Nondisplacement of Qualified Workers Under Service Contracts, 13382-13409 [2010-5781]

Agencies

• Office of the Secretary
• DEPARTMENT OF LABOR

[Federal Register Volume 75, Number 53 (Friday, March 19, 2010)]
[Proposed Rules]
[Pages 13382-13409]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5781]



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Part III





Department of Labor





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29 CFR Part 9



Nondisplacement of Qualified Workers Under Service Contracts; Proposed 
Rule

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

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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.

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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: https://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 https://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 
https://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 https://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 https://www.regulations.gov Web site. You may also 
access this notice via the Wage and Hour Division home page at https://www.dol.gov/whd/regulations/EO13495_2010_NPRM.htm. To comment 
electronically on federal rulemakings, go to the federal eRulemaking 
Portal at https://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 https://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-Wagner-O'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-by-section 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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec. Sec.  9.3 and 9.4 address the coverage and 
exclusionary provisions of the current Order. See 74 FR 6103-04. 
Specifically, proposed Sec.  9.3 applies coverage under part 9 to all 
service contracts and their solicitations, except those excluded by 
Sec.  9.4. Section 9.4 would implement the exclusions contained in 
sections 3 and 4 of Executive Order 13495. Id.
    Proposed Sec.  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 Sec.  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 Sec.  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 Sec.  9.4(b) implements the exclusions applicable to 
certain contracts or subcontracts awarded for services produced or 
provided by

[[Page 13386]]

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 Sec.  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 Sec.  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 Randolph-Sheppard Act, 20 U.S.C. 107.
    Proposed Sec.  9.4(b)(4) clarifies that the exclusions provided by 
Sec.  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 
Sec.  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 Sec.  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

[[Page 13387]]

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 Sec.  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 Sec.  9.11 addresses contracting agency requirements, and 
proposed Sec.  9.12 explains contractor requirements and prerogatives 
under the nondisplacement requirements.
    Proposed Sec.  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 non-compliance 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 Sec.  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 Sec.  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 Sec.  
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

[[Page 13388]]

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 Sec.  9.11? If an e-mail 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 Sec.  9.11(c) requires the Contracting Officer to provide 
the predecessor contractor's list of employees referenced in proposed 
Sec.  9.12(e) to the successor contractor and, on request, to employees 
or their representatives.
    Proposed Sec.  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 Sec.  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 Sec.  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 Sec.  9.4 or paragraphs (c) and (d) of proposed 
Sec.  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 Sec.  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

[[Page 13389]]

contract performance. Proposed Sec.  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 Sec.  9.12(b) discusses the method of the job offer, with 
Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 13390]]

on the list required by Sec.  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 Sec.  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 Sec.  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 
worke