The Department of Energy (DOE) has proposed an amendment to the Department of Energy Acquisition Regulation (DEAR) that, among other changes, clarifies that FAR Subpart 22.12, Nondisplacement of Qualified Workers Under Service Contracts, and the associated Department of Labor regulations, applies to subcontracts under DOE’s management and operating (M&O) contracts. M&O contractors and their subcontractors need to be aware of these changes, particularly the impact on the requirement to hire service employees working on incumbent contracts set forth in contract clause FAR 52.222-17.

FAR Subpart 22.12 implements Executive Order 13495 (January 30, 2009), and requires a successor contractor and its subcontractors to offer “service employees,” as defined by the Service Contract Act, under the predecessor contract (of the same or similar services at the same location) and whose employment will be terminated as a result of the successor contract award, a right of first refusal of employment under the new contract. Employment openings are generally prohibited until such right of refusal has been provided, meaning an incoming contractor will have limited opportunity to staff its current employees on the contract. Importantly, each bona fide express offer of employment must have a stated time limit of not less than 10 days for an employee response, a time period that successor contractors should account for when determining how long it will take to transition the contract. The contract clause, FAR 52.222-17, has to be flowed down to service subcontracts over the simplified acquisition threshold, typically $150,000. The requirements of FAR Subpart 22.12 do not apply to service contracts performed entirely outside the United States. 77 Fed. Reg. 75768 (Dec. 21, 2012).

Continue Reading

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Richard Arnholt Richard Arnholt

Richard Arnholt advises companies, large and small, on the complex rules and regulations applicable to grants and contracts from federal and state governmental entities. In an era of increased budgetary pressures for contractors, Richard focuses his practice on providing practical business and legal…

Richard Arnholt advises companies, large and small, on the complex rules and regulations applicable to grants and contracts from federal and state governmental entities. In an era of increased budgetary pressures for contractors, Richard focuses his practice on providing practical business and legal guidance to help clients efficiently navigate the minefield of government procurement and grant regulations.

Photo of Sylvia Yi Sylvia Yi

Sylvia Yi represents businesses across a broad range of sectors as they move through the contracting process with federal, state and local governments, and when they engage in international transactions. Sylvia counsels public and private companies on day to day compliance challenges, and…

Sylvia Yi represents businesses across a broad range of sectors as they move through the contracting process with federal, state and local governments, and when they engage in international transactions. Sylvia counsels public and private companies on day to day compliance challenges, and supports clients in responding to criminal and government investigations. She is a regular contributor to the firm’s Government Contracts & International Trade Blog, where she provides insight on the demanding and ever-changing regulatory environment.