27856 Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations

DEPARTMENT OF LABOR

Office of Labor-Management Programs

29 CFR Chapter II and Part 270

RIN 1294–AA13

Permanent Replacement of Lawfully

Striking Employees by Federal

Contractors

AGENCY: Office of Labor-Management

Programs, Office of the American

Workplace, Labor.

ACTION: Final rule.

SUMMARY: This final rule implements

Executive Order 12954, which was

signed by President Clinton on March 8,

1995 and became effective on that date.

Executive Order 12954 provides that in

procuring goods and services, in order

to ensure the economical and efficient

administration and completion of

contracts, federal contracting agencies

shall not contract with employers that

permanently replace lawfully striking

employees. This final rule also makes a

technical amendment to Chapter II of

the Department’s regulations, changing

the heading of that chapter to reflect the

earlier establishment of the Office of the

American Workplace and its component

offices, including the Office of LaborManagement Programs.

DATES: Effective June 26, 1995.

FOR FURTHER INFORMATION CONTACT:

Charles L. Smith, Special Assistant to

the Deputy Secretary, Office of the

American Workplace, U.S. Department

of Labor, 200 Constitution Avenue,

NW., Room S–2203, Washington, DC

20210, (202) 219–6045. This is not a

toll-free number.

SUPPLEMENTARY INFORMATION:

I. Background

On March 8, 1995, President Clinton

signed Executive Order 12954,

‘‘Ensuring the Economical and Efficient

Administration and Completion of

Federal Government Contracts.’’ The

Order became effective on March 8,

1995, the date it was signed, and was

published in the Federal Register on

March 10, 1995, 60 FR 13023.

In the Order, the President sets forth

the finding that economy and efficiency

in procurement are generally advanced

by contracting with employers that do

not permanently replace lawfully

striking employees. That is, the

permanent replacement of strikers can

adversely affect a contractor’s ability to

reliably provide high quality goods and

services, thereby adversely affecting the

Federal Government’s economy,

efficiency, and cost of operations. The

Order then states that ‘‘[i]t is the policy

of the executive branch in procuring

goods and services that, to ensure the

economical and efficient administration

and completion of Federal Government

contracts, contracting agencies shall not

contract with employers that

permanently replace lawfully striking

employees.’’ The Order further states

that all discretion under the Order is to

be exercised in accordance with this

policy.

The Order then establishes a flexible

mechanism, based on case-by-case

determinations, designed to ensure

economy and efficiency in government

procurement involving contractors that

have permanently replaced lawfully

striking employees. Under the Order,

the Secretary of Labor is authorized to

conduct investigations, either on the

basis of a complaint or on his or her

own initiative, and to hold hearings as

he or she deems advisable in order to

determine whether an organizational

unit of a federal contractor has

permanently replaced lawfully striking

employees.

When the Secretary finds that an

organizational unit of a federal

contractor has permanently replaced

lawfully striking employees, he or she

may exercise either or both of two

options. First, he or she may find that

it is appropriate to terminate existing

contracts for convenience; the head of

the contracting agency may object to

that finding in writing and the

termination for convenience shall not be

issued.

Second, the Secretary may find that it

is appropriate to debar the contractor

from future contracts and renewal of

existing contracts until the labor dispute

is resolved. However, a contracting

agency may enter into a contract with

the employer if there is a compelling

reason to do so.

The Secretary has delegated his

authority under the Order to the

Assistant Secretary for the American

Workplace in Secretary’s Order No. 2–

95, which was signed on March 8, 1995

and published in the Federal Register

on March 13, 1995, 60 FR 13602.

On March 29, 1995, the Department

published a notice of proposed

rulemaking, 60 FR 16354, setting forth

proposed regulations implementing the

Order. The notice also invited

comments from the public, with the

comment period ending April 28, 1995.

II. Summary and Discussion of the

Comments

Fifty comments were submitted and

considered. (Two additional comments

were not considered. One was

postmarked after the next business day

after the expiration of the comment

period, and the other was dated after the

expiration of the comment period.)

Thirty-four officials from the

following employers and employer

associations submitted comments:

—Phoenix Cement,

—RC Cement Company, Inc. (4

officials),

—Hercules Cement Company (2

officials),

—Kaiser Cement Corporation,

—Heartland Cement Company (2

officials),

—National Association of Hosiery

Manufacturers,

—Roanoke Cement Company,

—Signal Mountain Cement Company,

—National Electrical Contractors

Association, Puget Sound Chapter,

—National Association of PlumbingHeating-Cooling Contractors,

—Medusa Cement Company (2

officials),

—Holnam, Inc.,

—National Cement Company of

Alabama, Inc.,

—Medusa Aggregates Company (2

officials),

—American Portland Cement Alliance,

—Citadel Cement Company,

—Associated Builders and Contractors,

Inc.,

—The Associated General Contractors of

America,

—National Mining Association,

—National Private Truck Council,

—Can Manufacturers Institute,

—American Health Care Association,

—Textile Rental Services Association of

America,

—National Grocers Association,

—River Cement Company, Selma Plant,

—American Movers Conference,

—Painting and Decorating Contractors

of America.

Four comments were received from

the following associations:

—Labor Policy Association, Inc.,

—Alliance to Keep Americans Working,

—American Bar Association,

—Society for Human Resource

Management.

Two comments were received from

the following law firms:

—Wessels & Pautsch (on behalf of

unnamed clients),

—Jones, Day, Reavis & Pogue (on behalf

of the Chamber of Commerce of the

United States of America, the

National Association of

Manufacturers, Bridgestone/Firestone,

Inc., and Mosler Inc.).

Six comments were received from the

following labor organizations:

—United Automobile, Aerospace &

Agricultural Implement Workers of

America,
Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations 27857

—International Union of Operating

Engineers,

—International Brotherhood of

Teamsters,

—Air Line Pilots Association,

—American Association of University

Professors,

—United Steelworkers of America.

Two comments were received from

the following U.S. government agencies:

—Department of Health and Human

Services,

—General Services Administration.

Finally, two comments were received

from individuals.

The Department has carefully

reviewed and considered all statements

made in the comments in developing

this final rule. The following is a

summary of the comments and the

Department’s response.

A. Comments on the Definition of

‘‘Lawfully Striking Employee’’

Several comments objected to the

element of the definition in the

proposed regulations which provides

that a strike is considered to be lawful

until it has been finally adjudicated to

be unlawful. These comments stated

that final adjudication could take years,

thereby keeping the contractor in limbo

unfairly. One comment also stated that

in the case of clearly unlawful strikes

such as ‘‘wildcat’’ strikes or strikes in

violation of a ‘‘no strike’’ contract

clause, there should be discretion to

deny strikers protection from

replacement employees prior to final

adjudication.

The proposed regulations do provide

discretion, on a case-by-case basis, for

the Assistant Secretary to determine that

neither debarment nor termination of a

contract is appropriate based on the

entire record, and the nature of the

strike as well as the status of related

litigation may certainly be issues for

development in the record. However,

whether a strike is unlawful under

federal, state or local law is generally a

complex matter which is most suitably

resolved in accordance with the

standards and procedures set in those

laws. OAW should not as a rule

substitute its judgement for that of the

relevant agencies and the courts.

Accordingly, OAW believes that it is not

necessary or appropriate to change the

definition of ‘‘lawfully striking

employee’’ or otherwise modify the

regulations to specifically deal with

‘‘clearly unlawful strikes’’ since the

Assistant Secretary already has

sufficient discretion under the proposed

regulations.

One comment objected to the

reference to ‘‘state or local law’’ in the

proposed definition because the

lawfulness of a strike by employees

covered by the National Labor Relations

Act (NLRA) cannot be adjudicated

under state or local law. Another

comment stated that state law

characterization of a dispute as a

lockout for purposes of unemployment

compensation should not affect the

determination of whether a dispute is a

strike or a lockout under federal law.

The inclusion of the phrase ‘‘state or

local law’’ in the proposed definition is

intended to deal with the situation

where an entity of state or local

government has a federal contract. State

or local law would be pertinent in such

cases in determining the lawfulness of

a strike. However, state or local law

would not affect the characterization or

lawfulness of a strike by employees

covered by the NLRA or the Railway

Labor Act.

Finally, one comment expressed

concern over the definition of

‘‘employee,’’ which excludes

‘‘supervisors.’’ This comment suggested

that only those persons with full

managerial or supervisory authority

should be considered as supervisors

excluded from the definition of

employee, as recommended in the

report of the Commission on the Future

of Worker-Management Relations (also

referred to as the Dunlop Commission),

issued in December 1994. The comment

noted that the Supreme Court has

interpreted the similar definition of the

term ‘‘employee’’ in the NLRA as

excluding as supervisors persons who

incidentally direct other employees’

work.

Despite the similarity of the definition

of ‘‘employee’’ in the proposed

regulations to the definition in the

NLRA (and perhaps other statutes), and

the guidance that may be provided by

court or administrative rulings issued

pursuant to other statutes or executive

orders, the Assistant Secretary is not

necessarily bound by those rulings. The

Assistant Secretary has the discretion

and authority to make decisions on

debarment and contract termination on

the basis of the entire record in each

case so as to effectuate the purposes of

the Order.

B. Comments on the Definition of

‘‘Permanently Replaced’’

One comment objected to the

definition of permanently replaced

because it lacks any temporal element

and therefore may include any strikers

without an unconditional right to

reinstatement. That is, an employer that

contemplates permanently replacing

strikers in the future could be

determined to have actually

permanently replaced strikers since

their reinstatement may be conditional

upon return to work at a future time.

The comment argues that an employer

should not have to declare that striking

employees have an unconditional right

to reinstatement at any time in order to

prevent the Assistant Secretary from

concluding that it has permanently

replaced its striking employees. The

comment concludes by stating that an

employer should not be considered to

have permanently replaced its lawfully

striking employees unless it refuses to

reinstate them or declares or evidences

that its replacement workers may affect

the reinstatement rights of the striking

employees.

We do not believe that these concerns

are well-founded. Whether or not

lawfully striking employees have been

permanently replaced at a particular

point in time is a factual question to be

resolved on the basis of the entire

situation at that time, including (as the

commenter appears to note with

approval) the employer’s declarations

and other evidence from the employer’s

actions that its replacement workers

may affect the reinstatement rights of

the striking employees.

Another comment suggested that the

definition of ‘‘permanently replaced’’ be

revised to include situations where a

contractor has entered into a contract

with another entity to provide the goods

or services required by the contract as

well as the situation where a contractor

permanently replaces its striking

employees with replacement employees.

However, OAW does not believe it is

necessary or appropriate to revise the

language of the definition. Under the

proposed definition, the Assistant

Secretary has the authority and

discretion to determine on a case-bycase basis whether the Order is

applicable where employees are

permanently replaced by subcontracting

as well as replaced by hiring new

employees.

C. Comments on the Definitions of

‘‘Organizational Unit’’ and ‘‘Affiliate’’

The largest number of specific

comments concerned the definitions of

the terms ‘‘organizational unit of a

federal contractor’’ and ‘‘affiliate.’’

Several comments simply asked

questions concerning the scope of the

application of the Order and the

regulations. For example, these

questions included whether the Order

applies to a federal contractor whose

sister company permanently replaces

lawfully striking employees, whether it

applies to a contractor as a whole or just

the organizational element that is doing

the work on a federal contract, and
27858 Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations

whether it applies only to situations in

which workers on a federal contract are

replaced.

Many comments suggested that the

proposed regulations be revised so as to

limit the scope of the Order’s

application. For example, one comment

suggested generally that affiliates or

sister companies of a federal contractor

should not be subject to the Order;

another comment suggested that, for

nursing home chains, the Order’s

application should be limited to the

specific facility that permanently

replaced lawfully striking employees.

On the other hand, several comments

suggested that the proposed regulations

be revised to expand the scope of the

Order’s application. For example, one

comment suggested that the Order

should apply to sister companies to

which work in connection with a

federal contract is transferred when the

primary contractor has permanently

replaced lawfully striking employees;

another comment suggested that, for

institutions of higher learning, the Order

should apply to the entire university

and not to just the Department which

has the federal contract.

The number and variety of the

particular situations described in the

comments underscore the rationale for

making determinations on the Order’s

application on a case-by-case basis

rather than attempting to establish

general rules to cover all situations.

Further, in a rulemaking action it is not

appropriate to make determinations

about specific situations or particular

industries described in the comments.

Nevertheless, the following general

comments can be made on the questions

and situations raised in the comments

regarding the definitions of

organizational unit of a federal

contractor and affiliate.

In the case where (1) Corporation XYZ

is a prime contractor holding a contract

with a contracting agency, (2) Division

A of Corporation XYZ is responsible for

performing the contract, and (3)

Division B of Corporation XYZ performs

no work on the contract but could

provide the goods or services required

to be provided under the contract, then

Corporation XYZ, Division A, and

Division B (and any other affiliates of

Corporation XYZ that could provide the

goods or services required by the

contract) form an ‘‘organizational unit of

a federal contractor’’ under the

regulations. If any part of the

organizational unit permanently

replaces lawfully striking employees

(including, for example, employees of

Division B who are not performing work

on the federal contract), then the entire

organizational unit would be subject to

debarment if appropriate, and any

contracts over $100,000 which any part

of the organizational unit has with a

contracting agency would be subject to

a finding of whether termination for

convenience is appropriate.

With regard to questions and

comments concerning subcontractors,

the Order is directed only to prime or

first tier contractors. Thus, § 270.1(e)

defines ‘‘contractor’’ as a ‘‘prime

contractor,’’ which is defined at

§ 270.1(p) as any person holding a

contract with a contracting agency. One

comment noted that the regulations

implementing Executive Order 11246,

which deals with nondiscrimination in

employment by government contractors,

explicitly covers subcontractors as well

as federal contractors. However,

Executive Order 11246, unlike

Executive Order 12954, specifically

includes subcontractors within its

coverage. There is no basis for revising

the proposed regulations to include

subcontractors.

In addition to these general questions

and comments, there were two narrower

issues raised in the comments. One

comment suggested that the second part

of the proposed definition of

‘‘organizational unit of a federal

contractor,’’ relating to affiliates, be

revised to include only affiliates that

actually provide or will provide the

goods or services required by the

contract rather than affiliates that could

provide those goods or services.

However, OAW believes that the

proposed definition is more consistent

with the findings and purposes of the

Order.

Finally, one comment suggested that

the definition of ‘‘affiliate’’ in the

Federal Acquisition Regulation (FAR) be

used. However, the definition in the

proposed regulations closely follows the

FAR definition in all material respects.

D. Comments on Time Frames

Several comments suggested the

addition of time frames to the

procedures in the regulations. One of

these comments suggested that the

regulations at § 270.11, concerning

investigations, be revised so that an

agency which has a contract with a

contractor that may have permanently

replaced lawfully striking employees be

formally notified at the beginning of the

investigation. (Currently the only

reference to notification of interested

agencies is after the Assistant

Secretary’s decision that debarment

and/or termination of the contract is

appropriate.)

OAW believes that in most if not all

cases, agencies will receive early

notification since one of the first steps

in an investigation will very likely be to

obtain information from the contracting

agency about the existence and amount

of the contract with the contractor that

may have permanently replaced

lawfully striking employees. Therefore,

OAW does not believe that it is

necessary or appropriate to put a formal

notification requirement in the

regulations inasmuch as it is possible in

some cases that the matter will be

dismissed solely on the basis of

preliminary information obtained about

whether the contractor has permanently

replaced lawfully striking employees,

thus making it unnecessary to involve

the agency.

One comment suggested that the

contractor be notified that it is under

investigation within three business

days, or some other definite and limited

time period, so that the contractor has

time to adequately respond to the

complaint. OAW does not believe that

this is necessary or appropriate since

the regulations at §§ 270.12(d) and

270.13 provide sufficient time for a

contractor to present its position. In

addition, the matter may be dismissed at

an early stage based on information

obtained relating to the contract and/or

whether lawfully striking employees

have been permanently replaced, thus

obviating the need to notify the

contractor.

One comment suggested that

contractors be provided thirty days to

respond to a notice of proposed

debarment, as in the FAR at 48 CFR

9.406–3(c), rather than the fifteen days

in proposed § 270.12(d). OAW believes

that fifteen days is sufficient time for a

contractor to provide information that

raises a genuine dispute over material

facts, given the limited issues involved

in these proceedings. If the contractor

has raised a genuine dispute over

material facts, it will also be provided

the opportunity to present its position at

the hearing provided in § 270.13(a).

Another comment suggested the

addition of time frames throughout the

process for conducting investigations,

making findings, holding hearings, etc.

OAW does not believe that it is

appropriate to set a time frame for all

enforcement proceedings because the

nature of each proceeding will vary

based on the complexity and scope of

the issues.

Finally, two comments noted that the

regulations do not indicate when a

debarment decision becomes effective.

The final regulations have been revised

at § 270.15(b) to state that debarment is

effective immediately upon issuance of

the debarment decision. However,

unlike the FAR at 48 CFR 9.404 and

9.405, debarment is not effective at the
Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations 27859

time of the Assistant Secretary’s

decision to propose debarment

(§ 270.12(d)) since the Order authorizes

debarment only after a final decision.

(The Assistant Secretary will only

transmit the final decision to debar to

the General Services Administration for

inclusion on the consolidated list of

debarred contractors, currently titled the

‘‘List of Parties Excluded from

Procurement Programs,’’ not

information pertaining to the earlier

decision to propose debarment.) In

order to avoid confusion on this point,

the wording of § 270.12(d) has been

revised so as to eliminate the use of the

term ‘‘notice of proposed debarment.’’

E. Resolution of Labor Dispute

One comment suggested certain

revisions to § 270.16 concerning the

Assistant Secretary’s determination that

a labor dispute has been resolved. The

comment argued that there should be

two touchstones for such a

determination: (1) whether the parties

have resolved their differences and (2)

whether the striking employees have

returned to work. The commenter

proposed that § 270.16 provide that ‘‘an

agreement of the parties in which the

strikers which have been permanently

replaced have returned to work’’ be the

standard for determining that a labor

dispute has been resolved. OAW

believes that the current flexible

standard in § 270.16, which provides

that the Assistant Secretary will

consider various factors in determining

whether a labor dispute has been

resolved, is preferable to a rigid

definition.

F. Other Comments

1. Several comments suggested that

the regulations be revised to set out

standards and criteria for the exercise of

discretion in making decisions. Two

comments suggested that objective

contract performance criteria should be

established to govern decisions on

whether debarment and/or termination

of a contract for convenience is

appropriate. Another comment

suggested that § 270.15(a) be revised to

specify when the scope of a debarment

would go beyond the organizational unit

which permanently replaced lawfully

striking employees. However, in view of

the fact that the Order establishes a

flexible enforcement mechanism based

on case-by-case determinations, OAW

has decided that it would not be

appropriate to circumvent that

enforcement mechanism by

unnecessarily limiting the Assistant

Secretary’s discretion in the regulations.

2. Three comments suggested that this

rulemaking procedure be delayed

pending the outcome of current

litigation challenging the Executive

Order, and that the comment period be

reopened at the conclusion of the

litigation. It is clearly not possible to

delay rulemaking; the Order is effective

as of the date it was signed and the

Secretary has the obligation to

promulgate a final rule implementing

the Order.

3. One comment noted that under

proposed regulations governing

nonprocurement debarment and

suspension and FAR (59 FR 65607,

December 20, 1994), issued pursuant to

§ 2455 of the Federal Streamlining Act

of 1994 and Executive Order 12689,

reciprocal effect is to be given to

debarment and suspension under FAR

(for procurement programs) and under

Executive Order 12549 and the

implementing regulations (for

nonprocurement activity such as

grants). Thus, under these proposed

regulations, a federal contractor which

is debarred under Executive Order

12954 for permanently replacing

lawfully striking employees would also

be ineligible for nonprocurement

activity such as grants. Because of this

broad impact, the comment suggested

that state and local governments be

excluded from the definition of

‘‘person’’ so that they could not be

considered to be federal contractors.

OAW believes that any impact on

state and local government

nonprocurement activity, though

possible, will at most be rare. First,

under most state law, strikes by

employees of state entities are unlawful

so that Executive Order 12954 will not

be applicable. Second, the Assistant

Secretary has the authority and

discretion to find that debarment in a

particular case is not appropriate.

Finally, a finding by the Assistant

Secretary that termination of the

specific contract held by a state entity

is appropriate would not have any

impact on nonprocurement activity.

4. One comment asked whether it is

correct in concluding that an entity is

not a contractor subject to the Order

solely because it receives Medicare and/

or Medicaid reimbursements. This

position is correct. The relationship

between the federal government and a

health care provider receiving payments

under the Medicare program or

receiving payments from states under

the Medicaid program is a grantorgrantee relationship, not a contracting

agency-contractor relationship.

(Medicaid, unlike Medicare, does not

involve a relationship between an

executive agency of the U.S. government

and a participating health care provider;

rather, Medicaid is actually a grant

program to the states.) Therefore, a

contractor is not covered by the Order

by virtue of the receipt of Medicare and/

or Medicaid reimbursements.

However, under the proposed

regulations referred to in the preceding

comment regarding nonprocurement

debarment and suspension and FAR,

debarment under Executive Order 12954

for permanently replacing lawfully

striking employees would also render a

contractor ineligible for

nonprocurement activity, including

grants. Of course, as previously noted,

the regulations give the Assistant

Secretary the authority and discretion to

make determinations on a case-by-case

basis on whether debarment is

appropriate, or whether termination of

the specific contract is appropriate.

5. One comment suggested that the

regulations should require that the

agency head take certain steps before

deciding not to adopt the Assistant

Secretary’s decisions that debarment

and/or contract termination is

appropriate, including issuing a notice

and allowing the complainant to present

his or her position. However, the Order

does not provide the authority to require

such a procedure.

6. Two comments stated that

§§ 270.12 (b) and (c) of the regulations

are confusing because under § 270.12(c)

a contract can be terminated for

convenience only if the contractor is

found to have permanently replaced

lawfully striking employees after March

8, 1995 (the effective date of the

Executive Order) while § 270.12(b)

specifies that a contractor can be

debarred if the contractor is found to

have permanently replaced lawfully

striking employees and does not specify

a time frame. However, these provisions

of the proposed regulations reflect the

effective dates for debarment and

contract termination in the Order. That

is, a contractor may be debarred if the

contractor is found to have permanently

replaced lawfully striking employees

prior to March 8 but, pursuant to section

12(a) of the Order, a contract can only

be terminated for convenience if the

contractor is found to have permanently

replaced lawfully striking employees

after March 8.

7. One comment suggested revising

proposed § 270.12(d) to include the

effects of debarment in the notice to

contractors advising of the Assistant

Secretary’s decision to propose

debarment and/or termination. This

change has been made.

8. One comment suggested revising

proposed § 270.16(b) to state that the

Assistant Secretary will specifically

notify the General Services

Administration of any decision to
27860 Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations

terminate debarment because of the

resolution of the labor dispute and

publish the decision in the Federal

Register. This suggestion has been

adopted in this final rule.

9. Finally, many of the comments

questioned the legality and the rationale

of the Executive Order. These issues are

clearly not within the purview of this

rulemaking action.

In addition to promulgating

regulations implementing Executive

Order 12954, this final rule also changes

the heading of Chapter II of Title 29 of

the Code of Federal Regulations from

‘‘Bureau of Labor-Management Relations

and Cooperative Programs, Department

of Labor’’ to ‘‘Office of LaborManagement Programs, Department of

Labor.’’ The Office of LaborManagement Programs, a unit within

the Office of the American Workplace,

was established by Secretary’s Order 2–

93 (58 FR 42578) and, among other

things, performs functions previously

assigned to the Bureau of LaborManagement Relations and Cooperative

Programs.

III. Administrative Notices

A. Executive Order 12866

The Department of Labor has

determined that this rule is a significant

regulatory action as defined in section

3(f) of Executive Order 12866. The

Department is issuing this rule in

conformance with that Executive Order.

The Department has determined that the

potential benefits of this regulatory

action outweigh the potential costs, and

that the rule promotes the President’s

priorities. This rule does not meet the

criteria of section 3(f)(1) of Executive

Order 12866 and, therefore, the

information in section 6(a)(3)(C) of that

Executive Order is not required. This

rule has been reviewed by the Office of

Management and Budget.

B. Regulatory Flexibility Act

The Agency Head has certified that

this rule is not expected to have a

significant impact on a substantial

number of small entities as defined in

the Regulatory Flexibility Act. The

Order and the regulations apply only to

federal contracts in excess of $100,000.

C. Paperwork Reduction Act

This rule contains no information

collection requirements for purposes of

the Paperwork Reduction Act of 1980

(44 U.S.C. 3501 et seq.).

List of Subjects in 29 CFR Part 270

Administrative practice and

procedure; Government contracts;

Federal contractors and subcontractors.

Accordingly, Chapter II of Title 29 is

amended as set forth below.

Signed at Washington, D.C., this 23rd day

of May, 1995.

Charles L. Smith,

Special Assistant to the Deputy Secretary.

CHAPTER II—OFFICE OF LABORMANAGEMENT PROGRAMS, DEPARTMENT

OF LABOR

1. The heading of Chapter II, now

reading ‘‘Bureau of Labor-Management

Relations and Cooperative Programs,

Department of Labor,’’ is revised to read

‘‘Office of Labor-Management Programs,

Department of Labor.’’

2. A new Part 270 is added to 29 CFR

Chapter II to read as follows:

PART 270—OBLIGATIONS OF

FEDERAL CONTRACTING AGENCIES:

PERMANENT REPLACEMENT OF

LAWFULLY STRIKING EMPLOYEES

Subpart A—Preliminary Matters

Sec.

270.1 Definitions.

270.2 Statement of policy.

Subpart B—Enforcement

270.10 Complaints.

270.11 Investigations.

270.12 Findings by the Assistant Secretary.

270.13 Hearings.

270.14 Termination of contract for

convenience.

270.15 Debarment.

270.16 Determination of resolution of labor

dispute.

Subpart C—Ancillary Matters

270.20 Cooperation with the Assistant

Secretary.

270.21 Rulings and interpretations.

270.22 Delegation of authority by the

Secretary.

270.23 General.

Authority: Executive Order No. 12954, 60

FR 13023; Secretary’s Order No. 2–93, 58 FR

42578; Secretary’s Order No. 2–95, 60 FR

13602.

Subpart A—Preliminary Matters

§ 270.1 Definitions.

(a) Affiliates means business

concerns, organizations, or individuals

among which, directly or indirectly,

either one controls or has the power to

control the other, or a third party

controls or has the power to control

both. Indicia of control include, but are

not limited to, interlocking management

or ownership, identity of interest among

family members, shared facilities and

equipment, common use of employees,

or a business entity organized following

the debarment, suspension, or proposed

debarment of a contractor which has the

same or similar management,

ownership, or principal employees as

the contractor that was debarred,

suspended, or proposed for debarment.

(b) Assistant Secretary means the

Assistant Secretary of Labor for the

American Workplace.

(c) Contract means a mutually binding

agreement between the Government as a

buyer, represented by a contracting

agency, and a seller, where the seller

agrees to furnish supplies or services

(including construction) and the

Government agrees to pay for them. It

includes job orders or task orders issued

under basic ordering agreements; letter

contracts; orders, such as purchase

orders under which the contract

becomes effective by written acceptance

or performance; and bilateral

modifications to a contract, which

increase the supplies or services to be

delivered under the contract. For

purposes of this part a contract is

limited to agreements in which the

Government agrees to pay an amount in

excess of the Simplified Acquisition

Threshold of $100,000 specified in

section 4(11) of the Office of Federal

Procurement Policy Act, 41 U.S.C.

403(11). The term ‘‘contract’’ does not

include agreements in which the parties

stand in the relationship of employer

and employee.

(d) Contracting agency means any

executive department or independent

establishment in the executive branch of

the Government, including any wholly

owned Government corporation.

(e) Contractor means a prime

contractor.

(f) Department means the U.S.

Department of Labor.

(g) Deputy Assistant Secretary means

the Deputy Assistant Secretary for

Labor-Management Programs, Office of

the American Workplace, U.S.

Department of Labor.

(h) Employee includes any employee

of an employer, and includes any

individual whose work has ceased as a

consequence of, or in connection with,

any current labor dispute or because of

any unfair labor practice, but does not

include any individual having the status

of an independent contractor or any

individual employed as a supervisor.

(i) Government means the government

of the United States of America.

(j) Labor dispute includes any

controversy concerning terms, tenure, or

conditions of employment, or

concerning the association or

representation of persons in negotiating,

fixing, maintaining, changing, or

seeking to arrange terms or conditions of

employment, regardless of whether the

disputants stand in the proximate

relation of employer and employee.

(k) Lawfully striking employee means

an employee who is engaged in a strike
Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations 27861

that has not been finally adjudicated to

be unlawful under any applicable

federal, state, or local law.

(l) Order means Executive Order

12954, dated March 8, 1995 (60 FR

13023, March 10, 1995).

(m) Organizational unit of a federal

contractor includes:

(1) A division or other organizational

element of a person that is responsible

as the prime contractor for performing a

contract, and

(2) Any other affiliate of the person

that could provide the goods or services

required to be provided under the

contract.

(n) Permanently replaced, when used

in connection with a lawfully striking

employee, means that during a lawful

strike the employer has placed an

individual in the lawfully striking

employee’s position, and the striking

employee does not have an

unconditional right to reinstatement.

(o) Person means any natural person,

corporation, partnership or joint

venture, unincorporated association,

state or local government, and any

agency, instrumentality, or subdivision

of such a government.

(p) Prime contractor means any

person holding a contract with a

contracting agency.

(q) Secretary means the Secretary of

Labor, U.S. Department of Labor, or his

or her designee.

§ 270.2 Statement of Policy.

(a) It is the policy of the Executive

Branch of the Federal Government that

in procuring goods and services, in

order to ensure the economical and

efficient administration and completion

of contracts, contracting agencies shall

not contract with employers that

permanently replace lawfully striking

employees.

(b) All discretion under the Order and

this part shall be exercised consistent

with this policy.

(c) The Order and this part apply only

to contracts in excess of the Simplified

Acquisition Threshold of $100,000

established in section 4(11) of the Office

of Federal Procurement Policy Act, 41

U.S.C. 403(11).

Subpart B—Enforcement

§ 270.10 Complaints.

(a) Complaints may be filed by an

employee of an organizational unit of a

federal contractor, or his or her

representative, alleging that the

organizational unit has permanently

replaced lawfully striking employees.

All complaints should be filed with the

Deputy Assistant Secretary for LaborManagement Programs, Office of the

American Workplace, U.S. Department

of Labor, 200 Constitution Avenue,

NW., Room S–2203, Washington, DC

20210.

(b) The complaint must be in writing

and should include the name, address,

and telephone number of the

complainant, the name and address of

the organizational unit of the federal

contractor alleged to have permanently

replaced lawfully striking employees, an

identification of the lawfully striking

employees who were allegedly

permanently replaced, and any other

pertinent information which will assist

in the investigation and resolution of

the complaint.

§ 270.11 Investigations.

The Deputy Assistant Secretary may

cause an investigation to be conducted

of an organizational unit of a federal

contractor, regarding the permanent

replacement of lawfully striking

employees, on the basis of complaints

filed with the Department, information

submitted by other persons, or other

available information. The Deputy

Assistant Secretary shall notify the

organizational unit of a federal

contractor of the initiation of an

investigation and the potential

consequences under the Order. The

Deputy Assistant Secretary may also

cause a fact finding hearing to be

conducted, either instead of or in

addition to an investigation. The Deputy

Assistant Secretary shall transmit the

record, including a proposed finding of

fact and a recommendation as to

debarment and/or termination of a

contract or contracts, to the Assistant

Secretary.

§ 270.12 Findings by the Assistant

Secretary.

(a) Upon receipt of the record, the

Assistant Secretary shall make a finding

as to whether the organizational unit of

the federal contractor has permanently

replaced lawfully striking employees.

(b) If the Assistant Secretary finds that

the organizational unit of the federal

contractor has permanently replaced

lawfully striking employees, he or she

shall determine whether it is

appropriate to propose debarment.

(c) If the Assistant Secretary finds that

the organizational unit of the federal

contractor has permanently replaced

lawfully striking employees after March

8, 1995, the effective date of the Order,

he or she shall also determine whether

it is appropriate to propose termination

for convenience of the contract or

contracts of the organizational unit.

(d) If the Assistant Secretary proposes

debarment and/or termination, he or she

shall notify the organizational unit of

the proposed debarment and/or

termination by certified mail, return

receipt requested, advising the

organizational unit of the effects of

debarment and its right, within 15 days

after receipt of the notice, to submit, in

person, in writing, or through a

representative, information and

argument in opposition to debarment

and/or termination.

§ 270.13 Hearings.

(a) If the Assistant Secretary finds that

the submission by the organizational

unit of a federal contractor in opposition

to the proposed debarment and/or

termination raises a genuine dispute

over facts material to the proposed

debarment and/or termination, the

Assistant Secretary shall afford the

organizational unit the opportunity to

appear at an informal hearing. The

Assistant Secretary or his or her

designee shall preside over the

proceeding.

(b) The Assistant Secretary shall make

a decision on the proposed debarment

and/or termination of a contract or

contract based on the record.

§ 270.14 Termination of contract for

convenience.

(a) Upon finding that termination of a

contract or contracts for convenience is

appropriate, the Assistant Secretary

shall notify the organizational unit of a

federal contractor by certified mail,

return receipt requested, and shall

transmit that finding to the head of any

department or agency that contracts

with the organizational unit.

(b) The head of the department or

agency shall notify the Assistant

Secretary in writing of those contracts

that have been terminated for

convenience pursuant to the Assistant

Secretary’s finding.

(c) If the head of the department or

agency objects to the termination for

convenience of a contract, he or she

shall notify the Assistant Secretary in

writing, promptly after receipt of the

Assistant Secretary’s finding, of the

reasons for not terminating the contract

and the termination for convenience

shall not be issued.

§ 270.15 Debarment.

(a) The scope of any debarment

normally will be limited to the

organizational unit of a federal

contractor that the Assistant Secretary

has found to have permanently replaced

lawfully striking employees.

(b) Upon finding that debarment is

appropriate, the Assistant Secretary

shall promptly notify the organizational

unit of the federal contractor by certified

mail, return receipt requested. The
27862 Federal Register / Vol. 60, No. 101 / Thursday, May 25, 1995 / Rules and Regulations

notice shall advise the organizational

unit of the federal contractor:

(1) That debarment is effective

immediately;

(2) That the debarment will not

extend beyond the date when the labor

dispute precipitating the permanent

replacement of lawfully striking

employees has been resolved, as

determined by the Assistant Secretary in

accordance with § 270.16;

(3) That under the debarment,

contracting agencies throughout the

executive branch of the Government

shall not contract or consent to

subcontracts with the organizational

unit of the federal contractor nor renew

or otherwise extend the duration of

current contracts, unless the head of a

contracting agency or his or her

designee determines that there is a

compelling reason for such action.

(c) The Assistant Secretary shall

notify the Administrator of the General

Services Administration of the

debarment and the Administrator shall

include the contractor on the list of

debarred contractors. The Assistant

Secretary shall publish or cause to be

published in the Federal Register, the

names of contractors that have, in the

judgment of the Assistant Secretary,

permanently replaced lawfully striking

employees and have been the subject of

debarment. Departments and agencies

shall not renew or otherwise extend the

duration of current contracts or solicit

offers from, award contracts to, or

consent to subcontracts with these

contractors unless the head of the

agency or his or her designee

determines, in writing, that there is

compelling reason for such action.

§ 270.16 Determination of resolution of

labor dispute.

(a) The Assistant Secretary may cause

an investigation to be conducted, on his

or her own initiative or upon request by

any person, to determine whether a

labor dispute that resulted in debarment

has been resolved. Among the factors or

conditions that the Assistant Secretary

may consider are:

(1) Whether the parties to the labor

dispute have either reached a formal

settlement or agreed on a procedure for

resolving their differences.

(2) Whether the parties have agreed

informally to end the labor dispute

without the signing of a written

agreement.

(3) Whether striking employees have

returned to work.

(4) Any other relevant factors tending

to lead to the conclusion that the labor

dispute has ended.

(b) If the Assistant Secretary

determines that the labor dispute has

been resolved, he or she shall terminate

the debarment and notify the General

Services Administration of this action.

Notification shall also be given to the

public, federal agencies, federal

contractors, and other interested

persons, through publication in the

Federal Register, of this action.

Subpart C—Ancillary Matters

§ 270.20 Cooperation with the Assistant

Secretary.

Consistent with section 7 of the

Order, each contracting agency shall

cooperate with the Assistant Secretary

and provide such information and

assistance as the Assistant Secretary

may require in the performance of the

Assistant Secretary’s functions under

the Order and the regulations in this

part.

§ 270.21 Rulings and interpretations.

Rulings under or interpretations of the

Order or the regulations contained in

this part shall be made by the Assistant

Secretary or his or her designee.

§ 270.22 Delegation of authority by the

Secretary.

Consistent with section 8 of the

Order, the Secretary may delegate any

function or duty of the Secretary under

this Order to any officer in the

Department or to any other officer in the

executive branch of the Government,

with the consent of the head of the

department or agency in which that

officer serves.

§ 270.23 General.

(a) The regulations in this part

implement Executive Order 12954 only

and do not modify or affect the

interpretation of any other Department

of Labor regulations or policy.

(b) Consistent with section 10 of the

Order, nothing contained in the Order

or this part, or promulgated pursuant to

the Order or this part, is intended to

confer any substantive or procedural

right, benefit, or privilege enforceable at

law by a party against the United States,

its agencies or instrumentalities, its

officers, or its employees.

[FR Doc. 95–12960 Filed 5–24–95; 8:45 am]

BILLING CODE 4510–86–P