President Trump Revokes Rule on Nondisplacement of Qualified Workers Under Service Contracts
On Halloween Day of 2019, President Trump signed Executive Order 13897, titled “Improving Federal Contractor Operations by Revoking Executive Order 13495.” (84 Fed. Reg. 59709 (Oct. 31, 2019)). This Order revoked, effective immediately, Executive Order 13495 on “Nondisplacement of Qualified Workers Under Service Contracts,” which was issued by President Obama. (See 74 Fed. Reg. 6103 (Jan. 30, 2009).)
By doing so, Executive Order 13897 drastically changes the rules for the transition of contracts covered by the Service Contract Act of 1965, as amended (see 41 U.S.C. 6701 et seq.). Contractors will no longer be required to make offers of employment to those employees on incumbent contracts whose employment would otherwise be terminated due to the expiration of the incumbent contract, or the award of the successor contract to a different company.
President Trump directed the Secretary of Labor to “terminate, effective immediately, any investigations or compliance actions based on Executive Order 13495.” Thus, we should see enforcement of alleged violations of Executive Order 13495 and its implementing rules and regulations by DOL come to a halt.
Additionally, President Trump’s Order directs the Secretary of Labor, the Federal Acquisition Regulatory Council, and heads of executive departments and agencies to, “consistent with law, promptly move to rescind any orders, rules, regulations, guidelines, programs, or policies implementing or enforcing Executive Order 13495.” It is not clear how quickly federal agencies or the FAR Council will be able to rescind these rules and regulations. Because the Executive Order calls for regulations to be rescinded, it may avoid the requirement President Trump imposed through Executive Order 13771 to identify two regulations to be eliminated for every new regulation issued. (See 82 Fed. Reg. 9339 (Jan. 30, 2017).) Due to this, changes may happen faster than in instances requiring implementation of a new rule.
Until the rules in FAR subpart 22.12 and the clause at FAR 52.222-17, which implemented Executive Order 13495, are formally rescinded, Contracting Officers may still include FAR 52.222-17 in new solicitations. In the meantime, contractors should evaluate how changes affect their capture strategies and watch carefully for developments in this area to see if any new rules or policies provide a basis to argue that FAR 52.222-17 should not be included or incorporated.
As these developments unfold, contractors reviewing impacted solicitations should check if the Contracting Officer has included or incorporated FAR 52.222-17. If so, and if the contractor does not desire for it to be included, the contractor should raise Executive Order 13897 with the Contracting Officer by submitting questions about that clause in a timely manner. Alternatively, if appropriate, contractors should evaluate whether to file a pre-award bid protest to challenge the inclusion of FAR 52.222-17 in the solicitation since the underlying basis for the regulation has now been revoked.