Executive Order 12933 of October 20, 1994; ``Nondisplacement of Qualified Workers Under Certain Contracts''

DEPARTMENT OF LABOR

Employment Standards Administration; Wage and Hour Division

29 CFR Part 9

RIN 1215-AA95

Executive Order 12933 of October 20, 1994; ``Nondisplacement of

Qualified Workers Under Certain Contracts''

AGENCY: Wage and Hour Division, Employment Standards Administration,

Labor.

ACTION: Notice of proposed rulemaking, request for comments.

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SUMMARY: This document proposes regulations to implement Executive

Order 12933, ``Nondisplacement of Qualified Workers Under Certain

Contracts,'' signed by the President on October 20, 1994 (59 FR 53560,

October 24, 1994). The Executive Order requires that workers on a

building service contract for a public building be given the right of

first refusal for employment with the successor contractor, if they

would otherwise lose their jobs as a result of the termination of the

contract. The proposed rules contain a contract clause that must be

incorporated into each covered contract, implementing regulations, and

enforcement procedures.

DATES: Comments on the proposed rule are due on or before September 1,

1995.

ADDRESSES: Submit written comments to Maria Echaveste, Administrator,

Wage and Hour Division, Employment Standards Administration U.S.

Department of Labor, Room S-3502, 200 Constitution Avenue, NW.,

Washington, DC 20210. Commenters who wish to receive notification of

receipt of comments are requested to include a self-addressed, stamped

post card or to submit them by certified mail, return receipt

requested. As a convenience to commenters, comments may be transmitted

by facsimile (``FAX'') machine to (202) 219-5122. This is not a toll-

free number. If transmitted by FAX and a hard copy is also submitted by

mail, please indicate on the hard copy that it is a duplicate copy of

the FAX transmission.

[[Page 36757]]

FOR FURTHER INFORMATION CONTACT:

William W. Gross, Office of Program Operations, Wage and Hour Division,

Employment Standards Administration, U.S. Department of Labor, Room S-

3502, 200 Constitution Avenue, NW., Washington, DC 20210; telephone

(202) 219-8353. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

Reporting and recordkeeping requirements contained in the

regulations (Sec. 9.9(b) and Sec. 9.11) have been submitted to the

Office of Management and Budget under the provisions of the Paperwork

Reduction Act of 1990 (Pub. L. 96-511) for review.

The public reporting burden for information collection requirements

contained in these regulations is estimated to average as follows:

15 minutes per response, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

The reporting requirements of Sec. 9.11 are already required by the

Service Contract Act regulations, 29 CFR 4.6(1)(2), OMB Number 1215-

0150, and therefore impose no new burden. The only new requirement is

the recordkeeping requirement in Sec. 9.9.

Send comments regarding this burden to the Office of Information

Management, U.S. Department of Labor, Room N-1301, 200 Constitution

Avenue, NW., Washington, DC 20210; and the Office of Information and

Regulatory Affairs, Office of Management and Budget, Washington, DC

20503.

II. Background

Executive Order 12933 was signed October 20, 1994, by President

Clinton, and published in the Federal Register on October 24, 1994 (59

FR 53560). The purpose and need for the Executive Order are clearly

stated in the Executive Order itself:

When a service contract for the maintenance of a public building

expires and a follow-on contract is awarded for the same service,

the successor contractor typically hires the majority of the

predecessor's employees. On occasion, however, a follow-on

contractor will hire a new work force, and the predecessor's

employees are displaced.

As a buyer and participant in the marketplace, the Government is

concerned about hardships to individuals that may result from the

operation of our procurement system.

Furthermore, the Government's procurement interests in economy

and efficiency benefit from the fact that a carryover work force

will minimize disruption to the delivery of services during any

period of transition and provide the Government the benefits of an

experienced and trained work force rather than one that may not be

familiar with the Government facility.

In order to address these concerns, Section 1 of the Executive Order

makes the following statement of policy:

It is the policy of the Federal Government that solicitations

and building service contracts for public buildings shall include a

clause that requires the contractor under a contract that succeeds a

contract for performance of similar services at the same public

building to offer those employees (other than managerial or

supervisory employees) under the predecessor contract whose

employment will be terminated as a result of the award of the

successor contract, a right of first refusal to employment under the

contract in positions for which they are qualified. There shall be

no employment openings under the contract until such right of first

refusal has been provided. Nothing in this order shall be construed

to permit a contractor to fail to comply with any provision of any

other Executive order or laws of the United States.

The Executive Order requires that the Secretary of Labor issue

implementing regulations by April 20, 1995, and that the Federal

Acquisition Regulatory Council issue regulations by that date which

require inclusion of the contract clause in Federal solicitations and

contracts. The Executive Order further provides that the order does not

confer any right or benefit enforceable against the United States, but

that it is not intended to preclude judicial review of final decisions

by the Secretary of Labor in accordance with the Administrative

Procedure Act, 5 U.S.C. 701 et seq.

Key issues addressed in the regulations on which public comment is

particularly solicited are summarized and explained in this preamble.

As required by the Executive Order, the Department of Labor (DOL) has

consulted with the Federal Acquisition Regulatory (FAR) Council with

respect to the implementation of the Executive Order.

III. Summary and Discussion

Scope of Coverage

General Coverage (9.2)

The Executive Order applies only to ``building service contracts''

for ``public buildings'' where the contract is entered into by the

United States. These terms are defined elsewhere in the regulations.

The Order applies only to contracts of an amount equal to or greater

than the simplified acquisition threshold, set by the Office of Federal

Procurement Policy Act (41 U.S.C. 403(11)) at $100,000. Because the

language of the Executive Order does not specifically reference

subcontracts, the regulations contain no ``flow-down'' requirements for

subcontractors.

Where a contract is for both recurring building services and some

other purpose, such as construction, the building services are subject

to the Order, but only with respect to the building services portion of

the contract. However, where the building services are only incidental,

such as incidental maintenance performed under a contract to operate a

day-care center, the Order would not apply to such services. The

standards used for determining when construction work performed under a

mixed contract is covered by the Davis-Bacon Act are utilized in

determining when building services are more than incidental. See 29 CFR

4.116(c)(2); 48 CFR 22.402(b)(ii).

It is also important to point out that the coverage principles of

the Executive Order are different than those of the McNamara-O'Hara

Service Contract Act (SCA), 41 U.S.C. 351 et seq., although there is

significant overlap between the two programs.

Building Services Contract (9.3)

Section 2(b) of the Executive Order defines the term ``building

services contract'' to include contracts ``for recurring services

related to the maintenance of a public building, e.g., janitorial,

window washing, food service. * * *'' The regulations define

``recurring services'' to include services performed regularly or

periodically throughout a contract (and its follow-on contract) at the

same building. Contracts which are for non-recurring maintenance

services, such as servicing of fixed equipment which is performed only

one time each year, and contracts for services which are not

maintenance services, such as operation of a day care center, are not

subject to the Order.

Public Building (9.4)

Section 2 of the Executive Order defines the term ``public

building.'' The definition is patterned after the definition of a

public building in Section 13 of the Public Buildings Act of 1959, 40

U.S.C. 612, and the definition in the Executive Order is largely

repeated in section 9.4 of the regulations. Generally, buildings

suitable for office or storage space and administered by the General

Services Administration (GSA) or by another Federal agency under a

delegation from GSA are considered to be ``public buildings.''

Many buildings are specifically excluded from the term ``public

building,'' including buildings on

[[Page 36758]]

properties of the United States Postal Service, on military

installations, and on Department of Veterans Affairs installations used

for hospital or domiciliary purposes. In addition, buildings ``on the

public domain'' are not ``public buildings''. ``Public domain'' is

commonly considered to be public lands in the West. Accordingly,

``public domain'' in these regulations is defined to include lands

administered by the Department of the Interior, Bureau of Land

Management, and the Department of Agriculture, U.S. Forest Service.

Buildings on other Federal property are not considered to be ``on the

public domain'' for purposes of the Executive Order.

A unique situation arises with respect to the Pentagon. Originally,

the Pentagon was considered a ``public building'' within the scope of

the Public Buildings Act. Subsequently, Section 2804 of the National

Defense Authorization for FY 1991 (10 U.S.C. 2674) removed the Pentagon

from GSA's authority under the Public Buildings Act; however, that

legislation did not change the Public Buildings Act's definition of a

public building. This, while not specifically addressed in the

regulations, DOL considers the Pentagon to be a ``public building''

within the meaning of the Executive Order. Furthermore, this

interpretation is consistent with the purpose of the Executive Order,

to cover Government office buildings. Commenters are invited to address

this issue in their comments.

Leased buildings are not public buildings covered by the Executive

Order unless they are being leased pursuant to lease-purchase

contracts. It should be noted, however, that building services

performed on a building being leased pursuant to a lease-purchase

contract would be covered only if the services are being performed

under a contract directly with the Government; building services

performed by the lessor would be considered incidental to the lease

(see Sec. 9.2) and would not be covered.

Coverage Limitations (9.5)

The Order does not apply to contracts under the simplified

acquisition threshold, which is currently $100,000. In addition,

contracts for commodities or services by the blind or severely

handicapped awarded pursuant to the Javits-Wagner-O'Day Act, 41 U.S.C.

46-48a; contracts for certain services provided by sheltered workshops

for the severely handicapped, awarded pursuant to the Edgar Amendment

of the Treasury, Postal Services and General Government Appropriations

Act, Public Law 103-329; and vending service contracts operated by the

blind, awarded pursuant to the Randolph-Sheppard Act, 20 U.S.C. 107,

are excluded from coverage pursuant to section 3(b)-(d) of the

Executive Order.

The Executive Order also excludes ``services where the contractor's

employees perform work at the public building and at other locations

under contracts not subject to this Order (e.g., pest control or trash

removal where the contractor's employees visit the site periodically

and where the employees under the contract respond to service calls),''

provided that employees are not deployed in a manner designed to avoid

the purposes of the Order. Thus, the manner in which the services will

be performed by the successor contractor as well as the nature of the

services must both be considered in determining whether a building

services contract is subject to the Executive Order.

Contract Clause (9.6)

Section 4 of the Executive Order specifies the contract clause that

must be included in solicitations and contracts for building services

that succeed contracts for the performance of similar work at the same

public building. The regulations set forth additional provisions which

are necessary to implementation of the Order. In accordance with

Section 5 of the Order, a provision of the clause makes it clear that

disputes under the Order are to be resolved in accordance with DOL

procedures rather than pursuant to the general disputes clause of the

Contract Disputes Act, 41 U.S.C. 601 et seq. Provisions also provide

for withholding of contract funds in the event the contractor is

determined to have violated the provisions of the Executive Order and

is found liable for lost wages or other monetary relief; and to require

contractors to cooperate in investigations by DOL or the contracting

agency.

Contractor Obligations

Employee Coverage/Staffing (9.7/9.8)

With certain exclusions, all employees performing recurring

building services on the predecessor contract whose employment would

otherwise be terminated as the result of the award of the contract to a

new contractor, must in good faith be offered the right of first

refusal to employment under the successor contract before any other

employees may be hired. Because the successor contractor will not know

whether an individual employee of the predecessor contractor will

continue to be employed or will be terminated because of the change in

contracts, the regulations state a presumption that all employees will

be terminated when the predecessor's contract expires. This presumption

can be defeated by specific evidence to the contrary, which the

successor contractor could obtain through inquiries of, or contact

with, the contracting officer, the employees, or the predecessor

contractor after award of the contract to the successor.

The Executive Order does not require that a successor contractor

perform a contract with the same number of employees as the

predecessor. For example, if the predecessor employed twenty (20)

custodial workers, the successor may determine it can perform the

contract work with only eighteen (18) custodial workers. Thus if the

contractor continues to employ five (5) of its existing workers, the

offer of the right of first refusal would initially be limited to

thirteen (13) employees of the predecessor. The successor contractor

has complete discretion, within the constraints of these regulations,

to determine which employees will first be offered a right of first

refusal. If any of the predecessor's employees to whom the right of

first refusal was offered decline that offer, then the successor must

offer the right of first refusal to any remaining employees of the

predecessor who were not originally offered the right of first refusal.

The question arises, however, whether the successor contractor's

obligations continue throughout the performance of the contract.

Although the language of the Executive Order could arguably suggest

such a result, it would be impractical and unduly burdensome. Therefore

the regulations provide that once the contract is fully staffed and

contract performance has commenced, the obligation to offer the right

of first refusal ceases, and any subsequent vacant positions may be

filled in accordance with the successor's normal business practices.

The only exception to this provision would be if the evidence shows

that the successor contractor increased the initial staffing level

within the first three months after commencement of the contract. Three

months was selected as a reasonable period for continuing to impose an

obligation to offer a right of first refusal in order to ensure that

necessary staffing adjustments during the start-up period will be

covered, and at the same time to discourage attempts to manipulate the

work force. During this three month period the right of first refusal

must be offered to any eligible employees until the final staffing

level is reached.

Services at buildings not covered by the Order. The contractor is

not

[[Page 36759]]

obligated to offer a right of first refusal to employment in any

position which will perform services both at buildings covered by the

Executive Order and buildings not covered by the Order.

Managerial and supervisory employees. The successor contractor is

not required to offer a right of first refusal to employees who

performed as managers or supervisors under the predecessor contract or

to employees who are not service employees within the meaning of the

SCA. Thus the regulations provide that those employees who are employed

as bona fide executive, administrative, or professional employees

within the meaning of the regulations issued under the Fair Labor

Standards Act (FLSA) at 29 CFR Part 541 (and therefore are exempt from

the provisions of the FLSA and SCA), need not be offered a right of

first refusal.

The successor contractor has complete discretion to decide who will

be employed as managers and supervisors on the contract. However, if a

service employee of the predecessor is qualified for a management/

supervisory position, an offer of employment in that exempt

classification would satisfy the successor's obligation to offer the

employee a right of first refusal.

Existing employees of the successor contractor. The Executive Order

provides that employees who worked for the successor contractor for at

least three months immediately preceding the commencement of the

successor contract and who would otherwise face lay-off or discharge,

may be employed on the successor contract without regard to the

successor's obligation to offer the right of first refusal. The key

elements are that the employee (1) must have been employed by the

successor for at least three months prior to the commencement of the

successor contract and (2) would otherwise face lay-off or discharge.

Employees who had been laid-off by the successor prior to the

commencement of the successor contract or existing employees of the

successor who are not facing lay-off or termination because, for

example, they would continue to be employed on another contract, may

not be employed on the successor contract until all eligible employees

of the predecessor have been offered the right of first refusal.

Unsuitable employees. The successor contractor is not required to

offer the right of first refusal to any employee who the successor

reasonably believes, based on the particular employee's past

performance, has failed to perform suitably on the job. The regulation

implementing this provision does not define what constitutes a

``reasonable belief'' or ``suitable performance''. However, the

successor contractor must base the conclusion that an employee failed

to perform suitably on information from a credible source relative to a

particular employee's past performance on the job, such as the

predecessor contractor, the employee's supervisor or foreman, or the

contracting agency. Information that does not directly relate to an

employee's performance on the job may not be used as a basis for

failing to offer a right of first refusal.

Offer of Employment/Recordkeeping (9.9, 9.10)

The Executive Order requires the successor to make an express offer

of employment to each employee and state the time within which the

employee must accept such offer, which must be at least ten (10) days.

The regulation at section 9.9 states that the offer may be made either

in writing or orally at a meeting of the predecessor contractor's

employees, and requires that the contractor keeps either a copy of the

offer or minimum documentation regarding the meeting at which the offer

was made, which may consist of notations on the attendance roster and a

copy of any written notice distributed.

The regulations require the predecessor contractor to give the

contracting officer a list of current employees at least 60 days before

the end of the contract. However, the successor's obligation to extend

a right of first refusal applies to all employees employed at the end

of the contract, including any who may begin work after the list of

employees is provided. It is not envisioned that the omission of such

employees' name from the list will be unduly burdensome since successor

contractors commonly hire the predecessor's work force without the

convenience of such a list.

The regulations at section 9.10 discuss what is a bona fide offer

of employment. In general, an offer of employment will be presumed to

be bona fide. Employees need not be offered employment in the same job

that they were employed in under the predecessor contract, provided the

employee is qualified for the position offered. Thus an employee may be

equipped by education, training or experience to perform the duties of

a position to be filled by the successor contractor, even though he or

she encumbered a position under the predecessor contractor that did not

require or utilize such education, training or experience. However, an

offer of employment at a lower level or to a different position may be

a basis for closely examining whether the offer is bona fide, based on

valid business reasons.

Predecessor's Obligation to Provide a List of Employees (9.11)

The Executive Order requires that, no less than 60 days before the

completion of the contract, the predecessor contractor provide the

contracting officer with a certified list of all service employees

working at the Federal facility during the last month of the contract.

The list is also required to contain anniversary dates of employment,

either with the current or predecessor contractor, of each service

employee. The contracting officer in turn will provide the list to the

successor contractor, and it will be provided on request to employees

or their representatives.

Except for the timing of submission of the list, this requirement

is the same as the requirement under the SCA at 29 CFR 4.6(1)(2) that

the predecessor furnish the names and anniversary dates at least ten

days before contract termination. Thus the Executive Order does not

create any new obligation on the predecessor, but simply moves forward

the date the list must be submitted.

Because the predecessor contractor cannot know with certainty, 60

days in advance of termination, who will be performing on the contract

in the final month, the regulations provide that the predecessor will

provide the names of all service employees working on the contract. The

successor in turn must assume the employees listed will be working

during the final month of the contract unless the evidence demonstrates

otherwise.

Notice to Employees (9.12)

Service employees need to be advised of their right of first

refusal in the event of contract transition. Various options were

considered regarding how the employees should be so advised. Notice

could easily be accomplished by the predecessor contractor, but it has

no substantive obligations under the Order. The Department also

considered placing the obligation on the successor contractor, but

concluded that it would be more efficient to require notification by

the contracting agency since the predecessor's employees are working

regularly at the Federal building. Therefore the regulations require

that the agency either post a notice or give individual notice to the

predecessor contractor's employees. An optional, prototype notice is

included in an Appendix to the regulations.

[[Page 36760]]

Enforcement (Subpart B)

Section 5 of the Executive Order provides that the Secretary of

Labor is responsible for investigating and obtaining compliance with

the Executive Order. It further provides that the Secretary has the

authority to issue final orders prescribing appropriate sanctions and

remedies, including but not limited to, orders requiring employment and

payment of wages lost.

The executive Order also requires that alternative dispute

mechanisms be utilized to the maximum extent possible in resolving

enforcement issues. Thus, the thrust of the Executive Order is to keep

the enforcement processes as simple and timely as possible, given the

immediacy of both the employee's and the contractor's need for a

response.

Role of the Contracting Officer (9.100)

In developing the enforcement provisions of the regulations, we

have attempted to provide a process that encourages resolution at the

earliest possible stage with fairness and efficiency. For this reason,

the regulations provide that complaints alleging violations shall be

filed with the contracting officer, who will provide the employee and

the successor contractor with information about the requirements of the

Executive Order. If this is not sufficient to resolve the matter, the

regulations provide that the contracting officer will obtain statements

from the parties of their respective positions and submit a report to

the Department of Labor.

Role of the Department of Labor (9.101, 9.102)

If the contracting officer cannot resolve the dispute, section

9.100(b) provides that the contracting officer will submit his or her

report. Based on the contracting officer's report, Wage and Hour may

attempt to resolve the dispute through informal negotiations; however,

if that is not successful, Wage and Hour will conduct a full

investigation of the facts and issue a determination as to whether a

violation has occurred. The Administration also has the authority to

conduct an investigation on his or her own initiative.

Hearing Procedures (9.103-9.107)

The Administrator's determination shall become a final order of the

Secretary unless a request for a hearing is filed within 20 days or,

where the Administrator determines that relevant facts are not in

dispute, a petition for review is filed with the Board of Service

Contract Appeals (BSCA), which shall have the authority to hear all

appeals under the Executive Order. Section 9.103 provides the

procedures and time frames for appeal to the Board. The BSCA is

delegated the authority to hear and decide appeals on behalf of the

Secretary under the Executive Order because it currently hears appeals

under the Service Contract Act and his expertise in service contract

labor standards disputes.

Consistent with the Executive Order's directive to favor the

resolution of disputes by efficient and informal alternative dispute

methods, section 9.104 encourages parties to utilize settlement judges

to mediate settlement negotiations prior to an Administrative Law Judge

(ALJ) hearing. The general ALJ regulations, 29 CFR Part 18, Sec. 18.9,

already provide settlement judge procedures, and these procedures have

been expressly adopted for use under the Executive Order.

If a complaint cannot be resolved informally through the

conciliation or the settlement judge process, then section 9.105

provides procedures for a hearing before an ALJ. In most cases it is

envisioned that the parties to the proceeding will be the contractor

and the complainant (if any). However, the Wage-Hour Administrator may

appear in any proceeding as a party or as amicus curiae, and will

appear as a party in all cases in which inegligibility sanctions are

imposed. The contracting agency may also appear as amicus curiae.

As provided in section 9.106, the ALJ shall issue a decision within

60 days after the proceeding at which evidence was submitted. If the

ALJ determines that a violation has occurred, the ALJ may order

appropriate relief, and may assess against the successor contractor an

amount equal to the employees' costs and expenses (Sec. 9.106(c)).

Section 9.107 provides the procedures for appealing an ALJ decision to

the BSCA.

Since the Department does not anticipate participating in most

proceedings under the Executive Order where debarment is not an issue,

the Department is considering providing for payment of attorney fees or

costs where the complainant prevails. The Department seeks the views of

commenters regarding the permissibility of such a provision in the

absence of express statutory authority. In the alternative, because it

is anticipated that many complainants may lack the ability to hire

counsel if fees are not available,. the Department is considering

providing that parties may obtain the Administrator's investigation

record and submit it into evidence in proceedings where the Department

is not a party.

Remedies/Ineligibility Sanction (9.108-9.109)

Section 5 of the Executive Order provides that the Secretary has

the authority to prescribe appropriate remedies, including orders

requiring employment and payment of wages lost. Section 9.108 also sets

forth withholding procedures to obtain wages due, and a provision for

suspension of payments if the predecessor fails to provide the

contracting officer with a list of employees on the contract.

Furthermore, where a contractor has failed to comply with any order of

the Secretary or has committed willful violations of the Executive

Order or its regulations, the contractor and its responsible officers,

and any firm in which the contractor has a substantial interest, shall

be ineligible to be awarded any contract or subcontract of the United

States for a period of up to three years. Since debarment is only

imposed for the most serious of violations--i.e., violations that are

willful or failure to comply with an order of the Secretary, which in

itself is a willful violation--the regulations at section 9.109

prescribe a three-year period for debarment in all cases.

Definitions (9.200)

The regulations include definitions of several of the important

terms. The definition of ``service employee'' is based on the Service

Contract Act, as the Executive Order provides, but references back to

the coverage requirements of the Order (employees performing recurring

building services), rather than to employees on contracts subject to

the SCA.

Dates of Applicability

The regulations will apply to all contracts awarded after the

effective date, and the clauses contained in section 9.6 must be

included in all such contracts. In addition, in order to provide

successor contractors with the convenience of a list of names from the

predecessor contractor earlier than the SCA requirement of 10 days

before completion of the contract, it is suggested that existing

contracts be amended to include the clause in section 9.6(c).

Executive Order 12866

Because this rule provides the initial implementing regulations for

an executive order issued by the President, it will be treated as a

``significant regulatory action'' within the meaning of Executive Order

12866. However, no economic analysis is required since the rule will

not have a significant economic impact. The Executive Order

[[Page 36761]]

simply requires contractors to follow the practice which is currently

followed in most cases in any event as a good business practice, and

will improve Government efficiency and economy in those few cases where

the practice would not otherwise have been followed by decreasing or

eliminating the loss of productivity that may occur when experienced

employees are terminated.

Furthermore, the total value of Federal contracts covered by

Executive Order 12933 is less than $100 million, and only a small

fraction of that total may involve terminations of predecessor

employees. General Services Administration data for Fiscal Year 1994

indicate that no more than 88 new building service contract actions

were taken, with a value of $39.2 million. Since only a very small

percentage of that dollar value involves terminations, the economic

impact of the Executive Order is minimal.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (RFA) requires agencies to

prepare regulatory flexibility analyses, and to develop alternatives,

whenever possible, in drafting regulations that will have a

``significant economic impact on a substantial number of small

entities.'' The Department has determined that such an analysis is not

required for this rulemaking. This conclusion is based on the fact that

the Executive Order mandates a practice which is already followed in

almost all cases. Accordingly, this regulation will not have a

significant economic impact on a substantial number of small entities

within the meaning of the RFA. The Secretary has certified to the Chief

Counsel for Advocacy of the Small Business Administration to this

effect. Therefore, no regulatory flexibility analysis is required.

Document Preparation

This document was prepared under the direction and control of Maria

Echaveste, Administrator, Wage and Hour Division, Employment Standards

Administration, U.S. Department of Labor.

List of Subjects in 29 CFR Part 9

Employment, Federal buildings and facilities, Government contracts,

Law enforcement, Labor.

Signed at Washington, D.C. on this 12th day of July, 1995.

Maria Echaveste,

Administrator, Wage and Hour Division.

For the reasons set out in the preamble, 29 CFR Part 9 is proposed

to be added to read as follows:

PART 9--NONDISPLACEMENT OF QUALIFIED WORKERS UNDER CERTAIN

CONTRACTS

Subpart A--How is Executive Order 12933 Applied?

Covered Contracts Generally

Sec.

9.1 What is the purpose of Executive Order 12933?

9.2 Which contracts are covered by Executive Order 12933?

9.3 What is a ``building service contract?''

9.4 What is ``public building?''

9.5 Which contracts are not covered by Executive Order 12933?

Contract Clauses

9.6 What contract clauses must be included in covered contracts?

Contractor Obligations

9.7 May a contractor employ persons other than the predecessor

contractor's employees?

9.8 Must the successor contractor offer a right of first refusal to

all employees of the predecessor contractor?

9.9 In what manner must the successor contractor offer employment?

9.10 What constitutes a bona fide offer of employment?

9.11 What are the obligations of the predecessor contractor?

Notice to Employees

9.12 How ill employees learn of their rights?

Subpart B--What Enforcement Mechanisms Does Executive Order 12933

Provide?

Complaint Procedures

9.100 What may employees do if they believe that their rights under

the Executive Order have been violated?

9.101 What action will the Wage and Hour Division take to try to

resolve the complaint?

9.102 How are complaints resolved if conciliation is unsuccessful?

9.103 How are decisions of the Administrator appealed?

Administrative Law Judge Procedures

9.104 How may cases be settled without formal hearing?

9.105 What procedures are followed if a complaint cannot be

resolved through conciliation or settlement agreement?

9.106 What rules apply to the decision of the administrative law

judge?

Appeal Procedures

9.107 How may an administrative law judge's decision be appealed?

Enforcement Remedies

9.108 What are the consequences to a contractor of not complying

with the Executive Order?

9.109 Under what circumstances will ineligibility sanctions be

imposed?

Subpart C--Definitions

9.200 Definitions

Appendix A to Part 9--Notice to Building Service Contract Employees

Authority: Secs. 4-6, Executive Order 12933; 5 U.S.C. 301.

Subpart A--How is Executive Order 12933 Applied?

Covered Contracts Generally

Sec. 9.1 What is the purpose of Executive Order 12933?

The Government's procurement interests in both economy and

efficiency are furthered when a successor contractor carries over an

existing work force. A carryover work force minimizes disruption in the

delivery of services during a period of transition and provides the

Government the benefit of an experienced and trained work force.

Executive Order 12933 therefore generally requires that successor

contractors performing building service contracts for public buildings

offer a right of first refusal to employment under the contract to

those employees under the predecessor contract whose employment will be

terminated as a result of the award of the successor contract.

Sec. 9.2 Which contracts are covered by Executive Order 12933?

(a) The Executive Order and these rules apply to ``building service

contracts'' for ``public buildings'' where the contract is entered into

by the United States in an amount equal to or greater than the

simplified acquisition threshold of $100,000, as set forth in section

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

403(11)).

(b)(1) Except as provided in paragraph (b)(2) of this section,

contracts which include a requirement for recurring building services

are subject to the Executive Order and these regulations even if the

contract also contains non-service requirements, such as construction

or supplies, or requirements for other types of services, and even if

the contract is not subject to the McNamara-O'Hara Service Contract

Act, 41 U.S.C. 351 et seq. However, the requirements of the Executive

Order apply only to the building services portion of the contract.

(2) The requirements of the Executive Order do not apply to

building services

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which are only incidental to a contract for another purpose, such as

incidental maintenance under a contract to operate a day-care center.

Building services performed on a building being leased pursuant to a

lease-purpose contract would be considered incidental and would not be

covered unless the services are being performed under a contract

directly with the Government. Building service requirements will not be

considered incidental, and therefore will be subject to the Executive

Order, where:

(i) The contract contains specific requirements for a substantial

amount of building services or it is ascertainable that a substantial

amount of building services will be necessary to the performance of the

contract (the word ``substantial'' relates to the type and quantity of

building services to be performed and not merely to the total value of

such work (whether in absolute dollars or cost percentages) as compared

to the total value of the contract); and

(ii) The building services work is physically or functionally

separate from, and as a practical matter is capable of being performed

on a segregated basis from the other work called for by the contract.

Sec. 9.3 What is a ``building service contract?''

(a) A ``building service contract'' is a contract for ``recurring

services'' related to the maintenance of a public building. ``Recurring

services'' are services which are required to be performed regularly or

periodically throughout the course of a contract, and throughout the

course of the succeeding or follow-on contract at the same building.

Examples of building services contracts include, but are not limited

to, contracts for the recurring provision of custodial or janitorial

services; window washing; laundry; food services; guard or other

protective services; landscaping and groundskeeping services; and

inspection, maintenance, and repair of fixed equipment such as

elevators, air conditioning, and heating systems. However, as provided

in section 9.5(b)(5) of this part, excluded from the Executive Order

are those services where the employees work at both the public building

and at other locations not subject to the Executive Order.

(b)(1) Contracts which provide maintenance services only on a non-

recurring basis are not ``building service contracts'' within the

meaning of the Executive Order and are not subject to its provisions.

For example, a contract to perform servicing of fixed equipment once a

year, or to mulch a garden on a one-time or annual basis, is a non-

recurring maintenance contract that is not covered by the Executive

Order.

(2) Contracts for the provision of services which may be performed

in a public building but are not related to the maintenance of that

public building are not ``building service contracts'' and are not

covered by the Executive Order and these rules. For example, a contract

for day care services in a Federal office building would not be subject

to the Executive Order.

Sec. 9.4 What is a ``public building?''

(a) A ``public building'' is any building owned by the United

States which is generally suitable for office or storage space or both

for the use of one or more Federal agencies or mixed ownership

corporations, together with its grounds, approaches, and appurtenances.

Public buildings shall include:

(1) Federal office buildings;

(2) Customhouses;

(3) Courthouses;

(4) Border inspection facilities;

(5) Warehouses;

(6) Records centers;

(7) Appraiser stores;

(8) Relocation facilities; and

(9) Similar Federal facilities.

(b)(1) Public buildings do not include any building on the public

domain, including that reserved for national forests and other

purposes. The public domain includes only those lands administered by

the Department of the Interior, Bureau of Land Management, and the

Department of Agriculture, U.S. Forest Service.

(2) Also not covered are any buildings:

(i) On properties of the United States in foreign countries;

(ii) On Native American and Native Eskimo properties held in trust

by the United States;

(iii) On lands used in connection with Federal programs for

agricultural, recreational, and conservation purposes, including

research in connection therewith;

(iv) On or used in connection with river, harbor, flood control,

reclamation, or power objects; or for chemical manufacturing or

development projects; or for nuclear production, research, or

development projects;

(v) On or used in connection with housing and residential projects;

(vi) On properties of the United States Postal Service;

(vii) On military installations (including any fort, camp, post,

naval training station, airfield, proving ground, military supply

depot, military school, or any similar facility of the Department of

Defense);

(viii) On installations of the National Aeronautic and Space

Administration, except regular office buildings; and

(ix) On Department of Veterans Affairs installations used for

hospital or domiciliary purposes.

(3) Buildings leased by the Government are not public buildings

unless the building is leased pursuant to a lease-purchase contract.

Sec. 9.5 Which contracts are not covered by Executive Order 12933?

(a) A contract is not covered by the Executive Order unless it

requires the provision of recurring building services, and unless the

contract succeeds a contract for similar work at the same public

building.

(b) The Executive Order expressly excludes:

(1) Contracts for services under the simplified acquisition

threshold ($100,000);

(2) Contracts for commodities or services produced or provided by

the blind or severely handicapped, awarded pursuant to the Javits-

Wagner O'Day Act, 41 U.S.C. 46-48a; and any future enacted law creating

an employment preference for some group of workers under building

service contracts;

(3) Guard, elevator operator, messenger, or custodial services

provided to the Government under contracts with sheltered workshops

employing the severely handicapped as outlined in the Edgar Amendment,

section 505 of the Treasury, Postal Services and General Government

Appropriations Act, 1995, P.L. 103-329;

(4) Agreements for vending facilities operated by the blind,

entered into under the preference provisions of the Randolph-Sheppard

Act, 20 U.S.C. 107; and

(5) Services where the contractor's employees perform work at the

public building and at other locations under contracts not subject to

the Executive Order and these regulations, provided that the employees

are not deployed in a manner that is designed to avoid the purposes of

the Order. Examples include, but are not limited to, pest control or

trash removal services where the employees periodically visit various

Government and non-Government sites, and service calls to repair

equipment at various Government and non-Government buildings.

Contract Clauses

Sec. 9.6 What contract clauses must be included in covered contracts?

The clauses set forth in the following paragraphs shall be included

in full by the contracting agency in every solicitation and contract

entered into by

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the United States equal to or in excess of $100,000, where the contract

requires the provision of building services and succeeds a contract for

the performance of similar services at the same public building:

(a) Consistent with the efficient performance of this contract, the

contractor shall, except as otherwise provided herein, in good faith

offer those employees (other than managerial and supervisory employees)

under the predecessor contract whose employment will be terminated as a

result of award of this contract or the expiration of the contract

under which the employees were hired, a right of first refusal to

employment under the contract in positions for which the employees are

qualified. The contractor shall determine the number of employees

necessary for efficient performance of this contract and may elect to

employ fewer employees than the predecessor contractor employed in

connection with performance of the work. Except as provided in

paragraph (b) of this section, there shall be no employment opening

under the contract, and the contractor shall not offer employment under

the contract, to any person prior to having complied fully with this

obligation. The contractor shall make an express offer of employment to

each employee as provided herein and shall state the time within which

the employee must accept such offer, but in no case shall the period

within which the employee must accept such offer be less than 10 days.

(b) Notwithstanding the contractor's obligation under paragraph (a)

of this section, the contractor:

(1) May employ on the contract any employee who has worked for the

contractor for at least 3 months immediately preceding the commencement

of this contract and who would otherwise face lay-off or discharge, and

(2) Is not required to offer a right of first refusal to any

employee(s) of the predecessor contractor who are not service employees

within the meaning of the McNamara-O'Hara Service Contract Act, 41

U.S.C. 257(b), and

(3) Is not required to offer a right of first refusal to any

employee(s) of the predecessor contractor who the contractor reasonably

believes, based on the particular employee's past performance, has

failed to perform suitably on the job.

(c) In accordance with Federal Acquisition Regulation 52.222-4(n)

and 29 CFR 4.6(1)(2), the contractor shall, no less than 60 days before

completion of this contract, furnish the Contracting Officer with a

certified list of the names of all service employees working at the

Federal facility during the last month of contract performance. The

list shall also contain anniversary dates of employment on the contract

either with the current or predecessor contractors of each service

employee. The Contracting Officer will provide the list to the

successor contractor and the list shall be provided on request to

employees or their representatives.

(d) If it is determined, pursuant to regulations issued by the

Secretary of Labor, that the contractor is not in compliance with the

requirements of this clause or any regulation or order of the

Secretary, appropriate sanctions may be imposed and remedies invoked

against the contractor, as provided in Executive Order No. 12933, the

regulations of the Secretary of Labor at 29 CFR Part 9, and relevant

orders of the Secretary of Labor, or as otherwise provided by law.

(e) The Contracting Officer shall withhold or cause to be withheld

from the prime contractor under this or any other Government contract

with the same prime contractor such sums as an authorized official of

the Department of Labor requests, upon a determination by the

Administrator that the prime contractor failed to comply with the terms

of this clause, and that wages lost as a result of the violations are

due to employees or that other monetary relief is appropriate.

(f) The contractor shall cooperate in any investigation by the

contracting agency or the Department of Labor into possible violations

of the provisions of this cause and shall make records requested by

such official(s) available for inspection, copying, or transcription

upon request.

(g) Disputes arising out of this clause shall not be subject to the

general disputes of this contract. Such disputes shall be resolved in

accordance with the procedures of the Department of Labor set forth in

29 CFR Part 9. Disputes within the meaning of this clause include

disputes between the contractor and the contracting agency, the U.S.

Department of Labor, or the employees under the contract or its

predecessor contractor or their representatives.

Contractor Obligations

Sec. 9.7 May a contractor employ persons other than the predecessor

contractor's employees?

(a) There shall be no employment openings under a contract subject

to the Executive Order and the successor contractor shall not offer

employment under the contract until it fully complies with its

obligation to offer a right of first refusal, except as provided under

paragraph (b) of this section.

(b) A successor contractor may employ on the contract any employee

who has worked for that contractor for at least 3 months immediately

preceding the commencement of the contract and who would face lay-off

or discharge if not employed on the subject contract.

Sec. 9.8 Must the successor contractor offer a right of first refusal

to all employees of the predecessor contractor?

(a)(1) Except as provided in this section, a successor contractor

shall offer employment under the contract (i.e., a ``right of first

refusal'') to those employees of the predecessor contractor who, in the

final month of the contract, provided recurring building services

similar to the services to be performed under the successor contract,

and whose employment will be terminated as a result of the award of the

successor contract or expiration of the contract under which the

employees were hired.

(2) Unless the predecessor contractor (either directly or through

the contracting agency) or the individual employee in question provides

evidence to the contrary, the successor contractor must presume that

all service employees of the predecessor contractor who are working at

the same public building during the final month of contract performance

will be terminated when the contract ends.

(b)(1) A successor contractor is not required to offer a right of

first refusal to any managerial or supervisory employee or to any

employee of the predecessor contractor who is not a service employee

within the meaning of the McNarmara-O'Hara Service Contract Act, 41

U.S.C. 357(b). ``Managerial and supervisory'' employees and employees

who are not ``service employees'' are those persons engaged in the

performance of services under the contract who are employed in a bona

fide executive, administrative, or professional capacity, as those

terms are defined in the Fair Labor Standards Act regulations, 29 CFR

Part 541.

(2) A successor contractor is not required to offer a right of

first refusal to any employee of the predecessor contractor who the

successor contractor reasonably believes, based on the particular

employee's past performance, has failed to perform suitably on the job.

An assessment of the employee's past performance must be based on

information provided by a credible source such as the predecessor

contractor, the employee's supervisor, or the contracting agency.

(3) The contractor is not required to offer a right of first

refusal for

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employment in a position which will perform building services both at

public buildings covered by the Executive Order and these regulations,

and at other buildings not covered by the Executive Order.

(c) The successor contractor shall determine the number of

employees necessary for the efficient performance of the contract. The

contractor may, for bona fide staffing or work assignment reasons,

employ fewer employees than the predecessor contractor. Thus, the

successor contractor need not extend the right of first refusal to all

employees of the predecessor contractor, but must offer employment only

to the number of eligible employees it believes necessary to meet its

anticipated staffing pattern, except that:

(1) Where a successor contractor offers a right of first refusal to

fewer employees than were employed by the predecessor contractor, its

obligation to offer employment under the contract to the predecessor's

employees continues until the successor contractor reaches full

staffing levels. For example, a contractor with eighteen (18)

employment openings and a list of twenty (20) predecessor contractor's

employees must continue to offer a right of first refusal to

individuals on the list until eighteen (18) of the employees accept the

contractor's employment offer, or until all of the employees have

either accepted or refused the job offer.

(2) If a successor contractor raises its staffing level within

three months of the commencement of contract performance, its

obligation to offer employment under the contract to eligible employees

continues until the higher staffing level is reached. For example, if a

contractor determines two months into the contract period that it must

hire an additional ten (10) employees to sufficiently perform the

contract requirements, the contractor must first offer a right of first

refusal to ten (10) eligible employees of the predecessor contractor

(or to all of the employees of the predecessor contractor who have not

previously been offered a right of first refusal if less than ten

remain), and must continue to offer a right of first refusal to

individuals on the list until ten (10) of the employees accept the

contractor's employment offer, or until all of the employees have

refused the job offer.

Sec. 9.9 In what manner must the successor contractor offer

employment?

(a) Except as provided in sections 9.7 and 9.8 of this part, a

successor contractor must make a bona-fide express offer of employment

to each of the predecessor contractor's employees before offering

employment on the contract to any other person. The employment offer to

each employee may be either in writing on an individual basis, or

orally at a meeting attended by a group of the predecessor contractor's

employees.

(b) For a period of one year, the contractor must maintain copies

of any written offers of employment or a contemporaneous written record

of any oral offers of employment, including the date, location and

attendance roster of any employee meeting(s) at which the offers were

extended, a summary of each meeting and a copy of any written notice

which may have been distributed, and the names of the predecessor

contractor's employees to whom an offer was made. The contractor must

provide copies of such documentation upon request of any authorized

representative of the contracting agency or Department of Labor.

(c) The contractor shall state the time within which an employee

must accept an employment offer, but in no case may the period in which

the employee has to accept the offer be less than 10 days.

(d) The successor contractor's obligation to offer a right of first

refusal exists even if the successor contractor has not been provided a

list of the predecessor contractor's employees, or the list does not

contain the names of all persons employed during the final month of

contract performance.

Sec. 9.10 What constitutes a bona fide offer of employment?

(a) As a general matter, an offer of employment will be presumed to

be a bona fide offer of employment. An offer of employment need not be

to a position similar to that which the employee previously held, but

the employee must be qualified for the position. Information regarding

an employee's qualifications shall ordinarily come directly from the

employee. If a question arises concerning an employee's qualifications,

that question shall be decided based upon the employee's education and

employment history with particular emphasis on the employee's

experience on the predecessor contract.

(b) An offer of employment at a lower level or to different

positions than employees held before may be a basis for closely

examining the offers of employment to ensure they are bona fide, based

on valid business reasons (not related to a desire that the employee

refuse the offer, or that other employees be hired).

Sec. 9.11 What are the obligations of the predecessor contractor?

(a) Not less than 60 days before completion of its contract, the

predecessor contractor must furnish the contracting officer with a

certified list of the names of all service employees working at the

Federal facility, together with their anniversary dates of employment.

The contracting officer in turn shall provide the list to the successor

contractor and, if requested, to employees of the predecessor

contractor or their representatives.

(b) Unless the predecessor contractor (either directly or through

the contracting agency) or the individual employee in question provides

evidence to the contrary, the successor contractor must presume that

all service employees of the predecessor contractor who are working at

the same public building during the final month of contract performance

will be terminated when the contract ends.

Notice to Employees

Sec. 9.12 How will employees learn of their rights?

Where the successor contract is a contract subject to the Executive

Order and these regulations, the contracting officer will provide

notice to service employees of the predecessor contractor who are

engaged in building services of their possible right to an offer of

employment. Such notice may either be posted in a conspicuous place at

the worksite or may be delivered to the employees individually.

Contracting officers may either use the notice set forth in Appendix A

to this part or another form with the same information.

Subpart B--What Enforcement Mechanism Does Executive Order 12933

Provide?

Complaint Procedures

Sec. 9.100 What may employees do if they believe that their rights

under the Executive Order have been violated?

(a) Any employee of the predecessor contractor who believes he or

she was not offered employment by the successor contractor as required

by the Executive Order and these regulations may file a complaint with

the contracting officer of the appropriate Federal agency.

(b) Upon receipt of a complaint, the contracting officer shall

provide information to the employee(s) and the successor contractor

about their rights and responsibilities under the Executive Order. If

the matter is not resolved through such actions, the contracting

officer shall obtain statements of the

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positions of the parties and prepare a report, including the issues and

any relevant facts known to the contracting officer. The report shall

promptly be forwarded to the nearest District Office of the Wage and

Hour Division or to the Administrator of the Wage and Hour Division,

Employment Standards Administration, Room S-3502, U.S. Department of

Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Sec. 9.101 What action will the Wage and Hour Division take to try to

resolve the complaint?

After obtaining the necessary information from the contracting

officer regarding the alleged violations, the Wage and Hour Division

investigator may contact the successor contractor and attempt, through

conciliation procedures, to obtain a resolution to the matter which is

satisfactory to both the complainant(s) and the successor contractor

and consistent with the requirements of the Executive Order and these

regulations.

Sec. 9.102 How are complaints resolved if conciliation is

unsuccessful?

(a) Upon receipt of a contracting officer's report, the

Administrator shall investigate and gather data concerning such case.

Where conciliation efforts have been attempted, the Administrator need

not initiate the investigation unless and until the efforts fail. The

Administrator may also initiate an investigation at any time on his or

her own initiative. As part of the investigation, the Administrator may

inspect the records of the predecessor and successor contractors (and

make copies thereof), may question the predecessor and successor

contractors and any employees of these contractors, and may require the

production of any documentary or other evidence deemed necessary to

determine whether a violation of the Executive Order (including conduct

warranting imposition of ineligibility sanctions pursuant to section

9.109 of this part) has been committed.

(b) The contractor and the predecessor contractor shall cooperate

in any investigation conducted pursuant to this subpart, and shall not

interfere with the investigation or intimidate, blacklist, discharge,

or in any other manner discriminate against any person because such

person has cooperated in an investigation or proceeding under this

subpart or has attempted to exercise any rights afforded under this

part.

(c) Upon completion of the investigation, the Administrator shall

issue a written determination of whether a violation has occurred which

shall contain a statement of reasons for the findings and conclusions.

A determination that a violation occurred shall address appropriate

relief and the issue of ineligibility sanctions where appropriate.

Notice of the determination shall be given by certified mail to the

complainant (if any), the successor contractor and their

representatives (if any).

(d) The Administrator may conduct a new investigation or issue a

new determination if the Administrator concludes circumstances warrant,

such as where the proceedings before an Administrative Law Judge reveal

that there may have been violations with respect to other employees of

the predecessor contractor, or that imposition of ineligibility

sanctions is appropriate, or where the contractor has failed to comply

with an order of the Secretary.

Sec. 9.103 How are decisions of the Administrator appealed?

(a) Except as provided in paragraph (b), the determination of the

Administrator shall advise the parties (ordinarily the complaint (if

any) and the successor contractor) that the notice of determination

shall become the final order of the Secretary and shall not be

appealable in any administrative or judicial proceeding unless, within

20 days of the date of the determination of the Administrator, the

Chief Administrative Law Judge receives a request for a hearing. The

request for a hearing shall be accompanied by a copy of the

Administrator's determination and may be filed by U.S. mail, facsimile

(FAX), telegram, hand delivery, or next-day delivery service. At the

same time, a copy of any request for a hearing shall be sent to the

complainant(s) or successor contractor, as appropriate; the

Administrator of the Wage and Hour Division; and the Associate

Solicitor, Division of Fair Labor Standards, U.S. Department of Labor,

Washington, D.C. 20210. The Administrator's failure or refusal to seek

ineligibility sanctions shall not be appealable.

(b) If the Administrator concludes that no relevant facts are in

dispute, the parties will be so advised and will be further advised

that the determination shall become the final order of the Secretary

and shall not be appealable in any administrative or judicial

proceeding unless, within 20 days of the date of the determination of

the Administrator, a petition for review is filed with the Board of

Service Contract Appeals pursuant to section 9.107 of this part. The

determination will further advise that if an aggrieved party disagrees

with the factual findings or believes there are relevant facts in

dispute, the aggrieved party may advise the Administrator of the

disputed facts and request a hearing by letter, which must be received

within 20 days of the date of the determination. The Administrator will

either refer the request for a hearing to the Chief Administrative Law

Judge, or notify the aggrieved party of the Administrator's

determination that there is no relevant issue of fact and that a

petition for review may be filed with the Board of Service Contract

Appeals within 20 days of the date of the notice, in accordance with

the procedures at section 9.107 of this part.

(c) If any party desires review of the determination of the

Administrator, including judicial review, a request for an

administrative law judge hearing (or petition for review by the Board

of Service Contract Appeals) must first be filed in accordance with

paragraph (a) (or (b)) of this section. If a timely request for hearing

(or petition for review) is filed, the determination of the

Administrator shall be inoperative unless and until the administrative

law judge or the Board of Service Contract Appeals issues an order

affirming the determination.

Administative Law Judge Procedures

Sec. 9.104 How may cases be settled without formal hearing?

(a) In accordance with the Executive Order's directive to favor the

resolution of disputes by efficient and informal alternative dispute

resolution methods, the parties are encouraged to resolve disputes in

accordance with the conciliation procedures set forth in sections 9.100

and 9.101 of this subpart, or, where such efforts have failed, to

utilize settlement judges to mediate settlement negotiations pursuant

to 29 CFR Part 18, Sec. 18.9. At any time after commencement of a

proceeding, the parties jointly may move to defer the hearing for a

reasonable time to permit negotiation of a settlement or an agreement

containing findings and an order disposing of the whole or any part of

the proceeding.

(b) A settlement judge may be appointed by the Chief Administrative

Law Judge upon a request by a party or the presiding administrative law

judge. The Chief Administrative Law Judge has sole discretion to decide

whether to appoint a settlement judge, except that a settlement judge

shall not be appointed when a party objects to referral of the matter

to a settlement judge.

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Sec. 9.105 What procedures are followed if a complaint cannot be

resolved through conciliation or settlement agreement?

(a) If the case is not stayed to attempt settlement, the

administrative law judge to whom the case is assigned shall within

fifteen (15) calendar days following receipt of the request for

hearing, notify the parties of the day, time and place for hearing. The

date of the hearing shall not be more than 60 days from the date of

receipt of the request for hearing.

(b) Formal rules of evidence shall not apply, but rules or

principles designed to assure production of the most probative evidence

available shall be applied. The administrative law judge may exclude

evidence which is immaterial, irrelevant, or unduly repetitious.

(c) The administrative law judge may, at the request of a party, or

on his/her own motion, dismiss a challenge to a determination of the

Administrator upon the failure of the party requesting a hearing or

his/her representative to attend a hearing without good cause; or upon

the failure of said party to comply with a lawful order of the

administrative law judge.

(d) At the Administrator's discretion, the Administrator has the

right to participate as a party or as amicus curiae at any time in the

proceedings, including the right to petition for review of a decision

of an administrative law judge in a case in which the Administrator has

not previously participated. The Administrator shall participate as a

party in any proceeding in which the Administrator's determination has

sought imposition of ineligibility sanctions.

(e) Copies of the request for hearing and documents filed in all

cases, whether or not the Administrator is participating in the

proceeding, shall be sent to the Administrator, Wage and Hour Division,

and to the Associate Solicitor, Division of Fair Labor Standards, U.S.

Department of Labor, Washington, D.C. 20210.

(f) A Federal agency which is interested in a proceeding may

participate as amicus curiae at any time in the proceedings, at the

agency's discretion. At the request of a Federal agency which is

interested in a proceeding, copies of all pleadings in the case shall

be served on the Federal agency, whether or not the agency is

participating in the proceeding.

(g) The rules of practice and procedure for administrative hearings

before the Office of Administrative Law Judges at 29 CFR Part 18 shall

be applicable to the proceedings provided by this section. To the

extent the rules in 29 CFR Part 18 are inconsistent with a rule of

special application provided by these regulations or the Executive

Order, these regulations and the Executive Order are controlling.

Sec. 9.106 What rules apply to the decision of the administrative law

judge?

(a) The administrative law judge shall issue a decision within 60

days after the proceeding at which evidence was submitted. The decision

shall contain appropriate findings, conclusions, and an order and be

served upon all parties to the proceeding.

(b) Upon the conclusion of the hearing and the issuance of a

decision that a violation has occurred, the administrative law judge

shall issue an order that the successor contractor take appropriate

action to abate the violation, which may include hiring the affected

employee(s) in the same or a substantially equivalent position(s) to

that which the employee(s) held under the predecessor contract,

together with compensation (including lost wages), terms, conditions,

and privileges of that employment. Where ineligibility sanctions have

been sought by the Administrator, the order shall also address whether

such sanctions are appropriate.

(c) If an order is issued finding that the contractor violated the

Executive Order and these regulations, the administrative law judge may

assess a sum equal to the aggregate amount of all costs and expenses

reasonably incurred by the aggrieved employee(s) in the proceeding.

(d) The decision of the administrative law judge shall become the

final order of the Secretary unless a petition for review is timely

filed with the Board of Service Contract Appeals.

Appeal Procedures

Sec. 9.107 How may an administrative law judge's decision be appealed?

(a) The Board of Service Contract Appeals has jurisdiction to hear

and decide in its discretion appeals concerning questions of law and

fact from determinations of the Administrator pursuant to Sec. 9.103(b)

of this part and from decisions of administrative law judges pursuant

to Sec. 9.106 of this part.

(b) Any party desiring review of a decision of the administrative

law judge (or of the Administrator, pursuant to Sec. 9.103(b)) shall

file a petition for review, in writing, with the Board of Service

Contract Appeals. No administrative or judicial review shall be

available unless a timely petition for review to the Board of Service

Contract Appeals is first filed. To be effective, such a petition for

review must be received within 20 days of the date of the decision of

the administrative law judge (or Administrator) and shall be served on

all parties and the Chief Administrative Law Judge (except in cases

involving an appeal from a decision of the Administrator). If a timely

petition for review is filed, the decision of the administrative law

judge (or Administrator) shall be inoperative unless and until the

Board of Service Contract Appeals issues an order affirming the

decision. However, if a petition for review concerns only the

imposition of ineligibility sanctions, the remainder of the decision of

the administrative law judge shall be effective immediately.

(c)(1) A petition for review shall refer to the specific findings

of fact, conclusions of law, or order at issue.

(2) Copies of the petition and all briefs shall be served on the

Administrator, Wage and Hour Division, and on the Associate Solicitor,

Division of Fair Labor Standards, U.S. Department of Labor, Washington,

D.C. 20210.

(d) The Board's final decision shall be issued within 90 days of

the receipt of the petition for review and shall be served upon all

parties by mail to the last known address, and on the Chief

Administrative Law Judge (except in cases involving an appeal from the

determination of the Administrator).

(e) If the Board concludes that the contractor has violated the

Executive Order, the final order shall order action to abate the

violation, which may include hiring the affected employee(s) in the

same or a substantially equivalent position(s) to that which the

employee(s) held under the predecessor contract, together with

compensation (including lost wages), terms, conditions, and privileges

of that employment. Where the Administrator has sought imposition of

ineligibility sanctions, the Board shall also determine whether an

order imposing ineligibility sanctions is appropriate.

(f) If a final order finding violations of the Executive Order is

issued, the Board may assess against the successor contractor a sum

equal to the aggregate amount of all costs and expenses reasonably

incurred by the employee(s) in the proceeding.

(g) In considering the matters within the scope of its jurisdiction

the Board shall act as the authorized representative of the Secretary

and shall act fully and finally on behalf of the Secretary concerning

such matters. The Board shall not have jurisdiction to pass on the

validity of any provision of this part. The Board is an appellate body

and shall decide cases properly before it on

[[Page 36767]]

the basis of all relevant matter contained in the entire record before

it. The Board shall not hear cases de novo or receive new evidence into

the record.

Enforcement Remedies

Sec. 9.108 What are the consequences to a contractor of not complying

with the Executive Order?

(a) The Executive Order provides that the Secretary shall have the

authority to issue orders prescribing appropriate remedies, including,

but not limited to, requiring employment of the predecessor

contractor's employees and payment of wages lost.

(b) After an investigation and a determination by the Administrator

that lost wages or other monetary relief is due, the Administrator may

direct that so much of the accrued payments due on either the contract

or any other contract between the contractor and the Government shall

be withheld in a deposit fund as are necessary to pay the moneys due.

Upon the final order of the Secretary that such moneys are due, the

Administrator may direct that such withheld funds be transferred to the

Department of Labor for disbursement.

(c) If the contracting officer or the Secretary finds that the

predecessor contractor has failed to provide a list of the names of

employees working under the contract in accordance with Sec. 9.6(c),

the contracting officer may take such action as may be necessary to

cause the suspension of the payment of funds until such time as the

list is provided to the contracting officer.

Sec. 9.109 Under what circumstances will ineligibility sanctions be

imposed?

(a) Where the Secretary finds that a contractor has failed to

comply with any order of the Secretary or has committed willful

violations of the Executive Order or these regulations, the Secretary

may order that the contractor and its responsible officers, and any

firm in which the contractor has a substantial interest, shall be

ineligible to be awarded any contract or subcontract of the United

States for a period of three years.

(b) Upon order of the Secretary, the names of persons or firms

found to be ineligible for contracts in accordance with this section

shall be added to the ``List of Parties Excluded from Federal

Procurement and Nonprocurement Programs,'' compiled, maintained and

distributed by the General Services Administration in accordance with

48 CFR 9.404. No contract of the United States shall be awarded to the

persons or firms appearing on this list or to any firm, corporation,

partnership, or association in which such persons or firms have a

substantial interest until three years have elapsed from the date the

persons' or firms' name was entered on the electronic version of the

list.

Subpart C--Definitions

Sec. 9.200 Definitions.

For purposes of this part:

Administrator means the Administrator of the Wage and Hour

Division, Employment Standards Administration, U.S. Department of

Labor, and includes any official of the Wage and Hour Division

authorized to perform any of the functions of the Administrator under

this part.

Contract means any prime contract subject wholly or in part to the

provisions of the Executive Order.

Contracting officer means the individual, a duly appointed

successor, or authorized representative who is designated and

authorized to enter into contracts on behalf of the Federal agency.

Executive Order or Order means Executive Order 12933 (59 FR 53559,

October 24, 1994).

Federal Government means an agency or instrumentality of the United

States which enters into a contract pursuant to authority derived from

the Constitution and the laws of the United States.

Secretary means the Secretary of Labor or his/her authorized

representative.

Service employee means any person engaged in the performance of

recurring building services other than a person employed in a bona fide

executive, administrative, or professional capacity, as those terms are

defined in Part 541 of Title 29, Code of Federal Regulations, and shall

include all such persons regardless of any contractual relationship

that may be alleged to exist between a contractor and such person.

United States means the United States and all executive

departments, independent establishments, administrative agencies, and

instrumentalities of the United States, including corporations, all or

substantially all of the stock of which is owned by the United States,

by the foregoing departments, establishments, agencies,

instrumentalities, and including non-appropriated fund

instrumentalities.

Appendix A to Part 9--Notice to Building Service Contract Employees

The contract for (type of service) services currently performed

by (predecessor contractor) has been awarded to a new contractor.

(Successor contractor) will begin performance on (date successor

contract begins).

As a condition of the new contract:

(Successor contractor) may be required to offer

employment to most current contract employees.

If you are offered employment on the new contract,

you will have at least ten (10) days to accept the offer.

The following factors are reasons why some current employees may

not be offered employment on the new contract:

Managerial or supervisory employees on the current

contract are not entitled to an offer of employment.

The new contractor may reduce the size of the

current work force. Therefore, only a portion of the existing work

force may receive employment offers.

The new contractor may have the right to employ

some or all of its current employees on the new contract before

offering employment to the existing contract employees.

Employees whose performance has been unsuitable on

the current contract are not entitled to employment with the new

contractor.

If you have any questions about your right to employment on the

new contract, contact:

(Name, address, and telephone # for the contracting officer or the

contracting officer's representative)

[FR Doc. 95-17611 Filed 7-17-95; 8:45 am]

BILLING CODE 4510-27-M