Susan Walsh / AP

New Executive Order Seeks to Reduce Worker Turnover on Service Contracts 

This is one of several efforts by the Biden administration to use federal procurement and contracting to advance equity and its other priorities. 

President Biden issued an executive order on Thursday aimed at reducing worker turnover on service contracts. 

The executive order brings back policies from an Obama administration-era directive, which the Trump administration revoked. There are about 2 million service contract workers who contribute to “important federal functions” in a variety of roles “from maintenance on military bases to call centers to transportation to research and development,” said a fact-sheet from the White House. The employees are “disproportionately” women and people of color. 

“The executive order extends the right of first refusal to qualified workers when a service contract changes hands and the jobs on the new contract are similar,” as turnover can be timely and costly, said the fact-sheet. “Taxpayer-funded services [will] benefit from an experienced workforce that is already familiar with federal facilities, personnel and other requirements of the job” and this order will “provide firms that secure new federal contracts with a ready, skilled pool of workers.” 

Additionally, “this executive order will also remove the requirement that the new contract remain in the same location in order for the job continuity policy to take effect,” said the fact-sheet. “This change in policy updates the administration's approach to account for the flexible nature of service sector work in today’s economy.” 

Biden administration officials estimated that it could cost up to 20% of an employees’ salary to recruit, hire and train replacements, therefore this executive order would yield cost savings for the federal government, the Associated Press reported. Neither the fact-sheet nor the executive order mention any specific savings. 

In order to implement the provisions, the executive order directs the Labor Department to issue final regulations within 180 days and then within 60 days of that the Federal Acquisition Regulatory Council must amend the Federal Acquisition Regulation, so this can be included in contracts and solicitations. The Office of Management and Budget must also issue guidance. 

The order will “apply to solicitations issued on or after the effective date of the final regulations issued by the FAR Council,” said the executive order. For those issued in the meantime or those that have already been issued, federal agencies are “strongly encouraged” to apply the provisions. 

“Service contract” is defined as any contract, contract-like instrument or subcontract covered under the 1965 Service Contract Act. The executive order does not apply to contracts under the “simplified acquisition threshold,” which are contracts capped at $250,000, but can be higher for certain items, as well as employees hired to work on a federal service contract and at least one non-federal service contract as part of a single job “provided that the employees were not deployed in a manner that was designed to avoid the purposes of this order,” said the executive order. 

It also outlines how senior agency officials can make exceptions to this policy as well as authorizes the Labor secretary to investigate potential violations. 

The International Association of Machinists and Aerospace Workers, the largest defense and aerospace labor union in North America, which represents nearly 40,000 service contract workers, applauded the move. 

“President Biden is a champion for working families and continues to put them at the top of his agenda,” said Robert Martinez Jr., association president, in a statement. “Thousands of [International Association of Machinists and Aerospace Workers] members and other service contract workers can breathe a sigh of relief, knowing their jobs won’t be displaced when government service contracts change hands from one employer to another.” He sent a letter to Biden back in February advocating for this. 

Other initiatives the Biden administration has taken to use federal procurement and contracting to advance equity and its other priorities are working to strengthen “Buy America” rules and working to raise the minimum wage of service workers to $15 per hour.