Bona Fide Offers & The Service Employees' Right Of First Refusal

  • When a federal service contract succeeds a contract for performance of the same or similar services (as defined at 29 C.F.R. § 9.2) at the same location, the successor contractor and its subcontractors must:
  • Make a bona fide express offer of employment on the successor contract to each service employee employed under the predecessor contract whose employment will be terminated as a result of award of the successor contract or the expiration of the contract under which the service employees were hired, and
  • Give each such individual a "right of first refusal" in response to the offer of employment under the successor contract.
  • Such offers are required to be for employment in positions for which the service employees are qualified.
  • 29 C.F.R. §§ 9.2 and 9.12(b)(1); FAR 48 C.F.R. § 22.1202(a).

    • There shall be no employment opening under a covered contract, and the contractor and any subcontractors shall not offer employment under such a contract, to any person prior to having complied fully with this obligation. E.O. § 5 (b); 29 C.F.R. Part 9, Appendix A, paragraph (a); FAR 48 C.F.R. §§ 52.222-17(b)(2) and (c).
    • The obligation to offer employment shall cease upon the employee's first refusal of a bona fide offer of employment on the contract. 29 C.F.R. § 9.12(b).

    Method of job offer FAR 48 C.F.R. § 22.1203-4; 29 C.F.R. § 9.12(b).

    • The offer may be made in writing or orally, and
    • To ensure that the offer is effectively communicated, the successor contractor should take reasonable efforts to make the offer in a language that each worker understands.
    • For example, if the contractor holds a meeting for a group of employees on the predecessor contract in order to extend the employment offers, having a co-worker or other person who fluently translates for employees who are not fluent in English would satisfy this provision. 29 C.F.R. § 9.12(b)(3).
    • Each bona fide express offer of employment made to a qualified service employee on the predecessor contract must state a time limit of not less than 10 days for an employee response.
    • Prior to the expiration of the 10-day period, the contractor is prohibited from offering employment on the contract to any other person, except as otherwise allowed or required under provisions set forth in E.O. 13495 and its implementing regulations, as discussed below.

    E.O. § 5(a); 29 C.F.R. § 9.12(b)(2); FAR 48 C.F.R. § 22.1203-4.
    Bona fide offer of employment

    • As a general matter, an offer of employment to a position on the successor contract will be presumed to be bona fide:
    • Even if it is not for a position similar to the one the employee previously held, but is one for which the employee is qualified, and
    • Even if it is subject to different employment terms and conditions, including changes to pay or benefits, than those of the position the employee held with the predecessor contractor.
    • For example, an offer of employment to a position providing lower pay or benefits than those of the position the employee held with the predecessor contractor may be considered bona fide if the business reasons for the offer are valid - i.e., not related to a desire that the employee refuse the offer or that other employees be hired for the position.

    29 C.F.R. § 9.12(b)(4) and FAR 48 C.F.R. § 22.1203-4.

    • Note: Where an employee has been terminated under circumstances suggesting that the successor contractor's offer of employment may not have been bona fide, the facts and circumstances of the offer and the termination will be closely examined during any compliance action to ensure the offer was bona fide. 29 C.F.R. § 9.12(b)(6).

    Employee eligibility & qualifications

    • E.O. 13495 generally requires that successor contractors performing on federal service contracts offer a right of first refusal of suitable employment, i.e., a job for which the employee is qualified. 29 C.F.R. § 9.12(a).
    • A contractor must base its decision regarding an employee's qualifications on written credible information provided by a knowledgeable source such as the predecessor contractor, the local supervisor, the employee, or the contracting agency. 29 C.F.R. § 9.12(c)(4).
    • The successor contractor 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 E.O. 13495. 29 C.F.R. § 9.12(b)(1); FAR 48 C.F.R. § 22.1203-4.
    • Usually a person's entitlement to a job offer under E.O. 13495 and the implementing regulations will be based on whether he or she is named on the certified list of all service employees working under the predecessor's contract or subcontracts during the last month of contract performance.
    • However, a contractor must also accept other credible evidence of an employee's entitlement to a job offer under 29 C.F.R. Part 9.
    • For example, even if a person's name does not appear on the list of employees on the predecessor contract, an employee's assertion of an assignment to work on a contract during the predecessor's last month of performance coupled with contracting agency staff verification could constitute credible evidence of an employee's entitlement to a job offer.
    • Similarly, an employee could demonstrate eligibility by producing a paycheck stub identifying the work location and dates worked.

    29 C.F.R. § 9.12(a)(3).

    • 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. 29 C.F.R. § 9.12(a)(2).
    • The successor contractor and its subcontractors shall decide any question concerning an employee's qualifications based on the individual's education and employment history, with particular emphasis on the employee's experience on the predecessor contract. 29 C.F.R. § 9.12(b)(4); FAR 48 C.F.R. § 22.1203-4.

    Reduced staffing FAR 48 C.F.R. § 22.1203-6; 29 C.F.R. § 9.12(d).

    • A successor contractor and its subcontractors may employ fewer service employees than the predecessor contractor employed in connection with performance of the work.
    • Thus, the successor contractor need not offer employment on the contract to all service employees on the predecessor contract, but must offer employment only to the number of eligible service employees the successor contractor believes necessary to meet its anticipated staffing pattern, except that:
    • Where a successor contractor does not initially offer employment to all the predecessor contract service employees, the obligation to offer employment shall continue for 90 days after the successor contractor's first date of performance on the contract. 29 C.F.R. § 9.12(d)(3) and FAR 48 C.F.R. § 22.1203-6.
    • DOL regulations also provide that if there are staffing pattern changes when a contractor reduces the number of employees in any occupation on a contract with multiple occupations, resulting in some displacement, the contractor shall scrutinize each employee's qualifications in order to offer positions to the greatest number of predecessor contract employees possible. For examples, see 29 C.F.R. § 9.12(d)(3).
    • The contractor's obligation to offer employment opportunities and to implement the right of first refusal under E.O. 13495 and the implementing regulations will end when all of the predecessor contract employees have received a bona fide job offer (including stating the time within which the employee must accept such offer, which must be no less than 10 days) or the 90-day window of obligation has expired. (Three examples that demonstrate this principle are provided at 29 C.F.R. § 9.12((d)(1)(ii)(A), (B) & (C)).
    • DOL guidance at 29 C.F.R. § 9.12(d) addresses circumstances in which reduced staffing can occur.
    • The contractor and its subcontractors:
    • Determine the number of service employees necessary for efficient performance of the successor contract, and
    • May elect to employ fewer service employees than the predecessor contractor employed in connection with performance of the work, for bona fide staffing or work assignment reasons.

    E.O. § 5(a); 29 C.F.R. § 9.12(d)(3); 29 C.F.R. Part 9, Appendix A, paragraph (a); FAR 48 C.F.R. § 52.222-17(b)(1).

    • The successor contractor, subject to certain restrictions - such as under non-discrimination laws and regulations - will determine which of the predecessor contractor's employees will receive its offers of employment while the process described above is implemented.


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