[Federal Register Volume 75, Number 53 (Friday, March 19, 2010)]
[Proposed Rules]
[Pages 13382-13409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5781]
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Part III
Department of Labor
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29 CFR Part 9
Nondisplacement of Qualified Workers Under Service Contracts; Proposed
Rule
Federal Register / Vol. 75 , No. 53 / Friday, March 19, 2010 /
Proposed Rules
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 9
RIN 1215-AB69; RIN 1235-AA02
Nondisplacement of Qualified Workers Under Service Contracts
AGENCY: Wage and Hour Division, Labor.
ACTION: Notice of proposed rulemaking, request for comments.
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SUMMARY: This document proposes regulations to implement Executive
Order 13495, Nondisplacement of Qualified Workers Under Service
Contracts, signed by President Obama on January 30, 2009. The Executive
Order establishes a general policy of the Federal Government that
service contracts and solicitations for such contracts shall include a
clause that requires the contractor, and its subcontractors, under a
contract that succeeds a contract for performance of the same or
similar services at the same location, to offer those employees
employed under the predecessor contract whose employment will be
terminated as a result of the award of the successor contract, a right
of first refusal of employment under the contract in positions for
which they are qualified. The Executive Order also directs the
Department of Labor (DOL), in consultation with the Federal Acquisition
Regulatory Council (FARC), to issue regulations, within 180 days of the
date of the Order to the extent permitted by law, to implement the
requirements of this Order. The Regulatory Information Number (RIN)
identified for this rulemaking will change with publication of the
Spring Regulatory Agenda due to an organizational restructuring. The
old RIN was assigned to the Employment Standards Administration, which
no longer exists; a new RIN has been assigned to the Wage and Hour
Division.
DATES: Comments must be submitted on or before May 18, 2010.
ADDRESSES: You may submit comments, identified by RIN 1235-AA02, by
either one of the following methods:
Electronic comments: through the federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
Mail: Regulatory Analysis Branch, Wage and Hour Division, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, NW.,
Washington, DC 20210.
Instructions: Please submit one copy of your comments by only one
method. All submissions received must include the agency name and RIN
identified above for this rulemaking. Comments received will become a
matter of public record and will be posted to http://www.regulations.gov, including any personal information provided.
Because we continue to experience delays in receiving mail in the
Washington, DC, area, commenters are strongly encouraged to transmit
their comments electronically via the federal eRulemaking Portal at
http://www.regulations.gov or to submit them by mail early. For
additional information on submitting comments and the rulemaking
process, see the ``Public Participation'' heading of the SUPPLEMENTARY
INFORMATION section of this document.
Docket: For access to the docket to read background documents or
comments received, go to the federal eRulemaking Portal at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Michel Smyth, Chief, Regulatory
Analysis Branch, Wage and Hour Division, U.S. Department of Labor, Room
S-3506, 200 Constitution Avenue, NW., Washington, DC 20210; telephone:
(202) 693-0406 (this is not a toll-free number). Copies of this notice
may be obtained in alternative formats (Large Print, Braille, Audio
Tape or Disc), upon request, by calling (202) 693-0023 (not a toll-free
number). TTY/TDD callers may dial toll-free (877) 889-5627 to obtain
information or request materials in alternative formats.
SUPPLEMENTARY INFORMATION:
I. Electronic Access and Filing Comments
Public Participation: This notice is available through the Federal
Register and the http://www.regulations.gov Web site. You may also
access this notice via the Wage and Hour Division home page at http://www.dol.gov/whd/regulations/EO13495_2010_NPRM.htm. To comment
electronically on federal rulemakings, go to the federal eRulemaking
Portal at http://www.regulations.gov, which will allow you to find,
review, and submit comments on federal documents that are open for
comment and published in the Federal Register. Please identify all
comments submitted in electronic form by the RIN docket number (1235-
AA02). Because of delays in receiving mail in the Washington, DC, area,
commenters should transmit their comments electronically via the
federal eRulemaking Portal at http://www.regulations.gov, or submit
them by mail early to ensure timely receipt prior to the close of the
comment period. Submit one copy of your comments by only one method.
Request for Comments: The DOL requests comments on all issues
related to this notice of proposed rulemaking (NPRM).
II. Executive Order 13495 Requirements and Background
On January 30, 2009, President Barack Obama signed Executive Order
13495, Nondisplacement of Qualified Workers Under Service Contracts
(Executive Order 13495). 74 FR 6103. This Order establishes that, when
a service contract expires and a follow-on contract is awarded for the
same or similar services at the same location, the Federal Government's
procurement interests in economy and efficiency are better served when
a successor contractor hires the predecessor's employees. A carryover
work force reduces disruption to the delivery of services during the
period of transition between contractors and provides the Federal
Government the benefits of an experienced and trained work force that
is familiar with the Federal Government's personnel, facilities, and
requirements. As explained in the Order, the successor contractor or
its subcontractors often hires the majority of the predecessor's
employees when a service contract ends and the work is taken over from
one contractor to another. On some occasions, however, a successor
contractor or its subcontractors hires a new work force, thus
displacing the predecessor's employees.
Section 1 of Executive Order 13495 sets forth a general policy of
the Federal Government that service contracts and solicitations for
such contracts shall include a clause that requires the contractor and
its subcontractors, under a contract that succeeds a contract for
performance of the same or similar services at the same location, to
offer those employees (other than managerial and supervisory employees)
employed under the predecessor contract whose employment will be
terminated as a result of the award of the successor contract, a right
of first refusal of employment under the contract in positions for
which they are qualified. Section 1 also provides that there shall be
no employment openings under the contract until such right of first
refusal has been provided. Section 1 further stipulates that nothing in
Executive Order 13495 is to be construed to permit a contractor or
subcontractor to fail to comply with any provision of any other
Executive Order or law of the United States.
[[Page 13383]]
Section 2 of Executive Order 13495 defines service contract or
contract to mean any contract or subcontract for services entered into
by the Federal Government or its contractors that is covered by the
McNamara-O'Hara Service Contract Act of 1965 (SCA), as amended, 41
U.S.C. 351 et seq., and its implementing regulations. Section 2 also
defines employee to mean a service employee as defined in the SCA. 74
FR 6103. See 41 U.S.C. 357(b).
Section 3 of the Order exempts from its terms: (a) Contracts or
subcontracts under the simplified acquisition threshold as defined in
41 U.S.C. 403 (i.e., currently contracts less than $100,000); (b)
contracts or subcontracts awarded pursuant to the Javits-Wagner-O'Day
Act, 41 U.S.C. 46-48c; (c) guard, elevator operator, messenger, or
custodial services provided to the Federal Government under contracts
or subcontracts with sheltered workshops employing the severely
handicapped as described in section 505 of the Treasury, Postal
Services and General Government Appropriations Act, 1995, Public Law
103-329; (d) agreements for vending facilities entered into pursuant to
the preference regulations issued under the Randolph-Sheppard Act, 20
U.S.C. 107; and (e) employees who were hired to work under a Federal
service contract and one or more nonfederal service contracts as part
of a single job, provided that the employees were not deployed in a
manner that was designed to avoid the purposes of the Order. 74 FR
6103-04.
Section 4 of Executive Order 13495 authorizes the head of a
contracting department or agency to exempt its department or agency
from the requirements of any or all of the provisions of the Executive
Order with respect to a particular contract, subcontract, or purchase
order or any class of contracts, subcontracts, or purchase orders, if
the department or agency head finds that the application of any of the
requirements of the Order would not serve the purposes of the Order or
would impair the ability of the Federal Government to procure services
on an economical and efficient basis. 74 FR 6104.
Section 5 of the Order provides the wording for a required contract
clause regarding the nondisplacement of qualified workers that is to be
included in solicitations for and service contracts that succeed
contracts for performance of the same or similar work at the same
location. 74 FR 6104-05. Specifically, the new contract clause provides
that the contractor and its subcontractors shall, except as otherwise
provided by the clause, in good faith offer those employees (other than
managerial and supervisory employees) employed under the predecessor
contract whose employment will be terminated as a result of award of
the contract or the expiration of the contract under which the
employees were hired, a right of first refusal of employment under the
contract in positions for which they are qualified. The contractor and
its subcontractors determine the number of employees necessary for
efficient performance of the contract and may elect to employ fewer
employees than the predecessor contractor employed in performance of
the work. Except as provided by the contract clause there is to be no
employment opening under the contract, and the contractor and any
subcontractors shall not offer employment under the contract, to any
person prior to having complied fully with the obligation to offer
employment to employees on the predecessor contract. The contractor and
its subcontractors must make an express offer of employment to each
employee and must state the time within which the employee must accept
such offer, which must be at least 10 days. The clause also provides
that, notwithstanding the obligation to offer employment to employees
on the predecessor contract, the contractor and any subcontractors (1)
May employ under the contract any employee who has worked for the
contractor or subcontractor for at least 3 months immediately preceding
the commencement of the contract and who would otherwise face lay-off
or discharge, (2) are not required to offer a right of first refusal to
any employee(s) of the predecessor contractor who are not service
employees within the meaning of the SCA, 41 U.S.C. 357(b), and (3) are
not required to offer a right of first refusal to any employee(s) of
the predecessor contractor whom the contractor or any of its
subcontractors reasonably believes, based on the particular employee's
past performance, has failed to perform suitably on the job. The
contract clause also provides that, in accordance with Federal
Acquisition Regulation (FAR) 52.222-41(n), not less than 10 days before
completion of the contract, the contractor must furnish the Contracting
Officer a certified list of the names of all service employees working
under the contract and its subcontracts during the last month of
contract performance. The list must also contain anniversary dates of
employment of each service employee under the contract and its
predecessor contracts either with the current or predecessor
contractors or their subcontractors. The Contracting Officer must
provide the list to the successor contractor, and the list must be
provided on request to employees or their representatives. If it is
determined, pursuant to regulations issued by the Secretary of Labor,
that the contractor or its subcontractors are not in compliance with
the requirements of this clause or any regulation or order of the
Secretary, appropriate sanctions may be imposed and remedies invoked
against the contractor or its subcontractors, as provided in the
Executive Order, the regulations, and relevant orders of the Secretary,
or as otherwise provided by law. Finally, the clause provides that in
every subcontract entered into in order to perform services under the
contract, the contractor will include provisions that ensure that each
subcontractor will honor the requirements of the clause in the prime
contract with respect to the employees of a predecessor subcontractor
or subcontractors working under this contract, as well as employees of
a predecessor contractor and its subcontractors. The subcontract must
also include provisions to ensure that the subcontractor will provide
the contractor with the information about the employees of the
subcontractor needed by the contractor to comply with the prime
contract's requirement, in accordance with FAR 52.222-41(n). The
contractor must also take action with respect to any such subcontract
as may be directed by the Secretary of Labor as a means of enforcing
these provisions, including the imposition of sanctions for
noncompliance: Provided, however, that if the contractor, as a result
of such direction, becomes involved in litigation with a subcontractor,
or is threatened with such involvement, the contractor may request that
the United States enter into the litigation to protect the interests of
the United States. 74 FR 6104-05.
Section 6 of the Order assigns responsibility for investigating and
obtaining compliance with the Order to the DOL. In such proceedings,
this section also authorizes the DOL to issue final orders prescribing
appropriate sanctions and remedies, including, but not limited to,
orders requiring employment and payment of wages lost. The DOL also may
provide that where a contractor or subcontractor has failed to comply
with any order of the Secretary of Labor or has committed willful
violations of Executive Order 13495 or its implementing regulations,
the contractor or subcontractor, its responsible officers, and any firm
in which the contractor or subcontractor has a substantial interest
will be ineligible to be awarded any contract of
[[Page 13384]]
the United States for a period of up to three years. Neither an order
for debarment of any contractor or subcontractor from further
Government contracts under this section nor the inclusion of a
contractor or subcontractor on a published list of noncomplying
contractors is to be carried out without affording the contractor or
subcontractor an opportunity for a hearing. Section 6 also specifies
that Executive Order 13495 creates no rights under the Contract
Disputes Act, and disputes regarding the requirement of the contract
clause prescribed by section 5, to the extent permitted by law, will be
disposed of only as provided by DOL in regulations issued under the
Order. To the extent practicable, such regulations shall favor the
resolution of disputes by efficient and informal alternative dispute
resolution methods. Finally, section 6 provides that, to the extent
permitted by law and in consultation with the FARC, the DOL will issue
regulations to implement the requirements of the Executive Order. In
addition, to the extent permitted by law, the FARC is to issue
regulations in the Federal Acquisition Regulation to provide for
inclusion of the contract clause in Federal solicitations and contracts
subject to the current Order. See 74 FR 6105.
Section 7 of Executive Order 13495 revokes Executive Order 13204 of
February 17, 2001 (Bush Order), rescinding Executive Order 12933 of
October 20, 1994, Nondisplacement of Qualified Workers Under Certain
Contracts (Clinton Order). Id. See also 59 FR 53559 (Oct. 24, 1994), 66
FR 11228 (Feb. 22, 2001).
Section 8 of the Order provides that if any provision of the Order
or its application is held to be invalid, the remainder of the Order
and the application shall not be affected.
Section 9 of the Order specifies that nothing in Executive Order
13495 is to be construed to impair or otherwise Affect: Authority
granted by law to an executive department, agency, or the head thereof;
or functions of the Director of the Office of Management and Budget
relating to budgetary, administrative, or legislative proposals. In
addition, the Order is to be implemented consistent with applicable law
and subject to the availability of appropriations, and the Order is not
intended to, and does not, create any right or benefit, substantive or
procedural, enforceable at law or in equity by any party against the
United States, its departments, agencies, or entities, its officers,
employees, or agents, or any other person. Section 9 clarifies,
however, that the Order is not intended to preclude judicial review of
final decisions by the DOL in accordance with the Administrative
Procedure Act, 5 U.S.C. 701 et seq. 74 FR 6105-06.
As indicated, Section 7 of Executive Order 13495 revoked the 2001
Bush Order rescinding the 1994 Clinton Order, Nondisplacement of
Qualified Workers Under Certain Contracts. More specifically, the
rescinded Clinton and Bush Orders pertained to the obligations of
successor contractors to offer employment to employees of predecessor
contractors on Federal contracts to maintain public buildings. See 59
FR 53559 (Oct. 24, 1994), 66 FR 11228 (Feb. 22, 2001).
On May 22, 1997, the DOL promulgated regulations, 29 CFR part 9 (62
FR 28185) to implement the Clinton Order and, per the Bush Order,
rescinded them in a Notice appearing in the Federal Register on March
23, 2001 (66 FR 16126). There are some notable differences between the
current Order, Executive Order 13495, and the Clinton Order, Executive
Order 12933. For example, Executive Order 13495 covers all contracts
covered by the SCA above the simplified acquisition threshold
(currently $100,000); the Clinton Order was limited to building
services contracts in excess of the simplified acquisition threshold
for maintenance of public buildings. In addition, exemptions listed for
U.S. Postal Service, NASA, military, and Veterans Administration
installations (among others) in the Clinton Order have been eliminated.
A new provision authorizes the head of a contracting department or
agency to exempt any of its contracts from the current Order if the
agency finds the requirements would not serve the purposes of the Order
or would impair the Federal Government's ability to procure services
economically or efficiently. In addition, the current Order expressly
provides that it applies to subcontracts awarded in amounts equal to or
above the simplified acquisition threshold, while coverage under the
Clinton Order was determined at the prime contract level.
III. Discussion of Proposed Rule
The DOL proposes to implement the current Order with regulations
based on similar requirements to those issued under the Clinton Order.
While the current Order is broader in scope as to the types of service
contracts covered, both the current and Clinton Orders established a
Federal policy for successor contractors to offer employment in most
cases to the employees on the predecessor contract when the new
contract award would otherwise displace those workers. The DOL proposes
to change the format of the regulation from questions and answers to
the more common format of a descriptive section title. In addition, the
DOL proposes a number of minor modifications to the enforcement and
administrative procedures contained in this rule to clarify
responsibilities of various Federal officials as compared to the prior
rule. The following section-by-section discussion of this proposed rule
presents the contents of each section and highlights significant
differences between this proposal and the prior version of part 9
issued under the Clinton Order.
Proposed subpart A of part 9 relates to general matters, including
the purpose and scope of the rule, its definitions, coverage under the
current Order, and the exclusions it provides. Proposed Sec. 9.1(a)
explains that the purpose of the proposed rule is to implement E.O.
13495 and reiterates statements from the E.O. that the Federal
Government's procurement interests in economy and efficiency are served
when the successor contractor hires the predecessor's employees and why
this is the case.
Proposed Sec. 9.1(b) explains the general Federal Government
requirement for successor service contracts and their solicitations to
include a clause that requires the contractor and its subcontractors to
offer employment under the contract to those employees (other than
managerial and supervisory employees) employed under the predecessor
contract whose employment will be terminated as a result of the award
of the successor contract in positions for which the employees are
qualified. This section also clarifies that nothing in Executive Order
13495 or part 9 is to be construed to permit a contractor or
subcontractor to fail to comply with any provision of any other
Executive Order, regulation, or law of the United States.
Proposed Sec. 9.1(c) outlines the scope of this proposal and
provides that neither Executive Order 13495 nor part 9 creates any
rights under the Contract Disputes Act or any private right of action.
The DOL does not interpret the E.O. as limiting existing rights under
the Contract Disputes Act. The paragraph also restates the current
Order's provision that disputes regarding the requirement of the
prescribed contract clause, to the extent permitted by law, shall be
disposed of only as provided by the Secretary of Labor in regulations
issued under Executive Order 13495. This paragraph also restates the
provision for DOL regulations to favor
[[Page 13385]]
the resolution of disputes by efficient and informal alternative
dispute resolution methods to the extent practicable. Finally, the
paragraph applies the provision in Sec. 9(c) of Executive Order 13495
that neither the current Order nor this proposed rule would preclude
judicial review of final decisions by the Secretary in accordance with
the Administrative Procedure Act, 5 U.S.C. 701 et seq.
Proposed Sec. 9.2 defines terms for purposes of this rule. Most
defined terms follow common applications and are based on either the
current Order, the prior version of part 9, or other regulations. The
definition of day, taken from the meaning given to the term in the FAR,
is a calendar day, unless otherwise specified. 48 CFR 2.101; see also
--.201.
The NPRM would adopt the FAR definition of service employee to
define employee or service employee and refer to the SCA, in order to
preclude any ambiguity, because the Executive Order defers to the
statutory definition of service employee in the SCA at 41 U.S.C.
357(b). The DOL also proposes to adopt the definition of service
contract or contract provided in section 2(a) of Executive Order 13495.
74 FR 6103. In addition, the DOL proposes substantially to adopt the
definitions for the terms Administrator, Contracting Officer, Federal
Government, Secretary, and United States from the prior version of part
9, as the current Order does not define those terms. See 62 FR 28192
(May 22, 1997). The DOL proposes to define employment opening to mean
any vacancy in a position on the contract, including any vacancy caused
by replacing an employee or service employee from the predecessor
contract with a different employee.
The DOL also proposes to add a definition of managerial and
supervisory employee. The general policy stated in section 1 of the
current Order and in the contract clause parenthetically excludes
managerial and supervisory employees from its requirements; however,
the current Order does not define the term. See 74 FR 6103. The DOL
notes that the job offer requirements of the Clinton Order also did not
apply to management and supervisory workers, and it did not define the
term either. See 59 FR 53559 (Oct. 24, 1994). The SCA definition of
employee already excludes any person employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined in
29 CFR part 541. 41 U.S.C. 357(b). The prior version of part 9, while
not including managerial and supervisory employee in the definitions
section, implemented the exception by excluding 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 29 CFR part 541--from the job offer requirements.
62 FR 28188 (May 22, 1997). The definition in proposed Sec. 9.2(9)
adopts this exclusionary concept in a new freestanding definition of
managerial and supervisory employee that excludes from the requirements
of this part managerial and supervisory employees, as discussed further
in this NPRM. While the DOL does not believe the managerial and
supervisory exception to the nondisplacement provisions was intended to
apply to any person who performs managerial or supervisory tasks either
infrequently or as an incident to their primary duties and
responsibilities, the DOL welcomes specific comments on whether another
definition should be adopted and requests supporters of an alternative
definition to provide specific recommendations for the definition.
The DOL proposes to define month under the Executive Order as a
period of 30 consecutive days, regardless of the day of the calendar
month on which it begins. This definition was not included in the prior
version of part 9; however, the DOL believes defining the term will
clarify how to address partial months and will balance calendar months
of different lengths. In order to eliminate confusion caused by
similarly named components of various Departments and larger agencies
(e.g., Office of Administrative Law Judges), proposed Sec. 9.2 defines
certain agencies. The NPRM would define same or similar service to mean
a service that is either identical to or has characteristics that are
alike in substance and essentials to another service. Solicitation
would be defined to mean any request to submit offers or quotations to
the Government.
Proposed Sec. Sec. 9.3 and 9.4 address the coverage and
exclusionary provisions of the current Order. See 74 FR 6103-04.
Specifically, proposed Sec. 9.3 applies coverage under part 9 to all
service contracts and their solicitations, except those excluded by
Sec. 9.4. Section 9.4 would implement the exclusions contained in
sections 3 and 4 of Executive Order 13495. Id.
Proposed Sec. 9.4(a) addresses the exclusion for contracts or
subcontracts under the simplified acquisition threshold, as defined in
41 U.S.C. 403(11). 74 FR 6103. The simplified acquisition threshold
currently is $100,000. 41 U.S.C. 403(11). The proposed regulations do
not state that amount in the regulatory text, in contrast to the prior
version of part 9, in the event that a future statutory amendment
changes the amount. Any such change would automatically apply to
contracts subject to part 9. Proposed Sec. 9.4(a)(2) explains how the
exclusion applies to subcontracts, including when a successor
contractor discontinues the services of a subcontractor.
Proposed appendix A establishes an employee nondisplacement
contract clause to implement section 5 of Executive Order 13495. 74 FR
6105. Paragraph (e) of the nondisplacement contract clause requires the
contractor to include, in every subcontract entered into in order to
perform services under the prime contract, provisions to ensure each
subcontractor honors the requirements of paragraphs (a) through (b) of
the employee nondisplacement clause with respect to the employees of a
predecessor subcontractor or subcontractors working under the successor
contract as well as of a predecessor contractor and its subcontractors.
Id. The subcontract must also include provisions ensuring the
subcontractor will provide the contractor with the information about
the employees of the subcontractor needed by the contractor to comply
with paragraph (c) of the employee nondisplacement clause. The DOL
interprets the exclusion for contracts and subcontracts under the
simplified acquisition threshold as applying to subcontracts of less
than $100,000, even when the prime contract is for a greater amount,
because of the definition of a service contract in section 2(a) of the
SCA and the express terms of the exclusion in section 3(a) of Executive
Order 13495. However, while the proposed Sec. 9.4(a)(1) exclusion
would apply to subcontracts in such cases, the covered prime contractor
or higher tier subcontractor would still have to comply with the
requirements of this part. Were a covered contractor that is subject to
the nondisplacement requirements to discontinue the services of a
subcontractor at any time during the contract and perform those
services itself at the same location, the contractor would have to
offer employment to the subcontractor's employees who would otherwise
be displaced and would otherwise be qualified in accordance with this
part but for the size of the subcontract. The DOL notes the Clinton
Order excluded prime contracts under the simplified acquisition
threshold and did not mention subcontracts. 59 FR 53560.
Proposed Sec. 9.4(b) implements the exclusions applicable to
certain contracts or subcontracts awarded for services produced or
provided by
[[Page 13386]]
persons who are blind or have severe disabilities. 74 FR 6103-4.
Specifically, this paragraph excludes contracts or subcontracts awarded
pursuant to the Javits-Wagner-O'Day Act, 41 U.S.C. 46-48c, from the
requirements of part 9. Proposed Sec. 9.4(b)(2) provides that the
requirements of part 9 do not apply to guard, elevator operator,
messenger, or custodial services provided to the Federal Government
under contracts or subcontracts with ``sheltered workshops'' employing
the ``severely handicapped'' as described in section 505 of the
Treasury, Postal Services and General Government Appropriations Act,
1995, Public Law 103-329. Proposed Sec. 9.4(b)(3) specifies that the
requirements of part 9 do not apply to agreements for vending
facilities entered into pursuant to the preference regulations issued
under the Randolph-Sheppard Act, 20 U.S.C. 107.
Proposed Sec. 9.4(b)(4) clarifies that the exclusions provided by
Sec. 9.4(b)(1) through (b)(3) apply when either the predecessor or
successor contract has been awarded for services produced or provided
by the blind or severely disabled, as described. To require Federal
service contractors who obtain their work under the specified set-aside
programs to offer employment to predecessor contract employees would
defeat the purpose of these programs that allow people to participate
in the workforce who otherwise would not be able to do so. Proposed
Sec. 9.4(c) implements the exclusion in section 3(e) of Executive
Order 13495 relating to employment where Federal service work
constitutes only part of the employee's job. 74 FR 6104.
Proposed Sec. 9.4(d) implements the section 4 exclusion in
Executive Order 13495, which provides that, if the head of a
contracting department or agency finds that the application of any of
the requirements of Executive Order 13495 would not serve the purposes
of the Executive Order or would impair the ability of the Federal
Government to procure services on an economical and efficient basis,
the head of such department or agency may exempt its department or
agency from the requirements of any or all of the provisions of
Executive Order 13495 with respect to a particular contract,
subcontract, or purchase order or any class of contracts, subcontracts,
or purchase orders. Id. The DOL proposes to limit the time in which an
agency may decide to exempt contracts to no later than the solicitation
date. This limitation is needed to ensure the contract clause is
included in the solicitation, if applicable, as required by the
Executive Order. In addition, when an agency exercises its exemption
authority, the DOL proposes to require the contracting agency to notify
affected workers in writing, either in an individual notice given to
each worker or through a posting at the location where the work is
performed, of the finding and decision no later than the award date.
The notification would need to include facts supporting the decision.
This notification to the workers is consistent with and supports the
President's commitment to openness and transparency in government. See
January 21, 2009, Memorandum for the Heads of Executive Departments and
Agencies. 74 FR 4685.
As with other exemptions applicable to labor standards, the DOL
interprets the exemption authority of the agencies to be narrow. The
Executive Order states that the Federal Government's procurement
interests in economy and efficiency are served when the successor
contractor hires the predecessor's employees. It is predicated on the
determination that a carryover work force reduces disruption to the
delivery of services during the period of transition between
contractors and provides the Federal Government the benefits of an
experienced and trained work force that is familiar with the Federal
Government's personnel, facilities, and requirements. Given the
Executive Order's underlying assumptions, the Executive Order creates a
presumption that nondisplacement is in the interest of the Federal
Government for each contract, class of contracts, subcontract, or
purchase order. However, the presumption can be overcome based on a
finding that nondisplacement would not serve the purposes of Executive
Order 13495 or would impair the ability of the Federal Government to
procure services on an economical and efficient basis. DOL believes
that the basis for such a finding must be reasoned and transparent;
therefore, the NPRM would require a written analysis to support the
decision to claim the exemption. For example, where the decision to
claim the exemption is based on a finding that the nondisplacement
requirements would impair the ability of the Federal Government to
procure the services on an economical and efficient basis, the DOL
believes an agency would need to support a decision to claim the
exemption with a written analysis that explains how application of the
Executive Order's requirements would impair the ability of the agency
to procure services on an economical and efficient basis.
In addition, the reasons provided for the exemption in the agency's
analysis must be consistent with the Executive Order. The DOL proposes
that such a written analysis would, inter alia, compare the anticipated
outcomes of hiring predecessor contract employees against those of
hiring a new workforce. At the same time, the DOL specifically seeks
comments on what, if any, specific guidance the regulation should
provide regarding the consideration of cost and other factors in
exercising the agency's exemption authority, including guidance
regarding what information should be included in the agency's analysis
supporting a decision to exercise exemption authority. What costs are
most appropriately considered in determining whether application of the
Executive Order's requirements would or would not serve the purposes of
the Executive Order or impair the ability of the Federal Government to
procure services on an economical and efficient basis? How much weight
should be given to such costs? Should the regulation restrict a
contracting agency's ability to exercise the exemption based solely on
a demonstration that the cost of the predecessor contractor's workers
is greater than hiring new employees? If so, how should the restriction
be applied (e.g., the exemption cannot be exercised based solely on a
showing of marginal cost savings; or the exemption cannot be exercised
based solely on a showing of cost savings in any amount unless such
determination is coupled with an additional determination that the non-
cost benefits of hiring new employees outweigh the benefits of
retaining the predecessor's workers)? Should the guidance place any
restrictions on how an agency projects cost savings? The EO leaves it
to the contractor to determine the number of employees needed to
perform the work and the SCA establishes the minimum wage rates to be
paid workers. Therefore, should a contracting agency be prohibited from
making projections based on how it believes a successor contractor may
reconfigure the contract or wages to be paid? What non-cost factors are
most appropriately considered in determining whether application of the
Executive Order's requirements would or would not serve the purposes of
the Executive Order or impair the ability of the Federal Government to
procure services on an economical and efficient basis? How much weight
should be given to such non-cost factors? What factual information and
analysis should be required to be included in an agency's written
finding underlying its exemption decision, and in what level
[[Page 13387]]
of detail? The DOL also specifically invites comments regarding the
worker notification requirement, including what recourse might exist if
an agency fails timely to provide the written notification to the
workers or what specific requirements should be imposed.
Proposed Sec. 9.4(e) implements the parenthetical exclusion for
managerial and supervisory employees included in section 1 of Executive
Order 13495, stating that the Order does not apply to employees who are
managerial or supervisory employees of Federal service contractors or
subcontractors. 74 FR 6103. While not included in the exclusions listed
in section 3 of Executive Order 13495, the DOL believes including this
proposed paragraph provides important compliance assistance to
contractors and employees. The DOL notes this proposal is not different
in substance from how the same parenthetical exception was implemented
under the Clinton Order. 59 FR 53559; 62 FR 28188, (formerly 29 CFR
9.8(b)(1)).
Proposed subpart B of part 9 establishes the requirements that
contracting agencies and contractors will undertake to comply with the
nondisplacement provisions.
Proposed Sec. 9.11 addresses contracting agency requirements, and
proposed Sec. 9.12 explains contractor requirements and prerogatives
under the nondisplacement requirements.
Proposed Sec. 9.11 specifies contracting agency responsibilities
to incorporate the nondisplacement clause in applicable contracts, to
inform service contract employees of when a contract has been awarded
to a successor, to provide the list of employees on the predecessor
contract to the successor, and to forward complaints and other
pertinent information to the Wage and Hour Division when there are
allegations of contractor non-compliance with this part.
Section 5 of Executive Order 13495 specifies a contract clause that
must be included in solicitations and contracts for services that
succeed contracts for the performance of the same or similar work at
the same location. 74 FR 6104-05. Proposed Sec. 9.11(a) provides the
regulatory requirement to incorporate the contract clause specified in
appendix A in covered service contracts, and solicitations for such
contracts, that succeed contracts for performance of the same or
similar services at the same location. Contract clause paragraphs (a)
through (e) of proposed appendix A repeat the clause in paragraphs (a)
through (e) of the Executive Order verbatim, with three exceptions.
The first proposed modification would spell out the number three,
instead of using the numeral 3 (as was done in the Executive Order).
The second proposed modification would insert the number of the Order,
13495, to replace the blank line that appears in paragraph (d) of the
contract clause contained in the Order, as its number was not known at
the time the President signed the Order.
The final proposed modification is an alteration to accommodate the
numbering scheme of contracts. Specifically, the internal contract
clause paragraph (e) cross-reference to paragraph 5(c) is replaced
simply with a (c). This modification will allow contracting agencies to
implement the substantive requirements of the Order through the
required contract language while adjusting to the numbering structure
of the Federal Acquisition Regulation.
Proposed appendix A also sets forth additional provisions that are
necessary to implement the Order. The additional paragraphs would
appear in paragraphs (f) through (i) of the contract clause contained
in part 9. With the exception of a paragraph addressing recordkeeping,
similar contract clause paragraphs appeared in the earlier version of
part 9. See 62 FR 28188 (May 22, 1997).
Specifically, proposed clause paragraph (f) provides notice that
under certain circumstances the Contracting Officer will withhold or
cause to be withheld from the prime contractor funds otherwise due
under the subject contract or any other Government contract with the
same prime contractor. The withholding amount would equal sums an
authorized official of the DOL requests, upon a determination by the
Administrator, the Administrative Law Judge (ALJ), or the
Administrative Review Board that the prime contractor failed to comply
with the terms of the employee nondisplacement clause and that wages
lost as a result of the violations are due or that other monetary
relief is appropriate.
Proposed contract clause paragraph (g) requires the contractor to
maintain certain records to demonstrate compliance with the substantive
requirements of part 9. This proposed paragraph was not included in the
prior part 9; however, including it in the contract will better enable
contractors to understand their obligations and provide an easy
reference. The proposed paragraph specifies that the contractor is
required to maintain the particular records (regardless of format,
e.g., paper or electronic) for three years. The specified records
include copies of any written offers of employment or a contemporaneous
written record of any oral offers of employment, including the date,
location, and attendance roster of any employee meeting(s) at which the
offers were extended, a summary of each meeting, a copy of any written
notice that may have been distributed, and the names of the employees
from the predecessor contract to whom an offer was made; a copy of any
record that forms the basis for any exclusion or exemption claimed
under part 9; a copy of the employee list received from the contracting
agency, and an entry on the pay records for an employee of the amount
of any retroactive payment of wages or compensation under the
supervision of the Administrator of the Wage and Hour Division, the
period covered by such payment, and the date of payment, and a copy of
any receipt form provided by or authorized by the Wage and Hour
Division. The proposed clause also states that the contractor is to
deliver a copy of the receipt to the employee and, as evidence of
payment by the contractor, file the original receipt signed by the
employee with the Administrator or an authorized representative within
10 days after payment is made.
Proposed contract clause paragraph (h) requires the contractor, as
a condition of the contract award, to cooperate in any investigation by
the contracting agency or the DOL into possible violations of the
provisions of the nondisplacement clause and to make records requested
by such official(s) available for inspection, copying, or transcription
upon request. Proposed contract clause paragraph (i) provides that
disputes concerning the requirements of the nondisplacement clause will
not be subject to the general disputes clause of the contract. Instead,
such disputes are to be resolved in accordance with the procedures in
part 9.
Proposed Sec. 9.11(b) specifies a notice that contracting agencies
must provide when a contract will be awarded to a successor. A similar
requirement existed in the prior version of part 9 (see 62 FR 28189,
28192), but it did not require agencies to provide both English
language and translated notices where a significant portion of the
predecessor's workforce is not fluent in English. Proposed Sec.
9.11(b) requires the Contracting Officer to provide written notice to
service employees of the incumbent contractor of their possible right
to an offer of employment, by either posting a notice in a conspicuous
place at the worksite or delivering it to
[[Page 13388]]
the employees individually. The text of the notice is set forth in the
appendix B to part 9. The DOL intends to translate the notice into
several common foreign languages and make the English and translated
versions available in a poster format to contracting agencies via the
Internet, in order to allow easy access. Another form with the same
information may be used. Multiple foreign language notices will be
required where significant portions of the workforce speak different
foreign languages and there is no common language. If, for example, a
significant portion of a workforce speaks Korean and another
significant portion of the same workforce speaks Spanish, then the
contracting agency would need to provide the information in English,
Korean, and Spanish. Giving information only in English and Korean
typically would not provide the notice in a language with which the
Spanish speakers are more familiar than English. While electronic
communications were not part of the earlier part 9, the DOL recognizes
that reliance on electronic communication will increase in the future
and e-mail often may provide an inexpensive and reliable way to
communicate information quickly. The DOL seeks comments as to whether
allowing contracting agencies an electronic notification option, in
lieu of physical posting or providing a paper copy to the worker, will
provide the agencies greater flexibility and efficiency, especially
when contract work is performed at a location that is remote from
procurement staff, without sacrificing the quality of the information
provided to workers. For example, should the rule allow notices by e-
mail from the contracting agency to service employees who routinely
receive information from the agency by e-mail to meet the notification
requirement, provided the notice otherwise meets the requirements of
proposed Sec. 9.11? If an e-mail option were allowed, would additional
guidance for such communications need to be considered, and if so, what
should that guidance be? Of course, minimally, any particular
determination of the adequacy of a notification, regardless of the
method used, must be fact dependent and made on a case-by-case basis.
Proposed Sec. 9.11(c) requires the Contracting Officer to provide
the predecessor contractor's list of employees referenced in proposed
Sec. 9.12(e) to the successor contractor and, on request, to employees
or their representatives.
Proposed Sec. 9.11(d) addresses Contracting Officers'
responsibilities regarding complaints of alleged violations of part 9.
As under the prior version of part 9, contracting agencies would
initially receive complaints of alleged violations of the
nondisplacement requirements and, in a compliance assistance mode,
provide information to the complainant and contractor about their
rights and responsibilities under the employee nondisplacement
provision of the contract. Contracting agencies would not be obligated
to forward to the Wage and Hour Division any complaint that is
withdrawn because of this compliance assistance; thus, a Contracting
Officer need not forward to the Wage and Hour Division a complaint that
an employee withdraws because the employee was previously not aware of
the application of a particular exclusion. In all other cases, the
contracting agency will forward certain information that the DOL must
have in order to determine compliance. The DOL believes this proposal
strikes a balance that allows compliance concerns to be resolved as
expeditiously as possible without undue burdens on all parties. The
proposal requires the Contracting Officer, within 30 days of receipt of
a complaint, to forward to the headquarters of the Wage and Hour
Division any complaint alleging any violation of this part; available
statements by the employee or the contractor regarding the alleged
violation, evidence that a seniority list was issued by the predecessor
and provided to the successor; a copy of the seniority list; evidence
that the nondisplacement contract clause was included in contract or
that the contract was exempted by the agency; information concerning
known settlement negotiations between the parties (if applicable); and
other pertinent information the Contracting Officer chooses to
disclose. The proposal also would require the Contracting Officer to
provide copies to the contractor and the complainant. To assist the
agency in providing information to the Wage and Hour Division or to
protect the interests of the agency, the proposal would allow the
contracting agency to conduct an initial review of any nondisplacement
complaint. As part of the contracting agency's initial review, the
Contracting Officer may obtain statements of the positions of the
parties and inspect the records of the predecessor and successor
contractors (and make copies or transcriptions thereof), question the
predecessor and successor contractors and any employees of these
contractors, and require the production of any documentary or other
evidence deemed necessary to determine whether a violation of this part
has occurred. The Contracting Officer may provide information about the
contract clause to the complainant(s) and successor contractor, and
would not be required to forward any complaint or related information
when a complaint is withdrawn because of compliance assistance provided
by the contracting agency. Contracting agencies would be obligated to
refer questions of interpretations regarding part 9 to the nearest
local office of the Wage and Hour Division. The DOL particularly seeks
comments on whether the 30-day period for Contracting Officers to
forward information to the Wage and Hour Division is necessary and
appropriate, given the responsibilities envisioned if this proposed
rule were adopted.
Proposed Sec. 9.12 implements contractors' requirements and
prerogatives under the nondisplacement requirements. The proposed
section consists of the general obligation to offer employment, the
method of the job offer, exceptions, reduced staffing, obligations near
the end of the contract, recordkeeping, and obligations to cooperate
with reviews and investigations.
Proposed Sec. 9.12(a)(1) implements the requirement that there be
no employment openings prior to the contractor offering employment to
the employees on the predecessor contract. 74 FR 6103. Specifically,
the proposal provides that, except as provided under the exclusions
listed in proposed Sec. 9.4 or paragraphs (c) and (d) of proposed
Sec. 9.12, a successor contractor or subcontractor could not fill any
employment openings under the contract prior to making good faith
offers of employment, in positions for which the employees are
qualified, to those employees employed under the predecessor contract
whose employment will be terminated as a result of award of the
contract or the expiration of the contract under which the employees
were hired. The contractor and its subcontractors would be required to
make an express offer of employment to each employee and state the time
within which the employee must accept such offer, but in no case would
the period within which the employee must accept the offer of
employment be less than 10 days. Proposed Sec. 9.12(a)(2) would
clarify that the successor contractor's obligation to offer a right of
first refusal exists even if the successor contractor was not provided
a list of the predecessor contractor's employees or the list did not
contain the names of all persons employed during the final month of
[[Page 13389]]
contract performance. Proposed Sec. 9.12(a)(3) discusses determining
eligibility for the job offer and provides guidance that did not appear
in the earlier part 9. While a person's entitlement to a job offer
under this proposal usually would be based on whether his or her name
is included on the certified list of all service employees working
under the predecessor's contract or subcontracts during the last month
of contract performance, a contractor would also be required to accept
other credible evidence of an employee's entitlement to a job offer.
The successor contractor would be allowed to verify the information as
a condition of accepting it. For example, even if a person's name does
not appear on the list of employees on the predecessor contract, an
employee's assertion of an assignment to work on a contract during the
predecessor's last month of performance coupled with contracting agency
staff verification could constitute credible evidence of an employee's
entitlement to a job offer. Similarly, an employee could demonstrate
eligibility by producing a paycheck stub that identifies the work
location and dates worked for the predecessor. The successor could
verify the claim with the contracting agency, the predecessor, or
another person who worked at the facility. The guidance will provide
more clarity to contractors and employees as to the level of proof
needed to determine entitlement to a job offer.
Proposed Sec. 9.12(b) discusses the method of the job offer, with
Sec. 9.12(b)(1) requiring that--except as otherwise provided in part
9--a contractor must make a bona fide express offer of employment to
each employee on the predecessor contract before offering employment on
the contract to any other person. The obligation to offer employment
would cease upon the employee's first refusal of a bona fide offer to
employment on the contract. Proposed Sec. 9.12(b)(2) discusses the
time limit in which the employee has to accept the offer, which the
contractor determines, but in no case can be less than 10 days.
Proposed Sec. 9.12(b)(3) provides the process for making the job
offer. As proposed, the successor contractor is required to make an
oral or written employment offer to each employee, and, in order to
ensure that the offer is effectively communicated, to take reasonable
efforts to make the offer in a language that each worker understands.
The proposed rule contains an example of how the contractor could
satisfy this provision by having a co-worker or other person who can
fluently translate for employees who are not fluent in English, if the
contractor holds a meeting for a group of employees on the predecessor
contract. Proposed Sec. 9.12(b)(4) clarifies that the employment offer
may be to a different job position on the contract. More specifically,
an offer of employment on the successor's contract would generally be
presumed to be a bona fide offer of employment, even if not for a
position similar to the one the employee previously held but one for
which the employee were qualified. If a question arises concerning an
employee's qualifications, that question will be decided based upon the
employee's education and employment history with particular emphasis on
the employee's experience on the predecessor contract. A contractor
would have to base its decision regarding an employee's qualifications
on credible information provided by a knowledgeable source such as the
predecessor contractor, the local supervisor, the employee, or the
contracting agency. For example, an oral or written outline of job
duties or skills used in prior employment, school transcripts, or
copies of certificates and diplomas all would be credible information.
Proposed Sec. 9.12(b)(5) allows for an offer of employment to a
position providing different terms and conditions of employment than
those the employee held with the predecessor contractor, where the
reasons for the offer are not related to a desire that the employee
refuse the offer or that other employees be hired. Proposed Sec.
9.12(b)(6) provides that, where an employee is terminated under
circumstances suggesting the offer of employment may not have been bona
fide, the facts and circumstances of the offer and the termination will
be closely examined to ensure the offer was bona fide.
Proposed Sec. 9.12(c) addresses the exceptions to the general
obligation to offer employment under Executive Order 13495, which are
included in the contract clause established in section 5 of the Order
and are distinct from the exclusions discussed in proposed Sec. 9.4.
The exclusions specify both certain classes of contracts and certain
employees excluded from the provisions of Executive Order 13495. The
exemptions from the successor contractor's obligation to offer
employment on the contract to employees on the predecessor contract
prior to making the offer to anyone else do not relieve the contractor
of other requirements of this part (e.g., the obligation near the end
of the contract to provide a list of employees who worked on the
contract during the last month). The exceptions are to be construed
narrowly and the contractor will bear the burden of proof regarding the
appropriateness of claiming any exception.
Under proposed Sec. 9.12(c)(1), a contractor or subcontractor
would not be required to offer employment to any employee of the
predecessor who will be retained by the predecessor contractor. The
contractor is required to presume that all employees hired to work
under a predecessor's Federal service contract would be terminated as a
result of the award of the successor contract, absent an ability to
demonstrate a reasonable belief to the contrary based upon credible
information provided by a knowledgeable source such as the predecessor
contractor, the employee, or the contracting agency.
Under proposed Sec. 9.12(c)(2), a contractor or subcontractor
would be allowed to employ under the contract any employee who has
worked for the contractor or subcontractor for at least three months
immediately preceding the commencement, i.e., the first date of
performance, of the contract and who would otherwise face lay-off or
discharge. As would be the case with any exception to the
nondisplacement requirements, a contractor bears the burden of showing
how the exception applies. For example, a contractor would have to
demonstrate through a preponderance of the evidence that an employee
who it has employed for at least three months would face discharge were
a position on the contract not offered because the employee's work on
another contract has expired and there are no other openings for which
the employee is qualified within the commuting area. A successor could
not claim this exception to reemploy an employee who was already
terminated or laid off, because such a person has already faced a
discharge and such person has not been employed for the three months
preceding the commencement of the successor contract. Of course, a
person would still be considered to be employed during a period of
leave, such as vacation or sick leave, or a similar short-term absence.
Under proposed Sec. 9.12(c)(3), the contractor or subcontractor
would not be required to offer employment to any employee of the
predecessor who is not a service employee. Typically, this exemption
would apply to a person who is a managerial or supervisory employee on
the predecessor contract. The successor contractor would be required to
presume that all persons appearing
[[Page 13390]]
on the list required by Sec. 9.12(e) as employees hired to work under
a predecessor's Federal service contract or who have demonstrated they
should have been included on the list were service employees, absent an
ability to demonstrate a reasonable belief to the contrary, based upon
credible information provided by a knowledgeable source such as the
predecessor contractor, the employee, or the contracting agency.
Information regarding the general business practices of the predecessor
contractor or the industry would not be sufficient for purposes of the
exemption.
Under proposed Sec. 9.12(c)(4), a contractor or subcontractor
would not be required to offer employment to any employee of the
predecessor contractor whom the contractor or any of its subcontractors
reasonably believes, based on the particular employee's past
performance, has failed to perform suitably on the job. Again, the
contractor would be required to presume that all employees working
under the predecessor contract in the last month of performance
performed suitable work on the contract, absent an ability to
demonstrate a reasonable belief to the contrary based upon credible
information provided by a knowledgeable source such as the predecessor
contractor, the local supervisor, the employee, or the contracting
agency. A contractor could demonstrate its reasonable belief that the
employee in fact failed to perform suitably on the predecessor contract
through evidence of disciplinary action taken for poor performance or
evidence directly from the contracting agency that the particular
employee did not perform suitably. Similarly, a successor contractor
can use performance appraisal information in determining whether an
employee failed to perform suitably on the job; however, the DOL notes
that this NPRM would not require a predecessor contractor to provide
performance information. Information regarding the general performance
of the predecessor contractor would not be sufficient for purposes of
this exemption. The DOL seeks comments as to whether there should be
any requirement that the information supporting the contractor's or
subcontractor's reasonable belief be in writing and relatively
contemporaneous with the past performance.
Under proposed Sec. 9.12(c)(5), a contractor or subcontractor is
not required to offer employment to any employee hired to work under a
predecessor's Federal service contract and one or more nonfederal
service contracts as part of a single job, provided that the employee
was not deployed in a manner that was designed to avoid the purposes of
this part. The successor contractor is required to presume that all
employees hired to work under a predecessor's Federal service contract
did not work on one or more nonfederal service contracts as part of a
single job, unless the successor could demonstrate a reasonable belief
to the contrary based upon credible information provided by a
knowledgeable source such as the predecessor contractor, the local
supervisor, the employee, or the contracting agency. Information
regarding the general business practices of the predecessor contractor
or the industry would not be sufficient for purposes of this exemption.
For example, claims from several employees who state a janitorial
contractor reassigned its janitorial workers who previously worked
exclusively in a Federal building to both Federal and private clients
as part of a single job may indicate that the predecessor deployed
workers to avoid the purposes of the nondisplacement provisions, which
include Federal interests in economy and efficiency that are served
when the successor hires the predecessor's employees. Conversely, were
the employees on the predecessor contract traditionally deployed to
Federal and other buildings as part of their job, the successor would
not be required to offer employment to the workers. Knowledge that
contractors generally deploy workers to both Federal and other clients
would not be sufficient for the successor to claim the exception,
because such general practices may not have been observed on the
particular predecessor contract.
Proposed Sec. 9.12(d) addresses the provision in paragraph (a) of
Executive Order 13495's contract clause that allows the successor
contractor to reduce staffing. 74 FR 6104. Proposed Sec. 9.12(d)(1)
allows for the contractor or subcontractor to determine the number of
employees necessary for efficient performance of the contract and, for
bona fide staffing or work assignment reasons, to elect to employ fewer
employees than the predecessor contractor employed in performance of
the work. Thus, the successor contractor would not be required to offer
employment on the contract to all employees on the predecessor
contract, but must offer employment only to the number of eligible
employees the successor believes necessary to meet its anticipated
staffing pattern. Where a successor contractor does not offer
employment to all the predecessor contract employees, the obligation to
offer employment would continue for three months after the successor
contractor's first date of performance on the contract. In some cases a
successor contractor may reconfigure the staffing pattern to increase
the number of persons employed in some positions while decreasing the
number of employees in others, and in such cases Sec. 9.12(d)(3) would
require the contractor to examine the qualifications of each employee
so as to minimize displacement. Of course, as already provided in Sec.
9.1(b), this exception is not to be construed to permit a contractor or
subcontractor to fail to comply with any provision of any Executive
Order, regulation, or law of the United States; therefore, a contractor
could not use this exemption to justify unlawful discrimination against
any worker. While the Wage and Hour Division would not make compliance
determinations regarding Federal contractors' compliance with
nondiscrimination requirements administered by other regulatory
agencies, a finding by the DOL's Office of Federal Contract Compliance
Programs, another agency, or by a court that a contractor has
unlawfully discriminated against a worker would be considered in
determining whether the discriminatory action has also violated the
nondisplacement requirements. The DOL invites comments on whether the
rule should provide additional guidance in this regard and what any
additional guidance should be. The contractor's obligation would end
when all of the predecessor contract employees have received a bona
fide job offer or the 90-day obligation period expires. The proposed
regulation provides several examples to demonstrate the principle.
Proposed Sec. 9.12(e) specifies an incumbent contractor's
obligations near the end of the contract, not less than 10 days before
completion of the contract, to furnish the Contracting Officer a
certified list of the names of all service employees working under the
contract and its subcontracts during the last month of contract
performance, including their anniversary dates of employment with
either the current or predecessor contractors or their subcontractors.
The contractor may use the list submitted to satisfy the requirements
of the SCA contract clause specified at 29 CFR 4.6(l)(2) to meet this
provision. The earlier version of part 9 included a similar provision
that did not specifically state that the single list could be used to
satisfy the requirements of both parts 4 and 9;
[[Page 13391]]
however, the DOL believes specifying this option in the regulations may
help clarify that there is no duplication of effort in order to comply
with this requirement of Executive Order 13495. The earlier version of
part 9 also required that the list of employees be furnished 60 days
before completion of the contract. The current proposal reflects the
time frame used in the current Order and is identical to when the list
must be provided under 29 CFR 4.6(l)(2).
Proposed Sec. 9.12(f) addresses recordkeeping requirements.
Proposed Sec. 9.12(f)(1) clarifies that this part prescribes no
particular order or form of records for contractors, and the
recordkeeping requirements apply to all records regardless of their
format (e.g., paper or electronic). A contractor is allowed to use
records developed for any purpose to satisfy the requirements of part
9, provided the records otherwise meet the requirements and purposes of
this part. Proposed Sec. 9.12(f)(2) specifies the records contractors
must maintain, including copies of any written offers of employment or
a contemporaneous written record of any oral offers of employment,
including the date, location, and attendance roster of any employee
meeting(s) at which the offers were extended, a summary of each
meeting, a copy of any written notice that may have been distributed,
the names of the employees from the predecessor contract to whom an
offer was made, any written record that forms the basis for any
exclusion or exemption claimed under this part, the employee list
provided to the contracting agency, and the employee list received from
the contracting agency.
In addition, every contractor who makes retroactive payment of
wages or compensation under the supervision of the Wage and Hour
Division pursuant to proposed Sec. 9.24(b) will be required to record
and preserve for three years in the pay records the amount, the period
covered, and the date of payment to each employee, and to report each
such payment on a receipt form authorized by the Wage and Hour
Division. Contracting agency and Wage and Hour Division staff will use
these records in determining a contractor's compliance and the
propriety of any further sanctions.
Proposed Sec. 9.12(g) outlines the contractor's obligations to
cooperate during any investigation to determine compliance with part 9
and to not discriminate against any person because such person has
cooperated in an investigation or proceeding under part 9 or has
attempted to exercise any rights afforded under part 9. As proposed,
this obligation to cooperate with investigations is not limited to
investigations of the contractor's own actions, but also includes
investigations related to other contractors (e.g., predecessor and
subsequent contractors) and subcontractors.
Proposed Subpart C pertains to enforcement activities under this
part and provides for disputes to be resolved only as provided in
regulations by the Secretary of Labor. Executive Order 13495 directs
that the regulations, to the extent practicable, favor the resolution
of disputes by efficient and informal alternative dispute resolution
methods. This proposed subpart addresses the process for filing
complaints, informal resolution attempts by the Wage and Hour Division,
investigations, and remedies and penalties for violations.
Proposed Sec. 9.21 establishes the procedure for filing complaints
and adopts the complaint process used in the earlier version of part 9,
with the exception of now establishing time frames in which complaints
are to be filed. Proposed Sec. 9.21(a) outlines the procedure for
filing a complaint with the Contracting Officer of the appropriate
Federal agency within 120 days of the alleged violation. As provided
under the prior rule, the DOL believes that filing complaints first
with the contracting agency creates the best avenue for displaced
workers to begin the process of obtaining expeditious review of their
rights. The proposal includes a time limit for filing a complaint, in
order to assure that concerns are addressed promptly and the Federal
Government's procurement interests in economy and efficiency are
preserved. Proposed Sec. 9.21(b) outlines the procedure for filing a
complaint with the Wage and Hour Division if the complainant has not
been able timely to file the complaint with the Contracting Officer or
has not received, within 30 days of filing the complaint with the
Contracting Officer, a copy of the report forwarded to the Wage and
Hour Division under proposed Sec. 9.11(d)(1). The complainant would be
allowed to file the complaint directly with the Wage and Hour Division
within 180 days of the alleged violation.
Proposed Sec. 9.22 establishes the informal complaint resolution
process for complaints referred to the Wage and Hour Division. After
obtaining the necessary information from the Contracting Officer
regarding the alleged violations, the Wage and Hour Division could
contact the successor contractor about the complaint and attempt to
conciliate and reach an acceptable resolution that is consistent with
all applicable requirements.
Proposed Sec. 9.23 outlines the authority for the Wage and Hour
Division to investigate complaints under part 9. Proposed Sec. 9.23(a)
addresses initial investigations and provides that the Administrator
may initiate an investigation either as the result of the unsuccessful
conciliation of a complaint or at any time on his or her own
initiative. As part of the investigation, the Administrator would be
able to inspect the records of the predecessor and successor
contractors (and make copies or transcriptions thereof), question the
predecessor and successor contractors and any employees of these
contractors, and require the production of any documentary or other
evidence deemed necessary to determine whether a violation of this part
(including conduct warranting imposition of ineligibility sanctions
pursuant to Sec. 9.24(d)) has occurred. Proposed Sec. 9.23(b)
addresses subsequent investigations and allows the Administrator to
conduct a new investigation or issue a new determination if the
Administrator concludes circumstances warrant the additional action,
such as where the proceedings before an ALJ reveal that there may have
been violations with respect to other employees of the contractor,
where imposition of ineligibility sanctions is appropriate, or where
the contractor has failed to comply with an order of the Secretary.
Proposed Sec. 9.24 discusses remedies and sanctions for
violations. The Secretary will have the authority to issue orders
prescribing appropriate remedies, including, but not limited to,
requiring the contractor to offer employment to employees from the
predecessor contract and payment of wages lost. Proposed Sec. 9.24(b)
provides that, in addition to satisfying any costs imposed by an
administrative order under proposed Sec. Sec. 9.34(j) or 9.35(d), a
contractor that violates part 9 would be required to take appropriate
action to abate the violation, which could include hiring the affected
employee(s) in a position on the contract for which the employee is
qualified, together with compensation (including lost wages), terms,
conditions, and privileges of that employment.
Proposed Sec. 9.24(c) addresses the withholding of contract funds
for non-compliance. After an investigation and a determination that
lost wages or other monetary relief is due, the Administrator could
direct that accrued payments due on either the contract or any other
contract between the contractor and the Government be
[[Page 13392]]
withheld as necessary to pay the moneys due. Upon final order of the
Secretary, the Administrator may direct that withheld funds be
transferred to DOL for disbursement.
Proposed Sec. 9.24(c)(2) provides for the suspension of the
payment of funds if the Contracting Officer or the Secretary finds that
the predecessor contractor has failed to provide the required list of
employees working under the contract as required by Sec. 9.12(e). As
reflected in the earlier version of part 9, these proposed withholding
provisions would mirror the withholding standards of other labor
standards laws such as the Davis-Bacon Act and SCA.
Proposed Sec. 9.24(d) provides for debarment from Federal contract
work for up to three years for noncompliance with any order of the
Secretary or for willful or aggravated violations of the regulations in
this part.
Proposed subpart D addresses informal and formal proceedings to
determine compliance with the requirements of part 9 and resolution of
disputes. The proposal substantially reinstates provisions from the
prior part 9, but proposes minor changes to accommodate the format of
the proposed rule and to clarify various authorities of the
Administrator, Office of Administrative Law Judges, and Administrative
Review Board, and the effects of various notices and filings.
Proposed Sec. 9.31 provides that when an investigation is
completed and a resolution is not reached that is consistent with the
requirements of this part and acceptable to both the complainant(s) and
the successor contractor, the Administrator will issue a written
determination of whether a violation occurred. A written determination
will contain a statement of the investigation findings that will
address the appropriate relief and the issue of ineligibility sanctions
where appropriate, with notice of the determination sent by certified
mail to the parties. The notice of determination becomes the final
order of the Secretary and is not appealable in any administrative or
judicial proceeding unless a request for a hearing is filed within 20
days or, where relevant facts are not in dispute, a petition for review
is filed within 20 days with the Administrative Review Board.
Proposed Sec. 9.32(b) provides procedures for requesting appeals.
The proposed time limits are the same as under the earlier version of
part 9, and the proposed language provides due process rights for those
seeking appeals without needlessly delaying decisions from taking
effect.
Executive Order 13495 provides for its implementing regulations to
favor alternative dispute resolution methods to the extent practicable,
and proposed Sec. 9.33 generally encourages parties to resolve
disputes in accordance with the conciliation procedures set forth at
Sec. 9.22 or, where such efforts have failed, to utilize settlement
judges to mediate settlement negotiations pursuant to 29 CFR 18.9 when
those provisions apply. At any time after commencement of a proceeding,
the parties jointly could move to defer the hearing for a reasonable
time to permit negotiation of a settlement or an agreement disposing of
the proceeding. Proposed Sec. 9.33(b) establishes the procedure for
appointing a settlement judge to mediate cases scheduled with the
Office of Administrative Law Judges.
Proposed Sec. 9.34(a) provides for the Office of Administrative
Law Judges to hear and decide in its discretion appeals concerning
questions of law and fact from determinations of the Administrator. The
ALJ would act fully and finally as the authorized representative of the
Secretary, subject to any appeal filed to the Administrative Review
Board, and subject to certain limits. Specifically, the regulations
exclude from the ALJ's authority any jurisdiction to pass on the
validity of any provision of part 9. In addition, as the proceedings
are not required by an underlying statute to be determined on the
record after an opportunity for an agency hearing, the Equal Access to
Justice Act (EAJA), as amended (5 U.S.C. 504) does not apply to them;
therefore, an ALJ would have no authority to award attorney fees and/or
other litigation expenses pursuant to the provisions of the EAJA for
any proceeding under this part.
Absent a stay to attempt settlement, the ALJ will notify the
parties and any representatives within 15 calendar days following
receipt of the request for hearing of the day, time, and place for
hearing, which is to be held not more than 60 days from the date of
receipt of the hearing request under proposed Sec. 9.34(b).
Under proposed Sec. 9.34(d), the Administrator may 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 ALJ in a case in
which the Administrator has not previously participated. The
Administrator would participate as a party in any proceeding in which
the Administrator has determined that this part 9 has been violated.
Under proposed Sec. 9.34(e), a Federal agency that is interested in a
proceeding may participate as amicus curiae at any time in the
proceedings.
Proposed Sec. 9.34(g) applies, with certain exceptions, the rules
of practice and procedure for administrative hearings before the Office
of Administrative Law Judges at 29 CFR part 18, subpart A to
administrative proceedings under this part 9. The exceptions declare
inapplicable the Rules of Evidence at 29 CFR part 18, subpart B, and
provide that part 9 would be controlling to the extent it provides any
rules of special application that may be inconsistent with the rules in
part 18, subpart A. Proposed Sec. 9.34(h) requires ALJ decisions
(containing appropriate findings, conclusions, and an order) to be
issued within 60 days after completion of the proceeding. Upon the
issuance of a decision that a violation has occurred, the ALJ may order
appropriate relief, which may include that the successor contractor
hire the affected employee(s) in a position on the contract for which
the employee is qualified, together with compensation (including lost
wages), terms, conditions, and privileges of that employment. If the
Administrator has sought ineligibility sanctions, the order would also
be required to address whether debarment is appropriate. The ALJ may
assess against the contractor an amount equal to the employees' costs
and expenses (not including attorney fees). This amount would be
awarded in addition to any unpaid wages or other relief due. Proposed
Sec. 9.35 provides the procedures for appealing an ALJ decision to the
Administrative Review Board.
Finally, appendix A to part 9 contains the text of the contract
clause required by Sec. 9.11(a), and appendix B contains the text for
the notice that contracting agencies would be required to provide to
service employees on covered contracts that have been awarded to a
successor. If the final rule adopts this or a similar notice provision,
the DOL intends to make the text of appendix B available in a poster
format that will be available to contracting agencies on the Internet.
In addition to or as an alternative to posting, this proposal would
allow the text to be provided to affected employees electronically.
IV. Paperwork Reduction Act
As part of its continuing effort to reduce paperwork and respondent
burden, the Department conducts a preclearance consultation program to
provide the general public and federal agencies with an opportunity to
comment on proposed and continuing collections of information in
accordance with the Paperwork Reduction Act of
[[Page 13393]]
1995 (PRA), 44 U.S.C. 3506(c)(2)(A). This program helps to ensure that
requested data can be provided in the desired format, reporting burden
(time and financial resources) is minimized, collection instruments are
clearly understood, and the impact of collection requirements on
respondents can be properly assessed. The PRA typically requires an
agency to provide notice and seek public comments on any proposed
collection of information contained in a proposed rule. See 44 U.S.C.
3506(c)(2)(B); 5 CFR 1320.8. Persons are not required to respond to the
information collection requirements as contained in this proposal
unless and until they are approved by the OMB under the PRA at the
final rule stage. The Department has submitted the identified
information collections contained in the proposed rule to the OMB for
review under the PRA. See 44 U.S.C. 3507(d); 5 CFR 1320.11.
Purpose and Use: As previously explained, Executive Order 13495
applies to contracts or subcontracts at or above the simplified
acquisition threshold of $100,000 and requires service contracts and
their solicitations to include an additional labor standards clause
that requires the successor contractor, and its subcontractors, under a
contract for performance of the same services at the same location, to
provide a right of first refusal of employment to those employees
(other than managerial and supervisory employees) employed under the
predecessor contract during the final month of contract performance
whose employment will be terminated as a result of the award of the
successor contract. The Order also requires the successor contractor
and subcontractor to make an express offer of employment to each
predecessor employee, with some exceptions, stating the timeframe
within which each employee must accept such offer. For purposes of the
remaining PRA discussion, the term contractor covers both contractors
and subcontractors, excepted as noted. The DOL has strived to make the
information disclosures intuitive.
Proposed Sec. 9.12 describes the contractor's requirements and
prerogatives under the proposed rule, which include third party
disclosures and recordkeeping requirements that are subject to the PRA.
Proposed Sec. 9.12(a) and (b) requires the contractor to make a bona-
fide express offer of employment to each employee individually, either
in writing or orally. Proposed Sec. 9.12(f) also requires the
successor service contractor to maintain for specific periods of time
copies of records (regardless of format, e.g., paper or electronic) of
its compliance, including (1) any written offers of employment or a
contemporaneous written record of any oral offers of employment,
including the date, location, and attendance roster of any employee
meeting(s) at which the offers were extended; a summary of each
meeting; a copy of any written notice that may have been distributed,
and the names of the employees from the predecessor contract to whom an
offer was made; (2) any record that forms the basis for any exclusion
or exemption claimed under this part; and (3) the employee list
provided to or received from the contracting agency that meet
contractor obligations near the end of a contract.
The DOL notes that the proposed rule does not require contractors
to create any record regarding any basis for claiming an exclusion or
exemption from the nondisplacement provisions of Federal service
contracts; however, the contractor would need to retain any such record
if created. In addition, while the proposed rule also requires a
predecessor contractor near the end of a contract to provide a
certified list of the names of all service employees working under that
contract (and its subcontracts) during the last month of contract
performance to the contracting agency, that requirement may be met by
using the seniority list submitted to satisfy the requirements of the
contract clause specified in the current SCA regulations at 29 CFR
4.6(l)(2). Therefore, this requirement imposes no additional burden for
PRA purposes.
Proposed Sec. 9.21 outlines the procedures for filing complaints
under this part. This NPRM imposes no specific reporting burden on what
information complainants must provide; however, prudent persons
asserting certain employment rights normally would provide their own
contact information, contact information for their employer, and a
basis for why they are filing the complaint.
Information Technology: There is no particular order or form of
records prescribed by the proposed regulations. A contractor may meet
the requirements of this proposed rule using paper or electronic means.
Public Burden Estimates: The proposed rule contains information
collection requirements for contractors and complainants. The
Department bases the following burden estimates for this information
collection on agency experience in administering the SCA, the prior
version of part 9, and consultations with contracting agencies, except
as otherwise noted.
According to the Federal Procurement Data System's (FPDS) 2006
Federal Procurement Report, slightly less than 75,000 (74,611) Federal
government contract actions were subject to the SCA during that
reporting period. A contract action is any oral or written action that
results in the purchase, rent, or lease of supplies or equipment,
services, or construction using appropriated dollars over the micro-
purchase threshold, or modifications to these actions regardless of
dollar value. Many contract actions are modifications to or extensions
of existing Federal contracts or otherwise relate to actions where
there is no successor contractor. The DOL, therefore, assumes that
about 15,000 per year (slightly more than 20 percent of all SCA covered
contract actions in 2006) would be successor contracts subject to the
nondisplacement provisions that carry a burden under the PRA.
Subcontracts are not reported in the FPDS, and the DOL has not found a
reliable source on which to estimate the number of subcontracts per SCA
prime contract. Based on consultations with Federal procurement
officials, the DOL assumes that for PRA purposes a typical SCA contract
has one prime contractor and three subcontractors; therefore, the
Department estimates the information collection requirements of part 9
would apply to approximately 60,000 contracts. 15,000 covered contract
actions x 4 contractors. A review of FPDS data suggests that, while
about 110,000 contractors performed work on Federal service contracts
in FY 2006, only 44,039 contractors performed work on service contracts
in excess of $25,000. See David Berteau, et al., Structure and Dynamics
of the U.S. Federal Professional Services Industrial Base 1995-2007,
Center for Strategic and International Studies, February 2009, at 26,
http://www.csis.org/media/csis/pubs/090212_fps_report_2009.pdf (CSIS
Report). Of course, some lesser number of contractors would perform
work on contracts subject to the nondisplacement requirements; the DOL
estimates each year about 40,000 contractors and subcontractors will be
subject to this information collection.
Based on the Wage and Hour Division's enforcement experience under
the SCA, the DOL estimates that each service contract covered by this
information collection would involve an average of approximately 15
employees. Moreover, the DOL expects successor contractors typically
would make oral offers of employment at all-employee meetings where the
successor contractor need only make notations on a copy of the employee
roster of the offer of employment. Otherwise, the successor contractor
would likely make offers of employment individually by mail or
[[Page 13394]]
electronic means. Beyond making the offer of employment, the successor
contractor would also be responsible for maintaining copies of any
written offers of employment, or contemporaneous written records of any
oral offers of employment, and copies of any records that formed the
basis for any exclusion or exemption claimed under the proposed rule.
As job offers will typically be made in a bulk fashion, the DOL
estimates it would take a successor contractor an average of
approximately one and one-half minutes per employee to make an offer,
whether oral, written, or electronic, and another \1/2\ minute to file
the associated paperwork for each employee, including any paperwork
forming the basis for any exclusion or exemption from the obligation to
offer employment to a particular employee. Therefore, the DOL estimates
an annual disclosure and recordkeeping burden of 30 minutes per
contract for a total annual burden of 30,000 hours. 60,000 contracts x
15 third-party disclosures x 2 minutes.
The information collection requirement for contractors specified in
proposed Sec. 9.12(e)--the seniority list--is cleared under the SCA
regulations, 29 CFR 4.6(l)(2), OMB control number 1215-0150, and that
burden is not duplicated in these estimates.
Estimates prepared for the nondisplacement rules promulgated
pursuant to the Clinton Order suggested it applied to only 88 contract
actions per year; however, the burdens calculated at that time did not
include subcontracts. Using the same criteria as used to calculate
burdens under this proposal, the DOL estimates the total number of
covered contracts and subcontracts for the earlier rule to be
approximately 350; suggesting the current rule would apply to about 170
times more successor contracts. As previously noted the Wage and Hour
Division received approximately one complaint per year under the old
rule. Extrapolating to the current estimate of contracts subject to the
current rule, the DOL estimates it will receive 170 nondisplacement
complaints per year, half of which may include supplemental information
filed directly with the Wage and Hour Division for a total number of
complainant responses of 255. The DOL estimates that each complaint
filing will take about 20 minutes; therefore, the DOL estimates the
total burden for filing complaints to be about 85 hours. 255 responses
x 20 minutes.
The total burden estimates under the PRA (including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information) are as follows: 40,170 respondents; 900,255
responses; and 30,085 burden hours.
Public Comments: The DOL specifically seeks public comments
regarding the burdens imposed by information collections contained in
this proposed rule. In particular, the Department seeks comments that:
evaluate whether the proposed collection of information is necessary
for the proper performance of the functions of the agency, including
whether the information will have practical utility; evaluate the
accuracy of the agency's estimate of the burden of the proposed
collection of information, including the validity of the methodology
and assumptions used; enhance the quality, utility and clarity of the
information to be collected; and minimize the burden of the collection
of information on those who are to respond, including through the use
of appropriate automated, electronic, mechanical, or other
technological collection techniques or other forms of information
technology, e.g., permitting electronic submissions of responses.
Commenters may send their views about these information collections to
the Department in the same way as all other comments (e.g., through the
regulations.gov Web site). While much of the information provided to
the OMB in support of the information collection request appears in
this preamble, interested parties may obtain a copy of the full
supporting statement by sending a written request to the mail address
shown in the ADDRESSES section at the beginning of this preamble or by
visiting the http://www.reginfo.gov/public/do/PRAMain Web site. In
addition to having an opportunity to file comments with the Department,
comments about the paperwork implications of the proposed regulations
may be addressed to the OMB. Comments to the OMB should be directed to:
Office of Information and Regulatory Affairs, Attention OMB Desk
Officer for the Wage and Hour Division (WHD), Office of Management and
Budget, Room 10235, Washington, DC 20503, Telephone: 202-395-7316/Fax:
202-395-6974 (these are not toll-free numbers).
These paperwork burden estimates are summarized as follows:
Type of Review: Reinstatement with change of a previously approved
collection.
Agency: Wage and Hour Division, Department of Labor.
Title: Nondisplacement of Qualified Workers Under Service
Contracts.
OMB Control Number: 1215-0190.
Affected Public: Business or other for-profit and Individuals or
Households.
Estimated Number of Respondents: 40,170.
Estimated Number of Responses: 900,255.
Frequency of Response: On occasion.
Estimated Annual Burden Hours: 30,085.
Estimated Annual Burden Costs (Operation and Maintenance): $0.
V. Executive Order 12866, Regulatory Flexibility
This NPRM is considered to be a significant regulatory action
within the meaning of Executive Order 12866, and was submitted to OMB
for review before publication, because the proposed rule may raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866. The first sentence of Executive Order 13495 recognizes that
successor contractors often hire most of the employees who worked on
predecessor contract, if the contract work will continue at the same
location. The DOL believes the NPRM will not have a significant
economic impact, because the proposal would simply require contractors
to follow a practice currently used in most cases as a good business
practice. The DOL expects that, as further explained in this section,
there will be virtually no change in the way most contractors currently
conduct business, with the exception that they will need to ensure the
appropriate contract language appears in subcontracts. The DOL also
expects that a majority of remaining contractors will comply with the
new requirements by simply replacing aspects of their existing staffing
practices with similar practices that do not entail an additional
burden but do assure compliance with the NPRM. In addition, the DOL
expects that in certain instances a contracting agency will exercise
its exemption authority to exclude contracts from these requirements if
it is clear that application of the nondisplacement requirements would
impair the ability of the agency to procure services on an economical
and efficient basis.
In estimating the costs on contractors, the DOL has also considered
how current practices compare with expected actions contractors
typically will take under the nondisplacement provisions. For example,
those successor contractors that currently hire new employees for a
contract must recruit workers and evaluate their qualifications for
positions on the contract. In order to match employees with suitable
jobs under this NPRM,
[[Page 13395]]
successor contractors will evaluate the predecessor contract employees
and available positions; thus, successor contractors are likely to
spend an equal amount of time determining job-suitability under the
NPRM as under current practices. The costs for documenting these
employment decisions will also be similar under both the NPRM and
status quo.
For purposes of this analysis, the DOL also believes the time
contactors will save by not recruiting an entirely new workforce from
the outset will be offset by the additional time a successor contractor
will spend in recruiting a new employee when there is a vacant position
because the contractor cannot find suitable work for an employee who
worked on the predecessor contract or in considering how to minimize
displacement when the successor contractor reconfigures how it will
deploy employees performing on the successor contract. See Sec.
9.12(d)(3). This NPRM will also not affect wages contractors will pay
workers, because of the existing SCA requirement for the wage
determination that establishes the minimum rate for each occupation to
be incorporated into the contract; thus, existing regulatory
requirements already set wage rates, including when the predecessor's
collectively bargained rate is incorporated into the contract,
successors must pay. See 41 U.S.C. 353(c); 29 CFR 4.6(b)(1). This NPRM
does not require successor contractors to pay wages higher than the
rate required by the SCA, even when the predecessor paid a higher rate.
The successor contractor also may offer employment under different
terms and conditions, if the reasons for doing so are not related to a
desire that the employee refuse the offer or that other employees be
hired for the offer. See Sec. 9.12(b)(5).
The predecessor contractor must provide a list of persons employed
on the contract no less than 10 days before the end of the contractor's
performance. The clause makes clear that this is the same list as the
seniority list provided under the Service Contract Act clauses. Sec.
9.12(e). As this list already exists and is used by contractors in
hiring decisions under the status quo, the DOL baseline to calculate
additional costs accounts for the current business practice among
contractors to receive the employee list and make hiring decisions from
there.
The proposal does include a contract clause provision requiring
contractors to incorporate the nondisplacement contract clause into
each covered subcontract. This provision comes directly from Executive
Order 13495, and the DOL estimates that it will take a combined total
of 30 minutes for contractors to incorporate the contract clause into
each covered subcontract and the subcontractor to review it. Thus,
assuming covered contractors spend an additional two hours (accounting
for any additional time spent in making job offers, inserting and
reviewing the contract clause in subcontracts, and maintaining records)
per contract to comply with this proposed rule and increasing the
October 2009 average hourly earnings for professional and business
workers by 40 percent to account for fringe benefits (a total of $31.32
per hour), this rule is estimated to impose annual costs of $3,758,400
on contractors. 60,000 contracts x 2 hours x $31.32. See The Employment
Situation--December 2009, at 28, Table B-3, Bureau of Labor Statistics,
(http://www.bls.gov/news.release/archives/empsit_01082010.pdf).
While most contractors will obtain their information primarily from
the contract clause, and Wage and Hour Division offices throughout the
country are available to provide compliance assistance at no charge to
employers; however, in the course of researching compliance options
within the context of specific business needs, some contractors will
incur additional legal, accounting, and/or other costs associated with
complying with the nondisplacement requirements. For purposes of this
analysis, the DOL estimates 15 percent of covered contractors each will
incur additional costs averaging $5,000 because of the NPRM
requirements, for a total of $30,000,000. 40,000 contractors x 15% x
$5,000. The DOL believes ten percent of these 6,000 contractors will
face complex issues that will require each spending an average of
$10,000 additional dollars, totaling $6,000,000. 6,000 contractors x
10% x $10,000. The DOL estimates total costs contractors will incur to
comply with this NPRM to be $39,758,400. The DOL expects some of these
costs will be transferred to the Federal Government in the form of
higher bids; however, the agency is not aware of a reasonable way to
allocate those costs.
Executive Order 13495 and this proposal would improve Government
efficiency and economy in those cases where the practice of offering a
right of first refusal of employment would not otherwise have been
followed, because the requirements decrease or eliminate the loss of
productivity that may occur when experienced employees are terminated.
As previously indicated, the DOL estimates 20 percent of all SCA
covered contract actions in 2006 would be subject to this NPRM.
Applying this same percentage to the total FPDS reported value of SCA
contract actions during 2006, just under $115,000,000,000
($114,935,252,182), the DOL estimates the total value of contracts
subject to the nondisplacement provisions to be $23,000,000,000.
$115,000,000,000 x 0.2. As also previously stated, nothing will change
in a majority of these successor contracts; thus the Federal Government
will not realize an increase in economy or efficiency from a reduced
disruption in the delivery of services during the transition period
between contractors or from the benefits of already experienced and
trained service contract employees who are familiar with the Federal
Government's personnel, facilities, and requirements. Assuming,
however, an improvement in economy and efficiency that is equal to 1
percent on forty percent of the value of SCA covered contracts (i.e.,
four tenths of a percent of all SCA contracts) the DOL estimates the
nondisplacement provisions that are the subject of this NPRM will
result in a gross savings of $92,000,000. $23,000,000,000 x 0.4 x 0.01.
Some of these savings will be absorbed by the expenses contracting
agencies will incur to inform employees of their possible right to a
job offer and costs to administer the requirements. The DOL has used
the 2010 Rest of United States salary table to estimate salary
expenses. http://www.opm.gov/oca/10tables/html/RUS_h.asp. The DOL
believes contracting agencies will spend 30 minutes on each insertion
of the applicable contract clauses in a successor prime contract, for a
total of 7500 hours. 15,000 x 0.5 hours. The DOL assumes this work will
be performed by a GS-11, step 4 Federal employee, earning $30.26 per
hour, for a cost of $226,950. 7500 hours x $30.26. While it will be
clear that in most cases there is no reason for a contracting agency to
exempt a contract from the nondisplacement requirements, the DOL
estimates contracting agencies will spend an average of 2 hours on each
covered contract and subcontract to make the determination and that a
GS-13, step 4 Federal employee earning $43.13 per hour will perform the
work, for a cost of $5,175,600. 60,000 contracts and subcontracts x 2
hours x $43.13. Once this analysis is done, the contracting agency must
inform the contract employees of either their possible right to a job
offer or of the decision to exempt the contract. The DOL believes this
notification will take about 30 minutes per contract and that the work
will be performed by a GS-9,
[[Page 13396]]
Step 4 Federal employee earning $25.01, for a cost of $750,300. 60,000
contracts and subcontracts x 0.5 hours x $25.01. This includes the time
needed to prepare the notice and post it at the worksite or prepare a
written notice that is provided in a bulk manner to the employees. The
estimated general administrative costs equal $6,152,850.
The NPRM also requires Contracting Officers to accept complaints
from predecessor employees or their authorized representatives and to
forward the complaints, along with other supporting documentation, to
the Wage and hour Division within 30 days of the original filing. Sec.
9.11(d). The Federal costs associated with this requirement include the
time it takes to gather the documents related to the complaint and to
photocopy them for both the complainant and the contractor and the
reproduction and mailing cost to forward the copies. Federal costs will
also include the cost for the Wage and Hour Division to review the
complaint to determine what further action might be appropriate. The
DOL estimates the Wage and Hour Division will receive 170
nondisplacement complaints per year.
GS-13, step 4 to review complaint at the Wage and Hour Division and
determine whether to schedule compliance action.
170 complaints x 10 minutes review time = 28 hours (rounded)
28 hours x $43.13 = $1208 (rounded)
GS-11, step 4 to compile and review the complaint and supplemental
documents for forwarding:
170 complaints x 20 minutes = 57 hours (rounded)
57 hours x $30.26 = $1725 (rounded)
GS-3, step 4 to photocopy & assemble complaint documents:
170 complaints x 10 minutes = 28 hours (rounded)
28 hours x $13.14 = $368 (rounded)
Printing costs
170 complaints x 4 pages x 3 copies x $0.05 per page = $102
Postage:
170 complaints x 3 mailings (DOL, contractor, and complainant) x $0.47
($0.44 each + $0.03 per envelope) = $240 (rounded)
GS 12, step 4 to investigate complaints:
170 complaints x 20 hours = 3400 hours
3400 hours x $36.27 = $123,318
Printing 60,000 notices x $0.05 per notice = $3000
Enforcement Subtotal $129,961
Total Gross Annual Federal Cost estimate = $6,282,811
After offsetting the costs of administering the nondisplacement
requirements from the savings, the DOL estimates economies and
efficiencies arising from this NPRM would result in Federal cost
savings equaling $85,717,189. $92,000,000 gross savings-$6,282,811
gross costs. Some of these savings, however, may actually transfer to
contractors who are bidding on the contract, especially in light of the
additional costs they are likely to incur. After offsetting the overall
savings attributed to the Federal government from the overall
additional costs attributed to contractors, the nondisplacement
provisions covered by this NPRM will result in a net change to the
economy of $45,958,789 in overall cost savings. $85,717,189 overall
Federal savings-$39,758,400 contractor costs. The DOL wishes to
emphasize that while this analysis is presented in terms of contractor
and Federal Government costs and savings, because costs and savings
will factor into final bid proposals, some of the overall savings are
likely to transfer to contractors. In any event, this NPRM will result
in an effect on the economy that is less than the $100,000,000
threshold for a rule to be considered economically significant.
In addition, this NPRM would not be expected (1) To adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities; (2) to
create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) materially to alter the
budgetary impact of entitlements, grants, user fees, or loan programs
or the rights and obligations of recipient.
VI. Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980, as amended (RFA) requires
agencies to prepare regulatory flexibility analyses and make them
available for public comment, when proposing regulations that will have
a significant economic impact on a substantial number of small
entities. See 5 U.S.C. 603. If the rule is not expected to have a
significant economic impact on a substantial number of small entities,
the RFA allows an agency to certify such, in lieu of preparing an
analysis. See 5 U.S.C. 605. For the reasons explained in this section,
the DOL believes this NPRM is not likely to have a significant economic
impact on a substantial number of small entities, and therefore an
initial regulatory flexibility analysis is not required by the RFA.
However, in the interest or transparency and to provide an opportunity
for public comment, DOL has prepared the following analysis to assess
the impact of this regulation on small entities (as defined by the
applicable SBA size standards). The DOL specifically requests comments
on the following burden estimates, including the number of small
entities affected by the nondisplacement requirements, and whether
alternatives exist that will reduce burden on small entities while
still meeting the requirements of Executive Order 13495. The Chief
Counsel for Advocacy of the Small Business Administration was notified
of a draft of this rule upon submission of the rule to the Office of
Management and Budget under E.O. 12866, as amended, ``Regulatory
Planning and Review.'' 58 FR 51735, 67 FR 9385, 72 FR 2763.
Why agency is considering action: The DOL has published this NPRM
to implement the enforcement provisions of Executive Order 13495,
``Nondisplacement of Qualified Workers Under Service Contracts.'' The
Executive Order assigns enforcement responsibility for the
nondisplacement requirements to the DOL.
Objectives of and Legal Basis for Rule: This rule will provide
guidance on how to comply with the nondisplacement requirements of
Executive Order 13495 and how the DOL intends to administer and enforce
them. Section 6(a) of the Executive Order assigns the responsibility of
investigating and obtaining compliance with the nondisplacement
requirements to the DOL. 74 FR 6105. Section 6(b) directs the Secretary
of Labor, in consultation with the FARC, to issue regulations to
implement the requirements of the Order. Id.
Description and number of small entities covered by the NPRM: This
NPRM would apply to small entities that perform work for the Federal
Government on contracts or subcontracts subject to the SCA of $100,000
or more. The DOL has found no precise data with which to measure the
precise number of small entities that would be covered by this NPRM;
however, certain available data allow for estimates. As already
discussed in the Paperwork Reduction Act portion of this preamble,
according to the Federal Procurement Data System's (FPDS) 2006 Federal
Procurement Report, slightly less than 75,000 (74,611) Federal
Government contract actions were subject to the SCA during that
reporting period. A contract action is any oral or written action that
results in the
[[Page 13397]]
purchase, rent, or lease of supplies or equipment, services, or
construction using appropriated dollars over the micro-purchase
threshold, or modifications to these actions regardless of dollar
value. Many contract actions are modifications to or extensions of
existing Federal contracts or otherwise relate to actions where there
is no successor contractor. The DOL, therefore, assumes that about
15,000 per year (slightly more than 20 percent of all SCA covered
contract actions in 2006) would be successor contracts subject to the
nondisplacement provisions. Subcontracts are not reported in the FPDS,
and the DOL has not found a reliable source on which to estimate the
number of subcontracts per SCA prime contract. Based on consultations
with Federal procurement officials, the DOL assumes that for PRA
purposes a typical SCA contract has one prime contractor and three
subcontractors; therefore, the Department estimates the requirements of
part 9 would apply to approximately 60,000 contracts; 15,000 covered
contract actions x 4 contractors. A review of FPDS data suggests that,
while about 110,000 contractors performed work on Federal service
contracts in FY 2006, only 44,039 contractors performed work on service
contracts in excess of $25,000. See David Berteau, et al., Structure
and Dynamics of the U.S. Federal Professional Services Industrial Base
1995-2007, Center for Strategic and International Studies, February
2009, at 26, http://www.csis.org/media/csis/pubs/090212_fps_report_2009.pdf (CSIS Report). Of course, some lesser number of contractors
would perform work on contracts subject to the nondisplacement
requirements; the DOL estimates each year about 40,000 contractors and
subcontractors will be subject to this information collection. FPDS
data also suggest that slightly less than 55 percent of all contract
actions relate to small entities. Applying this percentage to the
40,000 estimated covered contractors and subcontractors (generically
referred to as contractors in this analysis, unless otherwise noted),
suggests this rule will apply to 22,000 small entities. The CSIS Report
found that 31,700 small businesses in FY 2006 undertook contracts worth
at least $25,000 (72 percent of all contractors undertaking Federal
professional service contracts of at least $25,000). CSIS Report at 26.
Again, this rule would apply only to a portion of these contractors;
however, using this latter percentage suggests the rule might apply to
28,800 small businesses. This is an upper bound estimate, because (in
addition to not applying to contracts or subcontracts of less than
$100,000) the NPRM would not apply to small entities with certain
contracts or subcontracts awarded for services produced or provided by
persons who are blind or have severe disabilities or contracts exempted
by the contracting agency. Applying the same percentage (72 percent) to
the total estimated value of $23,000,000,000 for all service contracts
subject to this rule, suggests the value of those contracts held by
small entities would equal $16,560,000,000. The earlier analysis
showing 40,000 contractors will work on 60,000 successor contracts and
subcontracts (generically referred to as contracts in this analysis,
unless otherwise noted) subject to this rule suggests a typical
contractor will work on 1.5 successor contracts subject to the
nondisplacement provisions. For purposes of this analysis, the DOL
assumes each covered small contractor will also work on an average of
1.5 covered successor contracts each year, the same ratio as all
contractors; thus, this NPRM is expected to apply to no more than
43,200 successor contracts awarded to small contractors.
Compliance requirements, including reporting and recordkeeping:
This NPRM would impose a general requirement on the contractor and its
subcontractors, under a contract that succeeds a contract for
performance of the same or similar services at the same location, to
offer those employees employed under the predecessor contract whose
employment will be terminated as a result of the award of the successor
contract, a right of first refusal of employment under the contract in
positions for which they are qualified. Specifically, the proposal
provides that, except as provided under specific exclusions listed in
proposed Sec. 9.4 or paragraphs (c) and (d) of proposed Sec. 9.12, a
successor contractor or subcontractor could not fill any employment
openings under the contract prior to making good faith offers of
employment, in positions for which the employees are qualified, to
those employees employed under the predecessor contract whose
employment will be terminated as a result of award of the contract or
the expiration of the contract under which the employees were hired.
The contractor and its subcontractors would be required to make an
express offer of employment to each employee and state the time within
which the employee must accept such offer, but in no case would the
period within which the employee must accept the offer of employment be
less than 10 days. The employment offer may be to a different job
position on the contract for which the employee is qualified.
The NPRM also addresses the exceptions to the general obligation to
offer employment under Executive Order 13495. The exclusions specify
both certain classes of contracts and certain employees excluded from
the provisions of Executive Order 13495. The exemptions from the
successor contractor's obligation to offer employment on the contract
to employees on the predecessor contract prior to making the offer to
anyone else do not relieve the contractor of other requirements of this
part (e.g., the obligation near the end of the contract to provide a
list of employees who worked on the contract during the last month).
Specifically, a contractor or subcontractor (1) Would not be required
to offer employment to any employee of the predecessor who will be
retained by the predecessor contractor; (2) would be allowed to employ
under the contract any employee who has worked for the contractor or
subcontractor for at least three months immediately preceding the
commencement, i.e., the first date of performance, of the contract and
who would otherwise face lay-off or discharge; (3) would not be
required to offer employment to any employee of the predecessor who is
not a service employee; (4) would not be required to offer employment
to any employee of the predecessor contractor for whom the contractor
or any of its subcontractors reasonably believes, based on the
particular employee's past performance, has failed to perform suitably
on the job; (5) would not be required to offer employment to any
employee hired to work under a predecessor's Federal service contract
and one or more nonfederal service contracts as part of a single job,
provided that the employee was not deployed in a manner that was
designed to avoid the purposes of this part; (6) would be required to
determine the number of employees necessary for efficient performance
of the contract and, for bona fide staffing or work assignment reasons,
to elect to employ fewer employees than the predecessor contractor
employed in performance of the work.
The NPRM would also require the contractor, not less than 10 days
before completion of the contract, to furnish the Contracting Officer a
certified list of the names of all service employees working under the
contract and its subcontracts during the last month of contract
performance, including their anniversary dates of employment with
either the current or predecessor contractors or their subcontractors.
The
[[Page 13398]]
contractor may use the list submitted to satisfy the requirements of
the SCA contract clause specified at 29 CFR 4.6(l)(2) to meet this
provision.
The NPRM prescribes no particular order or form of records for
contractors, and the recordkeeping requirements apply to all records
regardless of their format (e.g., paper or electronic). A contractor
would be allowed to use records developed for any purpose to satisfy
the requirements of part 9, provided the records otherwise meet the
requirements and purposes of this part. Contractors 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, a copy of any written notice
that may have been distributed, the names of the employees from the
predecessor contract to whom an offer was made, any written record that
forms the basis for any exclusion or exemption claimed under this part,
the employee list provided to the contracting agency, and the employee
list received from the contracting agency.
In addition, every contractor who makes retroactive payment of
wages or compensation under the supervision of the Wage and Hour
Division pursuant to proposed Sec. 9.24(b) will be required to record
and preserve for three years in the pay records the amount, the period
covered, and the date of payment to each employee, and to report each
such payment on a receipt form authorized by the Wage and Hour
Division.
Contractors would be obligated to cooperate during any
investigation to determine compliance with the nondisplacement
requirements as a condition of the contract award and to not
discriminate against any person because such person has cooperated in
an investigation or proceeding under part 9 or has attempted to
exercise any rights afforded under part 9. As proposed, this obligation
to cooperate with investigations is not limited to investigations of
the contractor's own actions, but also includes investigations related
to other contractors (e.g., predecessor and subsequent contractors) and
subcontractors.
All small entities subject to the nondisplacement requirements
would be required to comply with all the provisions of the NPRM, and
the work can be performed by a combination of management officials
(e.g., staff authorized to make job offers) and clerical staff (e.g.,
staff to maintain the list of persons offered employment and file
records). The compliance requirements are more fully described above in
other portions of this preamble.
Executive Order 13495 mandates a practice that successor
contractors already typically follow. As with other contractors, the
DOL expects there will be virtually no change in the way most small
contractors currently conduct business, with the exception that they
will need to ensure the appropriate contract language appears in
subcontracts. The DOL expects that a majority of small contractors
making changes to their business operations will comply with the new
requirements by simply replacing aspects of their existing staffing
practices with similar practices that do not entail an additional
burden but do assure compliance with the NPRM.
In estimating the costs on small contractors, the DOL has also
considered how current practices compare with expected actions
contractors typically will take under the nondisplacement provisions.
For example, those successor contractors that currently hire new
employees for a contract must recruit workers and evaluate their
qualifications for positions on the contract. In order to match
employees with suitable jobs under this NPRM, successor contractors
will evaluate the predecessor contract employees and available
positions; thus, successor contractors are likely to spend an equal
amount of time determining job-suitability under the NPRM as under
current practices. The costs for documenting these employment decisions
will also be similar under both the NPRM and status quo.
For purposes of this analysis, the DOL also believes the time small
contractors will save by not recruiting an entirely new workforce from
the outset will be offset by the additional time a successor contractor
will spend in recruiting a new employee when there is a vacant position
because the contractor cannot find suitable work for an employee who
worked on the predecessor contract or in considering how to minimize
displacement when the successor contractor reconfigures how it will
deploy employees performing on the successor contract. See Sec.
9.12(d)(3). As previously mentioned, this NPRM will also not affect
wages contractors will pay workers, because of the existing SCA
requirement for the wage determination that establishes the minimum
rate for each occupation to be incorporated into the contract; thus,
existing regulatory requirements already set wage rates, including when
the predecessor's collectively bargained rate is incorporated into the
contract, successors must pay. See 41 U.S.C. 353(c); 29 CFR 4.6(b)(1).
This NPRM does not require successor contractors to pay wages higher
than the rate required by the SCA. The successor contractor also may
offer employment under different terms and conditions, if the reasons
for doing so are not related to a desire that the employee refuse the
offer or that other employees be hired for the offer. See Sec.
9.12(b)(5).
The predecessor contractor must provide a list of persons employed
on the contract no less than 10 days before the end of the contractor's
performance. The clause makes clear that this is the same list as the
seniority list provided under the Service Contract Act clauses. Sec.
9.12(e). As this list already exists and is used by contractors in
hiring decisions under the status quo, the DOL baseline to calculate
additional costs for small entities accounts for the current business
practice among contractors to receive the employee list and make hiring
decisions from there.
The proposal does include a contract clause provision requiring
contractors to incorporate the nondisplacement contract clause into
each covered subcontract. This provision comes directly from Executive
Order 13495, and the DOL estimates that it will take a combined total
of 30 minutes for contractors to incorporate the contract clause into
each covered subcontract and the subcontractor to review it. As will be
further explained later in this analysis, 85 percent of all small
contractors are expected to incur no additional costs under this NPRM.
Assuming covered contractors spend an additional two hours (accounting
for any additional time spent in making job offers, inserting and
reviewing the contract clause in subcontracts, and maintaining records)
per contract to comply with this proposed rule and increasing the
October 2009 average hourly earnings for professional and business
workers by 40 percent to account for fringe benefits (a total of $31.32
per hour), this rule is estimated to impose annual costs of less than
$100 on most small contractors. 1.5 contracts per contractor x 2 hours
x $31.32. See The Employment Situation--December 2009, at 28, Table B-
3, Bureau of Labor Statistics, (http://www.bls.gov/news.release/archives/empsit_01082010.pdf). Aggregate compliance costs for these
general requirements are expected to be $2,706,048. 28,800 contractors
x 1.5 contracts x 2 hours x $31.32.
As with other contractors, most small contractors will obtain
information about the nondisplacement requirements primarily from the
contract clause, and Wage and Hour
[[Page 13399]]
Division offices throughout the country are available to provide
compliance assistance at no charge to employers. While the DOL believes
this rule has been drafted in a way that the vast majority of
contractors should be able to comply with the nondisplacement
requirements without the need of professional assistance from an
attorney or accountant, the DOL recognizes some contractors will seek
such assistance in the course of researching compliance options within
the context of specific business needs. In recognition of this latter
fact, for purposes of this analysis, the DOL estimates 15 percent of
covered contractors each will incur additional costs averaging $5000
because of the NPRM requirements, for a total of $21,600,000 spent by
4320 small contractors. 28,800 contractors x 15% x $5000. The DOL
believes ten percent of these 4320 contractors will face complex issues
that will require each spending an average of $10,000 additional
dollars, totaling $4,320,000 spent by 432 small contractors. 4320
contractors x 10% x $10,000. The DOL estimates total compliance costs
that the 28,800 small contractors subject to this NPRM will incur will
be $28,626,048, with more than 90 percent of costs being borne by 4320
of these contractors. $26,325,907/$28,626,048. Using the assumptions
already discussed, this NPRM would impose additional costs equaling
less than 3 percent of the combined estimated $248,400,000 value of
contracts awarded to the 432 small contractors who will bear the
greatest costs to comply with the nondisplacement requirements.
$16,560,000,000 value of contracts subject to NPRM awarded to small
contracts x 1.5 percent (percentage of contractors facing greatest
costs 432/28,800) = $248,400,000. $6,520,591 total estimated compliance
costs/$248,400,000 estimated compliance costs = 2.6 percent. As with
other contractors, the DOL expects some compliance costs will be
transferred to the Federal Government in the form of higher bids;
however, the agency is not aware of a reasonable way to allocate those
costs.
The DOL specifically requests comments on these burden estimates,
including the number of small entities affected by the nondisplacement
requirements, and on how the final rule can reduce burden on small
entities while still meeting the requirements of Executive Order 13495.
Relevant Federal rules duplicating, overlapping or conflicting with
the rule: Section 6(b) of the Executive Order requires the FARC to
issue regulations to provide for inclusion of the applicable contract
clause in Federal solicitations and contracts subject to the
nondisplacement requirements; thus, the contract clause and some
requirements applicable to contracting agencies will appear in both
this part and in the FARC regulations. As noted above, the certified
list of all service employees working under the contract and its
subcontracts during the last month of contract performance is the same
list a contractor covered by the SCA is already required to submit
pursuant to 29 CFR 4.6(l). See also, section 5, contract clause
paragraph (c) of Executive Order 13495. 74 FR 6104. The DOL is not
aware of any relevant Federal rules that conflict with this NPRM.
Differing Compliance and Reporting Requirements for Small Entities:
This NPRM provides for no differing compliance requirements and
reporting requirements for small entities. The DOL has strived to have
this proposal implement the nondisplacement requirements of Executive
Order 13495 with the least possible burden for small entities. The NPRM
provides a number of efficient and informal alternative dispute
mechanisms to resolve concerns about contractor compliance, including
allowing for complaints initially to be filed with the contracting
agency and having the contracting agency provide compliance assistance
to the contractor about the nondisplacement requirements and allowing
for the Wage and Hour Division to attempt an informal conciliation of
complaints instead of engaging in extensive investigations. These tools
will provide contractors with an opportunity to resolve inadvertent
errors rapidly and before significant liabilities develop.
Clarification, consolidation, and simplification of compliance and
reporting requirements for small entities: This NPRM was drafted to
clearly state the compliance and reporting requirements for all
contractors subject to the nondisplacement provisions. The only
reporting requirement is the certified list of the names of all service
employees working under the contract and its subcontracts during the
last month of contract performance, including their anniversary dates
of employment with either the current or predecessor contractors or
their subcontractors. The contractor may use the list submitted to
satisfy the requirements of the SCA contract clause specified at 29 CFR
4.6(l)(2) to meet this provision.
Use of Performance Rather Than Design Standards: This NPRM was
written to provide clear guidelines to ensure compliance with the
nondisplacement requirements. Many of the features incorporate
standards geared to performance. For example, the NPRM would provide
for the successor contractor to determine the number of employees
needed to perform the work and allow the successor contractor to decide
which predecessor contract employees would receive an offer of
employment on the contract, provided the offers resulted in the least
displacement possible.
Exemption from Coverage of the Rule for Small Entities: Executive
Order 13495 establishes its own coverage and exemption requirements;
therefore, the DOL has no authority to exempt additional small
businesses from the nondisplacement requirements beyond the express
language of Executive Order 13495.
VII. Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
1532, this NPRM does not include any Federal mandate that may result in
excess of $100 million in expenditures by state, local, and tribal
governments in the aggregate or by the private sector.
VIII. Executive Order 13132 (Federalism)
The DOL has (1) reviewed this rule in accordance with Executive
Order 13132 regarding federalism and (2) determined that it does not
have federalism implications. The NPRM would not have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
IX. Executive Order 13175, Indian Tribal Governments
This NPRM would not have tribal implications under Executive Order
13175 that would require a tribal summary impact statement. The NPRM
would not have substantial direct effects on one or more Indian tribes,
on the relationship between the Federal government and Indian tribes or
on the distribution of power and responsibilities between the Federal
government and Indian tribes.
X. Effects on Families
The undersigned hereby certifies that the NPRM would not adversely
affect the well-being of families, as discussed under section 654 of
the Treasury and General Government Appropriations Act, 1999.
[[Page 13400]]
XI. Executive Order 13045, Protection of Children
This NPRM would have no environmental health risk or safety risk
that may disproportionately affect children.
XII. Environmental Impact Assessment
A review of this NPRM in accordance with the requirements of the
National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et
seq.; the regulations of the Council on Environmental Quality, 40 CFR
1500 et seq.; and the Departmental NEPA procedures, 29 CFR part 11,
indicates the NPRM would not have a significant impact on the quality
of the human environment. There is, thus, no corresponding
environmental assessment or an environmental impact statement.
XIII. Executive Order 13211, Energy Supply
This NPRM is not subject to Executive Order 13211. It will not have
a significant adverse effect on the supply, distribution, or use of
energy.
XIV. Executive Order 12630, Constitutionally Protected Property Rights
This NPRM is not subject to Executive Order 12630, because it does
not involve implementation of a policy that has takings implications or
that could impose limitations on private property use.
XV. Executive Order 12988, Civil Justice Reform Analysis
This NPRM was drafted and reviewed in accordance with Executive
Order 12988 and will not unduly burden the Federal court system. The
NPRM was: (1) Reviewed to eliminate drafting errors and ambiguities;
(2) written to minimize litigation; and (3) written to provide a clear
legal standard for affected conduct and to promote burden reduction.
XVI. Dates of Applicability
This is a proposed rule, and any regulations to administer the
nondisplacement requirements would only become effective upon issuance
of a final rule. E.O. 13495 provides that its nondisplacement
provisions will apply to solicitations issued on or after the effective
date of the contract clause regulations to be implemented by the FARC.
List of Subjects in 29 CFR Part 9
Employment, Federal buildings and facilities, Government contracts,
Law enforcement, Labor.
Nancy J. Leppink,
Deputy Administrator, Wage and Hour Division.
For the reasons set out in the preamble, the DOL proposes to amend
Title 29 of the Code of Federal Regulations by adding part 9 as set
forth below:
PART 9--NONDISPLACEMENT OF QUALIFIED WORKERS UNDER SERVICE
CONTRACTS
Subpart A--General
Sec.
9.1 Purpose and scope.
9.2 Definitions.
9.3 Coverage.
9.4 Exclusions.
Subpart B--Requirements
9.11 Contracting agency requirements.
9.12 Contractor requirements and prerogatives.
Subpart C--Enforcement
9.21 Complaints.
9.22 Wage and Hour Division conciliation.
9.23 Wage and Hour Division investigation.
9.24 Remedies and sanctions for violations of this part.
Subpart D--Administrator's Determination, Mediation, and Administrative
Proceedings
9.31 Administrator's determination.
9.32 Requesting appeals.
9.33 Mediation.
9.34 Administrative Law Judge hearings.
9.35 Administrative Review Board hearings.
Appendix A to Part 9--Contract Clause
Appendix B to Part 9--Notice to Service Contract Employees
Authority: 5 U.S.C. 301; section 6, E.O. 13495, 74 FR 6103;
Secretary's Order 9-2009, 74 FR 58836.
Subpart A--General
Sec. 9.1 Purpose and scope.
(a) Purpose. This part contains the Department of Labor's rules
relating to the administration of Executive Order 13495,
``Nondisplacement of Qualified Workers Under Service Contracts,'' and
implements the enforcement provisions of the Executive Order. The
Executive Order assigns enforcement responsibility for the
nondisplacement requirements to the DOL. The Executive Order states
that the Federal Government's procurement interests in economy and
efficiency are served when the successor contractor hires the
predecessor's employees. A carryover work force minimizes disruption in
the delivery of services during a period of transition between
contractors and provides the Federal Government the benefit of an
experienced and trained work force that is familiar with the Federal
Government's personnel, facilities, and requirements. Executive Order
13495, therefore, generally requires that successor service contractors
performing on Federal contracts offer a right of first refusal to
suitable employment (i.e., a job for which the employee is qualified)
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.
(b) Policy. Executive Order 13495 establishes a Federal Government
policy for service contracts and their solicitations to include a
clause that requires the contractor and its subcontractors under a
contract that succeeds a contract for performance of the same or
similar services at the same location to offer a right of first refusal
of employment to those employees (other than managerial and supervisory
employees) employed under the predecessor contract whose employment
will be terminated as a result of the award of the successor contract
in positions for which the employees are qualified. Nothing in
Executive Order 13495 or this part shall be construed to permit a
contractor or subcontractor to fail to comply with any provision of any
other Executive Order, regulation, or law of the United States.
(c) Scope. Neither Executive Order 13495 nor this part creates any
rights under the Contract Disputes Act or any private right of action.
The Executive Order provides that disputes regarding the requirement of
the contract clause prescribed by section 5 of the Order, to the extent
permitted by law, shall be disposed of only as provided by the
Secretary of Labor in regulations issued under the Order. It also
provides for this part to favor the resolution of disputes by efficient
and informal alternative dispute resolution methods to the extent
practicable. The Order does not preclude judicial review of final
decisions by the Secretary in accordance with the Administrative
Procedure Act.
Sec. 9.2 Definitions.
For purposes of this part:
(1) Administrator means the Administrator of the Wage and Hour
Division and includes any official of the Wage and Hour Division
authorized to perform any of the functions of the Administrator under
this part.
(2) Administrative Review Board means the Administrative Review
Board, U.S. Department of Labor.
[[Page 13401]]
(3) Contractor means a prime contractor and all of its first or
lower tier subcontractors on a Federal service contract.
(4) Contracting Officer means the individual, a duly appointed
successor, or authorized representative who is designated and
authorized to enter into procurement contracts on behalf of the Federal
contracting agency.
(5) Day means, unless otherwise specified, a calendar day.
(6) Employee or service employee means any person engaged in the
performance of a service contract other than any person employed in a
bona fide executive, administrative, or professional capacity, as those
terms are defined in 29 CFR part 541. The term employee or service
employee includes all such persons, as defined in the McNamara-O'Hara
Service Contract Act of 1965, as amended, regardless of any contractual
relationship that may be alleged to exist between a contractor or
subcontractor and such persons.
(7) Employment opening means any vacancy in a position on the
contract, including any vacancy caused by replacing an employee from
the predecessor contract with a different employee.
(8) Federal Government means an agency or instrumentality of the
United States that enters into a procurement contract pursuant to
authority derived from the Constitution and the laws of the United
States.
(9) Managerial employee and supervisory employee mean a person
engaged in the performance of services under the contract who is
employed in a bona fide executive, administrative, or professional
capacity, as those terms are defined and delimited in 29 CFR part 541.
(10) Month means a period of 30 consecutive days, regardless of the
day of the calendar month on which it begins.
(11) Office of Administrative Law Judges means the Office of
Administrative Law Judges, U.S. Department of Labor.
(12) Secretary means the U.S. Secretary of Labor or an authorized
representative of the Secretary.
(13) Same or similar service means a service that is either
identical to or has characteristics that are alike in substance and
essentials to a service performed at the same location on a contract
that is being replaced by the Federal Government or a contractor on a
Federal service contract.
(14) Service contract or contract means any contract or subcontract
for services entered into by the Federal Government or its contractors
that is covered by the McNamara-O'Hara Service Contract Act of 1965, as
amended, and its implementing regulations.
(15) Solicitation means any request to submit offers or quotations
to the Government.
(16) United States means the United States and all executive
departments, independent establishments, administrative agencies, and
instrumentalities of the United States, including corporations of
which, all or substantially all, of the stock is owned by the United
States, by the foregoing departments, establishments, agencies,
instrumentalities, and including non-appropriated fund
instrumentalities.
(17) Wage and Hour Division means the Wage and Hour Division, U.S.
Department of Labor.
Sec. 9.3 Coverage.
This part applies to all service contracts and their solicitations,
except those excluded by Sec. 9.4 of this part, that succeed contracts
for the same or similar service at the same location.
Sec. 9.4 Exclusions.
(a) Small contracts.
(1) General. The requirements of this part do not apply to
contracts or subcontracts under the simplified acquisition threshold
set by the Office of Federal Procurement Policy Act, as amended.
(2) Application to subcontracts. While the Sec. 9.4(a)(1)
exclusion applies to subcontracts that are less than the simplified
acquisition threshold, the prime contractor must comply with the
requirements of this part, if the prime contract is at least the
threshold amount. When a contractor that is subject to the
nondisplacement requirements of this part discontinues the services of
a subcontractor at any time during the contract and performs those
services itself at the same location, the contractor shall offer
employment on the contract to the subcontractor's employees who would
otherwise be displaced and would otherwise be qualified in accordance
with this part but for the size of the subcontract.
(b) Certain contracts or subcontracts awarded for services produced
or provided by persons who are blind or have severe disabilities.
(1) The requirements of this part do not apply to contracts or
subcontracts pursuant to the Javits-Wagner-O'Day Act.
(2) The requirements of this part do not apply to contracts or
subcontracts for guard, elevator operator, messenger, or custodial
services provided to the Federal Government under contracts or
subcontracts with sheltered workshops employing the severely
handicapped as described in sec. 505 of the Treasury, Postal Services
and General Government Appropriations Act, 1995.
(3) The requirements of this part do not apply to agreements for
vending facilities entered into pursuant to the preference regulations
issued under the Randolph-Sheppard Act.
(4) The exclusions provided by paragraphs (b)(1) through (3) of
this section apply when either the predecessor or successor contract
has been awarded for services produced or provided by the severely
disabled, as described in paragraphs (b)(1) through (b)(3) of this
section.
(c) Federal service work constituting only part of employee's job.
This part does not apply to employees who were hired to work under a
Federal service contract and one or more nonfederal service contracts
as part of a single job, provided that the employees were not deployed
in a manner that was designed to avoid the purposes of Executive Order
13495.
(d) Contracts exempted by Federal agency. This part does not apply
to any contract, subcontract, or purchase order or any class of
contracts, subcontracts, or purchase orders if the head of a
contracting department or agency finds that the application of any of
the requirements of this part would not serve the purposes of Executive
Order 13495 or would impair the ability of the Federal Government to
procure services on an economical and efficient basis.
(1) The agency determination shall be made no later than the
solicitation date. As an alternative to waiving all provisions of this
part, the head of a contracting department or agency may waive one or
more individual provisions no later than the contract solicitation
date.
(2) When an agency exercises its exemption authority, the
contracting agency will notify affected workers in writing of the
finding and decision no later than the award date. The notification
shall include facts supporting the conclusion that the application of
any of the requirements of this part would not serve the purposes of
Executive Order 13495 or would impair the ability of the Federal
Government to procure services on an economical and efficient basis.
Where a contracting agency exempts a class of contracts, subcontracts,
or purchase orders, the agency will provide the notice to incumbent
workers for each individual award.
(3) The agency shall use the notification method specified in
[[Page 13402]]
Sec. 9.11(b) of this part to inform workers of the decision.
(4) In exercising the authority to exempt contracts under this
section, based on a finding that any of the nondisplacement provisions
would not serve the purposes of Executive Order 13495, the agency shall
prepare a written analysis supporting the determination that
application of the nondisplacement provisions would not serve the
purposes of the Executive Order or would impair the ability of the
Federal Government to procure services on an economical and efficient
basis.
(e) Managerial and supervisory employees. This part does not apply
to employees who are managerial or supervisory employees of Federal
service contractors or subcontractors. See Sec. 9.2(9) of this part,
definition of managerial employee and supervisory employee.
Subpart B--Requirements
Sec. 9.11 Contracting agency requirements.
(a) Contract Clause. The contract clause set forth in appendix A of
this part shall be included in covered service contracts, and
solicitations for such contracts, that succeed contracts for
performance of the same or similar services at the same location:
(b) Notice. Where a contract will be awarded to a successor for the
same or similar services to be performed at the same location, the
Contracting Officer (or designee) will provide written notice to
service employees of the predecessor contractor of their possible right
to an offer of employment. Such notice shall be either posted in a
conspicuous place at the worksite or delivered to the employees
individually. Where the predecessor contractor's workforce is comprised
of a significant portion of workers who are not fluent in English, the
notice shall be provided in both English and a language with which the
employees are more familiar. Multiple foreign language notices are
required where significant portions of the workforce speak different
foreign languages and there is no common language. Contracting Officers
may provide the notice set forth in appendix B to this part in either a
physical posting at the job site or another format (e.g., individual
paper notices or e-mail notification to the affected employees).
(c) Disclosures. The Contracting Officer shall provide the
incumbent contractor's list of employees referenced in Sec. 9.12(e) of
this part to the successor contractor and, on request, to employees or
their representatives.
(d) Actions on complaints.
(1) Reporting.
(i) Report contents: Except as provided by paragraph (d)(3) of this
section, the Contracting Officer shall forward to the Branch of
Government Contracts Enforcement, Wage and Hour Division, U.S.
Department of Labor, Washington, DC 20210 any:
(A) Complaint of contractor noncompliance with this part;
(B) Available statements by the employee or the contractor
regarding the alleged violation;
(C) Evidence that a seniority list was issued by the predecessor
and provided to the successor;
(D) A copy of the seniority list;
(E) Evidence that the nondisplacement contract clause was included
in the contract or that the contract was exempted by the contracting
agency;
(F) Information concerning known settlement negotiations between
the parties, if applicable;
(G) Any other relevant facts known to the contracting officer.
(ii) Additional distribution. The Contracting Officer shall provide
copies of the report to the contractor, including the prime contractor
when the complaint alleges violations by a subcontractor, and the
complainant. See Sec. 9.21(a) of this part regarding filing complaints
with the contracting agency.
(iii) Reporting time frame. All information shall be forwarded by
the Contracting Officer to the Wage and Hour Division within 30 days of
receipt of the complaint. See also Sec. 9.21 of this part, Complaints.
(2) Initial review. The contracting agency may conduct an initial
review of any complaint the agency receives under this part. As part of
the contracting agency's initial review, the Contracting Officer may
obtain statements of the positions of the parties and may inspect the
records of the predecessor and successor contractors (and make copies
or transcriptions thereof), question the predecessor and successor
contractors and any employees of these contractors, and require the
production of any documentary or other evidence deemed necessary to
determine whether a violation of this part has occurred.
(3) Compliance assistance. The Contracting Officer (or designee)
shall provide information about the contract clause provisions of this
part to the complainant(s) and successor contractor. Questions of
interpretations of this part shall be referred to the nearest local
office of the Wage and Hour Division. Contracting Officers need not
refer to the Wage and Hour Division any complaint that is withdrawn
because of compliance assistance provided by the contracting agency.
Sec. 9.12 Contractor requirements and prerogatives.
(a) General.
(1) No employment openings prior to right of first refusal. Except
as provided under the exclusions listed in Sec. 9.4 of this part or
paragraphs (c) and (d) of this section, a successor contractor or
subcontractor shall fill no employment openings under the contract
prior to making good faith offers of employment (i.e., a right of first
refusal to employment on the contract), in positions for which the
employees are qualified, to those employees employed under the
predecessor contract whose employment will be terminated as a result of
award of the contract or the expiration of the contract under which the
employees were hired. The contractor and its subcontractors shall make
an express offer of employment to a position for which the employee is
qualified to each employee and shall state the time within which the
employee must accept such offer, but in no case shall the period within
which the employee must accept the offer of employment be less than 10
days.
(2) No seniority list available. 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.
(3) Determining eligibility. While a person's entitlement to a job
offer under this part usually will be based on whether he or she is
named on the certified list of all service employees working under the
predecessor's contract or subcontracts during the last month of
contract performance, a contractor must also accept other credible
evidence of an employee's entitlement to a job offer under this part.
For example, even if a person's name does not appear on the list of
employees on the predecessor contract, an employee's assertion of an
assignment to work on a contract during the predecessor's last month of
performance coupled with contracting agency staff verification could
constitute credible evidence of an employee's entitlement to a job
offer, as otherwise provided for in this part. Similarly, an employee
could demonstrate eligibility by producing a paycheck stub identifying
the work location and dates worked.
(b) Method of job offer.
(1) Bona-fide offer. Except as otherwise provided in this part, a
[[Page 13403]]
contractor must make a bona-fide express offer of employment to each
employee on the predecessor contract before offering employment on the
contract to any other person. The obligation to offer employment under
this part shall cease upon the employee's first refusal of a bona fide
offer to employment on the contract.
(2) Establishing time limit for employee response. 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.
(3) Process. The successor contractor must, in writing or orally,
offer employment to each employee. See also paragraph (f) of this
section, Recordkeeping. In order to ensure that the offer is
effectively communicated, the successor contractor should take
reasonable efforts to make the offer in a language that each worker
understands. For example, if the contractor holds a meeting for a group
of employees on the predecessor contract in order to extend the
employment offers, having a co-worker or other person who fluently
translates for employees who are not fluent in English would satisfy
this provision.
(4) Different job position. As a general matter, an offer of
employment on the successor's contract will be presumed to be a bona
fide offer of employment, even if it is not for a position similar to
the one the employee previously held but one for which the employee is
qualified. 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. A contractor
must base its decision regarding an employee's qualifications on
credible information provided by a knowledgeable source such as the
predecessor contractor, the local supervisor, the employee, or the
contracting agency.
(5) Different employment terms and conditions. An offer of
employment to a position on the contract under different employment
terms and conditions, including changes to pay or benefits, than the
employee held with the predecessor contractor will be considered bona
fide, if the reasons are not related to a desire that the employee
refuse the offer or that other employees be hired for the offer.
(6) Termination after contract commencement. Where an employee is
terminated under circumstances suggesting the offer of employment may
not have been bona fide, the facts and circumstances of the offer and
the termination will be closely examined during any compliance action
to ensure the offer was bona fide.
(c) Exceptions. The successor contractor will bear the
responsibility of demonstrating the appropriateness of claiming any of
the following exceptions to the nondisplacement provisions subject to
this part.
(1) Nondisplaced employees.
(i) A contractor or subcontractor is not required to offer
employment to any employee of the predecessor contractor who will be
retained by the predecessor contractor.
(ii) The contractor must presume that all employees hired to work
under a predecessor's Federal service contract will be terminated as a
result of the award of the successor contract, absent an ability to
demonstrate a reasonable belief to the contrary that is based upon
credible information provided by a knowledgeable source such as the
predecessor contractor or the employee.
(2) Successor's current employees. A contractor or subcontractor
may employ under the contract any employee who has worked for the
contractor or subcontractor for at least 3 months immediately preceding
the commencement of the contract and who would otherwise face lay-off
or discharge.
(3) Predecessor contractor's non-service employees.
(i) A contractor or subcontractor is not required to offer
employment to any employee of the predecessor who is not a service
employee. See Sec. 9.2(6), (9), respectively, of this part for
definitions of employee, managerial employee and supervisory employee.
(ii) The contractor must presume that all employees hired to work
under a predecessor's Federal service contract are service employees,
absent an ability to demonstrate a reasonable belief to the contrary
that is based upon credible information provided by a knowledgeable
source such as the predecessor contractor, the employee, or the
contracting agency. Information regarding the general business
practices of the predecessor contractor or the industry is not
sufficient to claim this exemption.
(4) Employee's past unsuitable performance.
(i) A contractor or subcontractor is not required to offer
employment to any employee of the predecessor contractor for whom the
contractor or any of its subcontractors reasonably believes, based on
the particular employee's past performance, has failed to perform
suitably on the job.
(ii)(A) The contractor must presume that all employees working
under the predecessor contract in the last month of performance
performed suitable work on the contract, absent an ability to
demonstrate a reasonable belief to the contrary that is based upon
credible information provided by a knowledgeable source such as the
predecessor contractor and its subcontractors, the local supervisor,
the employee, or the contracting agency.
(B) For example, a contractor may demonstrate its reasonable belief
that the employee, in fact, failed to perform suitably on the
predecessor contract through evidence of disciplinary action taken for
poor performance or evidence directly from the contracting agency that
the particular employee did not perform suitably. The performance
determination must be made on an individual basis for each employee,
and information regarding the general performance of the predecessor
contractor is not sufficient to claim this exception.
(5) Non-Federal work.
(i) A contractor or subcontractor is not required to offer
employment to any employee hired to work under a predecessor's Federal
service contract and one or more nonfederal service contracts as part
of a single job, provided that the employee was not deployed in a
manner that was designed to avoid the purposes of this part.
(ii) The successor contractor must presume that no employees hired
to work under a predecessor's Federal service contract worked on one or
more nonfederal service contracts as part of a single job, unless the
successor can demonstrate a reasonable belief to the contrary. The
successor contractor must demonstrate that its belief is reasonable and
is based upon credible information provided by a knowledgeable source
such as the predecessor contractor, the local supervisor, the employee,
or the contracting agency. Information regarding the general business
practices of the predecessor contractor or the industry is not
sufficient.
(iii) A contractor that makes a reasonable determination that a
predecessor contractor's employee also performed work on one or more
nonfederal service contracts as part of a single job must also make a
reasonable determination that the employee was not deployed in such a
way that was designed to avoid the purposes of this part. The successor
contractor must demonstrate that its belief is reasonable and is based
upon credible information that has been provided by a knowledgeable
source such as the employee or the contracting agency. For
[[Page 13404]]
example, evidence from a contracting agency that an employee worked
only occasionally on a Federal service contract combined with a
statement from the employee indicating fulltime employment with the
predecessor would, absent other facts, constitute the basis for a
reasonable belief that there is no obligation to offer employment to
the employee. On the other hand, information suggesting a change in how
a predecessor contractor deployed employees near the end of the
contract period could suggest an effort to evade the purposes of this
part.
(d) Reduced staffing.
(1) Contractor determines how many employees.
(i) A contractor or subcontractor shall determine the number of
employees necessary for efficient performance of the contract or
subcontract and, for bona fide staffing or work assignment reasons, may
elect to employ fewer employees than the predecessor contractor
employed in connection with performance of the work. Thus, the
successor contractor need not offer employment on the contract to all
employees on the predecessor contract, but must offer employment only
to the number of eligible employees the successor contractor believes
necessary to meet its anticipated staffing pattern, except that:
(ii) Where, in accordance with this authority to employ fewer
employees, a successor contractor does not offer employment to all the
predecessor contract employees, the obligation to offer employment
shall continue for 90 days after the successor contractor's first date
of performance on the contract. The contractor's obligation under this
part will end when all of the predecessor contract employees have
received a bona fide job offer or the 90-day window of obligation has
expired. The following three examples demonstrate the principle.
(A) A contractor with 18 employment openings and a list of 20
employees from the predecessor contract must continue to offer
employment to individuals on the list until 18 of the employees accept
the contractor's employment offer or until the remaining employees have
rejected the offer. If an employee quits or is terminated from the
successor contract within 90 days of the first date of contract
performance, the contractor must first offer employment to any
remaining eligible employees of the predecessor contract.
(B) A successor contractor originally offers 20 jobs to predecessor
contract employees on a contract that had 30 positions under the
predecessor contractor. The first 20 predecessor contract employees the
successor contractor approaches accept the employment offer. Within a
month of commencing work on the contract, the successor determines that
it must hire seven additional employees to perform the contract
requirements. The first three predecessor contract employees to whom
the successor offers employment decline the offer; however, the next
four predecessor contract employees accept the offers. In accordance
with the provisions of this section, the successor contractor offers
employment on the contract to the three remaining predecessor contract
employees who all accept; however, two employees on the contract quit
five weeks later. The successor contractor has no further obligation
under this part to make a second employment offer to the persons who
previously declined an offer of employment on the contract.
(C) A successor contractor reduces staff on a successor contract by
two positions from the predecessor contract's staffing pattern. Each
predecessor contract employee the successor approaches accepts the
employment offer; therefore, employment offers are not made to two
predecessor contract employees. The successor contractor terminates an
employee five months later. The successor contractor has no obligation
to offer employment to the two remaining employees from the predecessor
contract, because more than 90 days have passed since the successor
contractor's first date of performance on the contract.
(2) Contractor determines which employees. The contractor, subject
to provisions of this part and other applicable restrictions (including
non-discrimination laws and regulations), will determine to which
employees it will offer employment. See Sec. 9.1(b) regarding
compliance with other requirements.
(3) Changes to staffing pattern. Where a contractor reduces the
number of employees in any occupation on a contract with multiple
occupations, resulting in some displacement, the contractor shall
scrutinize each employee's qualifications in order to offer positions
to the greatest number of predecessor contract employees possible.
Example: A successor contract is awarded for a food preparation and
services contract with Cook II, Cook I and dishwasher positions. The
Cook II position requires a higher level of skill than the Cook I
position. The successor contractor reconfigures the staffing pattern on
the contract by increasing the number persons employed as a Cook II and
Dishwashers but reducing the number of Cook I employees. The successor
contractor must examine the qualifications of each Cook I, to see if a
position as either a Cook II or dishwasher is possible. Conversely,
were the contractor to increase the number of Cook I employees,
decrease the number of Cook II employees, and keep the same number of
Dishwashers the contractor would generally be able offer Cook I
positions to some Cook II employees, because the Cook II performs a
higher level occupation. The contractor would also need to consider
whether offering Dishwasher positions to Cook I employees would result
in less overall displacement. Finally, should some Dishwashers decline
the employment offer, the Contractor would need to consider the
qualifications of the Cooks at both levels and offer positions on the
contract in a way that results in the least displacement.
(e) Contractor obligations near end of contract performance. The
contractor shall, not less than 10 days before completion of the
contractor's performance of services on a contract, furnish the
Contracting Officer with a certified list of the names of all service
employees working under the contract and its subcontracts during the
last month of contract performance. The list shall also contain
anniversary dates of employment of each service employee under the
contract and its predecessor contracts with either the current or
predecessor contractors or their subcontractors. The contractor may use
the list submitted to satisfy the requirements of the contract clause
specified at 29 CFR 4.6(l)(2) to meet this provision.
(f) Recordkeeping.
(1) Form of records. This part prescribes no particular order or
form of records for contractors. A contractor may use records developed
for any purpose to satisfy the requirements of this part, provided the
records otherwise meet the requirements and purposes of this part and
are fully accessible. The requirements of this part shall apply to all
records regardless of their format (e.g., paper or electronic).
(2) Records to be retained.
(i) The contractor shall 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, a copy of any written notice that may have been
distributed, and the names of the employees from the predecessor
contract to whom an offer was made.
[[Page 13405]]
(ii) The contractor shall maintain a copy of any record that forms
the basis for any exclusion or exemption claimed under this part.
(iii) The contractor shall maintain a copy of the employee list
received from the contracting agency. See paragraph (e) of this
section, contractor obligations near end of contract.
(iv) Every contractor who makes retroactive payment of wages or
compensation under the supervision of the Administrator of the Wage and
Hour Division pursuant to Sec. 9.24(b) of this part, shall:
(A) Record and preserve, as an entry on the pay records, the amount
of such payment to each employee, the period covered by such payment,
and the date of payment.
(B) Prepare a report of each such payment on a receipt form
provided by or authorized by the Wage and Hour Division, and
(1) Preserve a copy as part of the records,
(2) Deliver a copy to the employee, and
(3) File the original, as evidence of payment by the contractor and
receipt by the employee, with the Administrator or an authorized
representative within 10 days after payment is made.
(3) Records retention period. The contractor shall retain records
prescribed by section Sec. 9.12(f)(2) of this part for not less than a
period of three years from the date the records were created.
(4) Disclosure. The contractor must provide copies of such
documentation upon request of any authorized representative of the
contracting agency or Department of Labor.
(g) Investigations. The contractor shall cooperate in any review or
investigation conducted pursuant to this part 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 part or has
attempted to exercise any rights afforded under this part. This
obligation to cooperate with investigations is not limited to
investigations of the contractor's own actions, but also includes
investigations related to other contractors (e.g., predecessor and
subsequent contractors) and subcontractors.
Subpart C--Enforcement
Sec. 9.21 Complaints.
(a) With contracting agency. Any former employee(s) or authorized
employee representative(s) of the predecessor contractor who believes
the successor contractor has violated this part may file a complaint
with the Contracting Officer of the appropriate Federal agency within
120 days of the alleged violation. See also, Sec. 9.11(d) of this
part, Contracting agency actions on complaints.
(b) With Wage and Hour Division. The complainant may file the
complaint directly with the Branch of Government Contracts Enforcement,
Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210,
if the complainant has not been able to timely file the complaint with
the Contracting Officer or has not received, within 30 days of filing
the complaint with the Contracting Officer, a copy of the report
forwarded to the Wage and Hour Division under Sec. 9.11(d)(1) of this
part. The complaint must be filed with the Wage and Hour Division
within 180 days of the alleged violation.
Sec. 9.22 Wage and Hour Division conciliation.
After obtaining information regarding alleged violations, the Wage
and Hour Division may contact the successor contractor about the
complaint and attempt to conciliate and reach a resolution that is
consistent with the requirements of this part and is acceptable to both
the complainant(s) and the successor contractor.
Sec. 9.23 Wage and Hour Division investigation.
(a) Initial investigation. The Administrator may initiate an
investigation under this part either as the result of the unsuccessful
conciliation of a complaint or 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 or transcriptions thereof), question the predecessor and
successor contractors and any employees of these contractors, and
require the production of any documentary or other evidence deemed
necessary to determine whether a violation of this part (including
conduct warranting imposition of ineligibility sanctions pursuant to
Sec. 9.24(d) of this part) has occurred.
(b) Subsequent investigations. 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 contractor, where imposition of
ineligibility sanctions is appropriate, or where the contractor has
failed to comply with an order of the Secretary.
Sec. 9.24 Remedies and sanctions for violations of this part.
(a) Authority. Executive Order 13495 provides that the Secretary
shall have the authority to issue orders prescribing appropriate
remedies, including, but not limited to, requiring the contractor to
offer employment, in positions for which the employees are qualified,
to employees from the predecessor contract and payment of wages lost.
(b) Unpaid wages or other relief due. In addition to satisfying any
costs imposed under Sec. Sec. 9.34(j), 9.35(d) of this part, a
contractor who violates any provision of this part shall take
appropriate action to abate the violation, which may include hiring
each affected employee in a position on the contract for which the
employee is qualified, together with compensation (including lost
wages), terms, conditions, and privileges of that employment.
(c) Withholding of funds.
(1) Unpaid wages or other relief. 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 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.
(2) List of employees. If the Contracting Officer or the
Administrator, upon final order of 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. 9.12(e)
of this part, the Contracting Officer may in his or her discretion, or
upon request by the Administrator, take such action as may be necessary
to cause the suspension of the payment of contract funds until such
time as the list is provided to the Contracting Officer.
(d) Ineligibility listing. Where the Secretary finds that a
contractor has failed to comply with any order of the Secretary or has
committed willful or aggravated violations of this part, 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 up
[[Page 13406]]
to three years. Neither an order for debarment of any contractor or
subcontractor from further Government contracts under this section nor
the inclusion of a contractor or subcontractor on a published list of
noncomplying contractors shall be carried out without affording the
contractor or subcontractor an opportunity for a hearing.
Subpart D--Administrator's Determination, Mediation, and
Administrative Proceedings
Sec. 9.31 Determination of the Administrator.
(a) Written determination. Upon completion of an investigation
under Sec. 9.23 of this part, and provided that a resolution is not
reached that is consistent with the requirements of this part and
acceptable to both the complainant(s) and the successor contractor, the
Administrator will issue a written determination of whether a violation
has occurred. The determination shall contain a statement of the
investigation findings and conclusions. A determination that a
violation occurred shall address appropriate relief and the issue of
ineligibility sanctions where appropriate. The Administrator will
notify any complainant(s); employee representative(s); contractor,
including the prime contractor if a subcontractor is implicated; and
contractor representative(s) by personal service or by registered or
certified mail to the last known address, of the investigation
findings. Where service by certified mail is not accepted by the party,
the Administrator may exercise discretion to serve the determination by
regular mail.
(b) Notice to parties and effect.
(1) Relevant facts in dispute. Except as provided in paragraph
(b)(2) of this section, the determination of the Administrator shall
advise the parties (ordinarily any complainant, the successor
contractor, and any of their representatives) 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,
postmarked within 20 days of the date of the determination of the
Administrator, the Chief Administrative Law Judge receives a request
for a hearing pursuant to Sec. 9.32(b)(1) of this part. A detailed
statement of the reasons why the Administrator's ruling is in error,
including facts alleged to be in dispute, if any, shall be submitted
with the request for a hearing. The Administrator's determination not
to seek ineligibility sanctions shall not be appealable.
(2) Relevant facts not in dispute. If the Administrator concludes
that no relevant facts are in dispute, the parties and their
representatives, if any, 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, postmarked within 20 days of the date of the
determination of the Administrator, a petition for review is filed with
the Administrative Review Board pursuant to Sec. 9.32(b)(2) 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 parties and their
representatives, if any, of the determination of the Administrator that
there is no relevant issue of fact and that a petition for review may
be filed with the Administrative Review Board within 20 days of the
date of the notice, in accordance with the procedures at Sec.
9.32(b)(2) of this part.
Sec. 9.32 Requesting appeals.
(a) General. 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
Administrative Review Board must first be filed in accordance with
Sec. 9.31(b) of this part.
(b) Process.
(1) For Administrative Law Judge hearing.
(i) General. Any aggrieved party may file a request for a hearing
by an Administrative Law Judge within 20 days of the determination of
the Administrator. The request for a hearing shall be accompanied by a
copy of the determination of the Administrator and may be filed by U.S.
mail, facsimile (FAX), telegram, hand delivery, next-day delivery, or a
similar service. At the same time, a copy of any request for a hearing
shall be sent to the complainant(s) or successor contractor, and their
representatives, if any, 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, DC 20210.
(ii) By the complainant. The complainant or any other interested
party may request a hearing where the Administrator determines, after
investigation, that there is no basis for a finding that a contractor
has committed violation(s), or where the complainant or other
interested party believes that the Administrator has ordered inadequate
monetary relief. In such a proceeding, the party requesting the hearing
shall be the prosecuting party and the contractor shall be the
respondent; the Administrator may intervene as a party or appear as
amicus curiae at any time in the proceeding, at the Administrator's
discretion.
(iii) By the contractor. The contractor or any other interested
party may request a hearing where the Administrator determines, after
investigation, that the contractor has committed violation(s). In such
a proceeding, the Administrator shall be the prosecuting party and the
contractor shall be the respondent.
(2) For Administrative Review Board review.
(i) General. Any aggrieved party desiring review of a determination
of the Administrator in which there were no relevant facts in dispute,
or an Administrative Law Judge's decision, shall file a written
petition for review with the Administrative Review Board that must be
postmarked within 20 days of the date of the determination or decision
and shall be served on all parties and, where the case involves an
appeal from an Administrative Law Judge's decision, the Chief
Administrative Law Judge. See also Sec. 9.32(b)(1) of this part.
(ii) Contents and service.
(A) A petition for review shall refer to the specific findings of
fact, conclusions of law, or order at issue.
(B) 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,
DC 20210.
(c) Effect of filing. If a timely request for hearing or petition
for review is filed, the determination of the Administrator or the
decision of the Administrative Law Judge shall be inoperative unless
and until the Administrative Review Board issues an order affirming the
determination or decision, or the determination or decision otherwise
becomes a final order of the Secretary. If a petition for review
concerns only the imposition of ineligibility sanctions, however, the
remainder of the decision shall be effective immediately. No judicial
[[Page 13407]]
review shall be available unless a timely petition for review to the
Administrative Review Board is first filed.
Sec. 9.33 Mediation.
(a) General. The parties are encouraged to resolve disputes in
accordance with the conciliation procedures set forth at Sec. 9.22 of
this part, or, where such efforts have failed, to utilize settlement
judges to mediate settlement negotiations pursuant to 29 CFR 18.9 when
those provisions apply. 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) Appointing settlement judge for cases scheduled with the Office
of Administrative Law Judges. Upon a request by a party or the
presiding Administrative Law Judge, the Chief Administrative Law Judge
may appoint a settlement 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.
Sec. 9.34 Administrative Law Judge hearings.
(a) Authority.
(1) General. The Office of Administrative Law Judges has
jurisdiction to hear and decide appeals pursuant to Sec. 9.31(b)(1) of
this part concerning questions of law and fact from determinations of
the Administrator issued under Sec. 9.31 of this part. In considering
the matters within the scope of its jurisdiction, the Administrative
Law Judge shall act as the authorized representative of the Secretary
and shall act fully and, subject to an appeal filed under Sec.
9.32(b)(2) of this part, finally on behalf of the Secretary concerning
such matters.
(2) Limit on scope of review.
(i) The Administrative Law Judge shall not have jurisdiction to
pass on the validity of any provision of this part.
(ii) The Equal Access to Justice Act, as amended, does not apply to
hearings under this part. Accordingly, an Administrative Law Judge
shall have no authority to award attorney fees and/or other litigation
expenses pursuant to the provisions of the Equal Access to Justice Act
for any proceeding under this part.
(b) Scheduling. If the case is not stayed to attempt settlement in
accordance with Sec. 9.33(a) of this part, the Administrative Law
Judge to whom the case is assigned shall, within 15 calendar days
following receipt of the request for hearing, notify the parties and
any representatives, 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.
(c) Dismissing challenges for failure to participate. 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) Administrator's participation. 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 has found any violation of this part, except where
the complainant or other interested party challenges only the amount of
monetary relief. See also Sec. 9.32(b)(2)(i)(C) of this part.
(e) Agency participation. A Federal agency that is interested in a
proceeding may participate, at the agency's discretion, as amicus
curiae at any time in the proceedings. At the request of such Federal
agency, copies of all pleadings in a case shall be served on the
Federal agency, whether or not the agency is participating in the
proceeding.
(f) Requesting documents. 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, DC 20210.
(g) Rules of practice.
(1) The rules of practice and procedure for administrative hearings
before the Office of Administrative Law Judges at 29 CFR part 18,
subpart A, shall be applicable to the proceedings provided by this
section. This part is controlling to the extent it provides any rules
of special application that may be inconsistent with the rules in 29
CFR part 18, subpart A. The Rules of Evidence at 29 CFR 18, subpart B,
shall not apply. Rules or principles designed to assure production of
the most probative evidence available shall be applied. The
Administrative Law Judge may exclude evidence that is immaterial,
irrelevant, or unduly repetitive.
(h) Decisions. The Administrative Law Judge shall issue a decision
within 60 days after completion of 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.
(i) Orders. 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 each affected
employee in a position on the contract for which the employee is
qualified, together with compensation (including lost wages), terms,
conditions, and privileges of that employment. Where the Administrator
has sought ineligibility sanctions, the order shall also address
whether such sanctions are appropriate.
(j) Costs. If an order finding the successor contractor violated
this part is issued, the Administrative Law Judge may assess against
the contractor a sum equal to the aggregate amount of all costs (not
including attorney fees) and expenses reasonably incurred by the
aggrieved employee(s) in the proceeding. This amount shall be awarded
in addition to any unpaid wages or other relief due under Sec. 9.24(b)
of this part.
(k) Finality. 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 Administrative Review Board as set forth in
Sec. 9.32(b)(2) of this part.
Sec. 9.35 Administrative Review Board proceedings.
(a) Authority.
(1) General. The Administrative Review Board has jurisdiction to
hear and decide in its discretion appeals pursuant to Sec. 9.31(b)(2)
concerning questions of law and fact from determinations of the
Administrator issued under Sec. 9.31 of this part and from decisions
of Administrative Law Judges issued under Sec. 9.34 of this part. 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.
(2) Limit on scope of review.
(i) The Board shall not have jurisdiction to pass on the validity
of any provision of this part. The Board is
[[Page 13408]]
an appellate body and shall decide cases properly before it on the
basis of substantial evidence contained in the entire record before it.
The Board shall not receive new evidence into the record.
(ii) The Equal Access to Justice Act, as amended does not apply to
proceedings under this part. Accordingly, for any proceeding under this
part, the Administrative Review Board shall have no authority to award
attorney fees and/or other litigation expenses pursuant to the
provisions of the Equal Access to Justice Act for any proceeding under
this part.
(b) Decisions. 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 (in cases involving an appeal from an
Administrative Law Judge's decision).
(c) Orders. If the Board concludes that the contractor has violated
this part, the final order shall order action to abate the violation,
which may include hiring each affected employee in a position on the
contract for which the employee is qualified, 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.
(d) Costs. If a final order finding the successor contractor
violated this part is issued, the Board may assess against the
contractor a sum equal to the aggregate amount of all costs (not
including attorney fees) and expenses reasonably incurred by the
aggrieved employee(s) in the proceeding. This amount shall be awarded
in addition to any unpaid wages or other relief due under Sec. 9.24(b)
of this part.
(e) Finality. The decision of the Administrative Review Board shall
become the final order of the Secretary.
Appendix A to Part 9--Contract Clause
Nondisplacement of Qualified Workers
(a) Consistent with the efficient performance of this contract,
the contractor and its subcontractors shall, except as otherwise
provided herein, in good faith offer those employees (other than
managerial and supervisory employees) employed under the predecessor
contract whose employment will be terminated as a result of award of
this contract or the expiration of the contract under which the
employees were hired, a right of first refusal of employment under
this contract in positions for which employees are qualified. The
contractor and its subcontractors shall determine the number of
employees necessary for efficient performance of this contract and
may elect to employ fewer employees than the predecessor contractor
employed in connection with performance of the work. Except as
provided in paragraph (b) there shall be no employment opening under
this contract, and the contractor and any subcontractors shall not
offer employment under this contract, to any person prior to having
complied fully with this obligation. The contractor and its
subcontractors shall make an express offer of employment to each
employee as provided herein and shall state the time within which
the employee must accept such offer, but in no case shall the period
within which the employee must accept the offer of employment be
less than 10 days.
(b) Notwithstanding the obligation under paragraph (a) above,
the contractor and any subcontractors (1) May employ under this
contract any employee who has worked for the contractor or
subcontractor for at least three months immediately preceding the
commencement of this contract and who would otherwise face lay-off
or discharge, (2) are not required to offer a right of first refusal
to any employee(s) of the predecessor contractor who are not service
employees within the meaning of the Service Contract Act of 1965, as
amended, 41 U.S.C. 357(b), and (3) are not required to offer a right
of first refusal to any employee(s) of the predecessor contractor
whom the contractor or any of its subcontractors reasonably
believes, based on the particular employee's past performance, has
failed to perform suitably on the job.
(c) In accordance with Federal Acquisition Regulation 52.222-
41(n), the contractor shall, not less than 10 days before completion
of this contract, furnish the Contracting Officer a certified list
of the names of all service employees working under this contract
and its subcontracts during the last month of contract performance.
The list shall also contain anniversary dates of employment of each
service employee under this contract and its predecessor contracts
either with the current or predecessor contractors or their
subcontractors. The Contracting Officer will provide the list to the
successor contractor, and the list shall be provided on request, to
employees or their representatives.
(d) If it is determined, pursuant to regulations issued by the
Secretary of Labor (Secretary), that the contractor or its
subcontractors are not in compliance with the requirements of this
clause or any regulation or order of the Secretary, appropriate
sanctions may be imposed and remedies invoked against the contractor
or its subcontractors, as provided in Executive Order 13495, the
regulations, and relevant orders of the Secretary, or as otherwise
provided by law.
(e) In every subcontract entered into in order to perform
services under this contract, the contractor will include provisions
that ensure that each subcontractor will honor the requirements of
paragraphs (a) through (b) with respect to the employees of a
predecessor subcontractor or subcontractors working under this
contract, as well as of a predecessor contractor and its
subcontractors. The subcontract shall also include provisions to
ensure that the subcontractor will provide the contractor with the
information about the employees of the subcontractor needed by the
contractor to comply with paragraph (c), above. The contractor will
take such action with respect to any such subcontract as may be
directed by the Secretary as a means of enforcing such provisions,
including the imposition of sanctions for noncompliance: Provided,
however, that if the contractor, as a result of such direction,
becomes involved in litigation with a subcontractor, or is
threatened with such involvement, the contractor may request that
the United States enter into such litigation to protect the
interests of the United States.
(f) The Contracting Officer shall withhold or cause to be
withheld from the prime contractor under this or any other
Government contract with the same prime contractor such sums as an
authorized official of the Department of Labor requests, upon a
determination by the Administrator, the Administrative Law Judge, or
the Administrative Review Board that there has been a failure to
comply with the terms of this clause and that wages lost as a result
of the violations are due to employees or that other monetary relief
is appropriate. If the Contracting Officer or the Administrator,
upon final order of the Secretary, finds that the contractor has
failed to provide a list of the names of employees working under the
contract, the Contracting Officer may in his or her discretion, or
upon request by the Administrator, take such action as may be
necessary to cause the suspension of the payment of contract funds
until such time as the list is provided to the Contracting Officer.
(g) The contractor and subcontractor shall maintain the
following records (regardless of format, e.g., paper or electronic,
provided the records meet the requirements and purposes of this
subpart and are fully accessible) of its compliance with this clause
for not less than a period of three years from the date the records
were created:
(1) Copies of any written offers of employment or a
contemporaneous written record of any oral offers of employment,
including the date, location, and attendance roster of any employee
meeting(s) at which the offers were extended, a summary of each
meeting, a copy of any written notice that may have been
distributed, and the names of the employees from the predecessor
contract to whom an offer was made.
(2) A copy of any record that forms the basis for any exclusion
or exemption claimed under this part.
(3) A copy of the employee list provided to or received from the
contracting agency.
(4) An entry on the pay records of the amount of any retroactive
payment of wages or compensation under the supervision of the
Administrator of the Wage and Hour Division to each employee, the
period covered by such payment, and the date of payment, and a copy
of any receipt form provided by or authorized by the Wage and Hour
Division. The contractor shall also deliver a copy of the receipt to
the employee and file the original, as evidence of payment by the
contractor and receipt by the employee, with the Administrator or an
authorized representative within 10 days after payment is made.
[[Page 13409]]
(h) The contractor shall cooperate in any review or
investigation by the contracting agency or the Department of Labor
into possible violations of the provisions of this clause and shall
make records requested by such official(s) available for inspection,
copying, or transcription upon request.
(i) Disputes concerning the requirements of this clause shall
not be subject to the general disputes clause of this contract. Such
disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR part 9. Disputes within the
meaning of this clause include disputes between or among any of the
following: The contractor, the contracting agency, the U.S.
Department of Labor, and the employees under the contract or its
predecessor contract.
Appendix B to Part 9--Notice to Service Contract Employees
The contract for (insert type of service) services currently
performed by (insert name of predecessor contractor) has been
awarded to a successor contractor, (insert name of successor
contractor). The successor contractor's first date of performance on
the contract will be (insert first date of successor contractor's
performance). If the work is to be performed at the same location, a
successor contractor is generally required to offer employment to
the employees who worked on the contract during the last 30 days of
the predecessor performance, except in the following situations:
Employees who will not face layoff or discharge by the new
contract award are not entitled to an offer of employment.
Managerial, supervisory, or non-service employees on the current
contract are not entitled to an offer of employment.
The successor contractor may reduce the size of the current work
force; therefore, only a portion of the existing work force may
receive employment offers. However, the successor contractor must
offer employment to the displaced employees if any openings occur
during the first 90 days of performance on the successor contract.
The successor contractor may employ its current employee on the
successor contract before offering employment to the predecessor
contract's employees only if the successor contractor's current
employee has worked for the successor contractor for at least three
months immediately preceding the first date of performance on the
successor contract and would otherwise face layoff or discharge if
not employed under the new contract.
Where the successor contractor has reason to believe, based on
credible information from a knowledgeable source, that an employee's
job performance has been unsuitable, the employee is not entitled to
an offer of employment on the successor contract.
An employee hired to work under a predecessor's Federal service
contract and one or more nonfederal service contracts as part of a
single job is not entitled to an offer of employment on the
successor contract, provided that the employee was not deployed in a
manner that was designed to avoid the purposes of this part.
Time limit to accept offer: If you are offered employment on the
new contract, you will have at least 10 days to accept the offer.
Complaints: Any employee or authorized employee representative
who believes that he or she is entitled to an offer of employment
with the successor contractor and who has not received an offer, may
file a complaint with (insert Contracting Officer or representative
name, address and telephone number). Any complaint must be filed
with the contracting agency within 120 days of the alleged
violation. The Contracting Officer will inform the parties of their
rights and obligations regarding the nondisplacement of employees
and, forward a report to the U.S. Department of Labor, Wage and Hour
Division within 30 days. The employee may also file the complaint
directly with the Administrator, Wage and Hour Division, U.S.
Department of Labor, Washington, DC 20210, if the complainant has
not been able timely to file the complaint with the Contracting
Officer or received a copy of the information to be forwarded to the
Wage and Hour Division within 30 days of the original filing. The
complaint must be filed with the Wage and Hour Division within 180
days of the alleged violation.
For additional information: 1-866-4US-WAGE (1-866-487-9243) TTY:
1-877-889-5627, http://www.wagehour.dol.gov.
[FR Doc. 2010-5781 Filed 3-18-10; 8:45 am]
BILLING CODE 4510-27-P