FAR 22.12 May Make a Comeback

In 2001, times were good. The economy was, relatively speaking, doing well. Unemployment, according to the Bureau of Labor and Statistics, was rising slightly, but manageable (it went from 4.2 to 5.7 that year). In February of that year (with unemployment around 4.2), the president issued E.O. 13204 revoking FAR 22.12 in its entirety.

FAR 22.12 is currently “RESERVED,” but it used to give service contractor employees some “job security” for the service contract they were working on. The prescribed clause under 52.222-50 (paraphrasing) said:

As long as the contract is still being performed efficiently, those employees engaged in the performance of building services (other than managerial and supervisory employees) under the predecessor contract, who would be terminated as a result of award of the current contract, must be offered a right of first refusal to employment. Where the Contractor offers a right of first refusal to fewer employees than were employed by the predecessor contract, its obligation continues for 3 months after commencement of the contract.

Fast forward to today. I was browsing regulations.gov (because I am a little “dorky” like that) and came across a proposed rule that is currently open for comment. According to E.O. 13495┬ádated January 30, 2009 with an effective date of August 29, 2011, FAR 22.12 should be reinstated. I believe this is to help the revolving door of employees on contracts and subcontracts, but regulations.gov states:

This proposed rule would amend the FAR to add subpart 22.12 and a new clause at FAR 52.222-XX, providing the policy of the Federal Government, as expressed in E.O. 13495, to require service contractors and their subcontractors under successor contracts to offer employees of the predecessor contractor and its subcontractors a right of first refusal of employment for positions for which they are qualified.

Unemployment as of August of last year was 9.1, but most likely didn’t containt the “full story” of the issue.

Let’s think about a hypothetical 1 year service contract (with 2 option periods) for a moment that began in 2008. In 2011, we face the expiration of the contract and the loss of employees. A new contract is awarded to a different contractor who, under current regulation, can bring in his own folks for contract to do the same or similar work. Basically it amounts to a changing of the guard.

If FAR 22.12 would have been in place, the new contractor would have at least had to offer the “outgoing” employees the same or similar positions for the contract. Instead, the outgoing contractor has to let them go because the economy has been tanking since 2008 and the unemployment rate rises. 3 months later (and having contributed to the unemployment rate) the employees are hired back because another contract will fund them at the contractor. However, do they take the job in this case, knowing that they could be out of work when the contract expires again?

Do we see where this has gone now?

It seems to me that this rule should have stayed in place as “just good policy.” We are not asking successor contractors to pick up the dolts of the predecessor, but at least give those that have performed well previously the chance to continue to do the same work. I know as a former government employee that I was driven nuts by the constant switching of points of contact when a contract rolled over to another contractor.

If you are interested in the discussion, consider going to:
http://www.regulations.gov/#!documentDetail;D=FAR-2011-0028-0001

If you are interested in staying current no matter what changes take place to the FAR clauses, you should definitely try http://www.thefarmatrix.com

About Marty Herbert

With 13 years of government contract administration, analysis, finance, and audit experience, I have established a firm baseline in ethics and a specialization in government contracts that has prepared me to become a subject matter expert in my field. I am currently working on enhancing government contracts management and compliance through workflow tools and product offerings - attempting to make the process proactive as opposed to reactive.
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