Friday, 

March 19, 2010 

Part III 

Department of Labor 

29 CFR Part 9 

Nondisplacement of Qualified Workers 

Under Service Contracts; Proposed Rule 


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13382 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Proposed Rules 

DEPARTMENT OF LABOR 

Office of the Secretary 

29 CFR Part 9 

RIN 1215–AB69; RIN 1235–AA02 

Nondisplacement of Qualified Workers 

Under Service Contracts 

AGENCY: Wage and Hour Division, 

Labor. 

ACTION: Notice of proposed rulemaking, 

request for comments. 

SUMMARY: This document proposes 

regulations to implement Executive 

Order 13495, Nondisplacement of 

Qualified Workers Under Service 

Contracts, signed by President Obama 

on January 30, 2009. The Executive 

Order establishes a general policy of the 

Federal Government that service 

contracts and solicitations for such 

contracts shall include a clause that 

requires the contractor, and its 

subcontractors, under a contract that 

succeeds a contract for performance of 

the same or similar services at the same 

location, to offer those employees 

employed under the predecessor 

contract whose employment will be 

terminated as a result of the award of 

the successor contract, a right of first 

refusal of employment under the 

contract in positions for which they are 

qualified. The Executive Order also 

directs the Department of Labor (DOL), 

in consultation with the Federal 

Acquisition Regulatory Council (FARC), 

to issue regulations, within 180 days of 

the date of the Order to the extent 

permitted by law, to implement the 

requirements of this Order. The 

Regulatory Information Number (RIN) 

identified for this rulemaking will 

change with publication of the Spring 

Regulatory Agenda due to an 

organizational restructuring. The old 

RIN was assigned to the Employment 

Standards Administration, which no 

longer exists; a new RIN has been 

assigned to the Wage and Hour Division. 

DATES: Comments must be submitted on 

or before May 18, 2010. 

ADDRESSES: You may submit comments, 

identified by RIN 1235–AA02, by either 

one of the following methods: 

Electronic comments: through the 

federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail: Regulatory Analysis Branch, 

Wage and Hour Division, U.S. 

Department of Labor, Room S–3502, 200 

Constitution Avenue, NW., Washington, 

DC 20210. 

Instructions: Please submit one copy 

of your comments by only one method. 

All submissions received must include 

the agency name and RIN identified 

above for this rulemaking. Comments 

received will become a matter of public 

record and will be posted to http:// 

www.regulations.gov, including any 

personal information provided. Because 

we continue to experience delays in 

receiving mail in the Washington, DC, 

area, commenters are strongly 

encouraged to transmit their comments 

electronically via the federal 

eRulemaking Portal at http:// 

www.regulations.gov or to submit them 

by mail early. For additional 

information on submitting comments 

and the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to the federal 

eRulemaking Portal at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Michel Smyth, Chief, Regulatory 

Analysis Branch, Wage and Hour 

Division, U.S. Department of Labor, 

Room S–3506, 200 Constitution Avenue, 

NW., Washington, DC 20210; telephone: 

(202) 693–0406 (this is not a toll-free 

number). Copies of this notice may be 

obtained in alternative formats (Large 

Print, Braille, Audio Tape or Disc), upon 

request, by calling (202) 693–0023 (not 

a toll-free number). TTY/TDD callers 

may dial toll-free (877) 889–5627 to 

obtain information or request materials 

in alternative formats. 

SUPPLEMENTARY INFORMATION: 

I. Electronic Access and Filing 

Comments 

Public Participation: This notice is 

available through the Federal Register 

and the http://www.regulations.gov Web 

site. You may also access this notice via 

the Wage and Hour Division home page 

at http://www.dol.gov/whd/regulations/ 

EO13495_2010_NPRM.htm. To 

comment electronically on federal 

rulemakings, go to the federal 

eRulemaking Portal at http:// 

www.regulations.gov, which will allow 

you to find, review, and submit 

comments on federal documents that are 

open for comment and published in the 

Federal Register. Please identify all 

comments submitted in electronic form 

by the RIN docket number (1235– 

AA02). Because of delays in receiving 

mail in the Washington, DC, area, 

commenters should transmit their 

comments electronically via the federal 

eRulemaking Portal at http:// 

www.regulations.gov, or submit them by 

mail early to ensure timely receipt prior 

to the close of the comment period. 

Submit one copy of your comments by 

only one method. 

Request for Comments: The DOL 

requests comments on all issues related 

to this notice of proposed rulemaking 

(NPRM). 

II. Executive Order 13495 Requirements 

and Background 

On January 30, 2009, President Barack 

Obama signed Executive Order 13495, 

Nondisplacement of Qualified Workers 

Under Service Contracts (Executive 

Order 13495). 74 FR 6103. This Order 

establishes that, when a service contract 

expires and a follow-on contract is 

awarded for the same or similar services 

at the same location, the Federal 

Government’s procurement interests in 

economy and efficiency are better 

served when a successor contractor 

hires the predecessor’s employees. A 

carryover work force reduces disruption 

to the delivery of services during the 

period of transition between contractors 

and provides the Federal Government 

the benefits of an experienced and 

trained work force that is familiar with 

the Federal Government’s personnel, 

facilities, and requirements. As 

explained in the Order, the successor 

contractor or its subcontractors often 

hires the majority of the predecessor’s 

employees when a service contract ends 

and the work is taken over from one 

contractor to another. On some 

occasions, however, a successor 

contractor or its subcontractors hires a 

new work force, thus displacing the 

predecessor’s employees. 

Section 1 of Executive Order 13495 

sets forth a general policy of the Federal 

Government that service contracts and 

solicitations for such contracts shall 

include a clause that requires the 

contractor and its subcontractors, under 

a contract that succeeds a contract for 

performance of the same or similar 

services at the same location, to offer 

those employees (other than managerial 

and supervisory employees) employed 

under the predecessor contract whose 

employment will be terminated as a 

result of the award of the successor 

contract, a right of first refusal of 

employment under the contract in 

positions for which they are qualified. 

Section 1 also provides that there shall 

be no employment openings under the 

contract until such right of first refusal 

has been provided. Section 1 further 

stipulates that nothing in Executive 

Order 13495 is to be construed to permit 

a contractor or subcontractor to fail to 

comply with any provision of any other 

Executive Order or law of the United 

States. 


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Section 2 of Executive Order 13495 

defines service contract or contract to 

mean any contract or subcontract for 

services entered into by the Federal 

Government or its contractors that is 

covered by the McNamara-O’Hara 

Service Contract Act of 1965 (SCA), as 

amended, 41 U.S.C. 351 et seq., and its 

implementing regulations. Section 2 

also defines employee to mean a service 

employee as defined in the SCA. 74 FR 

6103. See 41 U.S.C. 357(b). 

Section 3 of the Order exempts from 

its terms: (a) Contracts or subcontracts 

under the simplified acquisition 

threshold as defined in 41 U.S.C. 403 

(i.e., currently contracts less than 

$100,000); (b) contracts or subcontracts 

awarded pursuant to the Javits-WagnerO’Day Act, 41 U.S.C. 46–48c; (c) 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, Public Law 

103–329; (d) agreements for vending 

facilities entered into pursuant to the 

preference regulations issued under the 

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

and (e) 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. 74 

FR 6103–04. 

Section 4 of Executive Order 13495 

authorizes the head of a contracting 

department or agency to exempt its 

department or agency from the 

requirements of any or all of the 

provisions of the Executive Order with 

respect to a particular contract, 

subcontract, or purchase order or any 

class of contracts, subcontracts, or 

purchase orders, if the department or 

agency head finds 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. 74 

FR 6104. 

Section 5 of the Order provides the 

wording for a required contract clause 

regarding the nondisplacement of 

qualified workers that is to be included 

in solicitations for and service contracts 

that succeed contracts for performance 

of the same or similar work at the same 

location. 74 FR 6104–05. Specifically, 

the new contract clause provides that 

the contractor and its subcontractors 

shall, except as otherwise provided by 

the clause, in good faith offer those 

employees (other than managerial and 

supervisory employees) employed 

under the predecessor contract whose 

employment will be terminated as a 

result of award of the contract or the 

expiration of the contract under which 

the employees were hired, a right of first 

refusal of employment under the 

contract in positions for which they are 

qualified. The contractor and its 

subcontractors determine the number of 

employees necessary for efficient 

performance of the contract and may 

elect to employ fewer employees than 

the predecessor contractor employed in 

performance of the work. Except as 

provided by the contract clause there is 

to be no employment opening under the 

contract, and the contractor and any 

subcontractors shall not offer 

employment under the contract, to any 

person prior to having complied fully 

with the obligation to offer employment 

to employees on the predecessor 

contract. 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, 

which must be at least 10 days. The 

clause also provides that, 

notwithstanding the obligation to offer 

employment to employees on the 

predecessor contract, the contractor and 

any subcontractors (1) May employ 

under the contract any employee who 

has worked for the contractor or 

subcontractor for at least 3 months 

immediately preceding the 

commencement of the contract and who 

would otherwise face lay-off or 

discharge, (2) 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 SCA, 41 U.S.C. 357(b), 

and (3) are not required to offer a right 

of first refusal to any employee(s) of the 

predecessor contractor whom the 

contractor or any of its subcontractors 

reasonably believes, based on the 

particular employee’s past performance, 

has failed to perform suitably on the job. 

The contract clause also provides that, 

in accordance with Federal Acquisition 

Regulation (FAR) 52.222–41(n), not less 

than 10 days before completion of the 

contract, the contractor must 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. The list must also contain 

anniversary dates of employment of 

each service employee under the 

contract and its predecessor contracts 

either with the current or predecessor 

contractors or their subcontractors. The 

Contracting Officer must provide the list 

to the successor contractor, and the list 

must be provided on request to 

employees or their representatives. If it 

is determined, pursuant to regulations 

issued by the Secretary of Labor, that 

the contractor or its subcontractors are 

not in compliance with the 

requirements of this clause or any 

regulation or order of the Secretary, 

appropriate sanctions may be imposed 

and remedies invoked 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. Finally, the clause 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 this contract, as well as 

employees of a predecessor contractor 

and its subcontractors. 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 contract’s requirement, in 

accordance with FAR 52.222–41(n). The 

contractor must also take action with 

respect to any such subcontract as may 

be directed by the Secretary of Labor as 

a means of enforcing these 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 the litigation to protect the interests 

of the United States. 74 FR 6104–05. 

Section 6 of the Order assigns 

responsibility for investigating and 

obtaining compliance with the Order to 

the DOL. In such proceedings, this 

section also authorizes the DOL to issue 

final orders prescribing appropriate 

sanctions and remedies, including, but 

not limited to, orders requiring 

employment and payment of wages lost. 

The DOL also may provide that where 

a contractor or subcontractor has failed 

to comply with any order of the 

Secretary of Labor or has committed 

willful violations of Executive Order 

13495 or its implementing regulations, 

the contractor or subcontractor, its 

responsible officers, and any firm in 

which the contractor or subcontractor 

has a substantial interest will be 

ineligible to be awarded any contract of 


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the United States for a period of up to 

three 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 is to be 

carried out without affording the 

contractor or subcontractor an 

opportunity for a hearing. Section 6 also 

specifies that Executive Order 13495 

creates no rights under the Contract 

Disputes Act, and disputes regarding the 

requirement of the contract clause 

prescribed by section 5, to the extent 

permitted by law, will be disposed of 

only as provided by DOL in regulations 

issued under the Order. To the extent 

practicable, such regulations shall favor 

the resolution of disputes by efficient 

and informal alternative dispute 

resolution methods. Finally, section 6 

provides that, to the extent permitted by 

law and in consultation with the FARC, 

the DOL will issue regulations to 

implement the requirements of the 

Executive Order. In addition, to the 

extent permitted by law, the FARC is to 

issue regulations in the Federal 

Acquisition Regulation to provide for 

inclusion of the contract clause in 

Federal solicitations and contracts 

subject to the current Order. See 74 FR 

6105. 

Section 7 of Executive Order 13495 

revokes Executive Order 13204 of 

February 17, 2001 (Bush Order), 

rescinding Executive Order 12933 of 

October 20, 1994, Nondisplacement of 

Qualified Workers Under Certain 

Contracts (Clinton Order). Id. See also 

59 FR 53559 (Oct. 24, 1994), 66 FR 

11228 (Feb. 22, 2001). 

Section 8 of the Order provides that 

if any provision of the Order or its 

application is held to be invalid, the 

remainder of the Order and the 

application shall not be affected. 

Section 9 of the Order specifies that 

nothing in Executive Order 13495 is to 

be construed to impair or otherwise 

Affect: Authority granted by law to an 

executive department, agency, or the 

head thereof; or functions of the 

Director of the Office of Management 

and Budget relating to budgetary, 

administrative, or legislative proposals. 

In addition, the Order is to be 

implemented consistent with applicable 

law and subject to the availability of 

appropriations, and 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. Section 9 

clarifies, however, that the Order is not 

intended to preclude judicial review of 

final decisions by the DOL in 

accordance with the Administrative 

Procedure Act, 5 U.S.C. 701 et seq. 74 

FR 6105–06. 

As indicated, Section 7 of Executive 

Order 13495 revoked the 2001 Bush 

Order rescinding the 1994 Clinton 

Order, Nondisplacement of Qualified 

Workers Under Certain Contracts. More 

specifically, the rescinded Clinton and 

Bush Orders pertained to the obligations 

of successor contractors to offer 

employment to employees of 

predecessor contractors on Federal 

contracts to maintain public buildings. 

See 59 FR 53559 (Oct. 24, 1994), 66 FR 

11228 (Feb. 22, 2001). 

On May 22, 1997, the DOL 

promulgated regulations, 29 CFR part 9 

(62 FR 28185) to implement the Clinton 

Order and, per the Bush Order, 

rescinded them in a Notice appearing in 

the Federal Register on March 23, 2001 

(66 FR 16126). There are some notable 

differences between the current Order, 

Executive Order 13495, and the Clinton 

Order, Executive Order 12933. For 

example, Executive Order 13495 covers 

all contracts covered by the SCA above 

the simplified acquisition threshold 

(currently $100,000); the Clinton Order 

was limited to building services 

contracts in excess of the simplified 

acquisition threshold for maintenance of 

public buildings. In addition, 

exemptions listed for U.S. Postal 

Service, NASA, military, and Veterans 

Administration installations (among 

others) in the Clinton Order have been 

eliminated. A new provision authorizes 

the head of a contracting department or 

agency to exempt any of its contracts 

from the current Order if the agency 

finds the requirements would not serve 

the purposes of the Order or would 

impair the Federal Government’s ability 

to procure services economically or 

efficiently. In addition, the current 

Order expressly provides that it applies 

to subcontracts awarded in amounts 

equal to or above the simplified 

acquisition threshold, while coverage 

under the Clinton Order was 

determined at the prime contract level. 

III. Discussion of Proposed Rule 

The DOL proposes to implement the 

current Order with regulations based on 

similar requirements to those issued 

under the Clinton Order. While the 

current Order is broader in scope as to 

the types of service contracts covered, 

both the current and Clinton Orders 

established a Federal policy for 

successor contractors to offer 

employment in most cases to the 

employees on the predecessor contract 

when the new contract award would 

otherwise displace those workers. The 

DOL proposes to change the format of 

the regulation from questions and 

answers to the more common format of 

a descriptive section title. In addition, 

the DOL proposes a number of minor 

modifications to the enforcement and 

administrative procedures contained in 

this rule to clarify responsibilities of 

various Federal officials as compared to 

the prior rule. The following section-bysection discussion of this proposed rule 

presents the contents of each section 

and highlights significant differences 

between this proposal and the prior 

version of part 9 issued under the 

Clinton Order. 

Proposed subpart A of part 9 relates 

to general matters, including the 

purpose and scope of the rule, its 

definitions, coverage under the current 

Order, and the exclusions it provides. 

Proposed § 9.1(a) explains that the 

purpose of the proposed rule is to 

implement E.O. 13495 and reiterates 

statements from the E.O. that the 

Federal Government’s procurement 

interests in economy and efficiency are 

served when the successor contractor 

hires the predecessor’s employees and 

why this is the case. 

Proposed § 9.1(b) explains the general 

Federal Government requirement for 

successor service contracts and their 

solicitations to include a clause that 

requires the contractor and its 

subcontractors to offer employment 

under the contract to those employees 

(other than managerial and supervisory 

employees) employed under the 

predecessor contract whose 

employment will be terminated as a 

result of the award of the successor 

contract in positions for which the 

employees are qualified. This section 

also clarifies that nothing in Executive 

Order 13495 or part 9 is to 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. 

Proposed § 9.1(c) outlines the scope of 

this proposal and provides that neither 

Executive Order 13495 nor part 9 

creates any rights under the Contract 

Disputes Act or any private right of 

action. The DOL does not interpret the 

E.O. as limiting existing rights under the 

Contract Disputes Act. The paragraph 

also restates the current Order’s 

provision that disputes regarding the 

requirement of the prescribed contract 

clause, to the extent permitted by law, 

shall be disposed of only as provided by 

the Secretary of Labor in regulations 

issued under Executive Order 13495. 

This paragraph also restates the 

provision for DOL regulations to favor 


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the resolution of disputes by efficient 

and informal alternative dispute 

resolution methods to the extent 

practicable. Finally, the paragraph 

applies the provision in § 9(c) of 

Executive Order 13495 that neither the 

current Order nor this proposed rule 

would preclude judicial review of final 

decisions by the Secretary in accordance 

with the Administrative Procedure Act, 

5 U.S.C. 701 et seq. 

Proposed § 9.2 defines terms for 

purposes of this rule. Most defined 

terms follow common applications and 

are based on either the current Order, 

the prior version of part 9, or other 

regulations. The definition of day, taken 

from the meaning given to the term in 

the FAR, is a calendar day, unless 

otherwise specified. 48 CFR 2.101; see 

also —.201. 

The NPRM would adopt the FAR 

definition of service employee to define 

employee or service employee and refer 

to the SCA, in order to preclude any 

ambiguity, because the Executive Order 

defers to the statutory definition of 

service employee in the SCA at 41 

U.S.C. 357(b). The DOL also proposes to 

adopt the definition of service contract 

or contract provided in section 2(a) of 

Executive Order 13495. 74 FR 6103. In 

addition, the DOL proposes 

substantially to adopt the definitions for 

the terms Administrator, Contracting 

Officer, Federal Government, Secretary, 

and United States from the prior version 

of part 9, as the current Order does not 

define those terms. See 62 FR 28192 

(May 22, 1997). The DOL proposes to 

define employment opening to mean 

any vacancy in a position on the 

contract, including any vacancy caused 

by replacing an employee or service 

employee from the predecessor contract 

with a different employee. 

The DOL also proposes to add a 

definition of managerial and 

supervisory employee. The general 

policy stated in section 1 of the current 

Order and in the contract clause 

parenthetically excludes managerial and 

supervisory employees from its 

requirements; however, the current 

Order does not define the term. See 74 

FR 6103. The DOL notes that the job 

offer requirements of the Clinton Order 

also did not apply to management and 

supervisory workers, and it did not 

define the term either. See 59 FR 53559 

(Oct. 24, 1994). The SCA definition of 

employee already excludes any person 

employed in a bona fide executive, 

administrative, or professional capacity, 

as those terms are defined in 29 CFR 

part 541. 41 U.S.C. 357(b). The prior 

version of part 9, while not including 

managerial and supervisory employee 

in the definitions section, implemented 

the exception by excluding persons 

engaged in the performance of services 

under the contract who are employed in 

a bona fide executive, administrative, or 

professional capacity—as those terms 

are defined in 29 CFR part 541—from 

the job offer requirements. 62 FR 28188 

(May 22, 1997). The definition in 

proposed § 9.2(9) adopts this 

exclusionary concept in a new 

freestanding definition of managerial 

and supervisory employee that excludes 

from the requirements of this part 

managerial and supervisory employees, 

as discussed further in this NPRM. 

While the DOL does not believe the 

managerial and supervisory exception to 

the nondisplacement provisions was 

intended to apply to any person who 

performs managerial or supervisory 

tasks either infrequently or as an 

incident to their primary duties and 

responsibilities, the DOL welcomes 

specific comments on whether another 

definition should be adopted and 

requests supporters of an alternative 

definition to provide specific 

recommendations for the definition. 

The DOL proposes to define month 

under the Executive Order as a period 

of 30 consecutive days, regardless of the 

day of the calendar month on which it 

begins. This definition was not included 

in the prior version of part 9; however, 

the DOL believes defining the term will 

clarify how to address partial months 

and will balance calendar months of 

different lengths. In order to eliminate 

confusion caused by similarly named 

components of various Departments and 

larger agencies (e.g., Office of 

Administrative Law Judges), proposed 

§ 9.2 defines certain agencies. The 

NPRM would define same or similar 

service to mean a service that is either 

identical to or has characteristics that 

are alike in substance and essentials to 

another service. Solicitation would be 

defined to mean any request to submit 

offers or quotations to the Government. 

Proposed §§ 9.3 and 9.4 address the 

coverage and exclusionary provisions of 

the current Order. See 74 FR 6103–04. 

Specifically, proposed § 9.3 applies 

coverage under part 9 to all service 

contracts and their solicitations, except 

those excluded by § 9.4. Section 9.4 

would implement the exclusions 

contained in sections 3 and 4 of 

Executive Order 13495. Id. 

Proposed § 9.4(a) addresses the 

exclusion for contracts or subcontracts 

under the simplified acquisition 

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

403(11). 74 FR 6103. The simplified 

acquisition threshold currently is 

$100,000. 41 U.S.C. 403(11). The 

proposed regulations do not state that 

amount in the regulatory text, in 

contrast to the prior version of part 9, 

in the event that a future statutory 

amendment changes the amount. Any 

such change would automatically apply 

to contracts subject to part 9. Proposed 

§ 9.4(a)(2) explains how the exclusion 

applies to subcontracts, including when 

a successor contractor discontinues the 

services of a subcontractor. 

Proposed appendix A establishes an 

employee nondisplacement contract 

clause to implement section 5 of 

Executive Order 13495. 74 FR 6105. 

Paragraph (e) of the nondisplacement 

contract clause requires the contractor 

to include, in every subcontract entered 

into in order to perform services under 

the prime contract, provisions to ensure 

each subcontractor honors the 

requirements of paragraphs (a) through 

(b) of the employee nondisplacement 

clause with respect to the employees of 

a predecessor subcontractor or 

subcontractors working under the 

successor contract as well as of a 

predecessor contractor and its 

subcontractors. Id. The subcontract 

must also include provisions ensuring 

the subcontractor will provide the 

contractor with the information about 

the employees of the subcontractor 

needed by the contractor to comply with 

paragraph (c) of the employee 

nondisplacement clause. The DOL 

interprets the exclusion for contracts 

and subcontracts under the simplified 

acquisition threshold as applying to 

subcontracts of less than $100,000, even 

when the prime contract is for a greater 

amount, because of the definition of a 

service contract in section 2(a) of the 

SCA and the express terms of the 

exclusion in section 3(a) of Executive 

Order 13495. However, while the 

proposed § 9.4(a)(1) exclusion would 

apply to subcontracts in such cases, the 

covered prime contractor or higher tier 

subcontractor would still have to 

comply with the requirements of this 

part. Were a covered contractor that is 

subject to the nondisplacement 

requirements to discontinue the services 

of a subcontractor at any time during the 

contract and perform those services 

itself at the same location, the contractor 

would have to offer employment to the 

subcontractor’s employees who would 

otherwise be displaced and would 

otherwise be qualified in accordance 

with this part but for the size of the 

subcontract. The DOL notes the Clinton 

Order excluded prime contracts under 

the simplified acquisition threshold and 

did not mention subcontracts. 59 FR 

53560. 

Proposed § 9.4(b) implements the 

exclusions applicable to certain 

contracts or subcontracts awarded for 

services produced or provided by 


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persons who are blind or have severe 

disabilities. 74 FR 6103–4. Specifically, 

this paragraph excludes contracts or 

subcontracts awarded pursuant to the 

Javits-Wagner-O’Day Act, 41 U.S.C. 46– 

48c, from the requirements of part 9. 

Proposed § 9.4(b)(2) provides that the 

requirements of part 9 do not apply to 

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, Public Law 103–329. 

Proposed § 9.4(b)(3) specifies that the 

requirements of part 9 do not apply to 

agreements for vending facilities entered 

into pursuant to the preference 

regulations issued under the RandolphSheppard Act, 20 U.S.C. 107. 

Proposed § 9.4(b)(4) clarifies that the 

exclusions provided by § 9.4(b)(1) 

through (b)(3) apply when either the 

predecessor or successor contract has 

been awarded for services produced or 

provided by the blind or severely 

disabled, as described. To require 

Federal service contractors who obtain 

their work under the specified set-aside 

programs to offer employment to 

predecessor contract employees would 

defeat the purpose of these programs 

that allow people to participate in the 

workforce who otherwise would not be 

able to do so. Proposed § 9.4(c) 

implements the exclusion in section 3(e) 

of Executive Order 13495 relating to 

employment where Federal service 

work constitutes only part of the 

employee’s job. 74 FR 6104. 

Proposed § 9.4(d) implements the 

section 4 exclusion in Executive Order 

13495, which provides that, if the head 

of a contracting department or agency 

finds that the application of any of the 

requirements of Executive Order 13495 

would not serve the purposes of the 

Executive 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 may exempt its 

department or agency from the 

requirements of any or all of the 

provisions of Executive Order 13495 

with respect to a particular contract, 

subcontract, or purchase order or any 

class of contracts, subcontracts, or 

purchase orders. Id. The DOL proposes 

to limit the time in which an agency 

may decide to exempt contracts to no 

later than the solicitation date. This 

limitation is needed to ensure the 

contract clause is included in the 

solicitation, if applicable, as required by 

the Executive Order. In addition, when 

an agency exercises its exemption 

authority, the DOL proposes to require 

the contracting agency to notify affected 

workers in writing, either in an 

individual notice given to each worker 

or through a posting at the location 

where the work is performed, of the 

finding and decision no later than the 

award date. The notification would 

need to include facts supporting the 

decision. This notification to the 

workers is consistent with and supports 

the President’s commitment to openness 

and transparency in government. See 

January 21, 2009, Memorandum for the 

Heads of Executive Departments and 

Agencies. 74 FR 4685. 

As with other exemptions applicable 

to labor standards, the DOL interprets 

the exemption authority of the agencies 

to be narrow. The Executive Order states 

that the Federal Government’s 

procurement interests in economy and 

efficiency are served when the successor 

contractor hires the predecessor’s 

employees. It is predicated on the 

determination that a carryover work 

force reduces disruption to the delivery 

of services during the period of 

transition between contractors and 

provides the Federal Government the 

benefits of an experienced and trained 

work force that is familiar with the 

Federal Government’s personnel, 

facilities, and requirements. Given the 

Executive Order’s underlying 

assumptions, the Executive Order 

creates a presumption that 

nondisplacement is in the interest of the 

Federal Government for each contract, 

class of contracts, subcontract, or 

purchase order. However, the 

presumption can be overcome based on 

a finding that nondisplacement would 

not serve the purposes of Executive 

Order 13495 or would impair the ability 

of the Federal Government to procure 

services on an economical and efficient 

basis. DOL believes that the basis for 

such a finding must be reasoned and 

transparent; therefore, the NPRM would 

require a written analysis to support the 

decision to claim the exemption. For 

example, where the decision to claim 

the exemption is based on a finding that 

the nondisplacement requirements 

would impair the ability of the Federal 

Government to procure the services on 

an economical and efficient basis, the 

DOL believes an agency would need to 

support a decision to claim the 

exemption with a written analysis that 

explains how application of the 

Executive Order’s requirements would 

impair the ability of the agency to 

procure services on an economical and 

efficient basis. 

In addition, the reasons provided for 

the exemption in the agency’s analysis 

must be consistent with the Executive 

Order. The DOL proposes that such a 

written analysis would, inter alia, 

compare the anticipated outcomes of 

hiring predecessor contract employees 

against those of hiring a new workforce. 

At the same time, the DOL specifically 

seeks comments on what, if any, 

specific guidance the regulation should 

provide regarding the consideration of 

cost and other factors in exercising the 

agency’s exemption authority, including 

guidance regarding what information 

should be included in the agency’s 

analysis supporting a decision to 

exercise exemption authority. What 

costs are most appropriately considered 

in determining whether application of 

the Executive Order’s requirements 

would or would not serve the purposes 

of the Executive Order or impair the 

ability of the Federal Government to 

procure services on an economical and 

efficient basis? How much weight 

should be given to such costs? Should 

the regulation restrict a contracting 

agency’s ability to exercise the 

exemption based solely on a 

demonstration that the cost of the 

predecessor contractor’s workers is 

greater than hiring new employees? If 

so, how should the restriction be 

applied (e.g., the exemption cannot be 

exercised based solely on a showing of 

marginal cost savings; or the exemption 

cannot be exercised based solely on a 

showing of cost savings in any amount 

unless such determination is coupled 

with an additional determination that 

the non-cost benefits of hiring new 

employees outweigh the benefits of 

retaining the predecessor’s workers)? 

Should the guidance place any 

restrictions on how an agency projects 

cost savings? The EO leaves it to the 

contractor to determine the number of 

employees needed to perform the work 

and the SCA establishes the minimum 

wage rates to be paid workers. 

Therefore, should a contracting agency 

be prohibited from making projections 

based on how it believes a successor 

contractor may reconfigure the contract 

or wages to be paid? What non-cost 

factors are most appropriately 

considered in determining whether 

application of the Executive Order’s 

requirements would or would not serve 

the purposes of the Executive Order or 

impair the ability of the Federal 

Government to procure services on an 

economical and efficient basis? How 

much weight should be given to such 

non-cost factors? What factual 

information and analysis should be 

required to be included in an agency’s 

written finding underlying its 

exemption decision, and in what level 


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of detail? The DOL also specifically 

invites comments regarding the worker 

notification requirement, including 

what recourse might exist if an agency 

fails timely to provide the written 

notification to the workers or what 

specific requirements should be 

imposed. 

Proposed § 9.4(e) implements the 

parenthetical exclusion for managerial 

and supervisory employees included in 

section 1 of Executive Order 13495, 

stating that the Order does not apply to 

employees who are managerial or 

supervisory employees of Federal 

service contractors or subcontractors. 74 

FR 6103. While not included in the 

exclusions listed in section 3 of 

Executive Order 13495, the DOL 

believes including this proposed 

paragraph provides important 

compliance assistance to contractors 

and employees. The DOL notes this 

proposal is not different in substance 

from how the same parenthetical 

exception was implemented under the 

Clinton Order. 59 FR 53559; 62 FR 

28188, (formerly 29 CFR 9.8(b)(1)). 

Proposed subpart B of part 9 

establishes the requirements that 

contracting agencies and contractors 

will undertake to comply with the 

nondisplacement provisions. 

Proposed § 9.11 addresses contracting 

agency requirements, and proposed 

§ 9.12 explains contractor requirements 

and prerogatives under the 

nondisplacement requirements. 

Proposed § 9.11 specifies contracting 

agency responsibilities to incorporate 

the nondisplacement clause in 

applicable contracts, to inform service 

contract employees of when a contract 

has been awarded to a successor, to 

provide the list of employees on the 

predecessor contract to the successor, 

and to forward complaints and other 

pertinent information to the Wage and 

Hour Division when there are 

allegations of contractor noncompliance with this part. 

Section 5 of Executive Order 13495 

specifies a contract clause that must be 

included in solicitations and contracts 

for services that succeed contracts for 

the performance of the same or similar 

work at the same location. 74 FR 6104– 

05. Proposed § 9.11(a) provides the 

regulatory requirement to incorporate 

the contract clause specified in 

appendix A in covered service 

contracts, and solicitations for such 

contracts, that succeed contracts for 

performance of the same or similar 

services at the same location. Contract 

clause paragraphs (a) through (e) of 

proposed appendix A repeat the clause 

in paragraphs (a) through (e) of the 

Executive Order verbatim, with three 

exceptions. 

The first proposed modification 

would spell out the number three, 

instead of using the numeral 3 (as was 

done in the Executive Order). The 

second proposed modification would 

insert the number of the Order, 13495, 

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. 

The final proposed modification is an 

alteration to accommodate the 

numbering scheme of contracts. 

Specifically, the internal contract clause 

paragraph (e) cross-reference to 

paragraph 5(c) is replaced simply with 

a (c). This modification will allow 

contracting agencies to implement the 

substantive requirements of the Order 

through the required contract language 

while adjusting to the numbering 

structure of the Federal Acquisition 

Regulation. 

Proposed appendix A also sets forth 

additional provisions that are necessary 

to implement the Order. The additional 

paragraphs would appear in paragraphs 

(f) through (i) of the contract clause 

contained in part 9. With the exception 

of a paragraph addressing 

recordkeeping, similar contract clause 

paragraphs appeared in the earlier 

version of part 9. See 62 FR 28188 (May 

22, 1997). 

Specifically, proposed clause 

paragraph (f) provides notice that under 

certain circumstances the Contracting 

Officer will withhold or cause to be 

withheld from the prime contractor 

funds otherwise due under the subject 

contract or any other Government 

contract with the same prime contractor. 

The withholding amount would equal 

sums an authorized official of the DOL 

requests, upon a determination by the 

Administrator, the Administrative Law 

Judge (ALJ), or the Administrative 

Review Board that the prime contractor 

failed to comply with the terms of the 

employee nondisplacement clause and 

that wages lost as a result of the 

violations are due or that other 

monetary relief is appropriate. 

Proposed contract clause paragraph 

(g) requires the contractor to maintain 

certain records to demonstrate 

compliance with the substantive 

requirements of part 9. This proposed 

paragraph was not included in the prior 

part 9; however, including it in the 

contract will better enable contractors to 

understand their obligations and 

provide an easy reference. The proposed 

paragraph specifies that the contractor is 

required to maintain the particular 

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

or electronic) for three years. The 

specified records 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 

exemption claimed under part 9; a copy 

of the employee list 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 Administrator of the 

Wage and Hour Division, 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 proposed 

clause also states that the contractor is 

to deliver a copy of the receipt to the 

employee and, as evidence of payment 

by the contractor, file the original 

receipt signed by the employee with the 

Administrator or an authorized 

representative within 10 days after 

payment is made. 

Proposed contract clause paragraph 

(h) requires the contractor, as a 

condition of the contract award, to 

cooperate in any investigation by the 

contracting agency or the DOL 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) 

provides that disputes concerning the 

requirements of the nondisplacement 

clause will not be subject to the general 

disputes clause of the contract. Instead, 

such disputes are to be resolved in 

accordance with the procedures in part 

9. 

Proposed § 9.11(b) specifies a notice 

that contracting agencies must provide 

when a contract will be awarded to a 

successor. A similar requirement existed 

in the prior version of part 9 (see 62 FR 

28189, 28192), but it did not require 

agencies to provide both English 

language and translated notices where a 

significant portion of the predecessor’s 

workforce is not fluent in English. 

Proposed § 9.11(b) requires the 

Contracting Officer to provide written 

notice to service employees of the 

incumbent contractor of their possible 

right to an offer of employment, by 

either posting a notice in a conspicuous 

place at the worksite or delivering it to 


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the employees individually. The text of 

the notice is set forth in the appendix 

B to part 9. The DOL intends to translate 

the notice into several common foreign 

languages and make the English and 

translated versions available in a poster 

format to contracting agencies via the 

Internet, in order to allow easy access. 

Another form with the same information 

may be used. Multiple foreign language 

notices will be required where 

significant portions of the workforce 

speak different foreign 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 

contracting agency would need to 

provide the information in English, 

Korean, and Spanish. Giving 

information only in English and Korean 

typically would not provide the notice 

in a language with which the Spanish 

speakers are more familiar than English. 

While electronic communications were 

not part of the earlier part 9, the DOL 

recognizes that reliance on electronic 

communication will increase in the 

future and e-mail often may provide an 

inexpensive and reliable way to 

communicate information quickly. The 

DOL seeks comments as to whether 

allowing contracting agencies an 

electronic notification option, in lieu of 

physical posting or providing a paper 

copy to the worker, will provide the 

agencies greater flexibility and 

efficiency, especially when contract 

work is performed at a location that is 

remote from procurement staff, without 

sacrificing the quality of the information 

provided to workers. For example, 

should the rule allow notices by e-mail 

from the contracting agency to service 

employees who routinely receive 

information from the agency by e-mail 

to meet the notification requirement, 

provided the notice otherwise meets the 

requirements of proposed § 9.11? If an email option were allowed, would 

additional guidance for such 

communications need to be considered, 

and if so, what should that guidance be? 

Of course, minimally, any particular 

determination of the adequacy of a 

notification, regardless of the method 

used, must be fact dependent and made 

on a case-by-case basis. 

Proposed § 9.11(c) requires the 

Contracting Officer to provide the 

predecessor contractor’s list of 

employees referenced in proposed 

§ 9.12(e) to the successor contractor and, 

on request, to employees or their 

representatives. 

Proposed § 9.11(d) addresses 

Contracting Officers’ responsibilities 

regarding complaints of alleged 

violations of part 9. As under the prior 

version of part 9, contracting agencies 

would initially receive complaints of 

alleged violations of the 

nondisplacement requirements and, in a 

compliance assistance mode, provide 

information to the complainant and 

contractor about their rights and 

responsibilities under the employee 

nondisplacement provision of the 

contract. Contracting agencies would 

not be obligated to forward to the Wage 

and Hour Division any complaint that is 

withdrawn because of this compliance 

assistance; thus, a Contracting Officer 

need not forward to the Wage and Hour 

Division a complaint that an employee 

withdraws because the employee was 

previously not aware of the application 

of a particular exclusion. In all other 

cases, the contracting agency will 

forward certain information that the 

DOL must have in order to determine 

compliance. The DOL believes this 

proposal strikes a balance that allows 

compliance concerns to be resolved as 

expeditiously as possible without undue 

burdens on all parties. The proposal 

requires the Contracting Officer, within 

30 days of receipt of a complaint, to 

forward to the headquarters of the Wage 

and Hour Division any complaint 

alleging any violation of 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 contract or that the contract 

was exempted by the agency; 

information concerning known 

settlement negotiations between the 

parties (if applicable); and other 

pertinent information the Contracting 

Officer chooses to disclose. The 

proposal also would require the 

Contracting Officer to provide copies to 

the contractor and the complainant. To 

assist the agency in providing 

information to the Wage and Hour 

Division or to protect the interests of the 

agency, the proposal would allow the 

contracting agency to conduct an initial 

review of any nondisplacement 

complaint. As part of the contracting 

agency’s initial review, the Contracting 

Officer may obtain statements of the 

positions of the parties and inspect the 

records of the predecessor and successor 

contractors (and make copies or 

transcriptions thereof), question the 

predecessor and successor contractors 

and any employees of these contractors, 

and require the production of any 

documentary or other evidence deemed 

necessary to determine whether a 

violation of this part has occurred. The 

Contracting Officer may provide 

information about the contract clause to 

the complainant(s) and successor 

contractor, and would not be required to 

forward any complaint or related 

information when a complaint is 

withdrawn because of compliance 

assistance provided by the contracting 

agency. Contracting agencies would be 

obligated to refer questions of 

interpretations regarding part 9 to the 

nearest local office of the Wage and 

Hour Division. The DOL particularly 

seeks comments on whether the 30-day 

period for Contracting Officers to 

forward information to the Wage and 

Hour Division is necessary and 

appropriate, given the responsibilities 

envisioned if this proposed rule were 

adopted. 

Proposed § 9.12 implements 

contractors’ requirements and 

prerogatives under the nondisplacement 

requirements. The proposed section 

consists of the general obligation to offer 

employment, the method of the job 

offer, exceptions, reduced staffing, 

obligations near the end of the contract, 

recordkeeping, and obligations to 

cooperate with reviews and 

investigations. 

Proposed § 9.12(a)(1) implements the 

requirement that there be no 

employment openings prior to the 

contractor offering employment to the 

employees on the predecessor contract. 

74 FR 6103. Specifically, the proposal 

provides that, except as provided under 

the exclusions listed in proposed § 9.4 

or paragraphs (c) and (d) of proposed 

§ 9.12, a successor contractor or 

subcontractor could not fill any 

employment openings under the 

contract prior to making good faith 

offers of employment, 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 contract or the 

expiration of the contract under which 

the employees were hired. The 

contractor and its subcontractors would 

be required to make an express offer of 

employment to each employee and state 

the time within which the employee 

must accept such offer, but in no case 

would the period within which the 

employee must accept the offer of 

employment be less than 10 days. 

Proposed § 9.12(a)(2) would clarify that 

the successor contractor’s obligation to 

offer a right of first refusal exists even 

if the successor contractor was not 

provided a list of the predecessor 

contractor’s employees or the list did 

not contain the names of all persons 

employed during the final month of 


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contract performance. Proposed 

§ 9.12(a)(3) discusses determining 

eligibility for the job offer and provides 

guidance that did not appear in the 

earlier part 9. While a person’s 

entitlement to a job offer under this 

proposal usually would be based on 

whether his or her name is included 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 would also be required to 

accept other credible evidence of an 

employee’s entitlement to a job offer. 

The successor contractor would be 

allowed to verify the information as a 

condition of accepting it. 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 a 

contract during the predecessor’s last 

month of performance coupled with 

contracting agency staff verification 

could 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. The successor could verify 

the claim with the contracting agency, 

the predecessor, or another person who 

worked at the facility. The guidance will 

provide more clarity to contractors and 

employees as to the level of proof 

needed to determine entitlement to a job 

offer. 

Proposed § 9.12(b) discusses the 

method of the job offer, with § 9.12(b)(1) 

requiring that—except as otherwise 

provided in part 9—a contractor must 

make a bona fide express offer of 

employment to each employee on the 

predecessor contract before offering 

employment on the contract to any 

other person. The obligation to offer 

employment would cease upon the 

employee’s first refusal of a bona fide 

offer to employment on the contract. 

Proposed § 9.12(b)(2) discusses the time 

limit in which the employee has to 

accept the offer, which the contractor 

determines, but in no case can be less 

than 10 days. Proposed § 9.12(b)(3) 

provides the process for making the job 

offer. As proposed, the successor 

contractor is required to make an oral or 

written employment offer to each 

employee, and, in order to ensure that 

the offer is effectively communicated, to 

take reasonable efforts to make the offer 

in a language that each worker 

understands. The proposed rule 

contains an example of how the 

contractor could satisfy this provision 

by having a co-worker or other person 

who can fluently translate for 

employees who are not fluent in 

English, if the contractor holds a 

meeting for a group of employees on the 

predecessor contract. Proposed 

§ 9.12(b)(4) clarifies that the 

employment offer may be to a different 

job position on the contract. More 

specifically, an offer of employment on 

the successor’s contract would generally 

be presumed to be a bona fide offer of 

employment, even if not for a position 

similar to the one the employee 

previously held but one for which the 

employee were qualified. If a question 

arises concerning an employee’s 

qualifications, that question will 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 would have to 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. For example, an oral 

or written outline of job duties or skills 

used in prior employment, school 

transcripts, or copies of certificates and 

diplomas all would be credible 

information. Proposed § 9.12(b)(5) 

allows for an offer of employment to a 

position providing different terms and 

conditions of employment than those 

the employee held with the predecessor 

contractor, where the reasons for the 

offer are not related to a desire that the 

employee refuse the offer or that other 

employees be hired. Proposed 

§ 9.12(b)(6) provides 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 will be closely 

examined to ensure the offer was bona 

fide. 

Proposed § 9.12(c) addresses the 

exceptions to the general obligation to 

offer employment under Executive 

Order 13495, which are included in the 

contract clause established in section 5 

of the Order and are distinct from the 

exclusions discussed in proposed § 9.4. 

The exclusions specify both certain 

classes of contracts and certain 

employees excluded from the provisions 

of Executive Order 13495. The 

exemptions from the successor 

contractor’s obligation to offer 

employment on the contract to 

employees on the predecessor contract 

prior to making the offer to anyone else 

do not relieve the contractor of other 

requirements of this part (e.g., the 

obligation near the end of the contract 

to provide a list of employees who 

worked on the contract during the last 

month). The exceptions are to be 

construed narrowly and the contractor 

will bear the burden of proof regarding 

the appropriateness of claiming any 

exception. 

Under proposed § 9.12(c)(1), a 

contractor or subcontractor would not 

be required to offer employment to any 

employee of the predecessor who will 

be retained by the predecessor 

contractor. The contractor is required to 

presume that all employees hired to 

work under a predecessor’s Federal 

service contract would be terminated as 

a result of the award of the successor 

contract, absent an ability to 

demonstrate a reasonable belief to the 

contrary based upon credible 

information provided by a 

knowledgeable source such as the 

predecessor contractor, the employee, or 

the contracting agency. 

Under proposed § 9.12(c)(2), a 

contractor or subcontractor would be 

allowed to employ under the contract 

any employee who has worked for the 

contractor or subcontractor for at least 

three months immediately preceding the 

commencement, i.e., the first date of 

performance, of the contract and who 

would otherwise face lay-off or 

discharge. As would be the case with 

any exception to the nondisplacement 

requirements, a contractor bears the 

burden of showing how the exception 

applies. For example, a contractor 

would have to demonstrate through a 

preponderance of the evidence that an 

employee who it has employed for at 

least three months would face discharge 

were a position on the contract not 

offered because the employee’s work on 

another contract has expired and there 

are no other openings for which the 

employee is qualified within the 

commuting area. A successor could not 

claim this exception to reemploy an 

employee who was already terminated 

or laid off, because such a person has 

already faced a discharge and such 

person has not been employed for the 

three months preceding the 

commencement of the successor 

contract. Of course, a person would still 

be considered to be employed during a 

period of leave, such as vacation or sick 

leave, or a similar short-term absence. 

Under proposed § 9.12(c)(3), the 

contractor or subcontractor would not 

be required to offer employment to any 

employee of the predecessor who is not 

a service employee. Typically, this 

exemption would apply to a person who 

is a managerial or supervisory employee 

on the predecessor contract. The 

successor contractor would be required 

to presume that all persons appearing 


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on the list required by § 9.12(e) as 

employees hired to work under a 

predecessor’s Federal service contract or 

who have demonstrated they should 

have been included on the list were 

service employees, absent an ability to 

demonstrate a reasonable belief to the 

contrary, based upon credible 

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 sufficient for 

purposes of the exemption. 

Under proposed § 9.12(c)(4), a 

contractor or subcontractor would not 

be required to offer employment to any 

employee of the predecessor contractor 

whom the contractor or any of its 

subcontractors reasonably believes, 

based on the particular employee’s past 

performance, has failed to perform 

suitably on the job. Again, the 

contractor would be required to 

presume that all employees working 

under the predecessor contract in the 

last month of performance performed 

suitable work on the contract, absent an 

ability to demonstrate a reasonable 

belief to the contrary based upon 

credible information provided by a 

knowledgeable source such as the 

predecessor contractor, the local 

supervisor, the employee, or the 

contracting agency. A contractor could 

demonstrate its reasonable belief that 

the employee in fact failed to perform 

suitably on the predecessor contract 

through evidence of disciplinary action 

taken for poor performance or evidence 

directly from the contracting agency that 

the particular employee did not perform 

suitably. Similarly, a successor 

contractor can use performance 

appraisal information in determining 

whether an employee failed to perform 

suitably on the job; however, the DOL 

notes that this NPRM would not require 

a predecessor contractor to provide 

performance information. Information 

regarding the general performance of the 

predecessor contractor would not be 

sufficient for purposes of this 

exemption. The DOL seeks comments as 

to whether there should be any 

requirement that the information 

supporting the contractor’s or 

subcontractor’s reasonable belief be in 

writing and relatively contemporaneous 

with the past performance. 

Under proposed § 9.12(c)(5), a 

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. The 

successor contractor is 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 based upon credible 

information 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 would not be sufficient for 

purposes of this exemption. For 

example, claims from several employees 

who state a janitorial contractor 

reassigned its janitorial workers who 

previously worked exclusively in a 

Federal building to both Federal and 

private clients as part of a single job 

may indicate that the predecessor 

deployed workers to avoid the purposes 

of the nondisplacement provisions, 

which include Federal interests in 

economy and efficiency that are served 

when the successor hires the 

predecessor’s employees. Conversely, 

were the employees on the predecessor 

contract traditionally deployed to 

Federal and other buildings as part of 

their job, the successor would not be 

required to offer employment to the 

workers. 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. 

Proposed § 9.12(d) addresses the 

provision in paragraph (a) of Executive 

Order 13495’s contract clause that 

allows the successor contractor to 

reduce staffing. 74 FR 6104. Proposed 

§ 9.12(d)(1) allows for the contractor or 

subcontractor to determine the number 

of employees necessary for efficient 

performance of the contract and, for 

bona fide staffing or work assignment 

reasons, to elect to employ fewer 

employees than the predecessor 

contractor employed in performance of 

the work. Thus, the successor contractor 

would not be required to 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 believes 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 

three months after the successor 

contractor’s first date of performance on 

the contract. In some cases a successor 

contractor may reconfigure the staffing 

pattern to increase the number of 

persons employed in some positions 

while decreasing the number of 

employees in others, and in such cases 

§ 9.12(d)(3) would require the contractor 

to examine the qualifications of each 

employee so as to minimize 

displacement. Of course, as already 

provided in § 9.1(b), this exception is 

not to be construed to permit a 

contractor or subcontractor to fail to 

comply with any provision of any 

Executive Order, regulation, or law of 

the United States; therefore, a contractor 

could not use this exemption to justify 

unlawful discrimination against any 

worker. While the Wage and Hour 

Division would not make compliance 

determinations regarding Federal 

contractors’ compliance with 

nondiscrimination requirements 

administered by other regulatory 

agencies, a finding by the DOL’s Office 

of Federal Contract Compliance 

Programs, another agency, or by a court 

that a contractor has unlawfully 

discriminated against a worker would 

be considered in determining whether 

the discriminatory action has also 

violated the nondisplacement 

requirements. The DOL invites 

comments on whether the rule should 

provide additional guidance in this 

regard and what any additional 

guidance should be. The contractor’s 

obligation would end when all of the 

predecessor contract employees have 

received a bona fide job offer or the 

90-day obligation period expires. The 

proposed regulation provides several 

examples to demonstrate the principle. 

Proposed § 9.12(e) specifies an 

incumbent contractor’s obligations near 

the end of the contract, not less than 10 

days before completion of the contract, 

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, 

including their anniversary dates of 

employment with either the current or 

predecessor contractors or their 

subcontractors. The contractor may use 

the list submitted to satisfy the 

requirements of the SCA contract clause 

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

provision. The earlier version of part 9 

included a similar provision that did 

not specifically state that the single list 

could be used to satisfy the 

requirements of both parts 4 and 9; 


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however, the DOL believes specifying 

this option in the regulations may help 

clarify that there is no duplication of 

effort in order to comply with this 

requirement of Executive Order 13495. 

The earlier version of part 9 also 

required that the list of employees be 

furnished 60 days before completion of 

the contract. The current proposal 

reflects the time frame used in the 

current Order and is identical to when 

the list must be provided under 29 CFR 

4.6(l)(2). 

Proposed § 9.12(f) addresses 

recordkeeping requirements. Proposed 

§ 9.12(f)(1) clarifies that this part 

prescribes no particular order or form of 

records for contractors, and the 

recordkeeping requirements apply to all 

records regardless of their format (e.g., 

paper or electronic). A contractor is 

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. Proposed 

§ 9.12(f)(2) specifies the records 

contractors must maintain, including 

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, the 

names of the employees from the 

predecessor contract to whom an offer 

was made, any written record that forms 

the basis for any exclusion or exemption 

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 who 

makes retroactive payment of wages or 

compensation under the supervision of 

the Wage and Hour Division pursuant to 

proposed § 9.24(b) will be required to 

record and preserve for three years in 

the pay records the amount, the period 

covered, and the date of payment to 

each employee, and to report each such 

payment on a receipt form authorized 

by the Wage and Hour Division. 

Contracting agency and Wage and Hour 

Division staff will use these records in 

determining a contractor’s compliance 

and the propriety of any further 

sanctions. 

Proposed § 9.12(g) outlines 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 is not limited to 

investigations of the contractor’s own 

actions, but also includes investigations 

related to other contractors (e.g., 

predecessor and subsequent contractors) 

and subcontractors. 

Proposed Subpart C pertains to 

enforcement activities under this part 

and provides for disputes to be resolved 

only as provided in regulations by the 

Secretary of Labor. Executive Order 

13495 directs that the regulations, to the 

extent practicable, favor the resolution 

of disputes by efficient and informal 

alternative dispute resolution methods. 

This proposed subpart addresses the 

process for filing complaints, informal 

resolution attempts by the Wage and 

Hour Division, investigations, and 

remedies and penalties for violations. 

Proposed § 9.21 establishes the 

procedure for filing complaints and 

adopts the complaint process used in 

the earlier version of part 9, with the 

exception of now establishing time 

frames in which complaints are to be 

filed. Proposed § 9.21(a) outlines the 

procedure for filing a complaint with 

the Contracting Officer of the 

appropriate Federal agency within 120 

days of the alleged violation. As 

provided under the prior rule, the DOL 

believes that filing complaints first with 

the contracting agency creates the best 

avenue for displaced workers to begin 

the process of obtaining expeditious 

review of their rights. The proposal 

includes a time limit for filing a 

complaint, in order to assure that 

concerns are addressed promptly and 

the Federal Government’s procurement 

interests in economy and efficiency are 

preserved. Proposed § 9.21(b) outlines 

the procedure for filing a complaint 

with the Wage and Hour Division if the 

complainant has not been able timely to 

file the complaint with the Contracting 

Officer or has not received, within 30 

days of filing the complaint with the 

Contracting Officer, a copy of the report 

forwarded to the Wage and Hour 

Division under proposed § 9.11(d)(1). 

The complainant would be allowed to 

file the complaint directly with the 

Wage and Hour Division within 180 

days of the alleged violation. 

Proposed § 9.22 establishes the 

informal complaint resolution process 

for complaints referred to the Wage and 

Hour Division. After obtaining the 

necessary information from the 

Contracting Officer regarding the alleged 

violations, the Wage and Hour Division 

could contact the successor contractor 

about the complaint and attempt to 

conciliate and reach an acceptable 

resolution that is consistent with all 

applicable requirements. 

Proposed § 9.23 outlines the authority 

for the Wage and Hour Division to 

investigate complaints under part 9. 

Proposed § 9.23(a) addresses initial 

investigations and provides that the 

Administrator may initiate an 

investigation either as the result of the 

unsuccessful conciliation of a complaint 

or at any time on his or her own 

initiative. As part of the investigation, 

the Administrator would be able to 

inspect the records of the predecessor 

and successor contractors (and make 

copies or transcriptions thereof), 

question the predecessor and successor 

contractors and any employees of these 

contractors, and require the production 

of any documentary or other evidence 

deemed necessary to determine whether 

a violation of this part (including 

conduct warranting imposition of 

ineligibility sanctions pursuant to 

§ 9.24(d)) has occurred. Proposed 

§ 9.23(b) addresses subsequent 

investigations and allows the 

Administrator to conduct a new 

investigation or issue a new 

determination if the Administrator 

concludes circumstances warrant the 

additional action, such as where the 

proceedings before an 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. 

Proposed § 9.24 discusses remedies 

and sanctions for violations. The 

Secretary will have the authority to 

issue orders prescribing appropriate 

remedies, including, but not limited to, 

requiring the contractor to offer 

employment to employees from the 

predecessor contract and payment of 

wages lost. Proposed § 9.24(b) provides 

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 

abate 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), 

terms, conditions, and privileges of that 

employment. 

Proposed § 9.24(c) addresses the 

withholding of contract funds for noncompliance. After an investigation and 

a determination that lost wages or other 

monetary relief is due, the 

Administrator could direct that accrued 

payments due on either the contract or 

any other contract between the 

contractor and the Government be 


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withheld as necessary to pay the 

moneys due. Upon final order of the 

Secretary, the Administrator may direct 

that withheld funds be transferred to 

DOL for disbursement. 

Proposed § 9.24(c)(2) provides for the 

suspension of the payment of funds if 

the Contracting Officer or the Secretary 

finds that the predecessor contractor has 

failed to provide the required list of 

employees working under the contract 

as required by § 9.12(e). As reflected in 

the earlier version of part 9, these 

proposed withholding provisions would 

mirror the withholding standards of 

other labor standards laws such as the 

Davis-Bacon Act and SCA. 

Proposed § 9.24(d) provides for 

debarment from Federal contract work 

for up to three years for noncompliance 

with any order of the Secretary or for 

willful or aggravated violations of the 

regulations in this part. 

Proposed subpart D addresses 

informal and formal proceedings to 

determine compliance with the 

requirements of part 9 and resolution of 

disputes. The proposal substantially 

reinstates provisions from the prior part 

9, but proposes minor changes to 

accommodate the format of the 

proposed rule and to clarify various 

authorities of the Administrator, Office 

of Administrative Law Judges, and 

Administrative Review Board, and the 

effects of various notices and filings. 

Proposed § 9.31 provides that when 

an investigation is completed and a 

resolution is not reached that is 

consistent with the requirements of this 

part and acceptable to both the 

complainant(s) and the successor 

contractor, the Administrator will issue 

a written determination of whether a 

violation occurred. A written 

determination will contain a statement 

of the investigation findings that will 

address the appropriate relief and the 

issue of ineligibility sanctions where 

appropriate, with notice of the 

determination sent by certified mail to 

the parties. The notice of 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 filed 

within 20 days or, where relevant facts 

are not in dispute, a petition for review 

is filed within 20 days with the 

Administrative Review Board. 

Proposed § 9.32(b) provides 

procedures for requesting appeals. The 

proposed time limits are the same as 

under the earlier version of part 9, and 

the proposed language provides due 

process rights for those seeking appeals 

without needlessly delaying decisions 

from taking effect. 

Executive Order 13495 provides for 

its implementing regulations to favor 

alternative dispute resolution methods 

to the extent practicable, and proposed 

§ 9.33 generally encourages parties to 

resolve disputes in accordance with the 

conciliation procedures set forth at 

§ 9.22 or, where such efforts have failed, 

to utilize settlement judges to mediate 

settlement negotiations pursuant to 29 

CFR 18.9 when those provisions apply. 

At any time after commencement of a 

proceeding, the parties jointly could 

move to defer the hearing for a 

reasonable time to permit negotiation of 

a settlement or an agreement disposing 

of the proceeding. Proposed § 9.33(b) 

establishes the procedure for appointing 

a settlement judge to mediate cases 

scheduled with the Office of 

Administrative Law Judges. 

Proposed § 9.34(a) provides for the 

Office of Administrative Law Judges to 

hear and decide in its discretion appeals 

concerning questions of law and fact 

from determinations of the 

Administrator. The ALJ would act fully 

and finally as the authorized 

representative of the Secretary, subject 

to any appeal filed to the Administrative 

Review Board, and subject to certain 

limits. Specifically, the regulations 

exclude from the ALJ’s authority any 

jurisdiction to pass on the validity of 

any provision of part 9. In addition, as 

the proceedings are not required by an 

underlying statute to be determined on 

the record after an opportunity for an 

agency hearing, the Equal Access to 

Justice Act (EAJA), as amended (5 

U.S.C. 504) does not apply to them; 

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 this part. 

Absent a stay to attempt settlement, 

the ALJ will 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, which is to be held not more 

than 60 days from the date of receipt of 

the hearing request under proposed 

§ 9.34(b). 

Under proposed § 9.34(d), the 

Administrator may 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 

ALJ in a case in which the 

Administrator has not previously 

participated. The Administrator would 

participate as a party in any proceeding 

in which the Administrator has 

determined that this part 9 has been 

violated. Under proposed § 9.34(e), a 

Federal agency that is interested in a 

proceeding may participate as amicus 

curiae at any time in the proceedings. 

Proposed § 9.34(g) applies, with 

certain exceptions, the rules of practice 

and procedure for administrative 

hearings before the Office of 

Administrative Law Judges at 29 CFR 

part 18, subpart A to administrative 

proceedings under this part 9. The 

exceptions declare inapplicable the 

Rules of Evidence at 29 CFR part 18, 

subpart B, and provide 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. Proposed § 9.34(h) 

requires ALJ decisions (containing 

appropriate findings, conclusions, and 

an order) to be issued within 60 days 

after completion of the proceeding. 

Upon the issuance of a decision that a 

violation has occurred, the ALJ may 

order appropriate relief, which may 

include that the successor contractor 

hire 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. If the Administrator has 

sought ineligibility sanctions, the order 

would also be required to address 

whether debarment is appropriate. The 

ALJ may assess against the contractor an 

amount equal to the employees’ costs 

and expenses (not including attorney 

fees). This amount would be awarded in 

addition to any unpaid wages or other 

relief due. Proposed § 9.35 provides the 

procedures for appealing an ALJ 

decision to the Administrative Review 

Board. 

Finally, appendix A to part 9 contains 

the text of the contract clause required 

by § 9.11(a), and appendix B contains 

the text for the notice that contracting 

agencies would be required to provide 

to service employees on covered 

contracts that have been awarded to a 

successor. If the final rule adopts this or 

a similar notice provision, the DOL 

intends to make the text of appendix B 

available in a poster format that will be 

available to contracting agencies on the 

Internet. In addition to or as an 

alternative to posting, this proposal 

would allow the text to be provided to 

affected employees electronically. 

IV. Paperwork Reduction Act 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department conducts a 

preclearance consultation program to 

provide the general public and federal 

agencies with an opportunity to 

comment on proposed and continuing 

collections of information in accordance 

with the Paperwork Reduction Act of 


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1995 (PRA), 44 U.S.C. 3506(c)(2)(A). 

This program helps to ensure that 

requested data can be provided in the 

desired format, reporting burden (time 

and financial resources) is minimized, 

collection instruments are clearly 

understood, and the impact of collection 

requirements on respondents can be 

properly assessed. The PRA typically 

requires an agency to provide notice and 

seek public comments on any proposed 

collection of information contained in a 

proposed rule. See 44 U.S.C. 

3506(c)(2)(B); 5 CFR 1320.8. Persons are 

not required to respond to the 

information collection requirements as 

contained in this proposal unless and 

until they are approved by the OMB 

under the PRA at the final rule stage. 

The Department has submitted the 

identified information collections 

contained in the proposed rule to the 

OMB for review under the PRA. See 44 

U.S.C. 3507(d); 5 CFR 1320.11. 

Purpose and Use: As previously 

explained, Executive Order 13495 

applies to contracts or subcontracts at or 

above the simplified acquisition 

threshold of $100,000 and requires 

service contracts and their solicitations 

to include an additional labor standards 

clause that requires the successor 

contractor, and its subcontractors, under 

a contract for performance of the same 

services at the same location, to provide 

a right of first refusal of employment to 

those employees (other than managerial 

and supervisory employees) employed 

under the predecessor contract during 

the final month of contract performance 

whose employment will be terminated 

as a result of the award of the successor 

contract. The Order also requires the 

successor contractor and subcontractor 

to make an express offer of employment 

to each predecessor employee, with 

some exceptions, stating the timeframe 

within which each employee must 

accept such offer. For purposes of the 

remaining PRA discussion, the term 

contractor covers both contractors and 

subcontractors, excepted as noted. The 

DOL has strived to make the 

information disclosures intuitive. 

Proposed § 9.12 describes the 

contractor’s requirements and 

prerogatives under the proposed rule, 

which include third party disclosures 

and recordkeeping requirements that are 

subject to the PRA. Proposed § 9.12(a) 

and (b) requires the contractor to make 

a bona-fide express offer of employment 

to each employee individually, either in 

writing or orally. Proposed § 9.12(f) also 

requires the successor service contractor 

to maintain for specific periods of time 

copies of records (regardless of format, 

e.g., paper or electronic) of its 

compliance, including (1) 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; (2) any record that 

forms the basis for any exclusion or 

exemption claimed under this part; and 

(3) the employee list provided to or 

received from the contracting agency 

that meet contractor obligations near the 

end of a contract. 

The DOL notes that the proposed rule 

does not require contractors to create 

any record regarding any basis for 

claiming an exclusion or exemption 

from the nondisplacement provisions of 

Federal service contracts; however, the 

contractor would need to retain any 

such record if created. In addition, 

while the proposed rule also requires a 

predecessor contractor near the end of a 

contract to provide a certified list of the 

names of all service employees working 

under that contract (and its 

subcontracts) during the last month of 

contract performance to the contracting 

agency, that requirement may be met by 

using the seniority list submitted to 

satisfy the requirements of the contract 

clause specified in the current SCA 

regulations at 29 CFR 4.6(l)(2). 

Therefore, this requirement imposes no 

additional burden for PRA purposes. 

Proposed § 9.21 outlines the 

procedures for filing complaints under 

this part. This NPRM imposes no 

specific reporting burden on what 

information complainants must provide; 

however, prudent persons asserting 

certain employment rights normally 

would provide their own contact 

information, contact information for 

their employer, and a basis for why they 

are filing the complaint. 

Information Technology: There is no 

particular order or form of records 

prescribed by the proposed regulations. 

A contractor may meet the requirements 

of this proposed rule using paper or 

electronic means. 

Public Burden Estimates: The 

proposed rule contains information 

collection requirements for contractors 

and complainants. The Department 

bases the following burden estimates for 

this information collection on agency 

experience in administering the SCA, 

the prior version of part 9, and 

consultations with contracting agencies, 

except as otherwise noted. 

According to the Federal Procurement 

Data System’s (FPDS) 2006 Federal 

Procurement Report, slightly less than 

75,000 (74,611) Federal government 

contract actions were subject to the SCA 

during that reporting period. A contract 

action is any oral or written action that 

results in the purchase, rent, or lease of 

supplies or equipment, services, or 

construction using appropriated dollars 

over the micro-purchase threshold, or 

modifications to these actions regardless 

of dollar value. Many contract actions 

are modifications to or extensions of 

existing Federal contracts or otherwise 

relate to actions where there is no 

successor contractor. The DOL, 

therefore, assumes that about 15,000 per 

year (slightly more than 20 percent of all 

SCA covered contract actions in 2006) 

would be successor contracts subject to 

the nondisplacement provisions that 

carry a burden under the PRA. 

Subcontracts are not reported in the 

FPDS, and the DOL has not found a 

reliable source on which to estimate the 

number of subcontracts per SCA prime 

contract. Based on consultations with 

Federal procurement officials, the DOL 

assumes that for PRA purposes a typical 

SCA contract has one prime contractor 

and three subcontractors; therefore, the 

Department estimates the information 

collection requirements of part 9 would 

apply to approximately 60,000 

contracts. 15,000 covered contract 

actions × 4 contractors. A review of 

FPDS data suggests that, while about 

110,000 contractors performed work on 

Federal service contracts in FY 2006, 

only 44,039 contractors performed work 

on service contracts in excess of 

$25,000. See David Berteau, et al., 

Structure and Dynamics of the U.S. 

Federal Professional Services Industrial 

Base 1995–2007, Center for Strategic 

and International Studies, February 

2009, at 26, http://www.csis.org/media/ 

csis/pubs/090212_fps_report_2009.pdf 

(CSIS Report). Of course, some lesser 

number of contractors would perform 

work on contracts subject to the 

nondisplacement requirements; the DOL 

estimates each year about 40,000 

contractors and subcontractors will be 

subject to this information collection. 

Based on the Wage and Hour 

Division’s enforcement experience 

under the SCA, the DOL estimates that 

each service contract covered by this 

information collection would involve an 

average of approximately 15 employees. 

Moreover, the DOL expects successor 

contractors typically would make oral 

offers of employment at all-employee 

meetings where the successor contractor 

need only make notations on a copy of 

the employee roster of the offer of 

employment. Otherwise, the successor 

contractor would likely make offers of 

employment individually by mail or 


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electronic means. Beyond making the 

offer of employment, the successor 

contractor would also be responsible for 

maintaining copies of any written offers 

of employment, or contemporaneous 

written records of any oral offers of 

employment, and copies of any records 

that formed the basis for any exclusion 

or exemption claimed under the 

proposed rule. As job offers will 

typically be made in a bulk fashion, the 

DOL estimates it would take a successor 

contractor an average of approximately 

one and one-half minutes per employee 

to make an offer, whether oral, written, 

or electronic, and another 1⁄2 minute to 

file the associated paperwork for each 

employee, including any paperwork 

forming the basis for any exclusion or 

exemption from the obligation to offer 

employment to a particular employee. 

Therefore, the DOL estimates an annual 

disclosure and recordkeeping burden of 

30 minutes per contract for a total 

annual burden of 30,000 hours. 60,000 

contracts × 15 third-party disclosures × 

2 minutes. 

The information collection 

requirement for contractors specified in 

proposed § 9.12(e)—the seniority list—is 

cleared under the SCA regulations, 29 

CFR 4.6(l)(2), OMB control number 

1215–0150, and that burden is not 

duplicated in these estimates. 

Estimates prepared for the 

nondisplacement rules promulgated 

pursuant to the Clinton Order suggested 

it applied to only 88 contract actions per 

year; however, the burdens calculated at 

that time did not include subcontracts. 

Using the same criteria as used to 

calculate burdens under this proposal, 

the DOL estimates the total number of 

covered contracts and subcontracts for 

the earlier rule to be approximately 350; 

suggesting the current rule would apply 

to about 170 times more successor 

contracts. As previously noted the Wage 

and Hour Division received 

approximately one complaint per year 

under the old rule. Extrapolating to the 

current estimate of contracts subject to 

the current rule, the DOL estimates it 

will receive 170 nondisplacement 

complaints per year, half of which may 

include supplemental information filed 

directly with the Wage and Hour 

Division for a total number of 

complainant responses of 255. The DOL 

estimates that each complaint filing will 

take about 20 minutes; therefore, the 

DOL estimates the total burden for filing 

complaints to be about 85 hours. 255 

responses × 20 minutes. 

The total burden estimates under the 

PRA (including the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information) 

are as follows: 40,170 respondents; 

900,255 responses; and 30,085 burden 

hours. 

Public Comments: The DOL 

specifically seeks public comments 

regarding the burdens imposed by 

information collections contained in 

this proposed rule. In particular, the 

Department seeks comments that: 

evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; evaluate the accuracy 

of the agency’s estimate of the burden of 

the proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

enhance the quality, utility and clarity 

of the information to be collected; and 

minimize the burden of the collection of 

information on those who are to 

respond, including through the use of 

appropriate automated, electronic, 

mechanical, or other technological 

collection techniques or other forms of 

information technology, e.g., permitting 

electronic submissions of responses. 

Commenters may send their views about 

these information collections to the 

Department in the same way as all other 

comments (e.g., through the 

regulations.gov Web site). While much 

of the information provided to the OMB 

in support of the information collection 

request appears in this preamble, 

interested parties may obtain a copy of 

the full supporting statement by sending 

a written request to the mail address 

shown in the ADDRESSES section at the 

beginning of this preamble or by visiting 

the http://www.reginfo.gov/public/do/ 

PRAMain Web site. In addition to 

having an opportunity to file comments 

with the Department, comments about 

the paperwork implications of the 

proposed regulations may be addressed 

to the OMB. Comments to the OMB 

should be directed to: Office of 

Information and Regulatory Affairs, 

Attention OMB Desk Officer for the 

Wage and Hour Division (WHD), Office 

of Management and Budget, Room 

10235, Washington, DC 20503, 

Telephone: 202–395–7316/Fax: 202– 

395–6974 (these are not toll-free 

numbers). 

These paperwork burden estimates 

are summarized as follows: 

Type of Review: Reinstatement with 

change of a previously approved 

collection. 

Agency: Wage and Hour Division, 

Department of Labor. 

Title: Nondisplacement of Qualified 

Workers Under Service Contracts. 

OMB Control Number: 1215–0190. 

Affected Public: Business or other forprofit and Individuals or Households. 

Estimated Number of Respondents: 

40,170. 

Estimated Number of Responses: 

900,255. 

Frequency of Response: On occasion. 

Estimated Annual Burden Hours: 

30,085. 

Estimated Annual Burden Costs 

(Operation and Maintenance): $0. 

V. Executive Order 12866, Regulatory 

Flexibility 

This NPRM is considered to be a 

significant regulatory action within the 

meaning of Executive Order 12866, and 

was submitted to OMB for review before 

publication, because the proposed rule 

may raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in Executive Order 12866. The 

first sentence of Executive Order 13495 

recognizes that successor contractors 

often hire most of the employees who 

worked on predecessor contract, if the 

contract work will continue at the same 

location. The DOL believes the NPRM 

will not have a significant economic 

impact, because the proposal would 

simply require contractors to follow a 

practice currently used in most cases as 

a good business practice. The DOL 

expects that, as further explained in this 

section, there will be virtually no 

change in the way most contractors 

currently conduct business, with the 

exception that they will need to ensure 

the appropriate contract language 

appears in subcontracts. The DOL also 

expects that a majority of remaining 

contractors will comply with the new 

requirements by simply replacing 

aspects of their existing staffing 

practices with similar practices that do 

not entail an additional burden but do 

assure compliance with the NPRM. In 

addition, the DOL expects that in 

certain instances a contracting agency 

will exercise its exemption authority to 

exclude contracts from these 

requirements if it is clear that 

application of the nondisplacement 

requirements would impair the ability 

of the agency to procure services on an 

economical and efficient basis. 

In estimating the costs on contractors, 

the DOL has also considered how 

current practices compare with 

expected actions contractors typically 

will take under the nondisplacement 

provisions. For example, those 

successor contractors that currently hire 

new employees for a contract must 

recruit workers and evaluate their 

qualifications for positions on the 

contract. In order to match employees 

with suitable jobs under this NPRM, 


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successor contractors will evaluate the 

predecessor contract employees and 

available positions; thus, successor 

contractors are likely to spend an equal 

amount of time determining jobsuitability under the NPRM as under 

current practices. The costs for 

documenting these employment 

decisions will also be similar under 

both the NPRM and status quo. 

For purposes of this analysis, the DOL 

also believes the time contactors will 

save by not recruiting an entirely new 

workforce from the outset will be offset 

by the additional time a successor 

contractor will spend in recruiting a 

new employee when there is a vacant 

position because the contractor cannot 

find suitable work for an employee who 

worked on the predecessor contract or 

in considering how to minimize 

displacement when the successor 

contractor reconfigures how it will 

deploy employees performing on the 

successor contract. See § 9.12(d)(3). This 

NPRM will also not affect wages 

contractors will pay workers, because of 

the existing SCA requirement for the 

wage determination that establishes the 

minimum rate for each occupation to be 

incorporated into the contract; thus, 

existing regulatory requirements already 

set wage rates, including when the 

predecessor’s collectively bargained rate 

is incorporated into the contract, 

successors must pay. See 41 U.S.C. 

353(c); 29 CFR 4.6(b)(1). This NPRM 

does not require successor contractors to 

pay wages higher than the rate required 

by the SCA, even when the predecessor 

paid a higher rate. The successor 

contractor also may offer employment 

under different terms and conditions, if 

the reasons for doing so are not related 

to a desire that the employee refuse the 

offer or that other employees be hired 

for the offer. See § 9.12(b)(5). 

The predecessor contractor must 

provide a list of persons employed on 

the contract no less than 10 days before 

the end of the contractor’s performance. 

The clause makes clear that this is the 

same list as the seniority list provided 

under the Service Contract Act clauses. 

§ 9.12(e). As this list already exists and 

is used by contractors in hiring 

decisions under the status quo, the DOL 

baseline to calculate additional costs 

accounts for the current business 

practice among contractors to receive 

the employee list and make hiring 

decisions from there. 

The proposal does include a contract 

clause provision requiring contractors to 

incorporate the nondisplacement 

contract clause into each covered 

subcontract. This provision comes 

directly from Executive Order 13495, 

and the DOL estimates that it will take 

a combined total of 30 minutes for 

contractors to incorporate the contract 

clause into each covered subcontract 

and the subcontractor to review it. Thus, 

assuming covered contractors spend an 

additional two hours (accounting for 

any additional time spent in making job 

offers, inserting and reviewing the 

contract clause in subcontracts, and 

maintaining records) per contract to 

comply with this proposed rule and 

increasing the October 2009 average 

hourly earnings for professional and 

business workers by 40 percent to 

account for fringe benefits (a total of 

$31.32 per hour), this rule is estimated 

to impose annual costs of $3,758,400 on 

contractors. 60,000 contracts × 2 hours 

× $31.32. See The Employment 

Situation—December 2009, at 28, Table 

B–3, Bureau of Labor Statistics, (http:// 

www.bls.gov/news.release/archives/ 

empsit_01082010.pdf). 

While most contractors will obtain 

their information primarily from the 

contract clause, and Wage and Hour 

Division offices throughout the country 

are available to provide compliance 

assistance at no charge to employers; 

however, in the course of researching 

compliance options within the context 

of specific business needs, some 

contractors will incur additional legal, 

accounting, and/or other costs 

associated with complying with the 

nondisplacement requirements. For 

purposes of this analysis, the DOL 

estimates 15 percent of covered 

contractors each will incur additional 

costs averaging $5,000 because of the 

NPRM requirements, for a total of 

$30,000,000. 40,000 contractors × 15% × 

$5,000. The DOL believes ten percent of 

these 6,000 contractors will face 

complex issues that will require each 

spending an average of $10,000 

additional dollars, totaling $6,000,000. 

6,000 contractors × 10% × $10,000. The 

DOL estimates total costs contractors 

will incur to comply with this NPRM to 

be $39,758,400. The DOL expects some 

of these costs will be transferred to the 

Federal Government in the form of 

higher bids; however, the agency is not 

aware of a reasonable way to allocate 

those costs. 

Executive Order 13495 and this 

proposal would improve Government 

efficiency and economy in those cases 

where the practice of offering a right of 

first refusal of employment would not 

otherwise have been followed, because 

the requirements decrease or eliminate 

the loss of productivity that may occur 

when experienced employees are 

terminated. As previously indicated, the 

DOL estimates 20 percent of all SCA 

covered contract actions in 2006 would 

be subject to this NPRM. Applying this 

same percentage to the total FPDS 

reported value of SCA contract actions 

during 2006, just under 

$115,000,000,000 ($114,935,252,182), 

the DOL estimates the total value of 

contracts subject to the 

nondisplacement provisions to be 

$23,000,000,000. $115,000,000,000 × 

0.2. As also previously stated, nothing 

will change in a majority of these 

successor contracts; thus the Federal 

Government will not realize an increase 

in economy or efficiency from a reduced 

disruption in the delivery of services 

during the transition period between 

contractors or from the benefits of 

already experienced and trained service 

contract employees who are familiar 

with the Federal Government’s 

personnel, facilities, and requirements. 

Assuming, however, an improvement in 

economy and efficiency that is equal to 

1 percent on forty percent of the value 

of SCA covered contracts (i.e., four 

tenths of a percent of all SCA contracts) 

the DOL estimates the nondisplacement 

provisions that are the subject of this 

NPRM will result in a gross savings of 

$92,000,000. $23,000,000,000 × 0.4 × 

0.01. 

Some of these savings will be 

absorbed by the expenses contracting 

agencies will incur to inform employees 

of their possible right to a job offer and 

costs to administer the requirements. 

The DOL has used the 2010 Rest of 

United States salary table to estimate 

salary expenses. http://www.opm.gov/ 

oca/10tables/html/RUS_h.asp. The DOL 

believes contracting agencies will spend 

30 minutes on each insertion of the 

applicable contract clauses in a 

successor prime contract, for a total of 

7500 hours. 15,000 × 0.5 hours. The 

DOL assumes this work will be 

performed by a GS–11, step 4 Federal 

employee, earning $30.26 per hour, for 

a cost of $226,950. 7500 hours × $30.26. 

While it will be clear that in most cases 

there is no reason for a contracting 

agency to exempt a contract from the 

nondisplacement requirements, the DOL 

estimates contracting agencies will 

spend an average of 2 hours on each 

covered contract and subcontract to 

make the determination and that a GS– 

13, step 4 Federal employee earning 

$43.13 per hour will perform the work, 

for a cost of $5,175,600. 60,000 contracts 

and subcontracts × 2 hours × $43.13. 

Once this analysis is done, the 

contracting agency must inform the 

contract employees of either their 

possible right to a job offer or of the 

decision to exempt the contract. The 

DOL believes this notification will take 

about 30 minutes per contract and that 

the work will be performed by a GS–9, 


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Step 4 Federal employee earning $25.01, 

for a cost of $750,300. 60,000 contracts 

and subcontracts × 0.5 hours × $25.01. 

This includes the time needed to 

prepare the notice and post it at the 

worksite or prepare a written notice that 

is provided in a bulk manner to the 

employees. The estimated general 

administrative costs equal $6,152,850. 

The NPRM also requires Contracting 

Officers to accept complaints from 

predecessor employees or their 

authorized representatives and to 

forward the complaints, along with 

other supporting documentation, to the 

Wage and hour Division within 30 days 

of the original filing. § 9.11(d). The 

Federal costs associated with this 

requirement include the time it takes to 

gather the documents related to the 

complaint and to photocopy them for 

both the complainant and the contractor 

and the reproduction and mailing cost 

to forward the copies. Federal costs will 

also include the cost for the Wage and 

Hour Division to review the complaint 

to determine what further action might 

be appropriate. The DOL estimates the 

Wage and Hour Division will receive 

170 nondisplacement complaints per 

year. 

GS–13, step 4 to review complaint at 

the Wage and Hour Division and 

determine whether to schedule 

compliance action. 

170 complaints × 10 minutes review 

time = 28 hours (rounded) 

28 hours × $43.13 = $1208 (rounded) 

GS–11, step 4 to compile and review 

the complaint and supplemental 

documents for forwarding: 

170 complaints × 20 minutes = 57 hours 

(rounded) 

57 hours × $30.26 = $1725 (rounded) 

GS–3, step 4 to photocopy & assemble 

complaint documents: 

170 complaints × 10 minutes = 28 hours 

(rounded) 

28 hours × $13.14 = $368 (rounded) 

Printing costs 

170 complaints × 4 pages × 3 copies × 

$0.05 per page = $102 

Postage: 

170 complaints × 3 mailings (DOL, 

contractor, and complainant) × 

$0.47 ($0.44 each + $0.03 per 

envelope) = $240 (rounded) 

GS 12, step 4 to investigate 

complaints: 

170 complaints × 20 hours = 3400 hours 

3400 hours × $36.27 = $123,318 

Printing 60,000 notices × $0.05 per 

notice = $3000 

Enforcement Subtotal $129,961 

Total Gross Annual Federal Cost 

estimate = $6,282,811 

After offsetting the costs of 

administering the nondisplacement 

requirements from the savings, the DOL 

estimates economies and efficiencies 

arising from this NPRM would result in 

Federal cost savings equaling 

$85,717,189. $92,000,000 gross 

savings¥$6,282,811 gross costs. Some 

of these savings, however, may actually 

transfer to contractors who are bidding 

on the contract, especially in light of the 

additional costs they are likely to incur. 

After offsetting the overall savings 

attributed to the Federal government 

from the overall additional costs 

attributed to contractors, the 

nondisplacement provisions covered by 

this NPRM will result in a net change 

to the economy of $45,958,789 in 

overall cost savings. $85,717,189 overall 

Federal savings¥$39,758,400 contractor 

costs. The DOL wishes to emphasize 

that while this analysis is presented in 

terms of contractor and Federal 

Government costs and savings, because 

costs and savings will factor into final 

bid proposals, some of the overall 

savings are likely to transfer to 

contractors. In any event, this NPRM 

will result in an effect on the economy 

that is less than the $100,000,000 

threshold for a rule to be considered 

economically significant. 

In addition, this NPRM would not be 

expected (1) To adversely affect in a 

material way the economy, a sector of 

the economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) to 

create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; (3) 

materially to alter the budgetary impact 

of entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipient. 

VI. Initial Regulatory Flexibility 

Analysis 

The Regulatory Flexibility Act of 

1980, as amended (RFA) requires 

agencies to prepare regulatory flexibility 

analyses and make them available for 

public comment, when proposing 

regulations that will have a significant 

economic impact on a substantial 

number of small entities. See 5 U.S.C. 

603. If the rule is not expected to have 

a significant economic impact on a 

substantial number of small entities, the 

RFA allows an agency to certify such, in 

lieu of preparing an analysis. See 5 

U.S.C. 605. For the reasons explained in 

this section, the DOL believes this 

NPRM is not likely to have a significant 

economic impact on a substantial 

number of small entities, and therefore 

an initial regulatory flexibility analysis 

is not required by the RFA. However, in 

the interest or transparency and to 

provide an opportunity for public 

comment, DOL has prepared the 

following analysis to assess the impact 

of this regulation on small entities (as 

defined by the applicable SBA size 

standards). The DOL specifically 

requests comments on the following 

burden estimates, including the number 

of small entities affected by the 

nondisplacement requirements, and 

whether alternatives exist that will 

reduce burden on small entities while 

still meeting the requirements of 

Executive Order 13495. The Chief 

Counsel for Advocacy of the Small 

Business Administration was notified of 

a draft of this rule upon submission of 

the rule to the Office of Management 

and Budget under E.O. 12866, as 

amended, ‘‘Regulatory Planning and 

Review.’’ 58 FR 51735, 67 FR 9385, 72 

FR 2763. 

Why agency is considering action: The 

DOL has published this NPRM to 

implement the enforcement provisions 

of Executive Order 13495, 

‘‘Nondisplacement of Qualified Workers 

Under Service Contracts.’’ The Executive 

Order assigns enforcement 

responsibility for the nondisplacement 

requirements to the DOL. 

Objectives of and Legal Basis for Rule: 

This rule will provide guidance on how 

to comply with the nondisplacement 

requirements of Executive Order 13495 

and how the DOL intends to administer 

and enforce them. Section 6(a) of the 

Executive Order assigns the 

responsibility of investigating and 

obtaining compliance with the 

nondisplacement requirements to the 

DOL. 74 FR 6105. Section 6(b) directs 

the Secretary of Labor, in consultation 

with the FARC, to issue regulations to 

implement the requirements of the 

Order. Id. 

Description and number of small 

entities covered by the NPRM: This 

NPRM would apply to small entities 

that perform work for the Federal 

Government on contracts or 

subcontracts subject to the SCA of 

$100,000 or more. The DOL has found 

no precise data with which to measure 

the precise number of small entities that 

would be covered by this NPRM; 

however, certain available data allow for 

estimates. As already discussed in the 

Paperwork Reduction Act portion of this 

preamble, according to the Federal 

Procurement Data System’s (FPDS) 2006 

Federal Procurement Report, slightly 

less than 75,000 (74,611) Federal 

Government contract actions were 

subject to the SCA during that reporting 

period. A contract action is any oral or 

written action that results in the 


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purchase, rent, or lease of supplies or 

equipment, services, or construction 

using appropriated dollars over the 

micro-purchase threshold, or 

modifications to these actions regardless 

of dollar value. Many contract actions 

are modifications to or extensions of 

existing Federal contracts or otherwise 

relate to actions where there is no 

successor contractor. The DOL, 

therefore, assumes that about 15,000 per 

year (slightly more than 20 percent of all 

SCA covered contract actions in 2006) 

would be successor contracts subject to 

the nondisplacement provisions. 

Subcontracts are not reported in the 

FPDS, and the DOL has not found a 

reliable source on which to estimate the 

number of subcontracts per SCA prime 

contract. Based on consultations with 

Federal procurement officials, the DOL 

assumes that for PRA purposes a typical 

SCA contract has one prime contractor 

and three subcontractors; therefore, the 

Department estimates the requirements 

of part 9 would apply to approximately 

60,000 contracts; 15,000 covered 

contract actions × 4 contractors. A 

review of FPDS data suggests that, while 

about 110,000 contractors performed 

work on Federal service contracts in FY 

2006, only 44,039 contractors performed 

work on service contracts in excess of 

$25,000. See David Berteau, et al., 

Structure and Dynamics of the U.S. 

Federal Professional Services Industrial 

Base 1995–2007, Center for Strategic 

and International Studies, February 

2009, at 26, http://www.csis.org/media/ 

csis/pubs/090212_fps_report_2009.pdf 

(CSIS Report). Of course, some lesser 

number of contractors would perform 

work on contracts subject to the 

nondisplacement requirements; the DOL 

estimates each year about 40,000 

contractors and subcontractors will be 

subject to this information collection. 

FPDS data also suggest that slightly less 

than 55 percent of all contract actions 

relate to small entities. Applying this 

percentage to the 40,000 estimated 

covered contractors and subcontractors 

(generically referred to as contractors in 

this analysis, unless otherwise noted), 

suggests this rule will apply to 22,000 

small entities. The CSIS Report found 

that 31,700 small businesses in FY 2006 

undertook contracts worth at least 

$25,000 (72 percent of all contractors 

undertaking Federal professional service 

contracts of at least $25,000). CSIS 

Report at 26. Again, this rule would 

apply only to a portion of these 

contractors; however, using this latter 

percentage suggests the rule might apply 

to 28,800 small businesses. This is an 

upper bound estimate, because (in 

addition to not applying to contracts or 

subcontracts of less than $100,000) the 

NPRM would not apply to small entities 

with certain contracts or subcontracts 

awarded for services produced or 

provided by persons who are blind or 

have severe disabilities or contracts 

exempted by the contracting agency. 

Applying the same percentage (72 

percent) to the total estimated value of 

$23,000,000,000 for all service contracts 

subject to this rule, suggests the value of 

those contracts held by small entities 

would equal $16,560,000,000. The 

earlier analysis showing 40,000 

contractors will work on 60,000 

successor contracts and subcontracts 

(generically referred to as contracts in 

this analysis, unless otherwise noted) 

subject to this rule suggests a typical 

contractor will work on 1.5 successor 

contracts subject to the 

nondisplacement provisions. For 

purposes of this analysis, the DOL 

assumes each covered small contractor 

will also work on an average of 1.5 

covered successor contracts each year, 

the same ratio as all contractors; thus, 

this NPRM is expected to apply to no 

more than 43,200 successor contracts 

awarded to small contractors. 

Compliance requirements, including 

reporting and recordkeeping: This 

NPRM would impose a general 

requirement on the contractor and its 

subcontractors, under a contract that 

succeeds a contract for performance of 

the same or similar services at the same 

location, to offer those employees 

employed under the predecessor 

contract whose employment will be 

terminated as a result of the award of 

the successor contract, a right of first 

refusal of employment under the 

contract in positions for which they are 

qualified. Specifically, the proposal 

provides that, except as provided under 

specific exclusions listed in proposed 

§ 9.4 or paragraphs (c) and (d) of 

proposed § 9.12, a successor contractor 

or subcontractor could not fill any 

employment openings under the 

contract prior to making good faith 

offers of employment, 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 contract or the 

expiration of the contract under which 

the employees were hired. The 

contractor and its subcontractors would 

be required to make an express offer of 

employment to each employee and state 

the time within which the employee 

must accept such offer, but in no case 

would the period within which the 

employee must accept the offer of 

employment be less than 10 days. The 

employment offer may be to a different 

job position on the contract for which 

the employee is qualified. 

The NPRM also addresses the 

exceptions to the general obligation to 

offer employment under Executive 

Order 13495. The exclusions specify 

both certain classes of contracts and 

certain employees excluded from the 

provisions of Executive Order 13495. 

The exemptions from the successor 

contractor’s obligation to offer 

employment on the contract to 

employees on the predecessor contract 

prior to making the offer to anyone else 

do not relieve the contractor of other 

requirements of this part (e.g., the 

obligation near the end of the contract 

to provide a list of employees who 

worked on the contract during the last 

month). Specifically, a contractor or 

subcontractor (1) Would not be required 

to offer employment to any employee of 

the predecessor who will be retained by 

the predecessor contractor; (2) would be 

allowed to employ under the contract 

any employee who has worked for the 

contractor or subcontractor for at least 

three months immediately preceding the 

commencement, i.e., the first date of 

performance, of the contract and who 

would otherwise face lay-off or 

discharge; (3) would not be required to 

offer employment to any employee of 

the predecessor who is not a service 

employee; (4) would not be required to 

offer employment to any employee of 

the predecessor contractor for whom the 

contractor or any of its subcontractors 

reasonably believes, based on the 

particular employee’s past performance, 

has failed to perform suitably on the job; 

(5) would not be 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; (6) would be required to determine 

the number of employees necessary for 

efficient performance of the contract 

and, for bona fide staffing or work 

assignment reasons, to elect to employ 

fewer employees than the predecessor 

contractor employed in performance of 

the work. 

The NPRM would also require the 

contractor, not less than 10 days before 

completion of the contract, 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, including their 

anniversary dates of employment with 

either the current or predecessor 

contractors or their subcontractors. The 


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contractor may use the list submitted to 

satisfy the requirements of the SCA 

contract clause specified at 29 CFR 

4.6(l)(2) to meet this provision. 

The NPRM prescribes no particular 

order or form of records for contractors, 

and the recordkeeping requirements 

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. 

Contractors must maintain 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, 

the names of the employees from the 

predecessor contract to whom an offer 

was made, any written record that forms 

the basis for any exclusion or exemption 

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 who 

makes retroactive payment of wages or 

compensation under the supervision of 

the Wage and Hour Division pursuant to 

proposed § 9.24(b) will be required to 

record and preserve for three years in 

the pay records the amount, the period 

covered, and the date of payment to 

each employee, and to report each such 

payment on a receipt form authorized 

by the Wage and Hour Division. 

Contractors would be obligated to 

cooperate during any investigation to 

determine compliance with the 

nondisplacement requirements as a 

condition of the contract award 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 is not limited to 

investigations of the contractor’s own 

actions, but also includes investigations 

related to other contractors (e.g., 

predecessor and subsequent contractors) 

and subcontractors. 

All small entities subject to the 

nondisplacement requirements would 

be required to comply with all the 

provisions of the NPRM, and the work 

can be performed by a combination of 

management officials (e.g., staff 

authorized to make job offers) and 

clerical staff (e.g., staff to maintain the 

list of persons offered employment and 

file records). The compliance 

requirements are more fully described 

above in other portions of this preamble. 

Executive Order 13495 mandates a 

practice that successor contractors 

already typically follow. As with other 

contractors, the DOL expects there will 

be virtually no change in the way most 

small contractors currently conduct 

business, with the exception that they 

will need to ensure the appropriate 

contract language appears in 

subcontracts. The DOL expects that a 

majority of small contractors making 

changes to their business operations 

will comply with the new requirements 

by simply replacing aspects of their 

existing staffing practices with similar 

practices that do not entail an additional 

burden but do assure compliance with 

the NPRM. 

In estimating the costs on small 

contractors, the DOL has also 

considered how current practices 

compare with expected actions 

contractors typically will take under the 

nondisplacement provisions. For 

example, those successor contractors 

that currently hire new employees for a 

contract must recruit workers and 

evaluate their qualifications for 

positions on the contract. In order to 

match employees with suitable jobs 

under this NPRM, successor contractors 

will evaluate the predecessor contract 

employees and available positions; thus, 

successor contractors are likely to spend 

an equal amount of time determining 

job-suitability under the NPRM as under 

current practices. The costs for 

documenting these employment 

decisions will also be similar under 

both the NPRM and status quo. 

For purposes of this analysis, the DOL 

also believes the time small contractors 

will save by not recruiting an entirely 

new workforce from the outset will be 

offset by the additional time a successor 

contractor will spend in recruiting a 

new employee when there is a vacant 

position because the contractor cannot 

find suitable work for an employee who 

worked on the predecessor contract or 

in considering how to minimize 

displacement when the successor 

contractor reconfigures how it will 

deploy employees performing on the 

successor contract. See § 9.12(d)(3). As 

previously mentioned, this NPRM will 

also not affect wages contractors will 

pay workers, because of the existing 

SCA requirement for the wage 

determination that establishes the 

minimum rate for each occupation to be 

incorporated into the contract; thus, 

existing regulatory requirements already 

set wage rates, including when the 

predecessor’s collectively bargained rate 

is incorporated into the contract, 

successors must pay. See 41 U.S.C. 

353(c); 29 CFR 4.6(b)(1). This NPRM 

does not require successor contractors to 

pay wages higher than the rate required 

by the SCA. The successor contractor 

also may offer employment under 

different terms and conditions, if the 

reasons for doing so are not related to 

a desire that the employee refuse the 

offer or that other employees be hired 

for the offer. See § 9.12(b)(5). 

The predecessor contractor must 

provide a list of persons employed on 

the contract no less than 10 days before 

the end of the contractor’s performance. 

The clause makes clear that this is the 

same list as the seniority list provided 

under the Service Contract Act clauses. 

§ 9.12(e). As this list already exists and 

is used by contractors in hiring 

decisions under the status quo, the DOL 

baseline to calculate additional costs for 

small entities accounts for the current 

business practice among contractors to 

receive the employee list and make 

hiring decisions from there. 

The proposal does include a contract 

clause provision requiring contractors to 

incorporate the nondisplacement 

contract clause into each covered 

subcontract. This provision comes 

directly from Executive Order 13495, 

and the DOL estimates that it will take 

a combined total of 30 minutes for 

contractors to incorporate the contract 

clause into each covered subcontract 

and the subcontractor to review it. As 

will be further explained later in this 

analysis, 85 percent of all small 

contractors are expected to incur no 

additional costs under this NPRM. 

Assuming covered contractors spend an 

additional two hours (accounting for 

any additional time spent in making job 

offers, inserting and reviewing the 

contract clause in subcontracts, and 

maintaining records) per contract to 

comply with this proposed rule and 

increasing the October 2009 average 

hourly earnings for professional and 

business workers by 40 percent to 

account for fringe benefits (a total of 

$31.32 per hour), this rule is estimated 

to impose annual costs of less than $100 

on most small contractors. 1.5 contracts 

per contractor × 2 hours × $31.32. See 

The Employment Situation—December 

2009, at 28, Table B–3, Bureau of Labor 

Statistics, (http://www.bls.gov/ 

news.release/archives/ 

empsit_01082010.pdf). Aggregate 

compliance costs for these general 

requirements are expected to be 

$2,706,048. 28,800 contractors × 1.5 

contracts × 2 hours × $31.32. 

As with other contractors, most small 

contractors will obtain information 

about the nondisplacement 

requirements primarily from the 

contract clause, and Wage and Hour 


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Division offices throughout the country 

are available to provide compliance 

assistance at no charge to employers. 

While the DOL believes this rule has 

been drafted in a way that the vast 

majority of contractors should be able to 

comply with the nondisplacement 

requirements without the need of 

professional assistance from an attorney 

or accountant, the DOL recognizes some 

contractors will seek such assistance in 

the course of researching compliance 

options within the context of specific 

business needs. In recognition of this 

latter fact, for purposes of this analysis, 

the DOL estimates 15 percent of covered 

contractors each will incur additional 

costs averaging $5000 because of the 

NPRM requirements, for a total of 

$21,600,000 spent by 4320 small 

contractors. 28,800 contractors × 15% × 

$5000. The DOL believes ten percent of 

these 4320 contractors will face 

complex issues that will require each 

spending an average of $10,000 

additional dollars, totaling $4,320,000 

spent by 432 small contractors. 4320 

contractors × 10% × $10,000. The DOL 

estimates total compliance costs that the 

28,800 small contractors subject to this 

NPRM will incur will be $28,626,048, 

with more than 90 percent of costs being 

borne by 4320 of these contractors. 

$26,325,907/$28,626,048. Using the 

assumptions already discussed, this 

NPRM would impose additional costs 

equaling less than 3 percent of the 

combined estimated $248,400,000 value 

of contracts awarded to the 432 small 

contractors who will bear the greatest 

costs to comply with the 

nondisplacement requirements. 

$16,560,000,000 value of contracts 

subject to NPRM awarded to small 

contracts × 1.5 percent (percentage of 

contractors facing greatest costs 432/ 

28,800) = $248,400,000. $6,520,591 total 

estimated compliance costs/ 

$248,400,000 estimated compliance 

costs = 2.6 percent. As with other 

contractors, the DOL expects some 

compliance costs will be transferred to 

the Federal Government in the form of 

higher bids; however, the agency is not 

aware of a reasonable way to allocate 

those costs. 

The DOL specifically requests 

comments on these burden estimates, 

including the number of small entities 

affected by the nondisplacement 

requirements, and on how the final rule 

can reduce burden on small entities 

while still meeting the requirements of 

Executive Order 13495. 

Relevant Federal rules duplicating, 

overlapping or conflicting with the rule: 

Section 6(b) of the Executive Order 

requires the FARC to issue regulations 

to provide for inclusion of the 

applicable contract clause in Federal 

solicitations and contracts subject to the 

nondisplacement requirements; thus, 

the contract clause and some 

requirements applicable to contracting 

agencies will appear in both this part 

and in the FARC regulations. As noted 

above, the certified list of all service 

employees working under the contract 

and its subcontracts during the last 

month of contract performance is the 

same list a contractor covered by the 

SCA is already required to submit 

pursuant to 29 CFR 4.6(l). See also, 

section 5, contract clause paragraph (c) 

of Executive Order 13495. 74 FR 6104. 

The DOL is not aware of any relevant 

Federal rules that conflict with this 

NPRM. 

Differing Compliance and Reporting 

Requirements for Small Entities: This 

NPRM provides for no differing 

compliance requirements and reporting 

requirements for small entities. The 

DOL has strived to have this proposal 

implement the nondisplacement 

requirements of Executive Order 13495 

with the least possible burden for small 

entities. The NPRM provides a number 

of efficient and informal alternative 

dispute mechanisms to resolve concerns 

about contractor compliance, including 

allowing for complaints initially to be 

filed with the contracting agency and 

having the contracting agency provide 

compliance assistance to the contractor 

about the nondisplacement 

requirements and allowing for the Wage 

and Hour Division to attempt an 

informal conciliation of complaints 

instead of engaging in extensive 

investigations. These tools will provide 

contractors with an opportunity to 

resolve inadvertent errors rapidly and 

before significant liabilities develop. 

Clarification, consolidation, and 

simplification of compliance and 

reporting requirements for small 

entities: This NPRM was drafted to 

clearly state the compliance and 

reporting requirements for all 

contractors subject to the 

nondisplacement provisions. The only 

reporting requirement is the certified 

list of the names of all service 

employees working under the contract 

and its subcontracts during the last 

month of contract performance, 

including their anniversary dates of 

employment with either the current or 

predecessor contractors or their 

subcontractors. The contractor may use 

the list submitted to satisfy the 

requirements of the SCA contract clause 

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

provision. 

Use of Performance Rather Than 

Design Standards: This NPRM was 

written to provide clear guidelines to 

ensure compliance with the 

nondisplacement requirements. Many of 

the features incorporate standards 

geared to performance. For example, the 

NPRM would provide for the successor 

contractor to determine the number of 

employees needed to perform the work 

and allow the successor contractor to 

decide which predecessor contract 

employees would receive an offer of 

employment on the contract, provided 

the offers resulted in the least 

displacement possible. 

Exemption from Coverage of the Rule 

for Small Entities: Executive Order 

13495 establishes its own coverage and 

exemption requirements; therefore, the 

DOL has no authority to exempt 

additional small businesses from the 

nondisplacement requirements beyond 

the express language of Executive Order 

13495. 

VII. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995, 2 U.S.C. 

1532, this NPRM does not include any 

Federal mandate that may result in 

excess of $100 million in expenditures 

by state, local, and tribal governments in 

the aggregate or by the private sector. 

VIII. Executive Order 13132 

(Federalism) 

The DOL has (1) reviewed this rule in 

accordance with Executive Order 13132 

regarding federalism and (2) determined 

that it does not have federalism 

implications. The NPRM would 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. 

IX. Executive Order 13175, Indian 

Tribal Governments 

This NPRM would not have tribal 

implications under Executive Order 

13175 that would require a tribal 

summary impact statement. The NPRM 

would 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. 

X. Effects on Families 

The undersigned hereby certifies that 

the NPRM would not adversely affect 

the well-being of families, as discussed 

under section 654 of the Treasury and 

General Government Appropriations 

Act, 1999. 


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XI. Executive Order 13045, Protection 

of Children 

This NPRM would have no 

environmental health risk or safety risk 

that may disproportionately affect 

children. 

XII. Environmental Impact Assessment 

A review of this NPRM in accordance 

with the requirements of the National 

Environmental Policy Act of 1969 

(NEPA), 42 U.S.C. 4321 et seq.; the 

regulations of the Council on 

Environmental Quality, 40 CFR 1500 et 

seq.; and the Departmental NEPA 

procedures, 29 CFR part 11, indicates 

the NPRM would not have a significant 

impact on the quality of the human 

environment. There is, thus, no 

corresponding environmental 

assessment or an environmental impact 

statement. 

XIII. Executive Order 13211, Energy 

Supply 

This NPRM is not subject to Executive 

Order 13211. It will not have a 

significant adverse effect on the supply, 

distribution, or use of energy. 

XIV. Executive Order 12630, 

Constitutionally Protected Property 

Rights 

This NPRM is not subject to Executive 

Order 12630, because it does not 

involve implementation of a policy that 

has takings implications or that could 

impose limitations on private property 

use. 

XV. Executive Order 12988, Civil 

Justice Reform Analysis 

This NPRM was drafted and reviewed 

in accordance with Executive Order 

12988 and will not unduly burden the 

Federal court system. The NPRM was: 

(1) Reviewed to eliminate drafting errors 

and ambiguities; (2) written to minimize 

litigation; and (3) written to provide a 

clear legal standard for affected conduct 

and to promote burden reduction. 

XVI. Dates of Applicability 

This is a proposed rule, and any 

regulations to administer the 

nondisplacement requirements would 

only become effective upon issuance of 

a final rule. E.O. 13495 provides that its 

nondisplacement provisions will apply 

to solicitations issued on or after the 

effective date of the contract clause 

regulations to be implemented by the 

FARC. 

List of Subjects in 29 CFR Part 9 

Employment, Federal buildings and 

facilities, Government contracts, Law 

enforcement, Labor. 

Nancy J. Leppink, 

Deputy Administrator, Wage and Hour 

Division. 

For the reasons set out in the 

preamble, the DOL proposes to amend 

Title 29 of the Code of Federal 

Regulations by adding part 9 as set forth 

below: 

PART 9—NONDISPLACEMENT OF 

QUALIFIED WORKERS UNDER 

SERVICE CONTRACTS 

Subpart A—General 

Sec. 

9.1 Purpose and scope. 

9.2 Definitions. 

9.3 Coverage. 

9.4 Exclusions. 

Subpart B—Requirements 

9.11 Contracting agency requirements. 

9.12 Contractor requirements and 

prerogatives. 

Subpart C—Enforcement 

9.21 Complaints. 

9.22 Wage and Hour Division conciliation. 

9.23 Wage and Hour Division investigation. 

9.24 Remedies and sanctions for violations 

of this part. 

Subpart D—Administrator’s Determination, 

Mediation, and Administrative Proceedings 

9.31 Administrator’s determination. 

9.32 Requesting appeals. 

9.33 Mediation. 

9.34 Administrative Law Judge hearings. 

9.35 Administrative Review Board hearings. 

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. 

13495, 74 FR 6103; Secretary’s Order 9–2009, 

74 FR 58836. 

Subpart A—General 

§ 9.1 Purpose and scope. 

(a) Purpose. This part contains the 

Department of Labor’s rules relating to 

the administration of Executive Order 

13495, ‘‘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 DOL. The Executive 

Order states that the Federal 

Government’s procurement interests in 

economy and efficiency are served 

when the successor contractor hires the 

predecessor’s employees. A carryover 

work force minimizes disruption in the 

delivery of services during a period of 

transition between contractors and 

provides the Federal Government the 

benefit of an experienced and trained 

work force that is familiar with the 

Federal Government’s personnel, 

facilities, and requirements. Executive 

Order 13495, therefore, generally 

requires that successor service 

contractors performing on Federal 

contracts 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 whose 

employment will be terminated as a 

result of the award of the successor 

contract. 

(b) Policy. Executive Order 13495 

establishes a Federal Government policy 

for service contracts and their 

solicitations to include a clause that 

requires the contractor and its 

subcontractors under a contract that 

succeeds a contract for performance of 

the same or similar services at the same 

location to offer a right of first refusal of 

employment to those employees (other 

than managerial and supervisory 

employees) employed under the 

predecessor contract whose 

employment will be terminated as a 

result of the award of the successor 

contract in positions for which the 

employees are qualified. Nothing in 

Executive Order 13495 or this part shall 

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 

13495 nor this part creates any rights 

under the Contract Disputes Act or any 

private right of action. The Executive 

Order provides that disputes regarding 

the requirement of the contract clause 

prescribed by section 5 of the Order, to 

the extent permitted by law, shall be 

disposed of only as provided by the 

Secretary of Labor in regulations issued 

under the Order. It also provides for this 

part to favor the resolution of disputes 

by efficient and informal alternative 

dispute resolution methods to the extent 

practicable. The Order does not 

preclude judicial review of final 

decisions by the Secretary in accordance 

with the Administrative Procedure Act. 

§ 9.2 Definitions. 

For purposes of this part: 

(1) 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. 

(2) Administrative Review Board 

means the Administrative Review 

Board, U.S. Department of Labor. 


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(3) Contractor means a prime 

contractor and all of its first or lower 

tier subcontractors on a Federal service 

contract. 

(4) Contracting Officer means the 

individual, a duly appointed successor, 

or authorized representative who is 

designated and authorized to enter into 

procurement contracts on behalf of the 

Federal contracting agency. 

(5) Day means, unless otherwise 

specified, a calendar day. 

(6) Employee or service employee 

means any person engaged in the 

performance of a service contract other 

than any person employed in a bona 

fide executive, administrative, or 

professional capacity, as those terms are 

defined in 29 CFR part 541. The term 

employee or service employee includes 

all such persons, as defined in the 

McNamara-O’Hara Service Contract Act 

of 1965, as amended, regardless of any 

contractual relationship that may be 

alleged to exist between a contractor or 

subcontractor and such persons. 

(7) 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. 

(8) Federal Government means an 

agency or instrumentality of the United 

States that enters into a procurement 

contract pursuant to authority derived 

from the Constitution and the laws of 

the United States. 

(9) Managerial employee and 

supervisory employee mean a person 

engaged in the performance of services 

under the contract who is employed in 

a bona fide executive, administrative, or 

professional capacity, as those terms are 

defined and delimited in 29 CFR part 

541. 

(10) Month means a period of 30 

consecutive days, regardless of the day 

of the calendar month on which it 

begins. 

(11) Office of Administrative Law 

Judges means the Office of 

Administrative Law Judges, U.S. 

Department of Labor. 

(12) Secretary means the U.S. 

Secretary of Labor or an authorized 

representative of the Secretary. 

(13) Same or similar service means a 

service that is either identical to or has 

characteristics that are alike in 

substance and essentials to a service 

performed at the same location on a 

contract that is being replaced by the 

Federal Government or a contractor on 

a Federal service contract. 

(14) Service contract or contract 

means any contract or subcontract for 

services entered into by the Federal 

Government or its contractors that is 

covered by the McNamara-O’Hara 

Service Contract Act of 1965, as 

amended, and its implementing 

regulations. 

(15) Solicitation means any request to 

submit offers or quotations to the 

Government. 

(16) 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. 

(17) Wage and Hour Division means 

the Wage and Hour Division, U.S. 

Department of Labor. 

§ 9.3 Coverage. 

This part applies to all service 

contracts and their solicitations, except 

those excluded by § 9.4 of this part, that 

succeed contracts for the same or 

similar service at the same location. 

§ 9.4 Exclusions. 

(a) Small contracts. 

(1) General. The requirements of this 

part do not apply to contracts or 

subcontracts under the simplified 

acquisition threshold set by the Office of 

Federal Procurement Policy Act, as 

amended. 

(2) Application to subcontracts. While 

the § 9.4(a)(1) exclusion applies to 

subcontracts that are less than the 

simplified acquisition threshold, the 

prime contractor must comply with the 

requirements of this part, if the prime 

contract is at least the threshold 

amount. When a 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 at the same location, 

the contractor shall 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 

but for the size of the subcontract. 

(b) Certain contracts or subcontracts 

awarded for services produced or 

provided by persons who are blind or 

have severe disabilities. 

(1) The requirements of this part do 

not apply to contracts or subcontracts 

pursuant to the Javits-Wagner-O’Day 

Act. 

(2) The requirements of this part do 

not apply to contracts or subcontracts 

for 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 sec. 505 of the Treasury, 

Postal Services and General Government 

Appropriations Act, 1995. 

(3) The requirements of this part do 

not apply to agreements for vending 

facilities entered into pursuant to the 

preference regulations issued under the 

Randolph-Sheppard Act. 

(4) The exclusions provided by 

paragraphs (b)(1) through (3) of this 

section apply when either the 

predecessor or successor contract has 

been awarded for services produced or 

provided by the severely disabled, as 

described in paragraphs (b)(1) through 

(b)(3) of this section. 

(c) 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 13495. 

(d) Contracts exempted by Federal 

agency. This part does not apply to any 

contract, subcontract, or purchase order 

or any class of contracts, subcontracts, 

or purchase orders if the head of a 

contracting department or agency finds 

that the application of any of the 

requirements of this part would not 

serve the purposes of Executive Order 

13495 or would impair the ability of the 

Federal Government to procure services 

on an economical and efficient basis. 

(1) The agency determination shall be 

made no later than the solicitation date. 

As an alternative to waiving all 

provisions of this part, the head of a 

contracting department or agency may 

waive one or more individual 

provisions no later than the contract 

solicitation date. 

(2) When an agency exercises its 

exemption authority, the contracting 

agency will notify affected workers in 

writing of the finding and decision no 

later than the award date. The 

notification shall include facts 

supporting the conclusion that the 

application of any of the requirements 

of this part would not serve the 

purposes of Executive Order 13495 or 

would impair the ability of the Federal 

Government to procure services on an 

economical and efficient basis. Where a 

contracting agency exempts a class of 

contracts, subcontracts, or purchase 

orders, the agency will provide the 

notice to incumbent workers for each 

individual award. 

(3) The agency shall use the 

notification method specified in 


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§ 9.11(b) of this part to inform workers 

of the decision. 

(4) In exercising the authority to 

exempt contracts under this section, 

based on a finding that any of the 

nondisplacement provisions would not 

serve the purposes of Executive Order 

13495, the agency shall prepare a 

written analysis supporting the 

determination that application of the 

nondisplacement provisions would not 

serve the purposes of the Executive 

Order or would impair the ability of the 

Federal Government to procure services 

on an economical and efficient basis. 

(e) Managerial and supervisory 

employees. This part does not apply to 

employees who are managerial or 

supervisory employees of Federal 

service contractors or subcontractors. 

See § 9.2(9) of this part, definition of 

managerial employee and supervisory 

employee. 

Subpart B—Requirements 

§ 9.11 Contracting agency requirements. 

(a) Contract Clause. The contract 

clause set forth in appendix A of this 

part shall be included in covered service 

contracts, and solicitations for such 

contracts, that succeed contracts for 

performance of the same or similar 

services at the same location: 

(b) Notice. Where a contract will be 

awarded to a successor for the same or 

similar services to be performed at the 

same location, the Contracting Officer 

(or designee) will provide written notice 

to service employees of the predecessor 

contractor of their possible right to an 

offer of employment. Such notice shall 

be either posted in a conspicuous place 

at the worksite or delivered to the 

employees individually. Where the 

predecessor contractor’s workforce is 

comprised of a significant portion of 

workers who are not fluent in English, 

the notice shall be provided in both 

English and a language with which the 

employees are more familiar. Multiple 

foreign language notices are required 

where significant portions of the 

workforce speak different foreign 

languages and there is no common 

language. Contracting Officers may 

provide the notice set forth in appendix 

B to this part in either a physical 

posting at the job site or another format 

(e.g., individual paper notices or e-mail 

notification to the affected employees). 

(c) Disclosures. The Contracting 

Officer shall provide the incumbent 

contractor’s list of employees referenced 

in § 9.12(e) of this part to the successor 

contractor and, on request, to employees 

or their representatives. 

(d) Actions on complaints. 

(1) Reporting. 

(i) Report contents: Except as 

provided by paragraph (d)(3) of this 

section, the Contracting Officer shall 

forward to the Branch of Government 

Contracts Enforcement, Wage and Hour 

Division, U.S. Department of Labor, 

Washington, DC 20210 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 exempted 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. 

(ii) Additional distribution. The 

Contracting Officer shall provide copies 

of the report to the contractor, including 

the prime contractor when the 

complaint alleges violations by a 

subcontractor, and the complainant. See 

§ 9.21(a) of this part regarding filing 

complaints with the contracting agency. 

(iii) Reporting time frame. All 

information shall be forwarded by the 

Contracting Officer to the Wage and 

Hour Division within 30 days of receipt 

of the complaint. See also § 9.21 of this 

part, Complaints. 

(2) Initial review. The contracting 

agency may conduct an initial review of 

any complaint the agency receives 

under this part. As part of the 

contracting agency’s initial review, the 

Contracting Officer may obtain 

statements of the positions of the parties 

and may inspect the records of the 

predecessor and successor contractors 

(and make copies or transcriptions 

thereof), question the predecessor and 

successor contractors and any 

employees of these contractors, and 

require the production of any 

documentary or other evidence deemed 

necessary to determine whether a 

violation of this part has occurred. 

(3) Compliance assistance. The 

Contracting Officer (or designee) shall 

provide information about the contract 

clause provisions of this part to the 

complainant(s) and successor 

contractor. Questions of interpretations 

of this part shall be referred to the 

nearest local office of the Wage and 

Hour Division. Contracting Officers 

need not refer to the Wage and Hour 

Division any complaint that is 

withdrawn because of compliance 

assistance provided by the contracting 

agency. 

§ 9.12 Contractor requirements and 

prerogatives. 

(a) General. 

(1) No employment openings prior to 

right of first refusal. Except as provided 

under the exclusions listed in § 9.4 of 

this part or paragraphs (c) and (d) of this 

section, a successor contractor or 

subcontractor shall fill no employment 

openings 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 contract or the 

expiration of the contract under which 

the employees were hired. The 

contractor and its subcontractors shall 

make an express offer of employment to 

a position for which the employee is 

qualified to each employee 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 days. 

(2) No seniority list 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 employees or 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 he or she 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 

credible 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 a contract during the 

predecessor’s last month of performance 

coupled with contracting agency staff 

verification could constitute credible 

evidence of an employee’s entitlement 

to a job offer, as otherwise provided for 

in this part. Similarly, an employee 

could demonstrate eligibility by 

producing a paycheck stub identifying 

the work location and dates worked. 

(b) Method of job offer. 

(1) Bona-fide offer. Except as 

otherwise provided in this part, a 


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contractor must make a bona-fide 

express offer of employment to each 

employee on the predecessor contract 

before offering employment on the 

contract to any other person. The 

obligation to offer employment under 

this part shall cease upon the 

employee’s first refusal of a bona fide 

offer to employment on the contract. 

(2) Establishing time limit for 

employee response. The contractor shall 

state the time within which an 

employee must accept an employment 

offer, but in no case may the period in 

which the employee has to accept the 

offer be less than 10 days. 

(3) Process. The successor contractor 

must, in writing or orally, offer 

employment to each employee. See also 

paragraph (f) of this section, 

Recordkeeping. In order to ensure that 

the offer is effectively communicated, 

the successor contractor should take 

reasonable efforts to make the offer in a 

language that each worker understands. 

For example, if the contractor holds a 

meeting for a group of employees on the 

predecessor contract in order to extend 

the employment offers, having a coworker or other person who fluently 

translates for employees who are not 

fluent in English would satisfy this 

provision. 

(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 

but one for which the employee is 

qualified. If a question arises concerning 

an employee’s qualifications, that 

question shall 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, 

including changes to pay or benefits, 

than the employee held with the 

predecessor contractor will be 

considered bona fide, if the reasons are 

not related to a desire that the employee 

refuse the offer or that other employees 

be hired for the offer. 

(6) Termination after contract 

commencement. 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 will be closely examined 

during any compliance action to ensure 

the offer was bona fide. 

(c) Exceptions. The successor 

contractor will bear the responsibility of 

demonstrating the appropriateness of 

claiming any of the following 

exceptions to the nondisplacement 

provisions subject to this part. 

(1) Nondisplaced employees. 

(i) A 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 contractor must presume that 

all employees hired to work under a 

predecessor’s Federal service contract 

will be terminated as a result of the 

award of the successor contract, absent 

an ability to demonstrate a reasonable 

belief to the contrary that is based upon 

credible information provided by a 

knowledgeable source such as the 

predecessor contractor or the employee. 

(2) Successor’s current employees. A 

contractor or subcontractor may employ 

under the contract any employee who 

has worked for the contractor or 

subcontractor for at least 3 months 

immediately preceding the 

commencement of the contract and who 

would otherwise face lay-off or 

discharge. 

(3) Predecessor contractor’s nonservice employees. 

(i) A contractor or subcontractor is not 

required to offer employment to any 

employee of the predecessor who is not 

a service employee. See § 9.2(6), (9), 

respectively, of this part for definitions 

of employee, managerial employee and 

supervisory employee. 

(ii) The contractor must presume that 

all employees hired to work under a 

predecessor’s Federal service contract 

are service employees, absent an ability 

to demonstrate a reasonable belief to the 

contrary that is based upon credible 

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 

exemption. 

(4) Employee’s past unsuitable 

performance. 

(i) A contractor or subcontractor is not 

required to offer employment to any 

employee of the predecessor contractor 

for whom the contractor or any of its 

subcontractors reasonably believes, 

based on the particular employee’s past 

performance, has failed to perform 

suitably on the job. 

(ii)(A) The contractor must presume 

that all employees working under the 

predecessor contract in the last month 

of performance performed suitable work 

on the contract, absent an ability to 

demonstrate a reasonable belief to the 

contrary that is based upon credible 

information provided by a 

knowledgeable source such as the 

predecessor contractor and its 

subcontractors, the local supervisor, the 

employee, or the contracting agency. 

(B) For example, a contractor may 

demonstrate its reasonable belief that 

the employee, in fact, failed to perform 

suitably on the predecessor contract 

through evidence of disciplinary action 

taken for poor performance or evidence 

directly from the contracting agency that 

the particular employee did not perform 

suitably. The performance 

determination must be made on an 

individual basis for each employee, and 

information regarding the general 

performance of the predecessor 

contractor is not sufficient to claim this 

exception. 

(5) Non-Federal work. 

(i) A 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 hired to 

work under a predecessor’s Federal 

service contract worked on one or more 

nonfederal service contracts as part of a 

single job, unless the successor can 

demonstrate a reasonable belief to the 

contrary. The successor contractor must 

demonstrate that its belief is reasonable 

and is based upon credible information 

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 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 such a way that was 

designed to avoid the purposes of this 

part. The successor contractor must 

demonstrate that its belief is reasonable 

and is based upon credible information 

that has been provided by a 

knowledgeable source such as the 

employee or the contracting agency. For 


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example, evidence from a contracting 

agency that an employee worked only 

occasionally on a Federal service 

contract combined with a statement 

from the employee indicating fulltime 

employment with the predecessor 

would, absent other facts, constitute the 

basis for a reasonable belief that there is 

no obligation to offer employment to the 

employee. On the other hand, 

information suggesting a change in how 

a predecessor contractor deployed 

employees near the end of the contract 

period could suggest an effort to evade 

the purposes of this part. 

(d) Reduced staffing. 

(1) Contractor determines how many 

employees. 

(i) A contractor or subcontractor shall 

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 

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 shall continue for 90 

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 or 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 days of 

the first date of contract performance, 

the contractor must first offer 

employment 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 five 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 days 

have passed since the successor 

contractor’s first date of performance on 

the contract. 

(2) 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 other 

requirements. 

(3) 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 shall scrutinize each 

employee’s qualifications in order to 

offer positions to the greatest number of 

predecessor contract employees 

possible. 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 persons employed as a Cook II 

and Dishwashers but reducing the 

number of Cook I employees. The 

successor contractor must examine the 

qualifications of each Cook I, to see if a 

position as either a Cook II or 

dishwasher is possible. 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 

offer Cook I positions to some Cook II 

employees, because the Cook II 

performs a higher level occupation. The 

contractor would also need to consider 

whether offering Dishwasher positions 

to Cook I employees would result in less 

overall displacement. Finally, should 

some Dishwashers decline the 

employment offer, the Contractor would 

need to consider the qualifications of 

the Cooks at both levels and offer 

positions on the contract in a way that 

results in the least displacement. 

(e) Contractor obligations near end of 

contract performance. The contractor 

shall, not less than 10 days before 

completion of the contractor’s 

performance of services on a contract, 

furnish the Contracting Officer with a 

certified list of the names of all service 

employees working under the 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 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. 

(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 

shall apply to all records regardless of 

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

(2) Records to be retained. 

(i) The contractor shall maintain 

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. 


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(ii) The contractor shall maintain a 

copy of any record that forms the basis 

for any exclusion or exemption claimed 

under this part. 

(iii) The contractor shall maintain a 

copy of the employee list received from 

the contracting agency. See paragraph 

(e) of this section, contractor obligations 

near end of contract. 

(iv) Every contractor who makes 

retroactive payment of wages or 

compensation under the supervision of 

the Administrator of the Wage and Hour 

Division pursuant to § 9.24(b) of this 

part, shall: 

(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 or an authorized 

representative within 10 days after 

payment is made. 

(3) Records retention period. The 

contractor shall retain records 

prescribed by section § 9.12(f)(2) of this 

part for not less than a period of three 

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 shall 

cooperate in any review or investigation 

conducted pursuant to this part and 

shall 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, but also 

includes investigations related to other 

contractors (e.g., predecessor and 

subsequent contractors) and 

subcontractors. 

Subpart C—Enforcement 

§ 9.21 Complaints. 

(a) With contracting agency. Any 

former employee(s) or authorized 

employee representative(s) of the 

predecessor contractor who believes the 

successor contractor has violated this 

part may file a complaint with the 

Contracting Officer of the appropriate 

Federal agency within 120 days of the 

alleged violation. See also, § 9.11(d) of 

this part, Contracting agency actions on 

complaints. 

(b) With Wage and Hour Division. The 

complainant may file the complaint 

directly with the Branch of Government 

Contracts Enforcement, Wage and Hour 

Division, U.S. Department of Labor, 

Washington, DC 20210, if the 

complainant has not been able to timely 

file the complaint with the Contracting 

Officer or has not received, within 30 

days of filing the complaint with the 

Contracting Officer, a copy of the report 

forwarded to the Wage and Hour 

Division under § 9.11(d)(1) of this part. 

The complaint must be filed with the 

Wage and Hour Division within 180 

days of the alleged violation. 

§ 9.22 Wage and Hour Division 

conciliation. 

After obtaining information regarding 

alleged violations, the Wage and Hour 

Division may contact the successor 

contractor about the complaint and 

attempt to conciliate and reach a 

resolution that is consistent with the 

requirements of this part and is 

acceptable to both the complainant(s) 

and the successor contractor. 

§ 9.23 Wage and Hour Division 

investigation. 

(a) Initial investigation. The 

Administrator may initiate an 

investigation under this part either as 

the result of the unsuccessful 

conciliation of a complaint or at any 

time on his or her own initiative. As 

part of the investigation, the 

Administrator may inspect the records 

of the predecessor and successor 

contractors (and make copies or 

transcriptions thereof), question the 

predecessor and successor contractors 

and any employees of these contractors, 

and require the production of any 

documentary or other evidence deemed 

necessary to determine whether a 

violation of this part (including conduct 

warranting imposition of ineligibility 

sanctions pursuant to § 9.24(d) of this 

part) has occurred. 

(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 

ineligibility sanctions is appropriate, or 

where the contractor has failed to 

comply with an order of the Secretary. 

§ 9.24 Remedies and sanctions for 

violations of this part. 

(a) Authority. Executive Order 13495 

provides that the Secretary shall have 

the authority to issue orders prescribing 

appropriate 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 payment of wages lost. 

(b) Unpaid wages or other relief due. 

In addition to satisfying any costs 

imposed under §§ 9.34(j), 9.35(d) of this 

part, a contractor who violates any 

provision of this part shall 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), terms, conditions, and 

privileges of that employment. 

(c) Withholding of funds. 

(1) Unpaid wages or other relief. After 

an investigation and a determination by 

the Administrator that lost wages or 

other monetary relief is due, the 

Administrator may direct that so much 

of the accrued payments due on either 

the contract or any other contract 

between the contractor and the 

Government shall be withheld as are 

necessary to pay the moneys due. Upon 

the final order of the Secretary that such 

moneys are due, the Administrator may 

direct that such withheld funds be 

transferred to the Department of Labor 

for disbursement. 

(2) List of employees. If the 

Contracting Officer or the 

Administrator, upon final order of the 

Secretary, finds that the predecessor 

contractor has failed to provide a list of 

the names of employees working under 

the contract in accordance with § 9.12(e) 

of this part, the Contracting Officer may 

in his or her discretion, or 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. 

(d) Ineligibility listing. Where the 

Secretary finds that a contractor has 

failed to comply with any order of the 

Secretary or has committed willful or 

aggravated violations of this part, the 

Secretary may order that the contractor 

and its responsible officers, and any 

firm in which the contractor has a 

substantial interest, shall be ineligible to 

be awarded any contract or subcontract 

of the United States for a period of up 


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to three 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 shall be 

carried out without affording the 

contractor or subcontractor an 

opportunity for a hearing. 

Subpart D—Administrator’s 

Determination, Mediation, and 

Administrative Proceedings 

§ 9.31 Determination of the Administrator. 

(a) Written determination. Upon 

completion of an investigation under 

§ 9.23 of this part, and provided that a 

resolution is not reached that is 

consistent with the requirements of this 

part and acceptable to both the 

complainant(s) and the successor 

contractor, the Administrator will issue 

a written determination of whether a 

violation has occurred. The 

determination shall contain a statement 

of the investigation findings and 

conclusions. A determination that a 

violation occurred shall address 

appropriate relief and the issue of 

ineligibility sanctions where 

appropriate. The Administrator will 

notify any complainant(s); employee 

representative(s); contractor, including 

the prime contractor if a subcontractor 

is implicated; and contractor 

representative(s) by personal service or 

by registered or certified mail to the last 

known address, of the investigation 

findings. Where service by certified mail 

is not accepted by the party, the 

Administrator may exercise discretion 

to serve the determination by regular 

mail. 

(b) Notice to parties and effect. 

(1) Relevant facts in dispute. Except 

as provided in paragraph (b)(2) of this 

section, the determination of the 

Administrator shall advise the parties 

(ordinarily any complainant, the 

successor contractor, and any of their 

representatives) that the notice of 

determination shall become the final 

order of the Secretary and shall not be 

appealable in any administrative or 

judicial proceeding unless, postmarked 

within 20 days of the date of the 

determination of the Administrator, the 

Chief Administrative Law Judge 

receives a request for a hearing pursuant 

to § 9.32(b)(1) of this part. A detailed 

statement of the reasons why the 

Administrator’s ruling is in error, 

including facts alleged to be in dispute, 

if any, shall be submitted with the 

request for a hearing. The 

Administrator’s determination not to 

seek ineligibility sanctions shall 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 and will be further advised 

that the determination shall become the 

final order of the Secretary and shall not 

be appealable in any administrative or 

judicial proceeding unless, postmarked 

within 20 days of the date of the 

determination of the Administrator, a 

petition for review is filed with the 

Administrative Review Board pursuant 

to § 9.32(b)(2) of this part. 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 letter, which must be received within 

20 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 

days of the date of the notice, in 

accordance with the procedures at 

§ 9.32(b)(2) of this part. 

§ 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) of this part. 

(b) Process. 

(1) For Administrative Law Judge 

hearing. 

(i) General. Any aggrieved party may 

file a request for a hearing by an 

Administrative Law Judge within 20 

days of the determination of the 

Administrator. The request for a hearing 

shall be accompanied by a copy of the 

determination of the Administrator and 

may be filed by U.S. mail, facsimile 

(FAX), telegram, hand delivery, nextday delivery, or a similar service. At the 

same time, a copy of any request for a 

hearing shall 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, U.S. Department of 

Labor, 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 there is no basis for 

a finding that a contractor has 

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 shall be the prosecuting 

party and the contractor shall 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 contractor 

or any other interested party may 

request a hearing where the 

Administrator determines, after 

investigation, that the contractor has 

committed violation(s). In such a 

proceeding, the Administrator shall be 

the prosecuting party and the contractor 

shall 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 an 

Administrative Law Judge’s decision, 

shall file a written petition for review 

with the Administrative Review Board 

that must be postmarked within 20 days 

of the date of the determination or 

decision and shall 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) of this part. 

(ii) Contents and service. 

(A) A petition for review shall refer to 

the specific findings of fact, conclusions 

of law, or order at issue. 

(B) Copies of the petition and all 

briefs shall be served on the 

Administrator, Wage and Hour Division, 

and on the Associate Solicitor, Division 

of Fair Labor Standards, U.S. 

Department of Labor, 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 shall 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 shall be 

effective immediately. No judicial 


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review shall be available unless a timely 

petition for review to the Administrative 

Review Board is first filed. 

§ 9.33 Mediation. 

(a) General. The parties are 

encouraged to resolve disputes in 

accordance with the conciliation 

procedures set forth at § 9.22 of this 

part, or, where such efforts have failed, 

to utilize settlement judges to mediate 

settlement negotiations pursuant to 29 

CFR 18.9 when those provisions apply. 

At any time after commencement of a 

proceeding, the parties jointly may 

move to defer the hearing for a 

reasonable time to permit negotiation of 

a settlement or an agreement containing 

findings and an order disposing of the 

whole or any part of the proceeding. 

(b) Appointing settlement judge for 

cases scheduled with the Office of 

Administrative Law Judges. Upon a 

request by a party or the presiding 

Administrative Law Judge, the Chief 

Administrative Law Judge may appoint 

a settlement judge. The Chief 

Administrative Law Judge has sole 

discretion to decide whether to appoint 

a settlement judge, except that a 

settlement judge shall not be appointed 

when a party objects to referral of the 

matter to a settlement judge. 

§ 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) of this part 

concerning questions of law and fact 

from determinations of the 

Administrator issued under § 9.31 of 

this part. In considering the matters 

within the scope of its jurisdiction, the 

Administrative Law Judge shall act as 

the authorized representative of the 

Secretary and shall act fully and, subject 

to an appeal filed under § 9.32(b)(2) of 

this part, finally on behalf of the 

Secretary concerning such matters. 

(2) Limit on scope of review. 

(i) The Administrative Law Judge 

shall 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 shall 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) of this part, 

the Administrative Law Judge to whom 

the case is assigned shall, 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 shall 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 his/her own motion, dismiss a 

challenge to a determination of the 

Administrator upon the failure of the 

party requesting a hearing or his/her 

representative to attend a hearing 

without good cause; or upon the failure 

of said 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 a case in which the 

Administrator has not previously 

participated. The Administrator shall 

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 challenges only the amount of 

monetary relief. See also 

§ 9.32(b)(2)(i)(C) of this part. 

(e) Agency participation. A Federal 

agency that is interested in a proceeding 

may participate, at the agency’s 

discretion, as amicus curiae at any time 

in the proceedings. At the request of 

such Federal agency, copies of all 

pleadings in a case shall be served on 

the Federal agency, whether or not the 

agency is participating in the 

proceeding. 

(f) Requesting documents. Copies of 

the request for hearing and documents 

filed in all cases, whether or not the 

Administrator is participating in the 

proceeding, shall be sent to the 

Administrator, Wage and Hour Division, 

and to the Associate Solicitor, Division 

of Fair Labor Standards, U.S. 

Department of Labor, Washington, DC 

20210. 

(g) Rules of practice. 

(1) The rules of practice and 

procedure for administrative hearings 

before the Office of Administrative Law 

Judges at 29 CFR part 18, subpart A, 

shall 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, shall 

not apply. Rules or principles designed 

to assure production of the most 

probative evidence available shall be 

applied. The Administrative Law Judge 

may exclude evidence that is 

immaterial, irrelevant, or unduly 

repetitive. 

(h) Decisions. The Administrative 

Law Judge shall issue a decision within 

60 days after completion of the 

proceeding at which evidence was 

submitted. The decision shall 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 shall issue an 

order that the successor contractor 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), terms, conditions, and 

privileges of that employment. Where 

the Administrator has sought 

ineligibility sanctions, the order shall 

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 shall be 

awarded in addition to any unpaid 

wages or other relief due under § 9.24(b) 

of this part. 

(k) Finality. The decision of the 

Administrative Law Judge shall 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) of this part. 

§ 9.35 Administrative Review Board 

proceedings. 

(a) Authority. 

(1) General. The Administrative 

Review Board 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 of this part and from 

decisions of Administrative Law Judges 

issued under § 9.34 of this part. In 

considering the matters within the 

scope of its jurisdiction, the Board shall 

act as the authorized representative of 

the Secretary and shall act fully and 

finally on behalf of the Secretary 

concerning such matters. 

(2) Limit on scope of review. 

(i) The Board shall not have 

jurisdiction to pass on the validity of 

any provision of this part. The Board is 


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an appellate body and shall decide cases 

properly before it on the basis of 

substantial evidence contained in the 

entire record before it. The Board shall 

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 shall 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) Decisions. The Board’s final 

decision shall be issued within 90 days 

of the receipt of the petition for review 

and shall 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 Board concludes that 

the contractor has violated this part, the 

final order shall order 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), terms, 

conditions, and privileges of that 

employment. Where the Administrator 

has sought imposition of ineligibility 

sanctions, the Board shall also 

determine whether an order imposing 

ineligibility sanctions is appropriate. 

(d) Costs. If a final order finding the 

successor contractor violated this part is 

issued, the Board 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 shall be 

awarded in addition to any unpaid 

wages or other relief due under § 9.24(b) 

of this part. 

(e) Finality. The decision of the 

Administrative Review Board shall 

become the final order of the Secretary. 

Appendix A to Part 9—Contract Clause 

Nondisplacement of Qualified Workers 

(a) Consistent with the efficient 

performance of this contract, the contractor 

and its subcontractors shall, except as 

otherwise provided herein, in good faith offer 

those employees (other than managerial and 

supervisory employees) employed under the 

predecessor contract whose employment will 

be terminated as a result of 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 

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 fewer employees than the 

predecessor contractor employed in 

connection with performance of the work. 

Except as provided in paragraph (b) there 

shall be no employment opening under this 

contract, and the contractor and any 

subcontractors shall not offer employment 

under this contract, to any person prior to 

having complied fully with this obligation. 

The contractor and its subcontractors shall 

make an express offer of employment to each 

employee as provided 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 days. 

(b) Notwithstanding the obligation under 

paragraph (a) above, the contractor and any 

subcontractors (1) May employ under this 

contract any employee who has worked for 

the contractor or subcontractor for at least 

three months immediately preceding the 

commencement of this contract and who 

would otherwise face lay-off or discharge, 

(2) 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. 357(b), 

and (3) are not required to offer a right of first 

refusal to any employee(s) of the predecessor 

contractor whom the contractor or any of its 

subcontractors reasonably believes, based on 

the particular employee’s past performance, 

has failed to perform suitably on the job. 

(c) In accordance with Federal Acquisition 

Regulation 52.222–41(n), the contractor shall, 

not less than 10 days before completion of 

this contract, furnish the Contracting Officer 

a certified list of the names 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 will 

provide the list to the successor contractor, 

and the list shall be provided on request, to 

employees or their representatives. 

(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, 

appropriate sanctions may be imposed and 

remedies invoked against the contractor or its 

subcontractors, as provided in Executive 

Order 13495, the regulations, 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 will include provisions that 

ensure that each subcontractor will honor the 

requirements of paragraphs (a) through (b) 

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 will provide the contractor 

with the information about the employees of 

the subcontractor needed by the contractor to 

comply with paragraph (c), above. The 

contractor will 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) The Contracting Officer shall withhold 

or cause to be withheld from the prime 

contractor under this or any other 

Government contract with the same prime 

contractor such sums as an authorized 

official of the Department of Labor requests, 

upon a determination by the Administrator, 

the Administrative Law Judge, or the 

Administrative Review Board that there has 

been a failure to comply with the terms of 

this clause and that wages lost as a result of 

the violations are due to employees or that 

other monetary relief is appropriate. If the 

Contracting Officer or the Administrator, 

upon final order of the Secretary, finds that 

the contractor has failed to provide a list of 

the names of employees working under the 

contract, the Contracting Officer may in his 

or her discretion, or 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. 

(g) The contractor and subcontractor shall 

maintain the following records (regardless of 

format, e.g., paper or electronic, provided the 

records meet the requirements and purposes 

of this subpart and are fully accessible) of its 

compliance with this clause for not less than 

a period of three years from the date the 

records were created: 

(1) 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. 

(2) A copy of any record that forms the 

basis for any exclusion or exemption claimed 

under this part. 

(3) A copy of the employee list 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 shall 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 or an authorized 

representative within 10 days after payment 

is made. 


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(h) The contractor shall 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 shall make records requested by 

such official(s) available for inspection, 

copying, or transcription upon request. 

(i) Disputes concerning the requirements of 

this clause shall not be subject to the general 

disputes clause of this contract. Such 

disputes shall 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. 

Appendix B to Part 9—Notice to Service 

Contract Employees 

The contract for (insert type of service) 

services currently performed by (insert name 

of predecessor contractor) has been awarded 

to a successor contractor, (insert name of 

successor contractor). The successor 

contractor’s first date of performance on the 

contract will be (insert first date of successor 

contractor’s performance). If the work is to be 

performed at the same location, a successor 

contractor is generally required to offer 

employment to the employees who worked 

on the contract during the last 30 days of the 

predecessor performance, except in the 

following situations: 

Employees who will not face layoff or 

discharge by the new contract award 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 successor contractor may reduce the 

size of the current work force; therefore, only 

a portion of the existing work force may 

receive employment offers. However, the 

successor contractor must offer employment 

to the displaced employees if any openings 

occur during the first 90 days of performance 

on the successor contract. 

The successor contractor may employ its 

current employee on the successor contract 

before offering employment to the 

predecessor contract’s employees only if the 

successor contractor’s current employee has 

worked for the successor contractor for at 

least three months immediately preceding 

the first date of performance on the successor 

contract and would otherwise face layoff or 

discharge if not employed under the new 

contract. 

Where the successor contractor has reason 

to believe, based on credible information 

from a knowledgeable source, that an 

employee’s job performance has been 

unsuitable, the employee is not entitled to an 

offer of employment on the successor 

contract. 

An employee hired to work under a 

predecessor’s 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 successor contract, 

provided that the employee was not 

deployed 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 

will have at least 10 days to accept the offer. 

Complaints: Any employee or authorized 

employee representative who believes that he 

or she is entitled to an offer of employment 

with the successor contractor and who has 

not received an offer, may file a complaint 

with (insert Contracting Officer or 

representative name, address and telephone 

number). Any complaint must be filed with 

the contracting agency within 120 days of the 

alleged violation. The Contracting Officer 

will inform the parties of their rights and 

obligations regarding the nondisplacement of 

employees and, forward a report to the U.S. 

Department of Labor, Wage and Hour 

Division within 30 days. The employee may 

also file the complaint directly with the 

Administrator, Wage and Hour Division, U.S. 

Department of Labor, Washington, DC 20210, 

if the complainant has not been able timely 

to file the complaint with the Contracting 

Officer or received a copy of the information 

to be forwarded to the Wage and Hour 

Division within 30 days of the original filing. 

The complaint must be filed with the Wage 

and Hour Division within 180 days of the 

alleged violation. 

For additional information: 1–866–4US– 

WAGE (1–866–487–9243) TTY: 1–877–889– 

5627, http://www.wagehour.dol.gov. 

[FR Doc. 2010–5781 Filed 3–18–10; 8:45 am] 

BILLING CODE 4510–27–P 


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