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On December 22, 2025, the Department of Labor withdrew the rule known as 29 CFR part 9 — the “Nondisplacement of Qualified Workers Under Service Contracts.” The change takes effect immediately for federal agencies and for the firms that hold or bid on covered service contracts (about 119,695 firms currently hold such contracts; up to 442,761 firms could be affected). Under the rescission, companies that win or take over federal service contracts (for work like cleaning, food service, and building maintenance) are no longer required to offer jobs first to the incumbent service workers when a contract changes hands. The administration says the move will save roughly $39.1 million in the first year and about $11.1 million per year on average over 10 years.
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This matters because it removes a longstanding job-protection for low- and middle-wage contract workers at the moment of a contractor change, increasing the risk of layoffs or forced reapplications when contracts are rebid or assigned. The policy is a clear regulatory shift toward giving contractors more hiring flexibility and reducing compliance requirements for contract transitions; it is effective immediately, so procurement offices and bidders must follow the new rule now. The government’s estimated savings are explicit but narrow — those figures may not capture broader costs such as higher worker turnover, lost institutional knowledge, or increased public assistance needs — so the practical budget and labor impacts should be watched rather than taken at face value.
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