Government contractors received a treat for Halloween, as President Trump issued an Executive Order on October 31, 2019 designed to ease the burden on successor contractors to federal service contracts and "to promote economy and efficiency in Federal Government procurement."
Since January 30, 2009, when then-President Obama issued Executive Order (EO) 13495 (Nondisplacement of Qualified Workers Under Service Contracts), the vast majority of federal contractors (and their subcontractors) awarded follow-on service contracts at a particular location had been obligated to take several measures before hiring their own workforce. Most notably, contractors were required to make bona fide job offers to employees of the predecessor contractor who had worked on the contract site for at least three months and who would otherwise be terminated. Only after employees refused these offers could contractors turn to hire the employees of their choosing. Additionally, the contracts themselves had to contain specific language detailing those obligations.
Executive Order 13495 has now been revoked, effective immediately. Secretary of Labor Eugene Scalia has also been ordered to terminate immediately any investigations or compliance actions based on EO 13495, and relevant departments and agencies must move "promptly" to rescind all regulations and other guidance arising from that EO.
The anticipated net effect of these changes is that federal service contractors should now have greater efficiency and autonomy in choosing their own workforce, as they did prior to 2009. If the predecessor contractor's workforce was unionized, the revocation of EO 13495 could also affect whether the new contractor inherits its predecessor's union.
While we have no way of knowing what will happen next, it would not be surprising to see this administration issue similar Executive Orders responding to the related Executive Orders on Economy in Government Contracting (which disallows government reimbursement of contractors' union campaign activity-related costs) and Notification of Employee Rights Under Federal Labor Laws (which requires contractors to post a written notice of their employees' rights to unionize or to refrain from unionizing and authorizes the Secretary of Labor to publish the names of contractors that fail to comply) — each of which was issued on the same day as the now-revoked EO.
We will provide further updates as they may become available.
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