New Executive Orders for Federal Contractors

On January 30, 2009, President Obama issued three Executive Orders that impact federal contractors.  These Orders are pro labor and are intended to reverse positions taken during President Bush’s administration.

Nondisplacement of Qualified Workers Under Service Contracts -  this Executive Order provides for the continuation of employment of employees who are working pursuant to a service contract with the federal government, when that contract is awarded to a new contractor or subcontractor who will be performing the same or similar services at the same location.  The successor contractor and/or subcontractor will be required to offer the existing nonmanagerial and nonsupervisory employees the right to continue their employment under the new contract before being permitted to hire other employees.  The Order exempts certain contracts and permits a contracting agency to exempt other contracts or subcontracts if the agency determines that the application of these rules would impair their ability to procure services on an economic and efficient basis.

Notification of Employee Rights Under Federal Labor Laws -  this Executive Order requires all federal contractors and subcontractors to post a notice in all places where employees covered by the National Labor Relations Act work, informing them of their rights under the federal labor laws.  The Secretary of the U.S. Department of Labor has 120 days to initiate rulemaking to specify the size, form and contents of this notice, which is to be posted during the term of the contract.

Economy in Government Contracting -  this Executive Order requires that costs associated with activities undertaken to persuade employees to exercise or not exercise their rights to bargain collectively through representatives of their own chosing (e.g. unions) should be treated as “unallowable” and a federal contractor may not be reimbursed for such costs.  The Federal Acquisition Regulatory Council has 150 days to adopt rules and regulations needed to implement this Order.