I finally had the opportunity to put my co-worker out of his misery. The incoming contractor sent him a letter informing him that he would not be offered a position in the new company. Pretty harsh to not have a face-to-face discussion, but I guess that's how things work.
The guy that was released wanted to chat with me about it. He just wanted some reason as to why he was being release. I didn't give him much more of a reason outside of telling him that the government officials were the ones to make the decision. It was a bummer for him as he had been recently hired and really didn't have that much of an opportunity to make an impression. He had a feeling that something might be up, so he wasn't totally surprised.
I took his badge from him and walked him out of the building. I felt like a jailer or a pastor walking a guy to the electric chair. I've personally never been removed from a job, so it was certainly an experience to do it to someone else. I have to walk him out of the building with the idea that once he's outside of the building, he won't have any access to get back in without passing security. This policy is obviously in place to keep the workers safe.
He understood that it wasn't my decision and I gave him my phone number in case he wanted any references for upcoming job interviews. We shook hands outside and I told him good luck. I felt bad, but it was out of my control.