On November 18, 2021, the Biden administration resurrected an executive order first issued by President Obama that the Trump administration had subsequently rescinded.

Executive Order 14055 will once again require contractors and subcontractors covered by the Service Contract Act of 1965, as amended, to make a good-faith offer to service employees employed under a predecessor contract and its subcontracts who would otherwise lose their jobs as a result of the award of the contract or expiration of the contract. In a notable departure from the Obama Order, the Biden Order does not exclude managerial or supervisory employees from this requirement.

The new contractor or subcontractor must give these predecessor employees the right of first refusal of employment under the successor contract in positions for which they are qualified. Successor employers must make an express offer of employment to each predecessor employee and must give predecessor employees a minimum of 10 business days to accept the offer. These requirements do not apply to non-service employees, nor do they apply to predecessor employees whom the successor reasonably believes, based on reliable evidence relating to the employee’s past performance, it would have just cause to discharge if the successor employed the employee.

The Order does not apply to contracts or subcontracts that fall under the simplified acquisition threshold as defined by 41 U.S.C. Section 403 or to employees who were hired to work under a federal service contract and one or more nonfederal service contracts “as part of a single job, provided that the employees were not deployed in a manner that was designed to avoid the purposes of this order.” Notably, the Biden Order does not include some other exceptions that were included in the Obama Order.

Procedurally, predecessor contractors must provide the contracting officer no less than 10 business days before the completion of the contract or its work on the contract, whichever is earlier, a certified list of names of all service employees who worked under contract and its subcontracts during the last month of contract performance. The list must contain anniversary dates of employment under the contract and predecessor contractors. The contracting officer will then provide this list to the successor contractor.

From an enforcement perspective, the Order allows the secretary of labor to impose “appropriate sanctions” on any contractor or subcontractor not in compliance with the requirements of the Order or associated regulations or orders of the secretary. Contractors must also include provisions in their subcontracts ensuring subcontractors will honor these requirements with respect to employees of predecessor subcontractors.