Economy in Government Contracting

This executive order prohibits federal contractors from billing the government for costs related to persuading employees about union organizing or collective bargaining, while allowing costs for general labor-management relations. The FAR Council must issue implementing regulations within 150 days. The order takes effect immediately but applies only to contracts from solicitations issued after the FAR Council acts.

Federal Register Open PDF 74 FR 6101

Impact dates

Jun 29, 2009
FAR Council adopts rules and regulations to carry out order

Key directives

Treat as unallowable costs of activities to persuade employees about organizing/collective bargaining rights
Exclude such costs from billing, claims, proposals, or disbursements
Allow costs for maintaining satisfactory labor relations (labor-management committees, employee publications, related activities)
FAR Council to adopt rules within 150 days of effective date
Rules must minimize compliance costs and not restrict non-reimbursed advocacy
EO applies to contracts from solicitations issued on or after FAR Council action date

Who is ordered

Federal Acquisition Regulatory Council · General Services Administration/DoD/NASA

Timeline

Immediate

EO effective immediately upon signing
contractors must begin tracking unallowable costs prospectively

Near term (90d)

FAR Council developing rules and regulations (150-day deadline extends beyond 90 days)

Long term

rules apply to contracts from solicitations issued after FAR Council action
ongoing compliance cost minimization for contractors

Risks & tensions

Vague boundary between 'persuasion' costs (unallowable) and 'maintaining satisfactory relations' (allowable) may create compliance uncertainty
Non-interference with non-reimbursed advocacy may be difficult to enforce in practice
Retroactivity concern: immediate effect but delayed applicability to contracts creates implementation gap
Potential tension with contractor free speech rights; text claims consistency with impartiality policy but this is contested terrain