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An Obama Executive Order Limits Contractors' Hiring Options

An Obama Executive Order Limits Contractors' Hiring Options

By Robert Brodsky | Government Executive Magazine

Less than two weeks after his inauguration, President Obama signed a little-noticed executive order that could dramatically change how federal contractors staff their government projects. The Jan. 30 directive requires service providers that win follow-on contracts to offer jobs to nonmanagerial employees at the previous company. No positions can be advertised until former employees have been granted the right of first refusal, according to the order.

“The federal government’s procurement interests in economy and efficiency are served when the successor contractor hires the predecessor’s employees,” the order states. “A carry- over workforce reduces disruption to the delivery of services during the period of transition between contractors and provides the federal government the benefits of an experienced and trained workforce that is familiar with the federal government’s personnel, facilities and requirements.”

But unlike some other Obama directives – including the president’s March 4 contracting reform memorandum – the order does little to change government’s dependence on the private sector. The work still will be performed by contract employees; the order simply limits the pool of talent. Some industry officials question the wisdom and necessity of the order. Service contractors frequently offer jobs to the incumbent company’s workers to retain their knowledge and to keep transition costs low.

But mandating such a system, in which a company is stuck with employees it did not hire, could limit the contractor’s flexibility, increase personnel and training costs, and stifle innovation, says Stan Soloway, president of the Professional Services Council, an industry trade association. “The biggest concern from an industry perspective . . . is making certain that appropriate flexibility is given that any employer would need to make determinations of suitability for hiring,” Soloway says.

Larry Allen, president of the Coalition for Government Procurement, another contracting group, says the directive might make outsourcing more unattractive and unnecessarily burdensome, thereby increasing the need to bring the work in-house. Federal employee unions, which supported Obama during his campaign, have advocated insourcing government jobs and ending the Bush administration’s public-private job competitions. The fiscal 2009 omnibus appropriations bill, which Obama signed in March, included provisions that accomplished both goals. But the measures expire on Sept. 30. “If you are a labor union, you are stopping outsourcing, which gets you one step closer to your goal of insourcing,” Allen says. “It’s a difference of degrees, but in essence it is the same thing as moving a runner from second base to third base. You’re not home yet, but you’re a lot closer than you were.”

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