Aligning Federal Contracting and Hiring Practices With the Interests of American Workers
Signed: August 3, 2020
Published: August 6, 2020
Document Number: 2020-17363
📋Summary
This executive order directs federal agencies to review recent federal contracts to see whether contractors used temporary foreign workers (including H-1B workers) or moved work overseas, and whether that reduced job opportunities for U.S. workers or raised national security concerns. It affects executive-branch agencies that award contracts, federal contractors and subcontractors, and employers that place H-1B workers at worksites (including third-party sites). Agencies must examine contracts from fiscal years 2018 and 2019, review their own hiring policies for compliance with existing citizenship-related federal employment rules, and report findings and recommended corrective actions to the Office of Management and Budget within 120 days. It also instructs the Departments of Labor and Homeland Security, within 45 days, to take steps to better enforce H-1B requirements so U.S. workers’ wages and working conditions are not harmed.
💼Business Impact
This order most affects **federal contractors and subcontractors**—especially **IT/services firms, engineering/professional services, staffing/consulting companies, and any contractor using H‑1B labor or offshore delivery centers** to perform U.S. contract work. Agencies are directed to review FY2018–2019 contracts for **use of temporary foreign labor and offshoring**, which can lead to **stricter solicitation terms, heightened scrutiny in recompetes, and potential “bring work back/onshore” expectations** tied to procurement “economy/efficiency” and **national security** rationales. Compliance risk and opportunity center on **documenting workforce composition and work location**: expect more requests for data on **where services are performed, which roles are filled by visa holders, and subcontractor practices**, plus tighter enforcement of **H‑1B Labor Condition Application (LCA) requirements** at third‑party worksites (wages, working conditions, notice, and proper worksite reporting). Contractors that can credibly show **U.S.-worker recruiting, onshore delivery, and reduced reliance on visa-dependent staffing models** may gain a competitive advantage in bids and renewals. Immediate actions: **(1)**
Full Text
Executive Order 13940 of August 3, 2020
Aligning Federal Contracting and Hiring Practices With the Interests of American Workers
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1 . Policy. It is the policy of the executive branch to create opportunities for United States workers to compete for jobs, including jobs created through Federal contracts. These opportunities, particularly in regions where the Federal Government remains the largest employer, are especially critical during the economic dislocation caused by the 2019 novel coronavirus (COVID-19) pandemic. When employers trade American jobs for temporary foreign labor, for example, it reduces opportunities for United States workers in a manner inconsistent with the role guest-worker programs are meant to play in the Nation's economy.
Sec. 2 . Review of Contracting and Hiring Practices. (a) The head of each executive department and agency (agency) that enters into contracts shall review, to the extent practicable, performance of contracts (including subcontracts) awarded by the agency in fiscal years 2018 and 2019 to assess:
(i) whether contractors (including subcontractors) used temporary foreign labor for contracts performed in the United States, and, if so, the nature of the work performed by temporary foreign labor on such contracts; whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring; and
(ii) whether contractors (including subcontractors) performed in foreign countries services previously performed in the United States, and, if so, whether opportunities for United States workers were affected by such offshoring; whether affected United States workers were eligible for assistance under the Trade Adjustment Assistance program authorized by the Trade Act of 1974; and any potential effects on the national security caused by such offshoring.
(b) The head of each agency that enters into contracts shall assess any negative impact of contractors' and subcontractors' temporary foreign labor hiring practices or offshoring practices on the economy and efficiency of Federal procurement and on the national security, and propose action, if necessary and as appropriate and consistent with applicable law, to improve the economy and efficiency of Federal procurement and protect the national security.
(c) The head of each agency shall, in coordination with the Director of the Office of Personnel Management, review the employment policies of the agency to assess the agency's compliance with Executive Order 11935 of September 2, 1976 (Citizenship Requirements for Federal Employment), and section 704 of the Consolidated Appropriations Act, 2020, Public Law 116-93.
(d) Within 120 days of the date of this order, the head of each agency shall submit a report to the Director of the Office of Management and Budget summarizing the results of the reviews required by subsections (a) through (c) of this section; recommending, if necessary, corrective actions that may be taken by the agency and timeframes to implement such actions; and proposing any Presidential actions that may be appropriate. ( printed page 47880)
Sec. 3 . Measures to Prevent Adverse Effects on United States Workers. Within 45 days of the date of this order, the Secretaries of Labor and Homeland Security shall take action, as appropriate and consistent with applicable law, to protect United States workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites (including third-party job sites), including measures to ensure that all employers of H-1B visa holders, including secondary employers, adhere to the requirements of section 212(n)(1) of the Immigration and Nationality Act (8 U.S.C. 1182(n)(1)).
Sec. 4 . General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
THE WHITE HOUSE,
August 3, 2020.