New rule could force inexperienced contractors onto agency projects

An agency could potentially be working with inexperienced employees when a new contractor takes over a job, if a new rule goes into effect, an industry group said July 5.

A proposed change to the Federal Acquisition Regulation would require contractors to offer jobs to the predecessor company’s qualified employees. It’s under a proposed non-displacement rule, giving those employees the right of first refusal for jobs. The FAR Council proposed the rule in May and it's still under review by officials.

The rule would require a company to offer jobs to remaining employees who might otherwise lose their jobs as a result of the transition between contractors involved in an agency program. However, the rule has a broad definition of “qualified,” which does not include consideration of how long an employee has worked in a position for a predecessor, or the employee's skill level.

“The proposed rule will not meet its stated efficiency objective when successors must offer employment to individuals added to a predecessor’s contract mere days or weeks before performance ends,” the Professional Services Council wrote in its comments on the rule.

“While it is certainly true that many successor contractors already voluntarily hire many of their predecessors’ employees to promote certain efficiencies, these efficiencies will be greatly reduced by inflexibly mandating—under threat of penalties imposed by [the Labor Department]—that nearly all successors must offer jobs to nearly all of their predecessor’s employees regardless of skill, qualifications, and job performance,” wrote PSC Executive Vice President and Counsel Alan Chvotkin. “Successor contractors already exercise business judgment as to when efficiencies will result from offering jobs to their predecessors’ employees—and exercise this judgment without the need for taxpayer dollars to be spent investigating and issuing rulings about who should have offered jobs to whom.”

A similar Labor Department rule states that a month prior to a contract's end is enough time for an employee to build solid experience.

The council recommended incoming contractors should only have to offer jobs to those who have held a position for at least six months prior to the predecessor’s contract ends.

“Without requiring this minimal experience on the predecessor contract, departments and agencies will not enjoy ‘reduced disruption to the delivery of services’ or a ‘trained workforce that is familiar with the federal government’s personnel, facilities, and requirements,’” Chvotkin wrote, citing Labor's non-displacement rule.

PSC also raises concerns with the relationship between the FAR Council’s proposed rule and Labor’s rule on non-displacement of service contractors. The two differ and officials need to explain how the two rules should be read. Among other things, the services council also makes recommendations on when it's appropriate to waive the rule and the use of suspensions and debarments as a punishment.

“While it is certainly true that many successor contractors already voluntarily hire many of their predecessors’ employees to promote certain efficiencies, these efficiencies will be greatly reduced,” the council wrote. “Simply put, the proposed rule’s attempt to mandate how contractors staff projects during turbulent economic times is unnecessary and counterproductive.”

The FAR Council’s proposed rule would implement President Barack Obama’s Jan. 30, 2009, Executive Order on Nondisplacement of Qualified Workers Under Service Contracts.

The order and regulations are meant to address situations in which a federal service contract ends and work is taken over by another contractor. The executive order states that the federal government’s interests are better served when the successor contractor hires the predecessor’s employees because it reduces disruptions to services.