Indeed, Executive Order (EO) No. 14055, Nondisplacement of Qualified Workers Under Service Contracts, was only one of many predecessor EOs rescinded by the Trump administration shortly after taking office. But its removal has significant impacts on federal government contracting. As explained in EO No. 14055, its requirements sought to promote skilled worker retention in the federal workforce by placing requirements on contractors (and subcontractors) to provide the service employees from predecessor service contracts an essential right of first refusal of employment in successor or follow-on contracts. But EO No. 14055 has now been officially rescinded as part of the new administration’s stated policy to lift any orders it felt were “replacing hard work, merit, and equality with a divisive and dangerous preferential hierarchy.”
For a brief history of EO No. 14055, it was most recently signed into action by President Biden in November 2021. As for purpose and policy, it explained, at the expiration of a service contract and award of its follow-on service contract “for the same or similar services,” the government’s “procurement interests in economy and efficiency are best served when the successor contractor or subcontractor hires the predecessor’s employees, thus avoiding displacement of these employees.” It further explained:
Using a carryover work force reduces disruption in the delivery of services during the period of transition between contractors, maintains physical and information security, and provides the Federal Government with the benefits of an experienced and well-trained work force that is familiar with the Federal Government’s personnel, facilities, and requirements.
As for its basic requirements and their enforcement, it required that all agencies “to the extent permitted by law, ensure that service contracts and subcontracts that succeed a contract for performance of the same or similar work, and solicitations for such contracts and subcontracts, include” the “Nondisplacement of Qualified Workers” clause. And it required contractors and their subcontractors to make a good faith offer of the “right of first refusal of employment under [a follow-on] contract in positions for which those employees are qualified” to all service employees under the predecessor contract and its subcontracts.
It further detailed the specific process for determining the number of employees necessary for the follow-on contract and making express offers of employment to the predecessor contract’s workers before acquiring any employees elsewhere. It also contained “Location Continuity” requirements for agencies to analyze whether performance of a follow-on contract “in the same locality or localities” as the predecessor contract “is reasonably necessary to ensure economical and efficient provision of services[.]” And finally, EO No. 14055 covered exclusions for certain contracts and exceptions that could be authorized by agencies.
But as of a couple weeks ago, these requirements were effectively removed from the (still very long) list of federal government contract requirements applicable to both contractors and contracting agencies. On January 20, 2025, the new administration issued EO No. 14148, “Initial Rescissions of Harmful Executive Orders and Actions,” ordering a massive revocation of predecessors’ EOs, including EO No. 14055. The purpose and policy of the massive EO rescission is stated follows:
The previous administration has embedded deeply unpopular, inflationary, illegal, and radical practices within every agency and office of the Federal Government. The injection of “diversity, equity, and inclusion” (DEI) into our institutions has corrupted them by replacing hard work, merit, and equality with a divisive and dangerous preferential hierarchy. Orders to open the borders have endangered the American people and dissolved Federal, State, and local resources that should be used to benefit the American people. Climate extremism has exploded inflation and overburdened businesses with regulation.
To commence the policies that will make our Nation united, fair, safe, and prosperous again, it is the policy of the United States to restore common sense to the Federal Government and unleash the potential of the American citizen. The revocations within this order will be the first of many steps the United States Federal Government will take to repair our institutions and our economy.
So, what exactly does this mean for federal contractors?
As the Department of Labor website explains in the notice it issued under the final rule for EO No. 14055: “Pursuant to section 3(a) of EO 14148, the Department will take steps to rescind 29 CFR part 9 to fully implement and effectuate the revocation of EO 14055.” So, it seems we can expect to see the regulatory changes soon to follow–also meaning, contractors can expect to see the implementing contract clauses of the Federal Acquisition Regulations removed from federal government solicitations and contracts as well. On a positive note, federal contractors will have significantly less restrictions on whom they can hire for contract performance. On a negative one, there is no longer any systematic job security for federal contractor employees at the end of their contracts’ terms–no matter how skilled they are or how many years of experience they’ve accumulated.
But keep in mind, President Biden’s 2021 issuance of EO No. 14055 was not the first time a President implemented these nondisplacement requirements. Nor was this the first time the subsequent President lifted such requirements–in fact, I previously blogged on the 2020 removal of the requirements from the FAR. Indeed, the requirements of EO No. 14055 have faced a lot of back and forth between previous administrations over the years. So, is it gone forever? Only time will tell.
If you have any questions about this or any other government contracting matter, please email us or give us a call at 785-200-8919.
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