Charles Walters Published in Bloomberg BNA’s Federal Contract Report
“New Rule Governing DOD, GSA and NASA Contractors’ Labor Relations Will Negatively Impact Non-Union Contractors”

An article by Employment partner Charles Walters was published in Bloomberg BNA’s February 28 Federal Contracts Report. In the article, Charles details Executive Order 13494, Economy in Government Contracting, which went into effect for the Department of Defense, General Services Administration and National Aeronautics and Space Administration in December. The rule prevents federal contractors from being reimbursed for the costs of engaging in lawful "activities undertaken to persuade employees, of any entity, 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."

According to Charles, although the new rule attempts to save the federal government money, it could result in increased unionization of non-union contractors, or in driving companies away from contracted work altogether due to the expense of complying with employees’ rights to exercise their rights under the National Labor Relations Act (NLRA). Charles also expresses concern that the order does not provide sufficient guidance on what are and are not allowable expenses, or the formal record-keeping measures that companies need to take. In the end, he surmises, non-unionized contractors will be at a disadvantage compared to their unionized counterparts.

“By effectively tilting the playing field in favor of unionized contractors, the rule (in conjunction with E.O. 13495 and 13496) will make it more difficult for non-union contractors to continue operating in the DOD, GSA and NASA space,” Charles posits. “This undoubtedly will increase the amount of such work done by unionized contractors which, in turn, may well create ripple effects such as the increased labor costs and threat of work stoppages that typically accompany unionization. Therefore, while certainly good news for organized labor and those contractors with unionized workforces, the rule very much is bad news for non-union contractors and, in the end, perhaps even DOD, GSA and NASA.”