diff --git a/scheduler/reconcile.go b/scheduler/reconcile.go
index 06f224e5a..f44d09b8f 100644
--- a/scheduler/reconcile.go
+++ b/scheduler/reconcile.go
@@ -113,7 +113,7 @@ func NewAllocReconciler(logger *log.Logger, allocUpdateFn allocUpdateType, batch
 	jobID string, job *structs.Job, deployment *structs.Deployment,
 	existingAllocs []*structs.Allocation, taintedNodes map[string]*structs.Node) *allocReconciler {
 
-	a := &allocReconciler{
+	return &allocReconciler{
 		logger:         logger,
 		allocUpdateFn:  allocUpdateFn,
 		batch:          batch,
@@ -126,14 +126,6 @@ func NewAllocReconciler(logger *log.Logger, allocUpdateFn allocUpdateType, batch
 			desiredTGUpdates: make(map[string]*structs.DesiredUpdates),
 		},
 	}
-
-	// Detect if the deployment is paused
-	if deployment != nil {
-		a.deploymentPaused = deployment.Status == structs.DeploymentStatusPaused
-		a.deploymentFailed = deployment.Status == structs.DeploymentStatusFailed
-	}
-
-	return a
 }
 
 // Compute reconciles the existing cluster state and returns the set of changes
@@ -152,6 +144,12 @@ func (a *allocReconciler) Compute() *reconcileResults {
 		return a.result
 	}
 
+	// Detect if the deployment is paused
+	if a.deployment != nil {
+		a.deploymentPaused = a.deployment.Status == structs.DeploymentStatusPaused
+		a.deploymentFailed = a.deployment.Status == structs.DeploymentStatusFailed
+	}
+
 	// Reconcile each group
 	complete := true
 	for group, as := range m {
@@ -184,8 +182,6 @@ func (a *allocReconciler) cancelDeployments() {
 		return
 	}
 
-	// TODO it doesn't like operating on a failed deployment
-	// Write a test
 	d := a.deployment
 	if d == nil {
 		return
diff --git a/scheduler/reconcile_test.go b/scheduler/reconcile_test.go
index 9f3194c28..e787987b4 100644
--- a/scheduler/reconcile_test.go
+++ b/scheduler/reconcile_test.go
@@ -2675,4 +2675,74 @@ func TestReconciler_FailedDeployment_CancelCanaries(t *testing.T) {
 	assertNamesHaveIndexes(t, intRange(0, 1), stopResultsToNames(r.stop))
 }
 
-// TODO Test that a failed deployment and updated job works
+// Test that a failed deployment and updated job works
+func TestReconciler_FailedDeployment_NewJob(t *testing.T) {
+	job := mock.Job()
+	job.TaskGroups[0].Update = noCanaryUpdate
+
+	// Create an existing failed deployment that has some placed allocs
+	d := structs.NewDeployment(job)
+	d.Status = structs.DeploymentStatusFailed
+	d.TaskGroups[job.TaskGroups[0].Name] = &structs.DeploymentState{
+		Promoted:     true,
+		DesiredTotal: 10,
+		PlacedAllocs: 4,
+	}
+
+	// Create 6 allocations from the old job
+	var allocs []*structs.Allocation
+	for i := 4; i < 10; i++ {
+		alloc := mock.Alloc()
+		alloc.Job = job
+		alloc.JobID = job.ID
+		alloc.NodeID = structs.GenerateUUID()
+		alloc.Name = structs.AllocName(job.ID, job.TaskGroups[0].Name, uint(i))
+		alloc.TaskGroup = job.TaskGroups[0].Name
+		allocs = append(allocs, alloc)
+	}
+
+	// Create the healthy replacements
+	for i := 0; i < 4; i++ {
+		new := mock.Alloc()
+		new.Job = job
+		new.JobID = job.ID
+		new.NodeID = structs.GenerateUUID()
+		new.Name = structs.AllocName(job.ID, job.TaskGroups[0].Name, uint(i))
+		new.TaskGroup = job.TaskGroups[0].Name
+		new.DeploymentID = d.ID
+		new.DeploymentStatus = &structs.AllocDeploymentStatus{
+			Healthy: helper.BoolToPtr(true),
+		}
+		allocs = append(allocs, new)
+	}
+
+	// Up the job version
+	jobNew := job.Copy()
+	jobNew.JobModifyIndex += 100
+
+	reconciler := NewAllocReconciler(testLogger(), allocUpdateFnDestructive, false, job.ID, jobNew, d, allocs, nil)
+	r := reconciler.Compute()
+
+	dnew := structs.NewDeployment(job)
+	dnew.TaskGroups[job.TaskGroups[0].Name] = &structs.DeploymentState{
+		DesiredTotal: 10,
+	}
+
+	// Assert the correct results
+	assertResults(t, r, &resultExpectation{
+		createDeployment:  dnew,
+		deploymentUpdates: nil,
+		place:             4,
+		inplace:           0,
+		stop:              4,
+		desiredTGUpdates: map[string]*structs.DesiredUpdates{
+			job.TaskGroups[0].Name: {
+				DestructiveUpdate: 4,
+				Ignore:            6,
+			},
+		},
+	})
+
+	assertNamesHaveIndexes(t, intRange(0, 3), stopResultsToNames(r.stop))
+	assertNamesHaveIndexes(t, intRange(0, 3), placeResultsToNames(r.place))
+}