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.

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Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Tue, Jul 10, 2012 Vern San Deigo

This has SO many flaws in it that many of you already poiinted out. I'm wondering, when 5 companies submit proposals (1 incumbent and 4 new), and they have to submit resumes for the type of experience they plan to use, are they now, by virtue of this rule, required to submit the SAME resumes?I was once [rightfully] corrected when I said we were becoming mnore and more socialist with all this government intervention. The person correcting me stated, "SOCIALISIM (Communism, Marxism, etc.) is when the government actually takes ownership of wealth and the means of and production whereas FASCISM is where they allow private ownership but simply regulate every facet of the wealth and mthe means of production." So we are really becomming a FASCIST nation. I suggest everyone read "The Road To Serfdom" by F.A. Hayek

Tue, Jul 10, 2012 John Virginia

The whole point of contracting is to get the best result we reasonably can for the money. If I'm happy with the results I'm currently getting, I'll push the selection committee to keep the incumbant contractor. Duh. If I'm NOT happy with the results, I'll push for a change and let the new contractor sort out who they want to keep on the mission and I'll hold them accountable for results. We've been told to move to Firm-Fixed Price for a given result and get out of the personnel business. I'm pretty sure forcing specific people on a new contractor will only raise the government's prices to cover the expense of new risk-management programmes. If a budget needs to be cut, start with the U.S. Dept of Labor. They're proving to be least useful.

Tue, Jul 10, 2012 Gator

What does this do to best value source selection? A new contractor may be propose better personnel in its proposal but will be required to use existing personnel?

Mon, Jul 9, 2012 A Federal PM DC

What a stupid rule. If I am running a project and the incumbent contractor is providing crappy staff, the single best way I have to improve the situation is through a recompete. Yet now if a more qualified competitor wins the competition, they'll have to offer jobs to the team that lost? This takes away the majority of the benefits of using a contractor for a job, or having a competition.

Mon, Jul 9, 2012 SPMayor Summit Point, WV

The services contractor community is rightfully concerned with the proposed FAR rule. In addition to the comments noted in the article as well as those made by AIA in its submitted comments, I would suggest two other concerns need to be addressed as well: 1] how practically will the rule be implemented so as to minimally impact the equity of opportunity to compete for the contract; and, 2] how will different corporate and DoL labor definitions and understandings of who is covered by the SCA impact the implementation of the rule. In regard to 1] the incumbent contractor's responsibility to provide a certified list of names of all employees working under the contract or associated subcontracts is predicated on the completion of the contract, not with the most reasonable dates related to the competition for the work. I am of the opinion proposals, evaluations and contract awards will be suspect and potentially filled with errors and flawed assumptions unless the information is provided sooner to all competitors. As to 2] I am of the opinion, particularly in regard to IT related labor categories, more positions may be covered by the SCA than realized by industry.To some degree, IT related positions may fall under the provisions of SCA as responsibilities have become more routine and less dependent on the skills typically and historically associated with the IT services industry. A careful review of the 1400 SCA labor categories will likely bear this comment out.

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