[Federal Register Volume 60, Number 137 (Tuesday, July 18, 1995)]
[Proposed Rules]
[Pages 36756-36767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17611]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employment Standards Administration; Wage and Hour Division

29 CFR Part 9

RIN 1215-AA95


Executive Order 12933 of October 20, 1994; ``Nondisplacement of 
Qualified Workers Under Certain Contracts''

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Notice of proposed rulemaking, request for comments.

-----------------------------------------------------------------------

SUMMARY: This document proposes regulations to implement Executive 
Order 12933, ``Nondisplacement of Qualified Workers Under Certain 
Contracts,'' signed by the President on October 20, 1994 (59 FR 53560, 
October 24, 1994). The Executive Order requires that workers on a 
building service contract for a public building be given the right of 
first refusal for employment with the successor contractor, if they 
would otherwise lose their jobs as a result of the termination of the 
contract. The proposed rules contain a contract clause that must be 
incorporated into each covered contract, implementing regulations, and 
enforcement procedures.

DATES: Comments on the proposed rule are due on or before September 1, 
1995.

ADDRESSES: Submit written comments to Maria Echaveste, Administrator, 
Wage and Hour Division, Employment Standards Administration U.S. 
Department of Labor, Room S-3502, 200 Constitution Avenue, NW., 
Washington, DC 20210. Commenters who wish to receive notification of 
receipt of comments are requested to include a self-addressed, stamped 
post card or to submit them by certified mail, return receipt 
requested. As a convenience to commenters, comments may be transmitted 
by facsimile (``FAX'') machine to (202) 219-5122. This is not a toll-
free number. If transmitted by FAX and a hard copy is also submitted by 
mail, please indicate on the hard copy that it is a duplicate copy of 
the FAX transmission.


[[Page 36757]]

FOR FURTHER INFORMATION CONTACT:
William W. Gross, Office of Program Operations, Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, Room S-
3502, 200 Constitution Avenue, NW., Washington, DC 20210; telephone 
(202) 219-8353. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: 

I. Paperwork Reduction Act

    Reporting and recordkeeping requirements contained in the 
regulations (Sec. 9.9(b) and Sec. 9.11) have been submitted to the 
Office of Management and Budget under the provisions of the Paperwork 
Reduction Act of 1990 (Pub. L. 96-511) for review.
    The public reporting burden for information collection requirements 
contained in these regulations is estimated to average as follows:
    15 minutes per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The reporting requirements of Sec. 9.11 are already required by the 
Service Contract Act regulations, 29 CFR 4.6(1)(2), OMB Number 1215-
0150, and therefore impose no new burden. The only new requirement is 
the recordkeeping requirement in Sec. 9.9.
    Send comments regarding this burden to the Office of Information 
Management, U.S. Department of Labor, Room N-1301, 200 Constitution 
Avenue, NW., Washington, DC 20210; and the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503.

II. Background

    Executive Order 12933 was signed October 20, 1994, by President 
Clinton, and published in the Federal Register on October 24, 1994 (59 
FR 53560). The purpose and need for the Executive Order are clearly 
stated in the Executive Order itself:

    When a service contract for the maintenance of a public building 
expires and a follow-on contract is awarded for the same service, 
the successor contractor typically hires the majority of the 
predecessor's employees. On occasion, however, a follow-on 
contractor will hire a new work force, and the predecessor's 
employees are displaced.
    As a buyer and participant in the marketplace, the Government is 
concerned about hardships to individuals that may result from the 
operation of our procurement system.
    Furthermore, the Government's procurement interests in economy 
and efficiency benefit from the fact that a carryover work force 
will minimize disruption to the delivery of services during any 
period of transition and provide the Government the benefits of an 
experienced and trained work force rather than one that may not be 
familiar with the Government facility.

In order to address these concerns, Section 1 of the Executive Order 
makes the following statement of policy:

    It is the policy of the Federal Government that solicitations 
and building service contracts for public buildings shall include a 
clause that requires the contractor under a contract that succeeds a 
contract for performance of similar services at the same public 
building to offer those employees (other than managerial or 
supervisory employees) under the predecessor contract whose 
employment will be terminated as a result of the award of the 
successor contract, a right of first refusal to employment under the 
contract in positions for which they are qualified. There shall be 
no employment openings under the contract until such right of first 
refusal has been provided. Nothing in this order shall be construed 
to permit a contractor to fail to comply with any provision of any 
other Executive order or laws of the United States.

    The Executive Order requires that the Secretary of Labor issue 
implementing regulations by April 20, 1995, and that the Federal 
Acquisition Regulatory Council issue regulations by that date which 
require inclusion of the contract clause in Federal solicitations and 
contracts. The Executive Order further provides that the order does not 
confer any right or benefit enforceable against the United States, but 
that it is not intended to preclude judicial review of final decisions 
by the Secretary of Labor in accordance with the Administrative 
Procedure Act, 5 U.S.C. 701 et seq.
    Key issues addressed in the regulations on which public comment is 
particularly solicited are summarized and explained in this preamble. 
As required by the Executive Order, the Department of Labor (DOL) has 
consulted with the Federal Acquisition Regulatory (FAR) Council with 
respect to the implementation of the Executive Order.

III. Summary and Discussion

Scope of Coverage

General Coverage (9.2)
    The Executive Order applies only to ``building service contracts'' 
for ``public buildings'' where the contract is entered into by the 
United States. These terms are defined elsewhere in the regulations. 
The Order applies only to contracts of an amount equal to or greater 
than the simplified acquisition threshold, set by the Office of Federal 
Procurement Policy Act (41 U.S.C. 403(11)) at $100,000. Because the 
language of the Executive Order does not specifically reference 
subcontracts, the regulations contain no ``flow-down'' requirements for 
subcontractors.
    Where a contract is for both recurring building services and some 
other purpose, such as construction, the building services are subject 
to the Order, but only with respect to the building services portion of 
the contract. However, where the building services are only incidental, 
such as incidental maintenance performed under a contract to operate a 
day-care center, the Order would not apply to such services. The 
standards used for determining when construction work performed under a 
mixed contract is covered by the Davis-Bacon Act are utilized in 
determining when building services are more than incidental. See 29 CFR 
4.116(c)(2); 48 CFR 22.402(b)(ii).
    It is also important to point out that the coverage principles of 
the Executive Order are different than those of the McNamara-O'Hara 
Service Contract Act (SCA), 41 U.S.C. 351 et seq., although there is 
significant overlap between the two programs.
Building Services Contract (9.3)
    Section 2(b) of the Executive Order defines the term ``building 
services contract'' to include contracts ``for recurring services 
related to the maintenance of a public building, e.g., janitorial, 
window washing, food service. * * *'' The regulations define 
``recurring services'' to include services performed regularly or 
periodically throughout a contract (and its follow-on contract) at the 
same building. Contracts which are for non-recurring maintenance 
services, such as servicing of fixed equipment which is performed only 
one time each year, and contracts for services which are not 
maintenance services, such as operation of a day care center, are not 
subject to the Order.
Public Building (9.4)
    Section 2 of the Executive Order defines the term ``public 
building.'' The definition is patterned after the definition of a 
public building in Section 13 of the Public Buildings Act of 1959, 40 
U.S.C. 612, and the definition in the Executive Order is largely 
repeated in section 9.4 of the regulations. Generally, buildings 
suitable for office or storage space and administered by the General 
Services Administration (GSA) or by another Federal agency under a 
delegation from GSA are considered to be ``public buildings.''
    Many buildings are specifically excluded from the term ``public 
building,'' including buildings on 

[[Page 36758]]
properties of the United States Postal Service, on military 
installations, and on Department of Veterans Affairs installations used 
for hospital or domiciliary purposes. In addition, buildings ``on the 
public domain'' are not ``public buildings''. ``Public domain'' is 
commonly considered to be public lands in the West. Accordingly, 
``public domain'' in these regulations is defined to include lands 
administered by the Department of the Interior, Bureau of Land 
Management, and the Department of Agriculture, U.S. Forest Service. 
Buildings on other Federal property are not considered to be ``on the 
public domain'' for purposes of the Executive Order.
    A unique situation arises with respect to the Pentagon. Originally, 
the Pentagon was considered a ``public building'' within the scope of 
the Public Buildings Act. Subsequently, Section 2804 of the National 
Defense Authorization for FY 1991 (10 U.S.C. 2674) removed the Pentagon 
from GSA's authority under the Public Buildings Act; however, that 
legislation did not change the Public Buildings Act's definition of a 
public building. This, while not specifically addressed in the 
regulations, DOL considers the Pentagon to be a ``public building'' 
within the meaning of the Executive Order. Furthermore, this 
interpretation is consistent with the purpose of the Executive Order, 
to cover Government office buildings. Commenters are invited to address 
this issue in their comments.
    Leased buildings are not public buildings covered by the Executive 
Order unless they are being leased pursuant to lease-purchase 
contracts. It should be noted, however, that building services 
performed on a building being leased pursuant to a lease-purchase 
contract would be covered only if the services are being performed 
under a contract directly with the Government; building services 
performed by the lessor would be considered incidental to the lease 
(see Sec. 9.2) and would not be covered.
Coverage Limitations (9.5)
    The Order does not apply to contracts under the simplified 
acquisition threshold, which is currently $100,000. In addition, 
contracts for commodities or services by the blind or severely 
handicapped awarded pursuant to the Javits-Wagner-O'Day Act, 41 U.S.C. 
46-48a; contracts for certain services provided by sheltered workshops 
for the severely handicapped, awarded pursuant to the Edgar Amendment 
of the Treasury, Postal Services and General Government Appropriations 
Act, Public Law 103-329; and vending service contracts operated by the 
blind, awarded pursuant to the Randolph-Sheppard Act, 20 U.S.C. 107, 
are excluded from coverage pursuant to section 3(b)-(d) of the 
Executive Order.
    The Executive Order also excludes ``services where the contractor's 
employees perform work at the public building and at other locations 
under contracts not subject to this Order (e.g., pest control or trash 
removal where the contractor's employees visit the site periodically 
and where the employees under the contract respond to service calls),'' 
provided that employees are not deployed in a manner designed to avoid 
the purposes of the Order. Thus, the manner in which the services will 
be performed by the successor contractor as well as the nature of the 
services must both be considered in determining whether a building 
services contract is subject to the Executive Order.
Contract Clause (9.6)
    Section 4 of the Executive Order specifies the contract clause that 
must be included in solicitations and contracts for building services 
that succeed contracts for the performance of similar work at the same 
public building. The regulations set forth additional provisions which 
are necessary to implementation of the Order. In accordance with 
Section 5 of the Order, a provision of the clause makes it clear that 
disputes under the Order are to be resolved in accordance with DOL 
procedures rather than pursuant to the general disputes clause of the 
Contract Disputes Act, 41 U.S.C. 601 et seq. Provisions also provide 
for withholding of contract funds in the event the contractor is 
determined to have violated the provisions of the Executive Order and 
is found liable for lost wages or other monetary relief; and to require 
contractors to cooperate in investigations by DOL or the contracting 
agency.

Contractor Obligations

Employee Coverage/Staffing (9.7/9.8)
    With certain exclusions, all employees performing recurring 
building services on the predecessor contract whose employment would 
otherwise be terminated as the result of the award of the contract to a 
new contractor, must in good faith be offered the right of first 
refusal to employment under the successor contract before any other 
employees may be hired. Because the successor contractor will not know 
whether an individual employee of the predecessor contractor will 
continue to be employed or will be terminated because of the change in 
contracts, the regulations state a presumption that all employees will 
be terminated when the predecessor's contract expires. This presumption 
can be defeated by specific evidence to the contrary, which the 
successor contractor could obtain through inquiries of, or contact 
with, the contracting officer, the employees, or the predecessor 
contractor after award of the contract to the successor.
    The Executive Order does not require that a successor contractor 
perform a contract with the same number of employees as the 
predecessor. For example, if the predecessor employed twenty (20) 
custodial workers, the successor may determine it can perform the 
contract work with only eighteen (18) custodial workers. Thus if the 
contractor continues to employ five (5) of its existing workers, the 
offer of the right of first refusal would initially be limited to 
thirteen (13) employees of the predecessor. The successor contractor 
has complete discretion, within the constraints of these regulations, 
to determine which employees will first be offered a right of first 
refusal. If any of the predecessor's employees to whom the right of 
first refusal was offered decline that offer, then the successor must 
offer the right of first refusal to any remaining employees of the 
predecessor who were not originally offered the right of first refusal.
    The question arises, however, whether the successor contractor's 
obligations continue throughout the performance of the contract. 
Although the language of the Executive Order could arguably suggest 
such a result, it would be impractical and unduly burdensome. Therefore 
the regulations provide that once the contract is fully staffed and 
contract performance has commenced, the obligation to offer the right 
of first refusal ceases, and any subsequent vacant positions may be 
filled in accordance with the successor's normal business practices. 
The only exception to this provision would be if the evidence shows 
that the successor contractor increased the initial staffing level 
within the first three months after commencement of the contract. Three 
months was selected as a reasonable period for continuing to impose an 
obligation to offer a right of first refusal in order to ensure that 
necessary staffing adjustments during the start-up period will be 
covered, and at the same time to discourage attempts to manipulate the 
work force. During this three month period the right of first refusal 
must be offered to any eligible employees until the final staffing 
level is reached.
    Services at buildings not covered by the Order. The contractor is 
not 

[[Page 36759]]
obligated to offer a right of first refusal to employment in any 
position which will perform services both at buildings covered by the 
Executive Order and buildings not covered by the Order.
    Managerial and supervisory employees. The successor contractor is 
not required to offer a right of first refusal to employees who 
performed as managers or supervisors under the predecessor contract or 
to employees who are not service employees within the meaning of the 
SCA. Thus the regulations provide that those employees who are employed 
as bona fide executive, administrative, or professional employees 
within the meaning of the regulations issued under the Fair Labor 
Standards Act (FLSA) at 29 CFR Part 541 (and therefore are exempt from 
the provisions of the FLSA and SCA), need not be offered a right of 
first refusal.
    The successor contractor has complete discretion to decide who will 
be employed as managers and supervisors on the contract. However, if a 
service employee of the predecessor is qualified for a management/
supervisory position, an offer of employment in that exempt 
classification would satisfy the successor's obligation to offer the 
employee a right of first refusal.
    Existing employees of the successor contractor. The Executive Order 
provides that employees who worked for the successor contractor for at 
least three months immediately preceding the commencement of the 
successor contract and who would otherwise face lay-off or discharge, 
may be employed on the successor contract without regard to the 
successor's obligation to offer the right of first refusal. The key 
elements are that the employee (1) must have been employed by the 
successor for at least three months prior to the commencement of the 
successor contract and (2) would otherwise face lay-off or discharge. 
Employees who had been laid-off by the successor prior to the 
commencement of the successor contract or existing employees of the 
successor who are not facing lay-off or termination because, for 
example, they would continue to be employed on another contract, may 
not be employed on the successor contract until all eligible employees 
of the predecessor have been offered the right of first refusal.
    Unsuitable employees. The successor contractor is not required to 
offer the right of first refusal to any employee who the successor 
reasonably believes, based on the particular employee's past 
performance, has failed to perform suitably on the job. The regulation 
implementing this provision does not define what constitutes a 
``reasonable belief'' or ``suitable performance''. However, the 
successor contractor must base the conclusion that an employee failed 
to perform suitably on information from a credible source relative to a 
particular employee's past performance on the job, such as the 
predecessor contractor, the employee's supervisor or foreman, or the 
contracting agency. Information that does not directly relate to an 
employee's performance on the job may not be used as a basis for 
failing to offer a right of first refusal.
Offer of Employment/Recordkeeping (9.9, 9.10)
    The Executive Order requires the successor to make an express offer 
of employment to each employee and state the time within which the 
employee must accept such offer, which must be at least ten (10) days. 
The regulation at section 9.9 states that the offer may be made either 
in writing or orally at a meeting of the predecessor contractor's 
employees, and requires that the contractor keeps either a copy of the 
offer or minimum documentation regarding the meeting at which the offer 
was made, which may consist of notations on the attendance roster and a 
copy of any written notice distributed.
    The regulations require the predecessor contractor to give the 
contracting officer a list of current employees at least 60 days before 
the end of the contract. However, the successor's obligation to extend 
a right of first refusal applies to all employees employed at the end 
of the contract, including any who may begin work after the list of 
employees is provided. It is not envisioned that the omission of such 
employees' name from the list will be unduly burdensome since successor 
contractors commonly hire the predecessor's work force without the 
convenience of such a list.
    The regulations at section 9.10 discuss what is a bona fide offer 
of employment. In general, an offer of employment will be presumed to 
be bona fide. Employees need not be offered employment in the same job 
that they were employed in under the predecessor contract, provided the 
employee is qualified for the position offered. Thus an employee may be 
equipped by education, training or experience to perform the duties of 
a position to be filled by the successor contractor, even though he or 
she encumbered a position under the predecessor contractor that did not 
require or utilize such education, training or experience. However, an 
offer of employment at a lower level or to a different position may be 
a basis for closely examining whether the offer is bona fide, based on 
valid business reasons.
Predecessor's Obligation to Provide a List of Employees (9.11)
    The Executive Order requires that, no less than 60 days before the 
completion of the contract, the predecessor contractor provide the 
contracting officer with a certified list of all service employees 
working at the Federal facility during the last month of the contract. 
The list is also required to contain anniversary dates of employment, 
either with the current or predecessor contractor, of each service 
employee. The contracting officer in turn will provide the list to the 
successor contractor, and it will be provided on request to employees 
or their representatives.
    Except for the timing of submission of the list, this requirement 
is the same as the requirement under the SCA at 29 CFR 4.6(1)(2) that 
the predecessor furnish the names and anniversary dates at least ten 
days before contract termination. Thus the Executive Order does not 
create any new obligation on the predecessor, but simply moves forward 
the date the list must be submitted.
    Because the predecessor contractor cannot know with certainty, 60 
days in advance of termination, who will be performing on the contract 
in the final month, the regulations provide that the predecessor will 
provide the names of all service employees working on the contract. The 
successor in turn must assume the employees listed will be working 
during the final month of the contract unless the evidence demonstrates 
otherwise.
Notice to Employees (9.12)
    Service employees need to be advised of their right of first 
refusal in the event of contract transition. Various options were 
considered regarding how the employees should be so advised. Notice 
could easily be accomplished by the predecessor contractor, but it has 
no substantive obligations under the Order. The Department also 
considered placing the obligation on the successor contractor, but 
concluded that it would be more efficient to require notification by 
the contracting agency since the predecessor's employees are working 
regularly at the Federal building. Therefore the regulations require 
that the agency either post a notice or give individual notice to the 
predecessor contractor's employees. An optional, prototype notice is 
included in an Appendix to the regulations.

[[Page 36760]]


Enforcement (Subpart B)

    Section 5 of the Executive Order provides that the Secretary of 
Labor is responsible for investigating and obtaining compliance with 
the Executive Order. It further provides that the Secretary has the 
authority to issue final orders prescribing appropriate sanctions and 
remedies, including but not limited to, orders requiring employment and 
payment of wages lost.
    The executive Order also requires that alternative dispute 
mechanisms be utilized to the maximum extent possible in resolving 
enforcement issues. Thus, the thrust of the Executive Order is to keep 
the enforcement processes as simple and timely as possible, given the 
immediacy of both the employee's and the contractor's need for a 
response.
Role of the Contracting Officer (9.100)
    In developing the enforcement provisions of the regulations, we 
have attempted to provide a process that encourages resolution at the 
earliest possible stage with fairness and efficiency. For this reason, 
the regulations provide that complaints alleging violations shall be 
filed with the contracting officer, who will provide the employee and 
the successor contractor with information about the requirements of the 
Executive Order. If this is not sufficient to resolve the matter, the 
regulations provide that the contracting officer will obtain statements 
from the parties of their respective positions and submit a report to 
the Department of Labor.
Role of the Department of Labor (9.101, 9.102)
    If the contracting officer cannot resolve the dispute, section 
9.100(b) provides that the contracting officer will submit his or her 
report. Based on the contracting officer's report, Wage and Hour may 
attempt to resolve the dispute through informal negotiations; however, 
if that is not successful, Wage and Hour will conduct a full 
investigation of the facts and issue a determination as to whether a 
violation has occurred. The Administration also has the authority to 
conduct an investigation on his or her own initiative.
Hearing Procedures (9.103-9.107)
    The Administrator's determination shall become a final order of the 
Secretary unless a request for a hearing is filed within 20 days or, 
where the Administrator determines that relevant facts are not in 
dispute, a petition for review is filed with the Board of Service 
Contract Appeals (BSCA), which shall have the authority to hear all 
appeals under the Executive Order. Section 9.103 provides the 
procedures and time frames for appeal to the Board. The BSCA is 
delegated the authority to hear and decide appeals on behalf of the 
Secretary under the Executive Order because it currently hears appeals 
under the Service Contract Act and his expertise in service contract 
labor standards disputes.
    Consistent with the Executive Order's directive to favor the 
resolution of disputes by efficient and informal alternative dispute 
methods, section 9.104 encourages parties to utilize settlement judges 
to mediate settlement negotiations prior to an Administrative Law Judge 
(ALJ) hearing. The general ALJ regulations, 29 CFR Part 18, Sec. 18.9, 
already provide settlement judge procedures, and these procedures have 
been expressly adopted for use under the Executive Order.
    If a complaint cannot be resolved informally through the 
conciliation or the settlement judge process, then section 9.105 
provides procedures for a hearing before an ALJ. In most cases it is 
envisioned that the parties to the proceeding will be the contractor 
and the complainant (if any). However, the Wage-Hour Administrator may 
appear in any proceeding as a party or as amicus curiae, and will 
appear as a party in all cases in which inegligibility sanctions are 
imposed. The contracting agency may also appear as amicus curiae.
    As provided in section 9.106, the ALJ shall issue a decision within 
60 days after the proceeding at which evidence was submitted. If the 
ALJ determines that a violation has occurred, the ALJ may order 
appropriate relief, and may assess against the successor contractor an 
amount equal to the employees' costs and expenses (Sec. 9.106(c)). 
Section 9.107 provides the procedures for appealing an ALJ decision to 
the BSCA.
    Since the Department does not anticipate participating in most 
proceedings under the Executive Order where debarment is not an issue, 
the Department is considering providing for payment of attorney fees or 
costs where the complainant prevails. The Department seeks the views of 
commenters regarding the permissibility of such a provision in the 
absence of express statutory authority. In the alternative, because it 
is anticipated that many complainants may lack the ability to hire 
counsel if fees are not available,. the Department is considering 
providing that parties may obtain the Administrator's investigation 
record and submit it into evidence in proceedings where the Department 
is not a party.
Remedies/Ineligibility Sanction (9.108-9.109)
    Section 5 of the Executive Order provides that the Secretary has 
the authority to prescribe appropriate remedies, including orders 
requiring employment and payment of wages lost. Section 9.108 also sets 
forth withholding procedures to obtain wages due, and a provision for 
suspension of payments if the predecessor fails to provide the 
contracting officer with a list of employees on the contract. 
Furthermore, where a contractor has failed to comply with any order of 
the Secretary or has committed willful violations of the Executive 
Order or its regulations, the contractor and its responsible officers, 
and any firm in which the contractor has a substantial interest, shall 
be ineligible to be awarded any contract or subcontract of the United 
States for a period of up to three years. Since debarment is only 
imposed for the most serious of violations--i.e., violations that are 
willful or failure to comply with an order of the Secretary, which in 
itself is a willful violation--the regulations at section 9.109 
prescribe a three-year period for debarment in all cases.
Definitions (9.200)
    The regulations include definitions of several of the important 
terms. The definition of ``service employee'' is based on the Service 
Contract Act, as the Executive Order provides, but references back to 
the coverage requirements of the Order (employees performing recurring 
building services), rather than to employees on contracts subject to 
the SCA.
Dates of Applicability

    The regulations will apply to all contracts awarded after the 
effective date, and the clauses contained in section 9.6 must be 
included in all such contracts. In addition, in order to provide 
successor contractors with the convenience of a list of names from the 
predecessor contractor earlier than the SCA requirement of 10 days 
before completion of the contract, it is suggested that existing 
contracts be amended to include the clause in section 9.6(c).

Executive Order 12866

    Because this rule provides the initial implementing regulations for 
an executive order issued by the President, it will be treated as a 
``significant regulatory action'' within the meaning of Executive Order 
12866. However, no economic analysis is required since the rule will 
not have a significant economic impact. The Executive Order 

[[Page 36761]]
simply requires contractors to follow the practice which is currently 
followed in most cases in any event as a good business practice, and 
will improve Government efficiency and economy in those few cases where 
the practice would not otherwise have been followed by decreasing or 
eliminating the loss of productivity that may occur when experienced 
employees are terminated.
    Furthermore, the total value of Federal contracts covered by 
Executive Order 12933 is less than $100 million, and only a small 
fraction of that total may involve terminations of predecessor 
employees. General Services Administration data for Fiscal Year 1994 
indicate that no more than 88 new building service contract actions 
were taken, with a value of $39.2 million. Since only a very small 
percentage of that dollar value involves terminations, the economic 
impact of the Executive Order is minimal.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (RFA) requires agencies to 
prepare regulatory flexibility analyses, and to develop alternatives, 
whenever possible, in drafting regulations that will have a 
``significant economic impact on a substantial number of small 
entities.'' The Department has determined that such an analysis is not 
required for this rulemaking. This conclusion is based on the fact that 
the Executive Order mandates a practice which is already followed in 
almost all cases. Accordingly, this regulation will not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the RFA. The Secretary has certified to the Chief 
Counsel for Advocacy of the Small Business Administration to this 
effect. Therefore, no regulatory flexibility analysis is required.

Document Preparation

    This document was prepared under the direction and control of Maria 
Echaveste, Administrator, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor.

List of Subjects in 29 CFR Part 9

    Employment, Federal buildings and facilities, Government contracts, 
Law enforcement, Labor.

    Signed at Washington, D.C. on this 12th day of July, 1995.
Maria Echaveste,
Administrator, Wage and Hour Division.

    For the reasons set out in the preamble, 29 CFR Part 9 is proposed 
to be added to read as follows:

PART 9--NONDISPLACEMENT OF QUALIFIED WORKERS UNDER CERTAIN 
CONTRACTS

Subpart A--How is Executive Order 12933 Applied?

Covered Contracts Generally

Sec.
9.1  What is the purpose of Executive Order 12933?
9.2  Which contracts are covered by Executive Order 12933?
9.3  What is a ``building service contract?''
9.4  What is ``public building?''
9.5  Which contracts are not covered by Executive Order 12933?
Contract Clauses

9.6  What contract clauses must be included in covered contracts?

Contractor Obligations

9.7  May a contractor employ persons other than the predecessor 
contractor's employees?
9.8  Must the successor contractor offer a right of first refusal to 
all employees of the predecessor contractor?
9.9  In what manner must the successor contractor offer employment?
9.10  What constitutes a bona fide offer of employment?
9.11  What are the obligations of the predecessor contractor?

Notice to Employees

9.12  How ill employees learn of their rights?
Subpart B--What Enforcement Mechanisms Does Executive Order 12933 
Provide?

Complaint Procedures

9.100  What may employees do if they believe that their rights under 
the Executive Order have been violated?
9.101  What action will the Wage and Hour Division take to try to 
resolve the complaint?
9.102  How are complaints resolved if conciliation is unsuccessful?
9.103  How are decisions of the Administrator appealed?

Administrative Law Judge Procedures

9.104  How may cases be settled without formal hearing?
9.105  What procedures are followed if a complaint cannot be 
resolved through conciliation or settlement agreement?
9.106  What rules apply to the decision of the administrative law 
judge?

Appeal Procedures

9.107  How may an administrative law judge's decision be appealed?

Enforcement Remedies

9.108  What are the consequences to a contractor of not complying 
with the Executive Order?
9.109  Under what circumstances will ineligibility sanctions be 
imposed?

Subpart C--Definitions

9.200  Definitions

Appendix A to Part 9--Notice to Building Service Contract Employees

    Authority: Secs. 4-6, Executive Order 12933; 5 U.S.C. 301.
Subpart A--How is Executive Order 12933 Applied?

Covered Contracts Generally


Sec. 9.1  What is the purpose of Executive Order 12933?

    The Government's procurement interests in both economy and 
efficiency are furthered when a successor contractor carries over an 
existing work force. A carryover work force minimizes disruption in the 
delivery of services during a period of transition and provides the 
Government the benefit of an experienced and trained work force. 
Executive Order 12933 therefore generally requires that successor 
contractors performing building service contracts for public buildings 
offer a right of first refusal to employment under the contract to 
those employees under the predecessor contract whose employment will be 
terminated as a result of the award of the successor contract.


Sec. 9.2  Which contracts are covered by Executive Order 12933?

    (a) The Executive Order and these rules apply to ``building service 
contracts'' for ``public buildings'' where the contract is entered into 
by the United States in an amount equal to or greater than the 
simplified acquisition threshold of $100,000, as set forth in section 
4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 
403(11)).
    (b)(1) Except as provided in paragraph (b)(2) of this section, 
contracts which include a requirement for recurring building services 
are subject to the Executive Order and these regulations even if the 
contract also contains non-service requirements, such as construction 
or supplies, or requirements for other types of services, and even if 
the contract is not subject to the McNamara-O'Hara Service Contract 
Act, 41 U.S.C. 351 et seq. However, the requirements of the Executive 
Order apply only to the building services portion of the contract.
    (2) The requirements of the Executive Order do not apply to 
building services 

[[Page 36762]]
which are only incidental to a contract for another purpose, such as 
incidental maintenance under a contract to operate a day-care center. 
Building services performed on a building being leased pursuant to a 
lease-purpose contract would be considered incidental and would not be 
covered unless the services are being performed under a contract 
directly with the Government. Building service requirements will not be 
considered incidental, and therefore will be subject to the Executive 
Order, where:
    (i) The contract contains specific requirements for a substantial 
amount of building services or it is ascertainable that a substantial 
amount of building services will be necessary to the performance of the 
contract (the word ``substantial'' relates to the type and quantity of 
building services to be performed and not merely to the total value of 
such work (whether in absolute dollars or cost percentages) as compared 
to the total value of the contract); and
    (ii) The building services work is physically or functionally 
separate from, and as a practical matter is capable of being performed 
on a segregated basis from the other work called for by the contract.


Sec. 9.3  What is a ``building service contract?''

    (a) A ``building service contract'' is a contract for ``recurring 
services'' related to the maintenance of a public building. ``Recurring 
services'' are services which are required to be performed regularly or 
periodically throughout the course of a contract, and throughout the 
course of the succeeding or follow-on contract at the same building. 
Examples of building services contracts include, but are not limited 
to, contracts for the recurring provision of custodial or janitorial 
services; window washing; laundry; food services; guard or other 
protective services; landscaping and groundskeeping services; and 
inspection, maintenance, and repair of fixed equipment such as 
elevators, air conditioning, and heating systems. However, as provided 
in section 9.5(b)(5) of this part, excluded from the Executive Order 
are those services where the employees work at both the public building 
and at other locations not subject to the Executive Order.
    (b)(1) Contracts which provide maintenance services only on a non-
recurring basis are not ``building service contracts'' within the 
meaning of the Executive Order and are not subject to its provisions. 
For example, a contract to perform servicing of fixed equipment once a 
year, or to mulch a garden on a one-time or annual basis, is a non-
recurring maintenance contract that is not covered by the Executive 
Order.
    (2) Contracts for the provision of services which may be performed 
in a public building but are not related to the maintenance of that 
public building are not ``building service contracts'' and are not 
covered by the Executive Order and these rules. For example, a contract 
for day care services in a Federal office building would not be subject 
to the Executive Order.


Sec. 9.4  What is a ``public building?''

    (a) A ``public building'' is any building owned by the United 
States which is generally suitable for office or storage space or both 
for the use of one or more Federal agencies or mixed ownership 
corporations, together with its grounds, approaches, and appurtenances. 
Public buildings shall include:
    (1) Federal office buildings;
    (2) Customhouses;
    (3) Courthouses;
    (4) Border inspection facilities;
    (5) Warehouses;
    (6) Records centers;
    (7) Appraiser stores;
    (8) Relocation facilities; and
    (9) Similar Federal facilities.
    (b)(1) Public buildings do not include any building on the public 
domain, including that reserved for national forests and other 
purposes. The public domain includes only those lands administered by 
the Department of the Interior, Bureau of Land Management, and the 
Department of Agriculture, U.S. Forest Service.
    (2) Also not covered are any buildings:
    (i) On properties of the United States in foreign countries;
    (ii) On Native American and Native Eskimo properties held in trust 
by the United States;
    (iii) On lands used in connection with Federal programs for 
agricultural, recreational, and conservation purposes, including 
research in connection therewith;
    (iv) On or used in connection with river, harbor, flood control, 
reclamation, or power objects; or for chemical manufacturing or 
development projects; or for nuclear production, research, or 
development projects;
    (v) On or used in connection with housing and residential projects;
    (vi) On properties of the United States Postal Service;
    (vii) On military installations (including any fort, camp, post, 
naval training station, airfield, proving ground, military supply 
depot, military school, or any similar facility of the Department of 
Defense);
    (viii) On installations of the National Aeronautic and Space 
Administration, except regular office buildings; and
    (ix) On Department of Veterans Affairs installations used for 
hospital or domiciliary purposes.
    (3) Buildings leased by the Government are not public buildings 
unless the building is leased pursuant to a lease-purchase contract.


Sec. 9.5  Which contracts are not covered by Executive Order 12933?

    (a) A contract is not covered by the Executive Order unless it 
requires the provision of recurring building services, and unless the 
contract succeeds a contract for similar work at the same public 
building.
    (b) The Executive Order expressly excludes:
    (1) Contracts for services under the simplified acquisition 
threshold ($100,000);
    (2) Contracts for commodities or services produced or provided by 
the blind or severely handicapped, awarded pursuant to the Javits-
Wagner O'Day Act, 41 U.S.C. 46-48a; and any future enacted law creating 
an employment preference for some group of workers under building 
service contracts;
    (3) Guard, elevator operator, messenger, or custodial services 
provided to the Government under contracts with sheltered workshops 
employing the severely handicapped as outlined in the Edgar Amendment, 
section 505 of the Treasury, Postal Services and General Government 
Appropriations Act, 1995, P.L. 103-329;
    (4) Agreements for vending facilities operated by the blind, 
entered into under the preference provisions of the Randolph-Sheppard 
Act, 20 U.S.C. 107; and
    (5) Services where the contractor's employees perform work at the 
public building and at other locations under contracts not subject to 
the Executive Order and these regulations, provided that the employees 
are not deployed in a manner that is designed to avoid the purposes of 
the Order. Examples include, but are not limited to, pest control or 
trash removal services where the employees periodically visit various 
Government and non-Government sites, and service calls to repair 
equipment at various Government and non-Government buildings.

Contract Clauses
Sec. 9.6  What contract clauses must be included in covered contracts?

    The clauses set forth in the following paragraphs shall be included 
in full by the contracting agency in every solicitation and contract 
entered into by 

[[Page 36763]]
the United States equal to or in excess of $100,000, where the contract 
requires the provision of building services and succeeds a contract for 
the performance of similar services at the same public building:
    (a) Consistent with the efficient performance of this contract, the 
contractor shall, except as otherwise provided herein, in good faith 
offer those employees (other than managerial and supervisory employees) 
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 to 
employment under the contract in positions for which the employees are 
qualified. The contractor 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) of this section, there shall be no employment opening 
under the contract, and the contractor shall not offer employment under 
the contract, to any person prior to having complied fully with this 
obligation. The contractor 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 such offer be less than 10 days.
    (b) Notwithstanding the contractor's obligation under paragraph (a) 
of this section, the contractor:
    (1) May employ on the contract any employee who has worked for the 
contractor for at least 3 months immediately preceding the commencement 
of this contract and who would otherwise face lay-off or discharge, and
    (2) Is 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 McNamara-O'Hara Service Contract Act, 41 
U.S.C. 257(b), and
    (3) Is not required to offer a right of first refusal to any 
employee(s) of the predecessor contractor who the contractor 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 52.222-4(n) 
and 29 CFR 4.6(1)(2), the contractor shall, no less than 60 days before 
completion of this contract, furnish the Contracting Officer with a 
certified list of the names of all service employees working at the 
Federal facility during the last month of contract performance. The 
list shall also contain anniversary dates of employment on the contract 
either with the current or predecessor contractors of each service 
employee. 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, that the contractor is 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, as provided in Executive Order No. 12933, the 
regulations of the Secretary of Labor at 29 CFR Part 9, and relevant 
orders of the Secretary of Labor, or as otherwise provided by law.
    (e) 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 that the prime contractor failed 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.
    (f) The contractor shall cooperate in any investigation by the 
contracting agency or the Department of Labor into possible violations 
of the provisions of this cause and shall make records requested by 
such official(s) available for inspection, copying, or transcription 
upon request.
    (g) Disputes arising out of this clause shall not be subject to the 
general disputes 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 the contractor and the contracting agency, the U.S. 
Department of Labor, or the employees under the contract or its 
predecessor contractor or their representatives.

Contractor Obligations


Sec. 9.7  May a contractor employ persons other than the predecessor 
contractor's employees?

    (a) There shall be no employment openings under a contract subject 
to the Executive Order and the successor contractor shall not offer 
employment under the contract until it fully complies with its 
obligation to offer a right of first refusal, except as provided under 
paragraph (b) of this section.
    (b) A successor contractor may employ on the contract any employee 
who has worked for that contractor for at least 3 months immediately 
preceding the commencement of the contract and who would face lay-off 
or discharge if not employed on the subject contract.


Sec. 9.8  Must the successor contractor offer a right of first refusal 
to all employees of the predecessor contractor?

    (a)(1) Except as provided in this section, a successor contractor 
shall offer employment under the contract (i.e., a ``right of first 
refusal'') to those employees of the predecessor contractor who, in the 
final month of the contract, provided recurring building services 
similar to the services to be performed under the successor contract, 
and whose employment will be terminated as a result of the award of the 
successor contract or expiration of the contract under which the 
employees were hired.
    (2) Unless the predecessor contractor (either directly or through 
the contracting agency) or the individual employee in question provides 
evidence to the contrary, the successor contractor must presume that 
all service employees of the predecessor contractor who are working at 
the same public building during the final month of contract performance 
will be terminated when the contract ends.
    (b)(1) A successor contractor is not required to offer a right of 
first refusal to any managerial or supervisory employee or to any 
employee of the predecessor contractor who is not a service employee 
within the meaning of the McNarmara-O'Hara Service Contract Act, 41 
U.S.C. 357(b). ``Managerial and supervisory'' employees and employees 
who are not ``service employees'' are those persons engaged in the 
performance of services under the contract who are employed in a bona 
fide executive, administrative, or professional capacity, as those 
terms are defined in the Fair Labor Standards Act regulations, 29 CFR 
Part 541.
    (2) A successor contractor is not required to offer a right of 
first refusal to any employee of the predecessor contractor who the 
successor contractor reasonably believes, based on the particular 
employee's past performance, has failed to perform suitably on the job. 
An assessment of the employee's past performance must be based on 
information provided by a credible source such as the predecessor 
contractor, the employee's supervisor, or the contracting agency.
    (3) The contractor is not required to offer a right of first 
refusal for 

[[Page 36764]]
employment in a position which will perform building services both at 
public buildings covered by the Executive Order and these regulations, 
and at other buildings not covered by the Executive Order.
    (c) The successor contractor shall determine the number of 
employees necessary for the efficient performance of the contract. The 
contractor may, for bona fide staffing or work assignment reasons, 
employ fewer employees than the predecessor contractor. Thus, the 
successor contractor need not extend the right of first refusal to all 
employees of the predecessor contractor, but must offer employment only 
to the number of eligible employees it believes necessary to meet its 
anticipated staffing pattern, except that:
    (1) Where a successor contractor offers a right of first refusal to 
fewer employees than were employed by the predecessor contractor, its 
obligation to offer employment under the contract to the predecessor's 
employees continues until the successor contractor reaches full 
staffing levels. For example, a contractor with eighteen (18) 
employment openings and a list of twenty (20) predecessor contractor's 
employees must continue to offer a right of first refusal to 
individuals on the list until eighteen (18) of the employees accept the 
contractor's employment offer, or until all of the employees have 
either accepted or refused the job offer.
    (2) If a successor contractor raises its staffing level within 
three months of the commencement of contract performance, its 
obligation to offer employment under the contract to eligible employees 
continues until the higher staffing level is reached. For example, if a 
contractor determines two months into the contract period that it must 
hire an additional ten (10) employees to sufficiently perform the 
contract requirements, the contractor must first offer a right of first 
refusal to ten (10) eligible employees of the predecessor contractor 
(or to all of the employees of the predecessor contractor who have not 
previously been offered a right of first refusal if less than ten 
remain), and must continue to offer a right of first refusal to 
individuals on the list until ten (10) of the employees accept the 
contractor's employment offer, or until all of the employees have 
refused the job offer.


Sec. 9.9  In what manner must the successor contractor offer 
employment?

    (a) Except as provided in sections 9.7 and 9.8 of this part, a 
successor contractor must make a bona-fide express offer of employment 
to each of the predecessor contractor's employees before offering 
employment on the contract to any other person. The employment offer to 
each employee may be either in writing on an individual basis, or 
orally at a meeting attended by a group of the predecessor contractor's 
employees.
    (b) For a period of one year, the contractor must maintain 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 and a copy of any written notice 
which may have been distributed, and the names of the predecessor 
contractor's employees to whom an offer was made. The contractor must 
provide copies of such documentation upon request of any authorized 
representative of the contracting agency or Department of Labor.
    (c) The contractor shall state the time within which an employee 
must accept an employment offer, but in no case may the period in which 
the employee has to accept the offer be less than 10 days.
    (d) The successor contractor's obligation to offer a right of first 
refusal exists even if the successor contractor has not been provided a 
list of the predecessor contractor's employees, or the list does not 
contain the names of all persons employed during the final month of 
contract performance.
Sec. 9.10  What constitutes a bona fide offer of employment?

    (a) As a general matter, an offer of employment will be presumed to 
be a bona fide offer of employment. An offer of employment need not be 
to a position similar to that which the employee previously held, but 
the employee must be qualified for the position. Information regarding 
an employee's qualifications shall ordinarily come directly from the 
employee. If a question arises concerning an employee's qualifications, 
that question shall be decided based upon the employee's education and 
employment history with particular emphasis on the employee's 
experience on the predecessor contract.
    (b) An offer of employment at a lower level or to different 
positions than employees held before may be a basis for closely 
examining the offers of employment to ensure they are bona fide, based 
on valid business reasons (not related to a desire that the employee 
refuse the offer, or that other employees be hired).


Sec. 9.11  What are the obligations of the predecessor contractor?

    (a) Not less than 60 days before completion of its contract, the 
predecessor contractor must furnish the contracting officer with a 
certified list of the names of all service employees working at the 
Federal facility, together with their anniversary dates of employment. 
The contracting officer in turn shall provide the list to the successor 
contractor and, if requested, to employees of the predecessor 
contractor or their representatives.
    (b) Unless the predecessor contractor (either directly or through 
the contracting agency) or the individual employee in question provides 
evidence to the contrary, the successor contractor must presume that 
all service employees of the predecessor contractor who are working at 
the same public building during the final month of contract performance 
will be terminated when the contract ends.

Notice to Employees


Sec. 9.12  How will employees learn of their rights?

    Where the successor contract is a contract subject to the Executive 
Order and these regulations, the contracting officer will provide 
notice to service employees of the predecessor contractor who are 
engaged in building services of their possible right to an offer of 
employment. Such notice may either be posted in a conspicuous place at 
the worksite or may be delivered to the employees individually. 
Contracting officers may either use the notice set forth in Appendix A 
to this part or another form with the same information.

Subpart B--What Enforcement Mechanism Does Executive Order 12933 
Provide?

Complaint Procedures


Sec. 9.100  What may employees do if they believe that their rights 
under the Executive Order have been violated?
    (a) Any employee of the predecessor contractor who believes he or 
she was not offered employment by the successor contractor as required 
by the Executive Order and these regulations may file a complaint with 
the contracting officer of the appropriate Federal agency.
    (b) Upon receipt of a complaint, the contracting officer shall 
provide information to the employee(s) and the successor contractor 
about their rights and responsibilities under the Executive Order. If 
the matter is not resolved through such actions, the contracting 
officer shall obtain statements of the 

[[Page 36765]]
positions of the parties and prepare a report, including the issues and 
any relevant facts known to the contracting officer. The report shall 
promptly be forwarded to the nearest District Office of the Wage and 
Hour Division or to the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Room S-3502, U.S. Department of 
Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.


Sec. 9.101  What action will the Wage and Hour Division take to try to 
resolve the complaint?

    After obtaining the necessary information from the contracting 
officer regarding the alleged violations, the Wage and Hour Division 
investigator may contact the successor contractor and attempt, through 
conciliation procedures, to obtain a resolution to the matter which is 
satisfactory to both the complainant(s) and the successor contractor 
and consistent with the requirements of the Executive Order and these 
regulations.


Sec. 9.102  How are complaints resolved if conciliation is 
unsuccessful?

    (a) Upon receipt of a contracting officer's report, the 
Administrator shall investigate and gather data concerning such case. 
Where conciliation efforts have been attempted, the Administrator need 
not initiate the investigation unless and until the efforts fail. The 
Administrator may also initiate an investigation at any time on his or 
her own initiative. As part of the investigation, the Administrator may 
inspect the records of the predecessor and successor contractors (and 
make copies thereof), may question the predecessor and successor 
contractors and any employees of these contractors, and may require the 
production of any documentary or other evidence deemed necessary to 
determine whether a violation of the Executive Order (including conduct 
warranting imposition of ineligibility sanctions pursuant to section 
9.109 of this part) has been committed.
    (b) The contractor and the predecessor contractor shall cooperate 
in any investigation conducted pursuant to this subpart, and shall not 
interfere with the investigation or intimidate, blacklist, discharge, 
or in any other manner discriminate against any person because such 
person has cooperated in an investigation or proceeding under this 
subpart or has attempted to exercise any rights afforded under this 
part.
    (c) Upon completion of the investigation, the Administrator shall 
issue a written determination of whether a violation has occurred which 
shall contain a statement of reasons for the findings and conclusions. 
A determination that a violation occurred shall address appropriate 
relief and the issue of ineligibility sanctions where appropriate. 
Notice of the determination shall be given by certified mail to the 
complainant (if any), the successor contractor and their 
representatives (if any).
    (d) The Administrator may conduct a new investigation or issue a 
new determination if the Administrator concludes circumstances warrant, 
such as where the proceedings before an Administrative Law Judge reveal 
that there may have been violations with respect to other employees of 
the predecessor contractor, or that imposition of ineligibility 
sanctions is appropriate, or where the contractor has failed to comply 
with an order of the Secretary.


Sec. 9.103  How are decisions of the Administrator appealed?
    (a) Except as provided in paragraph (b), the determination of the 
Administrator shall advise the parties (ordinarily the complaint (if 
any) and the successor contractor) that the notice of determination 
shall become the final order of the Secretary and shall not be 
appealable in any administrative or judicial proceeding unless, within 
20 days of the date of the determination of the Administrator, the 
Chief Administrative Law Judge receives a request for a hearing. The 
request for a hearing shall be accompanied by a copy of the 
Administrator's determination and may be filed by U.S. mail, facsimile 
(FAX), telegram, hand delivery, or next-day delivery service. At the 
same time, a copy of any request for a hearing shall be sent to the 
complainant(s) or successor contractor, as appropriate; the 
Administrator of the Wage and Hour Division; and the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor, 
Washington, D.C. 20210. The Administrator's failure or refusal to seek 
ineligibility sanctions shall not be appealable.
    (b) If the Administrator concludes that no relevant facts are in 
dispute, the parties will be so advised and will be further advised 
that the determination shall become the final order of the Secretary 
and shall not be appealable in any administrative or judicial 
proceeding unless, within 20 days of the date of the determination of 
the Administrator, a petition for review is filed with the Board of 
Service Contract Appeals pursuant to section 9.107 of this part. The 
determination will further advise that if an aggrieved party disagrees 
with the factual findings or believes there are relevant facts in 
dispute, the aggrieved party may advise the Administrator of the 
disputed facts and request a hearing by letter, which must be received 
within 20 days of the date of the determination. The Administrator will 
either refer the request for a hearing to the Chief Administrative Law 
Judge, or notify the aggrieved party of the Administrator's 
determination that there is no relevant issue of fact and that a 
petition for review may be filed with the Board of Service Contract 
Appeals within 20 days of the date of the notice, in accordance with 
the procedures at section 9.107 of this part.
    (c) If any party desires review of the determination of the 
Administrator, including judicial review, a request for an 
administrative law judge hearing (or petition for review by the Board 
of Service Contract Appeals) must first be filed in accordance with 
paragraph (a) (or (b)) of this section. If a timely request for hearing 
(or petition for review) is filed, the determination of the 
Administrator shall be inoperative unless and until the administrative 
law judge or the Board of Service Contract Appeals issues an order 
affirming the determination.

Administative Law Judge Procedures


Sec. 9.104  How may cases be settled without formal hearing?

    (a) In accordance with the Executive Order's directive to favor the 
resolution of disputes by efficient and informal alternative dispute 
resolution methods, the parties are encouraged to resolve disputes in 
accordance with the conciliation procedures set forth in sections 9.100 
and 9.101 of this subpart, or, where such efforts have failed, to 
utilize settlement judges to mediate settlement negotiations pursuant 
to 29 CFR Part 18, Sec. 18.9. At any time after commencement of a 
proceeding, the parties jointly may move to defer the hearing for a 
reasonable time to permit negotiation of a settlement or an agreement 
containing findings and an order disposing of the whole or any part of 
the proceeding.
    (b) A settlement judge may be appointed by the Chief Administrative 
Law Judge upon a request by a party or the presiding administrative law 
judge. The Chief Administrative Law Judge has sole discretion to decide 
whether to appoint a settlement judge, except that a settlement judge 
shall not be appointed when a party objects to referral of the matter 
to a settlement judge.

[[Page 36766]]



Sec. 9.105  What procedures are followed if a complaint cannot be 
resolved through conciliation or settlement agreement?

    (a) If the case is not stayed to attempt settlement, the 
administrative law judge to whom the case is assigned shall within 
fifteen (15) calendar days following receipt of the request for 
hearing, notify the parties of the day, time and place for hearing. The 
date of the hearing shall not be more than 60 days from the date of 
receipt of the request for hearing.
    (b) Formal rules of evidence shall not apply, but rules or 
principles designed to assure production of the most probative evidence 
available shall be applied. The administrative law judge may exclude 
evidence which is immaterial, irrelevant, or unduly repetitious.
    (c) The administrative law judge may, at the request of a party, or 
on his/her own motion, dismiss a challenge to a determination of the 
Administrator upon the failure of the party requesting a hearing or 
his/her representative to attend a hearing without good cause; or upon 
the failure of said party to comply with a lawful order of the 
administrative law judge.
    (d) At the Administrator's discretion, the Administrator has the 
right to participate as a party or as amicus curiae at any time in the 
proceedings, including the right to petition for review of a decision 
of an administrative law judge in a case in which the Administrator has 
not previously participated. The Administrator shall participate as a 
party in any proceeding in which the Administrator's determination has 
sought imposition of ineligibility sanctions.
    (e) Copies of the request for hearing and documents filed in all 
cases, whether or not the Administrator is participating in the 
proceeding, shall be sent to the Administrator, Wage and Hour Division, 
and to the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, D.C. 20210.
    (f) A Federal agency which is interested in a proceeding may 
participate as amicus curiae at any time in the proceedings, at the 
agency's discretion. At the request of a Federal agency which is 
interested in a proceeding, copies of all pleadings in the case shall 
be served on the Federal agency, whether or not the agency is 
participating in the proceeding.
    (g) The rules of practice and procedure for administrative hearings 
before the Office of Administrative Law Judges at 29 CFR Part 18 shall 
be applicable to the proceedings provided by this section. To the 
extent the rules in 29 CFR Part 18 are inconsistent with a rule of 
special application provided by these regulations or the Executive 
Order, these regulations and the Executive Order are controlling.


Sec. 9.106  What rules apply to the decision of the administrative law 
judge?

    (a) The administrative law judge shall issue a decision within 60 
days after the proceeding at which evidence was submitted. The decision 
shall contain appropriate findings, conclusions, and an order and be 
served upon all parties to the proceeding.
    (b) Upon the conclusion of the hearing and the issuance of a 
decision that a violation has occurred, the administrative law judge 
shall issue an order that the successor contractor take appropriate 
action to abate the violation, which may include hiring the affected 
employee(s) in the same or a substantially equivalent position(s) to 
that which the employee(s) held under the predecessor contract, 
together with compensation (including lost wages), terms, conditions, 
and privileges of that employment. Where ineligibility sanctions have 
been sought by the Administrator, the order shall also address whether 
such sanctions are appropriate.
    (c) If an order is issued finding that the contractor violated the 
Executive Order and these regulations, the administrative law judge may 
assess a sum equal to the aggregate amount of all costs and expenses 
reasonably incurred by the aggrieved employee(s) in the proceeding.
    (d) The decision of the administrative law judge shall become the 
final order of the Secretary unless a petition for review is timely 
filed with the Board of Service Contract Appeals.

Appeal Procedures


Sec. 9.107  How may an administrative law judge's decision be appealed?

    (a) The Board of Service Contract Appeals has jurisdiction to hear 
and decide in its discretion appeals concerning questions of law and 
fact from determinations of the Administrator pursuant to Sec. 9.103(b) 
of this part and from decisions of administrative law judges pursuant 
to Sec. 9.106 of this part.
    (b) Any party desiring review of a decision of the administrative 
law judge (or of the Administrator, pursuant to Sec. 9.103(b)) shall 
file a petition for review, in writing, with the Board of Service 
Contract Appeals. No administrative or judicial review shall be 
available unless a timely petition for review to the Board of Service 
Contract Appeals is first filed. To be effective, such a petition for 
review must be received within 20 days of the date of the decision of 
the administrative law judge (or Administrator) and shall be served on 
all parties and the Chief Administrative Law Judge (except in cases 
involving an appeal from a decision of the Administrator). If a timely 
petition for review is filed, the decision of the administrative law 
judge (or Administrator) shall be inoperative unless and until the 
Board of Service Contract Appeals issues an order affirming the 
decision. However, if a petition for review concerns only the 
imposition of ineligibility sanctions, the remainder of the decision of 
the administrative law judge shall be effective immediately.
    (c)(1) A petition for review shall refer to the specific findings 
of fact, conclusions of law, or order at issue.
    (2) Copies of the petition and all briefs shall be served on the 
Administrator, Wage and Hour Division, and on the Associate Solicitor, 
Division of Fair Labor Standards, U.S. Department of Labor, Washington, 
D.C. 20210.
    (d) The Board's final decision shall be issued within 90 days of 
the receipt of the petition for review and shall be served upon all 
parties by mail to the last known address, and on the Chief 
Administrative Law Judge (except in cases involving an appeal from the 
determination of the Administrator).
    (e) If the Board concludes that the contractor has violated the 
Executive Order, the final order shall order action to abate the 
violation, which may include hiring the affected employee(s) in the 
same or a substantially equivalent position(s) to that which the 
employee(s) held under the predecessor contract, together with 
compensation (including lost wages), terms, conditions, and privileges 
of that employment. Where the Administrator has sought imposition of 
ineligibility sanctions, the Board shall also determine whether an 
order imposing ineligibility sanctions is appropriate.
    (f) If a final order finding violations of the Executive Order is 
issued, the Board may assess against the successor contractor a sum 
equal to the aggregate amount of all costs and expenses reasonably 
incurred by the employee(s) in the proceeding.
    (g) In considering the matters within the scope of its jurisdiction 
the Board shall act as the authorized representative of the Secretary 
and shall act fully and finally on behalf of the Secretary concerning 
such matters. The Board shall not have jurisdiction to pass on the 
validity of any provision of this part. The Board is an appellate body 
and shall decide cases properly before it on 

[[Page 36767]]
the basis of all relevant matter contained in the entire record before 
it. The Board shall not hear cases de novo or receive new evidence into 
the record.

Enforcement Remedies


Sec. 9.108  What are the consequences to a contractor of not complying 
with the Executive Order?
    (a) The Executive Order provides that the Secretary shall have the 
authority to issue orders prescribing appropriate remedies, including, 
but not limited to, requiring employment of the predecessor 
contractor's employees and payment of wages lost.
    (b) After an investigation and a determination by the Administrator 
that lost wages or other monetary relief is due, the Administrator may 
direct that so much of the accrued payments due on either the contract 
or any other contract between the contractor and the Government shall 
be withheld in a deposit fund as are necessary to pay the moneys due. 
Upon the final order of the Secretary that such moneys are due, the 
Administrator may direct that such withheld funds be transferred to the 
Department of Labor for disbursement.
    (c) If the contracting officer or the Secretary finds that the 
predecessor contractor has failed to provide a list of the names of 
employees working under the contract in accordance with Sec. 9.6(c), 
the contracting officer may take such action as may be necessary to 
cause the suspension of the payment of funds until such time as the 
list is provided to the contracting officer.


Sec. 9.109  Under what circumstances will ineligibility sanctions be 
imposed?

    (a) Where the Secretary finds that a contractor has failed to 
comply with any order of the Secretary or has committed willful 
violations of the Executive Order or these regulations, the Secretary 
may order that the contractor and its responsible officers, and any 
firm in which the contractor has a substantial interest, shall be 
ineligible to be awarded any contract or subcontract of the United 
States for a period of three years.
    (b) Upon order of the Secretary, the names of persons or firms 
found to be ineligible for contracts in accordance with this section 
shall be added to the ``List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs,'' compiled, maintained and 
distributed by the General Services Administration in accordance with 
48 CFR 9.404. No contract of the United States shall be awarded to the 
persons or firms appearing on this list or to any firm, corporation, 
partnership, or association in which such persons or firms have a 
substantial interest until three years have elapsed from the date the 
persons' or firms' name was entered on the electronic version of the 
list.

Subpart C--Definitions


Sec. 9.200  Definitions.

    For purposes of this part:
    Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, U.S. Department of 
Labor, and includes any official of the Wage and Hour Division 
authorized to perform any of the functions of the Administrator under 
this part.
    Contract means any prime contract subject wholly or in part to the 
provisions of the Executive Order.
    Contracting officer means the individual, a duly appointed 
successor, or authorized representative who is designated and 
authorized to enter into contracts on behalf of the Federal agency.
    Executive Order or Order means Executive Order 12933 (59 FR 53559, 
October 24, 1994).
    Federal Government means an agency or instrumentality of the United 
States which enters into a contract pursuant to authority derived from 
the Constitution and the laws of the United States.
    Secretary means the Secretary of Labor or his/her authorized 
representative.
    Service employee means any person engaged in the performance of 
recurring building services other than a person employed in a bona fide 
executive, administrative, or professional capacity, as those terms are 
defined in Part 541 of Title 29, Code of Federal Regulations, and shall 
include all such persons regardless of any contractual relationship 
that may be alleged to exist between a contractor and such person.
    United States means the United States and all executive 
departments, independent establishments, administrative agencies, and 
instrumentalities of the United States, including corporations, all or 
substantially all of the stock of which is owned by the United States, 
by the foregoing departments, establishments, agencies, 
instrumentalities, and including non-appropriated fund 
instrumentalities.

Appendix A to Part 9--Notice to Building Service Contract Employees

    The contract for (type of service) services currently performed 
by (predecessor contractor) has been awarded to a new contractor. 
(Successor contractor) will begin performance on (date successor 
contract begins).
    As a condition of the new contract:
      (Successor contractor) may be required to offer 
employment to most current contract employees.
      If you are offered employment on the new contract, 
you will have at least ten (10) days to accept the offer.
    The following factors are reasons why some current employees may 
not be offered employment on the new contract:
      Managerial or supervisory employees on the current 
contract are not entitled to an offer of employment.
      The new contractor may reduce the size of the 
current work force. Therefore, only a portion of the existing work 
force may receive employment offers.
      The new contractor may have the right to employ 
some or all of its current employees on the new contract before 
offering employment to the existing contract employees.
      Employees whose performance has been unsuitable on 
the current contract are not entitled to employment with the new 
contractor.
    If you have any questions about your right to employment on the 
new contract, contact:

(Name, address, and telephone # for the contracting officer or the 
contracting officer's representative)

[FR Doc. 95-17611 Filed 7-17-95; 8:45 am]
BILLING CODE 4510-27-M