January 18 Is Effective Date for Executive Order 13495

The Federal Acquisition Regulatory Council has issued its Final rule implementing Executive Order 13495 and has announced January 18, 2013 as the Order’s effective date. Signed by President Obama on January 30, 2009, Executive Order 13495 requires contractors and subcontractors that fall “under a contract that succeeds a contract for performance of the same or similar services at the same location” to offer the employees of the predecessor contractor a right of first refusal of employment under the contract.

Department of Labor (DOL), which had already published its Final rule on Executive Order 13495, has announced that January 18, 2013 is the effective date for its rule as well. Outside of a few agencies that promulgate their own regulations, Federal Acquisitions Regulation (FAR) governs all federal contractors; however, DOL’s rule can place additional restrictions and requirements on contractors.

Here are some key points from the rules for contractors to keep in mind:

  • Apart from a few exceptions, successor contractors will be compelled to offer employment to their predecessors’ non-managerial and non-supervisory employees.
  • The successor only has to offer employment to the number of employees it believes necessary to do the work, but if additional personnel are needed in the 90-day period after the first day of performance, the successor must offer employment to any of the predecessor’s employees who have not yet received offers.
  • Contractors will not be able to apply their own hiring standards, including background checks, drug tests, and minimum qualifications, unless the contract requires them to do so or the process is provided for by the contracting agency.
  • If the prior employer’s workforce was unionized, the National Labor Relations Act may require the new employer to recognize the union. This may also apply if the predecessor’s employees were in the process of organizing a union.
  • Possible penalties for violating the rule include payment of lost wages and benefits and debarment for up to three years.

What Federal Contractors Need to Do:     Federal contractors should determine whether any new contracts awarded after January 18, 2013, or Modifications of Requests for Proposals include the successor obligations.  In bidding on contracts, successor employers should fully understand their obligations to the predecessor employer’s employees, and undertake appropriate financial and operational planning steps.

FortneyScott is offering a 60 minute lunch and learn to address these developments on January 18, 2013.  To register for the lunch and learn, visit the FortneyScott website.  For more information, contact the FortneyScott attorneys with whom you work.  To view the DOL’s Final rule, click here or the FAR Council’s Final rule here.


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