The Professional Services Council Disappointed By Labor Department’s Non-Displacement Rule

The Professional Services Council (PSC) announced last week that it is disapproves of the Labor Department’s final rule that requires contractors to hire all qualified personnel inherited by virtue of winning a contract re-competition for Service Contract Act (SCA) covered contracts.

“We are disappointed with the Labor Department’s final decisions on this rule,” said PSC President and CEO Stan Soloway (@StanSoloway). “DoL missed a real opportunity to improve the proposed rule implementing the executive order. The final rule places inappropriate and counter-intuitive requirements on contractors, and perpetuates confusion about the core requirements imposed on contractors and the means to comply with its terms and conditions.”

Although the new rule implements a 2009 executive order, it will not go into effect until the Federal Acquisition Regulation (FAR) Council completes its companion rule.  Any future coverage in the FAR action will be based on this Labor Department’s regulation.

“As such, there will not be a meaningful opportunity to revisit many of the key implementation gaps that remain or to improve the processes that will be so essential for contractor compliance,” Soloway said. “Like the executive order and the proposed rule, the final rule essentially requires companies to hire all qualified members of the incumbent workforce without a meaningful opportunity to meet the contract performance as they see fit. While experience shows that companies often hire as many qualified incumbents as possible to avoid the costs of training new employees, this rule denies those companies, who have full responsibility for performance under the contract, their ability to select a workforce they believe is best suited to meeting the contract requirements. As such, it will not serve the best interests of the government or the taxpayer.”

With over 350 member companies representing businesses that provide federal agencies with services of all types, PSC is the voice of the government professional and technical services industry.

To view PSC submitted broad observations on the May 2010 proposed rule outlining the gaps, click here. To view the full text of the DoL final rule, click here.

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