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Contractors working in buildings controlled by the General Services Administration might get buttonholed by a union organizer. That’s allowed now under a rule the GSA just finalized. What do contractor executives think about that? The Federal Drive with Tom Temin talks about that with Stephanie Kostro, the executive vice president for policy at the Professional Services Council.

Tom Temin: Stephanie, what are your members saying about this? Do they want union goons — I’m using their purported word — to come in and start organizing people that were just doing their work on a contract?

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Stephanie Kostro: Thanks again, Tom, for having me on your show. This is a rule that came out in final form on September 2. There is a 60 day comment period. And we are working with our member companies; the Professional Services Council, we represent government contractors who work on services, contracts, technology and professional services. And there’s a 60 day comment period that ends on November 1. And we are asking our members, what are you thinking about this? There was initially some confusion about why it was immediately a final rule. And that is because it amends the Federal Management Regulation of the acquisition regulations that we’re used to talking about. And really, it’s the latest in the administration support for organized labor and workers rights. It builds on recommendations from the White House and its task force on worker organizing and empowerment that was established by executive order. And the questions that we’re facing mostly from from our contractors is what does this mean for us? How can we talk to our employees? When will labor organizers or folks begin their campaign? And how will they do it? There are some guidelines that we are referring them to; we don’t offer legal or accounting advice, or opinions. But we do say, check out if you are under a service contract, act contract, any negotiation on services contracts. There are additional rules that you have to follow. And some of it is just common sense. If there’s a union campaign, don’t ever interrogate your employees, or make promises about terms of employment, etc. But the one question that we face the most, is, when will our employees talk with union organizers? What will that look like? For a long time now, union organizers could come and talk to federal employees. And I think this is just another example of the federal government treating contractor workers like their federal employees, and they’re assets of the federal government, rather than the companies themselves. So these conversations can happen outside of working areas. So if you think about it, you can get pamphlets, materials and whatnot, in break rooms and lunch rooms, outside in parking lots even. And so we’re waiting to see how this happens. Again, it was just passed or put into a final rule just two weeks ago. So we are watching this very closely.

Stephanie Kostro: And I guess there’s a practical question, besides the fact that the federal government legally is supposed to be neutral in labor relations, and just making sure that the rules in the statutes are followed, but not encouraging management, nor unions. But be that as it may, you wonder how it will work practically because, say I’m a larger contractor, I may have people on 10 different contracts, I may have 25 people here, 50 people there, 1000 people somewhere in a Navy yard or something, whatever the case might be, and what does that mean to organize 25 people here? Does that extend to every employee that you have anywhere? If one small unit at one contract at one location decides yeah, we’d like an election?

Stephanie Kostro: Yeah, that’s a fascinating question. And I think, Tom, this is something that franchises in the private sector have been dealing with. If the employees want to unionize at a Starbucks, for example, in New York City, does that impact Starbucks employees in other franchises, across the street even right? Because it is Starbucks, and it’s ubiquitous? I think that is one of the questions that we’re going to be asking: What does this mean, in terms of the company and the workers elsewhere? So as you pointed out, very appropriately at the beginning of this, this is for facilities under the control of the General Services Administration. So it’s not even throughout the entire government. And so I’m working through myself, how do we provide comments on this final rule and ask the questions that need to be asked? Because, again, the devil is always in the details. And implementation of this is going to be, as I said earlier, fascinating,

Tom Temin: Right? For example, Veterans Affairs has its own construction and its own building management. And I mentioned a Navy contract. And so many cases, facilities are controlled, not by the GSA, in those situations, but by the armed service involved. So that sort of does narrow it down a little bit, the scope.

Stephanie Kostro: Again, the devil is in the details. And as we’re pointing out to companies, they need to be monitoring the situation just to know what’s going on. Again, I don’t know that we’ve seen lots of unions come out and start pamphleting, or papering the break rooms and whatnot. But again, it’s just been about two weeks. So we’ll see what happens.

Tom Temin: Right. I guess we can expect it to be different unions coming than the federal employees; it’s not going to be AFGE or NTEU, because those are federal employee unions. They don’t have health plans, pension plans, because those all come from the government even where the unions are in place. So this would be other AFL-CIO affiliates and could be any of a dozen or 15 of them.

Stephanie Kostro: It could, and it’s not just about pay, right? It’s also about benefits. It’s about job security and the like. As we look forward into the future, what are going to be the key touch points for folks in these GSA controlled facilities? And will it expand throughout the rest of the government? I must confess, I have to become a little bit more familiar with the White House Task Force on worker organizing or organizing and empowerment, just to see what their recommendations are. But, again, this is not a surprise in the an administration that’s really pushing for organized labor and workers rights.

Tom Temin: We’re speaking with Stephanie Kostro. She’s executive vice president for policy at the Professional Services Council. And let’s move on to the other happy topic. Inflation guidance is now out. And people are picking that open to see exactly what’s in there. What’s the PSCs view of the guidance that was just out a couple of weeks ago?

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Stephanie Kostro: Yeah, Tom, a lot has happened since you last had a PSC official on your show. On September 9, the Department of Defense released updated guidance to contracting officers. They had initially released guidance back in May talking about economic price adjustments or requests for economic adjustments  and those, for your listeners, are basically anytime a company is experiencing higher than expected costs. Oftentimes, if they have a clause in their contract, they can make this request to be reimbursed for those costs, provided that they provide documentation and the like. Back in May, there was guidance that said, we can think about this. Reacquainting contracting officers with these EPA, these economic price adjustment clauses, that had sort of fallen out of contracts for a while. We were experiencing 2% inflation; that was expected. Not a big deal. Now we’re facing 9% inflation that was not expected. And so contractors are really feeling the pinch here. This new guidance from September 9 came out and said, we’ve also may consider these for firm, fixed price contracts which were excepted in the earlier guidance. That said, it doesn’t sound to me like they’re very encouraging at the Department of Defense for this. And I contrast that with the General Services Administration, I will mention them again. They released guidance back in March that they just updated with a supplement saying, Hey, we expanded the aperture for the EPA, or the requests for economic adjustments that you can ask for; it’s been working well, we’re keeping the industrial base relatively whole, and then they are getting reimbursed for justifiable costs. And we’re going to expand that a bit. And you no longer require additional approvals, pushing it down to the contracting officer to make these decisions. So we’re seeing on one hand, the Department of Defense not being entirely encouraging for this, and the GSA coming out and saying, we need this for for the health of our industrial base.

Tom Temin: Alright, so you go to one half of the government for relief on inflation, and you go to the other half for relief from union organizing, and I guess on average, contractors are doing pretty well. The other thing I wanted to ask you about is the tally. I hadn’t seen this, but the PSC put together a tally of President Biden’s executive orders last week and in 20 months, 99 of them. Wow. And there’s some pretty significant ones for federal contractors.

Stephanie Kostro: This is a really, really fast pace of executive orders. I hate to use the word unprecedented, because over the last two and a half years, that’s been used quite a bit in the COVID context. But if you compare it to previous administrations, in the Trump administration, he did sign out 220 of these things over the course of four years, but only 92 in the first two calendar years. So what I’m trying to do is figure out how much faster is the Biden-Harris administration sending these things out, and it’s quite a bit faster than the others. I think that’s partially a function of not getting exactly what they would like to see in legislation. It’s been a bit tough to move pieces and a little bit uncertain in that environment, particularly when you have an evenly split Senate chamber, where the Vice President has to break ties. And so recently, in the last few weeks, we’ve seen three executive orders come out with some impact potentially for contractors: one on CFIUS reform, that’s the Committee on Foreign investment in the United States. And this was explained to me that it is really can we reduce Chinese influence in US companies? And so we’re gonna see that, that was signed out just on the 15th of September. And then earlier in the month, he signed out an executive order on pieces of the Inflation Reduction Act. And I always trip over that, mostly because it’s mostly climate change and not necessarily inflation reduction, and another EO on biotech and bio manufacturing. My sense is that this is really the Biden-Harris administration doubling down on their economic recovery piece of the Build Back Better agenda. And they did release an economic blueprint on September 9. And so I suspect that these executive orders are closely tied to that push.

Tom Temin: All right, so then you’re just looking at them and there’s no real official contractor reaction here, sounds like.

Stephanie Kostro: Well, we’re waiting for — as you know, Tom, these executive orders are not open for public comment — and so we are waiting to see what comes out in the acquisition regulations. That said, we are supportive of any executive actions to help implement some of the appropriations and funding and the authorities that were in these bills, whether it’s the CHIPS bill for semiconductors or the Inflation Reduction Act for climate related issues. So on the whole, we’re waiting and seeing, but we are again waiting to see mostly what comes out in these new rules and regulations.

Tom Temin: Stephanie Kostro is executive vice president for policy at the Professional Services Council. As always, thanks so much.

Stephanie Kostro: Thanks, Tom.

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