On October 31, 2019, President Trump revoked E.O. 13495, which is implemented in the Federal Acquisition Regulation at 22.1200 et seq. and 52.222-17. President Obama issued E.O. 13495, entitled “Nondisplacement of Qualified Workers Under Service Contracts,” on January 30, 2009. In sum, it required contractors to offer service employees (other than managerial and supervisory employees) who were employed under the predecessor contract, a right of first refusal to those employment positions for the new contract. Prior to the expiration of a 10-day offer period for the incumbent employees, the E.O. and regulations prohibited contractors from offering employment on a contract to any other person. The E.O. also authorized the Secretary of Labor to impose sanctions and remedies against contractors found to have violated the E.O.
President Trump’s revocation E.O. requires agencies to “promptly move to rescind any orders, rules, regulations, guidelines, programs, or policies implementing or enforcing Executive Order 13495.” It further requires the Secretary of Labor to immediately terminate any investigations or compliance actions based on E.O. 13495.
Many contractors may welcome the revocation, because the 10-day offer period for incumbent service employees imposed by E.O. 13495 complicated contract transitions and effectively prohibited successor contractors from hiring employees they deemed more qualified than the existing employees. Other than enforcement actions, however, contractors should be aware that the revocation of E.O. 13495 must still go through the formal rulemaking process. Thus, this new E.O. will not be fully effective until a final rule is issued which implements the President’s revocation.
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