What Government Contractors Need to Know About Executive Order “Economy in Government Contracting” Raymond L. Hogge, Jr. Hogge Law Attorneys and Counselors at Law 500 E. Plume Street, Suite 800 Norfolk, Virginia, (757) This presentation is intended solely for informational purposes and is not offered as legal advice VirginiaLaborLaw.com

Federal Acquisition Regulations Part 31: Determines allowable costs under contracts with General Services Administration Department of Defense NASA VirginiaLaborLaw.com

Federal Acquisition Regulations Subpart 31.2: Governs contracts with commercial organizations VirginiaLaborLaw.com

Federal Acquisition Regulations Subpart : Governs costs allowable as labor relations costs VirginiaLaborLaw.com

Federal Acquisition Regulations Subpart before Executive Order 13494: “Costs incurred in maintaining satisfactory relations between the contractor and its employees” are allowable VirginiaLaborLaw.com

Federal Acquisition Regulations Subpart before Executive Order 13494: Allowable labor relations costs include Costs of shop stewards Costs of labor management committees Costs of employee publications Costs of other related activity VirginiaLaborLaw.com

Executive Order “Economy in Government Contracting” Amended Federal Acquisition Regulations Subpart Issued January 30, 2009 Amended Oct. 30, 2009 by Exec. Order VirginiaLaborLaw.com

Proposed regulations issued April 14, 2010 Final regulations issued Nov. 2, 2011 and effective December 2, CFR VirginiaLaborLaw.com

Under Executive Order costs incurred in maintaining satisfactory relations between the contractor and its employees include Costs of shop stewards Costs of labor management committees Costs of employee publications Costs of other related activities (same as before Executive Order 13494) VirginiaLaborLaw.com

Executive Order allows costs of “Costs incurred in maintaining satisfactory relations between the contractor and its employees” other than the costs of persuader activities VirginiaLaborLaw.com

Executive Order disallows costs of “persuader activities” “Any activities to persuade undertaken to persuade employees to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees’ own choosing” VirginiaLaborLaw.com

After Exec. Order 13494: Specifically disallows persuader activity costs of “preparing and distributing materials” (b)(1) VirginiaLaborLaw.com

After Exec. Order 13494: Specifically disallows persuader activity costs of “hiring or consulting legal counsel or consultants” (b)(2) VirginiaLaborLaw.com

After Exec. Order 13494: Specifically disallows persuader activity costs of “meetings (including paying the salaries of the attendees at meetings held for this purpose)” (b)(3) VirginiaLaborLaw.com

After Exec. Order 13494: Specifically disallows persuader activity costs of “planning or conducting activities by managers, supervisors, or union representatives during work hours” (b)(4) VirginiaLaborLaw.com

Costs associated with development, implementing, and enforcement of neutrality agreements Allowable provided the activity is not a persuader activity and is not “otherwise unlawful” (Preamble to Final Regulations) VirginiaLaborLaw.com

Costs associated with negotiating collective bargaining agreements Allowable provided the negotiation is not “otherwise unlawful” (Preamble to Final Regulations) VirginiaLaborLaw.com

Costs associated with encouraging employees to ratify a collective bargaining agreement Allowable provided the activity is not “otherwise unlawful” (Preamble to Final Regulations) VirginiaLaborLaw.com

Costs associated with “administering collective bargaining agreements” Allowable provided the activity is not “otherwise unlawful” (Preamble to Final Regulations) VirginiaLaborLaw.com

Costs associated with any activity found unlawful by the National Labor Relations Board Not allowable (Preamble to Final Regulations) VirginiaLaborLaw.com

Public Comment: The rule favors unions and penalizes contractors Response in Final Rule Preamble: The rule only applies to persuade activities VirginiaLaborLaw.com

Public Comment: The rule infringes on the rights of employers to engage in speech which is lawful under the National Labor Relations Act Response in Final Rule Preamble: The rule does not prohibit speech; it only disallows the contractor’s cost of engaging in that persuader activities VirginiaLaborLaw.com

Public Comment: The rule is unclear as to what costs are disallowed Response in Final Rule Preamble: The rule identifies the costs that are allowed and the costs that are disallowed VirginiaLaborLaw.com

Public Comment: The rule defines “persuader activity” more broadly than the Labor Management Relations Reporting and Disclosure Act Response in Final Rule Preamble: The rule does not alter the reporting obligations of employers under the LMRDA VirginiaLaborLaw.com

Public Comment: The rule imposes significant compliance burdens and accounting costs to segregate disallowed costs Response in Final Rule Preamble: FAR requires contractors to have accounting system to segregate allowable costs VirginiaLaborLaw.com

Employee handbook of non-union employer expressing preference to remain non-union A persuader activity? Cost disallowed for only the policy or for the entire handbook? VirginiaLaborLaw.com

Employee satisfaction surveys A persuader activity? Or maintaining satisfactory labor relations? VirginiaLaborLaw.com

Employer wage and benefit surveys A persuader activity? Or maintaining satisfactory labor relations? VirginiaLaborLaw.com

Workplace “town hall” meetings conducted by employer to discuss employee concerns A persuader activity? Or maintaining satisfactory labor relations? VirginiaLaborLaw.com

Use by employer of management consultants to improve workforce satisfaction A persuader activity? Or maintaining satisfactory labor relations? VirginiaLaborLaw.com

Use by employer of legal counsel for advice on labor relations issues A persuader activity? Or maintaining satisfactory labor relations? VirginiaLaborLaw.com

To obtain a complementary copy of this presentation, or for assistance in complying with Executive Order 13494, please contact Ray Hogge at (757) or at VirginiaLaborLaw.com