86736 Federal Register / Vol. 88, No. 239 / Thursday, December 14, 2023 / Rules and Regulations 

DEPARTMENT OF LABOR 

29 CFR Part 9 

RIN 1235–AA42 

Nondisplacement of Qualified Workers 

Under Service Contracts 

AGENCY: Wage and Hour Division, 

Department of Labor. 

ACTION: Final rule. 

SUMMARY: This document finalizes 

regulations to implement Executive 

Order 14055, ‘‘Nondisplacement of 

Qualified Workers Under Service 

Contracts’’ (Executive order or the 

order), which was signed by President 

Joseph R. Biden, Jr. on November 18, 

2021. The Executive order states that 

when a service contract with the Federal 

Government expires and a follow-on 

contract is awarded for the same or 

similar services, the Federal 

Government’s procurement interests in 

economy and efficiency are best served 

when the successor contractor or 

subcontractor hires the predecessor’s 

employees, thus avoiding displacement 

of these employees. The Executive 

order, therefore, provides that 

contractors and subcontractors 

performing on covered Federal service 

contracts must in good faith offer 

service employees employed under the 

predecessor contract a right of first 

refusal of employment. The Executive 

order directs the Secretary of Labor 

(Secretary) to issue regulations, 

consistent with applicable law, to 

implement the order’s requirements. 

This final rule establishes standards and 

procedures for implementing and 

enforcing the nondisplacement 

protections of the order. 

DATES: 

Effective date: This final rule is 

effective February 12, 2024. 

Applicability date: This final rule will 

apply to solicitations issued on or after 

the effective date of the final regulations 

issued by the Federal Acquisition 

Regulatory Council (FAR Council). 

FOR FURTHER INFORMATION CONTACT: 

Amy DeBisschop, Director, Division of 

Regulations, Legislation, and 

Interpretation, Wage and Hour Division, 

U.S. Department of Labor, Room S– 

3502, 200 Constitution Avenue NW, 

Washington, DC 20210; telephone: (202) 

693–0406 (this is not a toll-free 

number). Alternative formats are 

available upon request by calling 1– 

866–487–9243. If you are deaf, hard of 

hearing, or have a speech disability, 

please dial 7–1–1 to access 

telecommunications relay services. 

Questions of interpretation or 

enforcement of the agency’s existing 

regulations may be directed to the 

nearest Wage and Hour Division (WHD) 

district office. Locate the nearest office 

by calling the WHD’s toll-free help line 

at (866) 4US–WAGE ((866) 487–9243) 

between 8 a.m. and 5 p.m. in your local 

time zone, or log onto WHD’s website at 

https://www.dol.gov/agencies/whd/ 

contact/local-offices for a nationwide 

listing of WHD district and area offices. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On November 18, 2021, President 

Joseph R. Biden, Jr. issued Executive 

Order 14055, ‘‘Nondisplacement of 

Qualified Workers Under Service 

Contracts.’’ 86 FR 66397 (Nov. 23, 

2021). This order explains that ‘‘when a 

service contract expires and a follow-on 

contract is awarded for the same or 

similar services, the Federal 

Government’s procurement interests in 

economy and efficiency are best served 

when the successor contractor or 

subcontractor hires the predecessor’s 

employees, thus avoiding displacement 

of these employees.’’ Id. Accordingly, 

Executive Order 14055 provides that 

contractors and subcontractors 

performing on covered Federal service 

contracts must in good faith offer 

service employees employed under the 

predecessor contract a right of first 

refusal of employment. Id. 

Section 1 of Executive Order 14055 

sets forth a general policy of the Federal 

Government that when a service 

contract expires and a follow-on 

contract is awarded for the same or 

similar services, the Federal 

Government’s procurement interests in 

economy and efficiency are best served 

when the successor contractor or 

subcontractor hires the predecessor’s 

employees, thus avoiding displacement 

of these employees. 86 FR 66397. Using 

a carryover workforce reduces 

disruption in the delivery of services 

during the period of transition between 

contractors, maintains physical and 

information security, and provides the 

Federal Government with the benefits of 

an experienced and well-trained 

workforce that is familiar with the 

Federal Government’s personnel, 

facilities, and requirements. Id. Section 

1 explains that these same benefits are 

also often realized when a successor 

contractor or subcontractor performs the 

same or similar contract work at the 

same location where the predecessor 

contract was performed. Id. 

Section 2 of Executive Order 14055 

defines ‘‘service contract’’ or ‘‘contract’’ 

to mean any contract, contract-like 

instrument, or subcontract for services 

entered into by the Federal Government 

or its contractors that is covered by the 

Service Contract Act of 1965, as 

amended (SCA), 41 U.S.C. 6701 et seq., 

and its implementing regulations. 86 FR 

66397. Section 2 also defines 

‘‘employee’’ to mean a service employee 

as defined in the SCA, 41 U.S.C. 

6701(3). See 86 FR 66397. Finally, 

section 2 defines ‘‘agency’’ to mean an 

executive department or agency, 

including an independent establishment 

subject to the Federal Property and 

Administrative Services Act 

(Procurement Act), 40 U.S.C. 101 et seq. 

See 86 FR 66397 (citing 40 U.S.C. 

102(4)(A)). 

Section 3 of Executive Order 14055 

provides the wording for a required 

contract clause that each agency must, 

to the extent permitted by law, include 

in solicitations for service contracts and 

subcontracts that succeed a contract for 

performance of the same or similar 

work. 86 FR 66397–98. Specifically, the 

contract clause provides that the 

contractor and its subcontractors must, 

except as otherwise provided in the 

clause, in good faith offer service 

employees, as defined in the SCA, 

employed under the predecessor 

contract and its subcontracts whose 

employment would be terminated as a 

result of the award of the contract or the 

expiration of the predecessor contract 

under which the employees were hired, 

a right of first refusal of employment 

under the contract in positions for 

which those employees are qualified. Id. 

at 66397. The contractor and its 

subcontractors determine the number of 

employees necessary for efficient 

performance of the contract and may 

elect to employ more or fewer 

employees than the predecessor 

contractor employed in connection with 

performance of the work. Id. Except as 

otherwise provided by the contract 

clause, there is to be no employment 

opening under the contract or 

subcontract, and the contractor and any 

subcontractors may not offer 

employment under the contract to any 

employee prior to having complied fully 

with the obligation to offer employment 

to employees on the predecessor 

contract. Id. The contractor and its 

subcontractors must make an express 

offer of employment to each employee 

and must state the time within which 

the employee must accept such offer, 

and an employee must be provided at 

least 10 business days to accept the offer 

of employment. Id. at 66397–98. 

The contract clause in section 3 of the 

Executive order also provides that, 

notwithstanding the obligation to offer 

employment to employees on the 

predecessor contract, the contractor and 

any subcontractors (1) are not required 

to offer a right of first refusal to any 


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employee(s) of the predecessor 

contractor who are not service 

employees within the meaning of the 

SCA and (2) are not required to offer a 

right of first refusal to any employee(s) 

of the predecessor contractor for whom 

the contractor or any of its 

subcontractors reasonably believes, 

based on reliable evidence of the 

particular employee’s past performance, 

that there would be just cause to 

discharge the employee(s). 86 FR at 

66398. 

The contract clause also provides that 

a contractor must, not fewer than 10 

business days before the earlier of the 

completion of the contract or of its work 

on the contract, furnish the contracting 

officer a certified list of the names of all 

service employees working under the 

contract and its subcontracts during the 

last month of contract performance. 86 

FR at 66398. The list must also contain 

anniversary dates of employment of 

each service employee on the contract 

and its predecessor contracts either with 

the current or predecessor contractors or 

their subcontractors. Id. The contracting 

officer must provide the list to the 

successor contractor, and the list must 

be provided on request to employees or 

their representatives, consistent with 

the Privacy Act and other applicable 

law. Id. The contract clause further 

provides that if it is determined, 

pursuant to regulations issued by the 

Secretary, that the contractor or its 

subcontractors are not in compliance 

with the requirements of the contract 

clause or any regulation or order of the 

Secretary, the Secretary may impose 

appropriate sanctions against the 

contractor or its subcontractors, as 

provided in the Executive order, the 

regulations, and relevant orders of the 

Secretary, or as otherwise provided by 

law. Id. 

The contract clause also provides that 

in every subcontract entered into in 

order to perform services under the 

contract, the contractor will include 

provisions that ensure that each 

subcontractor will honor the 

requirements of the clause in the prime 

contract with respect to the employees 

of a predecessor subcontractor or 

subcontractors working under the 

contract, as well as of a predecessor 

contractor and its subcontractors. Id. 

The subcontract must also include 

provisions to ensure that the 

subcontractor will provide the 

contractor with the information about 

the employees of the subcontractor 

needed by the contractor to comply with 

the prime contractor’s requirements. Id. 

The contractor must also take action 

with respect to any such subcontract as 

may be directed by the Secretary as a 

means of enforcing these provisions, 

including the imposition of sanctions 

for noncompliance. However, if the 

contractor, as a result of such direction, 

becomes involved in litigation with a 

subcontractor, or is threatened with 

such involvement, the contractor may 

request that the United States enter into 

the litigation to protect the interests of 

the United States. Id. Finally, the 

contract clause states that nothing in the 

order may be construed to require or 

recommend that agencies, contractors, 

or subcontractors pay the relocation 

costs of employees who exercise their 

right to work for a successor contractor 

or subcontractor pursuant to the 

Executive order. Id. 

Section 4 of Executive Order 14055 

provides that when an agency prepares 

a solicitation for a service contract that 

succeeds a contract for performance of 

the same or similar work, the agency 

will consider whether performance of 

the work in the same locality or 

localities in which the contract is 

currently being performed is reasonably 

necessary to ensure economical and 

efficient provision of services. 86 FR at 

66398. If an agency determines that 

performance of the contract in the same 

locality or localities is reasonably 

necessary to ensure economical and 

efficient provision of services, section 4 

requires the agency, to the extent 

consistent with law, to include a 

requirement or preference in the 

solicitation for the successor contract 

that it be performed in the same locality 

or localities. 86 FR at 66399. 

Section 5 of Executive Order 14055 

provides exclusions. Specifically, 

section 5 provides that the order does 

not apply to (a) contracts under the 

simplified acquisition threshold as 

defined in 41 U.S.C. 134 (i.e., currently 

contracts less than $250,000); and (b) 

employees who were hired to work 

under a Federal service contract and one 

or more nonfederal service contracts as 

part of a single job, provided that the 

employees were not deployed in a 

manner that was designed to avoid the 

purposes of the order. 86 FR at 66399. 

Section 6 of Executive Order 14055 

authorizes a senior official of an agency 

to grant an exception from the 

requirements of section 3 of the order 

for a particular contract under certain 

circumstances. In order to grant an 

exception from the requirements of 

section 3 of the order, the senior official 

must, by no later than the solicitation 

date, provide a specific written 

explanation of why at least one of the 

following circumstances exists with 

respect to the contract: (i) adhering to 

the requirements of section 3 would not 

advance the Federal Government’s 

interests in achieving economy and 

efficiency in Federal procurement; (ii) 

based on a market analysis, adhering to 

the requirements of section 3 of the 

order would: (A) substantially reduce 

the number of potential bidders so as to 

frustrate full and open competition; and 

(B) not be reasonably tailored to the 

agency’s needs for the contract; or (iii) 

adhering to the requirements of section 

3 would otherwise be inconsistent with 

Federal statutes, regulations, Executive 

orders, or presidential memoranda. 86 

FR at 66399. The order also requires 

each agency to publish descriptions of 

the exceptions it has granted on a 

centralized public website, and any 

contractor granted an exception to 

provide written notice to affected 

workers and their collective bargaining 

representatives. Id. In addition, the 

Executive order requires each agency to 

report to the Office of Management and 

Budget (OMB) any exceptions granted 

on a quarterly basis. Id. 

Section 7 of Executive Order 14055 

provides that, consistent with 

applicable law, the Secretary will issue 

final regulations to implement the 

requirements of the order. 86 FR at 

66399. In addition, to the extent 

consistent with law, the FAR Council is 

to amend the Federal Acquisition 

Regulation (FAR) to provide for 

inclusion of the contract clause in 

Federal procurement solicitations and 

contracts subject to the order. Id. 

Additionally, the Director of OMB must, 

to the extent consistent with law, issue 

guidance to implement section 6(c) of 

the order, requiring each agency to 

report to OMB any exceptions granted 

on a quarterly basis. Id. 

Section 8 of Executive Order 14055 

assigns responsibility for investigating 

and obtaining compliance with the 

order to the U.S. Department of Labor 

(Department). 86 FR at 66399. This 

section authorizes the Department to 

issue final orders in such proceedings 

prescribing appropriate sanctions and 

remedies, including, but not limited to, 

orders requiring employment and 

payment of wages lost. Id. The 

Department may also provide that 

where a contractor or subcontractor has 

failed to comply with any order of the 

Secretary or has committed willful 

violations of the Executive order or its 

implementing regulations, the 

contractor or subcontractor, its 

responsible officers, and any firm in 

which the contractor or subcontractor 

has a substantial interest, may be 

ineligible to be awarded any contract of 

the United States for a period of up to 

3 years. 86 FR at 66399–400. Neither an 

order for debarment of any contractor or 

subcontractor from further Federal 


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Government contracts nor the inclusion 

of a contractor or subcontractor on a 

published list of noncomplying 

contractors is to be carried out without 

affording the contractor or subcontractor 

an opportunity to present information 

and argument in opposition to the 

proposed debarment or inclusion on the 

list. 86 FR at 66400. Section 8 also 

specifies that Executive Order 14055 

creates no rights under the Contract 

Disputes Act, 41 U.S.C. 7101 et seq., and 

that disputes regarding the requirements 

of the contract clause prescribed by 

section 3 of the order, to the extent 

permitted by law, will be disposed of 

only as provided by the Department in 

regulations issued under the order. 86 

FR at 66400. 

Section 9 of Executive Order 14055 

revokes Executive Order 13897 of 

October 31, 2019, which itself revoked 

Executive Order 13495 of January 30, 

2009, Nondisplacement of Qualified 

Workers Under Service Contracts. 86 FR 

at 66400; see also 84 FR 59709 (Nov. 5, 

2019); 74 FR 6103 (Jan. 30, 2009). 

Section 9 also explains that Executive 

Order 13495 remains revoked. 86 FR at 

66400. 

Section 10 of Executive Order 14055 

provides that if any provision of the 

order, or the application of any 

provision of the order to any person or 

circumstance, is held to be invalid, the 

remainder of the order and its 

application to any other person or 

circumstance will not be affected. 86 FR 

at 66400. 

Section 11 of Executive Order 14055 

provides that the order is effective 

immediately and applies to solicitations 

issued on or after the effective date of 

the final regulations issued by the FAR 

Council under section 7 of the order. 86 

FR at 66400. For solicitations issued 

between the date of Executive Order 

14055 and the date of the action taken 

by the FAR Council, or solicitations that 

were previously issued and were 

outstanding as of the date of Executive 

Order 14055, agencies are strongly 

encouraged, to the extent permitted by 

law, to include in the relevant 

solicitation the contract clause 

described in section 3 of the order. Id. 

Section 12 of Executive Order 14055 

specifies that nothing in the order is to 

be construed to impair or otherwise 

affect the authority granted by law to an 

executive department or agency, or the 

head thereof, or the functions of the 

Director of OMB relating to budgetary, 

administrative, or legislative proposals. 

86 FR at 66400. In addition, the order 

is to be implemented consistent with 

applicable law and subject to the 

availability of appropriations. The order 

is not intended to, and does not, create 

any right or benefit, substantive or 

procedural, enforceable at law or in 

equity by any party against the United 

States, its departments, agencies, or 

entities; its officers, employees, or 

agents; or any other person. Id. at 66401. 

A. Prior Relevant Executive Orders 

As indicated, section 9 of Executive 

Order 14055 revoked Executive Order 

13897, which revoked Executive Order 

13495, Nondisplacement of Qualified 

Workers Under Service Contracts. On 

August 29, 2011, after engaging in 

notice-and-comment rulemaking, the 

Department promulgated regulations, 29 

CFR part 9 (76 FR 53720), to implement 

Executive Order 13495. As required by 

Executive Order 13897, the Department 

rescinded these regulations in a notice 

published in the Federal Register on 

January 31, 2020. 85 FR 5567. 

Executive Order 14055 is very similar 

to Executive Order 13495, but there are 

a few notable differences. For example, 

Executive Order 14055 requires that the 

contractor give an employee at least 10 

business days to accept an employment 

offer, whereas Executive Order 13495 

only required 10 calendar days. 

Compare 86 FR at 66398, with 74 FR at 

6104. Similarly, Executive Order 14055 

requires that the contractor must 

provide the contracting officer a 

certified list of the names of all service 

employees working under the contract 

during the last month of contract 

performance at least 10 business days 

before contract completion, whereas 

Executive Order 13495 only required 10 

calendar days. Compare 86 FR at 66398, 

with 74 FR at 6104. Executive Order 

13495 required that performance of the 

work be at the same location for the 

order’s requirements to apply to the 

successor contract, whereas the 

requirements of Executive Order 14055 

apply even if the successor contract is 

not performed at the same location as 

the predecessor contract. Further, 

Executive Order 14055 directs an 

agency to consider, when preparing a 

solicitation for a service contract that 

succeeds a contract for performance of 

the same or similar work, whether 

performance of the contract in the same 

locality is reasonably necessary to 

ensure economical and efficient 

provision of services. If an agency 

determines that performance of the 

contract in the same locality or localities 

is reasonably necessary to ensure 

economical and efficient provision of 

services, then the agency will, to the 

extent consistent with law, include a 

requirement or preference in the 

solicitation for the successor contract 

that it be performed in the same locality. 

Executive Order 13495 did not contain 

a similar requirement. 

Executive Order 14055 also differs 

from Executive Order 13495 in its 

provisions regarding a contracting 

agency’s authority to grant an exception 

from the requirements of the order for 

a particular contract. Specifically, 

section 6 of Executive Order 14055 

provides that a senior official within an 

agency may except a particular contract 

from the requirements of section 3 of the 

order by, no later than the solicitation 

date, providing a specific written 

explanation of why at least one of the 

particular circumstances enumerated in 

the order as grounds for exemption 

exists with respect to that contract. 86 

FR at 66399. It also requires agencies to 

publish descriptions of each exception 

on a centralized public website and 

report exceptions to OMB on a quarterly 

basis. Id. Finally, Executive Order 14055 

requires agencies to ensure that the 

incumbent contractor notifies affected 

workers and their collective bargaining 

representatives, if any, in writing of the 

agency’s determination to grant an 

exception. Id. In contrast, Executive 

Order 13495 provided that if the head 

of a contracting department or agency 

found that the application of any of the 

requirements of the order would not 

serve the purposes of the order or would 

impair the ability of the Federal 

Government to procure services on an 

economical and efficient basis, the head 

of such department or agency could 

exempt its department or agency from 

the requirements of any or all of the 

provisions of the order with respect to 

a particular contract, subcontract, or 

purchase order or any class of contracts, 

subcontracts, or purchase orders. 74 FR 

at 6104. Executive Order 13495 did not 

require notice or publication of agency 

exemptions. See id. 

B. Notice of Proposed Rulemaking 

On July 15, 2022, the Department 

published a Notice of Proposed 

Rulemaking (NPRM) in the Federal 

Register inviting comments for a period 

of 30 days on a proposal to implement 

the provisions of Executive Order 

14055. See 87 FR 42552. The 30-day 

comment period closed on August 15, 

2022. The Department received 33 

timely comments in response to the 

NPRM from a variety of interested 

stakeholders, such as labor 

organizations, nonprofit organizations, 

contractors, and contractor associations. 

II. Discussion of Final Rule 

A. Legal Authority 

President Biden lawfully issued 

Executive Order 14055 pursuant to his 


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authority under ‘‘the Constitution and 

the laws of the United States,’’ expressly 

including the Procurement Act. 86 FR 

66397 (citing 40 U.S.C. 101 et seq.). The 

Procurement Act’s express purpose is 

‘‘to provide the Federal Government 

with an economical and efficient 

system’’ for ‘‘[p]rocuring and supplying 

property and nonpersonal services, and 

performing related functions including 

contracting.’’ 40 U.S.C. 101. The Act 

empowers the President to ‘‘prescribe 

policies and directives that the 

President considers necessary to carry 

out’’ that objective. 40 U.S.C. 121(a). 

Executive Order 14055 directs the 

Secretary, ‘‘to the extent consistent with 

law,’’ to issue regulations to ‘‘implement 

the requirements of this order.’’ 86 FR 

at 66399. The Secretary has delegated 

the authority to promulgate these types 

of regulations to the Administrator of 

the WHD (Administrator) and to the 

Deputy Administrator of the WHD if the 

Administrator position is vacant. 

Secretary’s Order 01–2014 (Dec. 19, 

2014), 79 FR 77527 (published Dec. 24, 

2014); Secretary’s Order 01–2017 (Jan. 

12, 2017), 82 FR 6653 (published Jan. 

19, 2017). 

Some commenters, particularly 

Associated Builders and Contractors 

(ABC), the Professional Services Council 

(PSC), and an anonymous commenter, 

generally contended that neither 

Executive Order 14055 nor the proposed 

rule provide evidentiary support for the 

proposition that establishing a 

nondisplacement obligation would 

actually achieve greater economy and 

efficiency in federal procurement. ABC 

further commented that it believes the 

proposed rule conflicts with the plain 

language of the SCA, as the SCA does 

not require a successor contractor to 

hire a predecessor contractor’s 

employees, and that neither the 

President nor the Department has the 

authority to override the SCA. 

Accordingly, ABC requested that the 

Department withdraw the proposed rule 

in its entirety. 

As a threshold matter, the purpose of 

this rulemaking is to implement 

Executive Order 14055, and therefore 

the President’s legal authority to issue 

Executive Order 14055, and the 

justification for doing so, are not matters 

within the scope of this rulemaking. 

Concerning the scope of the 

Department’s rulemaking authority, the 

Department strongly disagrees with 

ABC’s comment that the proposed rule 

is in conflict with the SCA. While ABC 

is correct that the SCA does not require 

a successor contractor to hire the 

predecessor contractor’s workforce, the 

SCA does not prohibit the hiring of the 

predecessor contractor’s workforce or 

address whether such hiring may be 

encouraged or required by another law. 

That Executive Order 14055 applies to 

SCA-covered contracts does not mean 

that the order and this rule must mirror 

the SCA’s substantive provisions and 

that the nondisplacement provision is 

‘‘in conflict’’ with the SCA because it is 

not required by that statute. Rather, 

Executive Order 14055 provides for 

contractual requirements that are 

separate and distinct from the legal 

obligations of the SCA—with the 

President’s authority to issue the 

Executive order derived from the 

Procurement Act in particular. The 

Procurement Act empowers the 

President to ‘‘prescribe policies and 

directives that the President considers 

necessary to carry out’’ its objectives, 

and Executive Order 14055 further 

directs the Secretary to issue regulations 

to ‘‘implement the requirements of this 

order.’’ 40 U.S.C. 121(a); 86 FR at 66399. 

This final rule has been promulgated 

consistent with that authority and 

contains obligations that are 

independent from a contractor’s 

responsibilities under the SCA. The 

SCA’s requirements thus do not 

preclude the Department from 

implementing and enforcing the 

nondisplacement requirements of 

Executive Order 14055. Instead, the 

SCA and Executive Order 14055 can and 

should be viewed as complementary 

and co-existing rather than in conflict 

because it is possible for contractors to 

comply with both authorities; the SCA 

does not reflect an intent to preclude 

application of a nondisplacement 

requirement established by another legal 

authority. Thus, the Department 

declines ABC’s request to withdraw the 

proposed rule. 

After considering all timely comments 

received to the proposed rule, the 

Department is issuing this final rule to 

implement the provisions of Executive 

Order 14055. 

B. Overview of the Rule 

This final rule, which amends Title 29 

of the Code of Federal Regulations (CFR) 

by adding part 9, sets forth standards 

and procedures for implementing and 

enforcing Executive Order 14055. 

Subpart A of part 9 relates to general 

matters, including the purpose and 

scope of the rule, as well as the 

definitions, coverage, exclusions, and 

exceptions that the rule provides 

pursuant to the Executive order. Subpart 

B establishes requirements for 

contracting agencies and contractors to 

comply with the Executive order. 

Subpart C specifies standards and 

procedures related to complaint intake, 

investigations, and remedies. Subpart D 

specifies standards and procedures 

related to administrative enforcement 

proceedings. 

The following section-by-section 

discussion of this rule presents the 

contents of each section in more detail. 

Part 9 Subpart A—General 

Subpart A of part 9 pertains to general 

matters, including the purpose and 

scope of the rule, as well as the 

definitions, coverage, exclusions, and 

exceptions that the rule provides 

pursuant to the Executive order. 

1. Section 9.1 Purpose and Scope 

Proposed § 9.1(a) explained that the 

purpose of the rule is to implement 

Executive Order 14055. The paragraph 

emphasized that the Executive order 

assigns enforcement responsibility for 

the nondisplacement requirements to 

the Department. 

Proposed § 9.1(b) explained the 

underlying policy of Executive Order 

14055. First, the provision repeated a 

statement from the Executive order that 

the Federal Government’s procurement 

interests in economy and efficiency are 

served when the successor contractor or 

subcontractor hires the predecessor’s 

employees. Like the order, the proposed 

rule elaborated that a carryover 

workforce minimizes disruption in the 

delivery of services during a period of 

transition between contractors, 

maintains physical and information 

security, and provides the Federal 

Government the benefit of an 

experienced and well-trained workforce 

that is familiar with the Federal 

Government’s personnel, facilities, and 

requirements. It is for these reasons that 

the Executive order concludes that 

requiring successor service contractors 

and subcontractors performing on 

Federal contracts to offer a right of first 

refusal to suitable employment under 

the contract to service employees under 

the predecessor contract and its 

subcontracts whose employment would 

be terminated as a result of the award 

of the successor contract will lead to 

improved economy and efficiency in 

Federal procurement. 

Proposed § 9.1(b) further explained 

the general requirement established in 

section 3 of Executive Order 14055 that 

service contracts and subcontracts that 

succeed a contract for performance of 

the same or similar work, and 

solicitations for such contracts and 

subcontracts, include a clause that 

requires the contractor and its 

subcontractors to offer a right of first 

refusal of employment to service 

employees employed under the 

predecessor contract and its 

subcontracts whose employment would 


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1As reflected in their comment, ‘‘the Coalition’’ 

refers collectively to the following organizations 

that submitted a joint comment in response to the 

NPRM: The American Association of People with 

Disabilities; the Autistic Self Advocacy Network; 

Communications Workers of America; the 

International Brotherhood of Teamsters; the 

Laborers’ International Union of North America; the 

National Employment Law Project; and the Service 

Employees International Union. 

be terminated as a result of the award 

of the successor contract in positions for 

which the employees are qualified. 

Proposed § 9.1(b) also clarified that 

nothing in Executive Order 14055 or 

part 9 is to be construed to excuse 

noncompliance with any applicable 

Executive order, regulation, or law of 

the United States. 

Proposed § 9.1(c) outlined the scope 

of the regulations and provided that 

neither Executive Order 14055 nor part 

9 creates or changes any rights under 

the Contract Disputes Act, 41 U.S.C. 

7101 et seq., or any private right of 

action. The Department does not 

interpret the Executive order as limiting 

existing rights under the Contract 

Disputes Act. The provision also 

restated the Executive order’s directive 

that disputes regarding the requirements 

of the contract clause prescribed by the 

Executive order, to the extent permitted 

by law, must be disposed of only as 

provided by the Secretary in regulations 

issued under the Executive order. This 

paragraph also clarified that neither the 

Executive order nor the regulations 

would preclude review of final 

decisions by the Secretary in accordance 

with the judicial review provisions of 

the Administrative Procedure Act, 5 

U.S.C. 701 et seq. 

The Department did not receive any 

comments directly related to § 9.1. The 

Department has addressed comments 

directed at specific elements of the 

nondisplacement requirements, such as 

the scope of the right of first refusal, in 

the preamble sections for the relevant 

elements of the order’s requirements. 

The final rule accordingly adopts the 

§ 9.1 provisions as proposed. 

2. Section 9.2 Definitions 

Proposed § 9.2 defined terms for 

purposes of this rule implementing 

Executive Order 14055. Most defined 

terms follow common applications and 

are based on either Executive Order 

14055 itself or the definitions of 

relevant terms set forth in the text of 

related statutes and Executive orders or 

the implementing regulations for those 

statutes and orders. The Department 

noted that, while the definitions 

discussed in the proposed rule would 

govern the implementation and 

enforcement of Executive Order 14055, 

nothing in the proposed rule was 

intended to alter the meaning of or to be 

interpreted inconsistently with the 

definitions set forth in the FAR for 

purposes of that regulation. 

Consistent with the definition 

provided in Executive Order 14055, the 

Department proposed to define agency 

to mean an executive department or 

agency, including an independent 

establishment subject to the 

Procurement Act. See 86 FR 66397. The 

Department explained that, for the 

purpose of this definition, ‘‘an executive 

department or agency’’ means any 

executive agency as defined in section 

2.101 of the FAR. 48 CFR 2.101. The 

proposed definition of agency therefore 

would include executive departments 

within the meaning of 5 U.S.C. 101, 

military departments within the 

meaning of 5 U.S.C. 102, independent 

establishments within the meaning of 5 

U.S.C. 104(1), and wholly owned 

Government corporations within the 

meaning of 31 U.S.C. 9101. The 

Department explained that the proposed 

definition would include independent 

regulatory agencies. The Department did 

not receive any comments addressing 

the term agency and the final rule 

adopts the definition of that term as 

proposed. 

The Department proposed to adopt 

the definition of Associate Solicitor in 

29 CFR 6.2(b), which means the 

Associate Solicitor for Fair Labor 

Standards, Office of the Solicitor, U.S. 

Department of Labor, Washington, DC 

20210. The Department did not receive 

any comments addressing the definition 

of Associate Solicitor, and the final rule 

adopts the definition of that term as 

proposed. 

The Department proposed to define 

business day as Monday through Friday, 

except Federal holidays declared under 

5 U.S.C. 6103 or by executive order, or 

any day with respect to which the U.S. 

Office of Personnel Management has 

announced that Federal agencies in the 

Washington, DC, area are closed. The 

Department did not receive any 

comments addressing the definition of 

business day. The final rule therefore 

adopts this definition as proposed, with 

one technical edit to correct the 

alphabetical order of definitions that is 

not intended to reflect a change in the 

substance of this section. 

Consistent with section 2(a) of the 

Executive order, the Department 

proposed to define contract or service 

contract to mean any contract, contractlike instrument, or subcontract for 

services entered into by the Federal 

Government or its contractors that is 

covered by the SCA and its 

implementing regulations. See 86 FR 

66397. PSC commented that the 

proposed definition of contract or 

service contract would wrongly expand 

the coverage of the SCA to ‘‘contractlike instruments,’’ while others, such as 

the Coalition,1 submitted comments 

supporting the proposed rule’s broad 

scope and coverage. 

PSC recommended removing 

‘‘contract-like instrument’’ from the 

definition of contract on the grounds 

that, among other reasons, the use of 

‘‘contract-like instrument’’ might 

‘‘create confusion by suggesting that a 

‘contract-like instrument’ can be subject 

to the SCA.’’ The Department 

acknowledges that the term ‘‘contractlike instrument’’ is not used in the SCA. 

However, the term ‘‘contract-like 

instrument’’ was expressly used in the 

definition of contract and service 

contract in Executive Order 14055, was 

used in both of the previous Executive 

orders requiring a minimum wage for 

Federal contractor employees (Executive 

Orders 13658 and 14026), and is 

defined, collectively with the term 

contract, in the Department’s 

regulations implementing both 

Executive Order 13658 and Executive 

Order 14026. See 29 CFR 10.2; 29 CFR 

23.20. Therefore, the Department 

expects that most contracting agencies 

and contractors affected by this 

rulemaking are already familiar with the 

use of this term. 

Furthermore, the use of the term 

‘‘contract-like instrument’’ in Executive 

Order 14055 neither expands SCA 

coverage nor expands coverage under 

Executive Order 14055 to contracts not 

subject to the SCA. Rather, consistent 

with the SCA’s scope of coverage, the 

term simply reflects that the order is 

intended to cover all agreements of a 

contractual nature (i.e., all agreements 

between two or more parties creating 

obligations that are enforceable or 

otherwise recognizable at law, including 

those agreements that may not be 

universally regarded as a contract in 

other contexts) that qualify as contracts 

under the SCA. Licenses, permits, and 

similar instruments may qualify as 

contracts under the SCA regardless of 

whether parties typically consider such 

instruments to be ‘‘contracts’’ and 

regardless of whether such instruments 

are characterized as ‘‘contracts’’ for 

purposes of the specific programs under 

which they are administered. Given the 

SCA’s coverage of a such a wide variety 

of service contracts and its broad 

definition of covered contracts, see, e.g., 

29 CFR 4.110, the Department views the 

term ‘‘contract-like instrument’’ as 

simply reinforcing the breadth of 

contract coverage under the SCA, and 


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hence under Executive Order 14055. 

The Department further believes that the 

use of the term ‘‘contract-like 

instrument’’ in Executive Order 14055 is 

intended to prevent disputes or 

extended discussions between 

contracting agencies and contractors 

regarding whether a particular legal 

arrangement qualifies as a contract for 

purposes of coverage by the order and 

this part. In sum, the use of the term 

‘‘contract-like instruments’’ in Executive 

Order 14055 and in this rule is 

consistent with previous Executive 

orders and will help facilitate more 

efficient determinations by contractors, 

contracting officers, and the Department 

as to whether a particular legal 

instrument is covered. The Department 

therefore declines to delete the term 

‘‘contract-like instrument’’ from the 

definition of contract. Separately, 

however, to reduce ambiguity in the 

definition of contract or service 

contract, the Department is clarifying 

that SCA-covered temporary interim 

contracts are also included within the 

definition of contract and service 

contract. This technical clarification 

will ensure that temporary interim 

contracts are understood to be fully 

included within the definition. To 

effectuate the order, temporary interim 

contracts must be within that definition 

to prevent workforce displacement 

during any such contracts. 

PSC also recommended removing the 

term ‘‘exercised contract options’’ from 

the illustrative list of terms defining 

contract, noting that the inclusion of the 

term in the definition is inconsistent 

with the Department’s statements in the 

preamble to § 9.3 regarding coverage. 

Under § 9.3, when an option is 

exercised and no solicitation is issued 

for a follow-on contract, the original 

contract is not considered expired for 

purposes of Executive Order 14055, and 

the requirements of the order and this 

rule do not apply at that time as a result 

of the exercised contract option. The 

Department agrees with PSC’s 

recommendation and therefore, to 

maintain consistency and reduce 

confusion, is not including ‘‘exercised 

contract options’’ in the definition of 

contract. 

The Department proposed to 

substantially adopt the definition of 

contracting officer in section 2.101 of 

the FAR, which defines the term to 

mean an agency official with the 

authority to enter into, administer, and/ 

or terminate contracts and make related 

determinations and findings. The term, 

as proposed, would include certain 

authorized representatives of the 

contracting officer acting within the 

limits of their authority as delegated by 

the contracting officer. See 48 CFR 

2.101. The Department did not receive 

any comments addressing the definition 

of contracting officer, and the final rule 

adopts the definition of that term as 

proposed. 

The Department proposed to define 

contractor to mean any individual or 

other legal entity that is awarded a 

Federal Government service contract or 

subcontract under a Federal 

Government service contract. The 

Department noted that, unless the 

context reflects otherwise, the term 

contractor refers collectively to both a 

prime contractor and all of its 

subcontractors of any tier on a service 

contract with the Federal Government. 

The proposed definition incorporated 

relevant aspects of the definitions of the 

term contractor in section 9.403 of the 

FAR, see 48 CFR 9.403, and the SCA’s 

regulations at 29 CFR 4.1a(f). 

Importantly, the Department noted 

that the fact that an individual or entity 

is a contractor under the Department’s 

definition does not mean that such an 

individual or entity has legal obligations 

under the Executive order. Thus, an 

individual or entity that is awarded a 

service contract with the Federal 

Government will qualify as a 

‘‘contractor’’ pursuant to the 

Department’s definition, but that 

individual or entity may only be subject 

to the nondisplacement requirements of 

the Executive order in connection with 

a particular contract if the contract is 

one that is covered under § 9.3(a). For 

example, an employment contract 

providing for direct services to a Federal 

agency by an individual is not covered 

by the SCA. 41 U.S.C. 6702(b)(6); 29 

CFR 4.121. As a result, an individual 

who enters into such a contract may be 

a ‘‘contractor’’ under the definition of 

contractor in the nondisplacement rule, 

but the contract will not be covered by 

the nondisplacement requirements. The 

Department did not receive any 

comments addressing the definition of 

contractor, and the final rule adopts the 

definition of that term as proposed. 

Consistent with the definition 

provided in Executive Order 14055, the 

Department proposed to define 

employee to mean a service employee as 

defined in the SCA. See 86 FR 66397 

(citing 41 U.S.C. 6701(3)). Accordingly, 

employee ‘‘means an individual engaged 

in the performance of’’ an SCA-covered 

contract. See 41 U.S.C. 6701(3)(A). The 

term ‘‘includes an individual without 

regard to any contractual relationship 

alleged to exist between the individual 

and a contractor or subcontractor,’’ and 

it therefore includes an individual who 

is identified as an independent 

contractor on the contract. See 41 U.S.C. 

6701(3)(B). It ‘‘does not include an 

individual employed in a bona fide 

executive, administrative, or 

professional capacity’’ as those terms 

are defined in 29 CFR part 541. See 41 

U.S.C. 6701(3)(C). 

The Coalition submitted a comment 

supporting the Department’s proposed 

inclusion of individuals identified as 

independent contractors in the 

definition of employee. They stated that 

given the significant volume of work 

performed by such individuals, the 

purposes of the Executive order will be 

promoted by inclusion of such workers. 

The Department received no other 

comments about the proposed definition 

of employee, and therefore the final rule 

adopts the definition as proposed in the 

NPRM, with an edit to remove ‘‘or 

service employee’’ from the regulatory 

text. This edit is not intended to reflect 

a change in the substance of the 

definition, but is made to reduce 

redundancy, as Executive Order 14055 

already states that employee means 

service employee as defined by the SCA. 

The Department proposed to define 

employment opening to mean any 

vacancy in a position on the successor 

contract. This is consistent with the 

definition of employment opening in the 

regulations that implemented Executive 

Order 13495. The Department did not 

receive any comments on the proposed 

definition of employment opening, and 

the final rule adopts the definition as 

proposed. 

The Department proposed to define 

the term Federal Government as an 

agency or instrumentality of the United 

States that enters into a contract 

pursuant to authority derived from the 

Constitution or the laws of the United 

States. This proposed definition was 

based on the definition set forth in the 

regulations that implemented Executive 

Order 13495. Consistent with that 

definition and the SCA, the proposed 

definition of the term Federal 

Government included nonappropriated 

fund instrumentalities under the 

jurisdiction of the Armed Forces or of 

other Federal agencies. See 29 CFR 

4.107(a). This proposed definition also 

included independent agencies because 

such agencies are subject to the order’s 

requirements. See 86 FR 66397. For 

purposes of Executive Order 14055 and 

part 9, the Department’s proposed 

definition would not include the 

District of Columbia or any Territory or 

possession of the United States. The 

Department did not receive any 

comments on the proposed definition of 

Federal Government, and the final rule 

adopts the definition as proposed. 

The Department proposed to define 

month under the Executive order as a 


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period of 30 consecutive calendar days, 

regardless of the day of the calendar 

month on which it begins. The 

Department proposed defining the term 

to clarify how to address partial months 

and to balance calendar months of 

different lengths. The proposed 

definition was consistent with the 

definition of month in the regulations 

that implemented Executive Order 

13495. The Department did not receive 

any comments addressing the definition 

of month, and the final rule adopts the 

definition of that term as proposed. 

The Department proposed to define 

same or similar work to mean work that 

is either identical to or has primary 

characteristics that are alike in 

substance to work performed on a 

contract that is being replaced either by 

the Federal Government or by contractor 

on a Federal service contract. This 

would require the work under the 

successor contract to, at a minimum, 

share the characteristics essential to the 

work performed under the predecessor 

contract. Accordingly, work under a 

successor contract would not be 

considered to be same or similar work 

where it only shares characteristics 

incidental to performance of the 

contract under the predecessor contract. 

PSC requested the Department further 

define how the definition of same or 

similar work would be applied to 

Multiple Agency Contracts, especially 

with regard to competition at the taskorder level and completion of task 

orders over years-long performance 

periods on the master contract as a 

whole, as well as best-in class contracts. 

PSC’s question also implicates the 

overall subset of contracts for indefinite 

delivery indefinite quantity (IDIQ), 

including the Multiple Award Schedule 

(MAS) and the Federal Supply Schedule 

program. See 48 CFR 8.401. 

Whether work is ‘‘same or similar’’ is 

only relevant when specific work on an 

expiring contract is going to be replaced 

by work under another contract, such 

that one contract can reasonably be 

considered to be a successor contract 

and the other a predecessor contract. In 

that situation, the contracting agency 

must compare the expiring work and the 

anticipated work to determine whether 

they share primary characteristics. 

Thus, where a contracting agency is 

considering the use of an order under an 

IDIQ contracting vehicle for a specific 

scope of work, the nondisplacement 

requirements of the Executive order— 

including the determination of whether 

a contract involves the same or similar 

work—would apply at the task order 

level in the same manner as for any 

other contract. For example, an agency 

may have an expiring non-MAS contract 

for security services at an individual 

federal facility and may seek to use the 

MAS program to identify a contractor to 

take over the same or similar security 

services at that facility. In such a 

circumstance, any new MAS program 

task order would need to include the 

nondisplacement clause to be a 

permissible contracting vehicle for the 

successor contract and the MAS 

contractor would need to provide job 

offers to qualified employees on the 

expiring non-MAS contract. 

The Coalition recommended the 

Department modify the definition of 

same or similar work to make it clear 

that the definition applies regardless of 

whether the successor changes in size. 

However, such a change would be 

redundant to the existing use of the term 

‘‘similar,’’ which encompasses contracts 

of varying monetary amounts or other 

material changes in size. Furthermore, 

the rule addresses reductions in staffing 

in detail at § 9.12(d), and the Coalition’s 

suggested revisions to the definition of 

same or similar work might add 

confusion to that existing framework. 

Although the Department therefore 

declines to modify the definition of 

same or similar work in the manner 

requested, the Department has revised 

the definition for purposes of clarity. As 

noted, the NPRM defined same or 

similar work as ‘‘work that is either 

identical to or has primary 

characteristics that are alike in 

substance to work performed on a 

contract that is being replaced either by 

the Federal Government or a contractor 

on a Federal service contract.’’ However, 

the portion of this proposed definition 

beginning with ‘‘that is being replaced’’ 

does not address whether the work at 

issue is the ‘‘same or similar,’’ but rather 

concerns the distinct (though related) 

issue of whether a predecessorsuccessor relationship exists. As a 

result, in the interest of clarity, the 

Department defines same or similar 

work in the final rule as ‘‘work that is 

either identical to or has primary 

characteristics that are alike in 

substance to work performed on another 

service contract.’’ This change is 

intended to be nonsubstantive, as it 

preserves the operative language 

regarding whether the work under a 

predecessor and successor contract is 

the same or similar. 

The Department proposed to define 

the term Service Contract Act to mean 

the McNamara-O’Hara Service Contract 

Act of 1965, as amended, 41 U.S.C. 6701 

et seq., and its implementing 

regulations. See 29 CFR part 4 (SCA 

implementing regulations); 29 CFR 

4.1a(a) (defining the SCA for the 

purpose of the implementing 

regulations). The Department did not 

receive comments about this proposed 

definition and the final rule adopts the 

definition as proposed. 

The Department proposed to define 

solicitation as any request to submit 

offers, bids, or quotations to the Federal 

Government. This definition is 

consistent with the definition of 

solicitation in both the regulations that 

implemented Executive Order 13495 

and in 48 CFR 2.101. The Department 

broadly interprets the term solicitation 

to apply to both traditional and 

nontraditional methods of solicitation, 

including informal requests by the 

Federal Government to submit offers or 

quotations. However, the Department 

notes that requests for information 

issued by Federal agencies and informal 

conversations with Federal workers are 

not ‘‘solicitations’’ for purposes of the 

Executive order. The Department did 

not receive any comments addressing 

the definition of solicitation, and the 

final rule adopts the definition of that 

term as proposed. 

The Department proposed to define 

the term United States as the United 

States and all executive departments, 

independent establishments, 

administrative agencies, and 

instrumentalities of the United States, 

including corporations of which all or 

substantially all of the stock is owned 

by the United States, by the foregoing 

departments, establishments, agencies, 

instrumentalities, and including 

nonappropriated fund instrumentalities. 

When the term is used in a geographic 

sense, the Department proposed that the 

United States means the 50 States, the 

District of Columbia, Puerto Rico, the 

Virgin Islands, Outer Continental Shelf 

lands as defined in the Outer 

Continental Shelf Lands Act, American 

Samoa, Guam, the Commonwealth of 

the Northern Mariana Islands, Wake 

Island, and Johnston Island. The 

geographic scope component of this 

proposed definition was derived from 

the regulations implementing the SCA 

at 29 CFR 4.112(a) and the SCA’s 

definition of the term United States at 

41 U.S.C. 6701(4). 

The Coalition expressed support for 

this proposed definition, stating that it 

appropriately defines the geography it 

covers broadly and consistently with the 

SCA and its implementing regulations. 

The Coalition stated that they support 

such consistency because the Federal 

Government will obtain the most 

economy and efficiency benefits from 

Executive Order 14055 if it is applied 

broadly, and that uniform coverage 

between Executive Order 14055 and the 

SCA provides clarity for Federal 

agencies, contractors, and Federal 


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service contractor workers. The 

Department did not receive any other 

comments about the proposed definition 

of United States, and therefore the final 

rule adopts the definition as proposed. 

Finally, the Department proposed to 

use the definitions of the terms 

Administrative Review Board, 

Administrator, Office of Administrative 

Law Judges, Secretary, and Wage and 

Hour Division that were set forth in the 

regulations that implemented Executive 

Order 13495. The Department did not 

receive comments on these proposed 

definitions, and the final rule adopts 

these definitions as proposed with one 

technical edit to correct the alphabetical 

order of Secretary that is not intended 

to reflect a change in the substance of 

this section. 

3. Section 9.3 Coverage 

Proposed § 9.3 addressed the coverage 

provisions of Executive Order 14055. It 

explained the scope of the Executive 

order and its coverage of executive 

agencies and contracts. 

Executive Order 14055 provides that 

agencies must, to the extent permitted 

by law, ensure that service contracts and 

subcontracts (and solicitations for such 

contracts and subcontracts) that succeed 

a contract for performance of the same 

or similar work include a specific 

nondisplacement clause. This clause 

must state that the successor contractor 

and its subcontractors, except as 

otherwise provided in the order, must, 

in good faith, offer service employees 

employed under the predecessor 

contract and its subcontracts a right of 

first refusal of employment under the 

successor contract in positions for 

which those employees are qualified, if 

those service employees’ employment 

would otherwise be terminated as a 

result of the award of the successor 

contract or the expiration of the contract 

under which the employees were hired. 

Section 2 of the order states that 

‘‘service contract’’ means any contract, 

contract-like instrument, or subcontract 

for services entered into by the Federal 

Government or its contractors that is 

covered by the SCA. Section 2 also 

defines agency to mean an executive 

department or agency of the Federal 

Government, including an independent 

establishment subject to the 

Procurement Act, 40 U.S.C. 102(4)(A). 

Section 5 of the order specifies that the 

order does not apply to contracts under 

the simplified acquisition threshold as 

defined in 41 U.S.C. 134. 

Section 9.3(a) of the NPRM proposed 

to implement these coverage provisions 

by stating that Executive Order 14055 

and part 9 would apply to any contract 

or solicitation for a contract with an 

executive department or agency of the 

Federal Government, provided that: (1) 

it is a contract for services covered by 

the SCA; and (2) the prime contract 

exceeds the simplified acquisition 

threshold as defined in 41 U.S.C. 134. 

Proposed § 9.3(b) would require all 

contracts that satisfy the requirements of 

§ 9.3(a) to contain the contract clause set 

forth in Appendix A, and all contractors 

on such contracts to comply, without 

limitation, with the related 

requirements of paragraphs (e), (f), and 

(g) of § 9.12, regarding contractor 

obligations near the end of contract 

performance, recordkeeping, and 

cooperation with investigations. 

Proposed § 9.3(c) would require all 

contracts that satisfy the requirements of 

§ 9.3(a) and that also succeed a contract 

for performance of the same or similar 

work, to contain the contract clause set 

forth in Appendix A. It also would 

require all contractors on such contracts 

to comply, without limitation, with all 

the requirements of § 9.12. As in the 

NPRM, several issues relating to the 

coverage provisions of the Executive 

order and § 9.3 are discussed below. 

i. Coverage of Agencies 

Section 9.3 of the NPRM proposed to 

apply the nondisplacement 

requirements to contracts or 

solicitations for contracts with ‘‘an 

agency.’’ This language reflects that 

Executive Order 14055 applies to 

contracts and solicitations with the 

‘‘Federal Government’’ that meet the 

other coverage requirements of the 

order. In § 9.2 of the NPRM, the 

Department proposed to define ‘‘Federal 

Government’’ to include ‘‘an agency or 

instrumentality of the United States that 

enters into a contract pursuant to 

authority derived from the Constitution 

or the laws of the United States.’’ And, 

consistent with section 2(c) of the 

Executive order, the Department 

proposed to define ‘‘agency’’ as an 

‘‘[e]xecutive department or agency, 

including an independent establishment 

subject to the [Procurement Act].’’ The 

Department noted in discussing the 

proposed definitions in § 9.2 that it 

would interpret the terms ‘‘executive 

departments’’ and ‘‘agencies’’ consistent 

with the definition of ‘‘executive 

agency’’ provided in section 2.101 of the 

FAR. See 48 CFR 2.101. Thus, the 

Department stated that the proposed 

rule would apply to contracts entered 

into by executive departments within 

the meaning of 5 U.S.C. 101, military 

departments within the meaning of 5 

U.S.C. 102, independent establishments 

within the meaning of 5 U.S.C. 104(1), 

and wholly owned Government 

corporations within the meaning of 31 

U.S.C. 9101. See 48 CFR 2.101 

(definition of ‘‘executive agency’’). The 

NPRM stated that this proposed 

definition would be interpreted to 

include independent regulatory 

agencies. 

The plain text of Executive Order 

14055 reflects that the order applies to 

executive departments and agencies, 

including independent establishments, 

but only when such establishments are 

subject to the Procurement Act, 40 

U.S.C. 101 et seq. Thus, for example, 

contracts awarded by the U.S. Postal 

Service are not covered by the order or 

part 9 because the U.S. Postal Service is 

not subject to the Procurement Act. 

Finally, pursuant to the proposed 

definition of ‘‘Federal Government,’’ 

contracts awarded by the District of 

Columbia and any Territory or 

possession of the United States would 

not be covered by the order. 

No comments were received regarding 

coverage of agencies. The Department 

therefore affirms its discussion of 

coverage of agencies in the final rule. 

ii. Coverage of Contracts 

Proposed § 9.3(a) provided that the 

requirements of the Executive order 

generally would apply to ‘‘any contract 

or solicitation for a contract with an 

agency.’’ Section 2(a) of the Executive 

order defines ‘‘contract’’ to mean ‘‘any 

contract, contract-like instrument, or 

subcontract for services entered into by 

the Federal Government or its 

contractors that is covered by the [SCA] 

and its implementing regulations.’’ In 

§ 9.2, the Department proposed to set 

forth a broadly inclusive definition of 

the term ‘‘contract’’ that is consistent 

with the Executive order and how the 

term is used in the SCA. Consistent with 

the definition of the term ‘‘contract’’ in 

the Restatement (Second) of Contracts, 

which was in the process of being 

developed when Congress enacted the 

SCA, an agreement is a ‘‘contract’’ for 

SCA purposes if it amounts to ‘‘a 

promise or set of promises for the 

breach of which the law gives a remedy, 

or the performance of which the law in 

some way recognizes a duty.’’ Cradle of 

Forestry in Am. Interpretive Ass’n, ARB 

No. 99–035, 2001 WL 328132, at *3 

(Mar. 30, 2001) (quoting Restatement 

(Second) of Contracts section 1 (Am. L. 

Inst. 1979)). As discussed above with 

regard to the definition of ‘‘contract’’ in 

§ 9.2, licenses, permits, and similar 

instruments thus may qualify as 

contracts under the SCA, id., regardless 

of whether parties typically consider 

such instruments to be ‘‘contracts’’ and 

regardless of whether such instruments 

are characterized as ‘‘contracts’’ for 


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purposes of the specific programs under 

which they are administered. 

Proposed § 9.3(a) provided that part 9 

would also apply to ‘‘any . . . 

solicitation for a contract’’ that meets 

the other requirements for coverage. In 

§ 9.2, the Department proposed to define 

‘‘solicitation’’ to mean ‘‘any request to 

submit offers, bids, or quotations to the 

Federal Government.’’ In keeping with 

the definition proposed in that section, 

the Department broadly interprets the 

term ‘‘solicitation’’ to apply to both 

traditional and nontraditional methods 

of solicitation, including informal 

requests by the Federal Government to 

submit offers or quotations. However, 

requests for information issued by 

Federal agencies and informal 

conversations with Federal workers are 

not ‘‘solicitations’’ for purposes of the 

Executive order. If the solicitation is for 

a contract that is covered by part 9, then 

the solicitation will also be covered. 

Consistent with section 2(a) of 

Executive Order 14055, proposed 

§ 9.3(a)(1) clarified that the contract 

must be a contract for services covered 

by the SCA in order to be covered by the 

Executive order and part 9. The SCA 

generally applies to every ‘‘contract or 

bid specification for a contract that . . . 

is made by the Federal Government’’ 

and that ‘‘has as its principal purpose 

the furnishing of services in the United 

States through the use of service 

employees.’’ 41 U.S.C. 6702(a)(3). The 

SCA is intended to cover a wide variety 

of service contracts with the Federal 

Government. See, e.g., 29 CFR 4.130(a) 

(providing a nonexclusive list of 

examples). As reflected in the SCA’s 

regulations, where the principal 

purpose of the contract with the Federal 

Government is to provide services 

through the use of service employees, 

the contract is covered by the SCA. See 

29 CFR 4.133(a). Such coverage exists 

regardless of the direct beneficiary of 

the services or the source of the funds 

from which the contractor is paid for the 

service and irrespective of whether the 

contractor performs the work in its own 

establishment, on a Federal Government 

installation, or elsewhere. Id. SCA 

coverage, however, does not extend to 

contracts for services to be performed 

exclusively by persons who are not 

service employees, i.e., persons who 

qualify as bona fide executive, 

administrative, or professional 

employees as defined in the FLSA 

regulations at 29 CFR part 541. 

Similarly, a contract for services 

performed essentially by bona fide 

executive, administrative, or 

professional employees, with the use of 

service employees being only a minor 

factor in contract performance, is not 

covered by the SCA and thus is not 

covered by the Executive order or part 

9. See 41 U.S.C. 6702(a)(3); 29 CFR 

4.113(a); WHD Field Operations 

Handbook (FOH) 14c07. No comments 

were received regarding § 9.3(a)(1). 

Aside from adding language to make 

clear that only contracts or solicitations 

issued or entered on or after the 

applicability date of part 9 are covered, 

the final rule adopts that provision as 

proposed. 

iii. Coverage of Contracts at or Above 

the Simplified Acquisition Threshold 

Proposed § 9.3(a)(2) provided that a 

prime contract must exceed the 

simplified acquisition threshold to be 

covered by part 9. This is consistent 

with section 5 of Executive Order 

14055, which provides that the order 

does not apply to contracts under the 

simplified acquisition threshold as 

defined in 41 U.S.C. 134. Unlike 

Executive Order 13495, which excluded 

‘‘contracts or subcontracts under the 

simplified acquisition threshold,’’ 

section 5 of Executive Order 14055 

expressly excludes only ‘‘contracts 

under the simplified acquisition 

threshold[.]’’ Accordingly, the 

Department proposed that all 

subcontracts for services, regardless of 

size, would be covered by part 9 if the 

prime contract meets the coverage 

requirements of § 9.3. As the 

Department noted in the NPRM, the 

definitions sections of both Executive 

Order 13495 and Executive Order 14055 

define ‘‘contract’’ to include ‘‘contract 

or subcontract,’’ which could support a 

continued exception for subcontracts 

under the simplified acquisition 

threshold. For this reason, the 

Department sought comment from the 

public on the potential impact, 

including any unintended 

consequences, of covering subcontracts 

below the simplified acquisition 

threshold. 

PSC advocated to exclude 

subcontracts with a value less than the 

simplified acquisition threshold, noting, 

as the Department also did, that 

Executive Order 14055 defines 

‘‘contract’’ to include ‘‘contract or 

subcontract.’’ PSC also commented that 

applying the rule’s nondisplacement 

requirements to subcontracts below the 

current simplified acquisition threshold 

would be unreasonable, calculating that 

a 5-year service subcontract that has a 

value below the current simplified 

acquisition threshold might only 

employ one person. Nakupuna 

Companies (Nakupuna) also opposed 

coverage of subcontracts below the 

simplified acquisition threshold, 

positing that the costs of compliance 

with Executive Order 14055 will be 

burdensome on small subcontractors. 

Conversely, multiple commenters 

supported covering subcontracts for 

amounts below the simplified 

acquisition threshold where the prime 

contract meets or exceeds the simplified 

acquisition threshold. The Coalition 

supported coverage of these 

subcontracts because such an approach 

maximizes the reach of Executive Order 

14055 and avoids incentivizing 

circumvention of the order’s 

requirements through subcontracting. 

Likewise, the American Federation of 

Labor and Congress of Industrial 

Organizations (AFL–CIO) supported 

coverage of subcontracts below the 

simplified acquisition threshold as an 

‘‘important tool for ensuring that the 

contractors do not evade the 

nondisplacement requirements,’’ and 

noted that the proposed rule 

appropriately specified that non-service 

subcontracts, such as supply 

subcontracts, were excluded. Relatedly, 

the Center for American Progress (CAP) 

supported the ways in which Executive 

Order 14055 ‘‘clos[ed] loopholes,’’ 

thereby ‘‘preventing low road firms from 

undermining the rules.’’ 

The final rule adopts the regulatory 

language at § 9.3(a)(2) as proposed in the 

NPRM, with a limited addition for 

clarity explained below. As in the 

NPRM, the final rule is not excluding 

subcontracts that fall below the 

simplified acquisition threshold where 

the prime contract is itself covered. 

While section 2(a) of the Executive 

order defines the term ‘‘contract’’ as 

‘‘any contract . . . or subcontract for 

services,’’ the order includes a different 

textual indication that the exclusion in 

section 5(a) for ‘‘contracts’’ below the 

simplified acquisition threshold is only 

intended to exclude prime contracts 

below that level, not subcontracts. 

Notwithstanding the expansive 

definition of the word ‘‘contract’’ in 

section 2(a), section 3(a) of the order 

expressly requires the incorporation of 

the contract clause into contracts ‘‘and 

subcontracts.’’ In section 5(a), however, 

the order provides an exclusion only for 

‘‘contracts’’ below the threshold and 

does not mention subcontracts. This 

comparison (in addition to the change 

in language from previous Executive 

Order 13495) supports limiting the 

interpretation of the term ‘‘contract’’ in 

section 5 to mean ‘‘prime contract.’’ 

This interpretation is consistent with 

the Executive order’s stated policy 

goals. The example provided by PSC— 

wherein a subcontractor employing a 

single person for 5 years might still be 

below the simplified acquisition 

threshold—supports, rather than 


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undercuts, extending nondisplacement 

protections to workers employed on 

subcontracts below the simplified 

acquisition threshold. This is because 

where, as in that example, an individual 

provides services to the government for 

a period as long as 5 years, displacing 

that well-trained and experienced 

employee when a new subcontract 

occurs would undermine the policies of 

Executive Order 14055, such as 

uninterrupted delivery of services, 

physical and informational security, and 

familiarity with operations. PSC’s 

example demonstrates that such goals 

are equally operative whether a 

particular service employee happens to 

be employed under a high-dollaramount subcontract or not. Consistent 

application of these goals outweighs the 

compliance costs to subcontractors even 

where subcontracts are for amounts 

below the simplified acquisition 

threshold. 

In reaching this conclusion, the 

Department also considered that the 

existing exclusions in the rule limit the 

real-world scenarios in which the 

commenters’ concerns regarding such 

compliance costs could be applicable. 

The Executive order’s nondisplacement 

requirements do not apply to small 

prime contracts (and any subcontracts of 

those small prime contracts) that fall 

below the simplified acquisition 

threshold, nor (in keeping with the 

SCA) to non-service contracts, nor to 

contracts for services performed 

essentially by bona fide executive, 

administrative, or professional 

employees as defined in the FLSA’s 

regulations at 29 CFR part 541, with the 

use of service employees being only a 

minor factor in contract performance. 

Likewise, the Executive order does not 

apply to ‘‘employees who were hired to 

work under a Federal service contract 

and one or more nonfederal service 

contracts as part of a single job.’’ As a 

result, many subcontracts below the 

simplified acquisition threshold will be 

excluded from coverage for other 

reasons. 

Finally, as indicated by commenters, 

extending coverage to subcontracts 

below the simplified acquisition 

threshold will avoid the creation of 

subcontracts for the purpose of 

circumventing the requirements of 

Executive Order 14055, helping to 

maintain the efficacy and consistent 

application of the order. 

Separately, the Department is 

modifying the language of § 9.3(a)(2) to 

clarify the coverage of contracts at the 

simplified acquisition threshold. 

Proposed § 9.3(a)(2) provided that part 9 

would apply only to prime contracts 

that exceed the simplified acquisition 

threshold. However, section 5 of 

Executive Order 14055 provides that the 

order does not apply to contracts under 

the simplified acquisition threshold. To 

avoid ambiguity, the Department is 

adding language to § 9.3(a)(2) to include 

prime contracts equal to the simplified 

acquisition threshold. The Department 

did not receive any comments on this 

issue. This clarification is consistent 

with the intent of the order and ensures 

that prime contracts equal to the 

simplified acquisition threshold are 

covered by part 9. 

Accordingly, the final rule adopts 

§ 9.3(a)(2) as proposed with an 

amendment to clarify that part 9 applies 

to prime contracts equal to the 

simplified acquisition threshold. 

iv. Coverage of Successor Contracts 

Proposed § 9.3(c) provided that all of 

the nondisplacement requirements 

would apply only to contracts that 

satisfy the requirements of paragraph (a) 

of § 9.3 and that ‘‘succeed’’ a contract 

for performance of the same or similar 

work. Pursuant to section 1 of Executive 

Order 14055, this successor contract 

relationship exists when an existing 

service contract ‘‘expires’’ and a followon contract is awarded. Under the 

Executive order, the Department views 

a service contract as expired when the 

contract ends due to the completion of 

performance or is terminated. In 

contrast, if a term of an existing contract 

is simply extended pursuant to an 

option clause, and no solicitation is 

issued for a follow-on contract, then the 

original contract is not considered 

expired for purposes of Executive Order 

14055, the extended term of the contract 

is not considered a new or a follow-on 

contract under the Executive order, and 

the requirements of the order and this 

part would not apply. 

In accordance with the terms of 

Executive Order 14055, if a contract 

expires, the Department considers 

successor service contracts and 

subcontracts for performance of the 

same or similar work, and solicitations 

for such contracts and subcontracts, to 

be covered by the order, assuming the 

successor contracts meet the 

requirements of § 9.3(a). Thus, for 

example, when the term of a contract 

ends and a follow-on contract is 

awarded, a predecessor-successor 

relationship exists for purposes of 

Executive Order 14055 if the two 

contracts are for the same or similar 

work. This includes circumstances 

where a temporary interim contract is 

the successor to a full-term predecessor 

contract and circumstances where a 

temporary interim contract is a 

predecessor to a full-term successor 

contract. Similarly, if a contract is 

terminated, a solicitation for a follow-on 

contract is issued, and a follow-on 

contract is awarded, then a predecessorsuccessor relationship exists for 

purposes of Executive Order 14055 

(again if the two contracts are for the 

same or similar work). The identity of 

the contractor awarded the successor 

contract does not impact the coverage 

determination. For example, when a 

contract expires and the same contractor 

is awarded the successor contract, the 

terms of the order and part 9 apply. 

Similarly, the successor contract does 

not need to be awarded by the same 

contracting agency as the predecessor 

contract to be covered by the Executive 

order and this part. 

PSC commented that the exclusion of 

options from the type of contract event 

that creates a successor contract under 

the Executive order conflicted with the 

Department’s inclusion of ‘‘exercised 

contract options’’ in the list of terms in 

§ 9.2 that define ‘‘contract’’ for purposes 

of the order. As explained in the 

discussion of § 9.2, to resolve this 

inconsistency in accordance with the 

Executive order’s scope of coverage, the 

Department is removing the term 

‘‘exercised contract options’’ from the 

definition in § 9.2 of the final rule. This 

change to § 9.2 reduces the potential for 

confusion identified by PSC and no 

change is necessary to § 9.3. No other 

comments were received regarding 

coverage of successor contracts, and the 

final rule adopts the language regarding 

those provisions of § 9.3 as proposed. 

For clarity, the Department has 

switched the order of § 9.3(b) and (c) 

and has revised the text for technical 

accuracy and to reflect that (b) applies 

to covered contracts that succeed a 

contract for performance of the same or 

similar work, whereas (c) applies to 

covered contracts and solicitations that 

do not succeed a contract for the same 

or similar work (i.e., SCA-covered 

contracts that are strictly predecessor 

contracts). Revised (b) and (c) thus 

reflect more clearly that contractor 

requirements under this rule may 

depend on whether a contractor is a 

predecessor contractor, a successor 

contractor, or both. For example, a 

predecessor contractor that is not 

succeeding a contract for the same or 

similar work will be required to provide 

the certified list of employees under 

§ 9.12(c) but would not be required to 

offer employment to any service 

employees because the contractor is not 

succeeding another contract. 


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v. Coverage of Contracts for Same or 

Similar Work 

Consistent with section 3 of Executive 

Order 14055, proposed § 9.3(c) would 

require successor contracts to be for the 

‘‘performance of the same or similar 

work’’ in order to be covered by the 

nondisplacement requirements. As 

explained in the discussion of proposed 

§ 9.2, the Department proposed to define 

‘‘same or similar work,’’ in relevant part, 

as ‘‘work that is either identical to or 

has primary characteristics that are alike 

in substance.’’ This definition requires 

the work under the successor contract 

to, at a minimum, share the 

characteristics essential to the work 

performed under the predecessor 

contract. Accordingly, work under a 

successor contract is not considered to 

be same or similar work where it only 

shares characteristics incidental to 

performance under the predecessor 

contract. 

In many instances, determining 

whether a contract involves the same or 

similar work as the predecessor contract 

will be straightforward. For example, 

when a contract for food service at a 

Federal building expires and a new 

contract for food service begins at the 

same location, the work on the 

successor contract would be considered 

to be ‘‘same or similar work.’’ This is 

true even where more limited food 

services are provided under the 

successor contract than the predecessor 

contract, or where work on the 

successor contract requires additional 

job classifications that were not required 

for work under the predecessor contract. 

In other instances, the particular facts 

and circumstances may need to be 

carefully scrutinized to determine 

whether a contract involves the same or 

similar work as the predecessor 

contract. For example, when a contract 

expires, specific requirements from the 

contract may be broken out and placed 

in a new contract or combined with 

requirements from other contracts into a 

consolidated new contract. In such 

circumstances, it will be necessary to 

evaluate the extent to which the prior 

and new contracts involve the same or 

similar functions of work and the same 

or similar job classifications to 

determine whether the prior and new 

contracts involve the same or similar 

work. Although such a circumstancespecific evaluation may be complex in 

certain instances, nondisplacement 

requirements can be expected to apply 

when a larger SCA-covered contract 

expires and is re-bid as several 

individual SCA-covered contracts, as 

well as when two covered contracts 

expire and the new solicitation 

combines the work previously 

performed under those two contracts 

into a new contract. Finally, in some 

instances, it will be evident that two 

contracts do not involve the same or 

similar work. For example, if an SCAcovered contract to operate a gift shop 

in a Federal building expires, and a new 

contract is awarded to operate a dry 

cleaning service in the same physical 

space as had been occupied by the gift 

shop, the two contracts would not 

involve the same or similar work 

because, even though the place of 

contract performance would be the 

same, the nature of the work performed 

under the contracts and the job 

classifications performing the work 

would not be the same or similar. 

PSC expressed concern that various 

federal acquisition initiatives, including 

the category management initiative, are 

leading to an increase in the 

consolidation of smaller contracts and 

having a negative effect on small 

business contractors that are less able to 

compete for the resulting larger 

contracts. PSC stated that if 

nondisplacement rules apply in these 

situations, ‘‘small business employees 

may be retained by successor 

contractors’’ and ‘‘small businesses 

themselves may suffer from employee 

attrition to follow-on successors.’’ 

However, PSC also stated that ‘‘such 

hiring is commonplace in many 

instances’’ already even without the 

nondisplacement order. The Department 

understands that the Federal 

Government is carefully monitoring 

small business participation levels and 

implementing strategies to help ensure 

that new contracting initiatives such as 

category management do not undermine 

small business contracting. The 

Department believes this strikes the 

right balance for both small businesses 

and workers on service contracts even 

though there may be the potential for 

employee attrition from a small business 

predecessor to a successor contract. 

As noted above, in the final rule, the 

Department has switched the order of 

§ 9.3(b) and (c) and made edits for 

clarity, so that the proposed § 9.3(c) is 

now, with minor revisions, located at 

§ 9.3(b). 

vi. Coverage of Subcontracts 

Consistent with sections 2 and 3 of 

Executive Order 14055, which specify 

that the nondisplacement requirements 

apply equally to subcontracts, the 

Department noted that where a prime 

contract is covered by the order and part 

9, any subcontracts for services are also 

covered and subject to the requirements 

of the order and part 9. As a corollary, 

the Executive order does not apply to 

non-service subcontracts. For example, 

a subcontract to supply napkins and 

utensils to a prime contractor as part of 

a covered contract to operate a cafeteria 

in a Federal building is not a covered 

subcontract for purposes of this order 

because it is a supply subcontract rather 

than a subcontract for services. No 

comments were received about the 

coverage of subcontracts, other than 

those related to the discussion of 

subcontracts below the simplified 

acquisition threshold. 

vii. Geographic Scope 

The Executive order and this part 

apply to contracts that are both: (1) with 

the Federal Government; and (2) require 

performance in whole or in part within 

the United States. Performance in whole 

or in part within the United States 

means within the 50 States, the District 

of Columbia, Puerto Rico, the Virgin 

Islands, Outer Continental Shelf lands 

as defined in the Outer Continental 

Shelf Lands Act, American Samoa, 

Guam, the Commonwealth of the 

Northern Mariana Islands, Wake Island, 

and Johnston Island. Under this 

approach—which is consistent with the 

geographic scope of coverage under the 

SCA—the Executive order and these 

regulations do not apply to contracts 

with the Federal Government to be 

performed in their entirety outside the 

geographical limits of the United States 

as thus defined. However, if a contract 

with the Federal Government is to be 

performed in part within and in part 

outside these geographical limits and is 

otherwise covered by the Executive 

order and these regulations, the order 

and the regulations apply to the contract 

and require a right of first refusal for any 

workers who have performed work 

inside the geographical limits of the 

United States as defined. As noted 

previously, contracts awarded by the 

District of Columbia or any Territory or 

possession of the United States are not 

covered by the order, as neither the 

District of Columbia nor any Territory or 

possession of the United States 

constitutes the ‘‘Federal Government’’ 

under these regulations. The Coalition 

expressed support for the scope of 

geographic coverage under the proposed 

rule; no other comments were received 

regarding the geographic scope of 

coverage. 

4. Section 9.4 Exclusions 

Pursuant to section 5(a) of Executive 

Order 14055, proposed § 9.4(a) 

addressed the exclusion for contracts 

under the simplified acquisition 

threshold, as defined in 41 U.S.C. 134. 

The simplified acquisition threshold 

currently is $250,000. 41 U.S.C. 134. 


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The regulations, as finalized, omit that 

amount from the regulatory text in the 

event that a future statutory amendment 

changes the amount. Any such change 

would automatically apply 

prospectively to new contracts subject 

to part 9. 

Proposed § 9.4(a)(2) clarified that the 

exclusion provision at § 9.4(a)(1) would 

apply only to prime contracts under the 

simplified acquisition threshold and 

that whether a subcontract is excluded 

from the requirements of part 9 is 

dependent on the prime contract 

amount. As discussed above in the 

discussion of § 9.3, section 5(a) of 

Executive Order 14055 excludes only 

‘‘contracts under the simplified 

acquisition threshold[.]’’ The proposed 

rule explained that this language differs 

from Executive Order 13495, which 

excluded ‘‘contracts or subcontracts 

under the simplified acquisition 

threshold.’’ See Executive Order 13495, 

74 FR 6103 (Feb. 4, 2009) (emphasis 

added). Accordingly, proposed 

§ 9.4(a)(2) explained that subcontracts 

would be excluded under § 9.4(a)(1) 

only if the prime contract is under the 

simplified acquisition threshold. The 

Department sought comment on the 

potential impact, including any 

unintended consequences, of covering 

subcontracts below the simplified 

acquisition threshold. 

As described in the preamble to 

§ 9.3(a)(2), the Coalition and the AFL– 

CIO commented in support of coverage 

of subcontracts below the simplified 

acquisition threshold where the prime 

contract exceeds the simplified 

acquisition threshold. Conversely, PSC 

and Nakupuna suggested excluding 

subcontracts with a value less than the 

simplified acquisition threshold from 

the requirements of Executive Order 

14055 and this part. For the reasons 

given in the preamble to § 9.3(a)(2), the 

final rule does not exclude subcontracts 

below the simplified acquisition 

threshold where the prime contract 

meets or exceeds that threshold, and the 

final rule adopts paragraphs § 9.4(a)(1) 

and 9.4(a)(2) as proposed. 

In § 9.4(b), the Department proposed 

to implement the exclusion in section 

5(b) of Executive Order 14055 relating to 

employment where Federal service 

work constitutes only part of the 

employee’s job. The Department did not 

receive any comments on proposed 

§ 9.4(b), and the final rule adopts the 

provision as proposed. 

Proposed § 9.4 did not include an 

exclusion for contracts awarded for 

services produced or provided by 

persons who are blind or have severe 

disabilities. The proposed rule 

explained that section 3 of Executive 

Order 13495 specifically excluded 

‘‘contracts or subcontracts awarded 

pursuant to the Javits-Wagner-O’Day 

Act,’’ ‘‘guard, elevator operator, 

messenger, or custodial services 

provided to the Federal Government 

under contracts or subcontracts with 

sheltered workshops employing the 

severely handicapped as described in 

section 505 of the Treasury, Postal 

Services and General Government 

Appropriations Act, 1995,’’ and 

‘‘agreements for vending facilities 

entered into pursuant to the preference 

regulations issued under the RandolphSheppard Act[.]’’ In contrast, section 5 

of Executive Order 14055 does not 

enumerate any such exclusions. For this 

reason, proposed § 9.4 did not exclude 

such contracts from the requirements of 

part 9. 

The proposed rule explained, 

however, that section 12 of Executive 

Order 14055 expressly provides that 

nothing in the order should be 

construed ‘‘to impair or otherwise affect 

. . . the authority granted by law’’ to an 

agency and directs that the order be 

‘‘implemented consistent with 

applicable law.’’ The applicable law 

encompassed by these sections includes 

the statutes that were excluded 

explicitly from Executive Order 13495, 

such as the Javits-Wagner-O’Day (JWOD) 

Act, 41 U.S.C. 8501 et seq., and the 

Randolph-Sheppard Act, 20 U.S.C. 107. 

These laws establish requirements for 

contracts awarded for services produced 

or provided by persons who are blind or 

have severe disabilities, and the laws 

may conflict with the requirements of 

Executive Order 14055 in that the laws 

may impose staffing requirements that 

in many cases would preclude, in whole 

or in part, offering employment to the 

employees on the predecessor contract. 

For example, under the JWOD Act, a 

qualified nonprofit agency operating 

under the AbilityOne Program is 

required to employ blind or severely 

disabled individuals for at least 75 

percent of the direct labor hours 

required for the particular nonprofit 

agency’s production or provision of 

services. See 41 U.S.C. 8501(6)(C). If 

there are few blind or severely disabled 

workers on a predecessor contract, it 

could be impossible for a successor 

contractor to make offers to all 

incumbent workers and also comply 

with the JWOD Act 75-percent 

requirement. The proposed rule 

explained that where direct legal 

conflicts squarely exist between the 

requirements of Executive Order 14055 

and the requirements of another statute, 

regulation, Executive order, or 

presidential memorandum under the 

particular factual circumstances of a 

specific situation, the requirements of 

this part would not apply. Under the 

proposed rule, a contracting agency 

would be obligated to follow the 

procedures proposed at § 9.5 to make a 

case-by-case exception for contracts on 

the basis of a determination that the 

requirements of this part did not apply 

to a particular contract because of a 

direct legal conflict. 

In the NPRM, the Department also 

recognized that contracting agencies 

award contracts under a wide variety of 

programs, including those mentioned 

above, some of which have, by law, 

specific processes and requirements that 

may make it challenging to fully 

implement the requirements of 

Executive Order 14055. The Department 

invited comments on how Executive 

Order 14055 and its implementing 

regulations should be applied to any 

specific programs that are subject to 

contracting requirements that may 

conflict with Executive Order 14055 or 

the provisions of the proposed rule. 

Several commenters supported the 

Department’s approach in the proposed 

rule. The Coalition commented that they 

supported the proposed rule’s coverage 

of contracts covered by the JWOD Act 

and awarded under the AbilityOne 

Program, indicating that coverage of 

AbilityOne contracts is consistent with 

modern disability policy and promotes 

‘‘integrated employment in which 

workers with disabilities work alongside 

nondisabled workers and enjoy the 

same rights and protections.’’ In its 

comment, Jobs to Move America 

thanked the Department for ‘‘providing 

equal treatment to disabled workers by 

covering’’ these contracts. 

Several other commenters expressed 

opposition to the proposed treatment of 

contracts covered by the JWOD Act. 

These commenters requested an acrossthe-board exclusion for contracts or 

subcontracts awarded pursuant to the 

JWOD Act, in line with the exclusion 

previously granted in Executive Order 

13495. These commenters criticized the 

proposed exception process in § 9.5 that 

contracting agencies would need to use 

for AbilityOne contracts if the 

Department did not provide an express 

exclusion. Peckham Inc., Didlake Inc., 

and Nobis Enterprises, which are 

AbilityOne contractors, commented that 

making ‘‘case-by-case determinations on 

AbilityOne contracts will lead to 

inconsistent management of the 

AbilityOne Program, unnecessary 

contract award delays, and adverse 

impacts on the employment of 

individuals with disabilities.’’ Source 

America, an AbilityOne contractor 

network, noted that the lack of an 


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86748 Federal Register / Vol. 88, No. 239 / Thursday, December 14, 2023 / Rules and Regulations 

2The HUBZone program, established by title VI 

of the Small Business Reauthorization Act of 1997, 

is one of several procurement-related preference 

programs for small businesses, and it is designed to 

aid small businesses that are located in 

economically distressed areas. See 15 U.S.C. 657a. 

HUBZone is an acronym for Historically 

Underutilized Business Zone Empowerment 

Contracting (HUBZone). The other small business 

preference programs include preferences for small 

businesses generally, Women-Owned Small 

Businesses, Service-Disabled Veteran-Owned Small 

Businesses, and Small Disadvantaged Businesses. 

See generally Congressional Research Service, 

Small Business Administration HUBZone Program, 

R41268, (Updated July 29, 2022), https://

sgp.fas.org/crs/misc/R41268.pdf. 

express exclusion puts the burden of 

decision-making on procurement 

officers, possibly leading to inconsistent 

application for contracts covered by the 

AbilityOne Program. Source America 

further noted that the exception process 

in the proposed rule does not apply to 

subcontracts and that there are several 

instances where a JWOD Act contractor 

may operate as a subcontractor instead 

of a prime contractor. 

National Industries for the Blind 

(NIB), a nonprofit agency designated by 

the AbilityOne Commission to 

distribute Federal Government orders 

for products and services on the 

AbilityOne Procurement List, wrote that 

the potential need for a case-by-case 

exception for AbilityOne contracts may 

not even be recognized by the 

contracting agency. Melwood 

Horticultural Training Center, Inc. 

(Melwood), an AbilityOne contractor, 

commented that if the rule, as finalized, 

applies to AbilityOne authorized 

contractors, it would be extremely 

unlikely that those contractors would be 

able to maintain compliance with the 

AbilityOne program when a predecessor 

workforce does not have individuals 

who meet the required AbilityOne labor 

criteria. Melwood further explained that 

‘‘[i]f AbilityOne authorized contractors 

are not explicitly exempted from the 

requirements of the rule, they will be 

compelled to hire the incumbent 

workforce instead of offering up 

meaningful, steady opportunities to 

people with significant disabilities.’’ 

Melwood recommended that the final 

rule explicitly exclude contracts under 

the JWOD Act. In the alternative, 

Melwood suggested that the Department 

codify an arrangement specifically for 

successor contracts awarded under the 

JWOD Act that would (1) create a right 

of nondisplacement for jobs constituting 

25 percent of the direct labor hours on 

a contract; (2) require the successor 

contractor to offer positions to displaced 

predecessor contract workers on other 

contracts to the extent doing so would 

not affect AbilityOne compliance; (3) 

require the successor contractor to offer 

to displaced predecessor contract 

workers a right to be recalled for up to 

two years should a vacancy occur in 

roles performing the 25 percent of direct 

labor hours performed by people 

without disabilities; and (4) require the 

successor contractor to take a neutral 

position should a displaced worker 

accept an offer at a non-unionized site 

and attempt to organize it. 

Other commenters similarly requested 

exemptions from the nondisplacement 

requirements based on a perceived 

inconsistency between the requirements 

and other statutes. PSC, in response to 

the Department’s question about 

location continuity and HUBZones, as 

well as other procurement preference 

programs,2 urged a broad exemption 

from the nondisplacement requirements 

whenever they would ‘‘impact internal 

organizational or federal Diversity, 

Equity, Inclusion and Accessibility 

goals.’’ The Council on Federal 

Procurement of Architectural & 

Engineering Services (COFPAES) 

asserted that architecture, engineering 

(A/E) and related services (including 

surveying and mapping) should be 

exempted from the rule because these 

services are governed by the Brooks Act, 

40 U.S.C. 1101 et seq. COFPAES stated 

that the Brooks Act is inconsistent with 

the right of first refusal, because it 

requires that evaluation and selection of 

firms for A/E services be based on 

‘‘demonstrated competence and 

qualification,’’ including award to the 

‘‘most highly qualified’’ firm. 

After consideration of these 

comments, the Department is amending 

the contract clause to give effect to the 

requirements and goals of Executive 

Order 14055 to the maximum extent 

possible in light of the requirements and 

policy objectives of the HUBZone 

program statute, the JWOD Act, and the 

Randolph-Sheppard Act. Specifically, 

the Department has added paragraph (j) 

to the contract clause in Appendix A, 

which sets forth a requirement that, to 

the maximum extent possible, 

contractors that are awarded contracts 

under the HUBZone program statute, 

the JWOD Act, or the RandolphSheppard Act must comply with both 

the relevant requirements under those 

statutes and the requirements of 

Executive Order 14055. Paragraph (j) 

clarifies that nothing in the contract 

clause will be construed to permit a 

contractor or subcontractor to fail to 

comply with any applicable provision of 

the HUBZone program statute, the 

JWOD Act, or the Randolph-Sheppard 

Act. Consistent with paragraph (j) of the 

contract clause, when the requirements 

of such laws would conflict with the 

requirements of Executive Order 14055 

in connection with a particular contract, 

then the requirements of such laws may 

be satisfied in tandem with and, if 

necessary, prior to the requirements of 

Executive Order 14055 and this part. In 

the contract clause, the Department has 

not included reference to section 505 of 

the Treasury, Postal Services and 

General Government Appropriations 

Act, because the requirements of that 

Act are covered already by the reference 

to the JWOD Act. 

Under this framework, for example, a 

successor AbilityOne contractor will be 

required to provide a right of first 

refusal to workers from the predecessor 

contract who have significant 

disabilities or visual impairment, as 

defined by the JWOD Act. The 

AbilityOne successor contractor could 

then hire non-predecessor contract 

workers with significant disabilities or 

visual impairment to the extent 

necessary to satisfy the employment 

threshold requirements of the 

AbilityOne Program. Specifically, the 

JWOD Act requires that 75 percent of 

direct labor hours be performed by 

workers with significant disabilities or 

visual impairment. See 41 U.S.C. 

8501(6)(c). After ensuring that this 

programmatic threshold requirement is 

met, the AbilityOne successor 

contractor will be required under 

paragraph (j) of the nondisplacement 

contract clause in Appendix A to 

provide the right of first refusal to as 

many of the remaining predecessor 

contract employees (i.e., those who do 

not have significant disabilities or visual 

impairment) as necessary to fill any 

remaining positions on the successor 

contract for which those employees are 

qualified. 

Similarly, the HUBZone program 

statute requires small business concerns 

(SBCs) to have 35 percent of all of their 

employees reside in a HUBZone to be 

certified under the program, and to 

attempt to maintain this percentage 

when they are awarded contracts on the 

basis of a HUBZone preference. See 14 

U.S.C. 657a(c) and (d). When both the 

successor and the predecessor 

contractors are SBCs, the residence 

requirement threshold normally could 

be met through a standard application of 

this final rule where the successor 

contractor is required to offer a right of 

first refusal to employees on the 

predecessor contract. Under 

circumstances where the successor is an 

SBC but the predecessor is not, 

HUBZone SBCs can meet both the 

requirements of the HUBZone program 

and the Executive order in accordance 

with paragraph (j) of the contract clause. 

For instance, the successor SBC 

contractor would first have to extend 


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3While the order does not require a right of first 

refusal for professional architects and engineers, 

Brooks Act contracts may still be covered by the 

nondisplacement requirement. As discussed in 

§ 9.3, the order applies to contracts that are covered 

by the SCA and are at or above the simplified 

acquisition threshold. See also Executive Order 

14055, section 2(a), 3(a). The SCA, and therefore the 

order, does not extend to contracts for services ‘‘to 

be performed exclusively by persons who are not 

service employees—i.e., persons who are bona fide 

executive, administrative or professional 

Continued 

offers of employment to the qualified 

predecessor contractor’s employees who 

reside in a HUBZone. If necessary to 

reach the residency threshold, the 

successor HUBZone SBC would next 

extend offers of employment to 

qualified residents of a HUBZone who 

are not employees of the predecessor. 

The HUBZone SBC would next extend 

offers for the remaining employment 

openings to non-HUBZone-resident 

qualified employees of the predecessor 

contractor. Under such an approach, the 

HUBZone SBC would first ensure that it 

meets the statutory requirements of the 

HUBZone program so that it is not 

decertified, and then would be required 

to offer employment to the predecessor’s 

employees pursuant to Executive Order 

14055 to the maximum extent possible 

without violating HUBZone program 

requirements. This approach would also 

apply in other circumstances, such as 

where the predecessor HUBZone SBC 

did not maintain the HUBZone 

residence requirement but was 

permitted to remain in the program. 

While the HUBZone SBC must maintain 

the 35 percent HUBZone residency 

requirement at all times while certified 

in the program, there is an exception: an 

SBC may ‘‘attempt to maintain’’ this 

requirement when performing on a 

HUBZone contract. When that occurs 

and the HUBZone SBC is permitted to 

fall below the 35 percent threshold, it 

still must meet the requirement any 

time it submits a subsequent offer and 

wins a HUBZone contract. Where a nonSBC successor follows a HUBZone SBC 

predecessor, the non-SBC successor 

would be required to comply without 

limitation with the requirements of the 

nondisplacement contract clause and 

implementing regulations by offering a 

right of first refusal to all qualified 

predecessor contract employees. This 

framework is consistent with the 

Department’s treatment of HUBZones in 

the 2011 final rule for Executive Order 

13495. See 76 FR 53720, 53723. 

The Department believes that this 

framework recognizes contractors’ 

obligations to comply with the 

requirements of the HUBZone program 

statute, the JWOD Act, and the 

Randolph-Sheppard Act while 

satisfying Executive Order 14055 by 

providing the nondisplacement benefit 

to workers employed on predecessor 

contracts to the greatest extent 

permissible. Consistent with Executive 

Order 14055, this part also applies to 

covered contracts in which the 

predecessor contractor, but not the 

successor contractor, is covered by the 

HUBZone program statute, the JWOD 

Act, or the Randolph-Sheppard Act. 

Similarly, this part applies to covered 

contracts in which both the predecessor 

and successor contracts are covered by 

the HUBZone program statute, the 

JWOD Act, the Randolph-Sheppard Act. 

In light of new paragraph (j) in the 

contract clause, there is no need for 

contracting agencies to authorize an 

exception under the agency exception 

procedure in § 9.5 of these regulations 

for contracts because of the potential 

application of the HUBZone program 

statute, the JWOD Act, or the RandolphSheppard Act. Paragraph (j) operates to 

provide an exception to the 

requirements of Executive Order 14055 

where necessary (and only to the extent 

necessary) to enable compliance with 

these statutory provisions. The 

Department believes that the approach 

reflected in the final rule will promote 

consistency in applying the 

requirements of Executive Order 14055 

to contracts subject to the HUBZone 

program statute, the JWOD Act, and the 

Randolph-Sheppard Act. The approach 

in the final rule thus is preferable to an 

approach under which some such 

contracts would nominally be fully 

subject to Executive Order 14055’s 

requirements even where application of 

those requirements would conflict with 

these statutory preference programs, 

while others would be entirely exempt 

from Executive Order 14055’s 

requirements even though certain 

positions on the successor contract 

could be filled with predecessor 

contract employees without any conflict 

with these preference programs. In this 

manner, the final rule strikes an 

important balance by retaining the 

nondisplacement benefit for many 

workers on predecessor contracts while 

enabling successor contractors to 

maintain compliance with these other 

statutes. 

The Department declines to create a 

broader exemption from the 

nondisplacement requirements 

wherever they might impact a 

contractor’s ‘‘internal organizational’’ or 

Federal Diversity, Equity, Inclusion, and 

Accessibility (DEIA) goals, as requested 

by PSC. There is no basis in the order 

to allow exceptions from the 

nondisplacement requirements to 

pursue internal corporate goals however 

laudable, and such an exemption would 

not be administrable. With regard to 

other Federal procurement preference 

and nondiscrimination programs, PSC 

did not identify any inconsistency 

between the nondisplacement 

requirements and such programs, other 

than the HUBZone employment 

requirements addressed in this 

preamble and contract clause. As noted 

in § 9.12(d)(3), contractors are required 

to carry out their responsibilities and 

exercise their discretion under the 

nondisplacement requirements in a 

manner consistent with nondiscrimination laws and regulations. 

The Department also considered 

COFPAES’s assertion that there is a 

direct conflict between the Brooks Act 

and the nondisplacement requirements. 

COFPAES commented that a conflict 

exists because the Brooks Act requires 

that evaluation and selection of firms for 

architecture and engineering services be 

based on ‘‘demonstrated competence 

and qualification’’ and be awarded to 

the ‘‘most highly qualified’’ firm. See 40 

U.S.C. 1101, 1103(d). COFPAES further 

stated that the Brooks Act requires 

selection of contractors based on the 

qualifications of ‘‘key employees’’ who 

will work on the contract and that firms 

compete by submitting a Standard Form 

(SF) 330 with the resumes of proposed 

personnel. See 48 CFR 36.603. The 

Department does not agree that these 

requirements create direct conflicts. The 

nondisplacement requirements do not 

conflict with a requirement to contract 

with the most highly qualified firm or 

with a firm based on its qualifications 

or demonstrated competence. Moreover, 

the order does not require a right of first 

refusal for employees who are exempt 

under the professional exemption in 

part 541 of the FLSA regulations and 

who therefore are not service employees 

within the meaning of the SCA. See 

Executive Order 14055, section 3(b). 

The Department’s FLSA regulations 

state that the ‘‘traditional professions’’ 

of architecture and engineering are 

‘‘field[s] of science or learning’’ such 

that employees performing work 

requiring advanced knowledge in those 

fields generally meet the duties 

requirements for the learned 

professional exemption. See 29 CFR 

541.301(a) and (c). Accordingly, these 

individuals will generally not be 

‘‘service employees’’ under the 

definition in the Executive order and 

thus there will generally not be any duty 

under the nondisplacement rule to 

provide a right of first refusal to these 

individuals or any reason that a bidder 

cannot list its own professional 

employees on its SF 330 form.3


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personnel[.]’’ 29 CFR 4.113(a)(2). However, SCA 

(and therefore nondisplacement) coverage extends 

to contracts ‘‘which may involve the use of service 

employees to a significant or substantial extent,’’ 

even if there is ‘‘some use of bona fide executive, 

administrative, or professional employees[.]’’ 29 

CFR 4.113(a)(3); see also Nat’l Cancer Inst., BSCA 

No. 93–10, 1993 WL 832143 (Dec. 30, 1993) 

(discussing the meaning of ‘‘significant or 

substantial extent’’). Many employees who work on 

Brooks Act-covered contracts may be nonexempt 

service employees. The Brooks Act contemplates 

that covered work may include ‘‘incidental 

services’’ carried out by architects and engineers 

‘‘and individuals in their employ.’’ 40 U.S.C. 

1103(2)(C)). Accordingly, some Brooks Act 

contracts could be covered by the SCA and 

therefore the nondisplacement order. 

While there is no direct conflict 

between the Brooks Act and the 

nondisplacement requirements so as to 

justify an across-the-board exemption, 

an agency exception may be appropriate 

depending on the specific facts of a 

particular contract under the 

nondisplacement regulations in 

§ 9.5(a)(1) or (a)(2). See section II.B.5. 

below. These agency exceptions apply 

where adhering to the requirements of 

the order or the implementing 

regulations would not advance the 

Federal Government’s interests in 

achieving economy and efficiency in 

Federal procurement or where, based on 

a market analysis, adhering to the 

requirements of the order or the 

implementing regulations would both 

substantially reduce the number of 

potential bidders so as to frustrate full 

and open competition and not be 

reasonably tailored to the agency’s 

needs for the contract. Where a contract 

is largely performed by SCA-exempt 

professional services employees, it may 

still be covered by the order even if only 

a relatively small percentage of the 

employees on the project would be 

provided with a right of first refusal. In 

such a situation, where the agency’s 

overriding interest may be in fostering 

creative competition between the 

professional employees on the project, it 

may not make sense to impose the 

nondisplacement requirements if their 

inclusion would adversely affect the 

ability of the agency to maximize the 

number of such firms that might 

participate while providing a benefit 

only to a limited number of covered 

service employees on the contract. 

Accordingly, the final rule adopts the 

paragraph at § 9.4 as proposed, along 

with the amendments specified above to 

the contract clause in Appendix A. 

5. Section 9.5 Exceptions Authorized 

by Agencies 

Section 6 of the order provides a 

procedure for Federal agencies to except 

particular contracts from the application 

of the nondisplacement requirements. 

The Department proposed to implement 

this procedure through language in § 9.5 

of the regulations. Under section 6 of 

the order, and in § 9.5 as proposed and 

as adopted in this final rule, an agency 

would be permitted to grant an 

exception from the requirements of 

section 3 of the order (the incorporation 

of the nondisplacement contract clause) 

for a particular contract under certain 

circumstances. The determination must 

be made no later than the solicitation 

date for the contract and must include 

a specific written explanation of why at 

least one of the qualifying 

circumstances exists with respect to that 

contract. 

Proposed § 9.5(a) listed the qualifying 

circumstances for an agency exception, 

as provided for in the agency exceptions 

provision in section 6(a) of the order. 

These included (1) where adhering to 

the requirements of the order or the 

implementing regulations would not 

advance the Federal Government’s 

interests in achieving economy and 

efficiency in Federal procurement; (2) 

where based on a market analysis, 

adhering to the requirements of the 

order or the implementing regulations 

would both substantially reduce the 

number of potential bidders so as to 

frustrate full and open competition and 

not be reasonably tailored to the 

agency’s needs for the contract; and (3) 

where adhering to the requirements of 

the order or the implementing 

regulations would otherwise be 

inconsistent with statutes, regulations, 

Executive orders, or Presidential 

Memoranda. 

The Department proposed to interpret 

section 6(a) of the order as allowing 

agencies to make exceptions only for 

prime contracts and not for individual 

subcontracts. The proposed language in 

§ 9.5(a) carried out this interpretation by 

authorizing contracting agencies to 

waive nondisplacement provisions only 

‘‘as to a prime contract.’’ The 

Department’s proposed interpretation of 

section 6(a) followed from a comparison 

of this section with the agency 

exemption provision in Executive Order 

13495. In Executive Order 13495, the 

agency exemption provision permitted 

agencies to exempt ‘‘a particular 

contract, subcontract, or purchase order 

or any class of contracts, subcontracts, 

or purchase orders.’’ In Executive Order 

14055, however, section 6(a) permits 

agencies to make exceptions only for ‘‘a 

particular contract’’ and does not 

reference subcontracts. In the NPRM, 

the Department also noted that section 

2(a) of Executive Order 14055 defines 

the term ‘‘contract’’ as including 

‘‘subcontract,’’ which could support an 

interpretation of section 6(a) as allowing 

a continued case-by-case exception for 

subcontracts. For that reason, the 

Department sought comment from the 

public on the potential impact, 

including any unintended 

consequences, of not allowing agency 

exceptions for particular subcontracts or 

classes of subcontracts. 

In response to the Department’s 

request for comments, the Coalition 

responded in support of the proposed 

limitation that would allow exceptions 

to be granted only for prime contracts 

and not separately for subcontracts. The 

Coalition expressed concern that 

permitting exceptions for particular 

subcontracts could ‘‘create 

opportunities for circumvention’’ of the 

nondisplacement requirements by 

‘‘pushing more work to the 

subcontractor.’’ The Coalition described 

an example of how contractors use 

subcontracting arrangements to evade 

contract requirements. In the example, a 

New Jersey state law required certain 

services to be provided only by 

nonprofits; a contractor evaded the law 

by using a shell nonprofit prime 

contractor and then subcontracting to a 

for-profit entity. 

No commenter specifically opposed 

the Department’s proposed 

interpretation. PSC’s comment, 

however, contained a more general legal 

argument that paralleled the 

Department’s discussion in the NPRM. 

PSC opposed the Department’s 

proposed limitation on the application 

of the simplified acquisition threshold 

exclusion (which appears in section 5(a) 

of the order) to subcontracts. In making 

its argument, PSC referenced the order’s 

definition section at section 2(a) that 

includes ‘‘subcontract’’ within the 

definition of the term ‘‘contract.’’ PSC 

asserted that, because of this definition, 

the order requires the exclusion for 

prime contracts below the simplified 

acquisition threshold in section 5(a) of 

the order to apply to subcontracts as 

well. Although PSC did not extend its 

argument to the interpretation of section 

6(a) of the order, the same logic would 

apply there too, given that section 6(a) 

provides for agency exceptions for ‘‘a 

particular contract.’’ 

NIB expressed concern that if the 

agency exception process only applies 

to prime contracts, then the regulations 

might not be able to adequately account 

for potential conflicts between the 

nondisplacement requirements and the 

requirements of the JWOD Act and the 

AbilityOne Program. NIB noted that the 

FAR recognizes ‘‘[t]he statutory 

obligation’’ under the JWOD Act ‘‘also 

applies when contractors purchase the 

supplies or services for Government 

use,’’ 48 CFR 8.002(c)—i.e., including 


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4Section 4 of Executive Order 13495 also 

included the authority to grant a waiver of that 

order’s effect but limited the authority to the ‘‘head 

of a contracting department or agency.’’ 

when contractors subcontract for 

services. Likewise, SourceAmerica 

noted that Marine Corps Food Service 

contracts are ‘‘mandatory subcontracts’’ 

under the JWOD Act, so there would be 

a direct conflict between the JWOD Act 

and the Executive order if JWODcovered subcontracts are not given an 

exception. To remedy this concern, NIB 

recommended providing an express 

exemption for AbilityOne contracts and 

subcontracts so that contracting 

agencies would not need to follow the 

procedures in § 9.5 of the 

nondisplacement regulations to except 

these contracts and subcontracts. 

Finally, PSC raised questions about 

the application of the Executive order 

and the regulations to Multi-Agency 

Contracts (MACs) and the individual 

task orders that may be made from 

them. For MACs, as well as for similar 

MAS/IDIQ contracts, there are at least 

two separate moments in which a 

contracting agency takes an action to 

enter into a contract: First, when the 

General Services Administration (GSA) 

(or other coordinating agency) 

negotiates the underlying umbrella 

contract with the contractor; and 

second, when the individual contracting 

agency issues a task order under the 

umbrella contract. As a general matter, 

an umbrella IDIQ contract should 

include the nondisplacement clause 

with appropriate modification (or some 

mechanism for its later inclusion at the 

task order level) if there is any 

reasonable possibility that a future task 

order under the contract could be found 

to be a covered successor contract. 

Unless a mechanism exists to add the 

nondisplacement clause to individual 

task orders at the time of their issuance, 

the fact that such a possibility is 

unknown at the time of the solicitation 

for the underlying MAS/IDIQ contract 

would not be sufficient reason to 

exempt the entire umbrella contract 

from coverage under the procedure in 

§ 9.5. 

Having considered these comments, 

the final rule retains the language that 

authorizes agency exceptions for ‘‘a 

prime contract’’ and not subcontracts. 

As noted in the NPRM, this approach 

follows from a comparison between 

Executive Order 14055 and its 

predecessor, Executive Order 13495. 

Executive Order 13495 expressly 

included the term ‘‘subcontracts’’ in its 

authorization for agency exceptions, 

while section 6(a) of Executive Order 

14055 does not. While it is true, as PSC 

noted, that the definition of ‘‘contract’’ 

in section 2(a) of Executive Order 14055 

includes subcontracts, Executive Order 

13495 contained this same definition. 

The Department therefore believes the 

better interpretation of Executive Order 

14055 is to give weight to the fact that 

Executive Order 14055 eliminated the 

express reference to ‘‘subcontracts’’ that 

was included in the agency exemptions 

provision of Executive Order 13495. A 

comparison between section 3(a) and 

section 6(a) supports this interpretation. 

Notwithstanding the expansive 

definition of the word ‘‘contract,’’ 

section 3(a) of the order expressly 

requires the incorporation of the 

contract clause into ‘‘contracts and 

subcontracts.’’ In 6(a), however, the 

order provides an exception process 

only for ‘‘contracts.’’ In addition, the 

potential division of contract work 

through subcontracts is often only clear 

after prime contractors have submitted 

bids in response to a solicitation and not 

before it is issued. It would be 

impractical or impossible in many cases 

for contracting agencies, prior to the 

solicitation date for a prime contract, to 

identify ‘‘particular’’ subcontracts 

which could appropriately be excepted 

from coverage. 

The Department is mindful of NIB’s 

concern regarding the application of the 

§ 9.5 agency exception procedure to 

JWOD Act-covered contracts and 

subcontracts. However, as discussed in 

section II.B.4., the Department has 

separately addressed these concerns by 

including language in the contract 

clause that applies to all such contracts 

and subcontracts and instructs 

contractors that they must implement 

the JWOD Act and the nondisplacement 

provisions in tandem and to the 

maximum extent possible. 

To account for the unique structure of 

MAS/IDIQ contracts, the Department 

has added a new sentence to § 9.5(b) 

that provides for a bifurcated exception 

process. The provision provides that for 

IDIQ contracts, an exception must be 

granted prior to the solicitation date if 

the basis for the exception cited would 

apply to all orders. Otherwise, 

exceptions must be granted for each 

order by the time of the notice of the 

intent to place an order. The appropriate 

entity to analyze and grant an agency 

exception at the time of a task order may 

often be the ordering agency, as the 

ordering agency will usually be best 

placed to make the initial determination 

of whether a task order is a successor 

contract that would be covered by the 

order and therefore whether it is 

relevant to consider an agency 

exception to coverage. As a general 

matter, however, the agency responsible 

for the umbrella contract may determine 

the procedure through which task 

orders may be excepted (and whether 

the contracting agency can overrule an 

ordering agency’s determination 

regarding an agency exception), as long 

as that procedure is consistent with the 

nondisplacement order, these 

regulations, and any applicable FAR 

provisions. 

Accordingly, the final rule adopts the 

language limiting section 6(a) to prime 

contracts as proposed, with a limited 

amendment to account for MAS/IDIQ 

contract task orders. The Department 

has also added a sentence to § 9.5(b) to 

clarify that when an agency determines 

that a prime contract is excepted under 

this section, the nondisplacement 

requirements will not apply to any 

subcontracts under that prime contract. 

Section 6(a) of Executive Order 14055 

also limits contracting agency exception 

decisions by requiring that a decision to 

except a contract must be made by a 

‘‘senior official’’ within the agency. The 

Department interprets ‘‘senior official’’ 

to mean the senior procurement 

executive, as defined in 41 U.S.C. 

1702(c). Consistent with this 

interpretation, the Department proposed 

regulatory text at § 9.5(a) that identifies 

the senior procurement executive as the 

senior official who must make an 

exception decision. In the NPRM, the 

Department explained that, because the 

order specifically requires the decision 

to be made by a senior official, the 

decision cannot be delegated by the 

senior procurement executive to a 

lower-level official. This same nondelegation principle was applied in the 

2012 FAR rule that implemented 

Executive Order 13495. See 77 FR at 

75773.4

The Coalition approved of the 

Department’s interpretation of the term 

‘‘senior official’’ in § 9.5(a), stating that 

the required approval of the senior 

procurement executive will ensure that 

exceptions are ‘‘subject to consistent, 

rigorous levels of review.’’ The Coalition 

noted that an agency’s senior 

procurement executive is ‘‘well 

positioned to assess whether the need 

for any particular service contract is 

sufficiently unusual to justify waiving 

the nondisplacement requirement.’’ The 

Coalition agreed with the Department 

that prohibiting any further delegation 

of this duty is consistent with use of the 

term ‘‘senior official’’ in section 6(a) of 

the order. The Coalition, however, also 

recommended that the Department add 

a consultation requirement, such that 

the senior procurement executive would 

have to make the determination ‘‘in 

consultation with the agency head.’’ The 

Coalition noted that such a requirement 


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would be consistent with the FAR, 

which permits individual deviations 

from FAR requirements when 

authorized by the agency head. See 48 

CFR 1.403. The AFL–CIO stated that 

they supported the requirement that any 

exception decision be made by the 

senior procurement executive. 

In contrast, Nakupuna expressed 

concern that the exception process in 

§ 9.5(a) is ‘‘too arduous’’ and may result 

in agencies not granting exceptions that 

would have been in the best interest of 

the Federal government. Nakupuna also 

stated that the head of a contracting 

department or agency should have the 

authority to exempt contracts from the 

requirements of the order if justified. 

Several other commenters expressed 

more general concerns about the 

requirements for senior-level decisionmaking. PSC, in a response to the 

Department’s proposal regarding 

location continuity, stated that requiring 

the senior procurement executive to 

make a determination ‘‘would cause 

needless delay’’ because such decisions 

‘‘require time, consideration, and 

decision capital’’ that may ‘‘bottleneck 

solicitations.’’ NIB, in requesting a 

blanket exemption for contracts 

awarded under the JWOD Act, suggested 

that exception decisions by senior 

procurement executives would be 

‘‘superfluous’’ and ‘‘time-consuming.’’ 

Several other entities involved in 

contracting under the JWOD Act 

expressed similar concerns. These 

comments, however, did not address the 

express language in section 6(a) of the 

Executive order that limits the 

exception authority to a ‘‘senior official 

within an agency’’ or suggest that the 

Department was incorrect to interpret 

that language as limiting the decision to 

the senior procurement executive. 

The final rule adopts the seniorprocurement-executive requirement in 

§ 9.5(a) as proposed. As the Coalition 

noted, this language is consistent with 

the requirement in the order that the 

decision must be made by a ‘‘senior 

official,’’ and the involvement of the 

senior procurement executive will 

promote consistency in agency 

exception decisions. The requirement is 

also consistent with the implementation 

of Executive Order 13495 in the 2012 

FAR final rule, which adopted language 

at 48 CFR 22.103–3 authorizing the 

senior procurement executive to waive 

nondisplacement requirements. See 77 

FR at 75767. The Department declines 

to implement the Coalition’s proposal to 

require consultation with the agency 

head. While such consultation may be 

appropriate and should be encouraged, 

it is not required by the order and may 

not be warranted in every instance. 

NIB also suggested that the word 

‘‘may’’ in § 9.5(a) should be replaced 

with the word ‘‘shall,’’ to more 

effectively require a contracting agency 

to grant an exception to the 

nondisplacement requirements in 

certain circumstances. While 

acknowledging that section 6(a) of the 

order itself uses the term ‘‘may,’’ NIB 

asserted that replacing it with the word 

‘‘shall’’ in the regulations would 

eliminate any implication that a 

contracting agency has any ‘‘discretion’’ 

to apply the nondisplacement 

requirements even when that would be 

inconsistent with another law such as 

the JWOD Act. The Department agrees 

with NIB that in circumstances in which 

the application of the nondisplacement 

requirements would directly conflict 

with an express provision of another 

statute, such that compliance with the 

nondisplacement requirements set forth 

in this final rule would necessarily 

result in a violation of another statute, 

the agency should authorize the 

exception. But the Department 

interprets the order’s use of the term 

‘‘may’’ to suggest only that (consistent 

with Nakupuna’s suggestion) the senior 

procurement executive’s determination 

can still be subject to review and 

revision by the contracting agency head 

or otherwise pursuant to an individual 

contracting agency’s procurement 

procedure. Accordingly, the final rule 

continues to authorize, but not require, 

the agency to waive the application of 

nondisplacement provisions after the 

determination of the senior procurement 

executive. The final rule therefore 

adopts the language of § 9.5(a) as 

proposed. 

Proposed § 9.5(b) reiterated the 

procedural requirements that section 

6(a) of the order states must be satisfied 

for an exception to be effective. The 

proposed language stated that the action 

to except a contract from some or all of 

the requirements of the Executive order 

or the regulations must include a 

specific written explanation of the facts 

and reasoning supporting the 

determination. Following the text of 

section 6(a) of the order, the proposed 

language in § 9.5(b) stated that this 

written explanation must be issued no 

later than the solicitation date, which is 

also the latest date that the action to 

except a contract may be taken. The 

proposed language in § 9.5(b) provided 

that any determination by an agency to 

exercise its exception authority that is 

made after the solicitation date or 

without the timely and specific written 

explanation would be inoperative. In 

such a circumstance, the contract clause 

would have been wrongly omitted and 

the agency would be required to take 

action consistent with paragraph 

§ 9.11(f) of this part, which sets forth the 

requirements for incorporating missing 

contract clauses. 

The Coalition and the AFL–CIO 

expressed general support for the 

proposed procedural requirements in 

§ 9.5(b). The Coalition noted that the 

requirement for a specific written 

explanation, including the facts and 

reasoning, will promote thorough 

analyses and consistent decisionmaking. They also noted that this 

requirement is in accordance with the 

FAR’s requirement that documentation 

in contract files be sufficient to 

constitute a complete history of the 

contractual action, including support for 

actions taken. See 48 CFR 4.801(b). The 

Coalition, however, recommended 

modifying the language of § 9.5(b) to 

also require an ‘‘attestation’’ by the 

incoming contractor that ‘‘no service 

disruption will occur due to the 

displacement of predecessor contract 

employees.’’ They explained that the 

attestation could be requested in the 

solicitation. 

The Department declines to require an 

additional ‘‘attestation’’ condition. Such 

an attestation requirement could be an 

effective mechanism in a particular 

contract to maximize the use of 

predecessor employees and limit 

disruption even when the 

nondisplacement contract clause is not 

included in the solicitation. However, 

the order does not impose this blanket 

requirement, and the Department did 

not propose one in the NPRM. Thus, 

while agencies are encouraged to take 

alternative and contract-specific 

measures to protect against service 

disruption where the nondisplacement 

provisions do not apply—including an 

attestation requirement on a contract-bycontract or agency-wide basis—the 

Department is not imposing such a 

requirement in this final rule. 

Multiple commenters noted potential 

challenges from the requirement in 

§ 9.5(b) that the exception determination 

and written analysis must be carried out 

no later than the solicitation date. One 

entity, Professional Contract Services, 

Inc. (PCSI), requested a modification of 

these timing requirements to 

accommodate the potential for 

interaction between bidders and the 

contracting agency. PCSI noted that the 

regulations do not provide for a 

‘‘process for a bidder or contractor to 

interact with the contracting agency and 

explain its need for such an exception.’’ 

PCSI suggested that such a procedure 

would be particularly useful with regard 

to the AbilityOne program, where ‘‘a 

contracting agency may not understand 


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the conflict in laws posed without such 

an interaction with the selected 

[AbilityOne contracting entity].’’ PCSI 

did not suggest how exactly the 

timeframe should be modified—whether 

by providing a pre-solicitation 

procedure or by allowing exceptions to 

be requested and provided after the 

solicitation date. 

The Coalition discussed the challenge 

of the exception deadline in the context 

of a comment about the proposed 

reconsideration process. Under their 

suggestion, agencies would be required 

to notify workers and their 

representatives of a proposed exception 

no later than 120 days before the 

solicitation, providing time for comment 

from interested parties. The deadline for 

the agency to make an initial exception 

decision would be 60 days prior to the 

solicitation date, to accommodate time 

for interested parties to then request 

reconsideration and for that 

reconsideration to be resolved before 

any bid solicitation goes out. The AFL– 

CIO expressed agreement with the 

Coalition’s proposed timeframe. 

The Department acknowledges that 

the solicitation-date deadline for an 

agency exception decision may be 

challenging in some circumstances 

because it requires agencies to collect 

relevant information regarding the need 

for an exception prior to the solicitation 

date, and because any decision that is 

made close to or on the solicitation date 

leaves little to no time for interested 

parties to assist the agency in correcting 

any mistakes before the solicitation is 

issued. Notwithstanding these concerns, 

the Department declines to extend the 

deadline for agency exceptions beyond 

the solicitation date, which would be 

contrary to the specification in the order 

itself that the exception may be granted 

‘‘no later than the solicitation date.’’ 

This language does not allow a 

procedure in which exceptions are 

granted after the solicitation date, unless 

the solicitation is subsequently canceled 

and reissued. Such a rule strikes a 

reasonable balance, as allowing 

exceptions after the solicitation date 

would not make sense procedurally and 

could invite abuse of the exceptions 

provision. 

The Department also declines to 

impose a procedural framework that 

would require agency exception 

decisions to be made 60 days before the 

solicitation date for all contracts. The 

Department agrees with the Coalition 

that agencies will be able to make betterinformed decisions and avoid errors if 

they engage with stakeholders— 

including workers on predecessor 

contracts or their collective bargaining 

representatives—as early as possible in 

the acquisition planning process. The 

order, however, requires only that the 

exception decision be made no later 

than the solicitation date, which allows, 

but does not require, agency exception 

decisions to be made at an earlier date. 

In responding to the Coalition’s 

suggestion, the Department considered 

that the FAR contains broad 

requirements for acquisition planning 

prior to the issuance of solicitations. See 

generally 48 CFR 7.102 (‘‘Agencies shall 

perform acquisition planning and 

conduct market research . . . for all 

acquisitions[.]’’). It is during this 

advance planning process that agencies 

should be identifying whether an 

exception from the nondisplacement 

provisions is necessary—and engaging 

workers and their representatives if 

possible—and not at the last minute 

before a solicitation is issued. The 

language of the order allows agencies to 

address exceptions in this way, and 

agencies are encouraged to carry out the 

exceptions decision as early as possible. 

At this time, however, the Department 

declines to impose by regulation an 

earlier deadline for agency exceptions 

determinations. As noted below, 

however, the Department has included 

new language in § 9.5(d) that requires 

contracting agencies, to the extent 

consistent with mission security, to 

include employee representatives in any 

pre-solicitation market-research-related 

industry exchanges that are specific to 

the nondisplacement requirements and 

conducted for the purpose of analyzing 

whether to impose an agency exception 

under § 9.5. 

For the foregoing reasons, the final 

rule adopts § 9.5(b) as proposed. 

i. Bases for Agency Exceptions 

In the NPRM, the Department also 

proposed to provide additional 

guidance and requirements applicable 

to each of the three circumstances in 

which an agency may make an 

exception for a particular contract. 

In § 9.5(c), the Department proposed 

language to address the first of the three 

circumstances under which an agency 

may authorize an exception from the 

nondisplacement provisions: where 

adhering to the requirements of the 

order would not advance the Federal 

Government’s interests in achieving 

economy and efficiency in Federal 

procurement. The proposed language in 

§ 9.5(c) is consistent with the language 

in section 6(a)(i) of Executive Order 

14055. The Department interprets this 

circumstance to be effectively the same 

as the agency exemption that was 

included in section 4 of Executive Order 

13495, which authorized an exemption 

where the nondisplacement 

requirements ‘‘would not serve the 

purposes of [the] order or would impair 

the ability of the Federal Government to 

procure services on an economical and 

efficient basis.’’ Both the Executive 

Order 13495 and Executive Order 14055 

versions of this exception require 

consideration of whether, in the specific 

circumstances of the particular contract, 

economy and efficiency will not be 

served if the contract clause is 

incorporated. In 2011, the Department 

issued detailed regulations to 

implement the Executive Order 13495 

exemption, including factors that could 

be considered and others that could not 

be considered. See 76 FR at 53726–29 

(discussion of comments); 29 CFR 

9.4(d)(4) (2012) (regulatory text). The 

Department has not received 

information suggesting that, during the 

several years in which the prior 

regulations were in effect, these factors 

were over- or under-prescriptive or 

abused by contracting agencies. The 

AFL–CIO noted in its comment that the 

prior nondisplacement procedure was a 

‘‘resounding success.’’ 

In § 9.5(c), as it did in the regulations 

implementing Executive Order 13495, 

the Department proposed to include 

language stating that the written 

analysis that accompanies the 

determination must, among other 

things, compare the anticipated 

outcomes of hiring predecessor contract 

employees with those of hiring a new 

workforce. In addition, the Department 

proposed to include the same 

requirement as under the prior 

regulations that the consideration of 

cost and other factors in exercising the 

agency’s exception authority must 

reflect the general findings made in 

section 1 of the Executive order that the 

government’s procurement interests in 

economy and efficiency are normally 

served when the successor contractor 

hires the predecessor’s employees. 

Thus, if the agency finds that costs or 

other factors support an exception from 

the nondisplacement requirements, it 

must specify how the particular 

circumstances support a conclusion 

contrary to the general findings of the 

order. 

In § 9.5(c)(1), the Department 

proposed to include a non-exhaustive 

list of factors that the contracting agency 

may consider in making its 

determination. These factors are the 

same factors that the Department 

adopted in the regulations that 

implemented Executive Order 13495. 

They include circumstances where the 

use of the carryover workforce would 

greatly increase disruption to the 

delivery of services during the period of 

transition between contracts. This might 


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occur where, for example, the entire 

predecessor workforce would require 

extensive training to learn new 

technology or processes that would not 

be required of a replacement workforce. 

They also include emergency situations, 

such as a natural disaster or an act of 

war, that physically displace incumbent 

employees. Finally, they include 

situations where the senior official at 

the contracting agency reasonably 

believes, based on the predecessor 

employees’ past performance, that the 

entire predecessor workforce failed, 

individually as well as collectively, to 

perform suitably, and it would not be 

economical or efficient to provide 

supplemental training to these workers. 

As the Department explained in the 

NPRM, a determination that the entire 

workforce failed cannot be made lightly. 

A senior agency official who makes 

such a determination must demonstrate 

that their belief is reasonable and is 

based upon reliable evidence that has 

been provided by a knowledgeable 

source, such as department or agency 

officials responsible for monitoring 

performance under the contract. Absent 

an ability to demonstrate that this belief 

is based upon reliable evidence, such as 

written credible information provided 

by such a knowledgeable source, the 

employees working under the 

predecessor contract in the last month 

of performance would be presumed to 

have performed suitable work on the 

contract. Alone, information regarding 

the general performance of the 

predecessor contractor is not sufficient 

to justify an exception. It is also less 

likely that the agency would be able to 

make this showing where the 

predecessor employed a large 

workforce. 

In § 9.5(c)(2), the Department 

proposed to list factors that the 

contracting agency may not consider in 

making an exception determination 

related to economy and efficiency. 

These include any general presumptions 

that directly contravene the purpose and 

findings of the order, such as any 

general presumption—without contractspecific facts—that the use of a 

carryover workforce would increase (as 

opposed to decrease) disruption of 

services during the transition between 

contracts. While, as described above, 

contract-specific factors demonstrating a 

potential for disruption are a potential 

factor that may be considered, any 

general presumption as to such 

disruption would be contrary to and 

inconsistent with the purpose and 

findings of the order. Similarly, it would 

not be appropriate to consider 

hypothetical cost savings that a 

contractor might attempt to achieve by 

hiring a workforce with less seniority 

given the critical benefits that an 

experienced contractor workforce 

provides to the government. 

The Department proposed in 

§ 9.5(c)(2), as it did in the regulations 

that implemented Executive Order 

13495, to preclude agencies from using 

any potential reconfiguration of the 

contract workforce by the successor 

contractor as a factor in supporting an 

exception. Successor contractors are 

permitted to reconfigure the staffing 

pattern to increase the number of 

employees employed in some positions 

while decreasing the number of 

employees in others. In such cases, 

providing a right of first refusal does not 

affect the contractor’s ability to do so, 

except that proposed § 9.12(c)(3) would 

require the contractor to examine the 

qualifications of each employee to 

minimize displacement. Thus, any 

potential for reconfiguration cannot 

justify excepting the entire contract 

from coverage. 

The Department also proposed in 

§ 9.5(c)(2), as it did in the regulations 

that implemented Executive Order 

13495, to prohibit any exception 

decision based solely on the contract 

performance by the predecessor 

contractor. This would include the 

termination of a service contract for 

default, which, standing alone, would 

not satisfy the exception standards of 

section 6(a)(i) of the Executive order. 

Such defaults, as well as other 

performance problems not leading to 

default, may result from poor 

management decisions of the 

predecessor contractor that have been 

addressed by awarding the contract to 

another entity. Even where contract 

problems can be traced to specific poor 

performing service employees, that is 

not necessarily sufficient to justify 

invocation of the exception, as, 

consistent with section 3(a) of the 

Executive order, the successor 

contractor can decline to offer the right 

of first refusal to employees for whom 

the contractor reasonably believes, 

based on reliable evidence of the 

particular employees’ past performance, 

that there would be just cause to 

discharge the employees. 

Finally, the Department proposed in 

§ 9.5(c)(2) to limit contracting agencies 

from considering wage rates and fringe 

benefit rates of services employees in 

most circumstances. Minimum wage 

and fringe benefit rates are set by the 

SCA and the Executive orders governing 

minimum wage and sick leave for 

Federal contractors, and these rates will 

therefore apply regardless of whether 

the predecessor workforce is rehired. 

Thus, as a general matter, cost savings 

from a reduction in wage or fringe 

benefits is not an appropriate basis for 

making an exception for a contract from 

the order’s requirements. Moreover, 

even where cost savings may be 

achieved theoretically by lowering 

wages and fringe benefits, such savings 

would be an inappropriate basis alone 

for an exception from the order because 

higher wages and benefits allow for the 

employment of workers with more skills 

and experience. Cf. 48 CFR 52.222–46(c) 

(stating, with regard to professional 

contracts not subject to the SCA, that 

‘‘[p]rofessional compensation that is 

unrealistically low or not in reasonable 

relationship to the various job 

categories, since it may impair the 

Contractor’s ability to attract and retain 

competent professional service 

employees, may be viewed as evidence 

of failure to comprehend the complexity 

of the contract requirements’’). While 

barring the consideration of wage costs 

in most circumstances, the proposed 

language in § 9.5(c)(2) would allow such 

costs to be considered in exceptional 

circumstances. These exceptional 

circumstances would be limited to 

emergency situations; where the entire 

workforce would need significant 

training; or in other similar situations in 

which the cost of employing a carryover 

workforce on the successor contract 

would be prohibitive. 

The AFL–CIO expressed general 

support for the Department’s approach 

to agency exceptions, including the 

Department’s decision to provide a set 

of specific factors in § 9.5(c) that the 

agency may and may not consider in 

determining whether an exception is 

appropriate. The Coalition stated that 

the Department’s proposed agency 

exception process was a ‘‘good start.’’ 

The Coalition in particular supported 

the requirement in § 9.5(c) that an 

agency justify its deviation from the 

order’s assessment of the benefits of 

nondisplacement if it seeks to rely on 

costs as a basis for exception. The 

Coalition stated that this requirement 

would promote a thorough and 

consistent analysis across agencies. 

They also stated that this requirement is 

in line with general principles under the 

Procurement Act, under which, they 

explained, ‘‘economy and efficiency are 

not necessarily promoted by contracting 

with the lowest bidder or seeking to 

minimize costs with a less effective 

workforce.’’ 

The Coalition also suggested a 

number of changes to the procedural 

requirements in § 9.5(c). As an initial 

matter, the Coalition recommended that 

the required comparison of anticipated 

outcomes should include a cost-benefit 

analysis in a standard format, as 


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determined by the Secretary, that 

estimates the direct and indirect costs of 

employee turnover during the first year 

of the successor contract. The Coalition 

also suggested amending the discussion 

of relevant factors in § 9.5(c)(1) and 

exceptional circumstances in § 9.5(c)(2) 

to require that any conclusions about 

potential disruptions or workforce 

failures must be based on ‘‘documented 

incidents’’ during the predecessor 

contract’s period of performance ‘‘such 

as at least two consecutive annual past 

performance ratings of ‘unsatisfactory’ 

as defined by FAR 42.1503(b)(4).’’ 

The Department declines to adopt the 

Coalition’s suggestion that § 9.5(c) 

include a requirement to carry out a 

standardized cost-benefit analysis in a 

format designated by the Secretary. As 

the Coalition noted, § 9.5(c) already 

requires agencies to carry out a written 

analysis that compares the anticipated 

outcomes of hiring predecessor contract 

employees with those of hiring a new 

workforce; and the proposed regulation 

already provides guidance for how to 

consider costs as part of that analysis, as 

well as guidance about factors that are 

not appropriate. The Department 

believes the scope of the current § 9.5(c) 

is sufficient to assist agencies in a way 

that will lead to consistent decisionmaking across agencies. Under 

paragraphs 6(b) and 6(c) of the 

Executive order, agencies are also 

required to publish descriptions of the 

exceptions they have granted on a 

centralized website and to report to 

OMB descriptions of these exceptions 

on a quarterly basis. The Department 

intends to analyze use of the agency 

exception process as these regulations 

are implemented and may consider in 

the future whether additional 

procedural requirements (such as the 

suggested standardized cost-benefit 

analysis) are necessary. 

The Department also declines to 

adopt the Coalition’s suggestion 

regarding additional guideposts for the 

discussion of factors in § 9.5(c)(1) and 

(c)(2). The existence of two consecutive 

annual ‘‘unsatisfactory’’ past 

performance ratings, as suggested by the 

Coalition, would certainly be relevant 

evidence for a determination made with 

reference to the factor at § 9.5(c)(1)(iii). 

That factor provides for agency 

exceptions in situations where there is 

a reasonable belief ‘‘based on the 

predecessor employees’ past 

performance, that the entire predecessor 

workforce failed, individually as well as 

collectively to perform suitably on the 

job[.]’’ However, as the Department 

noted in the NPRM, a contractor’s past 

performance alone will generally not be 

sufficient basis to invoke an exception, 

because poor performance may result 

from poor management decisions of the 

predecessor contractor (and not from 

failures of the predecessor’s service 

employees), and the management 

failures could be addressed by awarding 

the contract to another entity. Instead, 

as the Department proposed in the 

NPRM, the specific reasons for such 

poor performance ratings would need to 

be considered. The Department is 

concerned that adopting the Coalition’s 

suggested language could give the 

impression that past performance 

ratings alone can justify an exception. 

Thus, the Department declines to adopt 

the Coalition’s suggested amendments. 

For the reasons discussed, the final rule 

adopts § 9.5(c) as proposed. 

In § 9.5(d), the Department proposed 

language to address the second of the 

three circumstances under which an 

agency may authorize an exception from 

the nondisplacement provisions: where 

their application would substantially 

reduce the number of potential bidders 

so as to frustrate full and open 

competition and not be reasonably 

tailored to the agency’s needs for the 

contract. This exception is provided for 

in section 6(a)(ii) of Executive Order 

14055. The proposed language of 

§ 9.5(d) clarified that a reduction in the 

number of potential bidders is not, 

alone, sufficient to except a contract 

from coverage under this authority; the 

senior procurement executive at the 

contracting agency must also find that 

inclusion of the contract clause would 

frustrate full and open competition and 

would not be reasonably tailored to the 

agency’s needs for the contract. The 

proposed language stated that on 

finding that inclusion of the contract 

clause would not be reasonably tailored 

to the agency’s needs, the agency must 

specify in its written explanation how it 

intends to more effectively achieve the 

benefits that would have been provided 

by a carryover workforce, including 

physical and information security and a 

reduction in disruption of services. 

The order requires that any exercise of 

this authority must be based on a market 

analysis. This requirement was 

addressed in proposed § 9.5(a)(2) and 

(d). This market analysis requirement is 

consistent with existing requirements in 

the FAR. During the acquisition process 

for FAR-covered procurements, an 

agency must ‘‘conduct market research 

appropriate to the circumstances.’’ 

48 CFR 10.001. Thus, the extent of 

market research conducted for any 

acquisition ‘‘will vary, depending on 

such factors as urgency, estimated dollar 

value, complexity, and past 

experience.’’ 48 CFR 10.002(b)(1). To 

justify the exception from the 

nondisplacement requirements, the 

order requires that the market analysis 

show that adherence to the 

requirements would ‘‘substantially’’ 

reduce the number of potential bidders 

so as to frustrate full and open 

competition. In proposed § 9.5(d), the 

Department clarified that the likely 

reduction in the number of potential 

offerors indicated by market analysis is 

not, by itself, sufficient to except a 

contract from coverage under this 

authority unless the agency concludes 

that adhering to the nondisplacement 

requirements would diminish the 

number of potential offerors to such a 

degree that adequate competition at a 

‘‘fair and reasonable price’’ could not be 

achieved and adhering to the 

nondisplacement requirements would 

not be reasonably tailored to the 

agency’s needs. 

As with any of the exceptions, where 

an agency seeks to except a particular 

contract under this competition-related 

analysis, the agency is required, 

consistent with section 6(a) of Executive 

Order 14055 and proposed § 9.5(b), to 

provide a ‘‘specific written explanation’’ 

of why the circumstance exists. Thus, 

the agency’s market analysis—and 

consideration of whether the 

requirements are nonetheless reasonably 

tailored to its needs—must be 

documented in a manner sufficient to 

provide and support such an 

explanation. See also 48 CFR 4.801(b) 

(requiring sufficient documentation in 

contract files to support actions taken). 

The AFL–CIO stated their general 

support for the Department’s proposed 

specific requirements in § 9.5(d). As 

noted above, however, the AFL–CIO and 

the Coalition also sought a process by 

which employees for incumbent 

contractors would be notified of the 

potential for an exception 120 days 

before the solicitation date and allowed 

to submit comments. The final rule 

adopts § 9.5(d) as proposed with a slight 

and nonsubstantive change to the 

wording of one sentence, and with two 

limited additions. In a nonsubstantive 

change, the Department has streamlined 

the language that explains that a 

potential reduction in the number of 

bidders alone is not sufficient to justify 

the exception. The final rule clarifies 

that such a reduction is not sufficient 

‘‘unless it is coupled with the finding 

that the reduction would not allow for 

adequate competition at a fair and 

reasonable price’’ and adhering to the 

nondisplacement requirements would 

not be reasonably tailored to the 

agency’s needs for the contract. 

In the first addition to this paragraph, 

the Department has included a sentence 

to provide additional detail regarding 


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the requirement that the agency 

determine whether ‘‘a fair and 

reasonable price’’ can be achieved in 

order to justify this exception. The new 

sentence states that ‘‘[w]hen 

determining whether a fair and 

reasonable price can be achieved, the 

agency must consider current market 

conditions and the extent to which price 

fluctuations may be attributable to 

factors other than the nondisplacement 

requirements (e.g., costs of labor or 

materials, supply chain costs).’’ The 

consideration of current market 

conditions in a price analysis is 

consistent with agency approaches 

under FAR subpart 15.4 (Contract 

Pricing). See Nomura Enter., Inc., B– 

271215 (May 24, 1996). 

Second, the Department has added 

language to § 9.5(d) to require 

contracting agencies, to the extent 

consistent with mission security, to 

include employees’ representatives in 

any market-research-related exchanges 

with industry that are specific to the 

nondisplacement requirement. See 48 

CFR 10.002(b)(2) (discussing market 

research techniques involving industry 

outreach); 48 CFR 15.201 (encouraging 

‘‘early exchanges’’ of information with 

industry and other interested parties to 

identify concerns about acquisition 

strategy). As the Department noted in 

the NPRM, to satisfy the Executive 

order’s requirement for an agency 

exception, the market analysis must be 

an objective, contemporary, and 

proactive examination of the market 

conditions. Accordingly, it would not be 

appropriate for the agency to except a 

contract from the nondisplacement 

requirements on the basis of a market 

analysis without a proactive effort to 

determine whether sufficient bidders 

may exist so as to satisfy full and open 

competition, including through 

communication with other 

knowledgeable sources (such as, where 

feasible, the representatives of 

employees currently working in that 

industry) regarding the services to be 

provided. 

In § 9.5(e), the Department proposed 

to address the third circumstance in 

which an agency exception would be 

appropriate: where adhering to the 

requirements of the order would 

otherwise be inconsistent with statutes, 

regulations, Executive orders, or 

Presidential Memoranda. This exception 

basis is articulated in section 6(a)(iii) of 

Executive Order 14055 and restated in 

§ 9.5(a)(3) of the regulations. In § 9.5(e), 

the Department proposed to require that 

contracting agencies consult with the 

Department prior to excepting contracts 

on this basis, unless: (1) the governing 

statute at issue is one for which the 

contracting agency has regulatory 

authority, or (2) the Department has 

already issued guidance finding an 

exception on the basis of the specific 

statute, rule, order, or memorandum to 

be appropriate. The Department 

proposed this requirement to provide 

consistency, to the extent possible, in 

the application of the order. 

NIB commented that the exception 

process described in § 9.5(e) is, at least 

as to the legal questions around the 

JWOD Act, ‘‘unnecessary and likely to 

negatively impact the AbilityOne 

Program.’’ NIB noted that unless the 

Department issues guidance as 

referenced in the proposed § 9.5(e) 

regarding the AbilityOne Program, 

contracting agencies would always be 

required to consult with the Department 

before invoking this exception. For this 

reason, among others, NIB advocated for 

an express exemption for AbilityOne 

contracts to remove these steps from the 

procurement process. Melwood 

expressed a different but related general 

concern—that the determination of legal 

conflicts by contracting agencies ‘‘on a 

case-by-case basis’’ may lead to 

inconsistent application or exceptions 

for AbilityOne authorized contractors. 

Several other commenters, including 

SourceAmerica, Peckham Inc., 

ServiceSource, and Didlake Inc., 

expressed similar concerns. 

The Coalition, on the other hand, 

commented in support of the proposed 

consultation requirement in § 9.5(e). In 

their comment, however, the Coalition 

advocated that the rule should further 

require that the Department approve any 

exception before a contracting agency is 

allowed to proceed. They also 

advocated that the Department’s 

approval should be contingent on a 

finding that such an exception would be 

‘‘consistent with the federal 

government’s interest in promoting 

competitive integrated employment for 

people with disabilities, as defined by 

the Workforce Innovation and 

Opportunity Act and applicable 

implementing regulations and guidance 

issued by the Rehabilitation Services 

Administration.’’ 

Having considered the comments 

received regarding the procedure in 

proposed § 9.5(e), the final rule adopts 

the text of this paragraph as proposed. 

Section 6(a) of the Executive order itself 

provides for a default procedure of 

individual case-by-case determinations 

regarding potential legal conflicts with 

the nondisplacement requirements. The 

Department agrees with the various 

commenters that it makes sense to 

ensure, as much as possible, that these 

agency exception decisions are not 

made on an inconsistent basis or with 

inconsistent outcomes. The proposed 

consultation procedure in § 9.5(e) is 

intended to ensure that these case-bycase determinations are as consistent as 

possible. 

The Department declines to adopt the 

Coalition’s suggestion that agencies be 

required to receive approval from the 

Department, in addition to seeking 

consultation, before issuing an 

exception for a contract under § 9.5. The 

procedure in § 9.5(e) provides an 

appropriate balance. In most cases, the 

procedure will require consultation 

with the Department if a potential 

conflict is identified. Consultation will 

allow the Department to share any 

resources or information with the 

contracting agency, including how the 

specific potential conflict has been 

treated by other agencies. This should 

decrease the potential for inconsistency, 

about which commenters expressed 

concern. Section 9.5(e) also seeks to 

increase efficiency, without cost to 

consistency, by eliminating the 

consultation requirement where the 

Department has already issued guidance 

on the potential conflict. 

If an agency itself has the authority to 

interpret and implement a particular 

law or policy that potentially conflicts 

with the requirements of Executive 

Order 14055 or this regulation, the 

procedure in § 9.5(e) defers in the first 

instance to that agency and does not 

require consultation with the 

Department. Although no consultation 

is required, the Department encourages 

communication because the 

determination of whether a conflict 

exists between two legal requirements 

necessarily involves interpreting both 

legal requirements—and the Department 

itself has authority to interpret and 

enforce nondisplacement requirements. 

Finally, with regard to the potential 

conflicts with contracts covered by the 

JWOD Act, as discussed in section 

II.B.4. above, the Department has 

separately addressed these concerns by 

including a contract clause that applies 

to all such contracts and subcontracts 

and instructs contractors that they must 

implement the JWOD Act (and certain 

other statutory procurement preference 

programs) and the nondisplacement 

provisions in tandem and to the 

maximum extent possible. 

ii. Reconsideration of Agency 

Exceptions 

In the NPRM, the Department 

proposed language at § 9.5(f) to provide 

a procedure for interested parties to 

request reconsideration of agency 

exception determinations. This 

proposed language mirrored the 

procedure that was included in the 


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regulations that implemented Executive 

Order 13495. See 29 CFR 9.4(d)(5) 

(2012). In using the term ‘‘interested 

parties,’’ the Department stated that it 

intended to extend the opportunity to 

request reconsideration to affected 

workers or their representatives, in 

addition to actual or prospective 

bidders. The Department stated that it 

did not intend that the term be limited 

to actual or prospective bidders as it is 

under the Competition in Contracting 

Act. See 31 U.S.C. 3551(2). The 

Department sought input from 

commenters regarding the proposed 

procedure. 

PSC expressed concerns about the 

reconsideration process that the 

Department proposed for both the 

location continuity decision described 

in § 9.11 and the agency exception 

decision in § 9.5. The PSC noted that the 

Executive order does not expressly 

provide for a reconsideration process 

and stated that the process could have 

negative outcomes, such as by allowing 

a broad set of individuals or entities to 

‘‘potentially delay the implementation 

of business judgments of agency 

acquisition personnel’’ and thereby 

delay acquisitions. PSC warned that the 

Department’s intent to give a broad 

meaning to the term ‘‘interested parties’’ 

could have unforeseen results, like 

potentially allowing formal requests for 

reconsideration by governmental 

jurisdictions that might be competing to 

be the location of a successor contract. 

The Coalition and the AFL–CIO, on 

the other hand, expressed general 

support for the concept of a 

reconsideration provision, but with 

significant amendments. As noted 

above, these commenters suggested that 

agency exception decisions should be 

made 60 days before a solicitation is 

issued so that reconsideration could be 

sought and resolved before the 

solicitation date. The Coalition also 

advocated that requests for 

reconsideration be directed to the 

Department, not to the contracting 

agency that proposed the exception. The 

Coalition noted that this suggestion is 

‘‘consistent with the fundamental 

principle of fairness that appeals should 

not be directed to the original 

decisionmaker.’’ 

The Department considered these 

comments within the larger context of 

the agency exceptions determination 

and finds that it is not necessary at this 

time to include the proposed formal 

reconsideration provision in § 9.5. 

When an agency seeks to waive the 

nondisplacement requirements for a 

particular contract, there are several 

safeguards to ensure that this procedure 

is not misused. As adopted in this final 

rule, § 9.5(b) of the regulations requires 

the agency, through its senior 

procurement executive, to make a 

written explanation, ‘‘including the 

facts and reasoning supporting the 

determination,’’ and to make that 

determination no later than the 

solicitation date. Paragraphs 9.5(c) and 

(d) contain specific additional 

requirements regarding the factors that 

must be considered and those that 

cannot be considered for the first two 

exception provisions, and § 9.5(e) 

contains additional procedural 

requirements where an agency seeks to 

waive the nondisplacement provisions 

based on a perceived conflict with 

another law or policy. If the agency does 

not issue a timely specific written 

explanation, then the exception will be 

inoperative, and the agency will be 

required to either terminate the contract 

or cancel the solicitation and properly 

reissue it or to modify the existing 

contract to incorporate the 

nondisplacement contract clause 

consistent with the procedure outlined 

in § 9.11(f) of the regulations. 

Even without a formal reconsideration 

provision in the regulations, the 

Department expects and encourages 

workers and their representatives to 

communicate with contracting agencies 

(and the Department, as appropriate) 

about any potential agency exception 

decision. Decisions regarding agency 

exceptions should be rare. But when 

they occur, they will generally be factspecific, and workers and their 

representatives will likely have 

important information that can assist 

agencies in weighing the potential 

outcomes of a decision regarding an 

agency exception. Moreover, section 

6(b) of the Executive order itself 

requires agencies to provide notice of an 

agency exception decision to workers 

and any collective bargaining 

representatives. The implication of that 

notice provision is that contracting 

agencies should welcome 

communications from workers or their 

representatives about an exception 

decision, and agencies should be 

prepared to reconsider any decision if 

they are provided with material facts or 

persuasive legal arguments that they 

had not previously considered. 

In light of these safeguards—and in 

particular the availability of the 

retroactivity mechanism at § 9.11(f)—the 

Department finds that it is not necessary 

at this time to implement the formal 

reconsideration procedure that was 

previously proposed for § 9.5(f). 

However, the Department will carefully 

analyze the publication and reporting of 

exception decisions that is required 

under the order, along with feedback 

from workers, their representatives, and 

contractors. If appropriate, the 

Department may engage in a future 

notice and comment rulemaking to 

implement a more formal 

reconsideration procedure or take other 

appropriate action such as issuance of 

subregulatory guidance. 

The Department therefore is removing 

the reconsideration provision that was 

at § 9.5(f) of the proposed rule and is 

removing from the contract clause, set 

forth in Appendix A, the language that 

required notices of agency exceptions to 

include reference to the manner of 

directing a request for reconsideration. 

iii. Notification, Publication, and 

Reporting of Agency Exceptions 

In the NPRM, the Department 

proposed to include in the regulations at 

§ 9.5(g) a recitation of the notification, 

publication, and reporting requirements 

contained in sections 6(b) and 6(c) of 

the order. Section 6(b) of the order 

requires agencies, to the extent 

permitted by law and consistent with 

national security and executive branch 

confidentiality interests, to publish, on 

a centralized public website, 

descriptions of the exceptions it has 

granted under that section, and to 

ensure that the contractor notifies 

affected workers and their collective 

bargaining representatives, if any, in 

writing of the agency’s determination to 

grant an exception. Section 6(c) of the 

order also requires that, on a quarterly 

basis, each agency must report to the 

OMB descriptions of the exceptions 

granted under this section. 

The Department received comments 

from the Coalition and the AFL–CIO 

regarding these notice and publication 

provisions. The commenters proposed 

revisions to the timeframe for notice of 

agency exceptions decisions so that 

agencies would have to notify workers 

and their representatives of a proposed 

exception no later than 120 days before 

a bid solicitation goes out to give 

workers time to comment on the 

proposed exception, the agency to 

respond, and the workers to request 

reconsideration (from the Department). 

The Coalition and Jobs to Move America 

also encouraged the Department to 

provide guidance to agencies about the 

form, content, and accessibility of the 

required publications on agency 

websites that are required by section 

6(b) of the order, and to periodically 

monitor their compliance. They also 

stated that the Department could also 

promote the purposes of the order and 

transparency into government decisionmaking by coordinating with OMB to 

ensure that the quarterly reports that it 

receives from agencies are compiled and 


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published on a centralized public 

website. 

The Department acknowledges these 

comments, but notes that section 7(a) of 

the Executive order does not provide the 

Department with the authority to issue 

implementing regulations regarding the 

notice and publication requirements in 

paragraphs 6(b) and (c) of the order. 86 

FR at 66399. For that reason, the 

Department’s proposed regulations at 

§ 9.5(g), which are finalized in § 9.5(f) of 

the final rule, are recitations of the text 

of the Executive order itself and do not 

include any additional detail. For 

contracts that are subject to the FAR, the 

regulations that are implemented by the 

FAR Council may include additional 

instructions regarding the notice, 

publication, and reporting requirements. 

Accordingly, the final rule adopts the 

language regarding notice, publication, 

and reporting provisions as proposed, 

except that the language now appears in 

§ 9.5(f) of the final rule instead of 

§ 9.5(g) to account for the removal of the 

reconsideration language previously 

proposed for § 9.5(f). 

Subpart B—Requirements 

6. Section 9.11 Contracting Agency 

Requirements 

As proposed, § 9.11 would implement 

sections 3 and 4 of Executive Order 

14055. Section 3 of the order directs 

agencies to ensure that covered 

contracts and solicitations include the 

nondisplacement contract clause. 86 FR 

at 66397–98. Section 4 of the order 

directs agencies to consider, during the 

preparation of a covered solicitation, 

whether performance of the work in the 

same locality or localities in which the 

contract is currently being performed is 

reasonably necessary to ensure 

economical and efficient provision of 

services—and, if so, to include a 

requirement or preference for location 

continuity in the solicitation. Id. at 

66398–99. 

Proposed § 9.11 specified contracting 

agency responsibilities to incorporate 

the nondisplacement contract clause in 

covered contracts, to ensure notice is 

provided to employees on predecessor 

contracts of their possible right to an 

offer of employment, and to consider 

whether performance of the work in the 

same locality or localities in which a 

predecessor contract is currently being 

performed is reasonably necessary to 

ensure economical and efficient 

provision of services. The proposed 

section also specified contracting 

agency responsibilities to provide the 

list of employees working under the 

predecessor contract and its 

subcontracts to the successor, to forward 

complaints and other pertinent 

information to WHD when there are 

allegations of contractor noncompliance with the nondisplacement 

contract clause or this part, and to 

incorporate the contract clause when it 

has been erroneously omitted from the 

contract. 

i. Section 9.11(a) Incorporation of 

Contract Clause 

Section 3(a) of Executive Order 14055 

specifies the contract clause that must 

be included in solicitations and 

contracts for services that succeed 

contracts for the performance of the 

same or similar work. 86 FR 66397. 

Proposed § 9.11(a) provided a regulatory 

requirement to incorporate the contract 

clause specified in Appendix A into 

covered service contracts, and 

solicitations for such contracts, except 

for procurement contracts subject to the 

FAR. For procurement contracts subject 

to the FAR, contracting agencies would 

use the relevant clause developed to 

implement this rule set forth in the 

FAR. As the proposed rule explained, 

that clause must both accomplish the 

same purposes as the clause set forth in 

Appendix A and be consistent with the 

requirements set forth in this rule. 

Including the full contract clause in a 

covered contract is an effective and 

practical means of ensuring that 

contractors receive notice of their 

obligations under Executive Order 

14055. Therefore, the Department 

prefers that covered contracts include 

the contract clause in full. However, as 

the Department noted in the proposed 

rule, there could be instances in which 

a contracting agency or a contractor 

does not include the entire contract 

clause verbatim in a covered contract or 

solicitation for a covered contract, but 

the facts and circumstances establish 

that the contracting agency or the 

contractor sufficiently apprised a prime 

or lower-tier contractor that the 

Executive order and its requirements 

apply to the contract. In such instances, 

the Department believes it would be 

appropriate to find that the full contract 

clause has been properly incorporated 

by reference. See Nat’l Electro-Coatings, 

Inc. v. Brock, No. C86–2188, 1988 WL 

125784, at *4 (N.D. Ohio 1988) (finding 

SCA clause was enforceable where the 

SCA contract clause was not 

incorporated ‘‘verbatim,’’ but the 

contract incorporated by reference a 

GSA form that set forth the provisions 

of the SCA); Progressive Design & Build, 

Inc., WAB No. 87–31, 1990 WL 484308, 

at *2 (Feb. 21, 1990) (finding 

subcontractor liable for Davis-Bacon Act 

(DBA) back wages where the DBA 

contract clause was not physically 

incorporated into subcontracts, but was 

incorporated by reference). The 

Department specifically noted in the 

proposed rule that the full contract 

clause will be deemed to have been 

incorporated by reference in a covered 

contract when the contract provides that 

‘‘Executive Order 14055 

(Nondisplacement of Qualified Workers 

Under Service Contracts), and its 

implementing regulations, including the 

applicable contract clause, are 

incorporated by reference into this 

contract as if fully set forth in this 

contract,’’ with a citation to a web page 

that contains the contract clause in full 

or to the provision of the Code of 

Federal Regulations containing the 

contract clause set forth at Appendix A. 

Similarly, under the FAR, a contract 

that contains a provision expressly 

incorporating contract clauses by 

reference gives those clauses the same 

force and effect as if they were given in 

full text. See 48 CFR 52.107, 52.252–2. 

ii. Appendix A Contract Clause 

Appendix A contains the 

nondisplacement contract clause that 

must be inserted in covered contracts as 

required by § 9.11(a). The proposed 

language of the contract clause in 

Appendix A is based on the language of 

the clause that appears in the Executive 

order itself. Contract clause paragraphs 

(a) through (e) of proposed Appendix A 

repeat the language in paragraphs (a) 

through (e) of the Executive order’s 

contract clause verbatim, with one 

exception. The Department proposed to 

modify the contract clause by inserting 

the number of the Executive Order, 

14055, to replace the blank line that 

appears in paragraph (d) of the contract 

clause contained in the order, as its 

number was not known at the time the 

President signed the order. 

As proposed, contract clause 

paragraph (a) would require the 

successor contractor and its 

subcontractors to provide the service 

employees employed under the 

predecessor contract (including its 

subcontracts) the right of first refusal of 

employment in positions for which the 

employees are qualified. Proposed 

contract clause paragraph (b) would 

create two exceptions to the right of first 

refusal. One was for employees who are 

not service employees and the other was 

for any employee for whom there would 

be just cause to discharge based on 

evidence of the particular employee’s 

past performance. Proposed contract 

clause paragraph (c) would require 

contractors to furnish the contracting 

officer with a list of employees that the 

contracting officer would provide to the 

successor contractor to ensure the 


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successor contractor has the information 

necessary to provide the employees 

with the right of first refusal. Proposed 

contract clause paragraph (d) provided 

that the Secretary may pursue sanctions 

against a contractor for its failure to 

comply with Executive Order 14055. 

Proposed contract clause paragraph (e) 

would require contractors to include 

provisions in their subcontracts that 

ensure that each subcontractor honor 

the requirements of paragraphs (a) 

through (c) and would require 

contractors to take any action with 

respect to any such subcontract as may 

be directed by the Secretary as a means 

of enforcing such provisions, including 

the imposition of sanctions for 

noncompliance. 

Proposed Appendix A set forth 

additional provisions necessary to 

implement the Executive order. As the 

proposed rule explained, the additional 

paragraphs would appear in paragraphs 

(f) through (i) of the contract clause 

contained in Appendix A to part 9. 

Specifically, proposed contract clause 

paragraph (f)(1) provided notice that the 

contractor must furnish the contracting 

officer with a certified list of names of 

all service employees working under the 

contract (including its subcontracts) at 

the time the list is submitted. The list 

must also include anniversary dates of 

employment of each service employee 

on the contract and its predecessor 

contracts with either the current or 

predecessor contractors or their 

subcontractors. Proposed paragraph 

(f)(1) further explained that if there are 

changes to the workforce made after the 

submission of this certified list, the 

contractor must, in accordance with 

proposed paragraph (c), furnish the 

contracting officer with an updated 

certified list of all service employees 

employed within the last month of 

contract performance, including 

anniversary dates of employment. 

Proposed contract clause paragraph 

(f)(2) provided notice that under certain 

circumstances the contracting officer 

would, upon their own action or upon 

written request of the Administrator, 

withhold or cause to be withheld as 

much of the accrued payments due on 

either the contract or any other contract 

between the contractor and the 

Government that the Administrator 

requests or that the contracting officer 

decides may be necessary to pay unpaid 

wages or to provide other appropriate 

relief due under part 9. 

Proposed contract clause paragraph 

(f)(3) provided that contractors would 

deliver notices to their employees of an 

agency determination to except a 

successor contractor from the 

nondisplacement requirements of 29 

CFR part 9, or to decline to include 

location-continuity requirements or 

preferences in a successor contract. 

In contract clause paragraph (g), the 

Department proposed to require the 

contractor to maintain certain records to 

demonstrate compliance with the 

substantive requirements of part 9. As 

proposed, this paragraph would enable 

contractors to understand their 

obligations and provide a readily 

accessible list of records that contractors 

would be required to maintain. The 

proposed paragraph specified that the 

contractor would be required to 

maintain the particular records 

(regardless of format, e.g., paper or 

electronic) for 3 years. The proposed 

paragraph further specified that such 

records would include copies of any 

written offers of employment or a 

contemporaneous written record of any 

oral offers of employment, including the 

date, location, and attendance roster of 

any employee meeting(s) at which the 

offers were extended, a summary of 

each meeting, a copy of any written 

notice that may have been distributed, 

and the names of the employees from 

the predecessor contract to whom an 

offer was made; a copy of any record 

that forms the basis for any exclusion or 

exception claimed under part 9; a copy 

of the employee list(s) provided to or 

received from the contracting agency; 

and an entry on the pay records for an 

employee of the amount of any 

retroactive payment of wages or 

compensation under the supervision of 

the WHD Administrator, the period 

covered by such payment, and the date 

of payment, along with a copy of any 

receipt form provided by or authorized 

by WHD. The proposed clause also 

stated that the contractor is to deliver a 

copy of the receipt form provided by or 

authorized by WHD to the employee 

and, as evidence of payment by the 

contractor, file the original receipt 

signed by the employee with the 

Administrator within 10 business days 

after payment is made. 

Proposed contract clause paragraph 

(h) would require the contractor, as a 

condition of the contract award, to 

cooperate in any investigation by the 

contracting agency or the Department 

into possible violations of the 

provisions of the nondisplacement 

clause and to make records requested by 

such official(s) available for inspection, 

copying, or transcription upon request. 

Proposed contract clause paragraph (i) 

provided that disputes concerning the 

requirements of the nondisplacement 

clause would not be subject to the 

general disputes clause of the contract. 

Instead, such disputes would be 

resolved in accordance with the 

procedures in part 9. 

The Coalition requested that the 

Department explicitly provide in the 

contract clause a statement that covered 

employees are intended third-party 

beneficiaries of the contract clause. The 

Coalition explained that this would give 

employees the ability to pursue private 

litigation to enforce Executive Order 

14055. The Department does not adopt 

the Coalition’s suggestion. Section 12(c) 

of Executive Order 14055 states that the 

order ‘‘is not intended to, and does not, 

create any right or benefit, substantive 

or procedural, enforceable at law or in 

equity by any party against the United 

States, its departments, agencies, or 

entities, its officers, employees, or 

agents, or any other person.’’ 86 FR 

66400. The Department interprets this 

language to limit its discretion to create 

or authorize a private right of action. 

Accord 86 FR 67192 (interpreting 

identical language to similarly limit 

discretion under Executive Order 

14026). The Department declines to 

amend the contract clause to expressly 

designate workers as third-party 

beneficiaries of the contract’s 

nondisplacement requirements. While 

the Coalition noted that Executive Order 

14055 ‘‘explicitly create[s] particular 

nondisplacement rights for workers,’’ 

the Department believes that section 

12(c) of the order is clear in limiting the 

Department’s ability to create or 

authorize a private right of action under 

Executive Order 14055. As explained in 

§ 9.1(c), however, neither Executive 

Order 14055 nor this part creates or 

changes any private right of action that 

may exist under other applicable laws. 

Thus, nothing is intended to limit or 

preclude a civil action under the False 

Claims Act, 31 U.S.C. 3730, or criminal 

prosecution under 18 U.S.C. 1001. 

Likewise, whether a worker could make 

a third-party beneficiary claim under 

relevant state law would be determined 

by such state law. 

The Department did not receive 

additional comments on proposed 

§ 9.11(a) or on the proposed contract 

clause in Appendix A, and thus the 

final rule adopts them as proposed, with 

the following exceptions. The 

Department has added language to 

§ 9.11(a) to reflect that the application of 

the FAR nondisplacement clause will 

take place under the procedures set 

forth in the FAR, as well as paragraph 

(f)(3) of Appendix A to add reference to 

the requirement from § 9.12(e)(3) that 

predecessor contractors provide notice 

to employees of their possible right to 

an offer of employment on the successor 

contract. The Department also made 

several revisions to the contract clause 


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86760 Federal Register / Vol. 88, No. 239 / Thursday, December 14, 2023 / Rules and Regulations 

5See ‘‘Call Center to Close in Dover; 300 Jobs 

Cut,’’ Associated Press (Dec. 3, 2008), https://

www.seacoastonline.com/story/news/2008/12/03/ 

call-center-to-close-in/52169521007/; ‘‘Local AT&T 

Worker Claims Mich. Call Center Backed Up,’’ 

Fosters Daily Democrat (Mar. 11, 2009), https://

www.fosters.com/story/news/2009/03/11/local-at-tworker-claims/52067699007/. 

for purposes of clarity and to reflect 

revisions to the regulations that are 

discussed elsewhere in this final rule. 

iii. Section 9.11(b) Notices 

Proposed § 9.11(b) specified that 

when a contract will be awarded to a 

successor for the same or similar work, 

the contracting officer must take steps to 

ensure that the predecessor contractor 

provides written notice to service 

employees employed under the 

predecessor contract of their possible 

right to an offer of employment, 

consistent with the requirements in 

§ 9.12(e)(3). The Department did not 

receive any comments on proposed 

§ 9.11(b). Comments addressing the 

other notice requirements contained in 

this rule are addressed in the preamble 

sections corresponding to where they 

appear in the regulatory text. The final 

rule adopts § 9.11(b) as proposed, other 

than, for clarity, adding a crossreference to the other employee notice 

provisions found at § 9.11(c)(4) (relating 

to notice to employees’ representatives 

to provide information relevant to the 

location continuity analysis), and where 

relevant, § 9.5(f) (relating to agency 

exceptions). 

iv. Section 9.11(c) Location Continuity 

Section 9.11(c) implements the 

location continuity requirements in 

section 4 of Executive Order 14055. 

Section 4(a) of the order states that, in 

preparing covered solicitations, 

contracting agencies must consider 

whether performance of the work in the 

same locality or localities in which the 

contract is currently being performed is 

reasonably necessary to ensure 

economical and efficient provision of 

services. 86 FR at 66398. Section 4(b) 

states that, if a contracting agency 

determines that performance in the 

same locality is reasonably necessary, 

then the agency must, to the extent 

consistent with law, include a 

requirement or preference in the 

solicitation for the successor contract 

that it be performed in the same locality 

or localities. 86 FR at 66399. For IDIQ 

contracts under the MAS and other 

similar programs, the location 

continuity determination would be 

made by the ordering agency prior to 

issuing the RFQ. See 48 CFR 8.405– 

1(d)(2), 8.405–2(b)–(c), 8.405–3(b)(ii) 

(requiring statements of work and/or 

RFQs for proposed orders and blanket 

purchase agreements exceeding the 

simplified acquisition threshold). 

These requirements represent a 

different approach to location 

considerations than the prior 

nondisplacement provisions in 

Executive Order 13495. The new 

requirements seek to increase the 

government’s opportunity to benefit 

from carryover workforces even where a 

contract location changes, but the 

requirements also place significantly 

more emphasis on the potential benefits 

of keeping contract locations constant. 

Executive Order 13495 limited the 

application of the nondisplacement 

requirements to contracts for similar 

services at the ‘‘same location.’’ 74 FR 

at 6104. Executive Order 14055, in 

contrast, does not contain such a 

limitation. As a result, Executive Order 

14055 applies the nondisplacement 

requirements regardless of the location 

of the successor contract. Even if the 

place of performance for a successor 

contract will be in a different locality 

from the predecessor contract, the 

successor contract will still be required 

to include the nondisplacement contract 

clause and the successor contractor will 

still be required to provide workers on 

the predecessor contract with a right of 

first refusal for positions on the new 

contract. Section 3(b) of Executive Order 

14055, however, clarifies that these 

requirements should not be construed to 

require or recommend the payment of 

relocation costs to workers who exercise 

their right to take a new position when 

a contract location is moved. 86 FR at 

66398. Executive Order 14055 

recognizes this through the location 

continuity requirements in section 4 of 

the order, as well as in a discussion of 

location continuity in section 1 of the 

order. Id. at 66397–99. The central 

location continuity provisions, in 

section 1 and section 4 of Executive 

Order 14055, reflect the basic but 

important conclusion that the right of 

first refusal in the contract clause may 

have a more limited effect in many 

circumstances if a contract is moved 

beyond commuting distance from the 

predecessor contract. Section 1 states 

that location continuity can often 

provide the same benefits that stem 

from the core nondisplacement 

requirement—which, the order explains, 

includes reducing disruption in the 

delivery of services between contracts, 

maintaining physical and information 

security, and providing experienced and 

well-trained workforces that are familiar 

with the Federal Government’s 

personnel, facilities, and requirements. 

86 FR 66397. The benefits of using a 

carryover workforce and location 

continuity are intertwined because for 

many contracts, in particular those on 

which workers cannot or may not be 

allowed to work in a fully remote 

capacity, moving performance to a 

different locality will mean that most (or 

all) of the incumbent contractor’s 

workers will ultimately not be able or 

willing to relocate and therefore will not 

provide a carryover workforce. In such 

circumstances, imposing a location 

continuity requirement or preference 

may be the best way to ensure the 

effectiveness of Executive Order 14055. 

For that reason, the provisions of 

section 4 of the order require that for 

each covered contract, the contracting 

officer consider whether to include a 

requirement or preference for location 

continuity. See 86 FR at 66398–99. The 

Department proposed to restate these 

requirements from the order in 

§ 9.11(c)(1) and § 9.11(c)(2), 

respectively. 

The Department received several 

general comments regarding the location 

continuity requirements in the order 

and in the proposed text of § 9.11(c). 

The AFL–CIO and the Coalition 

expressed strong support for the 

requirements. The Coalition stated that 

the benefits of retaining experienced 

workers are no different for contracts 

that change locations. They provided 

the example of a 2008 decision by the 

State Department to move a call center 

contract for the National Passport Center 

to Michigan from New Hampshire, 

where it had been operating for 12 

years. The decision resulted in the 

termination of hundreds of trained 

workers and allegations of significant 

service disruptions.5 The AFL–CIO 

agreed with the NPRM that the benefits 

of using a carryover workforce and 

location continuity are intertwined. 

They stated that absent a location 

continuity requirement, there is 

‘‘significant risk that the broader 

benefits of the nondisplacement rule 

will not be realized.’’ 

In contrast, ABC and Nakupuna 

opposed the location continuity 

provision in its entirety. ABC 

commented that the combination of the 

location continuity provisions and the 

elimination of the ‘‘same location’’ 

requirement from the prior 

nondisplacement order ‘‘will needlessly 

limit successor contractors from 

performing the work in a new locality 

with employees who are familiar with 

the new location.’’ Nakupuna expressed 

concern that the required location 

continuity analysis will be burdensome 

for agencies and that ‘‘any subsequent 

final decision will severely constrain 

the government if labor market 


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6COFPAES also stated that the nondisplacement 

provisions are inconsistent with the Brooks Act, 40 

U.S.C. 1101 et seq, and its implementing 

regulations and stated that these types of contracts 

should be exempted from coverage. The Department 

has addressed this request for an exemption above 

in section II.B.4. 

conditions change rapidly throughout 

the solicitation, award, and hiring/ 

staffing process.’’ Nakupuna thus 

advocated for limiting coverage of the 

nondisplacement rule only to the same 

location, and ‘‘specifically the same 

Federal facility.’’ 

The Department reviewed and 

considered the above general comments 

regarding the location continuity 

provisions and declines to eliminate 

these provisions in the final rule. The 

Executive order expressly requires 

agencies to consider location continuity 

and include location continuity 

requirements or preferences where 

reasonably necessary. 86 FR at 66398– 

99. Accordingly, § 9.11(c)(1) and (c)(2), 

as finalized, include these requirements 

within the subpart of the regulations 

that addresses contracting agency 

requirements. 

The Department, however, also 

disagrees with ABC and Nakupuna that 

the location continuity requirements 

will have adverse effects. Even though 

there is no express requirement to do so 

in the FAR, agencies already in many 

cases require contracts to be performed 

at specific locations or otherwise 

consider whether to include location 

continuity requirements in solicitations. 

For example, where the services at issue 

are related to the physical security or 

maintenance of a specific Federal 

facility, the location of the contract 

performance will not be in question. In 

other circumstances, where the Federal 

employees who receive services from or 

provide oversight for the contract at 

issue are located at a specific Federal 

facility, location continuity or a related 

geographic limitation may be 

appropriate to ensure continuity of 

services or facilitate site visits to the 

contractor’s facilities for oversight or 

collaboration purposes. See, e.g., Novad 

Mgmt. Consulting, LLC, B–419194.5, 

2021 WL 3418798, at *3–4 (July 1, 2021) 

(finding geographic limitation to locate 

contracted loan services within 50 miles 

of Tulsa to be appropriate to facilitate 

oversight and monitoring of contractor 

facility by agency’s Tulsa office). In still 

other cases, however, where the place of 

performance would otherwise be 

unspecified, a location continuity 

requirement or preference may be 

reasonably necessary to ensure 

economical and efficient provision of 

services. 

Executive Order 14055 does not 

suggest that a location continuity 

requirement is appropriate in all 

circumstances. Rather, it instructs 

contracting agencies to consider 

whether to impose such a requirement 

or preference on a case-by-case basis. 86 

FR at 66398–99. In some cases, location 

continuity may be particularly 

important because the use of a carryover 

workforce provides critical benefits. 

This may be particularly true, for 

example, where the incumbent 

workforce on the contract handles 

classified information or sensitive 

information, such as personal financial 

or identifiable information. For such 

workforces, the contracting agency may 

have an overriding interest in keeping 

the contract’s incumbent employees— 

whose dependability and trust have 

already been tested—rather than starting 

over with a new set of contractor 

employees. One commenter, PSC, while 

opposing several of the procedural 

safeguards that the Department 

proposed for the location continuity 

requirement, noted its general 

agreement that location continuity 

might be appropriate where related to 

‘‘efficiency in facilities or with regard to 

classified information management.’’ 

The Department also noted in the 

NPRM that there will be other cases in 

which changed agency needs may 

outweigh the basic interest in a 

carryover workforce. If, for example, an 

agency moves the Federal facility that 

will be providing oversight for the 

contract from one state to another, it 

may make sense not to require or prefer 

location continuity but instead to move 

the preferred contract locality along 

with the related Federal facility even if 

it may have a detrimental effect on 

contract-employee retention. The 

Coalition provided another example in 

their comment. If workers under the 

predecessor contract have been 

primarily working in a fully remote 

capacity, location continuity may be 

less necessary to obtain the goals of the 

order, particularly if the solicitation 

contemplates the continued availability 

of remote work on the successor 

contract. As discussed below, the 

Department is not limiting contracting 

agencies from considering any aspects 

of agency requirements in making 

location continuity determinations. 

Accordingly, the Department does not 

agree with ABC or Nakupuna that the 

location continuity provisions will 

unnecessarily limit or constrain agency 

decision-making. 

(A) ‘‘Same Location’’ and ‘‘Same 

Locality’’ 

COFPAES requested clarification 

regarding the meaning of the Executive 

order’s statement in section 1 that the 

same benefits of the nondisplacement 

order are also realized when the 

successor contractor performs the work 

at ‘‘the same location where the 

predecessor contract was performed.’’ 

See 86 FR 66397. COFPAES stated that 

this reference was confusing because the 

NPRM explained that the order’s 

coverage applies coextensively with the 

SCA, and therefore applies irrespective 

of where the contractor performs the 

work. See 29 CFR 4.133(a).6 COFPAES 

also stated that the nondisplacement 

requirements would be ‘‘unworkable 

and impractical’’ if applied to mapping 

or engineering design firms where ‘‘a 

deliverable of plans and specifications 

is prepared on the contractor’s site and 

delivered to the government.’’ 

The order uses two slightly different 

terms to discuss the same concept: 

‘‘same location’’ (in section 1) and 

‘‘same locality’’ (in section 4). 86 FR at 

66397–98. The operative requirement of 

the order is in section 4 of the order and 

in § 9.11(c)(1) and (c)(2) of the 

regulations, all of which require 

consideration of whether performance 

of the work in the ‘‘same locality or 

localities’’ is reasonably necessary for 

economy and efficiency. See 86 FR at 

66398. The Department interprets this 

language to mean performance within a 

reasonable commuting distance of the 

specific facility at which the 

predecessor contract employees worked 

or were based, or, where relevant, 

within commuting distance of the 

locality in which most of the 

predecessor contract employees live. As 

noted in the NPRM, the language about 

contract ‘‘location’’ and ‘‘locality’’ and 

sections 1 and 4 of the order reflect the 

basic conclusion that the right of first 

refusal in the nondisplacement contract 

clause may have a more limited effect if 

a contract is moved beyond commuting 

distance from the predecessor contract, 

such that predecessor employees may be 

less likely to accept an offer of 

employment on the successor contract. 

Accordingly, a ‘‘same locality’’ 

preference or requirement generally 

means a preference or requirement that 

the location of the facility at which 

employees will be working or 

operations will be headquartered (if 

covered employees work remotely) be 

sufficiently within the same general 

geographic area such that employees on 

the predecessor contract could continue 

to work on the successor contract 

without having to move their 

residences. 

The Department’s understanding of 

the concept of ‘‘location’’ and ‘‘locality’’ 

in Executive Order 14055 is consistent 

with the FAR Council’s interpretation of 


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7The Office of Management and Budget 

designates counties or groups of counties as MSAs 

as part of its core based statistical area (CBSA) 

standards. See 86 FR 37770 (July 16, 2021). 

8The HUBZone program, 15 U.S.C. 657a, is one 

of several procurement-related preference programs 

for small businesses, and it is designed to aid small 

businesses that are located in economically 

distressed areas. See supra footnote 2 in section 

II.B.4. Of all existing small business preference 

programs, the HUBZone program is the only one 

that has a geographic component. 

the term ‘‘same location’’ as it was used 

in Executive Order 13495.In its final 

rule implementing Executive Order 

13495, the FAR Council refrained from 

narrowly defining the term to mean the 

‘‘same building, base, city, command’’ 

or something else. See 77 FR 75766, 

75768–69. Instead, it stated that what 

constitutes the ‘‘same location’’ in that 

context ‘‘will depend upon the 

geographic area in which performance 

under the predecessor and successor 

contracts occur’’ and can be resolved 

with reference to the statement of work 

or similar contract provision. Id. at 

75769. The Department’s understanding 

of these terms is also consistent with the 

interpretation of the term ‘‘locality’’ as 

it is used in the SCA to define the 

geographic unit within which prevailing 

wages are calculated. See 41 U.S.C. 

6703(1). In the SCA context, the 

Department and reviewing courts have 

given the word ‘‘locality’’ a flexible but 

not unlimited meaning, see S. 

Packaging & Storage Co. v. United 

States, 618 F.2d 1088 (4th Cir. 1980), 

such that a ‘‘locality’’ typically 

encompasses a metropolitan statistical 

area (MSA) or similar grouping of 

nonmetropolitan counties.7

(B) Location-Continuity Factors 

In the NPRM, the Department sought 

comment on whether § 9.11(c) should 

provide additional guidance on the 

relevant factors that an agency should 

consider when it is considering location 

continuity, and, if so, which factors to 

include and whether to provide 

guidance regarding any particular 

weight that should be given to each of 

them. The Department sought comment 

on whether contracting agencies should 

be required to start with a presumption 

in favor of location continuity, and 

regarding when, if ever, it is appropriate 

for contracting officers to consider costs 

as a reason to decline to require location 

continuity. The Department also sought 

comment on how the HUBZone program 

or other procurement-related programs 8

should factor into a location-continuity 

analysis, how an agency should weigh 

the history of remote work or telework 

by incumbent contractor employees, 

and whether there are circumstances in 

which the contracting agency should 

indicate in the solicitation that telework 

is permitted or require the successor 

contractor to allow workers to telework. 

The AFL–CIO and the Coalition 

encouraged the Department to apply a 

presumption in favor of location 

continuity. The AFL–CIO further 

proposed that contracting agencies 

should have to identify clear and 

convincing evidence to rebut such a 

presumption. They noted that it may be 

appropriate to presume that the 

contracting agency chose the location of 

the predecessor contract for a 

substantial reason, and that keeping the 

same location increases the benefits of 

the nondisplacement provisions by 

making it more likely that predecessor 

employees will be able to accept an offer 

from the successor contractor. 

Accordingly, they suggested, the burden 

should be on the contracting agency to 

explain why the location of a contract 

should be moved. 

The Coalition also urged the 

Department to provide additional 

guidance to contracting agencies in the 

final rule regarding relevant factors for 

a location-continuity determination and 

regarding the consideration of cost. The 

Coalition proposed several factors, 

including (1) the size of the workforce 

under the new contract; (2) the level of 

experience and training of the 

incumbent workforce; (3) whether 

workers on the predecessor contract 

have access to any sensitive, privileged, 

or classified information; and (4) prior 

successful performance by the 

predecessor workforce. The Coalition 

urged a general prohibition on the 

consideration of labor costs, asserting 

that the policy of the Executive order 

prefers the benefits of worker 

nondisplacement over potential 

reduction in labor costs. 

PSC, on the other hand, urged the 

Department not to impose a 

presumption in favor of location 

continuity or to provide guidance 

regarding factors to consider. They 

commented that a presumption would 

‘‘put[ ] agencies in the position of having 

to prove a negative’’ and would 

‘‘intrude[ ] on acquisition judgements.’’ 

They expressed concern that guidance 

regarding factors to consider would lead 

to a ‘‘check-the-box exercise on factors 

that may be irrelevant to the agency, and 

potentially downplay factors that really 

matter to the agency,’’ and that, even if 

the factors are framed as optional, they 

‘‘may not be optional in practice.’’ PSC 

stated that costs must always be a 

permissible consideration with regard to 

location continuity, ‘‘with the scope of 

other potential considerations left to the 

contracting officer’s discretion.’’ They 

added that if ‘‘economy and efficiency 

are realized by requiring successors to 

offer employment to predecessor 

employees by location, those 

efficiencies must be balanced with costs 

that may result from imposing that 

requirement.’’ 

The Department does not agree with 

PSC that the provision of guidance 

regarding factors to consider in the 

location-continuity analysis will 

confuse contracting officers or 

undermine their business judgement. 

The provision of nonexclusive lists of 

factors for contracting officers to 

consider is a routine aspect of contract 

formation. See, e.g., 48 CFR 15.304 

(Evaluation factors and significant 

subfactors). In addition, as the 

Department noted in the NPRM, many 

covered contracts will not require 

consideration of factors related to 

nondisplacement because the location 

of the services must be fixed for other 

reasons. For example, an agency 

drafting a solicitation for a successor 

contract for janitorial or security 

services for a specific federal facility 

would not need to consider 

nondisplacement factors as part of a 

location-continuity analysis because 

there is no reasonable possibility that 

the location of the services could be 

moved. However, where the agency 

believes the services could possibly 

(nondisplacement factors aside) be 

carried out at a different location, the 

location-continuity analysis required by 

the Executive order should include 

consideration of the nondisplacement 

factors. The final rule, therefore, 

includes at § 9.11(c)(3) a nonexclusive 

list of factors that are important to 

consider when there is a possibility that 

the successor contract could be 

performed in a locality other than where 

the predecessor contract has been 

performed. 

The list of factors in § 9.11(c)(3) 

includes: (i) whether factors specific to 

the contract at issue suggest that the 

employment of a new workforce at a 

new location would increase the 

potential for disruption to the delivery 

of services during the period of 

transition between contracts (e.g., the 

large size of workforce to be replaced or 

the relatively significant level of 

experience or training of the 

predecessor workforce); (ii) whether 

factors specific to the contract at issue 

suggest that the employment of a new 

workforce at a new location would 

unnecessarily increase physical or 

informational security risks on the 

contract (e.g. whether workers on the 

contract have had and will have access 

to sensitive, privileged, or classified 

information); (iii) whether the workforce 

on the predecessor contract has 


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9To benefit from the sole-source awards, setasides, or price-evaluation preferences under the 

HUBZone program, a contractor must become 

certified as a HUBZone small business concern 

(SBC), which requires that ‘‘the principal office of 

the business is located in a HUBZone and not fewer 

than 35 percent of its employees reside in a 

HUBZone.’’ 15 U.S.C. 657a(d)(1). The SBC also 

must certify that it will attempt to maintain the 35 

percent employment ratio during the performance 

of any contract awarded on the basis of one of these 

HUBZone mechanisms. Id. 

10 In addition to commenting on the location 

continuity analysis, PSC also recommended an 

exemption to the right-of-first refusal requirement 

when such a right would ‘‘impact internal 

organizational or federal Diversity, Equity, 

Inclusion and Accessibility goals.’’ The Department 

Continued 

demonstrated prior successful 

performance of contract objectives so as 

to warrant a preference to retain as 

much of the current workforce as 

possible; and (iv) whether programspecific statutory or regulatory 

requirements govern the method 

through which the location of contract 

performance must be determined or 

evaluated, or other contract-specific 

factors favor the performance of the 

contract in a particular location. 

The listed factors added in § 9.11(c)(3) 

of the final rule follow directly from the 

policy and purpose of the Executive 

order as described in section 1 therein. 

See 86 FR at 66397. The first three 

factors will generally weigh in favor of 

location continuity. 

The Coalition expressed concern 

about successor contractors eliminating 

or significantly reducing the options of 

remote work or telework where it has 

existed on predecessor contracts. If 

workers on a predecessor contract have 

been provided the option of remote 

work or significant telework, the 

removal of that option on the successor 

contract may make it difficult for the 

successor contractor to maintain a 

carryover workforce, even if the contract 

stays in the same location and even if 

the workers are provided with a 

nondisplacement right-of-first-refusal 

offer. Any reduction in the option for 

remote work, the Coalition asserted, 

‘‘should be treated as a change in 

location that is presumed to be 

disruptive.’’ 

The Department agrees that the 

removal of telework options by a 

successor contractor could cause 

significant disruptions, and 

consideration of the availability of 

remote work could therefore be relevant 

to location continuity determinations. 

Congress has specifically encouraged 

the use of telework by Federal 

contractors. See 41 U.S.C. 3306(f) 

(authorizing telecommuting for Federal 

contractors); see also 48 CFR 7.108 

(requiring agencies make a specific 

determination regarding security or 

other requirements before prohibiting 

telecommuting or unfavorably 

evaluating proposals involving 

telecommuting). In addition, § 9.12(b)(5) 

of these regulations limits successor 

contractors from changing the terms and 

conditions of predecessor contractors 

for the purpose of discouraging 

employees from accepting the offer of 

employment on the successor contract. 

That paragraph states that successor 

contractors generally must offer 

employees of the predecessor contractor 

the option of remote work under 

reasonably similar terms and conditions 

to those that the successor contractor 

offers to any employees it has or will 

have in the same or similar occupational 

classifications who work in an entirely 

remote capacity. 

The fourth factor in § 9.11(c)(3) of the 

final rule reminds contracting officers 

that it is appropriate to consider any 

program-specific statutory or regulatory 

requirements governing the method by 

which location of performance must be 

determined or evaluated, or other 

contract-specific factors that favor the 

performance of the contract in a 

particular location. For example, the 

FAR regulations regarding the 

architectural and engineering services 

under the Brooks Act contain their own 

location preference. See 48 CFR 

36.602(a)(5). Under this regulation, one 

of five enumerated selection criteria is: 

‘‘Location in the general geographical 

area of the project and knowledge of the 

locality of the project; provided, that 

application of this criterion leaves an 

appropriate number of qualified firms, 

given the nature and size of the project.’’ 

Id. Because the Brooks Act already 

determines that location is to be 

factored into the solicitation by way of 

this specific location-continuity 

preference, it generally would not be 

appropriate to impose a locationcontinuity requirement (as opposed to 

this preference) because of the locationcontinuity provision in the 

nondisplacement regulation. This factor 

is consistent with the Executive order’s 

mandate in section 4(b) that, upon 

determining that location continuity is 

reasonably necessary to ensure 

economical and efficient provision of 

services, agencies must include 

location-continuity requirements or 

preferences ‘‘to the extent consistent 

with law.’’ 86 FR at 66399. 

The language at § 9.11(c)(3) of the 

final rule that introduces the relevant 

location-continuity factors clarifies that 

the list is nonexclusive. It states that the 

location-continuity analysis ‘‘should 

generally include, but not be limited to’’ 

the listed considerations. The final rule 

does not contain a required 

presumption in favor of location 

continuity, and it does not restrict 

consideration of costs. Having 

considered the comments submitted 

regarding these additional proposed 

provisions, the Department finds at this 

time that they are not necessary to 

achieving the purpose of the order. The 

final rule requires agencies to approach 

the location-continuity analysis on a 

case-by-case basis, while providing 

guidance regarding the critical benefits 

that carryover workforces provide and 

the possibility that changing a contract’s 

location may have adverse effects on 

contract performance, physical or 

information security, or other 

proprietary interests of the Federal 

government. 

In this case-by-case analysis, in 

addition to considering whether a 

location-continuity requirement is 

reasonably necessary, the contracting 

agency must also consider the option of 

including a location-continuity 

preference instead of a requirement. 

Inclusion of a preference still allows the 

agency to weigh proposals that involve 

moving a contract to a different location 

and award the contract to such a bidder 

if the benefits from moving outweigh 

the nondisplacement-related and other 

benefits of maintaining the same 

contract location. However, in some 

circumstances where the need for a 

carryover workforce is stronger (for 

example, where retaining a carryover 

workforce may limit risks related to 

information and physical security), it 

may be more important to ensure 

workforce continuity and thus suggest 

that a location-continuity requirement 

may be more appropriate than a 

preference. Ultimately, the decision 

regarding whether to use a requirement 

or a preference, like the determination 

of reasonable necessity, will be a caseby-case determination based on the 

agency’s analysis of its needs. 

PSC responded to the Department’s 

request for comment about how the 

HUBZone program or other similar 

procurement programs should factor 

into the location-continuity analysis. In 

their response, PSC suggested that 

‘‘these considerations would greatly 

factor into such an analysis.’’ Though 

they did not suggest a specific method 

of balancing the programs or goals, PSC 

noted that 35 percent of employees of 

HUBZone contractors must live within 

a HUBZone.9 They also raised the 

question of whether ‘‘equity [would] be 

realized’’ if a successor contractor 

offered a right of first refusal to a 

HUBZone contractor’s employees ‘‘and 

relocated employees from that 

HUBZone.’’ 10


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had addressed this request for an exemption above 

in section II.B.4. 

The Department agrees that aspects of 

the HUBZone program could be relevant 

to whether an agency imposes a 

location-continuity requirement, 

depending on the facts and 

circumstances of the particular contract. 

As an initial matter, if a predecessor 

contract is located in a HUBZone, a 

location-continuity requirement or 

preference for a successor contract 

would be consistent with the goals of 

the HUBZone program. And even where 

the predecessor contract is outside of a 

HUBZone, a location-continuity 

requirement or preference would not 

necessarily be inconsistent with the 

program, as there is no requirement 

under the HUBZone program that 

contracts set aside for or awarded to 

HUBZone-certified contractors must 

themselves be performed within a 

HUBZone. See Cont. Mgmt., Inc. v. 

Rumsfeld, 434 F.3d 1145, 1149 (9th Cir. 

2006); see generally 48 CFR subpart 

19.13. There is also a possibility that a 

HUBZone-certified contractor could be 

awarded a contract outside of the solesource or set-aside processes, instead 

using only the HUBZone priceevaluation preference or in open 

competition. Given the breadth of 

contracts in which this can be the case, 

it would not be appropriate to give any 

significant weight against a locationcontinuity requirement or preference 

because of this possibility. 

However, there may also be 

circumstances in which a locationcontinuity requirement for a successor 

contract at a non-HUBZone location 

could make it challenging for HUBZone 

contractors to complete the successor 

contract while complying with the 35- 

percent employee-residency 

requirement. This could be the case, for 

example, where the contract location is 

outside of commuting distance from any 

HUBZone and the workers cannot 

perform the contract remotely. In such 

a situation, where an agency identifies 

the potential for a HUBZone sole-source 

award or a set-aside, this fact might 

reasonably weigh against imposing a 

location-continuity requirement. In that 

circumstance, however, the contracting 

agency would still also need to consider 

whether other aspects of the contract, 

such as the handling of classified or 

confidential information, may justify a 

location-continuity requirement and 

therefore instead make the contract not 

suitable for a HUBZone set-aside. 

Finally, while there may be 

circumstances in which the potential for 

a HUBZone set-aside weighs against a 

location-continuity requirement, such a 

potential will not weigh against the 

inclusion of a location continuity 

preference. As a general matter, there is 

no conflict where a solicitation contains 

multiple different preferences mandated 

by different statutes or regulations, as 

‘‘[e]ach preference can be given its due.’’ 

Automated Commc’n Sys., Inc. v. 

United States, 49 Fed. Cl. 570, 577–79 

(2001) (finding HUBZone preference 

and Randolph-Sheppard Act preference 

can both be applied in the same 

solicitation). Moreover, the inclusion of 

a location continuity preference will 

generally be compatible with the 

HUBZone program procedures even 

where a set-aside is used. Where a setaside is used, the inclusion of a location 

continuity preference may lead to 

location continuity if feasible for one of 

the SBCs, but not limit the contract from 

being performed at a new location if 

continuity is not feasible for any 

bidders. 

(C) Location-Continuity Procedural 

Safeguards 

In the NPRM, the Department 

proposed language in § 9.11(c)(3) to 

implement several procedural 

safeguards for the location continuity 

determination. The Department 

proposed to require that agencies 

complete the location continuity 

analysis prior to the date of issuance of 

the solicitation. The Department 

proposed that any agency decision not 

to include a location continuity 

requirement or preference in a 

particular contract must be made in 

writing by the agency’s senior 

procurement executive. In addition, the 

Department proposed that when an 

agency determines that no such 

requirement or preference is warranted, 

the agency must include a statement to 

that effect in the solicitation and also 

ensure that the incumbent contractor 

notifies affected workers and their 

collective bargaining representatives, if 

any, in writing of the agency’s 

determination and of the workers’ right 

to request reconsideration. 

In the NPRM, the Department also 

proposed further requirements related to 

notice to predecessor workers and 

requests for reconsideration. Under the 

proposed text, the notice would need to 

occur within 5 business days after the 

solicitation is issued, and the incumbent 

contractor would need to provide 

confirmation to the contracting agency 

that the notification has been made. The 

Department proposed language in the 

nondisplacement contract clause set 

forth in Appendix A of the NPRM to 

require contractors to agree to provide 

this notification. The NPRM also 

provided that any request by an 

interested party for reconsideration of 

an agency’s location continuity decision 

would have to be directed to the head 

of the contracting department or agency. 

Finally, the Department sought 

comment regarding whether there 

should be a remedy for an agency’s 

failure to follow location continuity 

procedures, such that a procedurally 

deficient location-related determination 

would be ineffective as a matter of law. 

The Department also requested 

comment on whether there should be 

specific remedies for workers or 

sanctions for contractors in the 

circumstances in which a contractor 

fails to timely provide the required 

notice of a location continuity 

determination. 

The Coalition and the AFL–CIO 

commented that the Department should 

require the same or similar procedural 

safeguards for location continuity as for 

agency exception decisions under the 

provisions set forth in § 9.5, and for the 

same reasons. These commenters thus 

supported the Department’s proposed 

requirement that decisions be made in 

writing, by an agency’s senior 

procurement executive, and before the 

solicitation date. As they did for § 9.5 

exceptions, however, the commenters 

also advocated that the Department 

amend the timing requirement for the 

determination, notice, and 

reconsideration, to provide ample time 

before the solicitation for interested 

parties to comment on the 

determination and request 

reconsideration if necessary. These 

commenters also advocated that the rule 

should include a right to appeal to the 

Secretary, who would be ‘‘an 

independent arbiter.’’ 

The Coalition and the AFL–CIO 

advocated that the final rule require 

agencies to notify workers and their 

representatives of their location 

continuity determinations no later than 

120 days before a bid solicitation goes 

out, and, with the notice, also provide 

the agency’s written analysis and 

supporting evidence. They suggested 

that interested parties be given 30 days 

to comment on the determination, that 

agencies be required to respond no 

fewer than 60 days before the bid 

solicitation, and that interested parties 

be given 15 days to file an appeal with 

the Secretary, who would have to 

decide the appeal within 45 days and 

before any solicitation is issued. The 

AFL–CIO strongly urged the Department 

to treat procedurally deficient locationcontinuity determinations in the same 

manner as exception determinations, by 

making such determinations ineffective 

as a matter of law. 


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11For similar reasons, the final rule does not 

contain the provision discussed in the NPRM that 

would result in a procedurally deficient contractlocation decision being inoperative as a matter of 

law. However, interested parties who believe that 

a location-continuity determination was made in a 

procedurally defective manner—or was not made at 

all—may communicate this concern to the 

Department, so that the Department may follow up 

with the contracting agency or take other 

appropriate action. 

Conversely, PSC and Nakupuna 

advocated against the Department’s 

proposed procedural safeguards. PSC 

stated that the Department’s 

interpretation of section 4 of the 

Executive order and proposed § 9.11(c) 

would be ‘‘unworkable.’’ PSC suggested 

that requiring a case-by-case analysis by 

the senior procurement executive could 

‘‘bottleneck solicitations’’ and cause 

‘‘needless delay.’’ PSC said the 

procedure would ‘‘make it difficult for 

contracting agencies to decide for 

themselves whether they really need 

performance to be in the same location,’’ 

thereby inviting contractor bid protests. 

Nakupuna commented that the 

subsequent notification of affected 

workers and their collective bargaining 

representatives is burdensome for both 

agencies and contractors. PSC likewise 

opposed, as unnecessary and 

burdensome, the Department’s proposed 

requirement that agencies must include 

language in the solicitation affirmatively 

stating that the location continuity 

analysis has been completed. PSC stated 

that the order only requires agencies to 

‘‘consider’’ location continuity, and that 

this obligation should be satisfied by 

acquisition teams with ‘‘[a] (brief) 

notation in the acquisition plan or 

equivalent, commensurate with the size 

and complexity of the acquisition.’’ 

PSC also opposed the Department’s 

proposed reconsideration language for 

the same reasons that they opposed the 

proposed provision discussing 

reconsideration of agency exceptions in 

§ 9.5. PSC stated that the order itself 

does not provide for such 

reconsideration, and that allowing 

‘‘catch-all ‘interested parties’ to 

speculate on . . . business judgments 

. . . will delay acquisitions needlessly 

and would undermine economy and 

efficiency in Government contract 

performance.’’ PSC stated that it 

recognizes workers must have a fair say 

in matters of their employment, but that 

‘‘interested parties’’ could include ‘‘a 

wide variety of entities or even a 

community in which many incumbent 

employees reside.’’ Finally, PSC 

recommended against including 

remedies or enforcement in 

circumstances where the predecessor 

contractor does not relay performance 

location determinations to employees. 

The final rule includes amended 

procedural safeguards for location 

continuity that are reorganized into a 

new paragraph at § 9.11(c)(4). In 

response to the comments received, the 

Department is narrowing the 

requirements to focus on ensuring that 

contracting agencies benefit from 

information that employees may have 

that would be helpful and relevant to 

the analysis. The Department is not 

adopting some of the proposed 

requirements that were not provided for 

expressly by the order—including the 

requirements that certain 

determinations be made by the senior 

procurement executive, that an 

affirmative statement regarding the 

analysis be made in the solicitation, and 

that requests for reconsideration be 

directed to the head of the contracting 

department or agency. Instead, the 

Department is amending the provision 

to require that agencies, to the extent 

consistent with mission security, ensure 

that employees covered by a collective 

bargaining agreement on the 

predecessor contract have an 

opportunity prior to the issuance of the 

solicitation to provide information 

relevant to the location continuity 

analysis. Thus, the final rule states that, 

at the earliest reasonable time in the 

acquisition planning process, the agency 

must direct the incumbent contractor to 

notify any collective bargaining 

representative(s) for affected employees 

of the appropriate method to 

communicate such information (i.e., 

contact information for a specific 

member of the agency’s acquisition 

team). The provision includes 

requirements regarding the methods of 

the notice that must be provided and 

model language that contracting 

agencies may use. While the final rule 

reflects the Department’s decision that a 

reconsideration process is not necessary 

at this time, the absence of a formal 

process from the regulations should not 

deter interested parties from 

communicating with contracting 

agencies or the Department if they 

believe that a location-continuity 

decision may have failed to consider 

important information.11

The Department agrees with the 

Coalition and the AFL–CIO that it is 

important to build into the program’s 

procedures ‘‘a role for workers and their 

representatives to provide input’’—and 

for this process to occur before bid 

solicitation. As the Coalition noted, 

interested parties ‘‘are likely to have 

information on the benefits of 

nondisplacement for any given service 

contract’’ and ‘‘are well positioned to 

identify any errors or omissions’’ in the 

contracting agency’s analysis. In 

addition, seeking feedback from affected 

workers accords with the PSC’s 

recognition that workers should have ‘‘a 

fair say in matters of their 

employment.’’ While the Department 

declines to adopt the specific 

timeframes for agency determinations 

and submissions that the Coalition and 

the AFL–CIO requested, the requirement 

that agencies seek information from 

predecessor employees prior to the 

solicitation date, if practicable, will help 

to ensure that the policies of the order 

are built into solicitations and are not 

dependent on convincing an agency to 

reconsider a solicitation it has already 

issued. Accordingly, the final rule 

includes revised language in § 9.11(c)(4) 

requiring pre-solicitation notice, to the 

extent consistent with mission security, 

instead of the proposed requirement for 

notice of a location continuity 

determination within 5 business days 

after the solicitation. 

In addition to the revised presolicitation notice requirement, the 

Department considered whether to 

retain the requirement in the proposed 

rule that incumbent contractors must 

provide confirmation to contracting 

agencies that the notification has been 

made. The Department is not including 

this requirement, given that § 9.12(f)(2) 

already requires contractors to maintain 

evidence of any notices that they 

provide to employees, or employees’ 

collective bargaining representatives, to 

satisfy the requirements of the order or 

these regulations—which includes the 

pre-solicitation notice regarding 

location continuity. The Department 

also considered whether to include 

specific required sanctions for 

contractors that fail to provide the 

notice. The final rule does not include 

a specific sanction. However, where a 

contractor fails to provide the notice, 

even after receiving a timely request 

from a contracting agency, evidence of 

this fact could support (in addition to 

other evidence) a lower past 

performance rating on the contract or a 

debarment decision. 

(D) Relocation Costs 

In the NPRM, the Department 

proposed language at § 9.11(c)(4) that 

restated, in part, the language from 

section 3(b) of the Executive order, 

which clarifies that nothing in the order 

should be interpreted as requiring or 

recommending that contractors, 

subcontractors, or contracting agencies 

must pay relocation costs for employees 

of predecessor contractors hired 

pursuant to their exercise of their rights 

under the order. See 86 at FR 66398. 

The Department proposed similar 

language, directed at contractors and 


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subcontractors specifically, in 

§ 9.12(b)(6). In the final rule, as noted 

above, the Department is moving the 

location continuity procedural 

safeguards and notice provisions from 

§ 9.11(c)(3) to § 9.11(c)(4). The 

Department therefore is moving the 

relocation costs language to § 9.11(c)(5). 

The Department did not receive any 

comments seeking to amend this 

language. Accordingly, the final rule 

adopts it as proposed. 

v. Section 9.11(d) Disclosures 

Proposed § 9.11(d) would require that 

the contracting officer provide the 

predecessor contractor’s list of 

employees referenced in proposed 

§ 9.12(e)(1) to the successor contractor 

and that, on request, the list will be 

provided to employees or their 

representatives, consistent with the 

Privacy Act, 5 U.S.C. 552a, and other 

applicable law. Proposed § 9.12(e)(1) 

required the predecessor contractor to 

provide the list of employees to the 

contracting officer no later than 30 

calendar days prior to before completion 

of the contractor’s performance of 

services on a contract. Under proposed 

§ 9.11(d), the contracting officer would 

have to provide the predecessor 

contractor’s list of employees to the 

successor contractor no later than 21 

calendar days prior to the beginning of 

performance on the contract, and if an 

updated list is provided by the 

predecessor contractor pursuant to 

§ 9.12(e)(2), the contracting officer 

would have to provide the updated list 

to the successor contractor within 7 

calendar days of the beginning of 

performance on the contract. However, 

if the contract is awarded fewer than 30 

days before the beginning of 

performance, then the predecessor 

contractor and the contracting agency 

would be required to transmit the list as 

soon as practicable. 

Although the Department anticipates 

that contracting officers typically will be 

able to provide the successor contractor 

with the seniority list almost 

immediately after receiving it from the 

predecessor contractor, there may be 

circumstances (such as if the contracting 

officer has questions about the accuracy 

of the list) in which the contracting 

officer needs several days to check or 

verify the list before transmitting it to 

the successor contractor. The deadlines 

set forth in proposed § 9.11(d) took such 

circumstances into account while also 

providing specific deadlines by which 

the seniority list must be transmitted to 

the successor contractor to ensure the 

successor has sufficient time to provide 

the workers with the right of first refusal 

and to ensure continuity of performance 

on the contract. 

One commenter, PCSI, recommended 

extending the timeframes in § 9.12(e) 

and § 9.11(d) to allow the predecessor 

contractor not less than 90 days to 

furnish the contracting officer with their 

certified list of employees and in turn 

allow contracting officers not less than 

60 days before the start of performance 

to provide this list to successor 

contractors. PCSI stated that the shorter 

proposed time frames were too short to 

provide enough time for successor 

contractors to ensure they have the 

employees to perform contracts on their 

start dates. The Department has 

considered this comment but declines to 

extend the timeframes. Longer time 

frames for furnishing the certified list 

will decrease the accuracy of the lists 

and may not always be in accord with 

procurement schedules. The 

timeframes, as proposed, best balance 

the need to provide an accurate and 

timely certified list of predecessor 

employees with the need to afford 

successors time to ensure continuity of 

performance. The final rule therefore 

adopts § 9.11(d) without change. 

vi. Section 9.11(e) Actions on 

Complaints 

Proposed § 9.11(e) addressed 

contracting officers’ responsibilities 

regarding complaints of alleged 

violations of part 9. The proposal stated 

that the contracting officer would be 

responsible for reporting complaint 

information to the WHD within 15 

calendar days of WHD’s request for such 

information. The Department believes 

15 calendar days is an appropriate 

timeframe within which to require 

production of information necessary to 

evaluate the complaint. The proposed 

section elaborated that the contracting 

officer would have to provide to WHD: 

any complaint of contractor 

noncompliance with this part; available 

statements by the employee or the 

contractor regarding the alleged 

violation; evidence that a seniority list 

was issued by the predecessor and 

provided to the successor; a copy of the 

seniority list; evidence that the 

nondisplacement contract clause was 

included in the contract or that the 

contract was excepted by the agency; 

information concerning known 

settlement negotiations between the 

parties (if applicable); and any other 

relevant facts known to the contracting 

officer or other information requested by 

WHD. The Department did not receive 

any comments on this provision; 

accordingly, the final rule adopts the 

provision as proposed. 

vii. Section 9.11(f) Incorporation of 

Omitted Contract Clause 

Proposed § 9.11(f) provided that when 

the nondisplacement contract clause is 

erroneously omitted from a contract, a 

contracting agency must retroactively 

incorporate the contract clause on its 

own initiative or within 15 calendar 

days of notification by an authorized 

representative of the Department. 

Proposed § 9.11(f) explained that there 

may be circumstances where only 

prospective, rather than retroactive, 

application of the contract clause is 

warranted. For example, solely 

prospective relief might be warranted 

where the contracting officer omitted 

the clause in good faith because the 

predecessor contractor would be the 

sole bidder on the contract and the 

contracting officer erroneously believed 

that it was not a successor contract for 

that reason. Proposed § 9.11(f) thus 

would have permitted the 

Administrator, at their discretion, to 

determine that the circumstances 

warrant prospective, rather than 

retroactive, incorporation of the contract 

clause. The NPRM explained that 

proposed § 9.12(b)(8) set forth the 

requirements for successor contractors 

on how to proceed when the 

nondisplacement clause is retroactively 

incorporated into a contract after the 

successor contractor already has begun 

performance on the contract. As noted 

in the NPRM, if the erroneous omission 

of the contract clause from a solicitation 

is discovered before contract award, 

proposed § 9.11(f) also would require 

the contracting agency to amend the 

solicitation. 

The Department did not receive any 

comments addressing § 9.11(f), but PSC 

expressed general concern about the 

disruption to the procurement process 

where an agency could be forced to 

reissue a solicitation after ‘‘missing a 

procedural step,’’ which could generate 

‘‘additional administrative burden and 

cost.’’ Having considered this comment, 

the Department is modifying the 

language of § 9.11(f) to require the 

Administrator to determine that 

retroactive incorporation of the 

nondisplacement contract clause is 

warranted in a manner consistent with 

retroactive incorporation of contract 

clauses and wage determinations under 

the SCA. Pursuant to 29 CFR 4.5(c), 

where the Department determines that a 

contracting agency made an erroneous 

determination that the SCA did not 

apply to a particular contract or failed 

to include an appropriate wage 

determination in a covered contract, the 

contracting agency must incorporate 

into the contract the required 


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stipulations and/or any applicable wage 

determination, which, at minimum, 

apply prospectively. Under 29 CFR 

4.5(c), the Administrator may require 

retroactive application of a wage 

determination. See also 48 CFR 22.1015 

(applying the error-correction and 

retroactivity provisions of 29 CFR 4.5 to 

contracts awarded under the FAR). This 

language effectively requires the 

Administrator to determine that 

retroactive application is appropriate, 

considering various factors, including 

whether there may be an ‘‘overly 

onerous administrative and economic 

burden’’ on the contracting agency that 

may constitute a ‘‘severe disruption in 

the agency’s procurement practices.’’ 

Raytheon Aerospace, ARB Nos. 03–017, 

03–019, 2004 WL 1166284, at *8–11 

(May 21, 2004) (identifying three 

reasonable factors the Administrator 

appropriately considered in exercising 

discretion to not apply the SCA 

retroactively). In this final rule, the 

Department is amending § 9.11(f) to 

more closely parallel the language used 

in 29 CFR 4.5(c), modified to fit the 

nondisplacement context. The 

Department believes that such 

consistency will provide clarity and 

streamline the incorporation process 

both for contracting agencies and 

contractors. As the terms of § 9.11(f) and 

29 CFR 4.5(c) are similar, the 

Department notes that the case law 

interpreting 29 CFR 4.5(c) would be 

persuasive regarding retroactive 

application of the contract clause under 

§ 9.11(f). See, e.g., Raytheon Aerospace, 

2004 WL 1166284, at *8–11; 

FlightSafety Def. Corp., ARB Nos. 2021– 

0071, 2022–0001, 2022 WL 20100986, at 

*9–10 (Feb. 28, 2022) (holding that the 

Administrator reasonably declined to 

retroactively apply the SCA). As such, 

the final rule states that the 

Administrator will consider the 

administrative and economic burdens 

on contracting agencies, among other 

factors, when determining whether 

retroactive application is appropriate in 

a given case. 

The Coalition generally approved of 

proposed § 9.11 but recommended 

adding a paragraph that would require 

contracting agencies to include training 

on the requirements of § 9.11 to existing 

acquisition training courses for the 

Federal acquisition workforce. The 

Coalition further recommended that 

compliance with § 9.11 should be a 

factor considered in evaluations of 

contractor performance pursuant to 48 

CFR 42.1502. The Coalition stated that 

these steps would promote compliance 

with Executive Order 14055. While the 

Department agrees training on the 

nondisplacement requirements will be 

important for promoting compliance 

and that past performance evaluations 

appropriately evaluate regulatory 

compliance (including compliance with 

labor regulations), these 

recommendations are outside the scope 

of this rulemaking. 

7. Section 9.12 Contractor 

Requirements and Prerogatives 

As proposed, § 9.12 would implement 

contractors’ requirements and 

prerogatives under Executive Order 

14055. The proposed section detailed a 

successor contractor’s general obligation 

to offer employment to qualified service 

employees from the predecessor 

contract, the method of making job 

offers, exceptions to the 

nondisplacement requirement, 

implementation of the nondisplacement 

requirement in the context of reduced 

staffing, obligations near the end of the 

predecessor contract, recordkeeping, 

and obligations to cooperate with 

reviews and investigations. 

i. Section 9.12(a) General 

Proposed § 9.12(a)(1) included the 

Executive order’s central requirement 

that employees on a predecessor 

contract receive offers of employment 

on the successor contract before any 

employment openings for service 

employees on the successor contract are 

otherwise filled. Specifically, the 

proposal provided that, unless an 

exception or exclusion applies, a 

successor contractor or subcontractor 

may not fill any employment openings 

for service employees under the contract 

prior to making ‘‘good faith offers’’ of 

employment to employees on the 

predecessor contract. Employees on the 

predecessor contract must only receive 

such offers in positions for which they 

are qualified, and only if their 

employment would be terminated as a 

result of award of the contract or the 

expiration of the contract under which 

they were hired. Because the order 

states that the term employee ‘‘includes 

an individual without regard to any 

contractual relationship alleged to exist 

between the individual and a contractor 

or subcontractor,’’ see supra section 

II.B.2., the contractor would be 

obligated to make good faith offers to 

any service employee under the 

predecessor contract, regardless of 

whether the service employee was 

classified as an employee or 

independent contractor on the 

predecessor contract. To the extent 

necessary to meet the successor 

contractor’s anticipated staffing pattern 

and in accordance with the 

requirements of the rule, proposed 

§ 9.12(a)(1) would require the successor 

contractor and its subcontractors to 

make a bona fide, express offer of 

employment to each service employee 

in a position for which the employee is 

qualified and state the time within 

which the employee must accept such 

offer. As discussed in proposed 

§ 9.12(b)(4), although the offer would 

have to be for a position for which the 

employee is qualified, it would not 

necessarily have to be for the same or 

similar position as the employee held 

on the predecessor contract. The 

proposed rule specified that in no case 

could the contractor or subcontractor 

give an employee fewer than 10 

business days to consider and accept the 

offer of employment. 

Comments received regarding 

proposed § 9.12(a)(1) are discussed 

below, in conjunction with related 

comments received regarding § 9.12(b). 

To emphasize the relationship between 

this section and other sections, a 

notation was added to the text of 

§ 9.12(a)(1) that all offers must be made 

in accordance with the requirements 

described in this part. Otherwise, the 

final rule adopts the language of 

§ 9.12(a)(1) as proposed. 

Proposed § 9.12(a)(2) clarified that the 

successor contractor’s obligation to offer 

a right of first refusal would exist even 

if the successor contractor was not 

provided a list of the predecessor 

contractor’s employees or if the list did 

not contain the names of all service 

employees employed during the final 

month of contract performance. The 

Coalition commented in support of the 

proposed rule’s job protections for 

employees on the predecessor contract, 

including under circumstances as 

described in § 9.12(a)(2). Conversely, an 

anonymous commenter pointed to 

circumstances such as those described 

in § 9.12(a)(2) as part of that 

commenter’s general contention that the 

proposed rule would be burdensome to 

contractors. However, even where a 

predecessor fails to provide the required 

list on a timely basis, the successor 

contractor may still determine which 

employees should be given offers by 

relying upon the types of evidence 

described in § 9.12(a)(3). Moreover, 

Executive Order 14055 does not make 

the obligation to provide a right of first 

refusal contingent upon receipt of a list 

of predecessor contract employees. 

Therefore, the final rule adopts the 

language of § 9.12(a)(2) as proposed. 

Proposed § 9.12(a)(3) discussed 

determining an employee’s eligibility 

for a job offer even when their name was 

not included on the certified list of all 

service employees working under the 

predecessor’s contract or subcontracts 


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during the last month of contract 

performance. As proposed, § 9.12(a)(3) 

would require a successor contractor to 

accept other reliable evidence, in 

addition to the certified list, of an 

employee’s right to receive a job offer. 

Under the provision as proposed, the 

successor contractor would be allowed 

to verify any such information before 

relying on it as a basis to extend a job 

offer. For example, even if a person’s 

name did not appear on the list of 

employees on the predecessor contract, 

an employee’s assertion of an 

assignment to work on the contract 

during the predecessor’s last month of 

performance, coupled with contracting 

agency staff verification, would 

constitute credible evidence of an 

employee’s entitlement to a job offer. 

Similarly, an employee could 

demonstrate eligibility by producing a 

paycheck stub that identifies the work 

location and dates worked for the 

predecessor or that otherwise reflects 

that the employee worked on the 

predecessor contract during the last 

month of performance. The successor 

contractor could verify the claim with 

the contracting agency, the predecessor, 

or another person who worked at the 

facility, though if the successor 

contractor were unable to verify the 

claim, the paycheck stub still would be 

considered sufficient to demonstrate 

eligibility absent evidence from the 

predecessor contractor indicating 

otherwise. 

The Coalition supported the proposed 

framework of § 9.12(a)(3) because it 

would provide several ways for an 

employee to establish eligibility for an 

offer of employment on the successor 

contract. The Coalition further 

encouraged the Department to clarify 

that the examples provided in the 

proposed rule are not exclusive and that 

other reliable data may be provided to 

determine whether a service employee 

is eligible to receive an offer of 

employment on the successor contract. 

The Department agrees that the 

examples are not exclusive and believes 

the proposed regulatory text made that 

sufficiently clear. Thus, after 

considering the comments, the final rule 

adopts the proposed language of 

§ 9.12(a)(3) without change. 

Proposed § 9.12(a)(4) clarified that 

contractors and subcontractors have an 

affirmative obligation to ensure that any 

covered contracts they hold contain the 

contract clause. In keeping with the 

related requirements at § 9.13(a) 

(relating to the insertion of required 

clauses into subcontracts), proposed 

§ 9.12(a)(4) stated that the contractor 

must notify the contracting officer as 

soon as possible if the contracting 

officer did not incorporate the required 

contract clause into a covered contract. 

No comments were received on 

§ 9.12(a)(4) and the final rule adopts 

§ 9.12(a)(4) as proposed. 

ii. Section 9.12(b) Method of Job Offer 

Proposed § 9.12(b) discussed the 

method of communicating the job offer. 

Proposed § 9.12(b)(1) required that, 

except as otherwise provided elsewhere 

in part 9, a contractor must make a bona 

fide, express offer of employment to 

each qualified employee on the 

predecessor contract before offering 

employment on the contract to any 

other service employee. Under proposed 

§ 9.12(b)(1), in determining whether an 

employee is entitled to a bona fide, 

express offer of employment, a 

contractor could consider the 

exceptions set forth in proposed 

§ 9.12(c) and the conditions detailed in 

§ 9.12(d). Proposed § 9.12(b)(1) clarified 

that a contractor could only use 

employment screening processes (such 

as drug tests, background checks, 

security clearance checks, and similar 

pre-employment screening mechanisms) 

under certain circumstances. These 

employment screening processes could 

only be used when they are specifically 

provided for by the contracting agency, 

are conditions of the service contract, 

and are consistent with Executive Order 

14055 and applicable local, state, and 

Federal laws. Proposed § 9.12(b)(1) also 

clarified that while the results of such 

screenings could show that an employee 

is unqualified for a position and thus 

not entitled to an offer of employment, 

a contractor could not use the 

requirement of an employment 

screening process by itself to conclude 

an employee is unqualified because they 

have not yet completed that screening 

process. For example, a successor 

contractor that requires all employees to 

undergo a background check could not 

deem predecessor employees 

unqualified solely because they had not 

completed the specific background 

check the successor contractor requires 

before receiving a job offer. However, 

the Department has edited § 9.12(b)(1) to 

clarify that an employee’s unreasonable 

failure to complete a screening process 

could be grounds to conclude an 

employee is unqualified. No comments 

were received regarding § 9.12(b)(1). 

Other than the clarification already 

noted, replacing the word ‘‘person’’ 

with ‘‘service employee’’ to make clear 

that a successor contractor may make 

offers of employment to non-service 

employees (for example, to hire an 

executive team) before extending offers 

to qualified employees on the 

predecessor contract, and replacing the 

phrase ‘‘by itself’’ with ‘‘solely’’ for 

clarity, the final rule adopts § 9.12(b)(1) 

as proposed. 

Proposed § 9.12(b)(2) discussed the 

time limit in which the employee has a 

right to accept the offer. Under the 

proposed language, the contractor has 

the discretion to determine the time 

limit for an acceptance, provided that 

the time limit is not shorter than 10 

business days. The obligation to offer 

employment to a particular employee 

would cease upon the employee’s first 

refusal of a bona fide offer to 

employment on the contract. ABC 

commented that this requirement was 

burdensome. Similarly, an anonymous 

commenter stated that in light of 

§ 9.12(a)(1)’s requirement that 

employees on a predecessor contract 

receive offers of employment on the 

successor contract before any 

employment openings for service 

employees on the successor contract are 

otherwise filled, the 10-business-day 

time period for acceptances might 

prevent contractors from having a full 

staff when the contract commences. The 

commenter noted that in practice, 

employers may be caught off guard by 

how many employees do not accept 

offers and be left with insufficient time 

to fill vacancies. Conversely, the 

Coalition supported the inclusion of the 

requirement that employees be given 10 

business days to accept or reject an 

offer. 

Section 3 of the Executive order 

specifies that ‘‘in no case shall the 

period within which the employee must 

accept the offer of employment be less 

than 10 business days.’’ 86 FR at 66398. 

Therefore, the Department does not 

have discretion to reduce the amount of 

time that employees must be given to 

consider offers of employment, and that 

time commences at the employee’s 

receipt of the offer. The Department also 

notes that, given the changes to 

proposed § 9.12(e)(1) set forth in this 

final rule, successor contractors will be 

provided with a list of employees’ 

addresses, lessening any delays 

contractors might face prior to making 

and receiving responses to offers. For 

these reasons, the final rule adopts 

§ 9.12(b)(2) as proposed. 

Proposed § 9.12(b)(3) set forth the 

process for making the job offer. Under 

the proposed provision, the successor 

contractor would have had the option of 

making a specific oral or written 

employment offer to each employee. 

Proposed § 9.12(b)(3) would require 

successor contractors to make 

reasonable efforts to make the offer in a 

language each worker understands, to 

ensure the offer was effectively 

communicated. Written offers would be 


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required to be sent by registered or 

certified mail to the employees’ last 

known address or by any other means 

normally ensuring delivery. Proposed 

§ 9.12(b)(3) provided examples of such 

other means, including, but not limited 

to, email to the last known email 

address, delivery to the last known 

address by commercial courier or 

express delivery service, or personal 

service to the last known address. 

Regarding proposed § 9.12(b)(3), the 

Coalition suggested the Department 

require job offers be provided in writing, 

and not verbally, to lessen disputes 

between contractors and employees as 

to the existence and adequacy of offers. 

The comment noted that requiring offers 

in writing also would lessen the degree 

of employees’ reliance on the accuracy 

of contractors’ interpreters. AFL–CIO 

echoed the Coalition’s views regarding 

the benefit of requiring that offers be 

made in writing. 

The Department agrees that requiring 

offers to be made in writing would 

reduce the risk of such factual disputes 

between contractors and employees 

(including disputes about the accuracy 

of translations), and for that reason, the 

final rule amends proposed § 9.12(b)(3), 

as well as the corresponding 

recordkeeping requirements of 

§ 9.12(f)(2)(i), to require that offers be 

made in writing. In regard to translation, 

the Department notes that, pursuant to 

§ 9.12(e)(3), where the predecessor 

contractor’s workforce is comprised of a 

significant portion of workers who are 

not fluent in English, notice of their 

possible right to an offer of employment 

on the successor contract must be 

provided in both English and a language 

in which the employees are fluent. 

Therefore, as it relates to the offer of 

employment to an individual, the 

Department is removing the requirement 

to translate the written offer into 

different languages. The final rule also 

removes as moot the example related to 

a bilingual coworker providing 

interpretation of an oral offer. Under the 

final rule, if a contractor makes an oral 

offer of employment, it must accompany 

such an offer with a communication of 

the offer in writing (and both the oral 

and written offers in this example 

would be subject to the requirement that 

the employee receive at least 10 

business days to consider the offer). 

Proposed § 9.12(b)(4) stated that the 

employment offer may be for a different 

job position on the successor contract. 

More specifically, the proposed 

provision stated that an offer of 

employment on the successor’s contract 

would generally be presumed to be a 

bona fide offer of employment, even if 

it were not for a position similar to the 

one the employee previously held, if the 

offer were for a position for which the 

employee is qualified. If a question 

arose concerning an employee’s 

qualifications, that question would be 

decided based upon the employee’s 

education and employment history, 

with particular emphasis on the 

employee’s experience on the 

predecessor contract. Under the 

proposed language of § 9.12(b)(4), a 

contractor could only base its decision 

regarding an employee’s qualifications 

on reliable information provided by a 

knowledgeable source, such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. For example, an oral 

or written outline of job duties or skills 

used in prior employment, school 

transcripts, or copies of relevant 

certificates and diplomas would be 

credible information. 

Regarding proposed § 9.12(b)(4), the 

Coalition commented that the successor 

should only be able to rely upon 

information a predecessor kept in the 

regular course of business to determine 

an employee’s qualifications. In 

considering this comment, the 

Department notes that adopting this 

approach might unnecessarily limit 

reliance on sources of information that 

could otherwise lead to employment 

opportunities for predecessor 

employees, as well as impose a 

potentially difficult burden on 

successors to determine which of its 

predecessors’ records were kept in the 

‘‘regular course of business.’’ For this 

reason, the Department declines to 

adopt this suggestion, and the final rule 

adopts § 9.12(b)(4) as proposed. 

Proposed § 9.12(b)(5) stated that the 

offer of employment may be to a 

position providing different terms and 

conditions of employment than those 

the employee held with the predecessor 

contractor, where the difference is not 

related to a desire that the employee 

refuse the offer, or a desire that other 

employees be hired. The Coalition 

commented that the final regulations 

should establish a presumption that an 

offer is not bona fide if positions are 

available under the successor contract 

with similar or better terms and 

conditions for which an employee is 

qualified, but the successor only makes 

an employee an offer for a position with 

worse terms or conditions. However, as 

discussed below regarding § 9.12(d)(2), 

when a contractor reduces the number 

of contract positions in an occupation, 

that provision already would require the 

contractor to scrutinize each employee’s 

qualifications ‘‘to offer the greatest 

possible number of predecessor contract 

employees positions equivalent to those 

held under the predecessor contract.’’ 

Given this framework, the Department 

believes the rule provides sufficient 

safeguards as proposed. 

The Department also proposed 

language in § 9.12(b)(5) that addressed 

terms and conditions related to remote 

work or telework. Under proposed 

§ 9.12(b)(5), if a successor contractor 

places limitations on telework or remote 

work for predecessor employees that it 

did not consistently place on other, 

similarly situated workers, that could 

indicate that those limitations are 

intended to cause the predecessor 

employees to refuse the offer, and thus, 

would likely be impermissible. 

Accordingly, under proposed 

§ 9.12(b)(5), where the successor 

contractor had or will have had any 

employees who work or will work 

entirely in a remote capacity, and the 

successor contractor has employment 

openings on the successor contract in 

the same or similar occupational 

classifications as the positions held by 

those successor employees, the 

successor contractor’s employment offer 

to qualified predecessor employees for 

such openings would be required to 

include the option of remote work 

under reasonably similar terms and 

conditions. The proposed language was 

based on the premise that such 

employment, where permitted on a 

successor contract and consistent with 

security and privacy requirements, 

would generally assist with workforce 

carryover, even in circumstances where 

the location of contract performance is 

changing. 

The Coalition supported the 

Department’s provision in proposed 

paragraph 9.12(b)(5) regarding remote 

work, while PSC voiced concerns. PSC 

commented that the proposed provision 

should be revised to require offers of 

remote work only when the successor 

contractor allows any worker in the 

same or similar classification to work 

remotely in performing on the same 

Federal contract, rather than permitting 

comparisons with any of the successor’s 

employees who are not working on that 

contract, because different types of 

contracts might involve different 

requirements. PSC further commented 

that because specific constraints, such 

as employees working in differing time 

zones, might interfere with contract 

performance, remote work should only 

be offered consistent with the 

requirements of the contract and its 

deliverables, and then no more than in 

proportion to the percentage of 

employees who worked remotely under 

predecessor contracts or other successor 

contracts. In response, the Department 

notes that where material differences 


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between employees’ job requirements 

on different contracts result in workers 

under each contract working in 

dissimilar occupational classifications, 

then these employees would (under the 

language of § 9.12(b)(5) as proposed) not 

be apt comparators for purposes of 

determining whether a contractor has 

limited remote work in order to 

discourage predecessor employees from 

accepting an offer. Furthermore, the 

proposed rule provided that even when 

the successor is required to offer the 

option of remote work, the successor’s 

obligation is subject to the qualifier that 

successor contractors are only required 

to offer remote work to employees of the 

predecessor under ‘‘reasonably similar 

terms and conditions.’’ Thus, where a 

contractor’s existing workers are granted 

remote work only as an accommodation, 

pursuant to certain preconditions, or 

subject to limitations that workers will 

be available during certain hours 

(defined in relation to a particular time 

zone), then that contractor could also 

place the same limitations on the remote 

working conditions of any predecessor 

employee—so long as the contractor’s 

intent was not to evade the 

nondisplacement mandates of the 

Executive order. Finally, PSC’s 

suggestion that the requirement for 

remote work be limited to certain 

percentages of the workforce would 

allow successor contractors to impose 

limits on remote work that are 

inconsistent with the Executive order. 

Thus, the Department declines to adopt 

all of PSC’s suggested change in the 

final rule, but has made edits in order 

to clarify that successor contractors may 

change remote working arrangements 

based on a legitimate business rationale. 

As already discussed in relation to 

§ 9.11(c), regarding location continuity, 

remote work plays a recognized role in 

the efficacy of federal contracting. Given 

the significance of remote work in 

avoiding potential workforce 

disruptions, absent a legitimate 

operational rationale, a contractor that 

eliminates the remote working 

arrangements under which employees 

successfully performed their jobs during 

the predecessor contract, or who does 

not offer employees of the predecessor 

contractor remote working arrangements 

available to other employees, should be 

presumed to be doing so to circumvent 

the Executive order. This is because, as 

is evident from the importance placed 

on location continuity considerations in 

the Executive order, enabling an 

employee to work in the same general 

place where they have worked before 

(be it in a particular commuting area or 

in their own home, remotely) is often a 

key factor in the retention of an 

experienced and well-trained workforce. 

See 86 FR at 66397–99. 

Therefore, while largely adopting the 

final rule language regarding terms and 

conditions as proposed, the Department 

amends § 9.12(b)(5) to clarify that a 

successor may offer different remote 

working arrangements than those the 

employee held with the predecessor 

contractor, so long as the change is not 

made for the purpose of discouraging 

acceptance of offers to work on the 

successor contract. In other words, a 

successor contractor may not 

capriciously end a predecessor’s remote 

working arrangements without 

contravening the requirements of the 

Executive order and this final rule. 

Likewise, the final rule reflects that a 

contractor must generally—absent a 

legitimate operational rationale to do 

otherwise—offer remote work to 

predecessor employees on a reasonably 

similar basis as it does for its other 

employees in the same or similar 

occupational classifications. This use of 

a rebuttable presumption framework is 

appropriate because successor 

contractors possess the information 

necessary to articulate and substantiate 

an operational reason for limiting 

remote working arrangements. 

Requiring contractors to support and 

justify their decisions in this context 

will enable the Department and 

interested parties to evaluate whether or 

not declining to offer remote working 

arrangements was intended to 

circumvent the nondisplacement 

requirement. 

In § 9.12(b)(6), the Department 

proposed to repeat, in part, the 

statement in section 3(b) of Executive 

Order 14055 that nothing in the order 

should be interpreted as requiring or 

recommending that contractors, 

subcontractors, or contracting agencies 

pay relocation costs for employees of 

predecessor contractors hired pursuant 

to their exercise of their rights under the 

order. See 86 FR at 66398. The 

Department proposed similar language, 

directed at contracting agencies 

specifically, in § 9.11(c)(3). The 

Department noted that this language 

would not forbid the voluntary payment 

of relocation expenses or the payment of 

any such expenses if they are otherwise 

required by contract or law. No 

comments were received regarding 

§ 9.12(b)(6), and the final rule adopts 

§ 9.12(b)(6) as proposed. 

Proposed § 9.12(b)(7) provided that 

where an employee is terminated under 

circumstances suggesting the offer of 

employment may not have been bona 

fide, the facts and circumstances of the 

offer and the termination would be 

closely examined to determine whether 

the offer was bona fide. No comments 

were received regarding § 9.12(b)(7), and 

the final rule adopts § 9.12(b)(7) as 

proposed. 

Proposed § 9.12(b)(8) provided 

requirements for successor contractors 

when the contracting agency 

retroactively incorporates the 

nondisplacement clause into a contract 

after the successor contractor has 

already begun performance on the 

contract. Pursuant to proposed § 9.11(f), 

when the nondisplacement contract 

clause is erroneously excluded from a 

contract, contracting agencies may be 

required to retroactively incorporate it, 

depending on the circumstances. Upon 

retroactive incorporation, the successor 

contractor would be required to offer a 

right of first refusal of employment to 

the employees on the predecessor 

contract in accordance with the 

requirements of Executive Order 14055 

and this part. Proposed § 9.12(b)(8) also 

provided requirements where the 

omitted contract clause has been 

incorporated only prospectively. In such 

cases, the successor contractor and its 

subcontractors would only be required 

to provide employees on the 

predecessor contract a right of first 

refusal for any positions that remain 

open. Regardless of whether 

incorporation of the contract clause is 

retroactive or prospective, in the event 

of an employment opening within 90 

calendar days of the first date of 

contract performance, under proposed 

§ 9.12(b)(8) the successor contractor and 

its subcontractors would be required to 

provide the nondisplacement right of 

first refusal to employees from the 

predecessor contract. The Department 

stated that these requirements struck an 

appropriate balance between the 

interests of the employees on the 

predecessor and successor contracts. 

In the final rule, the Department 

slightly modifies the language of 

§ 9.12(b)(8) for clarity and consistency 

with the final text of § 9.11(f), which is 

being amended, as discussed in section 

II.B.7.vii. above. In § 9.12(b)(8), the 

Department is replacing the proposed 

phrase ‘‘the Administrator has not 

exercised their discretion and required 

only prospective incorporation of the 

contract clause’’ with the phrase ‘‘the 

Administrator has required only 

prospective application of the contract 

clause.’’ The Department has also 

modified the phrase in the title of this 

paragraph from ‘‘[r]etroactive 

incorporation of contract clause’’ to 

‘‘[p]ost-award incorporation of omitted 

contract clause’’ because the paragraph 

also addresses contractor obligations 

when the contract clause is incorporated 


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only prospectively. For clarity and 

consistency with the definition of 

‘‘employment opening,’’ the Department 

has also replaced the phrase ‘‘positions 

become vacant’’ with the phrase ‘‘of an 

employment opening.’’ Other than the 

modifications described above, the final 

rule adopts § 9.12(b)(8) as proposed. 

iii. Section 9.12(c) Contractor 

Exceptions 

Proposed § 9.12(c) addressed the 

exceptions to the general obligation to 

offer employment under Executive 

Order 14055. As proposed, these 

exceptions detailed circumstances in 

which, although a contract or 

subcontract as a whole is covered by the 

nondisplacement requirements, a 

contractor or subcontractor would not 

need to make a bona fide offer of 

employment to certain employees. 

These proposed exceptions were 

therefore distinct from the ‘‘exceptions 

authorized by agencies’’ detailed in 

proposed § 9.5, which explained the 

circumstances in which contracts as a 

whole may be excepted from coverage 

through the actions of a contracting 

agency. As stated in the NPRM, the 

contractor bears the burden of proof 

regarding the appropriateness of 

claiming any exception in § 9.12(c). 

At the outset of § 9.12(c) in the final 

rule, for clarity, the Department is 

changing the phrase ‘‘[t]he successor 

contractor is responsible for 

demonstrating the applicability of the 

following exceptions to the 

nondisplacement provisions subject to 

this part,’’ to ‘‘[t]he successor contractor 

is responsible for demonstrating the 

applicability of the following exceptions 

to the nondisplacement provisions in 

this part.’’ 

As proposed under § 9.12(c)(1), a 

successor contractor or subcontractor 

would not be required to offer 

employment to any employee of the 

predecessor whom the predecessor 

contractor is retaining. However, the 

successor contractor would be required 

to presume that all employees working 

under a predecessor’s Federal service 

contract would be terminated as a result 

of the award of the successor contract, 

unless the successor contractor could 

demonstrate a reasonable belief to the 

contrary, based upon reliable 

information provided by a 

knowledgeable source, such as the 

predecessor contractor, the employee, or 

the contracting agency. No comments 

were received regarding § 9.12(c)(1). 

Other than modifying the phrase ‘‘hired 

to work’’ to ‘‘working’’ to clarify which 

employees are referenced, the final rule 

adopts § 9.12(c)(1) as proposed. 

Under proposed § 9.12(c)(2), the 

successor contractor or subcontractor 

would not be required to offer 

employment to any worker on the 

predecessor contract who is not a 

service employee, as defined by § 9.2. 

Consistent with proposed § 9.2, this 

exception would apply to individuals 

employed on the predecessor contract in 

a bona fide executive, administrative, or 

professional capacity, as those terms are 

defined in 29 CFR part 541. The 

successor contractor would be required 

to presume that all workers are service 

employees if they appear on the list of 

service employees the predecessor 

contractor is required to provide by 

proposed § 9.12(e) (or have 

demonstrated they should have been 

included on the list). However, the 

successor contractor would be permitted 

to conclude that the list included nonservice employees (and thus decline to 

offer those non-service employees 

employment) based upon reliable 

information provided by a 

knowledgeable source, such as the 

predecessor contractor, the employee, or 

the contracting agency. Information 

regarding the general business practices 

of the predecessor contractor or the 

industry would not be considered 

sufficient for purposes of the proposed 

exception. No comments were received 

regarding § 9.12(c)(2), and the final rule 

adopts it as proposed, other than 

modifying the phrase ‘‘hired to work’’ to 

‘‘working’’ to clarify which employees 

are referred to. 

Consistent with paragraph (b) of the 

contract clause in section 3(a) of the 

Executive order, § 9.12(c)(3) of the 

proposed rule reiterated that a successor 

contractor or subcontractor would not 

be required to offer employment to any 

employee of the predecessor contractor 

if the contractor or any of its 

subcontractors reasonably believed, 

based on reliable evidence of the 

particular employee’s past performance, 

that there would be just cause to 

discharge the employee if employed by 

the contractor or any subcontractors. 

See 86 FR at 66398. The proposed rule 

would require the successor contractor 

to presume that there was no just cause 

to discharge any employees, unless the 

contractor could demonstrate a 

reasonable belief to the contrary, based 

upon reliable evidence provided by a 

knowledgeable source, such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. 

For example, under the proposed rule, 

a successor contractor could 

demonstrate its reasonable belief that 

there would be just cause to discharge 

an employee through reliable written 

evidence that the predecessor contractor 

initiated a process to terminate the 

employee for conduct warranting 

termination prior to the expiration of 

the contract, but the termination process 

was not completed before the contract 

expired. Similarly, as the Department 

explained in the NPRM conclusive 

evidence that an employee on the 

predecessor contract engaged in 

misconduct warranting discharge, such 

as sexual harassment or serious safety 

violations, would provide the successor 

contractor with a reasonable belief that 

there would be just cause to discharge 

the employee, even if the predecessor 

contractor elected to impose discipline 

rather than discharge the employee. 

However, under the proposed language, 

written evidence that the predecessor 

contractor took disciplinary action 

against an employee for poor 

performance but stopped short of 

recommending termination would not 

generally constitute reliable evidence of 

just cause to discharge the employee. 

The determination that this exception 

applies would need to be made on an 

individual basis for each employee. 

Information regarding the general 

performance of the predecessor 

contractor or any subcontractors, or 

their respective workforces, would not 

be sufficient for purposes of this 

exception. The Department sought 

comment on whether there are other 

instances that would constitute just 

cause to discharge an employee that the 

Department should take into 

consideration to support the policy 

reflected in the Executive order. 

The Department received several 

comments on proposed § 9.12(c)(3). 

Laborers’ International Union of North 

America, Local Union 572 (LIUNA) 

suggested that the Department remove 

proposed § 9.12(c)(3) to exclude any 

performance-based exception from the 

final rule, asserting that any such 

exception is unnecessary and would 

lead to unfair hiring decisions and 

abuse, in particular for unionized 

workforces. The National Air Traffic 

Controllers Association (NATCA) 

suggested the Department modify the 

proposed rule to include a provision 

that would apply a predecessor 

contractor’s grievance arbitration and 

disciplinary action procedures 

contained in its collective bargaining 

agreement to the successor contractor 

when applying the section § 9.12(c)(3) 

exception. 

Several commenters also criticized 

proposed § 9.12(c)(3), as exemplified by 

the comment submitted by ABC, taking 

issue not only with the proposed rule 

but with the provisions of the Executive 

order, and arguing that it will be 


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difficult for incoming contractors to gain 

reliable information about the past 

performance of a predecessor’s 

employees, thereby requiring those 

contractors to hire unsuitable workers. 

Nakupuna also commented that it 

would be a challenge for successor 

contractors to obtain the level of 

evidence described in the proposed 

rule, which could result in the successor 

contractor being required to offer 

employment to employees with 

unsatisfactory performance, and 

asserted that providing information 

about the performance of current or 

previous employees could expose an 

employer to a wide range of legal 

liabilities. Nakupuna further suggested 

the Department clarify the definition of 

reliable evidence, provide specific 

examples, and establish methods for the 

successor contractor to obtain such 

evidence from the predecessor 

contractor or the contracting agency. 

PSC, suggesting ‘‘anecdotal’’ evidence 

should be considered ‘‘reliable,’’ 

commented that predecessors may not 

always disclose sensitive performance 

information about their employees, as 

requiring predecessor contractors to 

share reliable evidence of just cause to 

discharge an employee could, in some 

circumstances, conflict with laws 

protecting worker privacy. 

The Coalition generally supported the 

proposed exceptions to the obligation to 

offer a right of first refusal. The 

Coalition, however, expressed concern 

that a successor’s reliance upon a 

predecessor contractor’s unfinished 

termination process could be considered 

‘‘reliable evidence’’ or ‘‘just cause’’ 

without requiring the successor to also 

obtain (in addition to the bare fact that 

a termination process has commenced) 

reliable evidence that the predecessor’s 

proposed termination was supported by 

just cause. AFL–CIO also generally 

supported the just cause requirement, 

but similarly commented that the 

predecessor’s mere initiation of a 

termination process should not be 

considered sufficient evidence of just 

cause because additional information 

can be provided during a termination 

process that can reduce the discharge to 

a lesser penalty or eliminate the penalty 

altogether. 

Some commenters, like Nakupuna, 

ABC, and PSC, suggested a framework 

that, in effect, would permit successor 

contractors to decline to offer 

employment under a highly 

discretionary standard based on 

contractors’ assessments of past 

performance. Other commenters, like 

LIUNA, advocated for elimination of 

any performance-based exception to the 

nondisplacement principles. The 

Department declines to make changes as 

suggested by commenters on either side 

of this question. Instead, the final rule 

seeks to advance the goals of the 

Executive order, which explicitly states 

that such just-cause-based decisions 

must be based upon reliable evidence, 

by focusing on the underlying evidence. 

See 86 FR at 66398. After considering 

the comments, the Department is 

modifying the language in proposed 

§ 9.12(c)(3)(ii)(A). The proposed 

provision stated: ‘‘[c]onversely, written 

evidence of disciplinary action taken for 

poor performance without a 

recommendation of termination would 

generally not constitute reliable 

evidence of just cause to discharge the 

employee.’’ The Department is 

modifying the provision to state that 

‘‘[w]ritten evidence related to 

disciplinary action taken without a 

recommendation of termination may 

constitute reliable evidence of just cause 

to discharge the employee, depending 

on the specific facts and 

circumstances.’’ This change allows the 

successor contractor to have greater 

discretion when considering a 

predecessor’s written disciplinary 

records in its just cause determination, 

but still requires the contractor to 

demonstrate that just cause for 

termination exists based on reliable 

evidence. This change in the language is 

also consistent with the proposed rule’s 

acknowledgement that some forms of 

misconduct, such as severe sexual 

harassment, may be just cause for 

termination even if they did not result 

in termination of employment by the 

predecessor contractor. 

The Department also declines to 

require successor contractors to adhere 

to the due process procedures of their 

predecessors’ collective bargaining 

agreements in assessing past 

performance. The Executive order does 

not direct the imposition of such a 

requirement, and employees of the 

predecessor who have been wrongly 

denied an offer of employment can seek 

remedies provided consistent with the 

nondisplacement contract clause, as 

discussed further in § 9.21, regardless of 

whether they may have a right or ability 

to file a grievance under a collective 

bargaining agreement. The Department 

notes, however, that a contractor may 

not rely on Executive Order 14055 or its 

implementing regulations to circumvent 

any contractual obligations that it owes 

its employees, including those under a 

collective bargaining agreement. Nor 

does the order or the regulations 

supersede any obligations that a 

predecessor or successor contractor may 

have under the National Labor Relations 

Act. 

The Department also declines to add 

further discussion in the regulatory text 

regarding the meaning of ‘‘reliable 

evidence,’’ as successor employers are 

generally already aware that any 

evidence upon which evaluations of 

past performance are based must, in the 

event of any review pursuant to §§ 9.22 

and 9.34 of the rule, be sufficient to 

overcome the presumption (already 

stated explicitly in the proposed rule) 

that there is no just cause to discharge 

employees working on the predecessor 

contract during the last month of 

performance. As proposed, the language 

of the rule already permitted that such 

reliable evidence might come, for 

example, from the business records of 

the contracting agency, or from new 

statements supplied by other employees 

or other knowledgeable individuals; 

such evidence is not, as commenters 

like PSC and Nakupuna implied, only 

limited to a predecessor’s potentially 

confidential personnel files, thus 

negating those commenters’ calls for a 

provision protecting predecessor 

contractors who shared such 

confidential information. Finally, for 

greater clarity, the Department is 

moving the phrase ‘‘[t]his determination 

must be made on an individual basis for 

each employee. Information regarding 

the general performance of the 

predecessor contractor is not sufficient 

to claim this exception,’’ from 

§ 9.12(c)(3)(ii)(A) to § 9.12(c)(3)(ii), as 

that instruction applies broadly, and not 

only to the specific circumstances 

described in § 9.12(c)(3)(ii)(A). 

Pursuant to proposed § 9.12(c)(4), a 

contractor or subcontractor would not 

be required to offer employment to any 

employee who worked under both a 

predecessor’s Federal service contract 

and one or more nonfederal service 

contracts as part of a single job, 

provided that the employee was not 

deployed in a manner that was designed 

to avoid the purposes of the Executive 

order. The successor contractor would 

be required to presume that all 

employees hired to work under a 

predecessor’s Federal service contract 

did not work on one or more nonfederal 

service contracts as part of a single job 

unless the successor could demonstrate 

a reasonable belief to the contrary. 

Under the proposed rule, to be 

reasonable, such a belief should be 

based upon reliable evidence provided 

by a knowledgeable source, such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. Information 

regarding the general business practices 

of the predecessor contractor or the 


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industry would not be sufficient for 

purposes of this exception. Knowledge 

that contractors generally deploy 

workers to both Federal and other 

clients would not be sufficient for the 

successor to claim the exception, 

because such general practices may not 

have been observed on the particular 

predecessor contract. 

For example, statements from several 

employees that a janitorial contractor 

reassigned its workers who previously 

worked exclusively in a Federal 

building to both Federal and other 

private clients as part of a single job 

may indicate that the predecessor 

deployed workers to avoid the purposes 

of the nondisplacement provisions. 

Conversely, where the employees of the 

predecessor contractor were 

traditionally deployed to Federal and 

nonfederal service work as part of their 

job, and continued to do so on the 

predecessor contract, the successor 

would not be required to offer 

employment to the workers. 

The Coalition requested the 

Department modify the language in 

proposed § 9.12(c)(4)(i), regarding 

nonfederal work, by replacing 

‘‘working’’ with ‘‘hired to work,’’ 

pointing out, among other arguments, 

that such a change would more 

consistently track the language of the 

Executive Order 14055. After 

consideration of the comment, the final 

rule adopts § 9.12(c)(4) as proposed, 

other than changing the phrase 

‘‘working’’ to ‘‘hired to work,’’ in 

accordance with the language used in 

section 4(b) of the order, as well as 

substituting the phrase ‘‘in a manner’’ 

for ‘‘in such a way,’’ in § 9.12(c)(4)(iii) 

for clarity. 

iv. Section 9.12(d) Reduced Staffing 

Proposed § 9.12(d) addressed the 

provision in paragraph (a) of Executive 

Order 14055’s contract clause that 

allows the successor contractor to 

reduce staffing. Proposed § 9.12(d)(1) 

recognized that the contractor or 

subcontractor may determine the 

number of employees necessary for 

efficient performance of the contract 

and, for bona fide staffing or work 

assignment reasons, permitted the 

successor contractor or subcontractor to 

elect to employ fewer employees than 

the predecessor contractor employed in 

performance of the work. Thus, 

generally, the successor contractor 

would not be required to ensure offers 

of employment on the contract to all 

employees on the predecessor contract, 

but would be required to ensure offers 

of employment to the number of eligible 

employees the successor contractor 

believes would be necessary to meet its 

anticipated staffing pattern. Where a 

successor contractor does not offer 

employment to all the predecessor 

contract employees, the obligation to 

offer employment would continue for 90 

calendar days after the successor 

contractor’s first date of performance on 

the contract. The contractor’s obligation 

under this part would end either when 

all of the predecessor contract 

employees have received a bona fide job 

offer or when 90 calendar days have 

passed from the successor contractor’s 

first date of performance on the 

contract. The proposed regulation 

provided several examples to 

demonstrate the principle. 

A successor prime contractor may 

choose to use a different configuration 

of subcontractors than the predecessor 

prime contractor, but any change in the 

number of subcontractors or the scope 

of work that particular subcontractors 

perform would not alter the 

requirements of Executive Order 14055 

and this part. Consistent with proposed 

§ 9.13, a prime contractor would be 

responsible for ensuring that all 

qualified service employees working 

under the predecessor contract (whether 

they were employed directly by the 

predecessor prime contractor or by any 

subcontractors working under the 

predecessor contract) receive an offer of 

employment under the successor 

contract in accordance with the 

requirements of the Executive order and 

this part. Where a prime successor 

contractor chooses to use 

subcontractors, the prime contractor 

would be responsible for ensuring that 

any of its subcontractors and lower-tier 

subcontractors offer employment to 

service employees employed under the 

predecessor contract (including the 

predecessor subcontracts) in accordance 

with the requirements of the order and 

this part. Where a prime successor 

contractor chooses to subcontract less of 

the contract work than the prime 

predecessor contractor did, and instead 

chooses to employ more workers 

directly, the prime successor contractor 

would be required to offer direct 

employment to the number of eligible 

service employees employed under the 

predecessor contract (including workers 

employed by predecessor 

subcontractors) necessary to meet the 

prime successor contractor’s anticipated 

staffing pattern and as otherwise 

required by the order and this part. The 

Department did not receive comments 

on § 9.12(d)(1) and the final rule adopts 

§ 9.12(d)(1) as proposed. 

Proposed § 9.12(d)(2) acknowledged 

that in some cases a successor 

contractor may reconfigure the staffing 

pattern to increase the number of 

employees employed in some positions 

while decreasing the numbers employed 

in others. In such cases, proposed 

§ 9.12(d)(2) would require the contractor 

to examine the qualifications of each 

employee in order to offer the greatest 

possible number of predecessor contract 

employees positions equivalent to those 

they held under the predecessor 

contract, thereby minimizing 

displacement. The proposed regulation 

provided examples to demonstrate this 

principle. 

Nakupuna stated that this provision 

would impose restrictions on a 

successor contractor’s ability to reduce 

staff. Section 9.12(d)(1) allows a 

successor contractor to determine the 

number of employees necessary for 

efficient performance of the contract or 

subcontract (and, for bona fide staffing 

or work assignment reasons, to elect to 

employ fewer employees than the 

predecessor contractor employed in 

connection with performance of the 

work), while § 9.12(d)(2) provides 

safeguards to ensure that reductions in 

staff or changes to staffing patterns are 

made in a way that minimizes the 

displacement of predecessor contract 

employees. The Department believes 

these safeguards are necessary to fulfill 

the nondisplacement goals of the 

Executive order, and that they still 

provide flexibility for a successor 

contractor to make staffing decisions in 

pursuit of efficient performance of the 

contract. Thus, the final rule adopts 

§ 9.12(d)(2) as proposed. 

Proposed § 9.12(d)(3) clarified that, 

subject to provisions of this part and 

other applicable restrictions (including 

non-discrimination laws and 

regulations), the successor contractor 

would be permitted to determine to 

whom it will offer employment. 

Consistent with proposed § 9.1(b), this 

paragraph is not to be construed to 

excuse noncompliance with any 

applicable Executive order, regulation, 

or Federal, state, or local laws. For 

example, a contractor could not use this 

provision to justify unlawful 

discrimination against any worker. 

While WHD would not make 

determinations regarding Federal 

contractors’ compliance with 

nondiscrimination requirements 

administered by other agencies, a 

finding by the Department’s Office of 

Federal Contract Compliance Programs, 

another agency, or a court that a 

contractor has unlawfully discriminated 

or retaliated against a worker would be 

considered in determining whether the 

contractor’s action or omission also 

violated the nondisplacement 

requirements. 


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Regarding § 9.12(d)(3), the Coalition 

commented that when all the 

predecessor employees cannot be hired, 

the successor contractor’s offer of a right 

of first refusal should be based on 

seniority and length of service under the 

current and predecessor contractor for 

the same or similar service at the same 

location. The Department declines to 

adopt this change because the Executive 

order provides that employment be 

offered to qualified predecessor 

employees, without prescribing the 

criteria to be used when selecting 

among qualified workers to fill a 

reduced number of positions. See 86 FR 

at 66397. Establishing a bright-line 

requirement that a single criterion (such 

as seniority) must be used when a 

contractor is selecting among qualified 

employees could preclude employers 

from using a number of other legitimate 

factors (such as skills, prior experience, 

and cross-training) that successor 

contractors may wish to consider in 

selecting among qualified employees in 

this context. For this reason, the final 

rule adopts proposed § 9.12(d)(3) 

without change. 

v. Section 9.12(e) Contractor Obligations 

Near End of Contract Performance 

Proposed § 9.12(e) specified an 

incumbent contractor’s obligations near 

the end of the contract; these 

requirements would work in tandem 

with the requirements at § 9.11(d). As 

proposed, § 9.12(e)(1) would require a 

contractor to, no fewer than 30 calendar 

days before completion of the 

contractor’s performance of services on 

a contract, furnish the contracting 

officer a list of the names of all service 

employees under the contract and its 

subcontracts at that time. Proposed 

§ 9.12(e)(1) would require this list to 

also contain the anniversary dates of 

employment for each service employee 

on the contract with either the current 

or predecessor contractors or their 

subcontractors. A service employee 

would be considered employed under 

the contract even if they are in a leave 

status with the predecessor prime 

contractor or any of its subcontractors, 

whether paid or unpaid, and whether 

for medical or other reasons, during the 

last month of contract performance. To 

meet this provision, proposed 

§ 9.12(e)(1) would allow a contractor to 

use the list it submits or that it plans to 

submit to satisfy the requirements of the 

SCA contract clause specified at 29 CFR 

4.6(l)(2), assuming there are no changes 

to the workforce before the contract is 

completed. 

Where changes to the workforce are 

made after the submission of the 30-day 

certified list, proposed § 9.12(e)(2) 

would require a contractor to furnish 

the contracting officer with an amended 

certified list of the names of all service 

employees working under the contract 

and its subcontracts during the last 

month of contract performance not 

fewer than10 business days before 

completion of the contract. Proposed 

§ 9.12(e)(2) would require this list to 

include the anniversary dates of 

employment with either the current or 

predecessor contractors or their 

subcontractors. The contractor could 

use the list submitted to satisfy the 

requirements of the SCA contract clause 

specified at 29 CFR 4.6(l)(2) to meet this 

requirement. 

The Department received an 

anonymous comment suggesting that 

the burden on the incoming contractor 

could be lessened if they did not have 

to search for employees employed under 

the predecessor contract but were 

instead provided contact information for 

the employees such as phone numbers, 

email addresses, or mailing addresses. 

The Department agrees with that 

recommendation, especially as the 

burden of this change on predecessor 

contractors will be minimal in light of 

the existing requirement that contractors 

maintain records of addresses pursuant 

to 29 CFR 4.6(g)(1)(i). Accordingly, the 

Department is modifying proposed 

§ 9.12(e)(1) and (e)(2) to require 

predecessor contractors to list (in 

addition to names and anniversary 

dates) mailing addresses, and, if known, 

email addresses and phone numbers of 

the employees. The Department is also 

modifying § 9.12(e)(2) to remove the 

phrase ‘‘and, where applicable, dates of 

separation’’ from the information that 

must be included in the certified list of 

employees provided 10 days before 

contract completion, as this phrasing 

was unclear, and because where an 

employee is no longer employed by the 

predecessor 10 days before contract 

completion, that employee’s name 

would simply not appear on that list. 

The Department is also inserting 

‘‘business’’ before ‘‘days’’ for clarity. 

The Department also received an 

anonymous comment suggesting that 

bidding on a contract without knowing 

the seniority level of workers is 

difficult. The Department notes that 

under the SCA, successor contractors 

are specifically provided the list of 

employees’ dates of employment at the 

commencement of the successor 

contract pursuant to 29 CFR 4.6(l)(2). 

The commenter appeared to be 

suggesting a mandatory timeframe to 

communicate this information that 

would be earlier than this established 

regulation. The final rule does not adopt 

the suggestion to require earlier 

provision of a seniority list, because, for 

purposes of the Executive order, the 

provision of the list is meant to facilitate 

the communication of offers to 

employees and is not meant to 

otherwise influence the bidding process 

or the established rules and timeframes 

of the SCA. After considering the 

comments, the final rule adopts 

§ 9.12(e)(1) and (e)(2) as proposed other 

than the modifications discussed. 

Proposed § 9.12(e)(3) would require 

the predecessor contractor to, before 

contract completion, provide written 

notice to service employees employed 

under the predecessor contract of their 

possible right to an offer of employment 

on the successor contract. Such notice 

would be required to be posted in a 

conspicuous place at the worksite and/ 

or delivered to employees individually. 

The text of the proposed notice was set 

forth in Appendix B to part 9. The 

Department intends to translate the 

notice into several common languages 

and make the English and translated 

versions available online in a poster 

format to allow easy access. Language 

clarifying that another form with the 

same information could be used was 

added to the regulatory text. Proposed 

§ 9.12(e)(3) further explained that where 

the predecessor contractor’s workforce 

is comprised of a significant portion of 

workers who are not fluent in English, 

the notice would be required to be 

provided in both English and a language 

in which the employees are fluent. 

Multiple language notices would be 

required to be provided where 

significant portions of the workforce 

speak different languages and there is 

no common language. If, for example, a 

significant portion of a workforce speaks 

Korean and another significant portion 

of the same workforce speaks Spanish, 

then the information would need to be 

provided in English, Korean, and 

Spanish. If there is a question of 

whether a portion of the workforce is 

significant and the Department has a 

poster in the language common to those 

workers, the notice should be posted in 

that language. 

The Department solicited comments 

on whether it should establish a 

percentage threshold for determining 

what constitutes a ‘‘significant portion 

of the workforce.’’ In response to this 

question, the Coalition suggested that 

the Department impose a requirement 

consistent with their recommendation 

regarding § 9.12(b)(3) to provide notice 

in a language that each worker 

understands. As this worker-specific 

requirement would impose costs on the 

contractor regardless of whether a 

significant portion of the workforce 

required such translations, and as the 


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Department is modifying § 9.12(b)(3) to 

require that all offers be made in writing 

(making it possible for members of the 

workforce to themselves obtain a 

translation of the offer document), the 

Department declines this suggested 

change. Therefore, the final rule adopts 

§ 9.12(e)(3) as proposed, other than, for 

clarity, changing the heading of 

§ 9.12(e)(3) from ‘‘Notices’’ to the more 

specific ‘‘Notices to employees of 

possible right to offers of employment 

on successor contract,’’ and adding 

cross references to other employee 

notice provisions at § 9.5(f) (relating to 

agency exceptions) and § 9.11(c) 

(relating to location continuity). 

vi. Section 9.12(f) Recordkeeping 

Proposed § 9.12(f) addressed 

recordkeeping requirements. Proposed 

§ 9.12(f)(1) clarified that this part would 

prescribe no particular order or form of 

records for contractors, and that the 

recordkeeping requirements would 

apply to all records regardless of their 

format (e.g., paper or electronic). A 

contractor would be allowed to use 

records developed for any purpose to 

satisfy the requirements of part 9, 

provided the records otherwise meet the 

requirements and purposes of this part. 

No comments were received on 

§ 9.12(f)(1), and the final rule adopts 

§ 9.12(f)(1) as proposed. 

As proposed, § 9.12(f)(2) specified the 

records contractors must maintain, 

including copies of any written offers of 

employment. Proposed § 9.12(f)(2) also 

would require contractors to maintain a 

copy of any record that forms the basis 

for any exclusion or exception claimed 

under this part, the employee list 

provided to the contracting agency, and 

the employee list received from the 

contracting agency. In addition, every 

contractor that makes retroactive 

payment of wages or compensation 

under the supervision of WHD pursuant 

to proposed § 9.23(b) would be required 

to record and preserve as an entry in the 

pay records the amount of such 

payment to each employee, the period 

covered by the payment, and the date of 

payment to each employee, and to 

report each such payment through a 

method of documentation authorized by 

WHD. Finally, proposed § 9.12(f)(2) 

would require contractors to maintain 

evidence of any notices that they 

provide to workers, or workers’ 

collective bargaining representatives, to 

satisfy the requirements of the order or 

these regulations. These would include 

records of notices of the possibility of 

employment on the successor contract 

required under § 9.12(e)(3) of the 

regulations; notices of agency 

exceptions that a contracting agency 

requires a contractor to provide to 

affected workers and their collective 

bargaining representatives under § 9.5(f) 

of the regulations and section 6(b) of the 

Executive order; and notices to 

collective bargaining representatives of 

the opportunity to provide information 

relevant to the contracting agency’s 

location continuity determination in the 

solicitation for a successor contract, 

pursuant to § 9.11(c)(4) of the 

regulations. WHD would use the records 

that are retained pursuant to § 9.12(f)(2) 

in determining a contractor’s 

compliance with the order and this part. 

All contractors would be required to 

retain the records listed in proposed 

§ 9.12(f)(2) for at least 3 years from the 

date the records were created and to 

provide copies of such records upon 

request of any authorized representative 

of the contracting agency or the 

Department. 

As discussed above in relation to 

§ 9.12(b)(3), in response to comments 

recommending all offers be made in 

writing, the Department is adding such 

a requirement to § 9.12(b)(3). Therefore, 

the Department is modifying 

§ 9.12(f)(2)(ii) to remove reference to 

records related solely to oral offers, 

including removing the requirement for 

a contemporaneous written record of 

any oral offers of employment. The 

Department is also clarifying that copies 

of written offers must include the date 

of the offer. The Coalition was generally 

supportive of the proposed 

recordkeeping requirements, 

commenting that the requirements were 

similar to other requirements with 

which contractors are already required 

to comply. However, the Coalition also 

commented that the Department should 

require successor contractors to 

proactively report the number of 

employees they retained from the 

predecessor contract. The Department 

declines to add another procedural 

requirement to successor contractors in 

light of the other mechanisms provided 

by the rule for employees and the 

contracting agency to detect 

noncompliance. Finally, to conform to 

the final version of § 9.11(c), § 9.12(f)(2) 

was revised to require keeping records 

of notices to collective bargaining 

representatives regarding the provision 

of information related to the agency’s 

location continuity determination. 

Additionally, § 9.12(f)(2)(iii) was edited 

to twice replace the phrase ‘‘the 

employee list’’ with ‘‘any employee list’’ 

to clarify that contractors must maintain 

copies of any applicable list required by 

§ 9.12(e). Other than the modifications 

discussed above, the final rule adopts 

§ 9.12(f)(2) as proposed. 

vii. Section 9.12(g) Investigations 

Proposed § 9.12(g) outlined the 

contractor’s obligations to cooperate 

during any investigation to determine 

compliance with part 9 and to not 

discriminate against any person because 

such person has cooperated in an 

investigation or proceeding under part 9 

or has attempted to exercise any rights 

afforded under part 9. As proposed, this 

obligation to cooperate with 

investigations would not be limited to 

investigations of the contractor’s own 

actions, but also included investigations 

related to other contractors (e.g., 

predecessor and successor contractors) 

and subcontractors. The Department did 

not receive any comments regarding this 

proposed provision and the final rule 

adopts § 9.12(g) without change. 

8. Section 9.13 Subcontracts 

Proposed § 9.13(a) discussed the 

responsibilities and liabilities of prime 

contractors and subcontractors with 

respect to subcontractor compliance 

with the nondisplacement clause. The 

proposed section stated that prime 

contractors would be required to ensure 

the inclusion of the nondisplacement 

clause contained in Appendix A in any 

subcontracts and would require any 

subcontractors to include the 

nondisplacement clause in any lowertier subcontracts. Requiring that the 

contract clause be inserted in all 

subcontracts, including lower-tier 

subcontracts, would serve to notify a 

subcontractor of their obligation to 

provide employees the right of first 

refusal and of the enforcement methods 

WHD may use when a subcontractor is 

found to be in violation of the Executive 

order, including the withholding of 

contract funds. 

Proposed § 9.13(a) also explained that 

the prime contractor would be 

responsible for the compliance of any 

subcontractor or lower-tier 

subcontractor with the contract clause. 

In the event of a violation of the contract 

clause, both the prime contractor and 

any subcontractor(s) responsible would 

be held jointly and severally liable. The 

prime contractor’s contractual liability 

for subcontractor violations would be a 

strict liability that would not require 

that the prime contractor knew of or 

should have known of the violations of 

any subcontractors. The requirements of 

this proposed section would prevent 

contractors from circumventing the 

requirements of part 9 by subcontracting 

the work to other contractors. Thus, the 

proposed section would help to ensure 

that all covered contractors and 

subcontractors of any tier are aware of 

and adhere to the requirements of 


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Executive Order 14055 and this part, 

and that employees receive the 

protections of the order and this part 

regardless of whether they are employed 

by the prime contractor or a 

subcontractor of any tier. 

Proposed § 9.13(b) explained a prime 

contractor’s responsibility to a 

subcontractor’s employees when it 

discontinues the services of a 

subcontractor at any time during the 

contract and performs those services 

itself. Specifically, under this proposed 

section, the prime contractor must offer 

employment to qualified employees of 

the subcontractor who would otherwise 

be displaced. 

The Department received one 

comment from the Coalition regarding 

proposed § 9.13. The Coalition strongly 

supported the proposed section, citing 

concerns about subcontractor oversight. 

The Coalition stated that holding the 

prime contractor responsible for the 

compliance of a subcontractor will 

increase compliance and promote 

clarity and consistency because 

contracting agencies have minimal 

direct interaction with subcontractors. 

The Department agrees with the 

Coalition’s comment that proposed 

§ 9.13 would increase compliance and 

promote greater clarity and consistency. 

The final rule adopts § 9.13 as proposed, 

with minor modifications to reference 

the FAR contract clause that will be 

required to be flowed down (instead of 

the clause in Appendix A) in contracts 

covered by the FAR. 

Subpart C—Enforcement 

9. Section 9.21 Complaints 

As part of the NPRM, the Department 

put forth a process for filing complaints 

in proposed § 9.21. Section 9.21(a) 

outlined the procedure to file a 

complaint with any office of WHD. It 

provided that a complaint may be filed 

orally or in writing and that WHD 

would accept a complaint in any 

language. Section 9.21(b) reiterated the 

well-established policy of the 

Department with respect to confidential 

sources. See 29 CFR 4.191(a); 29 CFR 

5.6(a)(5). The Department received a few 

comments related to proposed § 9.21. 

The Coalition indicated support for 

much of the proposed enforcement 

provisions in the NPRM. NATCA 

commented that the NPRM did not 

account for employees of a predecessor 

contractor who are represented by a 

union and covered by a collective 

bargaining agreement that contains 

grievance and arbitration provisions. 

Specifically, NATCA requested that the 

Department amend § 9.21 to include a 

new provision that would allow an 

employee of a predecessor contractor 

who was covered by a collective 

bargaining agreement and who was not 

offered employment by the successor 

contractor pursuant to proposed 

§ 9.12(c)(3) to raise the matter pursuant 

to the complaint process under § 9.21(a) 

or under the predecessor contractor’s 

collective bargaining agreement’s 

negotiated alternative dispute resolution 

procedure. This proposal is addressed 

above in the discussion of the ‘‘just 

cause’’ exception to the 

nondisplacement requirements in 

§ 9.12(c)(3). The Department declines to 

impose this requirement in the rule, but 

notes that a contractor may not rely on 

Executive Order 14055 or its 

implementing regulations to circumvent 

any contractual obligations that it owes 

its employees, including those under a 

collective bargaining agreement. Nor do 

the order or the regulations supersede 

any obligations that a predecessor or 

successor contractor may have under 

the National Labor Relations Act. 

After review of the comments, the 

final rule adopts § 9.21 as proposed. 

10. Section 9.22 Wage and Hour 

Division Investigation 

Proposed § 9.22(a) outlined WHD’s 

investigative authority. The Department 

proposed to permit the Administrator to 

initiate an investigation either as the 

result of a complaint or at any time on 

the Administrator’s own initiative. As 

part of an investigation, the 

Administrator would be able to inspect 

the relevant records of the relevant 

contractors (and make copies or 

transcriptions thereof) as well as 

interview representatives and 

employees of those contractors. The 

Administrator would additionally be 

able to interview any of the contractors’ 

workers at the worksite during normal 

work hours and require the production 

of any documents or other evidence 

deemed necessary for inspection to 

determine whether a violation of this 

part (including conduct warranting 

imposition of debarment pursuant to 

§ 9.23(d) of this part) has occurred. The 

section would also require Federal 

agencies and contractors to cooperate 

with authorized representatives of the 

Department in the inspection of records, 

in interviews with workers, and in all 

aspects of an investigation. The 

proposal was consistent with WHD’s 

investigative authority under other 

statutes and regulations administered by 

WHD. 

Proposed § 9.22(b) addressed 

subsequent investigations and would 

allow the Administrator to conduct a 

new investigation or issue a new 

determination if the Administrator 

concludes the circumstances warrant 

additional action. The proposed rule 

included examples of situations where 

additional action may be warranted, 

such as situations where proceedings 

before an Administrative Law Judge 

(ALJ) reveal that there may have been 

violations with respect to other 

employees of the contractor, where 

imposition of ineligibility sanctions is 

appropriate, or where the contractor has 

failed to comply with an order of the 

Secretary. 

As noted in the preamble discussing 

§ 9.21, the Coalition generally supported 

the proposed enforcement provisions in 

the NPRM. The Coalition, however, also 

recommended that Departmental 

investigations commence within 15 

days of receipt of a complaint and that 

if the Administrator finds that the 

complaint was not frivolously brought, 

that the Administrative Review Board 

have the ability to order the immediate 

reinstatement of the employee upon 

application of the Administrator 

pending final order on the complaint. 

The Coalition further requested 

clarifying language in § 9.22 that 

workers and their representatives have 

the same right to inspect and copy 

relevant contractor records, documents, 

or evidence as the Department has 

under proposed § 9.22. 

The Department considered these 

suggestions and the views of those who 

opined on enforcement provisions. The 

Department understands commenter 

concerns but declines to implement 

these changes. Specifically, the 

Department will not implement a 15- 

day requirement for Departmental 

action following the receipt of a 

complaint. Nothing in the Executive 

order requires that investigations 

commence within 15 days of receipt of 

a complaint. Such a stringent 

requirement could negatively affect 

other enforcement obligations of the 

Department. The Department believes 

that the complaint procedure as 

proposed will ensure effective 

enforcement of and compliance with the 

rule’s requirements. 

The Department also declines to add 

the suggested provision giving workers 

and their representatives the right to 

inspect and copy relevant contractor 

records, documents, or evidence in the 

same manner as the Department. The 

Department recognizes that worker 

cooperation with Wage and Hour 

investigations is critical to effective 

enforcement. The final rule provides 

procedures in § 9.21 for workers to file 

complaints and in § 9.32 for 

complainants to request hearings by an 

Administrative Law Judge in specified 

circumstances, which may include 


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discovery of relevant evidence. The rule 

also includes an antiretaliation 

provision at § 9.23(e) to protect workers 

who file a complaint, cooperate in an 

investigation, or otherwise pursue any 

rights under the order. The Department 

further declines to add the suggested 

provision giving the Administrative 

Review Board the ability to reinstate an 

employee on an expedited basis if the 

Administrator finds that a complaint 

was not frivolously brought. 

‘‘Reinstatement’’ for a particular 

employee may not always be an 

appropriate remedy, depending on the 

circumstances. However, § 9.23(a) does 

afford the Secretary the authority to 

require a contractor to offer employment 

in positions for which the employee is 

qualified, if warranted, and a contractor 

may be debarred for noncompliance 

with any order of the Secretary. 

The Department believes that the 

Administrator’s investigation process, as 

proposed, will achieve effective 

enforcement of Executive Order 14055. 

Thus, the Department declines to amend 

the language in proposed § 9.22(a) to 

mandate additional procedures and 

authorities during the investigation 

process. 

The Department did not receive any 

other comments addressing proposed 

§ 9.22 and the final rule adopts the 

provision as proposed. 

11. Section 9.23 Remedies and 

Sanctions for Violations of This Part 

Proposed § 9.23 discussed remedies 

and sanctions for violations of Executive 

Order 14055 and this part. Proposed 

§ 9.23(a) reiterated the authority granted 

to the Secretary in section 8 of Executive 

Order 14055, providing the Secretary 

the authority to issue orders prescribing 

appropriate sanctions and remedies, 

including, but not limited to, requiring 

the contractor to offer employment to 

employees from the predecessor 

contract and payment of wages lost. 

Proposed § 9.23(b) provided that, in 

addition to satisfying any costs imposed 

by an administrative order under 

proposed §§ 9.34(j) or 9.35(d), a 

contractor that violates part 9 would be 

required to take appropriate action to 

remedy the violation, which could 

include hiring the affected employee(s) 

in a position on the contract for which 

the employee is qualified, together with 

compensation (including lost wages and 

interest) and other terms, conditions, 

and privileges of that employment. 

Proposed § 9.23(b) also provided that 

the contractor would be required to pay 

interest on any underpayment of wages. 

As explained in the proposed rule, 

payment of interest is consistent with 

the instruction in section 8 of the 

Executive order that the Secretary will 

have the authority to issue final orders 

prescribing appropriate sanctions and 

remedies. The payment of interest on 

back-pay is an appropriate remedial 

measure to make a worker fully whole. 

The proposed language provided that 

interest would be calculated from the 

date of the underpayment or loss, using 

the interest rate applicable to 

underpayment of taxes under 26 U.S.C. 

6621, and would be compounded daily. 

As the proposed rule explained, various 

OSHA whistleblower regulations use 

the tax underpayment rate and daily 

compounding because that accounting 

best achieves the make-whole purpose 

of an employee receiving back-pay. See 

Procedures for the Handling of 

Retaliation Complaints Under Section 

806 of the Sarbanes-Oxley Act of 2002, 

as Amended, Final Rule, 80 FR 11865, 

11872 (Mar. 5, 2015). A similar 

approach is warranted in implementing 

Executive Order 14055. 

Proposed § 9.23(c) addressed the 

withholding of contract funds for 

noncompliance. Under proposed 

§ 9.23(c)(1), the Administrator would be 

able to direct that payments due on the 

contract or any other contract between 

the contractor and the Federal 

Government be withheld in such 

amounts as may be necessary to pay 

unpaid wages or to provide other 

appropriate relief. Proposed § 9.23(c)(1) 

permitted the cross-withholding of 

monies due. The proposed rule 

explained that cross-withholding is a 

procedure through which contracting 

agencies withhold monies due a 

contractor from contracts other than 

those on which the alleged violations 

occurred, and it applies to require 

withholding regardless of whether the 

contract on which monies are to be 

withheld is held by a different agency 

from the agency that held the contract 

on which the alleged violations 

occurred. The provision further 

provided that where monies are 

withheld, upon final order of the 

Secretary that unpaid wages or other 

monetary relief are due, the 

Administrator may direct that withheld 

funds be transferred to the Department 

for disbursement. Withholding, the 

proposed rule explained, is a longestablished remedy for a contractor’s 

failure to fulfill its labor standards 

obligations under the SCA. The SCA 

provides for withholding to ensure the 

availability of monies for the payment of 

back wages to covered workers when a 

contractor or subcontractor has failed to 

pay the full amount of required wages. 

29 CFR 4.6(i). The Department believes 

that withholding will be an important 

enforcement tool to effectively enforce 

the requirements of Executive Order 

14055. 

Proposed § 9.23(c)(2) similarly 

provided for the suspension of the 

payment of funds if the contracting 

officer or the Administrator finds that 

the predecessor contractor has failed to 

provide the required list of service 

employees working under the contract 

and its subcontracts as required by 

§ 9.12(e). Proposed § 9.23(c)(3) clarified 

that if the Administrator directs a 

contracting agency to withhold funds 

from a contractor pursuant to § 9.23(c), 

the Administrator or contracting agency 

must notify the affected contractor. 

Proposed § 9.23(d) provided for 

debarment from Federal contract work 

for up to 3 years for noncompliance 

with any order of the Secretary or for 

willful violations of Executive Order 

14055 or the regulations in this part. 

The proposed provision provided that a 

contractor would have the opportunity 

for a hearing before an order of 

debarment is carried out and before the 

contractor is included on a published 

list of contractors subject to debarment. 

The Department explained in the 

proposed rule that, like withholding, 

debarment is a long-established remedy 

for a contractor’s failure to fulfill its 

labor standard obligations under the 

SCA. 41 U.S.C. 6706(b); 29 CFR 

4.188(a). The possibility that a 

contractor will be unable to obtain 

government contracts for a fixed period 

of time due to debarment promotes 

contractor compliance with the SCA, 

and the Department expects such a 

remedy will enhance contractor 

compliance with Executive Order 14055 

as well. 

Proposed § 9.23(e) stated that the 

Administrator may require a contractor 

to provide any relief appropriate, 

including employment, reinstatement, 

promotion, and the payment of lost 

wages, including interest, when the 

Administrator finds that a contractor 

has interfered with the Administrator’s 

investigation or has in any manner 

discriminated against any person 

because they cooperated in the 

Administrator’s investigation or 

attempted to exercise any rights 

afforded them under this part. The 

Department believes that such a 

provision will help ensure effective 

enforcement of Executive Order 14055, 

as effective enforcement requires worker 

cooperation. Consistent with the 

Supreme Court’s observation in 

interpreting the scope of the FLSA’s 

antiretaliation provision, enforcement of 

Executive Order 14055 will depend 

‘‘upon information and complaints 

received from employees seeking to 


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vindicate rights claimed to have been 

denied.’’ Kasten v. Saint-Gobain 

Performance Plastics Corp., 563 U.S. 1, 

11 (2011) (internal quotation marks 

omitted). The antiretaliation provision 

is to be construed broadly to effectuate 

its remedial purpose. Importantly, and 

consistent with the Supreme Court’s 

interpretation of the FLSA’s 

antiretaliation provision, the rule, as 

proposed, would protect workers who 

file oral as well as written complaints. 

See Kasten, 563 U.S. at 17. The 

Department’s rule, as proposed, also 

would protect workers from retaliation 

for filing complaints—regardless of 

whether they are filed with their 

employer, a higher-tier subcontractor or 

prime contractor, or with the 

Department or another Federal agency— 

and from retaliation for otherwise taking 

reasonable action with the intent to seek 

compliance with or enforcement of the 

order. 

As explained in the proposed rule, 

while section 8 of the order authorizes 

the Secretary to prescribe appropriate 

sanctions and remedies, the Department 

does not interpret this affirmative 

direction to the Secretary to limit 

contracting agencies from employing 

any sanctions or remedies otherwise 

available to them under applicable law 

or to limit contracting agencies from 

including noncompliance with 

nondisplacement contractual or 

regulatory provisions in past 

performance reports. 

In its comment, the Coalition 

requested that the Department add 

liquidated damages in an amount equal 

to two times the amount of back pay 

owed as a remedy available to 

employees under this section. The 

Coalition explained that this suggestion 

is modeled, in part, on the remedies 

provision in the FLSA and that the 

possibility of treble damages will deter 

employer noncompliance and help 

cover the added expenses workers may 

incur. The Department believes that the 

remedies under this section, which 

include the payment of interest on back 

pay, reinstatement, withholding, 

debarment, and the suspension of the 

payment of contract funds, are sufficient 

to both make a worker whole and deter 

employers from noncompliance. For 

this reason, the Department declines to 

implement the Coalition’s suggestion to 

add liquidated damages as a remedy 

available to employees under this 

section. The Department did not receive 

any additional comments, and the final 

rule adopts § 9.23 as proposed. 

Subpart D—Administrator’s 

Determination, Mediation, and 

Administrative Proceedings 

12. Section 9.31 Determination of the 

Administrator 

Proposed § 9.31(a) provided that 

when an investigation is completed, the 

Administrator would issue a written 

determination of whether a violation 

occurred. A written determination 

would contain a statement of the 

investigation findings that would 

address the appropriate relief and the 

issue of debarment where appropriate. 

Notice of the determination would be 

sent by registered or certified mail to the 

parties’ last known address or by any 

other means normally ensuring delivery. 

Examples of such other means include, 

but are not limited to, email to the last 

known email address, delivery to the 

last known address by commercial 

courier and express delivery services, or 

personal service to the last known 

address. As highlighted during the 

COVID–19 pandemic, while registered 

or certified mail may generally be a 

reliable means of delivery, in some 

circumstances other delivery methods 

may be just as reliable or even more 

successful at ensuring delivery. This 

flexibility would allow the Department 

to choose methods to ensure that the 

necessary notifications are effectively 

delivered to the parties. 

Proposed § 9.31(b)(1) explained that 

where the Administrator concludes that 

relevant facts are in dispute, the notice 

of determination would advise that the 

Administrator’s determination becomes 

the final order of the Secretary and is 

not appealable in any administrative or 

judicial proceeding unless a request for 

a hearing is sent within 20 calendar 

days of the date of the Administrator’s 

determination, in accordance with 

proposed § 9.32(b)(1). Determining 

when a request for a hearing or any 

other notification under this section was 

sent would depend on the means of 

delivery, such as by the date stamp on 

an email or the delivery confirmation 

provided by a commercial delivery 

service. This proposed section also 

stated that such a request may be sent 

by letter or by any other means normally 

ensuring delivery and that a detailed 

statement of the reasons why the 

Administrator’s determination is in 

error, including the facts alleged to be 

in dispute, if any, must be submitted 

with the request for hearing. The 

proposed regulation further explained 

that the Administrator’s determination 

not to seek debarment is not appealable. 

The Department explained that 

proposed § 9.31(b)(2) would apply to 

situations where the Administrator has 

concluded that there are no relevant 

facts in dispute. In such cases, the 

Administrator would advise the parties 

and their representatives, if any, that the 

Administrator has concluded that no 

relevant facts are in dispute and that the 

determination would become the final 

order of the Secretary and would not be 

appealable in any administrative or 

judicial proceeding unless a petition for 

review is properly filed within 20 days 

of the date of the determination with the 

Administrative Review Board (ARB). 

The Administrator’s determination 

would also advise that if an aggrieved 

party disagrees with the Administrator’s 

factual findings or believes there are 

relevant facts in dispute, the party may 

advise the Administrator of the disputed 

facts and request a hearing by letter or 

by any other means normally ensuring 

delivery sent within 20 calendar days of 

the date of the Administrator’s 

determination. Upon such a request, the 

Administrator would either refer the 

request for a hearing to the Chief ALJ or 

notify the parties and their 

representatives of the Administrator’s 

determination that there are still no 

relevant issues of fact and that a petition 

for review may be filed with the ARB in 

accordance with proposed § 9.32(b)(2). 

The Department received one 

comment on this proposal, from the 

Coalition, which generally supported 

the proposed administrative process 

provisions in the proposed rule. 

However, the Coalition recommended 

that the Department amend § 9.31(b) to 

provide that the Administrator’s 

decision not to seek debarment be 

appealable. The Department considered 

this recommendation but declines to 

make this change. The Department 

believes that the Administrator’s 

decision not to seek debarment should 

not be appealable, as the Administrator 

must consider several factors that are 

particularly within their purview when 

determining if debarment is warranted, 

such as whether pursuing debarment is 

the best use of Departmental resources 

under the particular circumstances. 

Moreover, the Administrator’s decision 

not to pursue debarment should be left 

to the Administrator’s discretion, 

particularly given that the 

Administrator would necessarily be 

required to participate in such an 

appeal, that debarment cases are 

resource-intensive, and that debarment 

does not provide individual relief to a 

particular employee. These factors 

render debarment a distinct form of 

relief and warrant special consideration. 

The Department believes that this 

provision, as proposed, will achieve 

effective enforcement of Executive 


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Order 14055. Thus, the Department does 

not adopt the recommendation to make 

the Administrator’s decision not to 

debar appealable. 

The Department did not receive any 

other comments addressing proposed 

§ 9.31, and the final rule adopts the 

provisions as proposed. 

13. Section 9.32 Requesting Appeals 

Proposed § 9.32 provided procedures 

for requesting appeals. Proposed 

§ 9.32(a) provided that any party 

desiring review of the Administrator’s 

determination, including judicial 

review, must first request a hearing with 

an ALJ or file a petition for review with 

the ARB, as appropriate, in accordance 

with the requirements of proposed 

§ 9.31(b) of this part. 

Proposed § 9.32(b)(1)(i) stated that any 

aggrieved party may request a hearing 

by an ALJ within 20 days of the 

determination of the Administrator. To 

request a hearing, the aggrieved party 

must send the request to the Chief ALJ 

of the Office of Administrative Law 

Judges by letter or by any other means 

normally ensuring delivery and the 

request must include a copy of the 

Administrator’s determination. The 

proposal also would require that the 

party send a copy of the request for a 

hearing to the complainant(s) or 

successor contractor, their 

representatives, if any, as appropriate, 

and to the Administrator and the 

Associate Solicitor. The final rule 

includes the complete address, adding 

Division of Fair Labor Standards, Office 

of the Solicitor, U.S. Department of 

Labor, 200 Constitution Avenue NW, 

Washington, DC 20210, to the regulatory 

text. 

Proposed § 9.32(b)(1)(ii) provided that 

a complainant or any other interested 

party may request a hearing where the 

Administrator determines that there is 

no basis for a finding that the employer 

has committed violations(s), or where 

the complainant or other interested 

party believes that the Administrator 

has ordered inadequate monetary relief. 

The proposal explained that in such a 

proceeding, the party requesting the 

hearing would be the prosecuting party 

and the employer would be the 

respondent. The Administrator may 

intervene in the proceeding as a party or 

as amicus curiae at any time at the 

Administrator’s discretion. 

Proposed § 9.32(b)(1)(iii) provided 

that the employer or any other 

interested party may request a hearing 

where the Administrator determines, 

after investigation, that the employer 

has committed violation(s). The 

proposal explained that in such a 

proceeding, the Administrator would be 

the prosecuting party and the employer 

would be the respondent. 

Proposed § 9.32(b)(2)(i) explained that 

any aggrieved party desiring a review of 

the Administrator’s determination in 

which there were no relevant facts in 

dispute or of an ALJ’s decision must file 

a petition for review with the ARB 

within 20 calendar days of the date of 

the determination or decision. The 

petition must be served on all parties, 

including the Chief ALJ if the case 

involves an appeal from an ALJ’s 

decision. 

Proposed § 9.32(b)(2)(ii)(A)–(B) stated 

that a petition for review must refer to 

the specific findings of fact, conclusion 

of law, or order at issue and that copies 

of the petition and all briefs filed by the 

parties must be served on the 

Administrator and the Associate 

Solicitor. The final rule includes the 

complete address, adding Division of 

Fair Labor Standards, Office of the 

Solicitor, U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, 

DC 20210, to the regulatory text. 

Proposed § 9.32(b)(2)(ii)(C) provided 

that if a timely request for a hearing or 

petition for review is filed, the 

Administrator’s determination or the 

ALJ’s decision, as appropriate, would be 

inoperative unless and until the ARB 

issues an order affirming the 

determination or decision, or the 

determination or decision otherwise 

becomes a final order of the Secretary. 

If a petition for review concerns only 

the imposition of ineligibility sanctions, 

however, the remainder of the decision 

would be immediately effective. The 

proposal stated that no judicial review 

would be available to parties unless a 

petition for review to the ARB is first 

filed. 

The Coalition recommended the 

Department amend § 9.32(b)(ii) by 

removing the word ‘‘monetary,’’ thereby 

allowing the complainant or other 

interested party to appeal an 

Administrator determination if the 

complainant or other interested party 

believes the Administrator has ordered 

inadequate nonmonetary relief, such as 

reinstatement. The Department 

considered this suggestion and declines 

to make this change. The requirements 

of proposed § 9.32(b)(ii) are identical to 

the approach the Department took in 

implementing Executive Order 13495, 

and the Department believes that such 

an approach aided in achieving effective 

enforcement of Executive Order 13495. 

Further, nothing in Executive Order 

14055 indicates that a different 

approach was expected or is warranted 

in implementing Executive Order 

14055. In addition, just as the 

Administrator’s decision of whether to 

pursue debarment of a contractor 

involves discretion, the Administrator’s 

decision of whether to seek 

reinstatement of a worker involves 

discretion. The Administrator may 

consider a variety of factors when 

considering whether to pursue 

reinstatement, including whether 

reinstatement may result in the 

termination of employment of another 

employee who is currently performing 

on the contract. Thus, it would not be 

appropriate to allow a complainant or 

other interested party to seek review 

where the Administrator has 

determined that reinstatement is not 

warranted. As another example, the 

Administrator might not order 

reinstatement and instead pursue front 

pay for the employee. In such an 

instance, it would add a level of 

complexity and inefficiency if the 

employee could seek reinstatement at 

the same time. For these reasons, the 

Department does not believe that it 

would be practicable for a complainant 

or other interested party to be able to 

request a hearing if they believe the 

Administrator has ordered inadequate 

nonmonetary relief. 

PSC also commented on proposed 

§ 9.32 and requested that the 

Administrator—and not the contractor— 

be the respondent in appeals of the 

Administrator’s determinations. PSC 

believes the proposed provision unfairly 

punishes contractors by creating the 

functional equivalent of a private right 

of action against the contractor. In 

particular, PSC believes that contractors 

should not incur the cost and burden to 

defend a challenge to the 

Administrator’s finding that the 

contractor did not commit a violation. 

The Department does not agree that 

permitting aggrieved and interested 

parties to seek review is unfair or 

unduly burdensome, and the final rule 

reaffirms that the employer is the 

appropriate respondent in appeals 

brought under this section, as the 

employer is best suited to represent its 

own interests in such appeals and may 

well wish to participate in such appeals 

to defend the legality of its actions. The 

Department also notes that Executive 

Order 14055 does not contemplate a 

private right of action, nor does the final 

rule provide a private right of action. 

The Department considered the 

comments received, and the final rule 

adopts the proposed language without 

change. 

14. Section 9.33 Mediation 

To resolve disputes by efficient and 

informal alternative dispute resolution 

methods to the extent practicable, 

proposed § 9.33 generally encouraged 


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parties to use settlement judges to 

mediate settlement negotiations 

pursuant to the procedures and 

requirements of 29 CFR 18.13. Proposed 

§ 9.33 also provided that the assigned 

ALJ must approve any settlement 

agreement reached by the parties 

consistent with the procedures and 

requirements of 29 CFR 18.71. The 

Department did not receive any 

comments related to § 9.33. The final 

rule accordingly adopts the provision as 

proposed. 

15. Section 9.34 Administrative Law 

Judge Hearings 

Proposed § 9.34(a) provided for the 

OALJ to hear and decide, in its 

discretion, appeals concerning 

questions of law and fact regarding 

determinations of the Administrator 

issued under proposed § 9.31. The ALJ 

assigned to the case would act fully and 

finally as the authorized representative 

of the Secretary, subject to any appeal 

filed with the ARB, and subject to 

certain limits. 

Proposed § 9.34(a)(2) detailed the 

limits on the scope of review for 

proceedings before the ALJ. Proposed 

§ 9.34(a)(2)(i) would exclude from the 

ALJ’s authority any jurisdiction to pass 

on the validity of any provision of part 

9. Proposed § 9.34(a)(2)(ii) provided that 

the Equal Access to Justice Act (EAJA), 

as amended, 5 U.S.C. 504, would not 

apply to proceedings under part 9 

because the proceedings proposed in 

subpart D are not required by an 

underlying statute to be determined on 

the record after an opportunity for an 

agency hearing. Therefore, an ALJ 

would have no authority to award 

attorney fees and/or other litigation 

expenses pursuant to the provisions of 

the EAJA for any proceeding under part 

9. 

Proposed § 9.34(b) stated that absent a 

stay to attempt settlement, the ALJ 

would notify the parties and any 

representatives within 15 calendar days 

following receipt of the request for 

hearing of the day, time, and place for 

hearing. The hearing would be held 

within 60 days from the date of receipt 

of the hearing request under proposed 

§ 9.34(b). 

Proposed § 9.34(c) provided that the 

ALJ may dismiss a party’s challenge to 

a determination of the Administrator if 

the party or the party’s representative 

requests a hearing and fails to attend the 

hearing without good cause. Proposed 

§ 9.34(c) also provided that the ALJ may 

dismiss a challenge to a determination 

of the Administrator if a party fails to 

comply with a lawful order of the ALJ. 

Proposed § 9.34(d) stated that the 

Administrator would have the right, at 

the Administrator’s discretion, to 

participate as a party or as amicus 

curiae at any time in the proceedings. 

This would include the right to petition 

for review of an ALJ’s decision in a case 

in which the Administrator has not 

previously participated. The 

Administrator would be required to 

participate as a party in any proceeding 

in which the Administrator has 

determined that part 9 has been 

violated, except where the proceeding 

only concerns a challenge to the amount 

of monetary relief awarded. 

Under proposed § 9.34(e), a Federal 

agency that is interested in a proceeding 

would be able to participate as amicus 

curiae at any time in the proceedings. 

The proposed paragraph also stated that 

copies of all pleadings in a proceeding 

must be served on the interested Federal 

agency at the request of such Federal 

agency, even if the Federal agency is not 

participating in the proceeding. 

Proposed § 9.34(f) provided that 

copies of the request for hearing under 

this part would be sent to the WHD 

Administrator and the Associate 

Solicitor of Labor, regardless of whether 

the Administrator is participating in the 

proceeding. 

With certain exceptions, proposed 

§ 9.34(g) stated that it would apply the 

rules of practice and procedure for 

administrative hearings before the OALJ 

at 29 CFR part 18, subpart A, to 

administrative proceedings under part 

9. The exceptions in proposed § 9.34(g) 

provided that part 9 would be 

controlling to the extent it provides any 

rules of special application that may be 

inconsistent with the rules in part 18, 

subpart A. In addition, proposed 

§ 9.34(g) provided that the Rules of 

Evidence at 29 CFR part 18, subpart B, 

would be inapplicable to administrative 

proceedings under this part. The 

proposed paragraph would clarify that 

rules or principles designed to ensure 

production of the most probative 

evidence available would be applied, 

and that the ALJ may exclude 

immaterial, irrelevant, or unduly 

repetitive evidence. 

Proposed § 9.34(h) would require ALJ 

decisions (containing appropriate 

findings, conclusions, and an order) to 

be issued within 60 days after 

completion of the proceeding and to be 

served upon all parties to the 

proceeding. 

Proposed § 9.34(i) stated that, upon 

the issuance of a decision that a 

violation had occurred, the ALJ would 

order the successor contractor to take 

appropriate action to remedy the 

violation. The remedies could include 

ordering the successor contractor to hire 

each affected employee in a position on 

the contract for which the employee is 

qualified, together with compensation 

(including lost wages), terms, 

conditions, and privileges of that 

employment. If the Administrator has 

sought debarment, the order would also 

be required to address whether 

debarment is appropriate. 

Proposed § 9.34(j) would allow the 

ALJ to assess against a successor 

contractor a sum equal to the aggregate 

amount of all costs (not including 

attorney fees) and expenses reasonably 

incurred by the aggrieved employee(s) 

in the proceeding when an order finding 

the successor contractor violated part 9 

is issued. This amount would be 

awarded in addition to any unpaid 

wages or other relief due. The Coalition 

suggested amending proposed § 9.34(j) 

to make reasonable expenses incurred 

by an employee’s representative in 

connection with ALJ hearings under this 

paragraph recoverable. However, 

§ 9.34(j) is not intended to be an openended provision for the recovery of 

costs incurred by anyone other than the 

aggrieved employee. The Department 

clarifies that labor costs incurred by an 

aggrieved employee’s representative 

would not be recoverable under this 

provision. However, the Department 

views costs for postage, photo copying, 

or messenger delivery, for example, that 

are initially incurred by the aggrieved 

employee’s representative could be 

‘‘costs incurred by the aggrieved 

employee’’ if they are ultimately 

charged to the employee. Such costs, 

therefore, could be recoverable under 

this provision if they are reasonable and 

otherwise meet the criteria for the 

recovery of costs under this paragraph. 

Therefore, the final rule does not 

expand the amount awarded to an 

aggrieved employee to include 

reasonable expenses incurred by an 

employee’s representative in connection 

with ALJ hearings and adopts the 

provision as proposed. 

Proposed § 9.34(k) provided that the 

ALJ’s decision would become the final 

order of the Secretary, unless a timely 

appeal is filed with the ARB. 

With exception of one comment 

related to § 9.34(j), the Department did 

not receive any comments on proposed 

§ 9.34 and the final rule adopts § 9.34 as 

proposed. 

16. Section 9.35 Administrative 

Review Board Proceedings 

Proposed § 9.35 described the ARB’s 

jurisdiction and provided the 

procedures for appealing an ALJ 

decision to the ARB under Executive 

Order 14055. 

Proposed § 9.35(a)(1) stated the ARB 

has jurisdiction to hear and decide, in 


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its discretion, appeals from the 

Administrator’s determinations issued 

under § 9.31 and from ALJ decisions 

issued under § 9.34. 

Proposed § 9.35(a)(2) identified the 

limitations on the ARB’s scope of 

review, including a restriction on 

passing on the validity of any provision 

of part 9, a general prohibition on 

receiving new evidence in the record 

(because the ARB is an appellate body 

and must decide cases before it based on 

substantial evidence in the existing 

record), and a bar on granting attorney 

fees or other litigation expenses under 

the EAJA. 

Proposed § 9.35(b) provided that the 

ARB would issue a final decision within 

90 days following receipt of the petition 

for review and would serve the decision 

by mail on all parties at their last known 

address, and on the Chief ALJ if the case 

were to involve an appeal from an ALJ’s 

decision. 

Proposed § 9.35(c) would require the 

ARB’s order to mandate action to 

remedy the violation if the ARB 

concludes a violation occurred. Under 

the proposed rule, such action may 

include hiring each affected employee 

in a position on the contract for which 

the employee is qualified, together with 

compensation (including lost wages), 

terms, conditions, and privileges of that 

employment. If the Administrator seeks 

debarment, the ARB would be required 

to determine whether debarment would 

be appropriate. Proposed § 9.35(c) also 

provided that the ARB’s order would be 

subject to discretionary review by the 

Secretary as provided in Secretary’s 

Order 01–2020 or any successor to that 

order. See Secretary of Labor’s Order, 

01–2020 (Feb. 21, 2020), 85 FR 13186 

(Mar. 6, 2020). 

Proposed § 9.35(d) would allow the 

ARB to assess against a successor 

contractor a sum equal to the aggregate 

amount of all costs (not including 

attorney fees) and expenses reasonably 

incurred by the aggrieved employee(s) 

in the proceeding. This amount would 

be awarded in addition to any lost 

wages or other relief due under § 9.23(b) 

of this part. 

Proposed § 9.35(e) provided that the 

ARB’s decision would become the 

Secretary’s final order in the matter in 

accordance with Secretary’s Order 01– 

2020 (or any successor to that order), 

which provides for discretionary review 

of such orders by the Secretary. See id. 

The Department did not receive any 

comments related to § 9.35. The final 

rule accordingly adopts the provision as 

proposed. 

17. Section 9.36 Severability 

Section 10 of Executive Order 14055 

states that if any provision of the order, 

or the application of any such provision 

to any person or circumstance, is held 

to be invalid, the remainder of the order 

and the application will not be affected. 

See 86 FR at 66400. Consistent with this 

directive, the Department proposed to 

include a severability clause in part 9. 

Proposed § 9.36 explained that each 

provision would be capable of operating 

independently from one another. If any 

provision of part 9 were held to be 

invalid or unenforceable by its terms, or 

as applied to any person or 

circumstance, or stayed pending further 

agency action, the Department intended 

that the remaining provisions would 

remain in effect. 

The Department did not receive any 

comments related to § 9.36. The final 

rule accordingly adopts the provision as 

proposed. 

18. Nonsubstantive Changes 

The Plain Writing Act of 2010 (Pub. 

L. 111–274, 124 Stat. 2861) requires 

Federal agencies to write documents in 

a clear, concise, well-organized manner. 

The Department has written this 

document to be consistent with the 

Plain Writing Act as well as the 

Presidential Memorandum, ‘‘Plain 

Language in Government Writing,’’ 

published June 10, 1998 (63 FR 31885). 

Consistent with this practice, technical 

edits have been made throughout the 

regulations such as replacing the term 

‘‘shall’’ with ‘‘will’’ or ‘‘must,’’ and 

replacing the term ‘‘assure’’ with 

‘‘ensure.’’ Such changes are not 

intended to reflect a change in the 

substance of these sections. 

III. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA), 44 U.S.C. 3501 et seq., and its 

attendant regulations, 5 CFR part 1320, 

require the Department to consider the 

agency’s need for its information 

collections, the information collections’ 

practical utility, the impact of 

paperwork and other information 

collection burdens imposed on the 

public, and how to minimize those 

burdens. Under the PRA, an agency may 

not collect or sponsor an information 

collection requirement unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. See 5 CFR 1320.8(b)(3)(vi). 

OMB has assigned control number 

1235–0021 to the information collection 

which gathers information from 

complainants alleging violations of the 

labor standards that WHD administers 

and enforces, and the Department 

requested a new control number be 

assigned to the new information 

collection required as part of this rule. 

In accordance with the PRA, the 

Department solicited public comments 

on the proposed changes to the 

information collection under control 

number 1235–0021 and the creation of 

the new information collection in the 

NPRM, as discussed below. See 87 FR 

42552 (July 15, 2022). The Department 

also submitted a contemporaneous 

request for OMB review of the proposed 

revisions to the existing information 

collection and the creation of a new 

information collection in accordance 

with 44 U.S.C. 3507(d). On August 16, 

2022, OMB issued a notice that assigned 

the new information collection control 

number 1235–0033 and on August 18, 

2022, issued a notice that continued the 

previous approval of the information 

collection under 1235–0021 under the 

existing terms of clearance. Both notices 

ask the Department to resubmit the 

requests upon promulgation of the final 

rule and after consideration of the 

public comments received. 

Circumstances Necessitating this 

Collection: This rulemaking implements 

Executive Order 14055, 

Nondisplacement of Qualified Workers 

Under Service Contracts, signed by 

President Joseph R. Biden, Jr. on 

November 18, 2021. The Department 

administers and enforces these 

regulations that implement Executive 

Order 14055. 

Executive Order 14055 generally 

requires Federal service contracts and 

subcontracts that succeed a contract for 

performance of the same or similar 

work, and solicitations for such 

contracts and subcontracts, to include a 

clause requiring the successor 

contractor and its subcontractors to offer 

service employees employed under the 

predecessor contract and its 

subcontracts whose employment will be 

terminated as a result of the award of 

the successor contract a right of first 

refusal of employment in positions for 

which those employees are qualified. 

Section 5 of Executive Order 14055 

contains exclusions, directing that the 

order will not apply to contracts under 

the simplified acquisition threshold as 

defined in 41 U.S.C. 134 or employees 

who were hired to work under a Federal 

service contract and one or more 

nonfederal service contracts as part of a 

single job, provided that the employees 

were not deployed in a manner that was 

designed to avoid the purposes of the 

Executive order. Section 6 of the 

Executive order permits agencies to 

except certain contracts from the 

requirements of the Executive order in 

certain circumstances. Section 8 of 


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Executive Order 14055 grants the 

Secretary authority to investigate 

potential violations of, and obtain 

compliance with, the order. 

This final rule, which implements 

Executive Order 14055, contains several 

provisions that could be considered to 

entail collections of information: (1) the 

requirement in § 9.12(b)(3) requiring 

successor contractors to make 

employment offers in writing; (2) the 

notice provision in § 9.11(c)(4) that 

requires contractors to provide notice to 

employees’ representatives on a contract 

of the method and opportunity to 

provide information to the contracting 

agency relevant to the location 

continuity determination; (3) the notice 

provision described in in § 9.5(f) that 

requires contractors to provide notice to 

workers of contracting agency decisions 

to except contracts from the 

nondisplacement requirements; (4) the 

requirement in § 9.12(e) that 

predecessor contractors submit a list of 

the names, mailing addresses, and, if 

known, phone numbers and email 

addresses of all service employees 

working under the contract and its 

subcontracts to the contracting officer 

before contract completion and the 

requirement to provide service 

employees with written notice of their 

possible right to an offer of employment 

on a successor contract; (5) disclosure 

and recordkeeping requirements for 

covered contractors described in 

§ 9.12(f); (6) the requirement in § 9.13(a) 

for the contractor to insert the 

nondisplacement contract clause into 

any lower-tier subcontracts; (7) the 

complaint process described in § 9.21; 

and (8) the administrative proceedings 

described in subpart D. These 

requirements are essential to the 

Department’s ability to implement and 

enforce the requirements of Executive 

Order 14055 and this final rule. 

Section 9.12 states compliance 

requirements for contractors covered by 

Executive Order 14055. As discussed 

above, under proposed § 9.12(b)(3) the 

successor contractor would have had 

the option of making a specific oral or 

written employment offer to each 

qualified employee on the predecessor 

contract. The final rule modifies the 

language of proposed § 9.12(b)(3), as 

well as the corresponding recordkeeping 

requirements of § 9.12(f)(2)(i), to require 

contractors to make offers of 

employment in writing. As all offers 

must be in writing, the final rule does 

not include the requirement that these 

offers be translated, as employees may 

obtain their own translations of the 

written offer documents in their 

possession. 

Section 9.12(e) details contractor 

obligations near the end of contract 

performance. Sections 9.12(e)(1) and 

(e)(2) require a contractor to furnish the 

contracting officer with a certified list of 

the names, mailing addresses, and, if 

known, phone numbers and email 

addresses of all service employees 

working under the contract and its 

subcontracts during the last month of 

contract performance. Additionally, 

§ 9.12(e)(3) requires a contractor to 

provide service employees with written 

notice of their possible right to an offer 

of employment on a successor contract. 

Finally, as noted in § 9.12(e)(3), 

contractors are also required to provide 

additional notices to workers by the 

provisions in § 9.5(f) (relating to agency 

exceptions) and § 9.11(c)(4) (relating to 

location continuity). 

To verify compliance with the 

requirements in part 9, § 9.12(f) requires 

contractors to maintain for 3 years 

copies of certain records that are subject 

to OMB clearance under the PRA, 

including (1) any written offers of 

employment; (2) any record that forms 

the basis for any exclusion or exception 

claimed from the nondisplacement 

requirements; and (3) a copy of the 

employee list received from the 

contracting agency and the employee 

list provided to the contracting agency. 

See 44 U.S.C. 3502(3), 3518(c)(1); 5 CFR 

1320.3(c), 1320.4(a)(2), 1320.4(c). 

Additionally, § 9.12(f)(2) requires 

contractors to maintain evidence of any 

notices that they have provided to 

workers, or workers’ collective 

bargaining representatives, to satisfy the 

requirements of the order or these 

regulations. These include records of 

notices of the possibility of employment 

on the successor contract that are 

required under § 9.12(e)(3) of the 

regulations; notices of agency 

exceptions that a contracting agency 

requires a contractor to provide under 

section 6(b) of the order and as 

described in § 9.5(f) of the regulations; 

and notices to collective bargaining 

representatives of the opportunity to 

provide information relevant to the 

contracting agency’s location continuity 

determination in the solicitation for a 

successor contract, pursuant to 

§ 9.11(c)(4) of the regulations. 

Section 9.13(a) requires the contractor 

or subcontractor to insert in any lowertier subcontracts the nondisplacement 

contract clause in Appendix A or the 

FAR, as appropriate. As explained in 

the preamble to that section, this 

requirement notifies subcontractors of 

their obligation to provide employees 

the right of first refusal and of the 

enforcement methods WHD may use 

when subcontracts are found to be in 

violation of the Executive order. The 

Department has estimated additional 

burden hours for this requirement, but 

believes that this additional burden will 

be minimal, because the clause will be 

easily accessible to contractors and 

subcontractors who may simply copy 

and insert the clause into the lower-tier 

subcontract. 

Section 9.21 details the procedure for 

filing complaints of violations of the 

Executive order or part 9. WHD obtains 

PRA clearance under control number 

1235–0021 for an information collection 

covering complaints alleging violations 

of various labor standards that the 

agency already administers and 

enforces. WHD submitted an 

Information Collection Request (ICR) to 

revise the approval under 1235–0021 to 

incorporate the regulatory citations in 

this rule and to adjust burden estimates 

to reflect an increase in the number of 

complaints filed. 

Subpart D establishes administrative 

proceedings to resolve investigation 

findings. Particularly with respect to 

hearings, the rule imposes information 

collection requirements. The 

Department notes that information 

exchanged between the target of a civil 

or administrative action and the agency 

to resolve the action is exempt from 

PRA requirements. See 44 U.S.C. 

3518(c)(1)(B); 5 CFR 1320.4(a)(2). This 

exemption applies throughout the civil 

or administrative action (such as an 

investigation and any related 

administrative hearings). Therefore, the 

Department has determined the 

administrative requirements contained 

in subpart D of this final rule are exempt 

from needing OMB approval under the 

PRA. 

Information and technology: There is 

no particular order or form of records 

prescribed by the regulations. A 

respondent may meet the requirements 

of this final rule using paper or 

electronic means. WHD, to reduce 

burden caused by the filing of 

complaints that are not actionable by 

the agency, uses a complaint filing 

process in which complainants discuss 

their concerns with WHD professional 

staff. This process allows agency staff to 

refer complainants raising concerns that 

are not actionable under wage and hour 

laws and regulations to an agency that 

may be able to assist. 

Public comments: The Department 

invited public comment on its analysis 

that the rule would create a slight 

increase in the paperwork burden 

associated with ICR 1235–0021 and on 

the burden related to the new ICR 1235– 

0033. The Department did not receive 

comments on the ICRs themselves or 

any comments submitted regarding the 


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12See 88 FR 21879 (Apr. 11, 2023); 58 FR 51735, 

51741 (Oct. 4, 1993). 

PRA analysis in particular. However, 

commenters addressed aspects of the 

information collections while 

commenting on the text of the proposed 

rule. 

For example, ABC commented that 

the 10-day time frame in which 

predecessor contractors must furnish to 

the contracting officer an updated list of 

employees working on the predecessor 

contract under § 9.12(e)(2) is both 

impractical and unworkable, arguing 

that 10 days is an inadequate time frame 

for the successor contractor to inform, 

interview, and evaluate the displaced 

workers prior to the commencement of 

the successor contract. Relatedly, an 

anonymous commenter suggested that 

the burden on the successor contractor 

to offer employment to qualified 

employees on the predecessor contract 

may be lessened if the successor 

contractor is provided with contact 

information for the employees such as 

phone numbers, email addresses, or 

mailing addresses. To address ABC’s 

concern that the 10-day time frame may 

make it impractical for the successor 

contractor to inform, interview, and 

evaluate employees prior to the 

commencement of the successor 

contract, the Department is adopting the 

anonymous commenter’s suggestion that 

the successor contractor be provided 

with employee contact information. 

Accordingly, as explained in the 

preamble to § 9.12, the Department is 

modifying proposed § 9.12(e)(1) and 

(e)(2) to require predecessor contractors 

to list (in addition to names and 

anniversary dates) mailing addresses, 

and, where known, email addresses and 

phone numbers of the employees. The 

Department believes that the burden of 

this change on contractors will be 

minimal in light of the existing 

requirement that contractors maintain 

records of addresses pursuant to 29 CFR 

4.6(g)(1)(i). 

The Coalition commented on the 

requirements for successor contractors 

in § 9.12(b)(3) when making the 

required job offers to employees on the 

predecessor contract. The Coalition 

suggested the Department require job 

offers be provided in writing, and not 

verbally, to lessen disputes between 

contractors and employees as to the 

existence and adequacy of offers. The 

Coalition further noted that requiring 

offers in writing would lessen the 

degree of employees’ reliance on the 

accuracy of contractors’ translators. 

AFL–CIO echoed the Coalition’s 

sentiments regarding offers being made 

in writing. The Department agrees that 

requiring offers to be made in writing 

would lessen such factual disputes 

between contractors and employees, 

including disputes about the fidelity of 

linguistic translations. For that reason, 

the Department is amending proposed 

§ 9.12(b)(3), as well as the 

corresponding recordkeeping 

requirements of § 9.12(f)(2), to require 

that offers be in writing, thus removing 

the option for successor contractors to 

make offers orally. Because this change 

removes the requirement for a 

contemporaneous written record of any 

oral offers of employment and simply 

retains the requirement that contractors 

maintain copies of any written offers of 

employment, this change does not 

require contractors to maintain 

additional information. Thus, the 

Department has not estimated 

additional recordkeeping burden hours 

or costs associated with this change. 

However, because this change requires 

contractors to provide written offers of 

employment to predecessor contract 

employees, the Department estimates 

additional burden hours and costs 

associated with this requirement. 

Total burden for the subject 

information collections, including the 

burdens that will be unaffected by this 

final rule and any changes, is 

summarized as follows: 

Type of review: Revision to currently 

approved information collections. 

Agency: Wage and Hour Division, 

Department of Labor. 

Title: Employment Information Form. 

OMB control number: 1235–0021. 

Affected public: Private sector, 

businesses or other for-profits and 

Individuals or Households. 

Estimated number of respondents: 

27,010 (10 from this rulemaking). 

Estimated number of responses: 

27,010 (10 from this rulemaking). 

Frequency of response: On occasion. 

Estimated annual burden hours: 9,003 

(3 burden hours due to this rulemaking). 

Capital/start-up costs: $0 ($0 from 

this rulemaking). 

Title: Nondisplacement of Qualified 

Workers Under Service Contracts. 

OMB control number: 1235–0033. 

Affected public: Private sector, 

businesses or other for-profits and 

Individuals or Households. 

Estimated number of respondents: 

137,463 (all from this rulemaking). 

Estimated number of responses: 

3,042,829 (all from this rulemaking). 

Frequency of response: on occasion. 

Estimated annual burden hours: 

205,332 (all from this rulemaking). 

Estimated annual burden costs: 

$13,307,567.00 

Capital/start-up costs: $0 ($0 from 

this rulemaking). 

IV. Executive Order 12866, Regulatory 

Planning and Review; Executive Order 

13563, Improved Regulation and 

Regulatory Review 

Under Executive Order 12866, as 

amended by Executive Order 14094, 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) determines 

whether a regulatory action is 

significant and, therefore, subject to the 

requirements of the Executive order and 

OMB review.12 OIRA has determined 

that this rule is a ‘‘significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. 

Executive Order 13563 directs 

agencies to, among other things, propose 

or adopt a regulation only upon a 

reasoned determination that its benefits 

justify its costs; that it is tailored to 

impose the least burden on society, 

consistent with obtaining the regulatory 

objectives; and that, in choosing among 

alternative regulatory approaches, the 

agency has selected those approaches 

that maximize net benefits. Executive 

Order 13563 recognizes that some costs 

and benefits are difficult to quantify and 

provides that, when appropriate and 

permitted by law, agencies may 

consider and discuss qualitatively 

values that are difficult or impossible to 

quantify, including equity, human 

dignity, fairness, and distributive 

impacts. The analysis below outlines 

the impacts that the Department 

anticipates could result from this rule 

and was prepared pursuant to the 

above-mentioned executive orders. 

A. Introduction 

On November 18, 2021, President 

Joseph R. Biden, Jr. issued Executive 

Order 14055, ‘‘Nondisplacement of 

Qualified Workers Under Service 

Contracts.’’ 86 FR 66397 (Nov. 23, 

2021). This order explains that ‘‘[w]hen 

a service contract expires, and a followon contract is awarded for the same or 

similar services, the Federal 

Government’s procurement interests in 

economy and efficiency are best served 

when the successor contractor or 

subcontractor hires the predecessor’s 

employees, thus avoiding displacement 

of these employees.’’ Accordingly, 

Executive Order 14055 provides that 

contractors and subcontractors 

performing on covered Federal service 

contracts must in good faith offer 

service employees employed under the 

predecessor contract a right of first 

refusal of employment. The order 

applies only to contracts that are 

covered by the SCA. 


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13The Department recognizes that some SCAcovered contracts that would be covered by this 

rule are not reflected in USASpending.gov (i.e., they 

are SCA-covered contracts that are not procuring 

services directly for the Federal Government, 

including certain licenses, permits, cooperative 

agreements, and concessions contracts, such as, for 

example, delegated leases of space on a military 

base from an agency to a contractor whereby the 

contractor operates a barber shop). However, the 

Department estimates that the number of firms 

holding such SCA-covered nonprocurement 

contracts is a small fraction of the number of firms 

identified based on USASpending.gov. 

14The Department also acknowledges that prime 

contracts that are less than $250,000 and their 

subcontracts would not be covered by this 

regulation, but the Department has not made an 

adjustment for these contracts in the estimation of 

covered contractors. Therefore, this estimate may be 

an overestimate of the number of contractors that 

are actually affected. 

15The Department estimated the number of prime 

contractors using the 2021 USASpending.gov data 

and found that there were fewer contractors in 2021 

than in 2019. The number of prime contractors in 

2019 was 85,987 and the number of prime 

contractors in 2021 was 78,347. This finding is in 

line with our hypothesis that remote work for 

Federal employees could have reduced the demand 

for SCA contractors in 2021. 

16For example, the Government purchases 

pencils; however, a contract solely to purchase 

pencils is not covered by the SCA and so would not 

be covered by the Executive order. Contracts for 

goods were identified in the USASpending.gov data 

if the product or service code begins with a number 

(the code for services begins with a letter). 

17Contracts covered by DBA were identified in 

the USASpending.gov data where the ‘‘Construction 

Wage Rate Requirements’’ element for a contract is 

marked ‘‘Y,’’ meaning that the contracting agency 

flagged that the contract is covered by the DBA. 

18For subcontractors, the Department was unable 

to make restrictions to limit the data to SCA 

contracts because none of the necessary variables 

are available in the USASpending.gov database (i.e., 

the Labor Standards variable, the Construction 

Wage Rate Requirements variable, or the product or 

service code variable). 

19The North American Industry Classification 

System (NAICS) is a method by which Federal 

statistical agencies classify business establishments 

in order to collect, analyze, and publish data about 

certain industries. Each industry is categorized by 

a sequence of codes ranging from 2 digits (most 

aggregated level) to 6 digits (most granular level). 

https://www.census.gov/naics/. 

20 In the data, a NAICS code is assigned to the 

contract and identifies the industry in which the 

contract work is typically performed. If a firm has 

contracts in several NAICS, the Department has 

assigned it to only one NAICS based on the ordering 

of the contracts in the data (this approximates a 

random assignment to one NAICS). 

21 Data released in monthly files. See GSA, 

SAM.gov, available at: https://www.sam.gov/SAM/ 

pages/public/extracts/samPublicAccessData.jsf. 

22Entities registering in SAM are asked if they 

wish to bid on contracts. If the firm answers ‘‘yes,’’ 

then they are included as ‘‘All Awards’’ in the 

‘‘Purpose of Registration’’ column in the SAM data. 

This rule requires that contracting 

agencies incorporate into every covered 

Federal service contract the contract 

clause included in Executive Order 

14055. That clause requires a successor 

contractor and its subcontractors to 

make bona fide, express offers of 

employment to service employees 

employed under the predecessor 

contract whose employment would be 

terminated with the change of contract. 

The required contract clause also 

forbids successor contractors or 

subcontractors from filling contract 

employment openings prior to making 

such good faith offers of employment to 

employees of the predecessor contractor 

or subcontractor. See section II.B. for an 

in-depth discussion of the provisions of 

the Executive order. 

B. Number of Potentially Affected 

Contractor Firms and Workers 

1. Number of Potentially Affected 

Contractor Firms 

To determine the number of firms that 

could potentially be affected by this 

rulemaking, the Department estimated a 

range of potentially affected firms. The 

more narrowly defined population 

(firms actively holding SCA-covered 

contracts) includes 119,700 firms (Table 

1). The broader population (including 

those bidding on SCA contracts but 

without active contracts, or those 

considering bidding in the future) 

includes 442,761 firms. 

i. Firms Currently Holding SCA 

Contracts 

USASpending.gov—the official source 

for spending data for the U.S. 

Government—contains Government 

award data from the Federal 

Procurement Data System Next 

Generation (FPDS–NG), which is the 

system of record for Federal 

procurement data. The Department used 

these data to identify the number of 

firms that currently hold SCA 

contracts.13 14 Although more recent 

data are available, the Department used 

data from 2019 to avoid any shifts in the 

data associated with the COVID–19 

pandemic in 2020. Because many 

Federal employees were working 

remotely throughout 2020 and 2021, 

reliance on service contracts for Federal 

buildings may have been reduced 

during those years and may not reflect 

the level of employment on and 

incidence of SCA contracts going 

forward.15

To identify firms with SCA contracts, 

the Department included all firms with 

the ‘‘Labor Standards’’ element equal to 

‘‘Y’’ for any of their contracts, meaning 

that the contracting agency flagged the 

contract as covered by the SCA. 

However, because this flag is often 

listed as ‘‘not applicable’’ and appears at 

times to be reported with error, the 

Department also included some other 

firms. Of the contracts not flagged as 

SCA, the Department excluded (1) those 

for the purchase of goods 16 and (2) 

those covered by the DBA.17 The 

Department also excluded (1) awards for 

financial assistance such as direct 

payments, loans, and insurance; and (2) 

contracts performed outside the U.S. 

because SCA coverage is limited to the 

50 states, the District of Columbia, and 

certain U.S. territories. The firms for the 

remaining contracts are included as 

potentially impacted by this 

rulemaking. 

In 2019, there were 86,000 unique 

prime contractors in USASpending.gov 

that fit the parameters discussed above, 

and the Department has used this 

number as an estimate of prime 

contractors with active SCA contracts. 

However, subcontractors are also 

impacted by this rule. The Department 

examined 5 years of USASpending.gov 

data (2015 through 2019) and identified 

33,708 unique subcontractors that did 

not hold contracts as prime contractors 

in 2019.18 The Department used 5 years 

of data for the count of subcontractors 

to compensate for lower-tier 

subcontractors that may not be included 

in USASpending.gov. 

In total, the Department estimates 

119,700 firms currently hold SCA 

contracts and could potentially be 

affected by this rulemaking under the 

narrow definition. Table 1 shows these 

firms by 2-digit NAICS code.19 20

ii. All Potentially Affected Contractors 

The Department also cast a wider net 

to identify other potentially affected 

contractors, both those directly affected 

(i.e., holding contracts) and those that 

plan to bid on SCA-covered contracts in 

the future. To determine the number of 

these firms, the Department identified 

firms registered in the GSA’s System for 

Award Management (SAM) since all 

entities bidding on Federal procurement 

contracts as a prime contractor or 

applying for grants must register in 

SAM. The Department believes that 

firms registered in SAM represent those 

that may be affected if they decide to 

bid on an SCA contract as a prime 

contractor in the future. However, it is 

also possible that some firms that are 

not already registered in SAM could 

decide to bid on SCA-covered contracts 

after this rulemaking; these firms are not 

included in the Department’s estimate. 

The rule could also impact such firms 

if they are awarded a future contract. 

Because SAM provides a more recent 

snapshot of data, the Department used 

October 2022 SAM data and identified 

409,053 registered firms.21 The 

Department excluded firms with 

expired registrations, firms only 

applying for grants,22 government 


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The Department included only firms with a value 

of ‘‘Z2,’’ which denotes ‘‘All Awards.’’ 

23While there are certain circumstances in which 

state and local government entities act as 

contractors that enter into contracts covered by the 

SCA, the number of such entities is relatively 

minimal and including all government entities 

would result in an inappropriate overestimation. 

24See 86 FR 67126, 67194 (Nov. 24, 2021). 

25See 81 FR 67598 (Sept. 30, 2016) and 79 FR 

60634 (Oct. 7, 2014). 

26 Identified when the ‘‘Construction Wage Rate 

Requirements’’ element is ‘‘Y,’’ meaning that the 

contracting agency flagged that the contract is 

covered by DBA. 

entities (such as city or county 

governments),23 foreign organizations, 

and companies that only sell products 

and do not provide services. SAM 

includes all prime contractors and some 

subcontractors (those that are also prime 

contractors or that have otherwise 

registered in SAM). However, the 

Department is unable to determine the 

number of subcontractors that are not in 

the SAM database. Therefore, the 

Department added the subcontractors 

identified in USASpending.gov to this 

estimate. Adding these 33,708 firms 

identified in USASpending.gov to the 

number of firms in SAM results in 

442,761 potentially affected firms. 

TABLE 1—RANGE OF NUMBER OF POTENTIALLY AFFECTED FIRMS

Industry NAICS 

Lower-bound estimate Upper-bound estimate 

Total Primes from 

USASpending.gov 

Subcontractors 

from 

USASpending.gov 

Total Firms 

from SAM 

Subcontractors 

from 

USASpending.gov 

Agriculture, forestry, fishing and hunting ................ 11 2,482 2,482 0 5,769 5,769 0 

Mining ..................................................................... 21 145 102 43 959 916 43 

Utilities .................................................................... 22 1,596 1,541 55 2,485 2,430 55 

Construction ............................................................ 23 13,708 5,457 8,251 56,126 47,875 8,251 

Manufacturing ......................................................... 31–33 13,958 5,637 8,321 51,299 42,978 8,321 

Wholesale trade ...................................................... 42 1,205 564 641 18,092 17,451 641 

Retail trade ............................................................. 44–45 344 317 27 7,979 7,952 27 

Transportation and warehousing ............................ 48–49 3,387 2,998 389 17,921 17,532 389 

Information .............................................................. 51 4,061 3,735 326 13,350 13,024 326 

Finance and insurance ........................................... 52 475 429 46 3,365 3,319 46 

Real estate and rental and leasing ........................ 53 2,822 2,821 1 19,439 19,438 1 

Professional, scientific, and technical services ...... 54 37,739 26,103 11,636 115,007 103,371 11,636 

Management of companies and enterprises .......... 55 3 3 0 604 604 0 

Administrative and waste services ......................... 56 15,120 11,509 3,611 36,187 32,576 3,611 

Educational services ............................................... 61 3,609 3,359 250 17,600 17,350 250 

Health care and social assistance ......................... 62 7,004 6,987 17 36,758 36,741 17 

Arts, entertainment, and recreation ........................ 71 916 915 1 5,172 5,171 1 

Accommodation and food services ........................ 72 3,037 3,031 6 10,474 10,468 6 

Other services ........................................................ 81 8,084 7,997 87 24,175 24,088 87 

Total private ..................................................... .............. 119,695 85,987 33,708 442,761 409,053 33,708 

2. Number of Potentially Affected 

Workers 

There are no readily available data on 

the number of workers working on SCA 

contracts; therefore, to estimate the 

number of these workers, the 

Department employed the approach 

used in the 2021 final rule, ‘‘Increasing 

the Minimum Wage for Federal 

Contractors,’’ which implements 

Executive Order 14026.24 That 

methodology is based on the 2016 

rulemaking implementing Executive 

Order 13706’s (Establishing Paid Sick 

Leave for Federal Contractors) paid sick 

leave requirements, which contained an 

updated version of the methodology 

used in the 2014 rulemaking for 

Executive Order 13658 (Establishing a 

Minimum Wage for Contractors).25

Using this methodology, the Department 

estimated the number of workers who 

work on SCA contracts, representing the 

number of ‘‘potentially affected 

workers,’’ is 1.4 million. This number is 

likely an overestimate because some 

workers will be in positions not covered 

by this rule (e.g., high-level 

management, non-service employees). 

One commenter also posited that this 

estimate could be an overestimate 

because many of these workers are 

already covered under collective 

bargaining agreements that may ensure 

them continued employment. 

The Department estimated the 

number of potentially affected workers 

in two parts. First, the Department 

estimated employees and self-employed 

workers working on SCA contracts in 

the 50 States and the District of 

Columbia. Second, the Department 

estimated the number of SCA workers in 

the U.S. territories. 

i. Workers on SCA Contracts in the 50 

States and the District of Columbia 

SCA contract employees on covered 

contracts were estimated by taking the 

ratio of covered Federal contracting 

expenditures to total output, by 

industry. Total output is the market 

value of the goods and services 

produced by an industry. This ratio is 

then applied to total private 

employment in that industry (Table 2). 

To estimate SCA contracting 

expenditures, the Department used 

USASpending.gov data and the same 

methodology as used above for 

estimating affected firms. The 

Department included all contracts with 

the ‘‘Labor Standards’’ element equal to 

‘‘Y,’’ meaning that the contracting 

agency flagged the contract as covered 

by SCA. Of the contracts not flagged as 

SCA, the Department excluded (1) those 

for the purchase of goods and (2) those 

covered by DBA.26 The firms for the 

remaining contracts are also included as 

potentially impacted by this 


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27Bureau of Economic Analysis (BEA). Table 8. 

Gross Output by Industry Group. 2020, available at: 

https://www.bea.gov/news/2020/gross-domesticproduct-industry-fourth-quarter-and-year-2019. The 

BEA provides the definition: ‘‘Gross output of an 

industry is the market value of the goods and 

services produced by an industry, including 

commodity taxes. The components of gross output 

include sales or receipts and other operating 

income, commodity taxes, plus inventory change. 

Gross output differs from value added, which 

measures the contribution of the industry’s labor 

and capital to its gross output.’’ 

28Bureau of Labor Statistics Occupational 

Employment and Wage Statistics. May 2019. 

Available at: https://www.bls.gov/oes/. 

29 GDP is limited to personal consumption 

expenditures and gross private domestic 

investment. 

30For example, in Puerto Rico, personal 

consumption expenditures plus gross private 

domestic investment equaled $73.4 billion. 

Therefore, Puerto Rico gross output was calculated 

as $73.4 billion × 1.5 = $110.1 billion. 

31For the U.S. territories, the unincorporated selfemployed are excluded because CPS data are not 

available on the number of unincorporated selfemployed workers in U.S. territories. 

rulemaking. The Department also 

excluded (1) awards for financial 

assistance such as direct payments, 

loans, and insurance; and (2) contracts 

performed outside the U.S. because SCA 

coverage is limited to the 50 states, the 

District of Columbia, and certain U.S. 

territories. 

To determine the share of all output 

associated with SCA contracts, the 

Department divided contracting 

expenditures by gross output, in each 2- 

digit NAICS code.27 This results in 0.93 

percent of output being covered by SCA 

contracts (Table 2). The Department 

then multiplied the ratio of covered-togross output by private sector 

employment for each NAICS code to 

estimate the share of employees working 

on SCA contracts. The Department’s 

private sector employment number is 

primarily comprised of employment 

from the May 2019 Occupational 

Employment and Wage Statistics 

(OEWS) data, formerly Occupational 

Employment Statistics.28 However, the 

OEWS excludes unincorporated selfemployed workers, so the Department 

supplemented OEWS data with data 

from the 2019 Current Population 

Survey Merged Outgoing Rotation 

Group (CPS MORG) to include 

unincorporated self-employed workers 

in the estimate of workers. 

According to this methodology, the 

Department estimates there are 1.4 

million workers on SCA covered 

contracts in the 50 States and the 

District of Columbia (see Table 2 below). 

This methodology represents the 

number of year-round-equivalent 

potentially affected workers who work 

exclusively on SCA contracts. Thus, 

when the Department refers to 

potentially affected employees in this 

analysis, the Department is referring to 

this conceptual number of people 

working exclusively on covered 

contracts. The total number of 

potentially affected workers will likely 

exceed this number because not all 

workers work exclusively on SCA 

contracts. However, some of the total 

number of potentially affected workers 

may not be covered by this rulemaking. 

ii. Workers on SCA Contracts in the U.S. 

Territories 

The methodology used to estimate 

potentially affected workers in certain 

U.S. territories (American Samoa, the 

Commonwealth of the Northern Mariana 

Islands, Guam, Puerto Rico, and the U.S. 

Virgin Islands) is similar to the 

methodology used above for the 50 

States and the District of Columbia. The 

primary difference is that data on gross 

output in the U.S. territories are not 

available, and so the Department had to 

make some additional assumptions. The 

Department approximated gross output 

in the U.S. territories by calculating the 

ratio of gross output to Gross Domestic 

Product (GDP) for the U.S. (1.5), then 

multiplying that ratio by GDP in each 

territory to estimate total gross 

output.29 30 The other difference is the 

analysis is not performed by NAICS 

because the GDP data are not available 

at that level of disaggregation. 

The rest of the methodology follows 

the methodology for the 50 States and 

the District of Columbia. To determine 

the share of all output associated with 

SCA contracts, the Department divided 

contract expenditures from 

USASpending.gov for each territory by 

gross output. The Department then 

multiplied the ratio of covered contract 

spending to gross output by private 

sector employment (from the OEWS) to 

estimate the number of workers working 

on covered contracts (9,900).31

TABLE 2—NUMBER OF POTENTIALLY AFFECTED WORKERS

NAICS 

Total private 

output 

(billions) a

Covered 

contracting 

output 

(millions) b

Share output 

from covered 

contracting 

(%) 

Private 

sector workers 

(1,000s) c

Workers on 

SCA 

contracts 

(1,000s) d

11 ......................................................................................... $450 $431 0.10 1,168 1 

21 ......................................................................................... 577 104 0.02 699 0 

22 ......................................................................................... 498 2,350 0.47 547 3 

23 ......................................................................................... 1,662 7,218 0.43 9,100 40 

31–33 ................................................................................... 6,266 42,023 0.67 12,958 87 

42 ......................................................................................... 2,098 183 0.01 5,955 1 

44–45 ................................................................................... 1,929 331 0.02 16,488 3 

48–49 ................................................................................... 1,289 14,288 1.11 6,215 69 

51 ......................................................................................... 1,942 10,308 0.53 2,971 16 

52 ......................................................................................... 3,161 12,474 0.39 6,180 24 

53 ......................................................................................... 4,143 968 0.02 2,699 1 

54 ......................................................................................... 2,487 151,809 6.10 10,581 646 

55 ......................................................................................... 675 0 0.00 2,470 0 

56 ......................................................................................... 1,141 36,238 3.18 10,158 323 

61 ......................................................................................... 381 4,140 1.09 3,271 36 

62 ......................................................................................... 2,648 11,130 0.42 20,791 87 

71 ......................................................................................... 382 82 0.02 2,949 1 

72 ......................................................................................... 1,192 1,019 0.09 14,303 12 

81 ......................................................................................... 772 2,699 0.35 5,260 18 

Territories ............................................................................. 156 1,501 (e) 963 9.9 


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32Center for American Progress, ‘‘Federal 

Contracting Doesn’t Go Far Enough to Protect 

American Workers.’’ November 19, 2020. Available 

at: https://www.americanprogressaction.org/article/ 

federal-contracting-doesnt-go-far-enough-protectamerican-workers/. 

33This includes the median base wage of $30.83 

from the 2021 OEWS plus benefits paid at a rate of 

46 percent of the base wage, as estimated from the 

BLS’s Employer Costs for Employee Compensation 

(ECEC) data, and overhead costs of 17 percent. 

OEWS data available at: https://www.bls.gov/ 

news.release/ocwage.t01.htm. 

TABLE 2—NUMBER OF POTENTIALLY AFFECTED WORKERS—Continued 

NAICS 

Total private 

output 

(billions) a

Covered 

contracting 

output 

(millions) b

Share output 

from covered 

contracting 

(%) 

Private 

sector workers 

(1,000s) c

Workers on 

SCA 

contracts 

(1,000s) d

Total .............................................................................. 33,691 297,794 0.88 134,761 1,376 

aBureau of Economic Analysis, NIPA Tables, Gross output. 2019. For territories, gross output is estimated by multiplying total GDP for the territory by the ratio of total gross output to total GDP for the U.S. b USASpending.gov. Contracting expenditures for covered contracts in 2019. cOEWS May 2019. Excludes Federal U.S. Postal service employees, employees of government hospitals, and employees of government educational institutions. For non-territories, added to the OWES employee estimates were unincorporated self-employed workers from the 2019 CPS 

MORG data. dAssumes share of expenditures on contracting is same as share of employment. Assumes employees work exclusively, year-round on Federal contracts. Thus, this may be an underestimate if some employees are not working entirely on Federal contracts. eVaries based on U.S. territory. 

Because there is no readily available 

data source on workers on SCA 

contracts, and employment is spread 

throughout many industries, the 

Department was unable to provide any 

estimates of demographic information 

for potentially affected workers. In the 

proposed rule, the Department asked for 

comments regarding any data sources 

that would allow it to analyze the 

demographic composition of SCA 

contract workers, so that it could better 

assess any equity impacts of this 

rulemaking. In their comment, the 

Center for American Progress (CAP) 

noted that women and people of color 

are overrepresented in many of the 

service industries that the Federal 

government contracts out. CAP, along 

with multiple other commenters, cited 

their analysis which looked at 

industries with significant Federal 

contracting spending and found that 

women and people of color were 

overrepresented in industries such as 

building services, administrative 

services, security services, nursing care, 

and meat and food processing.32 In their 

comment, the American Federation of 

State, County, and Municipal 

Employees (AFSCME) also noted that 

‘‘[c]overed workers under the SCA 

comprise a disproportionate share of 

women, people of color, LGBTQ 

individuals, people with disabilities, 

and veterans compared to the workforce 

as a whole.’’ They stated that this rule 

will help reduce historical inequities in 

the effects of job displacement for these 

groups. 

C. Costs 

1. Rule Familiarization Costs 

This rule would impose direct costs 

on some covered contractors that will 

review the regulations to understand 

their responsibilities. Both firms that 

currently hold contracts that may be 

awarded to a successor contractor in the 

future and firms that are considering 

bidding on an SCA contract may be 

interested in reviewing this rule, so the 

Department used the upper-bound 

estimate of 442,761 potentially affected 

firms to calculate rule familiarization 

costs. This is an overestimate, because 

not all of the firms that are registered in 

SAM currently hold contracts or will 

bid on an SCA contract. Those that do 

not hold contracts and are not interested 

in bidding would not need to review the 

rule. 

The Department estimates that, on 

average, 30 minutes of a human 

resources staff member’s time will be 

spent reviewing the rulemaking. Some 

firms will spend more time reviewing 

the rule, but as discussed above, many 

others will spend less or no time 

reviewing the rule, so the Department 

believes that this average estimate is 

appropriate. Many firms will also just 

rely on the content of the contract 

clause itself as incorporated into a 

solicitation, third-party summaries of 

the rule, or the comprehensive 

compliance assistance materials 

published by the Department. This rule 

is also substantially similar to the 2011 

final rule implementing Executive Order 

13495 (Nondisplacement of Qualified 

Workers Under Service Contracts), with 

which many firms are already familiar. 

Thus, this regulation is not introducing 

an entirely novel policy that would 

require substantially more time for rule 

familiarization. This time estimate only 

represents the cost of reviewing the rule; 

any implementation costs are calculated 

separately below. The cost of this time 

is the median loaded wage for a 

Compensation, Benefits, and Job 

Analysis Specialist of $50.25 per hour.33

Therefore, the Department has estimated 

regulatory familiarization costs to be 

$11,124,370 ($50.25 per hour × 0.5 hour 

× 442,761 contractors). The Department 

has included all regulatory 

familiarization costs in Year 1. 

2. Implementation Costs 

This rule contains various 

requirements for contractors. The rule 

includes a contract clause provision 

requiring contracting agencies to ensure 

that service contracts and subcontracts 

that succeed a contract for performance 

of the same or similar work, and 

solicitations for such contracts and 

subcontracts, include the 

nondisplacement contract clause. This 

provision comes directly from Executive 

Order 14055, and the Department 

estimated that it will take an average of 

30 minutes total for contractors to 

incorporate the contract clause into 

their covered subcontracts. This 

estimate is similar to the one used in the 

Executive Order 13495 final rule. A 

contractor must provide notices to 

affected workers and their collective 

bargaining representatives, if any, in 

writing of the agency’s determination to 

grant an exception and of the 

opportunity to provide information 

relevant to an agency’s location 

continuity determination. Additionally, 

predecessor contractors are required to 

provide written notice to service 

employees employed under the contract 

of their possible right to an offer of 

employment on the successor contract. 

Contractors may also be required to 

retroactively incorporate a contract 

clause into subcontracts when it was not 

initially incorporated. In the NPRM, the 

Department estimated that these 

requirements would take an average of 

30 minutes for each contractor. The 

Department explained that this average 


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34Because the work of the contracting agency 

may be split among different positions, the 

Department has used the wage of a more senior 

position for the estimate. 

35The Department has used the 2021 Rest of 

United States salary table to estimate salary 

expenses. See https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/salary-tables/ 

21Tables/html/RUS_h.aspx. 

36Based on a 2017 study from CBO. 

Congressional Budget Office, ‘‘Comparing the 

Compensation of Federal and Private-Sector 

Employees, 2011 to 2015,’’ April 25, 2017, https:// 

www.cbo.gov/publication/52637. 

estimate is appropriate because some of 

these requirements would not apply to 

all potentially affected contractors. For 

example, the requirement that a 

contractor send an agency exception 

notice would only apply when an 

agency grants an exception. In this final 

rule, the Department has increased this 

estimate to an average of 45 minutes for 

each contractor. This increase is to 

account for the change to the locationcontinuity notice procedure in the final 

rule, which now requires contractors to 

provide collective bargaining 

representatives with notice of an 

opportunity to provide information 

regarding location continuity 

determinations where a location change 

is possible. Under this amended 

procedure, location-continuity notices 

still will not be required for all 

predecessor contracts; but they will be 

required wherever a location change is 

possible, whereas under the NPRM, the 

provision required notice only after 

contracting agencies determine not to 

require location continuity. The 

increase is also to account for the time 

it takes a successor contractor to issue 

an offer letter (to a predecessor 

employee) in circumstances where the 

successor contractor otherwise may not 

have needed to issue an offer letter to 

staff the successor contract. 

For these cost estimates, the 

Department used the lower-bound of 

potentially affected firms (119,695), 

because only the firms that will have a 

covered contract would incur these 

implementation costs. The cost of this 

time is the median loaded wage for a 

Compensation, Benefits, and Job 

Analysis Specialist of $50.25 per hour. 

Therefore, the Department has estimated 

the cost of these requirements to be 

$7,518,342 ($50.25 per hour × 1.25 hour 

× 119,695 contractors). This estimate is 

likely an overestimate because many 

SCA contracts can last for several years. 

Therefore, only a fraction of these firms 

would need to include the required 

contract clause in subcontracts each 

year since the clause only needs to be 

included in new contracts (which under 

Executive Order 14055 and this rule do 

not include options or other extensions) 

and their subcontracts. 

Under this rule, contracting agencies 

will, among other things, be required to 

ensure contractors provide notice to 

employees on predecessor contracts of 

their possible right to an offer of 

employment. Contracting agencies will 

also be required to consider whether 

performance of the work in the same 

locality or localities in which a 

predecessor contract is currently being 

performed is reasonably necessary to 

ensure economical and efficient 

provision of services. Contracting 

agencies would also be required to 

provide the list of employees on the 

predecessor contract to the successor 

contractor, to forward complaints and 

other pertinent information to WHD, 

and to incorporate the contract clause 

post-award when it was not initially 

incorporated. Please see section II.B. for 

a more in-depth discussion of 

contracting agency requirements. The 

Department estimates that it will take 

the contracting agencies an extra 2.5 

hours of work on average on each 

covered contract, and that the work will 

be performed by a GS 14, Step 1 Federal 

employee contracting officer, with a 

fully loaded hourly wage of $97.04.34

This includes the median base wage of 

$52.17 from Office of Personnel 

Management salary tables,35 plus 

benefits paid at a rate of 69 percent of 

the base wage,36 and overhead costs of 

17 percent. Using the USASpending 

data mentioned above, the Department 

estimated that there were 576,122 

contracts. In order to estimate the share 

of these contracts that are new in a 

given year, the Department has used 20 

percent (115,224), because SCA 

contracts tend to average about 5 years. 

Therefore, the estimated cost to 

contracting agencies is $27,953,342 

($97.04 per hour × 2.5 hours × 115,224 

contracts). 

3. Recordkeeping Costs 

This rule will require a predecessor 

contractor to, no less than 30 calendar 

days before completion of the 

contractor’s performance of services on 

a contract, furnish the contracting 

officer a list of the names of all service 

employees under the contract and its 

subcontracts at that time. This list must 

also contain the anniversary dates of 

employment for each service employee 

on the contract and its predecessor 

contracts with either the current or 

predecessor contractors or their 

subcontractors. If changes to the 

workforce are made after the submission 

of this certified list, this rule will also 

require a contractor to furnish the 

contracting officer a certified list of the 

names of all service employees working 

under the contract and its subcontracts 

during the last month of contract 

performance not less than 10 business 

days before completion of the contract. 

This rule also specifies the records 

successor contractors would be required 

to maintain, including copies of or 

documentation of any written offers of 

employment and copies of the written 

notices that have been posted or 

delivered. The rule will also require 

contractors to maintain a copy of any 

record that forms the basis for any 

exclusion or exception claimed, the 

employee list provided to the 

contracting agency, and the employee 

list received from the contracting 

agency. 

The Department estimates that the 

extra time associated with keeping and 

providing these records, including the 

list of employees, to be an average of 1 

hour per firm per year, and that the 

work will be completed by a 

Compensation, Benefits, and Job 

Analysis Specialist, at a rate of $50.25 

per hour. The estimated recordkeeping 

cost is $6,014,674 ($50.25 per hour × 1 

hour × 119,695). 

4. Summary of Costs 

Costs in Year 1 consist of $11,124,370 

in rule familiarization costs, 

$35,471,685 in implementation costs 

($7,518,342 for contractors and 

$27,953,342 for contracting agencies), 

and $6,014,674 in recordkeeping costs. 

Therefore, total Year 1 costs are 

$52,610,728. Costs in the following 

years consist only of implementation 

and recordkeeping costs and amount to 

$41,486,358. Average annualized costs 

over 10 years are $43 million using a 7 

percent discount rate, and $52 million 

using a 3 percent discount rate. 

5. Other Potential Impacts 

This rule requires successor 

contractors and subcontractors to make 

a bona fide, express offer of employment 

to each employee to a position for 

which the employee is qualified, and to 

state the time within which the 

employee must accept such offer. To 

match employees with suitable jobs 

under this rule, successor contractors 

will have to spend time evaluating the 

predecessor contract employees and 

available positions. However, those 

successor contractors that currently hire 

new employees for a contract already 

must recruit workers and evaluate their 

qualifications for positions on the 

contract. Thus, successor contractors 

will likely spend at most an equal 

amount of time determining job 

suitability under this final rule as under 

current practices. To the extent that, in 

the absence of this rule, a successor 


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37 In support of their analysis, NELP cited a study 

in an academic journal. See Jennie E. Brand, ‘‘The 

Far-Reaching Impact of Job Loss and 

Unemployment.’’ Annual Review of Sociology. Aug 

2015. https://www.ncbi.nlm.nih.gov/pmc/articles/ 

PMC4553243/. 

38See Ben Miller, IBM: Government Data 

Breaches Becoming Less Costly (Aug. 18, 2020), 

https://www.govtech.com/data/ibm-governmentdata-breaches-becoming-less-costly.html. 

39U.S. Dep’t of Def., Def. Counterintel. & Sec. 

Agency, DCSA Products & Services Billing Rates for 

Fiscal Years 2023 and 2024 (June 30, 2022), 

available at https://www.dcsa.mil/Portals/91/ 

Documents/pv/GovHRSec/FINs/FY22/FIN_22-01_

FY23-FY24-Billing-Rates_30June2022.pdf; Lindsey 

Kyzer, How Much Does It Cost to Obtain a 

Clearance—FY 2022/23 Costs Go Down, 

ClearanceJobs (Sept. 7, 2021, available at https://

news.clearancejobs.com/2021/09/07/how-muchdoes-it-cost-to-obtain-a-clearance-fy-2022-23-costsgo-down/. 

40 Kuhn, Peter and Lizi Yu. 2021. ‘‘How Costly is 

Turnover? Evidence from Retail.’’ Journal of Labor 

Economics 39(2), 461–496. 

41Bahn, Kate and Carmen Sanchez Cumming. 

2020. ‘‘Improving U.S. labor standards and the 

quality of jobs to reduce the costs of employee 

turnover to U.S. companies.’’ Washington Center for 

Equitable Growth Issue Brief. https://

equitablegrowth.org/improving-u-s-labor-standardsand-the-quality-of-jobs-to-reduce-the-costs-ofemployee-turnover-to-u-s-companies/. 

42Heather Boushey and Sarah Jane Glynn, There 

Are Significant Business Costs to Replacing 

Employees, Center for American Progress, 

November 2012. https://www.americanprogress.org/ 

article/there-are-significant-business-costs-toContinued 

contractor would need to hire an 

entirely new workforce when it is 

awarded a contract, the requirement for 

it to make offers of employment to the 

predecessor contractor’s workforce 

could save the contractor time if the 

predecessor contract employees hold 

the same positions that the successor 

contractor is looking to fill. It may be 

easier to determine job suitability for 

workers already working in those 

positions on the contract than it would 

be for workers who are new to both the 

contract and the successor contractor. 

Many successor contractors may 

already be keeping the predecessor 

contractor’s employees on the contract, 

so the Executive order and this rule 

would not impact any existing hiring 

practices for these firms. 

There may be some cases in which the 

successor contractor had existing 

employees that it planned to assign to 

a newly awarded contract, but the 

requirement to offer employment to 

predecessor contract workers would 

make the successor contractor’s existing 

employees redundant. In this situation, 

if the successor contractor truly could 

not find another position for the 

employee on the new contract or on any 

of their other existing projects, the 

continued employment of a predecessor 

contract worker could be offset by the 

successor contract worker being laid off. 

While this could potentially happen in 

certain circumstances immediately 

following the publication of this 

regulation, the Department expects that 

this situation would become relatively 

uncommon in the future once 

contractors are familiar with the 

requirements of the rule and can plan 

their staffing accordingly. Furthermore, 

these workers may themselves also be 

protected by the Executive order. If they 

are currently working on a covered 

contract which is then awarded to 

another contractor, they would receive 

offers of employment from the successor 

contractor. 

This rule will not affect wages that 

contractors will pay employees, because 

other applicable laws already establish 

the minimum wage rate for each 

occupation to be incorporated into the 

contract. This rule does not require 

successor contractors to pay wages 

higher than the rate required by the 

SCA, Executive Order 14026 (Increasing 

the Minimum Wage for Federal 

Contractors), or Executive Order 13658 

(Establishing a Minimum Wage for 

Contractors). Executive Order 14055 and 

this rule also do not require the 

successor contractor to pay workers the 

same wages that they were paid on the 

predecessor contract. Although workers’ 

wages may increase or decrease with the 

changing of contracts, any change will 

not be a result of this rule. What this 

rule will do is help ensure that these 

workers have continued employment, 

saving them the costs of finding a new 

job. The requirement for successor 

contractors to make bona fide offers of 

employment could also prevent 

unemployment and increase job security 

for predecessor contract workers. This, 

in turn, could reduce reliance on social 

safety net programs and improve wellbeing for such workers. In their 

comment, NELP agreed that displaced 

workers may suffer financial hardship 

and communities could see an increased 

need for social insurance programs.37 As 

discussed above, the benefits of 

increased job security and prevention of 

unemployment could be offset in some 

cases in which the successor contractor 

has existing employees for whom it is 

unable to find positions because of the 

requirements of this rule. The 

Department did not receive any 

comments discussing this scenario. 

D. Benefits 

Executive Order 14055 states that 

using a carryover workforce reduces 

disruption in the delivery of services 

during the period of transition between 

contractors, maintains physical and 

information security, and provides the 

Federal Government with the benefits of 

an experienced and well-trained 

workforce that is familiar with the 

Federal Government’s personnel, 

facilities, and requirements. A 2020 

report from IBM estimated that data 

breaches in the public sector cost about 

$1.6 million per breach, and about 28 

percent of data breaches are due to 

human error.38 Maintaining the same 

staff on a Federal Government contract 

could reduce the occurrence of these 

costly data breaches. The Coalition 

agreed that the rule will promote 

physical and information security. They 

note, ‘‘Whether through building 

security, janitorial services provided in 

a secure facility, or CMS call center 

representatives addressing callers’ 

personal health information, federal 

service contract workers regularly 

provide physical security and work with 

or adjacent to classified, sensitive, or 

private personal information. Retaining 

those workers across service contracts 

limits the need for costly training and 

vetting[.]’’ They also note that the 

requirements of this rule will lead to 

cost savings for new contractors and the 

Federal Government, because of the 

extensive security clearance process 

required to enter Federal buildings. 

They stated that, ‘‘[a]ccording to the 

Defense Counterintelligence and 

Security Agency, prices for new 

background investigations and 

clearances for fiscal year 2023 will range 

from $140 each at the lowest level of 

vetting, to $400 for a secret clearance, 

and then up to $5,140 for a top-secret 

clearance.’’ 39 If successor contractors 

hire predecessor contractor employees 

who already have the necessary security 

clearances, it could lead to cost savings. 

The requirements of the Executive 

order and this rule also will help reduce 

training costs, which can be costly for 

firms and therefore for the agency that 

contracts with them. Training costs are 

a component of turnover costs. One 

study found a modest cost associated 

with employee turnover, finding 10 

percent turnover is about as costly as a 

0.6 percent wage increase.40 Another 

paper conducted an analysis of case 

studies and found that turnover costs 

represent 39.6 percent of a position’s 

annual wage.41 Multiple commenters 

also agreed that this rule would help 

reduce turnover, and they provided 

additional sources showing the high 

cost of turnover in multiple industries. 

The Economic Policy Institute (EPI) 

cited research showing that ‘‘worker 

turnover can cost employers 

approximately one-fifth of a job’s salary 

to fill each vacancy, plus an average of 

nearly $1,300 in training expenditures 

for each new hire.’’ 42 Other commenters 


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replacing-employees/. Lorri Freifeld, ‘‘2020 

Training Industry Report,’’ Training Magazine, 

November 17, 2020. https://pubs.royle.com/ 

publication/?m=20617&i=678873&p=30

&ver=html5. 

43TaeYoun Park and Jason Shaw, ‘‘Turnover 

Rates and Organizational Performance: A MetaAnalysis,’’ Journal of Applied Psychology, 98 (2) 

(2013): 268–309. https://leeds-faculty.colorado.edu/ 

dahe7472/Park%20and%20Shaw

%20Turnover%20rates%20and%20organizational

%20performance_%20A%20meta-analysis%

202013.pdf. 

44Mahesh Subramony and Brook Holtom, ‘‘The 

LongTerm Influence of Service Employee Attrition 

on Customer Outcomes and Profits,’’ Journal of 

Service Research, 15 (4) (2012): 460–473. https://

www.researchgate.net/publication/258158753_The_

Long-Term_Influence_of_Service_Employee_

Attrition_on_Customer_Outcomes_and_Profits. 

45The Department also acknowledges that prime 

contracts that are less than $250,000 and their 

subcontracts would not be covered by this 

regulation but has not made an adjustment for these 

contracts in the estimation of covered contractors. 

Therefore, this estimate may be an overestimate of 

the number of contractors that are actually affected. 

cited literature showing that turnover 

impacts organizational performance and 

customer service.43 44 This rule will lead 

to staffing continuity from the 

perspective of the customer (both the 

Federal government and its clients) and 

could therefore lead to improved 

service. 

E. Comments Received Relating to the 

Economic Analysis 

The Department received various 

other comments on the impacts 

discussed in this economic analysis. For 

example, both ABC and PSC generally 

contended that the Department did not 

provide evidentiary support that the 

rule would actually achieve greater 

efficiency in federal procurement. The 

Department notes that section IV.D. 

discusses various ways in which the 

rule is expected to promote increased 

efficiency, such as through reduced 

turnover and by maintaining 

information security. Additionally, PSC 

said that the Department did not offer 

any analysis or studies concluding that 

the potential benefits would outweigh 

the administrative costs that the rule 

would impose on contractors and 

contracting agencies. They also noted 

that the Department only included 

studies about the costs of turnover in 

the retail sector, so in light of this 

comment, the Department has included 

a discussion of additional literature 

provided by other commenters in the 

above section. Moreover, as noted 

above, Executive Order 13563 

recognizes that some costs and benefits 

are difficult to quantify and provides 

that, when appropriate and permitted by 

law, agencies may consider and discuss 

qualitatively values that are difficult or 

impossible to quantify. The cost of data 

security breaches is such a cost, with 

individual data security breaches having 

the potential for widespread private 

costs where confidential personal 

information may be involved or very 

difficult to quantify public costs where 

data breaches may involve national 

security. See, e.g., Protecting Against 

Nat’l Sec. Threats to the Commc’ns 

Supply Chain Through FCC Programs, 

34 F.C.C. Rcd. 11423, 11466–67 (2019) 

(noting that such national securityrelated benefits of data security are 

particularly hard to quantify). 

One commenter asserted that the true 

costs of implementing this rule are 

unknown. They state that the cost 

estimate does not include the time it 

will take successor contractors to track 

down the predecessor contractor’s 

employees. The Department believes 

that because the rule requires the 

predecessor contractor to provide the 

successor contractor with a list of its 

employees and their contact 

information, it will not take successor 

contractors a significant amount of time 

to get in contact with employees. The 

commenter also stated that the cost 

estimate does not include the ‘‘resources 

needed for contractors (and 

subcontractors) to onboard the 

predecessor’s SCA employees at the last 

minute.’’ The Department believes that 

any cost to onboard predecessor 

contract employees will be alleviated 

because these workers are already 

familiar with the work of the contract. 

The successor contractor will therefore 

save on training costs. 

V. Final Regulatory Flexibility Act 

Analysis 

The Regulatory Flexibility Act of 1980 

(RFA), 5 U.S.C. 601 et seq., as amended 

by the Small Business Regulatory 

Enforcement Fairness Act of 1996, 

Public Law 104–121 (March 29, 1996), 

requires Federal agencies engaged in 

rulemaking to consider the impact of 

their rules on small entities, consider 

alternatives to minimize that impact, 

and solicit public comment on their 

analyses. The RFA requires the 

assessment of the impact of a regulation 

on a wide range of small entities, 

including small businesses, not-forprofit organizations, and small 

governmental jurisdictions. Agencies 

must perform a review to determine 

whether a proposed or final rule would 

have a significant economic impact on 

a substantial number of small entities. 5 

U.S.C. 603, 604. 

A. Need for, and Objectives of, the Rule 

On November 18, 2021, President 

Joseph R. Biden, Jr. issued Executive 

Order 14055, ‘‘Nondisplacement of 

Qualified Workers Under Service 

Contracts.’’ 86 FR 66397 (Nov. 23, 

2021). This order explains that when a 

service contract expires, and a follow-on 

contract is awarded for the same or 

similar services, the Federal 

Government’s procurement interests in 

economy and efficiency are best served 

when the successor contractor or 

subcontractor hires the predecessor’s 

employees, thus avoiding displacement 

of these employees. The Department is 

issuing this final rule to implement the 

directives of the Executive order. 

B. Comments Received in Response to 

the Initial Regulatory Flexibility 

Analysis 

The Department received a few 

comments regarding the rule’s impact 

on small businesses. For example, ABC 

stated that the proposed rule would 

disincentivize small businesses from 

engaging in federal contracting. They 

requested that DOL provide additional 

flexibility to small business contractors 

and provide businesses with a Small 

Entity Compliance Guide. Following 

issuance of this rule, the Department 

will publish a Small Entity Compliance 

Guide, which will help small entities 

comply with the requirements of 

Executive Order 14055 and these 

implementing regulations. The 

Department will also publish 

subregulatory guidance and offer 

technical assistance to help businesses 

understand and comply with the rule. In 

its comment, PSC stated that ‘‘[w]hile 

small business employees may be 

retained by successor contractors, small 

businesses themselves may suffer from 

employee attrition to follow-on 

successors.’’ While predecessor 

contractors of all sizes could see some 

employee attrition if their current 

employees chose to remain on the 

contract, the Department notes that this 

rule can be expected to benefit small 

businesses who are successor 

contractors, because they will gain 

employees who are already familiar 

with the work of the contract. 

The Chief Counsel for Advocacy of 

the Small Business Administration did 

not provide a comment on the proposed 

rulemaking. 

C. Estimating the Number of Small 

Businesses Affected by the Rulemaking 

In order to determine the number of 

small businesses that will be affected by 

the rulemaking, the Department 

followed the same methodology laid out 

in section IV.B.1. of the economic 

analysis.45 For the data from 

USASpending.gov, the business 

determination was based on the 


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46This includes the median base wage of $32.30 

from the 2020 OEWS plus benefits paid at a rate of 

46 percent of the base wage, as estimated from the 

BLS’s Employer Costs for Employee Compensation 

(ECEC) data, and overhead costs of 17 percent. 

OEWS data available at: https://www.bls.gov/oes/ 

current/oes131141.htm. 

inclusion of ‘‘small’’ or ‘‘SBA’’ in the 

business type. For GSA’s System for 

Award Management (SAM) for February 

2022, if a company qualified as a small 

business in any reported NAICS, they 

were classified as ‘‘small.’’ Table 3 

shows the range of potentially affected 

small firms by industry. The total 

number of potentially affected small 

firms ranges from 74,097 to 329,470. 

TABLE 3—RANGE OF POTENTIALLY AFFECTED SMALL FIRMS

Industry NAICS 

Lower-bound estimate Upper-bound estimate 

Total Small primes from 

USASpending.gov 

Small 

subcontractors from 

USASpending.gov 

Total 

Small 

firms from 

SAM 

Small 

subcontractors from 

USASpending.gov 

Agriculture, forestry, fishing and hunting ................ 11 2,198 2,198 0 3,849 3,849 0 

Mining ..................................................................... 21 94 72 22 888 866 22 

Utilities .................................................................... 22 374 358 16 1,601 1,585 16 

Construction ............................................................ 23 8,290 4,348 3,942 45,683 41,741 3,942 

Manufacturing ......................................................... 31–33 6,621 4,243 2,378 39,631 37,253 2,378 

Wholesale trade ...................................................... 42 516 411 105 15,810 15,705 105 

Retail trade ............................................................. 44–45 227 222 5 7,500 7,495 5 

Transportation and warehousing ............................ 48–49 2,120 1,989 131 14,854 14,723 131 

Information .............................................................. 51 2,352 2,218 134 11,208 11,074 134 

Finance and insurance ........................................... 52 179 154 25 2,299 2,274 25 

Real estate and rental and leasing ........................ 53 2,068 2,068 0 7,654 7,654 0 

Professional, scientific, and technical services ...... 54 24,371 20,164 4,207 90,547 86,340 4,207 

Management of companies and enterprises .......... 55 0 0 0 290 290 0 

Administrative and waste services ......................... 56 10,251 9,060 1,191 30,932 29,741 1,191 

Educational services ............................................... 61 2,224 2,123 101 11,800 11,699 101 

Health care and social assistance ......................... 62 4,060 4,054 6 16,904 16,898 6 

Arts, entertainment, and recreation ........................ 71 546 546 0 3,944 3,944 0 

Accommodation and food services ........................ 72 2,102 2,098 4 9,321 9,317 4 

Other services ........................................................ 81 5,504 5,479 25 14,755 14,730 25 

Total private ..................................................... .............. 74,097 61,805 12,292 329,470 317,178 12,292 

D. Compliance Requirements of the 

Rule, Including Reporting and 

Recordkeeping 

The rule includes a contract clause 

provision requiring contracting agencies 

to ensure that service contracts and 

subcontracts that succeed a contract for 

performance of the same or similar 

work, and solicitations for such 

contracts and subcontracts, include the 

nondisplacement contract clause. The 

rule also requires contracting agencies 

to incorporate the nondisplacement 

contract clause in applicable contracts; 

ensure contractors provide notices to 

employees on predecessor contracts of 

their possible right to an offer of 

employment, of agency decisions to 

except a successor contract from 

nondisplacement requirements, and of 

employees’ opportunity to provide 

information relevant to the location 

continuity analysis; and to consider 

whether performance of the work in the 

same locality or localities in which a 

predecessor contract is currently being 

performed is reasonably necessary to 

ensure economical and efficient 

provision of services. Contracting 

agencies will also be required, among 

other things, to provide the list of 

employees on the predecessor contract 

to the successor, to forward complaints 

and other pertinent information to 

WHD, and to incorporate the contract 

clause when it was not initially 

incorporated. See Section II.B. for a 

more in-depth discussion of contracting 

agency requirements. 

This rule requires a contractor, no less 

than 30 calendar days before completion 

of the contractor’s performance of 

services on a contract, to furnish the 

contracting officer a list of the names 

and contact information of all service 

employees under the contract and its 

subcontracts at that time. This list must 

also contain the anniversary dates of 

employment for each service employee 

on the contract and its predecessor 

contracts with either the current or 

predecessor contractors or their 

subcontractors. If changes to the 

workforce are made after the submission 

of this certified list, this rule also 

requires a contractor to furnish the 

contracting officer a certified list of the 

names and contact information of all 

service employees working under the 

contract and its subcontracts during the 

last month of contract performance not 

less than 10 business days before 

completion of the contract. See section 

II.B. for a more in-depth discussion of 

requirements for contractors. 

E. Calculating the Impact of the Rule on 

Small Business Firms 

This rule could result in costs for 

small business firms in the form of rule 

familiarization costs, implementation 

costs, and recordkeeping costs. See 

section IV.C. for an in-depth discussion 

of these costs. 

For rule familiarization costs, the 

Department estimates that on average, 

30 minutes of a human resources staff 

member’s time will be spent reviewing 

the rulemaking. Some firms will spend 

more time reviewing the rule, but many 

others will spend less or no time 

reviewing the rule, so the Department 

believes that this average estimate is 

appropriate. This rule is also 

substantially similar to the 2011 final 

rule implementing Executive Order 

13495, with which many firms were 

already familiar. The cost of this time is 

the median loaded wage for a 

Compensation, Benefits, and Job 

Analysis Specialist of $50.25 per hour.46

Therefore, the Department has estimated 

regulatory familiarization costs to be 

$25.13 per small firm ($50.25 per hour 

× 0.5 hour). 

For implementation costs, the 

Department estimates that it will take an 

average of 30 minutes total for 

contractors to incorporate the contract 

clause into their covered subcontracts, 

and another 45 minutes for the other 

contractor requirements discussed in 

Section IV.C.2. The cost of this time is 

the median loaded wage for a 

Compensation, Benefits, and Job 

Analysis Specialist of $50.25 per hour. 

Therefore, the Department has estimated 

the cost of including the required 


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contract clause to be $62.81 per small 

firm ($50.25 per hour × 1.25 hour). 

For recordkeeping costs, the 

Department estimates that the extra time 

associated with keeping and providing 

these records to be an average of 1 hour 

and be completed by Compensation, 

Benefits, and Job Analysis Specialist of 

$50.25 per hour. The estimated 

recordkeeping cost is $50.25 per firm. 

Therefore, the small firms that are 

impacted by this rule could each have 

additional costs of $138.19 in Year 1 

($25.13 + $62.81 + $50.25). 

As discussed in section IV.C.5., the 

Department does not expect there to be 

additional costs for successor contracts 

associated with evaluating predecessor 

contract employees and available 

positions beyond what they already 

would have incurred. In absence of this 

rule, the successor contractor would 

incur costs associated with hiring a new 

workforce and assigning them to 

positions on the contract. The benefits 

discussed in section IV.D. would also 

apply to small firms. 

F. Regulatory Alternatives and the 

Impact on Small Entities 

The Department is issuing a 

rulemaking to implement Executive 

Order 14055 and cannot deviate from 

the language of the Executive order. 

Therefore, there are limited instances in 

which there is discretion to offer 

regulatory alternatives. However, in the 

proposed rule, the Department 

discussed a few specific provisions in 

which limited alternatives could have 

been possible. 

First, the Department has some 

discretion in defining the specific 

analysis that must be completed by 

contracting agencies regarding location 

continuity. The Department considered 

whether to require contracting officers 

to analyze additional factors when 

determining whether to decline to 

require location continuity. In the final 

rule, the Department has limited this 

language to provide a list of factors for 

consideration only when a location 

change is a possibility, and the rule 

suggests the factors that generally 

should be considered but does not 

mandate their consideration. In the final 

rule, the Department also has eliminated 

the proposed requirement that a 

location continuity determination must 

be made in writing by the Senior 

Procurement Executive, and declined to 

adopt reconsideration procedures 

suggested by commenters that could 

have increased the contract 

administration responsibilities of 

agencies related to location continuity 

determinations. The Department also 

proposed, but did not adopt, a 

reconsideration procedure for agency 

exceptions that could have had a similar 

effect. The Department’s decisions not 

to include such requirements and 

procedures reduces the impact of the 

rule on small entities. 

There are also a few places in this rule 

where the Department has developed 

additional requirements beyond what is 

set forth in Executive Order 14055. For 

example, Executive Order 14055 does 

not address the issue of remote work or 

telework, including whether it is 

permissible for a successor contractor to 

allow its incumbent employees in 

similar positions to use remote work or 

telework but not offer remote work or 

telework to predecessor employees in 

similar positions. However, based on 

the Department’s previous enforcement 

experience, lack of clarity on this issue 

leads to confusion on the part of 

stakeholders and difficulties in 

enforcement when trying to determine 

whether the successor contractor has 

offered different employment terms and 

conditions to predecessor employees to 

discourage them from accepting 

employment offers. Accordingly, the 

Department has added the requirement 

that the successor contractor must 

generally offer employees of the 

predecessor contractor the option of 

remote work under reasonably similar 

terms and conditions, where the 

successor contractor has or will have 

any employees in the same or similar 

occupational classifications who work 

or will work entirely in a remote 

capacity. The Department believes that 

these clarifications will help small 

businesses comply with the rulemaking. 

VI. Unfunded Mandates Reform Act of 

1995 

The Unfunded Mandates Reform Act 

of 1995, 2 U.S.C. 1532, requires agencies 

to prepare a written statement, which 

includes an assessment of anticipated 

costs and benefits, before proposing any 

unfunded Federal mandate that may 

result in excess of $100 million 

(adjusted annually for inflation) in 

expenditures in any one year by State, 

local, and tribal governments in the 

aggregate, or by the private sector. This 

rulemaking is not expected to impose 

unfunded mandates that exceed that 

threshold. See section V. for an 

assessment of anticipated costs and 

benefits. 

VII. Executive Order 13132, Federalism 

The Department has reviewed this 

final rule in accordance with Executive 

Order 13132 regarding federalism and 

determined that it does not have 

federalism implications. The final rule 

will not have substantial direct effects 

on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. 

VIII. Executive Order 13175, Indian 

Tribal Governments 

This final rule will not have tribal 

implications under Executive Order 

13175 that would require a tribal 

summary impact statement. The final 

rule will not have substantial direct 

effects on one or more Indian tribes, on 

the relationship between the Federal 

Government and Indian tribes, or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

List of Subjects in 29 CFR Part 9 

Employment, Federal buildings and 

facilities, Government contracts, Law 

enforcement, Labor. 

For the reasons set out in the 

preamble, the Department of Labor 

amends Title 29 of the Code of Federal 

Regulations by adding part 9 

PART 9—NONDISPLACEMENT OF 

QUALIFIED WORKERS UNDER 

SERVICE CONTRACTS 

Sec. 

Subpart A—General 

9.1 Purpose and scope. 

9.2 Definitions. 

9.3 Coverage. 

9.4 Exclusions. 

9.5 Exceptions authorized by Federal 

agencies. 

Subpart B—Requirements 

9.11 Contracting agency requirements. 

9.12 Contractor requirements and 

prerogatives. 

9.13 Subcontracts. 

Subpart C—Enforcement 

9.21 Complaints. 

9.22 Wage and Hour Division investigation. 

9.23 Remedies and sanctions for violations 

of this part. 

Subpart D—Administrator’s Determination, 

Mediation, and Administrative Proceedings 

9.31 Determination of the Administrator. 

9.32 Requesting appeals. 

9.33 Mediation. 

9.34 Administrative Law Judge hearings. 

9.35 Administrative Review Board 

proceedings. 

9.36 Severability. 

Appendix A to Part 9—Contract Clause 

Appendix B to Part 9—Notice to Service 

Contract Employees 

Authority: 5 U.S.C. 301; section 6, E.O. 

14055, 86 FR 66397; Secretary of Labor’s 

Order 01–2014 (Dec. 19, 2014), 79 FR 77527 

(Dec. 24, 2014). 


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Subpart A—General 

§ 9.1 Purpose and scope. 

(a) Purpose. This part contains the 

Department of Labor’s (Department) 

rules relating to the administration of 

Executive Order 14055 (Executive order 

or the order), ‘‘Nondisplacement of 

Qualified Workers Under Service 

Contracts,’’ and implements the 

enforcement provisions of the Executive 

order. The Executive order assigns 

enforcement responsibility for the 

nondisplacement requirements to the 

Department. 

(b) Policy. (1) The Executive order 

states that the Federal Government’s 

procurement interests in economy and 

efficiency are served when the successor 

contractor or subcontractor hires the 

predecessor’s employees. A carryover 

workforce minimizes disruption in the 

delivery of services during a period of 

transition between contractors, 

maintains physical and information 

security, and provides the Federal 

Government the benefit of an 

experienced and well-trained workforce 

that is familiar with the Federal 

Government’s personnel, facilities, and 

requirements. Accordingly, Executive 

Order 14055 sets forth a general position 

of the Federal Government that 

requiring successor service contractors 

and subcontractors performing on 

Federal contracts to offer a right of first 

refusal to suitable employment (i.e., a 

job for which the employee is qualified) 

under the contract to those employees 

under the predecessor contract and its 

subcontracts whose employment will be 

terminated as a result of the award of 

the successor contract will lead to 

improved economy and efficiency in 

Federal procurement. 

(2) The Executive order provides that 

executive departments and agencies, 

including independent establishments 

subject to the Federal Property and 

Administrative Services Act, must, to 

the extent permitted by law, ensure that 

service contracts and subcontracts that 

succeed a contract for performance of 

the same or similar work, and 

solicitations for such contracts and 

subcontracts, include a clause that 

requires the contractor and its 

subcontractors to offer a right of first 

refusal of employment to service 

employees employed under the 

predecessor contract and its 

subcontracts whose employment would 

be terminated as a result of the award 

of the successor contract in positions for 

which the employees are qualified. 

Nothing in Executive Order 14055 or 

this part will be construed to permit a 

contractor or subcontractor to fail to 

comply with any provision of any other 

Executive order, regulation, or law of 

the United States. 

(c) Scope. Neither Executive Order 

14055 nor this part creates or changes 

any rights under the Contract Disputes 

Act, 41 U.S.C. 7101 et seq., or any 

private right of action that may exist 

under other applicable laws. The 

Executive order provides that disputes 

regarding the requirement of the 

contract clause prescribed by section 3 

of the order, to the extent permitted by 

law, must be disposed of only as 

provided by the Secretary of Labor in 

regulations issued under the order. The 

order, however, does not preclude 

review of final decisions by the 

Secretary in accordance with the 

judicial review provisions of the 

Administrative Procedure Act, 5 U.S.C. 

701 et seq. Additionally, the Executive 

order also provides that it is to be 

implemented consistent with applicable 

law and subject to the availability of 

appropriations. 

§ 9.2 Definitions. 

For purposes of this part: 

Administrative Review Board (ARB) 

means the Administrative Review 

Board, U.S. Department of Labor. 

Administrator means the 

Administrator of the Wage and Hour 

Division and includes any official of the 

Wage and Hour Division authorized to 

perform any of the functions of the 

Administrator under this part. 

Agency means an executive 

department or agency, including an 

independent establishment subject to 

the Federal Property and Administrative 

Services Act. 

Associate Solicitor means the 

Associate Solicitor for Fair Labor 

Standards, Office of the Solicitor, U.S. 

Department of Labor, Washington, DC 

20210. 

Business day means Monday through 

Friday, except the legal public holidays 

specified in 5 U.S.C. 6103, any day 

declared to be a holiday by Federal 

statute or executive order, or any day 

with respect to which the U.S. Office of 

Personnel Management has announced 

that Federal agencies in the Washington, 

DC, area are closed. 

Contract or service contract means 

any contract, contract-like instrument, 

or subcontract for services entered into 

by the Federal Government or its 

contractors that is covered by the 

Service Contract Act (SCA). Contract or 

contract-like instrument means an 

agreement between two or more parties 

creating obligations that are enforceable 

or otherwise recognizable at law. This 

definition includes, but is not limited 

to, a mutually binding legal relationship 

obligating one party to furnish services 

and another party to pay for them. The 

term contract includes all contracts and 

any subcontracts of any tier thereunder, 

whether negotiated or advertised, 

including any procurement actions, 

cooperative agreements, provider 

agreements, intergovernmental service 

agreements, service agreements, 

temporary interim contracts, licenses, 

permits, or any other type of agreement, 

regardless of nomenclature, type, or 

particular form, and whether entered 

into verbally or in writing, to the extent 

such contracts and subcontracts are 

subject to the SCA. Contracts may be the 

result of competitive bidding or 

awarded to a single source under 

applicable authority to do so. In 

addition to bilateral instruments, 

contracts include, but are not limited to, 

awards and notices of awards; job orders 

or task letters issued under basic 

ordering agreements; letter contracts; 

orders, such as purchase orders, under 

which the contract becomes effective by 

written acceptance or performance; and 

bilateral contract modifications. 

Contracting officer means an agency 

official with the authority to enter into, 

administer, and/or terminate contracts 

and make related determinations and 

findings. This term includes certain 

authorized representatives of the 

contracting officer acting within the 

limits of their authority as delegated by 

the contracting officer. 

Contractor means any individual or 

other legal entity that is awarded a 

Federal Government service contract or 

subcontract under a Federal 

Government service contract. Unless the 

context of the provision reflects 

otherwise, the term ‘‘contractor’’ refers 

collectively to a prime contractor and all 

of its subcontractors of any tier on a 

service contract with the Federal 

Government. The term ‘‘employer’’ is 

used interchangeably with the terms 

‘‘contractor’’ and ‘‘subcontractor’’ in 

various sections of this part. The U.S. 

Government, its agencies, and 

instrumentalities are not contractors, 

subcontractors, employers, or joint 

employers for purposes of compliance 

with the provisions of the Executive 

order. 

Employee means a service employee 

as defined in the Service Contract Act, 

41 U.S.C. 6701(3), and its implementing 

regulations. 

Employment opening means any 

vacancy in a position on the contract, 

including any vacancy caused by 

replacing an employee from the 

predecessor contract with a different 

employee. 

Federal Government means an agency 

or instrumentality of the United States 

that enters into a contract pursuant to 


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authority derived from the Constitution 

or the laws of the United States. This 

definition does not include the District 

of Columbia or any Territory or 

possession of the United States. 

Month means a period of 30 

consecutive calendar days, regardless of 

the day of the calendar month on which 

it begins. 

Office of Administrative Law Judges 

means the Office of Administrative Law 

Judges, U.S. Department of Labor. 

Same or similar work means work 

that is either identical to or has primary 

characteristics that are alike in 

substance to work performed on another 

service contract. 

Secretary means the U.S. Secretary of 

Labor or an authorized representative of 

the Secretary. 

Service Contract Act means the 

McNamara-O’Hara Service Contract Act 

of 1965, as amended, 41 U.S.C. 6701 et 

seq., and the implementing regulations 

in this subtitle. 

Solicitation means any request to 

submit offers, bids, or quotations to the 

Federal Government. 

United States means the United States 

and all executive departments, 

independent establishments, 

administrative agencies, and 

instrumentalities of the United States, 

including corporations of which all or 

substantially all of the stock is owned 

by the United States, by the foregoing 

departments, establishments, agencies, 

instrumentalities, and including nonappropriated fund instrumentalities. 

When used in a geographic sense, the 

United States means the 50 States, the 

District of Columbia, Puerto Rico, the 

Virgin Islands, Outer Continental Shelf 

lands as defined in the Outer 

Continental Shelf Lands Act, American 

Samoa, Guam, the Commonwealth of 

the Northern Mariana Islands, Wake 

Island, and Johnston Island. 

Wage and Hour Division means the 

Wage and Hour Division, U.S. 

Department of Labor. 

§ 9.3 Coverage. 

(a) This part applies to any contract or 

solicitation for a contract with an 

agency issued or entered on or after the 

applicability date of this part, provided 

that: 

(1) It is a contract for services covered 

by the Service Contract Act; and 

(2) The prime contract is equal to or 

exceeds the simplified acquisition 

threshold as defined in 41 U.S.C. 134. 

(b) Contracts and solicitations that 

satisfy the requirements of paragraph (a) 

of this section, and that succeed a 

contract for performance of the same or 

similar work, must contain the contract 

clause described in § 9.11(a), and 

contractors on such contracts must 

comply with all the requirements of 

§ 9.12 unless the contract is excluded or 

excepted under this part. 

(c) Contracts and solicitations that 

satisfy the requirements of paragraph (a) 

of this section, but do not succeed a 

contract for performance of the same or 

similar work, must contain the contract 

clause described in § 9.11(a), and all 

contractors on such contracts must 

comply with the requirements of 

§ 9.12(a)(4), (e), (f), and (g), unless the 

contract is excluded or excepted under 

this part. 

§ 9.4 Exclusions. 

(a) Small contracts—(1) General. The 

requirements of this part do not apply 

to prime contracts under the simplified 

acquisition threshold set by the Office of 

Federal Procurement Policy Act, as 

amended (41 U.S.C. 134), and any 

subcontracts of any tier under such 

prime contracts. 

(2) Application to subcontracts. The 

amount of the prime contract 

determines whether a subcontract is 

excluded from the requirements of this 

part. If a prime contract is under the 

simplified acquisition threshold, then 

each subcontract under that prime 

contract will also be excluded from the 

requirements of this part. If a prime 

contract meets or exceeds the simplified 

acquisition threshold and meets the 

other coverage requirements of § 9.3, 

then each subcontract for services under 

that prime contract will also be subject 

to the requirements of this part, even if 

the value of an individual subcontract is 

under the simplified acquisition 

threshold. 

(b) Federal service work constituting 

only part of employee’s job. This part 

does not apply to employees who were 

hired to work under a Federal service 

contract and one or more nonfederal 

service contracts as part of a single job, 

provided that the employees were not 

deployed in a manner that was designed 

to avoid the purposes of Executive 

Order 14055. 

§ 9.5 Exceptions authorized by Federal 

agencies. 

(a) A contracting agency may waive 

the application of some or all of the 

provisions of this part as to a prime 

contract, if the senior procurement 

executive within the agency issues a 

written determination that at least one 

of the following circumstances exists 

with respect to that contract: 

(1) Adhering to the requirements of 

Executive Order 14055 or this part 

would not advance the Federal 

Government’s interest in achieving 

economy and efficiency in Federal 

procurement; 

(2) Based on a market analysis, 

adhering to the requirements of the 

order or this part would: 

(i) Substantially reduce the number of 

potential bidders so as to frustrate full 

and open competition, and 

(ii) Not be reasonably tailored to the 

agency’s needs for the contract; or 

(3) Adhering to the requirements of 

the order or this part would otherwise 

be inconsistent with statutes, 

regulations, Executive Orders, or 

Presidential Memoranda. 

(b) Any agency determination to 

exercise its exception authority under 

section 6 of the Executive order and 

paragraph (c)(1) of this section must 

include a specific written explanation, 

including the facts and reasoning 

supporting the determination, and must 

be issued no later than the solicitation 

date. Any agency determination to 

exercise its exception authority under 

section 6 of the Executive order and 

paragraph (c)(1) of this section made 

after the solicitation date or without a 

specific written explanation will be 

inoperative. In such a circumstance, the 

agency must take action, consistent with 

§ 9.11(f), to incorporate the contract 

clause set forth in Appendix A of this 

part into the relevant solicitation or 

contract. Where an agency determines 

that a prime contract is excepted under 

this section, the nondisplacement 

requirements will also not apply to any 

subcontracts under the excepted prime 

contract. For indefinite-deliveryindefinite-quantity (IDIQ) contracts, an 

exception must be granted prior to the 

solicitation date if the basis for the 

exception cited would apply to all 

orders. Otherwise, exceptions must be 

granted for each order by the time of the 

notice of the intent to place an order. 

(c) In exercising the authority to grant 

an exception for a contract because 

adhering to the requirements of the 

order or this part would not advance 

economy and efficiency, the agency’s 

written analysis must, among other 

things, compare the anticipated 

outcomes of hiring predecessor contract 

employees with those of hiring a new 

workforce. The consideration of cost 

and other factors in exercising the 

agency’s exception authority must 

reflect the general findings in section 1 

of the Executive order that the Federal 

Government’s procurement interests in 

economy and efficiency are normally 

served when the successor contractor 

hires the predecessor’s employees and 

must specify how the particular 

circumstances support a contrary 

conclusion. General assertions or 

presumptions of an inability to procure 


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services on an economical and efficient 

basis using a carryover workforce are 

insufficient. 

(1) Factors that the agency may 

consider include, but are not limited to, 

the following: 

(i) Whether factors specific to the 

contract at issue suggest that the use of 

a carryover workforce would greatly 

increase disruption to the delivery of 

services during the period of transition 

between contracts (e.g., the carryover 

workforce in its entirety would not be 

an experienced and trained workforce 

that is familiar with the Federal 

Government’s personnel, facilities, and 

requirements as pertinent to the contract 

at issue and would require extensive 

training to learn new technology or 

processes that would not be required of 

a new workforce). 

(ii) Emergency situations, such as a 

natural disaster or an act of war, that 

physically displace incumbent 

employees from the location of the 

service contract work and make it 

impossible or impracticable to extend 

offers to hire as required by the 

Executive order. 

(iii) Situations where the senior 

procurement executive reasonably 

believes, based on the predecessor 

employees’ past performance, that the 

entire predecessor workforce failed, 

individually as well as collectively to 

perform suitably on the job and that it 

is not in the interest of economy and 

efficiency to provide supplemental 

training to the predecessor’s workers. 

(2) Factors the senior procurement 

executive may not consider in making 

an exception determination related to 

economy and efficiency include any 

general assumption that the use of 

carryover workforces usually or always 

greatly increase disruption to the 

delivery of services during the period of 

transition between contracts; the job 

performance of the predecessor 

contractor (unless a determination has 

been made that the entire predecessor 

workforce failed, individually as well as 

collectively); the seniority of the 

workforce; and the reconfiguration of 

the contract work by a successor 

contractor. The agency also may not 

consider wage rates and fringe benefits 

of service employees in making an 

exception determination except in the 

following exceptional circumstances: 

(i) In emergency situations, such as a 

natural disaster or an act of war, that 

physically displace incumbent 

employees from the locations of the 

service contract work and make it 

impossible or impracticable to extend 

offers to hire as required by the 

Executive order; 

(ii) When a carryover workforce in its 

entirety would not constitute an 

experienced and trained workforce that 

is familiar with the Federal 

Government’s personnel, facilities, and 

requirements but rather would require 

extensive training to learn new 

technology or processes that would not 

be required of a new workforce; or 

(iii) Other, similar circumstances in 

which the cost of employing a carryover 

workforce on the successor contract 

would be prohibitive. 

(d) In exercising the authority to grant 

an exception to a contract because 

adhering to the requirements of the 

order or this part would substantially 

reduce the number of potential bidders 

so as to frustrate full and open 

competition, the contracting agency 

must carry out a market analysis. Where 

an incumbent contractor’s employees 

are covered by a collective bargaining 

agreement, the contracting agency must, 

to the extent consistent with mission 

security, include the employees’ 

representative in any market-researchrelated exchanges with industry that are 

specific to the nondisplacement 

requirement. A likely reduction in the 

number of potential offerors indicated 

by market analysis is not, by itself, 

sufficient to except a contract from 

coverage under this authority unless it 

is coupled with the finding that the 

reduction would not allow for adequate 

competition at a fair and reasonable 

price and adhering to the requirements 

of the order would not be reasonably 

tailored to the agency’s needs. When 

determining whether a fair and 

reasonable price can be achieved, the 

agency must consider current market 

conditions and the extent to which price 

fluctuations may be attributable to 

factors other than the nondisplacement 

requirements (e.g., costs of labor or 

materials, supply chain costs). In 

finding that inclusion of the contract 

clause would not be reasonably tailored 

to the agency’s needs, the agency must 

specify how it intends to more 

effectively achieve the benefits that 

would have been provided by a 

carryover workforce, including physical 

and information security and a 

reduction in disruption of services. 

(e) Before exercising the authority to 

grant an exception to a contract because 

adhering to the requirements of the 

order or this part would otherwise be 

inconsistent with statutes, regulations, 

Executive orders, or Presidential 

Memoranda, the contracting agency 

must consult with the Department of 

Labor, unless the agency has regulatory 

authority for implementing and 

interpreting the statute at issue, or the 

Department has already issued guidance 

finding an exception on the basis at 

issue to be appropriate. 

(f) Section 6 of Executive Order 14055 

requires that, to the extent permitted by 

law and consistent with national 

security and executive branch 

confidentiality interests, each agency 

must publish, on a centralized public 

website, descriptions of the exceptions 

it has granted under this section. Each 

agency must also ensure that the 

contractor notifies affected workers and 

their collective bargaining 

representatives, if any, in writing of the 

agency’s determination to grant an 

exception. Each agency also must, on a 

quarterly basis, report to the Office of 

Management and Budget descriptions of 

the exceptions granted under this 

section. 

Subpart B—Requirements 

§ 9.11 Contracting agency requirements. 

(a) Contract clause. The contract 

clause set forth in Appendix A of this 

part must be included in covered 

service contracts, and solicitations for 

such contracts, that succeed contracts 

for performance of the same or similar 

work, except for procurement contracts 

subject to the Federal Acquisition 

Regulation (FAR). The contract clause in 

Appendix A affords employees who 

worked on the prior contract a right of 

first refusal pursuant to Executive Order 

14055. For procurement contracts 

subject to the FAR, contracting agencies 

must use the clause set forth in the FAR 

developed to implement this section. 

Such clause will accomplish the same 

purposes as the clause set forth in 

appendix A of this part and be 

consistent with the requirements set 

forth in this section. 

(b) Notices. Where a contract will be 

awarded to a successor for the same or 

similar work, the contracting officer 

must take steps to ensure that the 

predecessor contractor provides written 

notice to service employees employed 

under the predecessor contract of their 

possible right to an offer of employment, 

consistent with the requirements in 

§ 9.12(e)(3), and, where relevant, notice 

to employees’ representatives consistent 

with the provisions of § 9.11(c)(4) 

(relating to the location continuity 

analysis), and § 9.5(f) (relating to agency 

exceptions). 

(c) Location continuity. (1) When an 

agency prepares a solicitation for a 

service contract that succeeds a contract 

for performance of the same or similar 

work, the agency must consider whether 

performance of the work in the same 

locality or localities in which the 

contract is currently being performed is 

reasonably necessary to ensure 


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economical and efficient provision of 

services. 

(2) If an agency determines that 

performance of the contract in the same 

locality or localities is reasonably 

necessary to ensure economical and 

efficient provision of services, then the 

agency must, to the extent consistent 

with law, include a requirement or 

preference in the solicitation for the 

successor contract that it be performed 

in the same locality or localities. 

(3) When there is a possibility that the 

successor contract could be performed 

in a locality other than where the 

predecessor contract has been 

performed, and a location change is 

under consideration, an agency’s 

location-continuity analysis should 

generally include, but not be limited to, 

the following considerations: 

(i) Whether factors specific to the 

contract at issue suggest that the 

employment of a new workforce at a 

new location would increase the 

potential for disruption to the delivery 

of services during the period of 

transition between contracts (e.g., the 

large size of workforce to be replaced or 

the relatively significant level of 

experience or training of the 

predecessor workforce); 

(ii) Whether factors specific to the 

contract at issue suggest that the 

employment of a new workforce at a 

new location would unnecessarily 

increase physical or informational 

security risks on the contract (e.g., 

whether workers on the contract have 

had and will have access to sensitive, 

privileged, or classified information); 

(iii) Whether the workforce on the 

predecessor contract has demonstrated 

prior successful performance of contract 

objectives so as to warrant a preference 

to retain as much of the current 

workforce as possible; and 

(iv) Whether program-specific 

statutory or regulatory requirements 

govern the method through which the 

location of contract performance must 

be determined or evaluated, or other 

contract-specific factors favor the 

performance of the contract in a 

particular location. 

(4) Agencies must complete the 

location-continuity analysis required 

under paragraph (c)(1) of this section 

prior to the date of issuance of the 

solicitation. Where an incumbent 

contractor’s employees are covered by a 

collective bargaining agreement and a 

contract location change is possible and 

under consideration, the agency must, 

to the extent consistent with mission 

security, provide the employees with an 

opportunity prior to the issuance of the 

solicitation to submit information 

relevant to this analysis. Under such 

circumstances, the agency must, at the 

earliest reasonable time in the 

acquisition planning process, direct the 

incumbent contractor to notify the 

collective bargaining representative(s) 

for the affected employees of the 

appropriate method to communicate 

such information. 

(i) Method of notice. Agencies must 

direct the incumbent contractor to 

provide notice in the manner set forth 

in this paragraph. The contractor must 

provide written notice directly to the 

employees’ representative in the same 

manner customarily used by the 

contractor to communicate with the 

representative. 

(ii) Model notice. Agencies may use 

the following sample language as a basis 

in preparing their own notices regarding 

location continuity: Notice to 

Employees Regarding Location 

Continuity of Federal Contract Services. 

The contract for [insert type of service] 

services currently performed by [insert 

name of incumbent contractor] is 

scheduled to expire on [insert date]. 

[Insert name of contracting agency] is 

currently preparing a [insert type of 

solicitation] for a new contract for the 

provision of these services. As part of 

the acquisition planning process, [insert 

name of contracting agency] is 

considering whether to require or 

include a preference that these services 

continue to be performed in the same 

locality. If you have information 

regarding the provision of these services 

that would be relevant to this location 

continuity analysis, please contact 

[insert name of contracting agency 

contact] at [insert email address]. Before 

completion of the [insert name of 

incumbent contractor] contract, a 

subsequent notice will be provided to 

employees regarding the rights of 

certain service employees on the current 

contract to an offer of employment on 

any successor contract that is awarded. 

For additional information, contact the 

Wage and Hour Division of the United 

States Department of Labor at 1–866– 

4US–WAGE (1–866–487–9243), https:// 

www.dol.gov/agencies/whd. If you are 

deaf, hard of hearing, or have a speech 

disability, please dial 7–1–1 to access 

telecommunications relay services. 

(5) If the successor contract will be 

performed in a new locality, nothing in 

this part requires the contracting agency 

or the successor contractor to pay the 

relocation costs of employees who 

exercise their right to work for the 

successor contractor or subcontractor 

under the contract clause. 

(d) Disclosures. The contracting 

officer must provide the incumbent 

contractor’s list of employees referenced 

in § 9.12(e) to the successor contractor 

no later than 21 calendar days prior to 

the start of performance on the 

successor’s contract and, on request, the 

predecessor contractor must provide the 

employee list to employees or their 

representatives, consistent with the 

Privacy Act, 5 U.S.C. 552a, and other 

applicable law. When the incumbent 

contractor provides the contracting 

agency with an updated employee list 

pursuant to § 9.12(e)(2), the contracting 

agency will provide the updated list to 

the successor contractor no later than 7 

calendar days prior to the start of 

performance on the successor contract. 

However, if the contract is awarded less 

than 30 days before the beginning of 

performance, then the predecessor 

contractor and the contracting agency 

must transmit the list as soon as 

practicable. 

(e) Actions on complaints—(1) 

Reporting—(i) Reporting time frame. 

Within 15 calendar days of receiving a 

complaint or being contacted by the 

Wage and Hour Division with a request 

for the information in paragraph 

(e)(1)(ii) of this section, the contracting 

officer will forward all information 

listed in paragraph (e)(1)(ii) of this 

section to the local Wage and Hour 

office. 

(ii) Report contents: The contracting 

officer will forward to the Wage and 

Hour Division any: 

(A) Complaint of contractor 

noncompliance with this part; 

(B) Available statements by the 

employee or the contractor regarding the 

alleged violation; 

(C) Evidence that a seniority list was 

issued by the predecessor and provided 

to the successor; 

(D) A copy of the seniority list; 

(E) Evidence that the 

nondisplacement contract clause was 

included in the contract or that the 

contract was excepted by the 

contracting agency; 

(F) Information concerning known 

settlement negotiations between the 

parties, if applicable; 

(G) Any other relevant facts known to 

the contracting officer or other 

information requested by the Wage and 

Hour Division. 

(2) [Reserved] 

(f) Incorporation of omitted contract 

clause. Where the Department or the 

contracting agency discovers or 

determines, whether before or 

subsequent to a contract award, that a 

contracting agency made an erroneous 

determination that Executive Order 

14055 or this part did not apply to a 

particular contract and/or failed to 

include the applicable contract clause in 

a contract to which the Executive order 

applies, the contracting agency will 


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incorporate the contract clause in the 

contract through the exercise of any and 

all authority that may be needed 

(including, where necessary, its 

authority to negotiate or amend, its 

authority to pay any necessary 

additional costs, and its authority under 

any contract provision authorizing 

changes, cancellation and termination). 

Such incorporation must happen either 

on the initiative of the contracting 

agency or within 15 calendar days of 

notification by an authorized 

representative of the Department of 

Labor. Where the circumstances so 

warrant, the Administrator may require 

retroactive application of the contract 

clause to the commencement of 

performance under the contract or other 

date the Administrator determines to be 

appropriate. In determining whether 

retroactive application is appropriate, 

the Administrator will consider, among 

other factors, whether retroactive 

application would result in an overly 

onerous administrative or economic 

burden on the contracting agency that 

may constitute a severe disruption in 

the agency’s procurement practices. 

§ 9.12 Contractor requirements and 

prerogatives. 

(a) General—(1) No filling of 

employment openings prior to right of 

first refusal. Except as provided under 

the exclusion listed in § 9.4(b) or the 

exceptions listed in paragraph (c) of this 

section, a successor contractor or 

subcontractor must not fill any 

employment openings for positions 

subject to the SCA under the contract 

prior to making good faith offers of 

employment (i.e., a right of first refusal 

to employment on the contract), in 

positions for which the employees are 

qualified, to those employees employed 

under the predecessor contract whose 

employment will be terminated as a 

result of award of the successor contract 

or the expiration of the contract under 

which the employees were hired. To the 

extent necessary to meet its anticipated 

staffing pattern and in accordance with 

the requirements described in this part, 

the contractor and its subcontractors 

must make a bona fide, express offer of 

employment to each employee to a 

position for which the employee is 

qualified and must state the time within 

which the employee must accept such 

offer. In no case may the contractor or 

subcontractor give an employee fewer 

than 10 business days to consider and 

accept the offer of employment. 

(2) Right of first refusal exists when no 

seniority list is available. The successor 

contractor’s obligation to offer a right of 

first refusal exists even if the successor 

contractor has not been provided a list 

of the predecessor contractor’s and 

subcontractor(s)’ employees or if the list 

does not contain the names of all 

persons employed during the final 

month of contract performance. 

(3) Determining eligibility. While a 

person’s entitlement to a job offer under 

this part usually will be based on 

whether the person is named on the 

certified list of all service employees 

working under the predecessor’s 

contract or subcontracts during the last 

month of contract performance, a 

contractor must also accept other 

reliable evidence of an employee’s 

entitlement to a job offer under this part. 

For example, even if a person’s name 

does not appear on the list of employees 

on the predecessor contract, an 

employee’s assertion of an assignment 

to work on the predecessor contract 

during the predecessor’s last month of 

performance, coupled with contracting 

agency staff verification, could 

constitute reliable evidence of an 

employee’s entitlement to a job offer 

under this part. Similarly, an employee 

could demonstrate eligibility by 

producing a paycheck stub identifying 

the work location and dates worked or 

otherwise reflecting that the employee 

worked on the predecessor contract 

during the last month of performance. 

(4) Obligation to ensure proper 

placement of contract clause. A 

contractor or subcontractor has an 

affirmative obligation to ensure its 

covered contract contains the contract 

clause. The contractor or subcontractor 

must notify the contracting officer as 

soon as possible if the contracting 

officer did not incorporate the required 

contract clause into a contract. 

(b) Method of job offer—(1) Bona-fide 

offers to qualified employees. Except as 

otherwise provided in this part, a 

contractor must make a bona fide, 

express offer of employment to each 

qualified employee on the predecessor 

contract before offering employment on 

the contract to any other service 

employee. In determining whether an 

employee is entitled to a bona fide, 

express offer of employment, a 

contractor may consider the exceptions 

set forth in paragraph (c) of this section 

and the conditions detailed in 

paragraph (d) of this section. A 

contractor may only use employment 

screening processes (e.g., drug tests, 

background checks, security clearance 

checks, and similar pre-employment 

screening mechanisms) when such 

processes are provided for by the 

contracting agency, are conditions of the 

service contract, and are consistent with 

the Executive order. While the results of 

such screenings may show that an 

employee is unqualified for a position 

and thus not entitled to an offer of 

employment, a contractor may not use 

the requirement of an employment 

screening process to conclude an 

employee is unqualified solely because, 

despite an employee’s reasonable efforts 

to do so, they have not yet completed 

that screening process. 

(2) Establishing time limit for 

employee response. The contractor must 

state the time within which an 

employee must accept an employment 

offer. In no case may the period in 

which the employee has to accept the 

offer be less than 10 business days. The 

obligation to offer employment under 

this part will cease upon the employee’s 

first refusal of a bona fide offer of 

employment on the contract. 

(3) Process. The successor contractor 

must, in writing, offer employment to 

each employee. See also paragraph (f) of 

this section, Recordkeeping. Where 

written offers are not delivered in 

person, the offers should be sent by 

registered or certified mail to the 

employees’ last known address or by 

any other means normally ensuring 

delivery. Examples of such other means 

include, but are not limited to, email to 

the last known email address, delivery 

to the last known address by 

commercial courier or express delivery 

services, or by personal service to the 

last known address. 

(4) Different job position. As a general 

matter, an offer of employment on the 

successor’s contract will be presumed to 

be a bona fide offer of employment, 

even if it is not for a position similar to 

the one the employee previously held, 

so long as it is one for which the 

employee is qualified. If a question 

arises concerning an employee’s 

qualifications, that question must be 

decided based upon the employee’s 

education and employment history, 

with particular emphasis on the 

employee’s experience on the 

predecessor contract. A contractor must 

base its decision regarding an 

employee’s qualifications on credible 

information provided by a 

knowledgeable source, such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. 

(5) Different employment terms and 

conditions. An offer of employment to a 

position on the contract under different 

employment terms and conditions than 

the employee held with the predecessor 

contractor is permitted provided that 

the offer is still bona fide, i.e., the 

different employment terms and 

conditions are not offered to discourage 

the employee from accepting the offer. 

This would include offers with changes 

to pay, benefits, or terms and conditions 


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such as the option of remote work, 

provided that these changes were not 

made to discourage acceptance of the 

offer. Where the successor contractor 

has or will have any employees in the 

same or similar occupational 

classifications during the course of the 

contract who work or will work entirely 

in a remote capacity, the successor 

contractor generally must offer 

employees of the predecessor contractor 

the option of remote work under 

reasonably similar terms and 

conditions. 

(6) Relocation costs. If the successor 

contract will be performed in a new 

locality, nothing in this part requires or 

recommends that contractors or 

subcontractors pay the relocation costs 

of employees who exercise their right to 

work for the successor contractor or 

subcontractor under this part. 

(7) Termination after contract 

commencement. Where an employee is 

terminated by the successor contractor 

under circumstances suggesting the 

offer of employment may not have been 

bona fide, the facts and circumstances of 

the offer and the termination will be 

closely examined during any 

compliance action to determine whether 

the offer was bona fide. 

(8) Post-award incorporation of 

omitted contract clause modifies 

contractor’s obligations. Pursuant to 

§ 9.11(f), in a situation where the 

contracting agency retroactively 

incorporates the contract clause, if the 

successor contractor already hired 

employees to perform on the contract at 

the time the clause was retroactively 

incorporated, the successor contractor 

will be required to offer a right of first 

refusal of employment to the 

predecessor’s employees in accordance 

with the requirements of Executive 

Order 14055 and this part. Where, 

pursuant to § 9.11(f), the Administrator 

has required only prospective 

incorporation of the contract clause 

from the date of incorporation, the 

successor contractor must provide the 

employees on the predecessor contract a 

right of first refusal for any positions 

that remain open. In the event of an 

employment opening within 90 

calendar days of the first date of 

contract performance, the successor 

contractor must provide the employees 

of the predecessor contractor the right of 

first refusal as well, regardless of 

whether incorporation of the contract 

clause is retroactive or prospective. 

(c) Exceptions. The successor 

contractor is responsible for 

demonstrating the applicability of the 

following exceptions to the 

nondisplacement provisions in this part. 

(1) Nondisplaced employees. (i) A 

successor contractor or subcontractor is 

not required to offer employment to any 

employee of the predecessor contractor 

who will be retained by the predecessor 

contractor. 

(ii) The successor contractor must 

presume that all employees working 

under a predecessor’s Federal service 

contract will be terminated as a result of 

the award of the successor contract, 

unless it can demonstrate a reasonable 

belief to the contrary based upon 

reliable information provided by a 

knowledgeable source, such as the 

predecessor contractor, the employee, or 

the contracting agency. 

(2) Predecessor contract’s non-service 

workers. (i) A successor contractor or 

subcontractor is not required to offer 

employment to any person working on 

the predecessor contract who is not a 

service employee as defined in § 9.2 of 

this part. 

(ii) The successor contractor must 

presume that all employees working 

under a predecessor’s Federal service 

contract are service employees, unless it 

can demonstrate a reasonable belief to 

the contrary based upon reliable 

information provided by a 

knowledgeable source, such as the 

predecessor contractor, the employee, or 

the contracting agency. Information 

regarding the general business practices 

of the predecessor contractor or the 

industry is not sufficient to claim this 

exception. 

(3) Employee’s past performance. (i) A 

successor contractor or subcontractor is 

not required to offer employment to an 

employee of the predecessor contractor 

if the successor contractor or any of its 

subcontractors reasonably believes, 

based on reliable evidence of the 

particular employee’s past performance, 

that there would be just cause to 

discharge the employee if employed by 

the successor contractor or any 

subcontractor. 

(ii) A successor contractor must 

presume that there would be no just 

cause to discharge any employees 

working under the predecessor contract 

in the last month of performance, unless 

it can demonstrate a reasonable belief to 

the contrary that is based upon reliable 

evidence provided by a knowledgeable 

source, such as the predecessor 

contractor and its subcontractors, the 

local supervisor, the employee, or the 

contracting agency. This determination 

must be made on an individual basis for 

each employee. Information regarding 

the general performance of the 

predecessor contractor is not sufficient 

to claim this exception. 

(A) For example, a successor 

contractor may demonstrate its 

reasonable belief that there would be 

just cause to discharge an employee 

through reliable written evidence that 

the predecessor contractor initiated a 

process to terminate the employee for 

conduct clearly warranting termination 

prior to the expiration of the contract, 

but the termination process was not 

completed before the contract expired. 

Written evidence related to disciplinary 

action taken without a recommendation 

of termination may constitute reliable 

evidence of just cause to discharge the 

employee, depending on the specific 

facts and circumstances. 

(B) [Reserved]. 

(4) Nonfederal work. (i) A successor 

contractor or subcontractor is not 

required to offer employment to any 

employee hired to work under a 

predecessor’s Federal service contract 

and one or more nonfederal service 

contracts as part of a single job, 

provided that the employee was not 

deployed in a manner that was designed 

to avoid the purposes of this part. 

(ii) The successor contractor must 

presume that no employees who worked 

under a predecessor’s Federal service 

contract also worked on one or more 

nonfederal service contracts as part of a 

single job, unless the successor can 

demonstrate a reasonable belief based 

on reliable evidence to the contrary. The 

successor contractor must demonstrate 

that its belief is reasonable and is based 

upon reliable evidence provided by a 

knowledgeable source, such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. Information 

regarding the general business practices 

of the predecessor contractor or the 

industry is not sufficient. 

(iii) A successor contractor that makes 

a reasonable determination that a 

predecessor contractor’s employee also 

performed work on one or more 

nonfederal service contracts as part of a 

single job must also make a reasonable 

determination that the employee was 

not deployed in a manner that was 

designed to avoid the purposes of this 

part. The successor contractor must 

demonstrate that its belief is reasonable 

and is based upon reliable evidence that 

has been provided by a knowledgeable 

source, such as the employee or the 

contracting agency. 

(d) Reduced staffing—(1) Contractor 

determines how many employees. (i) A 

successor contractor or subcontractor 

will determine the number of employees 

necessary for efficient performance of 

the contract or subcontract and, for bona 

fide staffing or work assignment 

reasons, may elect to employ fewer 

employees than the predecessor 

contractor employed in connection with 


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performance of the work. Thus, the 

successor contractor need not offer 

employment on the contract to all 

employees on the predecessor contract, 

but must offer employment only to the 

number of eligible employees the 

successor contractor believes necessary 

to meet its anticipated staffing pattern, 

except that: 

(ii) Where, in accordance with this 

authority to employ fewer employees, a 

successor contractor does not offer 

employment to all the predecessor 

contract employees, the obligation to 

offer employment will continue for 90 

calendar days after the successor 

contractor’s first date of performance on 

the contract. The contractor’s obligation 

under this part will end when all of the 

predecessor contract employees have 

received a bona fide job offer, as 

described in § 9.12(b), or when the 90- 

day window of obligation has expired. 

The following three examples 

demonstrate the principle. 

(A) A contractor with 18 employment 

openings and a list of 20 employees 

from the predecessor contract must 

continue to offer employment to 

individuals on the list until 18 of the 

employees accept the contractor’s 

employment offer or until the remaining 

employees have rejected the offer. If an 

employee quits or is terminated from 

the successor contract within 90 

calendar days of the first date of 

contract performance, the contractor 

must first offer that employment 

opening to any remaining eligible 

employees of the predecessor contract. 

(B) A successor contractor originally 

offers 20 jobs to predecessor contract 

employees on a contract that had 30 

positions under the predecessor 

contractor. The first 20 predecessor 

contract employees the successor 

contractor approaches accept the 

employment offer. Within a month of 

commencing work on the contract, the 

successor determines that it must hire 

seven additional employees to perform 

the contract requirements. The first 

three predecessor contract employees to 

whom the successor offers employment 

decline the offer; however, the next four 

predecessor contract employees accept 

the offers. In accordance with the 

provisions of this section, the successor 

contractor offers employment on the 

contract to the three remaining 

predecessor contract employees who all 

accept; however, two employees on the 

contract quit 5 weeks later. The 

successor contractor has no further 

obligation under this part to make a 

second employment offer to the persons 

who previously declined an offer of 

employment on the contract. 

(C) A successor contractor reduces 

staff on a successor contract by two 

positions from the predecessor 

contract’s staffing pattern. Each 

predecessor contract employee the 

successor approaches accepts the 

employment offer; therefore, 

employment offers are not made to two 

predecessor contract employees. The 

successor contractor terminates an 

employee five months later. The 

successor contractor has no obligation to 

offer employment to the two remaining 

employees from the predecessor 

contract because more than 90 calendar 

days have passed since the successor 

contractor’s first date of performance on 

the contract. 

(2) Changes to staffing pattern. Where 

a contractor reduces the number of 

employees in any occupation on a 

contract with multiple occupations, 

resulting in some displacement, the 

contractor must scrutinize each 

employee’s qualifications in order to 

offer the greatest possible number of 

predecessor contract employees 

positions equivalent to those they held 

under the predecessor contract. 

Example: A successor contract is 

awarded for a food preparation and 

services contract with Cook II, Cook I, 

and dishwasher positions. The Cook II 

position requires a higher level of skill 

than the Cook I position. The successor 

contractor reconfigures the staffing 

pattern on the contract by increasing the 

number of persons employed as Cook IIs 

and Dishwashers and reducing the 

number of Cook I employees. The 

successor contractor must examine the 

qualifications of each Cook I to 

determine whether they are qualified for 

either a Cook II or Dishwasher position. 

Conversely, were the contractor to 

increase the number of Cook I 

employees, decrease the number of 

Cook II employees, and keep the same 

number of Dishwashers, the contractor 

would generally be able to offer Cook I 

positions to some Cook II employees, 

because the Cook II performs a higherlevel occupation. 

(3) Contractor determines which 

employees. The contractor, subject to 

provisions of this part and other 

applicable restrictions (including nondiscrimination laws and regulations), 

will determine to which employees it 

will offer employment. See § 9.1(b) 

regarding compliance with requirements 

of other Executive orders, regulations, or 

Federal, state, or local laws. 

(e) Contractor obligations near end of 

contract performance—(1) Certified list 

of employees provided 30 calendar days 

before contract completion. The 

contractor will, not less than 30 

calendar days before completion of the 

contractor’s performance of services on 

a contract, furnish the contracting 

officer with a list of the names, mailing 

addresses, and if known, phone 

numbers and email addresses of all 

service employees working under the 

contract and its subcontracts at the time 

the list is submitted. The list must also 

contain anniversary dates of 

employment of each service employee 

on the contract and its predecessor 

contracts with either the current or 

predecessor contractors or their 

subcontractors. Assuming there are no 

changes to the workforce before the 

contract is completed, the contractor 

may use the list submitted, or to be 

submitted, to satisfy the requirements of 

the contract clause specified at 29 CFR 

4.6(l)(2) to meet this provision but must 

also include the mailing address, and if 

known, phone numbers and email 

addresses of the workers. 

(2) Certified list of employees 

provided 10 business days before 

contract completion. Where changes to 

the workforce are made after the 

submission of the certified list described 

in paragraph (e)(1) of this section, the 

contractor will, not less than 10 

business days before completion of the 

contractor’s performance of services on 

a contract, furnish the contracting 

officer with a certified list of the names, 

mailing addresses, and if known, phone 

numbers and email addresses of all 

service employees employed within the 

last month of contract performance. The 

list must also contain anniversary dates 

of employment of each service 

employee on the contract and its 

predecessor contracts with either the 

current or predecessor contractors or 

their subcontractors. The contractor may 

use the list submitted to satisfy the 

requirements of the contract clause 

specified at 29 CFR 4.6(l)(2) to meet this 

provision but must also include the 

mailing addresses, and if known, phone 

numbers and email addresses of the 

workers. 

(3) Notices to employees of possible 

right to offers of employment on 

successor contract. Before contract 

completion, the contractor must provide 

written notice to service employees 

employed under the contract of their 

possible right to an offer of employment 

on the successor contract. Such notice 

will be either posted in a conspicuous 

place at the worksite or delivered to the 

employees individually. Where the 

workforce on the predecessor contract is 

comprised of a significant portion of 

workers who are not fluent in English, 

the notice will be provided in both 

English and a language in which the 

employees are fluent. Multiple language 

notices are required where significant 


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portions of the workforce speak 

different languages and there is no 

common language. Contractors may 

provide the notice set forth in Appendix 

B to this part in either a physical 

posting at the job site, or in another 

manner that effectively provides 

individual notice such as individual 

paper notices or effective email 

notification to the affected employees. 

Another form with the same information 

can be used. To be effective, email 

notification must result in an electronic 

delivery receipt or some other reliable 

confirmation that the intended recipient 

received the notice. Any particular 

determination of the adequacy of a 

notification, regardless of the method 

used, will be fact-dependent and made 

on a case-by-case basis. These notice 

requirements are in addition to the 

notice provisions listed at § 9.5(f) 

(relating to agency exceptions) and 

§ 9.11(c) (relating to location 

continuity). 

(f) Recordkeeping—(1) Form of 

records. This part prescribes no 

particular order or form of records for 

contractors. A contractor may use 

records developed for any purpose to 

satisfy the requirements of this part, 

provided the records otherwise meet the 

requirements and purposes of this part 

and are fully accessible. The 

requirements of this part will apply to 

all records regardless of their format 

(e.g., paper or electronic). 

(2) Records to be retained. (i) The 

contractor must maintain copies of any 

written offers of employment, including 

the date of the offer. 

(ii) The contractor must maintain a 

copy of any record that forms the basis 

for any exclusion or exception claimed 

under this part. 

(iii) The contractor must maintain a 

copy of any employee list received from 

the contracting agency and any 

employee list provided to the 

contracting agency. See paragraph (e) of 

this section, contractor obligations near 

end of contract performance. 

(iv) Every contractor that makes 

retroactive payment of wages or 

compensation under the supervision of 

the Administrator pursuant to § 9.23(b), 

must: 

(A) Record and preserve, as an entry 

on the pay records, the amount of such 

payment to each employee, the period 

covered by such payment, and the date 

of payment. 

(B) Prepare a report of each such 

payment on a receipt form provided by 

or authorized by the Wage and Hour 

Division, and 

(1) Preserve a copy as part of the 

records, 

(2) Deliver a copy to the employee, 

and 

(3) File the original, as evidence of 

payment by the contractor and receipt 

by the employee, with the 

Administrator within 10 business days 

after payment is made. 

(v) The contractor must maintain 

evidence of any notices that they have 

provided to workers, or workers’ 

collective bargaining representatives, to 

satisfy the requirements of the order or 

these regulations, including notices of 

the possibility of employment on the 

successor contract as required under 

§ 9.12(e)(3); notices of agency 

exceptions that a contracting agency 

requires a contractor to provide under 

§ 9.5(f) and section 6(b) of the order; and 

notices to workers and their 

representatives of the opportunity to 

provide information relevant to the 

contracting agency’s location-continuity 

determination in the solicitation for a 

successor contract pursuant to 

§ 9.11(c)(4). 

(3) Records retention period. The 

contractor must retain records 

prescribed by § 9.12(f)(2) of this part for 

not less than a period of 3 years from 

the date the records were created. 

(4) Disclosure. The contractor must 

provide copies of such documentation 

upon request of any authorized 

representative of the contracting agency 

or Department of Labor. 

(g) Investigations. The contractor must 

cooperate in any review or investigation 

conducted pursuant to this part and 

must not interfere with the investigation 

or intimidate, blacklist, discharge, or in 

any other manner discriminate against 

any person because such person has 

cooperated in an investigation or 

proceeding under this part or has 

attempted to exercise any rights 

afforded under this part. This obligation 

to cooperate with investigations is not 

limited to investigations of the 

contractor’s own actions, and also 

includes investigations related to other 

contractors (e.g., predecessor and 

successor contractors) and 

subcontractors. 

§ 9.13 Subcontracts. 

(a) Subcontractor liability. The 

contractor or subcontractor must insert 

in any subcontracts the 

nondisplacement contract clause 

contained in Appendix A or the FAR, as 

appropriate. The contractor or 

subcontractor must also insert a clause 

in any subcontracts to require the 

subcontractor to include the Appendix 

A or FAR contract clause in any lowertier subcontracts. The prime contractor 

is responsible for the compliance of any 

subcontractor or lower-tier 

subcontractor with the contract clause. 

In the event of any violations of the 

contract clause, the prime contractor 

and any subcontractor(s) responsible 

will be jointly and severally liable for 

any unpaid wages and pre-judgment 

and post-judgment interest, and may be 

subject to debarment, as appropriate. 

(b) Discontinuation of subcontractor 

services. When a prime contractor that 

is subject to the nondisplacement 

requirements of this part discontinues 

the services of a subcontractor at any 

time during the contract and performs 

those services itself, the prime 

contractor must offer employment on 

the contract to the subcontractor’s 

employees who would otherwise be 

displaced and would otherwise be 

qualified in accordance with this part. 

Subpart C—Enforcement 

§ 9.21 Complaints. 

(a) Filing a complaint. Any employee 

of the predecessor contractor who 

believes the successor contractor has 

violated this part, or their authorized 

representative, may file a complaint 

with the Wage and Hour Division 

(WHD) within 120 days from the first 

date of contract performance. The 

employee or authorized representative 

may file a complaint directly with any 

office of the WHD. No particular form of 

complaint is required. A complaint may 

be filed orally or in writing. The WHD 

will accept the complaint in any 

language. 

(b) Confidentiality. It is the policy of 

the Department of Labor to protect the 

identity of its confidential sources and 

to prevent an unwarranted invasion of 

personal privacy. Accordingly, the 

identity of any individual who makes a 

written or oral statement as a complaint 

or in the course of an investigation, as 

well as portions of the statement which 

would tend to reveal the individual’s 

identity, will not be disclosed in any 

manner to anyone other than Federal 

officials without the prior consent of the 

individual. Disclosure of such 

statements will be governed by the 

provisions of the Freedom of 

Information Act (5 U.S.C. 552, see 29 

CFR part 70) and the Privacy Act of 

1974 (5 U.S.C. 552a). 

§ 9.22 Wage and Hour Division 

investigation. 

(a) Initial investigation. The 

Administrator may initiate an 

investigation under this part either as 

the result of a complaint or at any time 

on the Administrator’s own initiative. 

The Administrator may investigate 

potential violations of, and obtain 

compliance with, the Executive Order. 


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As part of the investigation, the 

Administrator may conduct interviews 

with the predecessor and successor 

contractors, as well as confidential 

interviews with the relevant contractors’ 

workers at the worksite during normal 

work hours; inspect the relevant 

contractors’ records; make copies and 

transcriptions of such records; and 

require the production of any 

documents or other evidence deemed 

necessary to determine whether a 

violation of this part, including conduct 

warranting imposition of debarment 

pursuant to § 9.23(d), has occurred. 

Federal agencies and contractors must 

cooperate with any authorized 

representative of the Department of 

Labor in the inspection of records, in 

interviews with workers, and in all 

aspects of investigations. 

(b) Subsequent investigations. The 

Administrator may conduct a new 

investigation or issue a new 

determination if the Administrator 

concludes circumstances warrant, such 

as where the proceedings before an 

Administrative Law Judge reveal that 

there may have been violations with 

respect to other employees of the 

contractor, where imposition of 

debarment is appropriate, or where the 

contractor has failed to comply with an 

order of the Secretary. 

§ 9.23 Remedies and Sanctions for 

Violations of This Part. 

(a) Authority. Executive Order 14055 

provides that the Secretary will have the 

authority to issue final orders 

prescribing appropriate sanctions and 

remedies, including but not limited to 

requiring the contractor to offer 

employment, in positions for which the 

employees are qualified, to employees 

from the predecessor contract and the 

payment of wages lost. 

(b) Unpaid wages or other relief due. 

In addition to satisfying any costs 

imposed under §§ 9.34(j) or 9.35(d) of 

this part, a contractor that violates any 

provision of this part must take 

appropriate action to abate the violation, 

which may include hiring each affected 

employee in a position on the contract 

for which the employee is qualified, 

together with compensation (including 

lost wages) and other terms, conditions, 

and privileges of that employment. The 

contractor will pay interest on any 

underpayment of wages and on any 

other monetary relief due under this 

part. Interest on any back wages or 

monetary relief provided for in this part 

will be calculated using the percentage 

established for the underpayment of 

taxes under 26 U.S.C. 6621 and will be 

compounded daily. 

(c) Withholding of funds—(1) Unpaid 

wages or other relief. The Administrator 

may additionally direct that payments 

due on the contract or any other 

contract between the contractor and the 

Federal Government be withheld in 

such amounts as may be necessary to 

pay unpaid wages or to provide other 

appropriate relief due under this part. 

Upon the final order of the Secretary 

that such monies are due, the 

Administrator may direct the relevant 

contracting agency to transfer the 

withheld funds to the Department of 

Labor for disbursement. 

(2) List of employees. If the 

contracting officer or the Administrator 

finds that the predecessor contractor has 

failed to provide a list of the names of 

service employees working under the 

contract and its subcontracts during the 

last month of contract performance in 

accordance with § 9.12(e), the 

contracting officer may, at their 

discretion, and must upon request by 

the Administrator, take such action as 

may be necessary to cause the 

suspension of the payment of contract 

funds until such time as the list is 

provided to the contracting officer. 

(3) Notification to a contractor of the 

withholding of funds. If the 

Administrator directs a contracting 

agency to withhold funds from a 

contractor pursuant to § 9.23(c)(1), the 

Administrator or contracting agency 

must notify the affected contractor. 

(d) Debarment. Where the Secretary 

finds that a contractor has failed to 

comply with any order of the Secretary 

or has committed willful violations of 

Executive Order 14055 or this part, the 

Secretary may order that the contractor 

and its responsible officers, and any 

firm in which the contractor has a 

substantial interest, will be ineligible to 

be awarded any contract or subcontract 

of the United States for a period of up 

to 3 years. Neither an order for 

debarment of any contractor or 

subcontractor from further government 

contracts under this section nor the 

inclusion of a contractor or 

subcontractor on a published list of 

noncomplying contractors will be 

carried out without affording the 

contractor or subcontractor an 

opportunity for a hearing. 

(e) Antiretaliation. When the 

Administrator finds that a contractor 

has interfered with an investigation of 

the Administrator under this part or has 

in any manner discriminated against 

any person because such person has 

cooperated in such an investigation or 

has attempted to exercise any rights 

afforded under this part, the 

Administrator may require the 

contractor to provide any relief to the 

affected person as may be appropriate, 

including employment, reinstatement, 

promotion, and the payment of lost 

wages, including interest. 

Subpart D—Administrator’s 

Determination, Mediation, and 

Administrative Proceedings 

§ 9.31 Determination of the Administrator. 

(a) Written determination. Upon 

completion of an investigation under 

§ 9.22, the Administrator will issue a 

written determination of whether a 

violation has occurred. The 

determination will contain a statement 

of the investigation findings and 

conclusions. A determination that a 

violation occurred will address 

appropriate relief and the issue of 

debarment where appropriate. The 

Administrator will notify any 

complainant(s); employee 

representative(s); contractors, including 

the prime contractor if a subcontractor 

is implicated; contractor 

representative(s); and the contracting 

officer by registered or certified mail to 

the last known address or by any other 

means normally ensuring delivery, of 

the investigation findings. 

(b) Notice to parties and effect—(1) 

Relevant facts in dispute. If the 

Administrator concludes that relevant 

facts are in dispute, the Administrator’s 

determination will so advise the parties 

and their representatives, if any. It will 

further advise that the notice of 

determination will become the final 

order of the Secretary and will not be 

appealable in any administrative or 

judicial proceeding unless an interested 

party requests a hearing within 20 

calendar days of the date of the 

Administrator’s determination, in 

accordance with § 9.32(b)(1). Such a 

request may be sent by mail or by any 

other means normally ensuring delivery 

to the Chief Administrative Law Judge 

of the Office of the Administrative Law 

Judges. A detailed statement of the 

reasons why the Administrator’s 

determination is in error, including facts 

alleged to be in dispute, if any, must be 

submitted with the request for a hearing. 

The Administrator’s determination not 

to seek debarment will not be 

appealable. 

(2) Relevant facts not in dispute. If the 

Administrator concludes that no 

relevant facts are in dispute, the parties 

and their representatives, if any, will be 

so advised. They will also be advised 

that the determination will become the 

final order of the Secretary and will not 

be appealable in any administrative or 

judicial proceeding unless an interested 

party files a petition for review with the 

Administrative Review Board pursuant 


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to § 9.32(b)(2) within 20 calendar days 

of the date of the determination of the 

Administrator. The determination will 

further advise that if an aggrieved party 

disagrees with the factual findings or 

believes there are relevant facts in 

dispute, the aggrieved party may advise 

the Administrator of the disputed facts 

and request a hearing by mail or by any 

other means normally ensuring delivery. 

The request must be sent within 20 

calendar days of the date of the 

determination. The Administrator will 

either refer the request for a hearing to 

the Chief Administrative Law Judge or 

notify the parties and their 

representatives, if any, of the 

determination of the Administrator that 

there is no relevant issue of fact and that 

a petition for review may be filed with 

the Administrative Review Board within 

20 calendar days of the date of the 

notice, in accordance with the 

procedures at § 9.32(b)(2). 

§ 9.32 Requesting appeals. 

(a) General. If any party desires 

review of the determination of the 

Administrator, including judicial 

review, a request for an Administrative 

Law Judge hearing or petition for review 

by the Administrative Review Board 

must first be filed in accordance with 

§ 9.31(b). 

(b) Process—(1) For Administrative 

Law Judge hearing—(i) General. Any 

aggrieved party may request a hearing 

by an Administrative Law Judge by 

sending a request to the Chief 

Administrative Law Judge of the Office 

of the Administrative Law Judges within 

20 days of the determination of the 

Administrator. The request for a hearing 

may be sent by mail or by any other 

means normally ensuring delivery and 

must be accompanied by a copy of the 

determination of the Administrator. At 

the same time, a copy of any request for 

a hearing will be sent to the 

complainant(s) or successor contractor, 

and their representatives, if any, as 

appropriate; the Administrator of the 

Wage and Hour Division; and the 

Associate Solicitor, Division of Fair 

Labor Standards, Office of the Solicitor, 

U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, 

DC 20210. 

(ii) By the complainant. The 

complainant or any other interested 

party may request a hearing where the 

Administrator determines, after 

investigation, that the employer has not 

committed violation(s), or where the 

complainant or other interested party 

believes that the Administrator has 

ordered inadequate monetary relief. In 

such a proceeding, the party requesting 

the hearing will be the prosecuting party 

and the employer will be the 

respondent; the Administrator may 

intervene as a party or appear as amicus 

curiae at any time in the proceeding, at 

the Administrator’s discretion. 

(iii) By the contractor. The employer 

or any other interested party may 

request a hearing where the 

Administrator determines, after 

investigation, that the employer has 

committed violation(s). In such a 

proceeding, the Administrator will be 

the prosecuting party and the employer 

will be the respondent. 

(2) For Administrative Review Board 

review—(i) General. Any aggrieved party 

desiring review of a determination of 

the Administrator in which there were 

no relevant facts in dispute, or of an 

Administrative Law Judge’s decision, 

must file a petition for review with the 

Administrative Review Board within 20 

calendar days of the date of the 

determination or decision. The petition 

must be served on all parties and, where 

the case involves an appeal from an 

Administrative Law Judge’s decision, 

the Chief Administrative Law Judge. See 

also § 9.32(b)(1). 

(ii) Contents and service—(A) 

Contents. A petition for review must 

refer to the specific findings of fact, 

conclusions of law, or order at issue. 

(B) Service. Copies of the petition and 

all briefs must be served on the 

Administrator, Wage and Hour Division, 

and on the Associate Solicitor, Division 

of Fair Labor Standards, Office of the 

Solicitor, U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, 

DC 20210. 

(C) Effect of filing. If a timely request 

for hearing or petition for review is 

filed, the determination of the 

Administrator or the decision of the 

Administrative Law Judge will be 

inoperative unless and until the 

Administrative Review Board issues an 

order affirming the determination or 

decision, or the determination or 

decision otherwise becomes a final 

order of the Secretary. If a petition for 

review concerns only the imposition of 

ineligibility sanctions, however, the 

remainder of the decision will be 

effective immediately. No judicial 

review will be available unless a timely 

petition for review to the Administrative 

Review Board is first filed. 

§ 9.33 Mediation. 

The parties are encouraged to resolve 

disputes by using settlement judges to 

mediate settlement negotiations 

pursuant to the procedures and 

requirements of 29 CFR 18.13 or any 

successor to the regulation. Any 

settlement agreement reached must be 

approved by the assigned 

Administrative Law Judge consistent 

with the procedures and requirements 

of 29 CFR 18.71. 

§ 9.34 Administrative Law Judge hearings. 

(a) Authority—(1) General. The Office 

of Administrative Law Judges has 

jurisdiction to hear and decide appeals 

pursuant to § 9.31(b)(1) concerning 

questions of law and fact from 

determinations of the Administrator 

issued under § 9.31. In considering the 

matters within the scope of its 

jurisdiction, the Administrative Law 

Judge will act as the authorized 

representative of the Secretary and will 

act fully and, subject to an appeal filed 

under § 9.32(b)(2), finally on behalf of 

the Secretary concerning such matters. 

(2) Limit on scope of review. (i) The 

Administrative Law Judge will not have 

jurisdiction to pass on the validity of 

any provision of this part. 

(ii) The Equal Access to Justice Act, 

as amended, does not apply to hearings 

under this part. Accordingly, an 

Administrative Law Judge will have no 

authority to award attorney fees and/or 

other litigation expenses pursuant to the 

provisions of the Equal Access to Justice 

Act for any proceeding under this part. 

(b) Scheduling. If the case is not 

stayed to attempt settlement in 

accordance with § 9.33(a), the 

Administrative Law Judge to whom the 

case is assigned will, within 15 calendar 

days following receipt of the request for 

hearing, notify the parties and any 

representatives, of the day, time, and 

place for hearing. The date of the 

hearing will not be more than 60 days 

from the date of receipt of the request 

for hearing. 

(c) Dismissing challenges for failure to 

participate. The Administrative Law 

Judge may, at the request of a party or 

on their own motion, dismiss a 

challenge to a determination of the 

Administrator upon the failure of the 

party requesting a hearing or their 

representative to attend a hearing 

without good cause; or upon the failure 

of the party to comply with a lawful 

order of the Administrative Law Judge. 

(d) Administrator’s participation. At 

the Administrator’s discretion, the 

Administrator has the right to 

participate as a party or as amicus 

curiae at any time in the proceedings, 

including the right to petition for review 

of a decision of an Administrative Law 

Judge in which the Administrator has 

not previously participated. The 

Administrator will participate as a party 

in any proceeding in which the 

Administrator has found any violation 

of this part, except where the 

complainant or other interested party 


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challenges only the amount of monetary 

relief. See also § 9.32(b)(2)(i)(C). 

(e) Agency participation. A Federal 

agency that is interested in a proceeding 

may participate as amicus curiae at any 

time in the proceedings. At the request 

of such Federal agency, copies of all 

pleadings in a case must be served on 

the Federal agency, whether or not the 

agency is participating in the 

proceeding. 

(f) Hearing documents. Copies of the 

request for hearing under this part and 

documents filed in all cases, whether or 

not the Administrator is participating in 

the proceeding, must be sent to the 

Administrator, Wage and Hour Division, 

and to the Associate Solicitor. 

(g) Rules of practice. The rules of 

practice and procedure for 

administrative hearings before the 

Office of Administrative Law Judges at 

29 CFR part 18, subpart A, will be 

applicable to the proceedings provided 

by this section. This part is controlling 

to the extent it provides any rules of 

special application that may be 

inconsistent with the rules in 29 CFR 

part 18, subpart A. The Rules of 

Evidence at 29 CFR 18, subpart B, will 

not apply. Rules or principles designed 

to ensure production of the most 

probative evidence available will be 

applied. The Administrative Law Judge 

may exclude evidence that is 

immaterial, irrelevant, or unduly 

repetitive. 

(h) Decisions. The Administrative 

Law Judge will issue a decision within 

60 days after completion of the 

proceeding. The decision will contain 

appropriate findings, conclusions, and 

an order and be served upon all parties 

to the proceeding. 

(i) Orders. Upon the conclusion of the 

hearing and the issuance of a decision 

that a violation has occurred, the 

Administrative Law Judge will issue an 

order that the successor contractor take 

appropriate action to remedy the 

violation. This may include hiring the 

affected employee(s) in a position on the 

contract for which the employee is 

qualified, together with compensation 

(including lost wages), terms, 

conditions, and privileges of that 

employment. Where the Administrator 

has sought debarment, the order must 

also address whether such sanctions are 

appropriate. 

(j) Costs. If an order finding the 

successor contractor violated this part is 

issued, the Administrative Law Judge 

may assess against the contractor a sum 

equal to the aggregate amount of all 

costs (not including attorney fees) and 

expenses reasonably incurred by the 

aggrieved employee(s) in the 

proceeding. This amount will be 

awarded in addition to any unpaid 

wages or other relief due under 

§ 9.23(b). 

(k) Finality. The decision of the 

Administrative Law Judge will become 

the final order of the Secretary, unless 

a petition for review is timely filed with 

the Administrative Review Board as set 

forth in § 9.32(b)(2). 

§ 9.35 Administrative Review Board 

proceedings. 

(a) Authority—(1) General. The ARB 

has jurisdiction to hear and decide in its 

discretion appeals pursuant to 

§ 9.31(b)(2) concerning questions of law 

and fact from determinations of the 

Administrator issued under § 9.31 and 

from decisions of Administrative Law 

Judges issued under § 9.34. In 

considering the matters within the 

scope of its jurisdiction, the ARB acts as 

the authorized representative of the 

Secretary and acts fully on behalf of the 

Secretary concerning such matters. 

(2) Limit on scope of review. (i) The 

ARB will not have jurisdiction to pass 

on the validity of any provision of this 

part. The ARB is an appellate body and 

will decide cases properly before it on 

the basis of substantial evidence 

contained in the entire record before it. 

The ARB will not receive new evidence 

into the record. 

(ii) The Equal Access to Justice Act, 

as amended, does not apply to 

proceedings under this part. 

Accordingly, for any proceeding under 

this part, the Administrative Review 

Board will have no authority to award 

attorney fees and/or other litigation 

expenses pursuant to the provisions of 

the Equal Access to Justice Act. 

(b) Decisions. The ARB’s final 

decision will be issued within 90 days 

of the receipt of the petition for review 

and will be served upon all parties by 

mail to the last known address and on 

the Chief Administrative Law Judge (in 

cases involving an appeal from an 

Administrative Law Judge’s decision). 

(c) Orders. If the ARB concludes that 

the contractor has violated this part, the 

final order will order action to remedy 

the violation, which may include hiring 

each affected employee in a position on 

the contract for which the employee is 

qualified, together with compensation 

(including lost wages), terms, 

conditions, and privileges of that 

employment. Where the Administrator 

has sought imposition of debarment, the 

ARB will determine whether an order 

imposing debarment is appropriate. The 

ARB’s order under this section is subject 

to discretionary review by the Secretary 

as provided in Secretary’s Order 01– 

2020 (or any successor to that order). 

(d) Costs. If a final order finding the 

successor contractor violated this part is 

issued, the ARB may assess against the 

contractor a sum equal to the aggregate 

amount of all costs (not including 

attorney fees) and expenses reasonably 

incurred by the aggrieved employee(s) 

in the proceeding. This amount will be 

awarded in addition to any unpaid 

wages or other relief due under 

§ 9.23(b). 

(e) Finality. The decision of the 

Administrative Review Board will 

become the final order of the Secretary 

in accordance with Secretary’s Order 

01–2020 (or any successor to that order), 

which provides for discretionary review 

of such orders by the Secretary. 

§ 9.36 Severability. 

If any provision of this part is held to 

be invalid or unenforceable by its terms, 

or as applied to any person or 

circumstance, or stayed pending further 

agency action, the provision is to be 

construed so as to continue to give the 

maximum effect to the provision 

permitted by law, unless such holding 

will be one of utter invalidity or 

unenforceability, in which event the 

provision will be severable from this 

part and will not affect the remainder 

thereof. 

Appendix A to Part 9—Contract Clause 

The following clause must be included by 

the contracting agency in every contract and 

solicitation to which Executive Order 14055 

applies, except for procurement contracts 

subject to the Federal Acquisition Regulation 

(FAR): 

Nondisplacement of Qualified Workers 

(a) The contractor and its subcontractors 

shall, except as otherwise provided herein, in 

good faith offer service employees (as defined 

in the Service Contract Act of 1965, as 

amended, 41 U.S.C. 6701(3)) employed under 

the predecessor contract and its subcontracts 

whose employment would be terminated as 

a result of the award of this contract or the 

expiration of the contract under which the 

employees were hired, a right of first refusal 

of employment under this contract in 

positions for which those employees are 

qualified. The contractor and its 

subcontractors shall determine the number of 

employees necessary for efficient 

performance of this contract and may elect to 

employ more or fewer employees than the 

predecessor contractor employed in 

connection with performance of the work 

solely on the basis of that determination. 

Except as provided in paragraph (b) of this 

clause, there shall be no employment 

opening under this contract or subcontract, 

and the contractor and any subcontractors 

shall not offer employment under this 

contract to any person prior to having 

complied fully with the obligations described 

in this clause. The contractor and its 

subcontractors shall make an express offer of 

employment to each employee as provided 


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herein and shall state the time within which 

the employee must accept such offer, but in 

no case shall the period within which the 

employee must accept the offer of 

employment be less than 10 business days. 

(b) Notwithstanding the obligation under 

paragraph (a) of this clause, the contractor 

and any subcontractors: 

(1) Are not required to offer a right of first 

refusal to any employee(s) of the predecessor 

contractor who are not service employees 

within the meaning of the Service Contract 

Act of 1965, as amended, 41 U.S.C. 6701(3); 

and 

(2) Are not required to offer a right of first 

refusal to any employee(s) of the predecessor 

contractor for whom the contractor or any of 

its subcontractors reasonably believes, based 

on reliable evidence of the particular 

employees’ past performance, that there 

would be just cause to discharge the 

employee(s) if employed by the contractor or 

any subcontractors. 

(c) The contractor shall, not less than 10 

business days before the earlier of the 

completion of this contract or of its work on 

this contract, furnish the contracting officer 

a certified list of the names, mailing 

addresses, and if known, phone numbers and 

email addresses of all service employees 

working under this contract and its 

subcontracts during the last month of 

contract performance. The list shall also 

contain anniversary dates of employment of 

each service employee under this contract 

and its predecessor contracts either with the 

current or predecessor contractors or their 

subcontractors. The contracting officer shall 

provide the list to the successor contractor, 

and the list shall be provided on request to 

employees or their representatives, consistent 

with the Privacy Act, 5 U.S.C. 552(a), and 

other applicable law. 

(d) If it is determined, pursuant to 

regulations issued by the Secretary of Labor 

(Secretary), that the contractor or its 

subcontractors are not in compliance with 

the requirements of this clause or any 

regulation or order of the Secretary, the 

Secretary may impose appropriate sanctions 

against the contractor or its subcontractors, as 

provided in Executive Order 14055, the 

regulations implementing that order, and 

relevant orders of the Secretary, or as 

otherwise provided by law. 

(e) In every subcontract entered into in 

order to perform services under this contract, 

the contractor shall include provisions that 

ensure that each subcontractor shall honor 

the requirements of paragraphs (a) and (b) of 

this clause with respect to the employees of 

a predecessor subcontractor or subcontractors 

working under this contract, as well as of a 

predecessor contractor and its 

subcontractors. The subcontract shall also 

include provisions to ensure that the 

subcontractor shall provide the contractor 

with the information about the employees of 

the subcontractor needed by the contractor to 

comply with paragraph (c) of this clause. The 

contractor shall take such action with respect 

to any such subcontract as may be directed 

by the Secretary as a means of enforcing such 

provisions, including the imposition of 

sanctions for noncompliance: provided, 

however, that if the contractor, as a result of 

such direction, becomes involved in 

litigation with a subcontractor, or is 

threatened with such involvement, the 

contractor may request that the United States 

enter into such litigation to protect the 

interests of the United States. 

(f)(1) The contractor must, not less than 30 

calendar days before completion of the 

contractor’s performance of services on a 

contract, furnish the contracting officer with 

a certified list of the names, mailing 

addresses, and if known, phone numbers and 

email addresses of all service employees 

working under the contract and its 

subcontracts at the time the list is submitted. 

The list must also contain anniversary dates 

of employment of each service employee 

under the contract and its predecessor 

contracts with either the current or 

predecessor contractors or their 

subcontractors. Where changes to the 

workforce are made after the submission of 

the certified list described in this paragraph 

(f)(1) of this clause, the contractor must, in 

accordance with paragraph (c) of this clause, 

not less than 10 business days before 

completion of the contractor’s performance of 

services on a contract, furnish the contracting 

officer with an updated certified list of the 

names, mailing addresses, and if known, 

phone numbers and email addresses of all 

service employees employed within the last 

month of contract performance. The updated 

list must also contain anniversary dates of 

employment of each service employee under 

the contract and its predecessor contracts 

with either the current or predecessor 

contractors or their subcontractors. Only 

contractors experiencing a change in their 

workforce between the 30- and 10-day 

periods will have to submit a list in 

accordance with paragraph (c) of this clause. 

(2) The contracting officer must upon their 

own action or upon written request of the 

Administrator withhold or cause to be 

withheld as much of the accrued payments 

due on either the contract or any other 

contract between the contractor and the 

Government that the Department of Labor 

representative requests or that the contracting 

officer decides may be necessary to pay 

unpaid wages or to provide other appropriate 

relief due under 29 CFR part 9. Upon the 

final order of the Secretary that such moneys 

are due, the Administrator may direct the 

relevant contracting agency to transfer the 

withheld funds to the Department of Labor 

for disbursement. If the contracting officer or 

the Administrator finds that the predecessor 

contractor has failed to provide a list of the 

names and mailing addresses of service 

employees working under the contract and 

its subcontracts during the last month of 

contract performance in accordance with 29 

CFR part 9, the contracting officer may, at 

their discretion, and must upon request by 

the Administrator, take such action as may be 

necessary to cause the suspension of the 

payment of contract funds until such time as 

the list is provided to the contracting officer. 

(3) Before contract completion, the 

contractor must provide written notice to 

service employees employed under the 

contract of their possible right to an offer of 

employment on the successor contract. Such 

notice will be either posted in a conspicuous 

place at the worksite or delivered to the 

employees individually. Where the 

workforce on the predecessor contract is 

comprised of a significant portion of workers 

who are not fluent in English, the notice will 

be provided in both English and a language 

in which the employees are fluent. The 

contractor further agrees to provide 

notifications to employees under the 

contract, and their representatives, if any, in 

the timeframes and methods requested by the 

contracting agency, to notify employees of 

any agency determination to except a 

successor contract from the nondisplacement 

requirements of 29 CFR part 9, and to notify 

them of the opportunity to provide 

information relevant to the contracting 

agency’s location-continuity determination in 

the solicitation for a successor contract. 

(g) The contractor and subcontractors must 

maintain records of their compliance with 

this clause for not less than a period of 3 

years from the date the records were created. 

These records may be maintained in any 

format, paper or electronic, provided the 

records meet the requirements and purposes 

of 29 CFR part 9 and are fully accessible. The 

records maintained must include the 

following: 

(1) Copies of any written offers of 

employment. 

(2) A copy of any record that forms the 

basis for any exclusion or exception claimed 

under this part. 

(3) A copy of the employee list(s) provided 

to or received from the contracting agency. 

(4) An entry on the pay records of the 

amount of any retroactive payment of wages 

or compensation under the supervision of the 

Administrator of the Wage and Hour Division 

to each employee, the period covered by such 

payment, and the date of payment, and a 

copy of any receipt form provided by or 

authorized by the Wage and Hour Division. 

The contractor must also deliver a copy of 

the receipt to the employee and file the 

original, as evidence of payment by the 

contractor and receipt by the employee, with 

the Administrator within 10 days after 

payment is made. 

(h) The contractor must cooperate in any 

review or investigation by the contracting 

agency or the Department of Labor into 

possible violations of the provisions of this 

clause and must make records requested by 

such official(s) available for inspection, 

copying, or transcription upon request. 

(i) Disputes concerning the requirements of 

this clause will not be subject to the general 

disputes clause of this contract. Such 

disputes will be resolved in accordance with 

the procedures of the Department of Labor set 

forth in 29 CFR part 9. Disputes within the 

meaning of this clause include disputes 

between or among any of the following: the 

contractor, the contracting agency, the U.S. 

Department of Labor, and the employees 

under the contract or its predecessor 

contract. 

(j) Nothing in this clause will relieve a 

contractor or subcontractor of any obligation 

under the HUBZone program statute, 15 

U.S.C. 657a, the Javits-Wagner-O’Day Act, 41 

U.S.C. 8501–8506, the Randolph-Sheppard 

Act, 20 U.S.C. 107. The provisions of those 

laws must be satisfied in tandem with and, 


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if necessary, prior to, the requirements of 

Executive Order 14055, 29 CFR part 9, and 

this clause. Thus, any contractor or 

subcontractor operating under a contract 

awarded on the basis of a HUBZone 

preference, 41 U.S.C. 657a(c); operating 

pursuant to the Javits-Wagner-O’Day Act, 41 

U.S.C. 8501–8506; or operating pursuant to 

agreements for vending facilities entered into 

pursuant to the regulations establishing a 

priority for individuals who are blind issued 

under the Randolph-Sheppard Act, 20 U.S.C. 

107, must ensure that it complies with the 

statutory and regulatory requirements of the 

relevant program. Such contractor or 

subcontractor must, whenever possible, also 

comply with requirements of this clause, 

Executive Order 14055, and 29 CFR part 9, 

to the extent that such compliance would not 

result in a violation of the requirements of 

the relevant program. 

Appendix B to Part 9—Notice to Service 

Contract Employees 

Service contract employees entitled to 

nondisplacement: The contract for [insert 

type of service] services currently performed 

by [insert name of predecessor contractor] 

has been awarded to a new (successor) 

contractor [insert name of successor 

contractor]. The new contractor’s first date of 

performance on the contract will be [insert 

first date of successor contractor’s 

performance]. The new contractor is 

generally required to offer employment, in 

writing, to the employees who worked on the 

contract during the last 30 calendar days of 

the current contract, except as follows: 

Employees who will not be laid off or 

discharged as a result of the end of this 

contract are not entitled to an offer of 

employment. 

Managerial, supervisory, or non-service 

employees on the current contract are not 

entitled to an offer of employment. 

The new contractor is permitted to reduce 

the size of the current workforce; in such 

circumstances, only a portion of the existing 

workforce may receive employment offers. 

However, the new contractor must offer 

employment to the displaced employees in 

positions for which they are qualified if any 

openings occur during the first 90 calendar 

days of performance on the new contract. 

A successor contractor or subcontractor is 

not required to offer employment to an 

employee of the predecessor contractor if the 

successor contractor or any of its 

subcontractors reasonably believes, based on 

reliable evidence of the particular employee’s 

past performance, that there would be just 

cause to discharge the employee. 

An employee hired to work under the 

current federal service contract and one or 

more nonfederal service contracts as part of 

a single job is not entitled to an offer of 

employment on the new contract, provided 

that the existing contractor did not deploy 

the employee in a manner that was designed 

to avoid the purposes of this part. 

Time limit to accept offer: If you are 

offered employment on the new contract, you 

must be given at least 10 business days to 

accept the offer. 

Complaints: Any employee(s) or 

authorized employee representative(s) of the 

predecessor contractor who believes that they 

are entitled to an offer of employment with 

the new contractor and who has not received 

an offer, may file a complaint, within 120 

calendar days from the first date of contract 

performance, with the local Wage and Hour 

office. 

For additional information: 1–866–4US– 

WAGE (1–866–487–9243), https://

www.dol.gov/agencies/whd. If you are deaf, 

hard of hearing, or have a speech disability, 

please dial 7–1–1 to access 

telecommunications relay services. 

Jessica Looman, 

Administrator, Wage and Hour Division. 

[FR Doc. 2023–27072 Filed 12–13–23; 8:45 am] 

BILLING CODE 4510–27–P 


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