Permanent Replacement of Lawfully Striking Employees by Federal Contractors

SUMMARY: This final rule implements Executive Order 12954, which was

signed by President Clinton on March 8, 1995 and became effective on

that date. Executive Order 12954 provides that in procuring goods and

services, in order to ensure the economical and efficient

administration and completion of contracts, federal contracting

agencies shall not contract with employers that permanently replace

lawfully striking employees. This final rule also makes a technical

amendment to Chapter II of the Department's regulations, changing the

heading of that chapter to reflect the earlier establishment of the

Office of the American Workplace and its component offices, including

the Office of Labor-Management Programs.

DATES: Effective June 26, 1995.

FOR FURTHER INFORMATION CONTACT: Charles L. Smith, Special Assistant to

the Deputy Secretary, Office of the American Workplace, U.S. Department

of Labor, 200 Constitution Avenue, NW., Room S-2203, Washington, DC

20210, (202) 219-6045. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Background

On March 8, 1995, President Clinton signed Executive Order 12954,

``Ensuring the Economical and Efficient Administration and Completion

of Federal Government Contracts.'' The Order became effective on March

8, 1995, the date it was signed, and was published in the Federal

Register on March 10, 1995, 60 FR 13023.

In the Order, the President sets forth the finding that economy and

efficiency in procurement are generally advanced by contracting with

employers that do not permanently replace lawfully striking employees.

That is, the permanent replacement of strikers can adversely affect a

contractor's ability to reliably provide high quality goods and

services, thereby adversely affecting the Federal Government's economy,

efficiency, and cost of operations. The Order then states that ``[i]t

is the policy of the executive branch in procuring goods and services

that, to ensure the economical and efficient administration and

completion of Federal Government contracts, contracting agencies shall

not contract with employers that permanently replace lawfully striking

employees.'' The Order further states that all discretion under the

Order is to be exercised in accordance with this policy.

The Order then establishes a flexible mechanism, based on case-by-

case determinations, designed to ensure economy and efficiency in

government procurement involving contractors that have permanently

replaced lawfully striking employees. Under the Order, the Secretary of

Labor is authorized to conduct investigations, either on the basis of a

complaint or on his or her own initiative, and to hold hearings as he

or she deems advisable in order to determine whether an organizational

unit of a federal contractor has permanently replaced lawfully striking

employees.

When the Secretary finds that an organizational unit of a federal

contractor has permanently replaced lawfully striking employees, he or

she may exercise either or both of two options. First, he or she may

find that it is appropriate to terminate existing contracts for

convenience; the head of the contracting agency may object to that

finding in writing and the termination for convenience shall not be

issued.

Second, the Secretary may find that it is appropriate to debar the

contractor from future contracts and renewal of existing contracts

until the labor dispute is resolved. However, a contracting agency may

enter into a contract with the employer if there is a compelling reason

to do so.

The Secretary has delegated his authority under the Order to the

Assistant Secretary for the American Workplace in Secretary's Order No.

2-95, which was signed on March 8, 1995 and published in the Federal

Register on March 13, 1995, 60 FR 13602.

On March 29, 1995, the Department published a notice of proposed

rulemaking, 60 FR 16354, setting forth proposed regulations

implementing the Order. The notice also invited comments from the

public, with the comment period ending April 28, 1995.

II. Summary and Discussion of the Comments

Fifty comments were submitted and considered. (Two additional

comments were not considered. One was postmarked after the next

business day after the expiration of the comment period, and the other

was dated after the expiration of the comment period.)

Thirty-four officials from the following employers and employer

associations submitted comments:

--Phoenix Cement,

--RC Cement Company, Inc. (4 officials),

--Hercules Cement Company (2 officials),

--Kaiser Cement Corporation,

--Heartland Cement Company (2 officials),

--National Association of Hosiery Manufacturers,

--Roanoke Cement Company,

--Signal Mountain Cement Company,

--National Electrical Contractors Association, Puget Sound Chapter,

--National Association of Plumbing-Heating-Cooling Contractors,

--Medusa Cement Company (2 officials),

--Holnam, Inc.,

--National Cement Company of Alabama, Inc.,

--Medusa Aggregates Company (2 officials),

--American Portland Cement Alliance,

--Citadel Cement Company,

--Associated Builders and Contractors, Inc.,

--The Associated General Contractors of America,

--National Mining Association,

--National Private Truck Council,

--Can Manufacturers Institute,

--American Health Care Association,

--Textile Rental Services Association of America,

--National Grocers Association,

--River Cement Company, Selma Plant,

--American Movers Conference,

--Painting and Decorating Contractors of America.

Four comments were received from the following associations:

--Labor Policy Association, Inc.,

--Alliance to Keep Americans Working,

--American Bar Association,

--Society for Human Resource Management.

Two comments were received from the following law firms:

--Wessels & Pautsch (on behalf of unnamed clients),

--Jones, Day, Reavis & Pogue (on behalf of the Chamber of Commerce of

the United States of America, the National Association of

Manufacturers, Bridgestone/Firestone, Inc., and Mosler Inc.).

Six comments were received from the following labor organizations:

--United Automobile, Aerospace & Agricultural Implement Workers of

America, [[Page 27857]]

--International Union of Operating Engineers,

--International Brotherhood of Teamsters,

--Air Line Pilots Association,

--American Association of University Professors,

--United Steelworkers of America.

Two comments were received from the following U.S. government

agencies:

--Department of Health and Human Services,

--General Services Administration.

Finally, two comments were received from individuals.

The Department has carefully reviewed and considered all statements

made in the comments in developing this final rule. The following is a

summary of the comments and the Department's response.

A. Comments on the Definition of ``Lawfully Striking Employee''

Several comments objected to the element of the definition in the

proposed regulations which provides that a strike is considered to be

lawful until it has been finally adjudicated to be unlawful. These

comments stated that final adjudication could take years, thereby

keeping the contractor in limbo unfairly. One comment also stated that

in the case of clearly unlawful strikes such as ``wildcat'' strikes or

strikes in violation of a ``no strike'' contract clause, there should

be discretion to deny strikers protection from replacement employees

prior to final adjudication.

The proposed regulations do provide discretion, on a case-by-case

basis, for the Assistant Secretary to determine that neither debarment

nor termination of a contract is appropriate based on the entire

record, and the nature of the strike as well as the status of related

litigation may certainly be issues for development in the record.

However, whether a strike is unlawful under federal, state or local law

is generally a complex matter which is most suitably resolved in

accordance with the standards and procedures set in those laws. OAW

should not as a rule substitute its judgement for that of the relevant

agencies and the courts. Accordingly, OAW believes that it is not

necessary or appropriate to change the definition of ``lawfully

striking employee'' or otherwise modify the regulations to specifically

deal with ``clearly unlawful strikes'' since the Assistant Secretary

already has sufficient discretion under the proposed regulations.

One comment objected to the reference to ``state or local law'' in

the proposed definition because the lawfulness of a strike by employees

covered by the National Labor Relations Act (NLRA) cannot be

adjudicated under state or local law. Another comment stated that state

law characterization of a dispute as a lockout for purposes of

unemployment compensation should not affect the determination of

whether a dispute is a strike or a lockout under federal law.

The inclusion of the phrase ``state or local law'' in the proposed

definition is intended to deal with the situation where an entity of

state or local government has a federal contract. State or local law

would be pertinent in such cases in determining the lawfulness of a

strike. However, state or local law would not affect the

characterization or lawfulness of a strike by employees covered by the

NLRA or the Railway Labor Act.

Finally, one comment expressed concern over the definition of

``employee,'' which excludes ``supervisors.'' This comment suggested

that only those persons with full managerial or supervisory authority

should be considered as supervisors excluded from the definition of

employee, as recommended in the report of the Commission on the Future

of Worker-Management Relations (also referred to as the Dunlop

Commission), issued in December 1994. The comment noted that the

Supreme Court has interpreted the similar definition of the term

``employee'' in the NLRA as excluding as supervisors persons who

incidentally direct other employees' work.

Despite the similarity of the definition of ``employee'' in the

proposed regulations to the definition in the NLRA (and perhaps other

statutes), and the guidance that may be provided by court or

administrative rulings issued pursuant to other statutes or executive

orders, the Assistant Secretary is not necessarily bound by those

rulings. The Assistant Secretary has the discretion and authority to

make decisions on debarment and contract termination on the basis of

the entire record in each case so as to effectuate the purposes of the

Order.

B. Comments on the Definition of ``Permanently Replaced''

One comment objected to the definition of permanently replaced

because it lacks any temporal element and therefore may include any

strikers without an unconditional right to reinstatement. That is, an

employer that contemplates permanently replacing strikers in the future

could be determined to have actually permanently replaced strikers

since their reinstatement may be conditional upon return to work at a

future time. The comment argues that an employer should not have to

declare that striking employees have an unconditional right to

reinstatement at any time in order to prevent the Assistant Secretary

from concluding that it has permanently replaced its striking

employees. The comment concludes by stating that an employer should not

be considered to have permanently replaced its lawfully striking

employees unless it refuses to reinstate them or declares or evidences

that its replacement workers may affect the reinstatement rights of the

striking employees.

We do not believe that these concerns are well-founded. Whether or

not lawfully striking employees have been permanently replaced at a

particular point in time is a factual question to be resolved on the

basis of the entire situation at that time, including (as the commenter

appears to note with approval) the employer's declarations and other

evidence from the employer's actions that its replacement workers may

affect the reinstatement rights of the striking employees.

Another comment suggested that the definition of ``permanently

replaced'' be revised to include situations where a contractor has

entered into a contract with another entity to provide the goods or

services required by the contract as well as the situation where a

contractor permanently replaces its striking employees with replacement

employees. However, OAW does not believe it is necessary or appropriate

to revise the language of the definition. Under the proposed

definition, the Assistant Secretary has the authority and discretion to

determine on a case-by-case basis whether the Order is applicable where

employees are permanently replaced by subcontracting as well as

replaced by hiring new employees.

C. Comments on the Definitions of ``Organizational Unit'' and

``Affiliate''

The largest number of specific comments concerned the definitions

of the terms ``organizational unit of a federal contractor'' and

``affiliate.'' Several comments simply asked questions concerning the

scope of the application of the Order and the regulations. For example,

these questions included whether the Order applies to a federal

contractor whose sister company permanently replaces lawfully striking

employees, whether it applies to a contractor as a whole or just the

organizational element that is doing the work on a federal contract,

and [[Page 27858]] whether it applies only to situations in which

workers on a federal contract are replaced.

Many comments suggested that the proposed regulations be revised so

as to limit the scope of the Order's application. For example, one

comment suggested generally that affiliates or sister companies of a

federal contractor should not be subject to the Order; another comment

suggested that, for nursing home chains, the Order's application should

be limited to the specific facility that permanently replaced lawfully

striking employees.

On the other hand, several comments suggested that the proposed

regulations be revised to expand the scope of the Order's application.

For example, one comment suggested that the Order should apply to

sister companies to which work in connection with a federal contract is

transferred when the primary contractor has permanently replaced

lawfully striking employees; another comment suggested that, for

institutions of higher learning, the Order should apply to the entire

university and not to just the Department which has the federal

contract.

The number and variety of the particular situations described in

the comments underscore the rationale for making determinations on the

Order's application on a case-by-case basis rather than attempting to

establish general rules to cover all situations. Further, in a

rulemaking action it is not appropriate to make determinations about

specific situations or particular industries described in the comments.

Nevertheless, the following general comments can be made on the

questions and situations raised in the comments regarding the

definitions of organizational unit of a federal contractor and

affiliate.

In the case where (1) Corporation XYZ is a prime contractor holding

a contract with a contracting agency, (2) Division A of Corporation XYZ

is responsible for performing the contract, and (3) Division B of

Corporation XYZ performs no work on the contract but could provide the

goods or services required to be provided under the contract, then

Corporation XYZ, Division A, and Division B (and any other affiliates

of Corporation XYZ that could provide the goods or services required by

the contract) form an ``organizational unit of a federal contractor''

under the regulations. If any part of the organizational unit

permanently replaces lawfully striking employees (including, for

example, employees of Division B who are not performing work on the

federal contract), then the entire organizational unit would be subject

to debarment if appropriate, and any contracts over $100,000 which any

part of the organizational unit has with a contracting agency would be

subject to a finding of whether termination for convenience is

appropriate.

With regard to questions and comments concerning subcontractors,

the Order is directed only to prime or first tier contractors. Thus,

Sec. 270.1(e) defines ``contractor'' as a ``prime contractor,'' which

is defined at Sec. 270.1(p) as any person holding a contract with a

contracting agency. One comment noted that the regulations implementing

Executive Order 11246, which deals with nondiscrimination in employment

by government contractors, explicitly covers subcontractors as well as

federal contractors. However, Executive Order 11246, unlike Executive

Order 12954, specifically includes subcontractors within its coverage.

There is no basis for revising the proposed regulations to include

subcontractors.

In addition to these general questions and comments, there were two

narrower issues raised in the comments. One comment suggested that the

second part of the proposed definition of ``organizational unit of a

federal contractor,'' relating to affiliates, be revised to include

only affiliates that actually provide or will provide the goods or

services required by the contract rather than affiliates that could

provide those goods or services. However, OAW believes that the

proposed definition is more consistent with the findings and purposes

of the Order.

Finally, one comment suggested that the definition of ``affiliate''

in the Federal Acquisition Regulation (FAR) be used. However, the

definition in the proposed regulations closely follows the FAR

definition in all material respects.

D. Comments on Time Frames

Several comments suggested the addition of time frames to the

procedures in the regulations. One of these comments suggested that the

regulations at Sec. 270.11, concerning investigations, be revised so

that an agency which has a contract with a contractor that may have

permanently replaced lawfully striking employees be formally notified

at the beginning of the investigation. (Currently the only reference to

notification of interested agencies is after the Assistant Secretary's

decision that debarment and/or termination of the contract is

appropriate.)

OAW believes that in most if not all cases, agencies will receive

early notification since one of the first steps in an investigation

will very likely be to obtain information from the contracting agency

about the existence and amount of the contract with the contractor that

may have permanently replaced lawfully striking employees. Therefore,

OAW does not believe that it is necessary or appropriate to put a

formal notification requirement in the regulations inasmuch as it is

possible in some cases that the matter will be dismissed solely on the

basis of preliminary information obtained about whether the contractor

has permanently replaced lawfully striking employees, thus making it

unnecessary to involve the agency.

One comment suggested that the contractor be notified that it is

under investigation within three business days, or some other definite

and limited time period, so that the contractor has time to adequately

respond to the complaint. OAW does not believe that this is necessary

or appropriate since the regulations at Secs. 270.12(d) and 270.13

provide sufficient time for a contractor to present its position. In

addition, the matter may be dismissed at an early stage based on

information obtained relating to the contract and/or whether lawfully

striking employees have been permanently replaced, thus obviating the

need to notify the contractor.

One comment suggested that contractors be provided thirty days to

respond to a notice of proposed debarment, as in the FAR at 48 CFR

9.406-3(c), rather than the fifteen days in proposed Sec. 270.12(d).

OAW believes that fifteen days is sufficient time for a contractor to

provide information that raises a genuine dispute over material facts,

given the limited issues involved in these proceedings. If the

contractor has raised a genuine dispute over material facts, it will

also be provided the opportunity to present its position at the hearing

provided in Sec. 270.13(a).

Another comment suggested the addition of time frames throughout

the process for conducting investigations, making findings, holding

hearings, etc. OAW does not believe that it is appropriate to set a

time frame for all enforcement proceedings because the nature of each

proceeding will vary based on the complexity and scope of the issues.

Finally, two comments noted that the regulations do not indicate

when a debarment decision becomes effective. The final regulations have

been revised at Sec. 270.15(b) to state that debarment is effective

immediately upon issuance of the debarment decision. However, unlike

the FAR at 48 CFR 9.404 and 9.405, debarment is not effective at the

[[Page 27859]] time of the Assistant Secretary's decision to propose

debarment (Sec. 270.12(d)) since the Order authorizes debarment only

after a final decision. (The Assistant Secretary will only transmit the

final decision to debar to the General Services Administration for

inclusion on the consolidated list of debarred contractors, currently

titled the ``List of Parties Excluded from Procurement Programs,'' not

information pertaining to the earlier decision to propose debarment.)

In order to avoid confusion on this point, the wording of

Sec. 270.12(d) has been revised so as to eliminate the use of the term

``notice of proposed debarment.''

E. Resolution of Labor Dispute

One comment suggested certain revisions to Sec. 270.16 concerning

the Assistant Secretary's determination that a labor dispute has been

resolved. The comment argued that there should be two touchstones for

such a determination: (1) whether the parties have resolved their

differences and (2) whether the striking employees have returned to

work. The commenter proposed that Sec. 270.16 provide that ``an

agreement of the parties in which the strikers which have been

permanently replaced have returned to work'' be the standard for

determining that a labor dispute has been resolved. OAW believes that

the current flexible standard in Sec. 270.16, which provides that the

Assistant Secretary will consider various factors in determining

whether a labor dispute has been resolved, is preferable to a rigid

definition.

F. Other Comments

1. Several comments suggested that the regulations be revised to

set out standards and criteria for the exercise of discretion in making

decisions. Two comments suggested that objective contract performance

criteria should be established to govern decisions on whether debarment

and/or termination of a contract for convenience is appropriate.

Another comment suggested that Sec. 270.15(a) be revised to specify

when the scope of a debarment would go beyond the organizational unit

which permanently replaced lawfully striking employees. However, in

view of the fact that the Order establishes a flexible enforcement

mechanism based on case-by-case determinations, OAW has decided that it

would not be appropriate to circumvent that enforcement mechanism by

unnecessarily limiting the Assistant Secretary's discretion in the

regulations.

2. Three comments suggested that this rulemaking procedure be

delayed pending the outcome of current litigation challenging the

Executive Order, and that the comment period be reopened at the

conclusion of the litigation. It is clearly not possible to delay

rulemaking; the Order is effective as of the date it was signed and the

Secretary has the obligation to promulgate a final rule implementing

the Order.

3. One comment noted that under proposed regulations governing

nonprocurement debarment and suspension and FAR (59 FR 65607, December

20, 1994), issued pursuant to Sec. 2455 of the Federal Streamlining Act

of 1994 and Executive Order 12689, reciprocal effect is to be given to

debarment and suspension under FAR (for procurement programs) and under

Executive Order 12549 and the implementing regulations (for

nonprocurement activity such as grants). Thus, under these proposed

regulations, a federal contractor which is debarred under Executive

Order 12954 for permanently replacing lawfully striking employees would

also be ineligible for nonprocurement activity such as grants. Because

of this broad impact, the comment suggested that state and local

governments be excluded from the definition of ``person'' so that they

could not be considered to be federal contractors.

OAW believes that any impact on state and local government

nonprocurement activity, though possible, will at most be rare. First,

under most state law, strikes by employees of state entities are

unlawful so that Executive Order 12954 will not be applicable. Second,

the Assistant Secretary has the authority and discretion to find that

debarment in a particular case is not appropriate. Finally, a finding

by the Assistant Secretary that termination of the specific contract

held by a state entity is appropriate would not have any impact on

nonprocurement activity.

4. One comment asked whether it is correct in concluding that an

entity is not a contractor subject to the Order solely because it

receives Medicare and/or Medicaid reimbursements. This position is

correct. The relationship between the federal government and a health

care provider receiving payments under the Medicare program or

receiving payments from states under the Medicaid program is a grantor-

grantee relationship, not a contracting agency-contractor relationship.

(Medicaid, unlike Medicare, does not involve a relationship between an

executive agency of the U.S. government and a participating health care

provider; rather, Medicaid is actually a grant program to the states.)

Therefore, a contractor is not covered by the Order by virtue of the

receipt of Medicare and/or Medicaid reimbursements.

However, under the proposed regulations referred to in the

preceding comment regarding nonprocurement debarment and suspension and

FAR, debarment under Executive Order 12954 for permanently replacing

lawfully striking employees would also render a contractor ineligible

for nonprocurement activity, including grants. Of course, as previously

noted, the regulations give the Assistant Secretary the authority and

discretion to make determinations on a case-by-case basis on whether

debarment is appropriate, or whether termination of the specific

contract is appropriate.

5. One comment suggested that the regulations should require that

the agency head take certain steps before deciding not to adopt the

Assistant Secretary's decisions that debarment and/or contract

termination is appropriate, including issuing a notice and allowing the

complainant to present his or her position. However, the Order does not

provide the authority to require such a procedure.

6. Two comments stated that Secs. 270.12 (b) and (c) of the

regulations are confusing because under Sec. 270.12(c) a contract can

be terminated for convenience only if the contractor is found to have

permanently replaced lawfully striking employees after March 8, 1995

(the effective date of the Executive Order) while Sec. 270.12(b)

specifies that a contractor can be debarred if the contractor is found

to have permanently replaced lawfully striking employees and does not

specify a time frame. However, these provisions of the proposed

regulations reflect the effective dates for debarment and contract

termination in the Order. That is, a contractor may be debarred if the

contractor is found to have permanently replaced lawfully striking

employees prior to March 8 but, pursuant to section 12(a) of the Order,

a contract can only be terminated for convenience if the contractor is

found to have permanently replaced lawfully striking employees after

March 8.

7. One comment suggested revising proposed Sec. 270.12(d) to

include the effects of debarment in the notice to contractors advising

of the Assistant Secretary's decision to propose debarment and/or

termination. This change has been made.

8. One comment suggested revising proposed Sec. 270.16(b) to state

that the Assistant Secretary will specifically notify the General

Services Administration of any decision to [[Page 27860]] terminate

debarment because of the resolution of the labor dispute and publish

the decision in the Federal Register. This suggestion has been adopted

in this final rule.

9. Finally, many of the comments questioned the legality and the

rationale of the Executive Order. These issues are clearly not within

the purview of this rulemaking action.

In addition to promulgating regulations implementing Executive

Order 12954, this final rule also changes the heading of Chapter II of

Title 29 of the Code of Federal Regulations from ``Bureau of Labor-

Management Relations and Cooperative Programs, Department of Labor'' to

``Office of Labor-Management Programs, Department of Labor.'' The

Office of Labor-Management Programs, a unit within the Office of the

American Workplace, was established by Secretary's Order 2-93 (58 FR

42578) and, among other things, performs functions previously assigned

to the Bureau of Labor-Management Relations and Cooperative Programs.

III. Administrative Notices

A. Executive Order 12866

The Department of Labor has determined that this rule is a

significant regulatory action as defined in section 3(f) of Executive

Order 12866. The Department is issuing this rule in conformance with

that Executive Order. The Department has determined that the potential

benefits of this regulatory action outweigh the potential costs, and

that the rule promotes the President's priorities. This rule does not

meet the criteria of section 3(f)(1) of Executive Order 12866 and,

therefore, the information in section 6(a)(3)(C) of that Executive

Order is not required. This rule has been reviewed by the Office of

Management and Budget.

B. Regulatory Flexibility Act

The Agency Head has certified that this rule is not expected to

have a significant impact on a substantial number of small entities as

defined in the Regulatory Flexibility Act. The Order and the

regulations apply only to federal contracts in excess of $100,000.

C. Paperwork Reduction Act

This rule contains no information collection requirements for

purposes of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et

seq.).

List of Subjects in 29 CFR Part 270

Administrative practice and procedure; Government contracts;

Federal contractors and subcontractors.

Accordingly, Chapter II of Title 29 is amended as set forth below.

Signed at Washington, D.C., this 23rd day of May, 1995.

Charles L. Smith,

Special Assistant to the Deputy Secretary.

CHAPTER II--OFFICE OF LABOR-MANAGEMENT PROGRAMS, DEPARTMENT OF LABOR

1. The heading of Chapter II, now reading ``Bureau of Labor-

Management Relations and Cooperative Programs, Department of Labor,''

is revised to read ``Office of Labor-Management Programs, Department of

Labor.''

2. A new Part 270 is added to 29 CFR Chapter II to read as follows:

PART 270--OBLIGATIONS OF FEDERAL CONTRACTING AGENCIES: PERMANENT

REPLACEMENT OF LAWFULLY STRIKING EMPLOYEES

Subpart A--Preliminary Matters

Sec.

270.1 Definitions.

270.2 Statement of policy.

Subpart B--Enforcement

270.10 Complaints.

270.11 Investigations.

270.12 Findings by the Assistant Secretary.

270.13 Hearings.

270.14 Termination of contract for convenience.

270.15 Debarment.

270.16 Determination of resolution of labor dispute.

Subpart C--Ancillary Matters

270.20 Cooperation with the Assistant Secretary.

270.21 Rulings and interpretations.

270.22 Delegation of authority by the Secretary.

270.23 General.

Authority: Executive Order No. 12954, 60 FR 13023; Secretary's

Order No. 2-93, 58 FR 42578; Secretary's Order No. 2-95, 60 FR

13602.

Subpart A--Preliminary Matters

Sec. 270.1 Definitions.

(a) Affiliates means business concerns, organizations, or

individuals among which, directly or indirectly, either one controls or

has the power to control the other, or a third party controls or has

the power to control both. Indicia of control include, but are not

limited to, interlocking management or ownership, identity of interest

among family members, shared facilities and equipment, common use of

employees, or a business entity organized following the debarment,

suspension, or proposed debarment of a contractor which has the same or

similar management, ownership, or principal employees as the contractor

that was debarred, suspended, or proposed for debarment.

(b) Assistant Secretary means the Assistant Secretary of Labor for

the American Workplace.

(c) Contract means a mutually binding agreement between the

Government as a buyer, represented by a contracting agency, and a

seller, where the seller agrees to furnish supplies or services

(including construction) and the Government agrees to pay for them. It

includes job orders or task orders issued under basic ordering

agreements; letter contracts; orders, such as purchase orders under

which the contract becomes effective by written acceptance or

performance; and bilateral modifications to a contract, which increase

the supplies or services to be delivered under the contract. For

purposes of this part a contract is limited to agreements in which the

Government agrees to pay an amount in excess of the Simplified

Acquisition Threshold of $100,000 specified in section 4(11) of the

Office of Federal Procurement Policy Act, 41 U.S.C. 403(11). The term

``contract'' does not include agreements in which the parties stand in

the relationship of employer and employee.

(d) Contracting agency means any executive department or

independent establishment in the executive branch of the Government,

including any wholly owned Government corporation.

(e) Contractor means a prime contractor.

(f) Department means the U.S. Department of Labor.

(g) Deputy Assistant Secretary means the Deputy Assistant Secretary

for Labor-Management Programs, Office of the American Workplace, U.S.

Department of Labor.

(h) Employee includes any employee of an employer, and includes any

individual whose work has ceased as a consequence of, or in connection

with, any current labor dispute or because of any unfair labor

practice, but does not include any individual having the status of an

independent contractor or any individual employed as a supervisor.

(i) Government means the government of the United States of

America.

(j) Labor dispute includes any controversy concerning terms,

tenure, or conditions of employment, or concerning the association or

representation of persons in negotiating, fixing, maintaining,

changing, or seeking to arrange terms or conditions of employment,

regardless of whether the disputants stand in the proximate relation of

employer and employee.

(k) Lawfully striking employee means an employee who is engaged in

a strike [[Page 27861]] that has not been finally adjudicated to be

unlawful under any applicable federal, state, or local law.

(l) Order means Executive Order 12954, dated March 8, 1995 (60 FR

13023, March 10, 1995).

(m) Organizational unit of a federal contractor includes:

(1) A division or other organizational element of a person that is

responsible as the prime contractor for performing a contract, and

(2) Any other affiliate of the person that could provide the goods

or services required to be provided under the contract.

(n) Permanently replaced, when used in connection with a lawfully

striking employee, means that during a lawful strike the employer has

placed an individual in the lawfully striking employee's position, and

the striking employee does not have an unconditional right to

reinstatement.

(o) Person means any natural person, corporation, partnership or

joint venture, unincorporated association, state or local government,

and any agency, instrumentality, or subdivision of such a government.

(p) Prime contractor means any person holding a contract with a

contracting agency.

(q) Secretary means the Secretary of Labor, U.S. Department of

Labor, or his or her designee.

Sec. 270.2 Statement of Policy.

(a) It is the policy of the Executive Branch of the Federal

Government that in procuring goods and services, in order to ensure the

economical and efficient administration and completion of contracts,

contracting agencies shall not contract with employers that permanently

replace lawfully striking employees.

(b) All discretion under the Order and this part shall be exercised

consistent with this policy.

(c) The Order and this part apply only to contracts in excess of

the Simplified Acquisition Threshold of $100,000 established in section

4(11) of the Office of Federal Procurement Policy Act, 41 U.S.C.

403(11).

Subpart B--Enforcement

Sec. 270.10 Complaints.

(a) Complaints may be filed by an employee of an organizational

unit of a federal contractor, or his or her representative, alleging

that the organizational unit has permanently replaced lawfully striking

employees. All complaints should be filed with the Deputy Assistant

Secretary for Labor-Management Programs, Office of the American

Workplace, U.S. Department of Labor, 200 Constitution Avenue, NW., Room

S-2203, Washington, DC 20210.

(b) The complaint must be in writing and should include the name,

address, and telephone number of the complainant, the name and address

of the organizational unit of the federal contractor alleged to have

permanently replaced lawfully striking employees, an identification of

the lawfully striking employees who were allegedly permanently

replaced, and any other pertinent information which will assist in the

investigation and resolution of the complaint.

Sec. 270.11 Investigations.

The Deputy Assistant Secretary may cause an investigation to be

conducted of an organizational unit of a federal contractor, regarding

the permanent replacement of lawfully striking employees, on the basis

of complaints filed with the Department, information submitted by other

persons, or other available information. The Deputy Assistant Secretary

shall notify the organizational unit of a federal contractor of the

initiation of an investigation and the potential consequences under the

Order. The Deputy Assistant Secretary may also cause a fact finding

hearing to be conducted, either instead of or in addition to an

investigation. The Deputy Assistant Secretary shall transmit the

record, including a proposed finding of fact and a recommendation as to

debarment and/or termination of a contract or contracts, to the

Assistant Secretary.

Sec. 270.12 Findings by the Assistant Secretary.

(a) Upon receipt of the record, the Assistant Secretary shall make

a finding as to whether the organizational unit of the federal

contractor has permanently replaced lawfully striking employees.

(b) If the Assistant Secretary finds that the organizational unit

of the federal contractor has permanently replaced lawfully striking

employees, he or she shall determine whether it is appropriate to

propose debarment.

(c) If the Assistant Secretary finds that the organizational unit

of the federal contractor has permanently replaced lawfully striking

employees after March 8, 1995, the effective date of the Order, he or

she shall also determine whether it is appropriate to propose

termination for convenience of the contract or contracts of the

organizational unit.

(d) If the Assistant Secretary proposes debarment and/or

termination, he or she shall notify the organizational unit of the

proposed debarment and/or termination by certified mail, return receipt

requested, advising the organizational unit of the effects of debarment

and its right, within 15 days after receipt of the notice, to submit,

in person, in writing, or through a representative, information and

argument in opposition to debarment and/or termination.

Sec. 270.13 Hearings.

(a) If the Assistant Secretary finds that the submission by the

organizational unit of a federal contractor in opposition to the

proposed debarment and/or termination raises a genuine dispute over

facts material to the proposed debarment and/or termination, the

Assistant Secretary shall afford the organizational unit the

opportunity to appear at an informal hearing. The Assistant Secretary

or his or her designee shall preside over the proceeding.

(b) The Assistant Secretary shall make a decision on the proposed

debarment and/or termination of a contract or contract based on the

record.

Sec. 270.14 Termination of contract for convenience.

(a) Upon finding that termination of a contract or contracts for

convenience is appropriate, the Assistant Secretary shall notify the

organizational unit of a federal contractor by certified mail, return

receipt requested, and shall transmit that finding to the head of any

department or agency that contracts with the organizational unit.

(b) The head of the department or agency shall notify the Assistant

Secretary in writing of those contracts that have been terminated for

convenience pursuant to the Assistant Secretary's finding.

(c) If the head of the department or agency objects to the

termination for convenience of a contract, he or she shall notify the

Assistant Secretary in writing, promptly after receipt of the Assistant

Secretary's finding, of the reasons for not terminating the contract

and the termination for convenience shall not be issued.

Sec. 270.15 Debarment.

(a) The scope of any debarment normally will be limited to the

organizational unit of a federal contractor that the Assistant

Secretary has found to have permanently replaced lawfully striking

employees.

(b) Upon finding that debarment is appropriate, the Assistant

Secretary shall promptly notify the organizational unit of the federal

contractor by certified mail, return receipt requested. The

[[Page 27862]] notice shall advise the organizational unit of the

federal contractor:

(1) That debarment is effective immediately;

(2) That the debarment will not extend beyond the date when the

labor dispute precipitating the permanent replacement of lawfully

striking employees has been resolved, as determined by the Assistant

Secretary in accordance with Sec. 270.16;

(3) That under the debarment, contracting agencies throughout the

executive branch of the Government shall not contract or consent to

subcontracts with the organizational unit of the federal contractor nor

renew or otherwise extend the duration of current contracts, unless the

head of a contracting agency or his or her designee determines that

there is a compelling reason for such action.

(c) The Assistant Secretary shall notify the Administrator of the

General Services Administration of the debarment and the Administrator

shall include the contractor on the list of debarred contractors. The

Assistant Secretary shall publish or cause to be published in the

Federal Register, the names of contractors that have, in the judgment

of the Assistant Secretary, permanently replaced lawfully striking

employees and have been the subject of debarment. Departments and

agencies shall not renew or otherwise extend the duration of current

contracts or solicit offers from, award contracts to, or consent to

subcontracts with these contractors unless the head of the agency or

his or her designee determines, in writing, that there is compelling

reason for such action.

Sec. 270.16 Determination of resolution of labor dispute.

(a) The Assistant Secretary may cause an investigation to be

conducted, on his or her own initiative or upon request by any person,

to determine whether a labor dispute that resulted in debarment has

been resolved. Among the factors or conditions that the Assistant

Secretary may consider are:

(1) Whether the parties to the labor dispute have either reached a

formal settlement or agreed on a procedure for resolving their

differences.

(2) Whether the parties have agreed informally to end the labor

dispute without the signing of a written agreement.

(3) Whether striking employees have returned to work.

(4) Any other relevant factors tending to lead to the conclusion

that the labor dispute has ended.

(b) If the Assistant Secretary determines that the labor dispute

has been resolved, he or she shall terminate the debarment and notify

the General Services Administration of this action. Notification shall

also be given to the public, federal agencies, federal contractors, and

other interested persons, through publication in the Federal Register,

of this action.

Subpart C--Ancillary Matters

Sec. 270.20 Cooperation with the Assistant Secretary.

Consistent with section 7 of the Order, each contracting agency

shall cooperate with the Assistant Secretary and provide such

information and assistance as the Assistant Secretary may require in

the performance of the Assistant Secretary's functions under the Order

and the regulations in this part.

Sec. 270.21 Rulings and interpretations.

Rulings under or interpretations of the Order or the regulations

contained in this part shall be made by the Assistant Secretary or his

or her designee.

Sec. 270.22 Delegation of authority by the Secretary.

Consistent with section 8 of the Order, the Secretary may delegate

any function or duty of the Secretary under this Order to any officer

in the Department or to any other officer in the executive branch of

the Government, with the consent of the head of the department or

agency in which that officer serves.

Sec. 270.23 General.

(a) The regulations in this part implement Executive Order 12954

only and do not modify or affect the interpretation of any other

Department of Labor regulations or policy.

(b) Consistent with section 10 of the Order, nothing contained in

the Order or this part, or promulgated pursuant to the Order or this

part, is intended to confer any substantive or procedural right,

benefit, or privilege enforceable at law by a party against the United

States, its agencies or instrumentalities, its officers, or its

employees.

[FR Doc. 95-12960 Filed 5-24-95; 8:45 am]

BILLING CODE 4510-86-P