Executive Order Requires Hiring of Losing Incumbents Employees

By Lynn Patton Thompson

President Obama issued an Executive Order requiring contractors that have won service contracts to hire the non-managerial employees of the losing incumbent. The winning contractor is not permitted to advertise for the non-managerial positions until after the losing contractor’s employees have been given their "right of first refusal". The Order states that "[t]he federal government’s procurement interests in economy and efficiency are served when the successor contractor hires the predecessor’s employees." Although a similar Executive Order was in place during the Clinton Administration, supporters and critics of President Obama’s policy are making their voices heard.

Critics are concerned that mandating a predecessor’s employees be retained limits the winning contractor’s flexibility in achieving economy and efficiency. There are concerns also that it gives union-like protection for jobs. One of the exceptions for not hiring a predecessor’s employee is that he or she did not "perform suitably on the job." This language may be used as a sword against successor contractors by non-retained workers who want to contest the decision not to hire them. It might also require that the predecessor contractor hand over the employees’ personnel records. If non-retained workers can sue a contactor for not being hired, that alone may result in winning contractors maintaining "marginal" incumbent employees rather than hiring better skilled or motivated new employees. It may also have a chilling effect on how contractors rate their employees or document their records if there "poor references" may cause an employee not to be hired by a successor contractor.

Supporters of the requirement argue that it increases job stability, decreasing training costs. They point out also that most successor contractors already hired the predecessor’s employees anyway.