Executive Order 13495 has had a bit of a rocky past. Originally issued by President Clinton, the Order has been rescinded and then replaced, depending on the President’s political persuasions. After being reinstated by President Obama in 2009, many (like me) assumed that President Trump would have promptly rescinded it again.
Three years into his administration, President Trump has now acted: on Halloween, he rescinded Executive Order 13495.
Let’s take a step back by refreshing ourselves as to what, exactly, Executive Order 13495 required. Formally known as the Nondisplacement of Qualified Workers Under Service Contracts Executive Order, the Order required a follow-on contractor under a service contract to issue a right of first refusal to incumbent employees whose jobs would be terminated as a result of the new contract. Specifically, the Order stated:
Consistent with the efficient performance of this contract, the contractor and its subcontractors shall, except as otherwise provided herein, in good faith offer those employees (other than managerial and supervisory employees) employed under the predecessor contract whose employment will be terminated as a result of award of this contract or the expiration of the contract under which the employees were hired, a right of first refusal of employment under this contract in positions for which the employees were qualified.
Colloquially known as the “Right of First Refusal Order,” Executive Order 13495 was aimed at ensuring both the continuity of knowledge from one contractor to the next, while minimizing the risk of unemployment following the transition of contractors. Importantly, the Order did not apply to all incumbent workers (as it excluded managerial and supervisory employees), nor did it contemplate that a new contractor would hire the incumbent personnel en masse. The Secretary of Labor was designated as being responsible for ensuring compliance with the Order.
Executive Order 13495 obviously had significant implications for service contractors. Under FAR 52.222-17 (which implemented the Order in conjunction with Department of Labor regulations), contractors would often be subject to compliance throughout their contract. Not only would agencies often evaluate offerors on their ability to retain incumbent employees, but the Order and FAR 52.222-17(b)(2) specifically prohibited contractors from offering employment to non-incumbent personnel before the contractor offered rights of first refusal.
Following the ideological split on the usefulness of Executive Order 13495, President Trump revoked Executive Order 13495 on October 31, 2019. This revocation is comprehensive:
The Secretary of Labor, the Federal Acquisition Regulatory Council, and heads of executive departments and agencies shall, consistent with law, promptly move to rescind any orders, rules, regulations, guidelines, programs, or policies implementing or enforcing Executive Order 13495.
Additionally, the revocation requires the Secretary of Labor to “terminate, effective immediately, any investigations or compliance actions based on Executive Order 13495.” In other words, not only does 13495 go away, but the FAR Council was instructed to rescind FAR 52.222-17.
Though comprehensive, it might take awhile for contractors to feel any effects of the revocation of Executive Order 13495 outside of enforcement by the Department of Labor. That is, FAR 52.222-17 is technically still on the books. And an agency might decide, as part of its evaluation criteria, to continue to assess an offeror’s ability to recruit and retain incumbent personnel, if the agency believes it is in its best interest to do so. Moreover, the follow-on contractor’s decision to recruit incumbent employees en masse will continue to be a factor under the ostensible subcontractor affiliation analysis.
If you have any questions about Executive Order 13495, or how its revocation might impact your work with the government, please give me a call.