New regulations on Nondisplacement of Qualified Workers Under Service Contracts

January 17, 2013
5 min read

Effective January 18, 2013:
New regulations on Nondisplacement of Qualified Workers Under Service Contracts
The Department of Labor has announced that new regulations addressing the Nondisplacement of Qualified Workers Under Service Contracts covered by the McNamara-O’Hara Service Contract (Act) will go into effect on January 18, 2013. The publication of the corresponding FAR final rule on December 21, 2012 ends a nearly four-year process that began with the Issuance of Executive Order 13495 on January 30, 2009.
The DOL’s action will result in all SCA covered contracts over the simplified acquisition threshold (currently $150,000) awarded on or after January 18, 2013 to include a contract clause (FAR 52.222-17) which requires prime contractors and their subcontractors under successor contract to offer SCA-covered employees of the predecessor contractor and it subcontractors a right of first refusal of employment for positions for which they are qualified.

What exactly does the Nondisplacement of Qualified Workers Under Service Contracts order mean for you?
Obligations of predecessor contractor/subcontractor:

  • Inform existing workforce of their right of first refusal.
  • Provide list of service employees to the contracting officer no less than 30 days before contract completion.

Obligations of successor contractor/subcontract:

  • In good faith offer SCA-covered employees of the predecessor contractor/subcontractor a right of first refusal of employment for contract positions for which the employees are qualified.
  • All offers to incumbent service employees must state a time limit of not less than 10 days for an employee’s response. Only then can a position vacated by an incumbent service employee be filled.
  • The obligation remains in place for 90 days after the first date of performance on the contract to provide displaced employees a right of first refusal if additional service personnel are added to the contract.


  • The successor may elect to reduce staff. There is no obligation for all of the predecessor’s employees to get a job offer if the number of job openings on the successor contract(s) is lower than the number of qualified incumbent service employees.
  • An offer of employment will be presumed to be bona fide even if it is for a different position than the employee previously held, but the employee is qualified to perform, even if it is subject to different employment terms and conditions including changes to pay and benefits.
  • Successor contractor may continue to employee their own employees who have worked for them for at least 3 months and who would otherwise be laid off.
  • The successor has no obligation to extend offers to incumbent service employees who will be retained by the predecessor.


  • There is no obligation for the predecessor to provide contact information for their employees, only names and anniversary dates.
  • The successor may utilize employment screening processes only when such processes are provided for by the contracting agency, are conditions of the service contract, and are consistent with the EO.
  • The successor contractor is to presume that that all employees working under the predecessor contract in the last month of performance performed suitable work.
  • Encourages contracting officers to enter into bilateral modification with existing service contractors to agree to perform paragraph (c ) of the clause at FAR 52.222.17.
  • Allows for agency to exempt contracts from the application of the nondisplacement requirements.

Now That It’s Here You Need To Get Ready!
With January 18th being only days away, employers covered by the final rule should immediately evaluate what, if any, obligations they may have moving forward and take any steps necessary to ensure timely compliance with the final rule. The Department of Labor provides some helpful information on the basics of the new requirements.
GSA has several subject matter professionals available to consult with to ensure all compliance requirements are met. Please contact us with questions about these changes and how to prepare at 1-800-250-2741, ext. 170 or via email at

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