goods and services, in order to ensure the 
economical and efficient administration and completion of contracts, 
contracting agencies shall not contract with employers that permanently 
replace lawfully striking employees.
    (b) All discretion under the Order and this part shall be exercised 
consistent with this policy.
    (c) The Order and this part apply only to contracts in excess of 
the Simplified Acquisition Threshold of $100,000 established in section 
4(11) of the Office of Federal Procurement Policy Act, 41 U.S.C. 
403(11).

Subpart B--Enforcement


Sec. 270.10  Complaints.

    (a) Complaints may be filed by an employee of an organizational 
unit of a federal contractor, or his or her representative, alleging 
that the organizational unit has permanently replaced lawfully striking 
employees. All complaints should be filed with the Deputy Assistant 
Secretary for Labor-Management Programs, Office of the American 
Workplace, U.S. Department of Labor, 200 Constitution Avenue NW., Room 
S-2203, Washington, DC 20210.
    (b) The complaint must be in writing and should include the name, 
address, and telephone number of the complainant, the name and address 
of the organizational unit of the federal contractor alleged to have 
permanently replaced lawfully striking employees, an identification of 
the lawfully striking employees who were allegedly permanently 
replaced, and any other pertinent information which will assist in the 
investigation and resolution of the complaint.


Sec. 270.11  Investigations.

    The Deputy Assistant Secretary may cause an investigation to be 
conducted of an organizational unit of a federal contractor, regarding 
the permanent replacement of lawfully striking employees, on the basis 
of complaints filed with the Department, information submitted by other 
persons, or other available information. The Deputy Assistant Secretary 
shall notify the organizational unit of a federal contractor of the 
initiation of an investigation and the potential consequences under the 
Order. The Deputy Assistant Secretary may also cause a fact finding 
hearing to be conducted, either instead of or in addition to an 
investigation. The Deputy Assistant Secretary shall transmit the 
record, including a proposed finding of fact and a recommendation as to 
debarment and/or termination of a contract or contracts, to the 
Assistant Secretary.


Sec. 270.12  Findings by the Assistant Secretary.

    (a) Upon receipt of the record, the Assistant Secretary shall make 
a finding as to whether the organizational unit of the federal 
contractor has permanently replaced lawfully striking employees.
    (b) If the Assistant Secretary finds that the organizational unit 
of the federal contractor has permanently replaced lawfully striking 
employees, he or she shall determine whether it is appropriate to 
propose debarment.
    (c) If the Assistant Secretary finds that the organizational unit 
of the federal contractor has permanently replaced lawfully striking 
employees after March 8, 1995, the effective date of the Order, he or 
she shall also determine whether [[Page 16356]] it is appropriate to 
propose termination for convenience of the contract or contracts of the 
organizational unit.
    (d) If the Assistant Secretary proposes debarment and/or 
termination, he or she shall send the organizational unit a notice of 
proposed debarment and/or termination by certified mail, return receipt 
requested, advising the organizational unit of its right, within 15 
days after receipt of the notice, to submit, in person, in writing, or 
through a representative, information and argument in opposition to 
debarment and/or termination.


Sec. 270.13  Hearings.

    (a) If the Assistant Secretary finds that the submission by the 
organizational unit of a federal contractor in opposition to the 
proposed debarment and/or termination raises a genuine dispute over 
facts material to the proposed debarment and/or termination, the 
Assistant Secretary shall afford the organizational unit the 
opportunity to appear at an informal hearing. The Assistant Secretary 
or his or her designee shall preside over the proceeding.
    (b) The Assistant Secretary shall make a decision on the proposed 
debarment and/or termination of a contract or contract based on the 
record.


Sec. 270.14  Termination of contract for convenience.

    (a) Upon finding that termination of a contract or contracts for 
convenience is appropriate, the Assistant Secretary shall notify the 
organizational unit of a federal contractor by certified mail, return 
receipt requested, and shall transmit that finding to the head of any 
department or agency that contracts with the organizational unit.
    (b) The head of the department or agency shall notify the Assistant 
Secretary in writing of those contracts that have been terminated for 
convenience pursuant to the Assistant Secretary's finding.
    (c) If the head of the department or agency objects to the 
termination for convenience of a contract, he or she shall notify the 
Assistant Secretary in writing, promptly after receipt of the Assistant 
Secretary's finding, of the reasons for not terminating the contract 
and the termination for convenience shall not be issued.


Sec. 270.15  Debarment.

    (a) The scope of any debarment normally will be limited to the 
organizational unit of a federal contractor that the Assistant 
Secretary has found to have permanently replaced lawfully striking 
employees.
    (b) Upon finding that debarment is appropriate, the Assistant 
Secretary shall promptly notify the organizational unit of the federal 
contractor by certified mail, return receipt requested. The notice 
shall advise the organizational unit of the federal contractor:
    (1) Of the effective date of the debarment;
    (2) That the debarment will not extend beyond the date when the 
labor dispute precipitating the permanent replacement of lawfully 
striking employees has been resolved, as determined by the Assistant 
Secretary in accordance with Sec. 270.16;
    (3) That under the debarment, contracting agencies throughout the 
executive branch of the Government shall not contract or consent to 
subcontracts with the organizational unit of the federal contractor nor 
renew or otherwise extend the duration of current contracts, unless the 
head of a contracting agency or his or her designee determines that 
there is a compelling reason for such action.
    (c) The Assistant Secretary shall notify the Administrator of the 
General Services Administration of the debarment and the Administrator 
shall include the contractor on the list of debarred contractors. The 
Assistant Secretary shall publish or cause to be published in the 
Federal Register, the names of contractors that have, in the judgment 
of the Assistant Secretary, permanently replaced lawfully striking 
employees and have been the subject of debarment. Departments and 
agencies shall not renew or otherwise extend the duration of current 
contracts or solicit offers from, award contracts to, or consent to 
subcontracts with these contractors unless the head of the agency or 
his or her designee determines, in writing, that there is compelling 
reason for such action.


Sec. 270.16  Determination of Resolution of Labor Dispute.

    (a) The Assistant Secretary may cause an investigation to be 
conducted, on his or her own initiative or upon request by any person, 
to determine whether a labor dispute that resulted in debarment has 
been resolved. Among the factors or conditions that the Assistant 
Secretary may consider are:
    (1) Whether the parties to the labor dispute have either reached a 
formal settlement or agreed on a procedure for resolving their 
differences;
    (2) Whether the parties have agreed informally to end the labor 
dispute without the signing of a written agreement;
    (3) Whether striking employees have returned to work;
    (4) Any other relevant factors tending to lead to the conclusion 
that the labor dispute has ended.
    (b) If the Assistant Secretary determines that the labor dispute 
has been resolved, he or she shall terminate the debarment and notify 
the public, federal agencies, federal contractors, and other interested 
persons, through publication in the Federal Register or otherwise, of 
this action.

Subpart C--Ancillary Matters


Sec. 270.20  Cooperation with the Assistant Secretary.

    Consistent with section 7 of the Order, each contracting agency 
shall cooperate with the Assistant Secretary and provide such 
information and assistance as the Assistant Secretary may require in 
the performance of the Assistant Secretary's functions under the Order 
and the regulations in this part.


Sec. 270.21  Rulings and interpretations.

    Rulings under or interpretations of the Order or the regulations 
contained in this part shall be made by the Assistant Secretary or his 
or her designee.


Sec. 270.22  Delegation of Authority by the Secretary.

    Consistent with section 8 of the Order, the Secretary may delegate 
any function or duty of the Secretary under this Order to any officer 
in the Department or to any other officer in the executive branch of 
the Government, with the consent of the head of the department or 
agency in which that officer serves.


Sec. 270.23  General.

    (a) The regulations in this part implement Executive Order 12954 
only and do not modify or affect the interpretation of any other 
Department of Labor regulations or policy.
    (b) Consistent with section 10 of the Order, nothing contained in 
the Order or this part, or promulgated pursuant to the Order or this 
part, is intended to confer any substantive or procedural right, 
benefit, or privilege enforceable at law by a party against the United 
States, its agencies or instrumentalities, its officers, or its 
employees.

[FR Doc. 95-7732 Filed 3-24-95; 4:09 pm]
BILLING CODE 4510-86-P