New Contractor Must Retain Incumbent’s Workers A contractor that takes over an existing services contract must offer jobs to the previous incumbent’s employees under a new Labor Department rule. The rule grows out of President Obama’s 2009 executive order. He said the carryover workforce would ensure that there was no disruption in service during the transition to a new contractor. Industry groups complain that the policy will limit a contractor’s ability to choose its workers and prevent a new contractor from making changes in how the work is done. The rule will become effective when the Federal Acquisition Regulation councils issue implementing regulations. It will apply to services contracts above the $150,000 simplified acquisition threshold. The Labor Department estimates that about 40,000 contractors and subcontractors will be covered by the rule. An incoming contractor will have to offer jobs to qualified employees of the previous incumbent, not including managers or supervisors. The new contractor will not be required to hire all incumbents if it decides to perform the contract with fewer employees. An employee whose performance had been unsatisfactory would not be entitled to a job. However, the incoming contractor cannot impose its own hiring standards—such as drug tests or requirements for a college degree—without the consent of the agency. The Labor Department declined to determine whether a new contractor would inherit any union agreements with the previous contractor, saying that is up to the National Labor Relations Board. An agency head would be allowed to exempt a particular contract from the rule if it would impair efficiency or if the agency determined that the previous contractor’s entire workforce had not performed satisfactorily. Contractor groups were virtually unanimous in opposing the rule. “While experience shows that companies often hire as many qualified incumbents as possible to avoid the costs of training new employees, this rule denies those companies, who have full responsibility for performance under the contract, their ability to select a workforce they believe is best suited to meeting the contract requirements,” said Stan Soloway, president of the Professional Services Council. “As such, it will not serve the best interests of the government or the taxpayer.” The issue has been a political football. President Clinton imposed a similar order, but President George W. Bush rescinded it when he took office.