Federal Register, Volume 90 Issue 243 (Monday, December 22, 2025)

[Federal Register Volume 90, Number 243 (Monday, December 22, 2025)]
[Rules and Regulations]
[Pages 59734-59740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-23626]

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DEPARTMENT OF LABOR

29 CFR Part 9

[Docket No. WHD-2025-0034]
RIN 1235-AA45

Nondisplacement of Qualified Workers Under Service Contracts;
Rescission of Regulations

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Final rule; rescission of regulations.

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SUMMARY: On January 20, 2025, President Trump issued an Executive order
rescinding certain Executive orders and actions, which revoked an
Executive order concerning nondisplacement of qualified workers under
Federal service contracts and directed the heads of each agency to take
immediate steps to effectuate the revocations listed. In accordance
with this directive, the Department of Labor is issuing a final rule to
rescind the regulations on nondisplacement of qualified workers under
service contracts, which were promulgated solely pursuant to the
authority provided by the revoked Executive order.

DATES: This rule is effective December 22, 2025.

FOR FURTHER INFORMATION CONTACT: Daniel Navarrete, Director, Division
of Regulations, Legislation, and Interpretation, Wage and Hour Division
(WHD), U.S. Department of Labor, Room S-3502, 200 Constitution Avenue
NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not a
toll-free number). Alternative formats are available upon request by
calling 1-866-487-9243. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
Questions of interpretation or enforcement of the agency's existing
regulations may be directed to the nearest WHD district office. Locate
the nearest office by calling the WHD's toll-free help line at (866)
4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time
zone, or log onto WHD's website at https://www.dol.gov/agencies/whd/contact/local-offices for a nationwide listing of WHD district and area
offices.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

On January 20, 2025, President Trump issued Executive Order 14148,
``Initial Rescissions of Harmful Executive Orders and Actions'' (90 FR
8237 (Jan. 28, 2025)). Executive Order 14148 directs the heads of each
agency to take immediate steps to effectuate the revocations listed in
the Executive Order, including Executive Order 14055 of November 18,
2021, ``Nondisplacement of Qualified Workers Under Service Contracts''
(86 FR 66397 (Nov. 23, 2021)). Accordingly, the Department of Labor
(Department) issues this final rule rescinding 29 CFR part 9 as these
regulations implement Executive Order 14055.

II. Background

Executive Order 14055 provided that qualified employees on a
Federal service contract be given the right of first refusal of
employment with a successor contractor if they would otherwise lose
their jobs as a result of expiration of the contract. The implementing
regulations, 29 CFR part 9, were promulgated solely in accordance with
the terms of Executive Order 14055 and were published in the Federal
Register on December 14, 2023 (88 FR 86736).
On January 20, 2025, President Trump issued Executive Order 14148,
Initial Rescissions of Harmful Executive Orders and Actions. Executive
Order 14148 directs the heads of each agency to take immediate steps to
effectuate the revocations listed in the Executive Order, including
Executive Order 14055.

III. Procedural Matters

Section 553(b)(B) of the Administrative Procedure Act (APA)
provides that an agency is not required to publish a notice of proposed
rulemaking in the Federal Register and solicit public comments when the
agency has good cause to find that doing so would be ``impracticable,
unnecessary, or contrary to the public interest.'' 5 U.S.C. 553(b)(B).
Section 553(d) of the APA further provides that substantive rules
should take effect not less than 30 days after the date they are
published in the Federal Register unless ``otherwise provided by the
agency for good cause found[.]'' 5 U.S.C. 553(d)(3).
Since the sole authority for the regulations at 29 CFR part 9 no
longer exists, the Department finds that good cause exists to dispense
with public notice-and-comment rulemaking procedures in this final rule
because such procedures are unnecessary. Executive Order 14055 was the
sole authority for those regulations. Further, the express purpose of
the regulations was to administer and implement that executive order
(29 CFR 9.1(a)). With the rescission of Executive Order 14055, the
nondisplacement regulations are ultra vires and serve no purpose. No
public comment could affect those underlying considerations and
therefore such public process is unnecessary. See EME Homer City
Generation, L.P. v. E.P.A., 795 F.3d 118, 134 (D.C. Cir. 2015)
(upholding agency's invocation of the ``unnecessary'' prong where
``commentators could not have said anything during a notice and comment
period that would have changed'' the need to issue the rule in response
to a court order). For the same reason, the Department similarly finds
good cause under 5 U.S.C. 553(d)(3) to make this final rule immediately
effective.
Furthermore, this final rule is considered a deregulatory action
for the purposes of Executive Order 14192, Unleashing Prosperity
Through Deregulation, 90 FR 9065. Details on reduced burdens and cost
savings of this final rule can be found in the rule's economic
analysis.

IV. Paperwork Reduction Act

The information collection requirements contained in the
regulations at 29 CFR part 9 were previously approved by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1980
(Pub. L. 96-511) and assigned OMB Control Number 1235-0033. In light of
the rescission of these regulations, the Department has submitted a
request to OMB to discontinue the information collection under OMB
control number 1235-0033.

V. Executive Order 12866, Regulatory Planning and Review; Executive
Order 13563, Improved Regulation and Regulatory Review

Under Executive Order 12866, OMB's Office of Information and
Regulatory Affairs (OIRA) determines whether a regulatory action is
significant and, therefore, subject to the requirements of the
Executive Order and OMB review.\1\ Section 3(f) of Executive Order
12866 defines a ``significant regulatory action'' as a regulatory
action that is likely to result in a rule that may: (1) have an annual
effect on the economy of $100 million or more, or adversely affect in a
material way a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or state, local, or tribal
governments or communities (also referred to as economically
significant); (2) create serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees or loan

[[Page 59735]]

programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the Executive
Order. OIRA has determined this rule to be ``economically significant''
under Executive Order 12866 section 3(f)(1), and is therefore subject
to review under section 6(a)(3)(C) of that order.
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\1\ See 58 FR 51735, 51741 (Oct. 4, 1993).
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Executive Order 13563 directs agencies to, among other things,
propose or adopt a regulation only upon a reasoned determination that
its benefits justify its costs; that it is tailored to impose the least
burden on society, consistent with obtaining the regulatory objectives;
and that, in choosing among alternative regulatory approaches, the
agency has selected those approaches that maximize net benefits.
Executive Order 13563 recognizes that some costs and benefits are
difficult to quantify and provides that, when appropriate and permitted
by law, agencies may consider and discuss qualitatively values that are
difficult or impossible to quantify, including equity, human dignity,
fairness, and distributive impacts. The analysis below outlines the
impacts that the Department anticipates may result from this rescission
and was prepared pursuant to the above-mentioned executive orders.

A. Background

On December 14, 2023, the Department published the
``Nondisplacement of Qualified Workers Under Service Contracts'' final
rule (Nondisplacement final rule) exclusively to implement Executive
Order 14055.\2\ The rule required that contractors and subcontractors
performing on covered Federal service contracts must in good faith
offer service employees employed under the predecessor contract a right
of first refusal of employment. The order applied to contracts that are
covered by the McNamara-O'Hara Service Contract Act (SCA) and are at or
above the simplified acquisition threshold. Because section 11 of
Executive Order 14055 stated that the Executive order applied to
solicitations issued on or after the effective date of the final
regulations issued by the FAR Council, and because the Federal
Acquisition Regulatory Council (FAR Council) never promulgated
regulations to implement the requirements of Executive Order 14055 as
part of the Federal Acquisition Regulation (FAR), the Department's rule
effectively never became applicable.\3\ The Department is unaware of
any solicitations that incorporated the provisions outlined by either
Executive Order 14055 or the Department's implementing regulations at
29 CFR part 9. The Department expects minimal rule familiarization
costs from the rescission of the rule and provides a qualitative
discussion of costs that may be avoided by rescinding the rule.
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\2\ See 88 FR 86736 (Dec. 14, 2023).
\3\ Because the rule never became applicable, WHD does not
believe serious reliance interests are implicated by this action.
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B. Number of Potentially Affected Contractor Firms

To determine the number of firms that could potentially be affected
by this rulemaking, the Department used a broad measure of firms that
may incur regulatory familiarization costs. To determine the number of
firms that could potentially be affected by this rulemaking, the
Department estimated a range of potentially affected firms. The more
narrowly defined population (firms actively holding SCA-covered
contracts) includes 119,695 firms (Table 1). The broader population
consists of those bidding on SCA contracts but without active contracts
(33,708) as well as those considering bidding in the future (409,053),
for a total of 442,761 firms.
1. Firms Currently Holding SCA Contracts
USASpending.gov--the official source for spending data for the U.S.
Government--contains Government award data from the Federal Procurement
Data System Next Generation (FPDS-NG), which is the system of record
for Federal procurement data. The Department used these data to
identify the number of firms that currently hold SCA
contracts.^{4 5} Although more recent data are available, the
Department used data from 2019 to avoid any shifts in the data
associated with the COVID-19 pandemic in 2020. Because many Federal
employees were working remotely throughout 2020 and 2021, reliance on
service contracts for Federal buildings may have been reduced during
those years and may not reflect the level of employment on and
incidence of SCA contracts going forward.\6\
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\4\ The Department recognizes that some SCA-covered contracts
that would be covered by this rule are not reflected in
USASpending.gov (i.e., they are SCA-covered contracts that are not
procuring services directly for the Federal Government, including
certain licenses, permits, cooperative agreements, and concessions
contracts, such as, for example, delegated leases of space on a
military base from an agency to a contractor whereby the contractor
operates a barber shop). However, the Department estimates that the
number of firms holding such SCA-covered nonprocurement contracts is
a small fraction of the number of firms identified based on
USASpending.gov.
\5\ The Department also acknowledges that prime contracts that
are less than $250,000 and their subcontracts would not be covered
by this regulation, but the Department has not made an adjustment
for these contracts in the estimation of covered contractors.
Therefore, this estimate may be an overestimate of the number of
contractors that are actually affected.
\6\ The Department estimated the number of prime contractors
using the 2021 USASpending.gov data and found that there were fewer
contractors in 2021 than in 2019. The number of prime contractors in
2019 was 85,987 and the number of prime contractors in 2021 was
78,347. This finding is in line with the Department's hypothesis
that remote work for Federal employees could have reduced the demand
for SCA contractors in 2021.
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To identify firms with SCA contracts, the Department included all
firms with the ``Labor Standards'' element equal to ``Y'' for any of
their contracts, meaning that the contracting agency flagged the
contract as covered by the SCA. However, because this flag is often
listed as ``not applicable'' and appears at times to be reported with
error, the Department also included some other firms. Of the contracts
not flagged as SCA, the Department excluded (1) those for the purchase
of goods \7\ and (2) those covered by the DBA.\8\ The Department also
excluded (1) awards for financial assistance such as direct payments,
loans, and insurance; and (2) contracts performed outside the U.S.
because SCA coverage is limited to the 50 states, the District of
Columbia, and certain U.S. territories. The firms for the remaining
contracts are included as potentially impacted by this rulemaking.
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\7\ For example, the Government purchases pencils; however, a
contract solely to purchase pencils is not covered by the SCA and so
would not be covered by the Executive Order. Contracts for goods
were identified in the USASpending.gov data if the product or
service code begins with a number (the code for services begins with
a letter).
\8\ Contracts covered by DBA were identified in the
USASpending.gov data where the ``Construction Wage Rate
Requirements'' element for a contract is marked ``Y,'' meaning that
the contracting agency flagged that the contract is covered by the
DBA.
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In 2019, there were approximately 86,000 unique prime contractors
in USASpending.gov that fit the parameters discussed above, and the
Department has used this number as an estimate of prime contractors
with active SCA contracts. However, subcontractors are also impacted by
this rule. The Department examined 5 years of USASpending.gov data
(2015 through 2019) and identified 33,708 unique subcontractors that
did not hold contracts as prime contractors in 2019.\9\

[[Page 59736]]

The Department used 5 years of data for the count of subcontractors to
compensate for lower-tier subcontractors that may not be included in
USASpending.gov.
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\9\ For subcontractors, the Department was unable to make
restrictions to limit the data to SCA contracts because none of the
necessary variables are available in the USASpending.gov database
(i.e., the Labor Standards variable, the Construction Wage Rate
Requirements variable, or the product or service code variable).
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In total, the Department estimates 119,695 firms currently hold SCA
contracts and could potentially be affected by this rulemaking under
the narrow definition. Table 1 shows these firms by 2-digit NAICS code.
^{10 11}
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\10\ The North American Industry Classification System (NAICS)
is a method by which Federal statistical agencies classify business
establishments in order to collect, analyze, and publish data about
certain industries. Each industry is categorized by a sequence of
codes ranging from 2 digits (most aggregated level) to 6 digits
(most granular level). https://www.census.gov/naics/.
\11\ In the data, a NAICS code is assigned to the contract and
identifies the industry in which the contract work is typically
performed. If a firm has contracts in several NAICS, the Department
has assigned it to only one NAICS based on the ordering of the
contracts in the data (this approximates a random assignment to one
NAICS).
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2. All Potentially Affected Contractors
The Department also cast a wider net to identify other potentially
affected contractors, both those directly affected (i.e., holding
contracts) and those that plan to bid on SCA-covered contracts in the
future. To determine the estimated number of firms, the Department
identified firms registered in the General Services Administration's
(GSA) System for Award Management (SAM) since all entities bidding on
Federal procurement contracts or applying for grants must register in
SAM. The Department believes that firms registered in SAM represent
those that may be affected if they decide to bid on an SCA contract in
the future. However, it is also possible that some firms that are not
already registered in SAM may be considering bidding on SCA-covered
contracts, but due to the uncertainty about the existence and potential
number of these firms, no additional firm counts were included in the
Department's estimate.
The Department used October 2022 SAM data and identified 409,053
registered firms.\12\ The Department excluded firms with expired
registrations, firms only applying for grants,\13\ government entities
(such as city or county governments),\14\ foreign organizations, and
companies that only sell products and do not provide services. SAM
includes all prime contractors and some subcontractors (those that are
also prime contractors or that have otherwise registered in SAM).
However, the Department is unable to determine the number of
subcontractors that are not in the SAM database. Therefore, the
Department added the subcontractors identified in USASpending to the
estimate from the SAM database. Adding these 33,708 firms identified in
USASpending to the number of firms in SAM (409,053) results in a total
of 442,761 potentially affected firms.
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\12\ Data released in monthly files. Available at: https://www.sam.gov/SAM/pages/public/extracts/samPublicAccessData.jsf.
\13\ Entities registering in SAM are asked if they wish to bid
on contracts. If the firm answers ``yes,'' then they are included as
``All Awards'' in the ``Purpose of Registration'' column in the SAM
data. The Department included only firms with a value of ``Z2,''
which denotes ``All Awards.''
\14\ While there are certain circumstances in which state and
local government entities act as contractors that enter into
contracts covered by the SCA, the number of such entities is minimal
and including all government entities would result in an
inappropriate overestimation.

Table 1--Range of Number of Potentially Affected Firms By Industry
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Lower-bound estimate Upper-bound estimate
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Industry NAICS Subcontractors Subcontractors
Total Primes from from Total Firms fromUSASpending.gov USASpending.gov from SAM USASpending.gov
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Agriculture, forestry, fishing and hunting......... 11 2,482 2,482 0 5,769 5,769 0
Mining............................................. 21 145 102 43 959 916 43
Utilities.......................................... 22 1,596 1,541 55 2,485 2,430 55
Construction....................................... 23 13,708 5,457 8,251 56,126 47,875 8,251
Manufacturing...................................... 31-33 13,958 5,637 8,321 51,299 42,978 8,321
Wholesale trade.................................... 42 1,205 564 641 18,092 17,451 641
Retail trade....................................... 44-45 344 317 27 7,979 7,952 27
Transportation and warehousing..................... 48-49 3,387 2,998 389 17,921 17,532 389
Information........................................ 51 4,061 3,735 326 13,350 13,024 326
Finance and insurance.............................. 52 475 429 46 3,365 3,319 46
Real estate and rental and leasing................. 53 2,822 2,821 1 19,439 19,438 1
Professional, scientific, and technical services... 54 37,739 26,103 11,636 115,007 103,371 11,636
Management of companies and enterprises............ 55 3 3 0 604 604 0
Administrative and waste services.................. 56 15,120 11,509 3,611 36,187 32,576 3,611
Educational services............................... 61 3,609 3,359 250 17,600 17,350 250
Health care and social assistance.................. 62 7,004 6,987 17 36,758 36,741 17
Arts, entertainment, and recreation................ 71 916 915 1 5,172 5,171 1
Accommodation and food services.................... 72 3,037 3,031 6 10,474 10,468 6
Other services..................................... 81 8,084 7,997 87 24,175 24,088 87
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Total private.................................. ......... 119,695 85,987 33,708 442,761 409,053 33,708
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[[Page 59737]]

C. Costs

1. Rule Familiarization Costs
Some covered contractors will choose to read and review this rule
rescinding the Nondisplacement final rule and will thus incur direct
costs. To estimate these ``regulatory familiarization costs,'' three
pieces of information must be estimated: (1) the number of affected
firms; (2) a wage level for the employees reviewing the rule; and (3)
the amount of time spent reviewing the rule.
As discussed above, the Department estimates an upper-bound of
442,761 potentially affected firms.\15\ This is likely an overestimate
as not all of the firms that are registered in SAM are predecessor
contractors or will bid on an SCA contract, and because firms that are
not interested in bidding on an SCA contract do not need to review the
rescission final rule.
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\15\ See Table 1, Range of Number of Potentially Affected Firms.
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The Department estimates that, on average, affected firms will
spend an average of 19 minutes reviewing this rule. The Department
assumes that a Compensation, Benefits, and Job Analysis Specialist (SOC
13-1141) with a median hourly wage of $30.83 will review this
rulemaking. The Department also assumes that benefits are paid at a
rate of 46 percent of the base wage and overhead costs are paid at a
rate of 17 percent of the base wage, resulting in an hourly rate of
$50.25 per hour. Using the GDP deflator to inflate this into 2024
dollars corresponds to a rate of $57.10 per hour.
The Department assumes that each reviewer will spend 1 minute per
page reviewing the rule,\16\ which is equivalent to 19 double-spaced
pages at the time of publication. Therefore, the Department has
estimated the undiscounted regulatory familiarization costs to be $8.01
million ($57.10 per hour x (19 minutes / 60) hour x 442,761
contractors).
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\16\ Brysbaert, Marc (April 12, 2019), ``How many words do we
read per minute? A review and meta-analysis of reading rate,''
https://doi.org/10.31234/osf.io/xynwg.
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The Department believes that this average estimate is appropriate
as some firms will spend more time reviewing the rescission, but as
discussed above, many others will spend less or no time reviewing the
rescission.\17\ The Department has included all regulatory
familiarization costs in Year 1.
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\17\ This includes the median base wage of $30.83 from the 2021
OEWS plus benefits paid at a rate of 46 percent of the base wage, as
estimated from the BLS's Employer Costs for Employee Compensation
(ECEC) data, and overhead costs of 17 percent. OEWS data available
at: https://www.bls.gov/news.release/ocwage.t01.htm.
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D. Cost Savings

Because section 11 of Executive Order 14055 stated that the
Executive order applied to solicitations issued on or after the
effective date of the final regulations issued by the FAR Council, and
because the FAR Council never promulgated regulations to implement
Executive Order 14055, the requirements of the Nondisplacement final
rule were effectively never applicable to the regulated community. The
Department is unaware of any solicitations that incorporated the
provisions outlined by either Executive Order 14055 or the Department's
implementation regulations at 29 CFR part 9, so assessing the cost
savings of the rescission relative to the current practice would result
in non-monetized cost savings.
1. Implementation Cost Savings
The Nondisplacement final rule included a contract clause provision
requiring contracting agencies to ensure that covered service contracts
and subcontracts that succeed a contract for performance of the same or
similar work, and solicitations for such contracts and subcontracts,
include the nondisplacement contract clause. In the Nondisplacement
final rule, the Department estimated that it would take an average of
30 minutes total for contractors to incorporate the contract clause
into their covered subcontracts. With the rescission of the rule, these
contractor costs to incorporate this contract clause into covered
subcontracts will not be incurred. The Nondisplacement final rule also
would have required that a contractor provide notices to affected
workers and their collective bargaining representatives, if any, in
writing of an agency's determination to grant an exception to the
Executive Order 14055 requirements, and of the opportunity to provide
information relevant to an agency's location continuity determination
pursuant to 29 CFR 9.11(c)(3). Additionally, predecessor contractors
would have been required to provide written notice to service employees
employed under the contract of their possible right to an offer of
employment on the successor contract. Contractors may have also been
required to retroactively incorporate a contract clause into
subcontracts when it was not initially incorporated. In the
Nondisplacement final rule, the Department estimated that these
requirements would take an average of 45 minutes for each contractor.
For these cost savings estimates, the Department used the lower-
bound of potentially affected firms (119,695), because only the firms
with a covered contract would incur these implementation costs. The
cost of this time is the median loaded wage for a Compensation,
Benefits, and Job Analysis Specialist of $57.10 per hour. Therefore,
the Department has estimated the undiscounted cost savings of these
requirements to be $8.54 million ($57.10 per hour x 1.25 hour x 119,695
contractors). This is likely an underestimate because many SCA
contracts last for several years.
Under the Nondisplacement final rule, contracting agencies would
also, among other things, have been required to ensure contractors
provide notice to employees on predecessor contracts of their possible
right to an offer of employment, and consider whether performance of
the work in the same locality or localities in which a predecessor
contract is currently being performed is reasonably necessary to ensure
economical and efficient provision of services. Contracting agencies
would also have been required to provide the list of employees on the
predecessor contract to the successor contractor, to forward complaints
and other pertinent information to the Department, and to retroactively
incorporate the contract clause when it was not initially incorporated.
Contracting agencies will not incur these costs because of this
rescission.
In the Nondisplacement final rule, the Department estimated that it
would take the contracting agencies an extra 2.5 hours of work on
average on each covered contract, and that the work would be performed
by a GS 14, Step 1 Federal employee contracting officer, with a fully
loaded hourly wage of $97.04.\18\ This includes the median base wage of
$52.17 from Office of Personnel Management salary tables,\19\ plus
benefits paid at a rate of 69 percent of the base wage,\20\ and
overhead costs of 17 percent. Using the GDP deflator to inflate this
into 2024 dollars corresponds to a rate of $110.26 per hour. Using the
USASpending data mentioned above, the Department

[[Page 59738]]

estimated that there were 576,122 contracts. To estimate the share of
these contracts that are new in a given year, the Department has used
20 percent (115,224), because the average length of an SCA contract is
about 5 years. Therefore, the estimated undiscounted cost savings to
contracting agencies is $31.76 million ($110.26 per hour x 2.5 hours x
115,224 contracts).
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\18\ Because the work of the contracting agency may be split
among different positions, the Department has used the wage of a
more senior position for the estimate.
\19\ The Department has used the 2025 Rest of United States
salary table to estimate salary expenses. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/21Tables/html/RUS_h.aspx.
\20\ See Congressional Budget Office, ``Comparing the
Compensation of Federal and Private-Sector Employees, 2011 to
2015,'' April 25, 2017, https://www.cbo.gov/publication/52637.
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2. Recordkeeping Cost Savings
The rescinded rule would have required a predecessor contractor to,
no less than 30 calendar days before completion of the contractor's
performance of services on a contract, furnish the contracting officer
a list of the names of all service employees under the contract and its
subcontracts at that time. This list would have needed to include the
anniversary dates of employment for each service employee under the
contract and its predecessor contracts with either the current or
predecessor contractors or their subcontractors. If changes to the
workforce were made after the submission of this certified list, the
rule also would have required a contractor to 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 not less than 10 business days before
completion of the contract.
The rule specified the records successor contractors would have
been required to maintain, including copies of or documentation of any
written or oral offers of employment, 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. The rule also would
have required contractors to maintain a copy of any record that forms
the basis for any exclusion or exception claimed, the employee list
provided to the contracting agency, and the employee list received from
the contracting agency.
The Department estimates that the extra time associated with
keeping and providing these records, including the list of employees,
to be an average of 1 hour per firm per year, and that the work will be
completed by a Compensation, Benefits, and Job Analysis Specialist, at
a rate of $50.25 per hour. Using the GDP deflator to inflate this into
2024 dollars corresponds to a rate of $57.10 per hour. The estimated
undiscounted cost savings from eliminating the recordkeeping
requirement is $6.83 million ($57.10 per hour x 1 hour x 119,695).
3. Displacement of Successor Contractor Employees
There may be some limited cases of cost savings when a successor
contractor has existing employees that they planned to assign to a
newly-awarded contract, but the requirement to offer employment to
predecessor contract workers might make their existing employees
redundant. In this situation, if the successor contractor truly could
not find another position for the employee on the new contract or on
any of their other existing projects, the continued employment of a
predecessor contract worker could be offset by the successor contract
worker being laid off. The rescission of the rule may yield some
additional cost savings to successor contractors in these cases.

E. Summary of Costs and Cost Savings

Costs and cost savings in Year 1 consist of $8.01 million in
undiscounted rule rescission familiarization costs, $40.30 million in
implementation cost savings ($8.54 million for contractors and $31.76
million for contracting agencies), and $6.83 million in recordkeeping
cost savings. Therefore, the total Year 1 undiscounted net cost savings
of the are $39.12 million. Average annualized net cost savings over 10
years are $11.13 million using a 7 percent discount rate.

F. Congressional Review Act

Before a rule can take effect, 5 U.S.C. 801, the Congressional
Review Act (CRA) requires agencies to submit the rule and a report
indicating whether it is a major rule to Congress and the Comptroller
General. This final rule meets the criteria at 5 U.S.C. 804(2)(a) under
the CRA because the revocation of 29 CFR part 9 is likely to have an
annual effect on the economy of $100,000,000 or more. However, this
final rule is not subject to the CRA's general 60-day delayed effective
date requirement, see 5 U.S.C. 801(a)(3), because the Department has
determined that notice-and-comment rulemaking is unnecessary, for the
reasons explained earlier. See 5 U.S.C. 808(2).

VI. Regulatory Flexibility Act and Small Business Regulatory
Enforcement Fairness Act

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996, Public Law 104-121 (March 29, 1996), requires Federal agencies
engaged in rulemaking to consider the impact of their rules on small
entities, consider alternatives to minimize that impact, and solicit
public comment on their analyses. The RFA requires an assessment of the
impact of a regulation on a wide range of small entities, including
small businesses, not-for-profit organizations, and small governmental
jurisdictions. Agencies must perform a review to determine whether a
proposed or final rule would have a significant economic impact on a
substantial number of small entities. 5 U.S.C. 603, 604.

A. Estimating the Number of Small Businesses Affected by the Rulemaking

In order to determine the number of small businesses that will be
affected by the rulemaking, the Department followed the same
methodology laid out in section V.B.2. of the economic analysis. For
the data fromUSASpending.gov, the business determination was based on
the inclusion of ``small'' or ``SBA'' in the business type. For GSA's
System for Award Management (SAM) for October 2022, if a company
qualified as a small business in any reported NAICS, they were
classified as ``small.'' Table 3 shows the range of potentially
affected small firms by industry. The total number of potentially
affected small firms ranges from 74,097 to 329,470.

Table 2--Range of Number of Potentially Affected Small Firms by Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lower-bound estimate Upper-bound estimate
-----------------------------------------------------------------------------------------
Small Small
Industry NAICS Small primes from subcontractors Small subcontractors
Total USASpending.gov from Total firms fromUSASpending.gov from SAM USASpending.gov
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting......... 11 2,198 2,198 0 3,849 3,849 0

[[Page 59739]]

Mining............................................. 21 94 72 22 888 866 22
Utilities.......................................... 22 374 358 16 1,601 1,585 16
Construction....................................... 23 8,290 4,348 3,942 45,683 41,741 3,942
Manufacturing...................................... 31-33 6,621 4,243 2,378 39,631 37,253 2,378
Wholesale trade.................................... 42 516 411 105 15,810 15,705 105
Retail trade....................................... 44-45 227 222 5 7,500 7,495 5
Transportation and warehousing..................... 48-49 2,120 1,989 131 14,854 14,723 131
Information........................................ 51 2,352 2,218 134 11,208 11,074 134
Finance and insurance.............................. 52 179 154 25 2,299 2,274 25
Real estate and rental and leasing................. 53 2,068 2,068 0 7,654 7,654 0
Professional, scientific, and technical services... 54 24,371 20,164 4,207 90,547 86,340 4,207
Management of companies and enterprises............ 55 0 0 0 290 290 0
Administrative and waste services.................. 56 10,251 9,060 1,191 30,932 29,741 1,191
Educational services............................... 61 2,224 2,123 101 11,800 11,699 101
Health care and social assistance.................. 62 4,060 4,054 6 16,904 16,898 6
Arts, entertainment, and recreation................ 71 546 546 0 3,944 3,944 0
Accommodation and food services.................... 72 2,102 2,098 4 9,321 9,317 4
Other services..................................... 81 5,504 5,479 25 14,755 14,730 25
----------------------------------------------------------------------------------------------------
Total private.................................. ......... 74,097 61,805 12,292 329,470 317,178 12,292
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Calculating the Impact of the Rule on Small Business Firms

This rule could result in costs for small business firms in the
form of rule familiarization costs, and cost savings through the
elimination of implementation and recordkeeping costs that would
otherwise have been imposed by the Nondisplacement final rule.
1. Rule Familiarization Costs
As mentioned previously in section V, the Department estimates
that, on average, affected firms will spend an average of 19 minutes
reviewing this rule. Some firms will spend more time reviewing the
rule, but many others will spend less or no time reviewing the rule, so
the Department believes that this average estimate is appropriate. The
Department assumes that a Compensation, Benefits, and Job Analysis
Specialist (SOC 13-1141) with a median hourly wage of $30.83 will
review this rulemaking. The Department also assumes that benefits are
paid at a rate of 46 percent of the base wage and overhead costs are
paid at a rate of 17 percent of the base wage, resulting in a per firm
cost of $50.25. Using the GDP deflator to inflate this into 2024
dollars and applying the 19 minutes to review the rule corresponds to a
rate of $18.08 per small firm.
2. Cost Savings
Small entities should experience cost savings due to the
elimination of the implementation costs that would otherwise have been
imposed by the Nondisplacement final rule. In the Nondisplacement final
rule, the Department estimated that it would take an average of 30
minutes total for contractors to incorporate the contract clause into
their covered subcontracts and another 45 minutes for contractors to
retroactively incorporate a contract clause into subcontracts when it
was not initially incorporated. The Department has estimated the cost
savings of eliminating this requirement to be $62.81 per hour ($50.25
per hour x 1.25 hours). Using the GDP deflator to inflate this into
2024 dollars corresponds to a rate of $71.35 per small firm.
For cost savings incurred from the elimination of the recordkeeping
requirement, the Department estimates that the extra time associated
with keeping and providing these records to be an average of 1 hour and
be completed by Compensation, Benefits, and Job Analysis Specialist of
$50.25 per hour. Using the GDP deflator to inflate this into 2024
dollars corresponds to a cost savings of $57.10 per small firm.

C. Summary of Costs and Cost Savings

Undiscounted regulatory familiarization costs for small businesses
are estimated to range between a lower-bound estimate of $1.18 million
($50.25 per hour x (19 minutes / 60) hour x 74,097 contractors), to a
higher-bound estimate of $5.24 million ($50.25 per hour x (19 minutes /
60) hour x 329,470 contractors).
As discussed in section V, the Department used the lower-bound of
potentially affected firms (119,695) to estimate total cost savings
because only the firms with a covered contract are likely to incur
implementation and recordkeeping costs. For purposes of estimating cost
savings for small businesses, the Department applies this same
methodology and uses the lower-bound of potentially affected small
firms (i.e., 74,097 contractors). As noted above, the Department
estimates cost savings in the amount of $128.45 per small firm ($71.35
in implementation cost savings + $57.10 in recordkeeping cost savings),
which results in estimated cost savings of $9.52 million on small
businesses ($128.45 per hour x 74,097 contractors).

[[Page 59740]]

Therefore, the Department estimates the total undiscounted net cost
savings for small firms in the amount of $4.28 million ($9.52 million
in cost savings - $5.24 million in costs).

List of Subjects in 29 CFR Part 9

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

PART 9--[REMOVED AND RESERVED]

0
Accordingly, and under the authority of Executive Order 14148, 90 FR
8237, part 9 of title 29 of the Code of Federal Regulations is hereby
removed and reserved.

Dated: December 18, 2025.
Andrew B. Rogers,
Administrator, Wage and Hour Division.
[FR Doc. 2025-23626 Filed 12-19-25; 8:45 am]
BILLING CODE 4510-27-P