Executive Order 13494: Economy in Government Contracting
President: Barack Obama
Made contractor costs of persuading employees about unionization non-reimbursable under federal contracts.
Status: In effect as amended. Is Executive Order 13494 still in effect? Yes. Executive Order 13494 remains in effect as amended by Executive Order 13517 on October 30, 2009. The Federal Register disposition table records that amendment, not a revocation, and FAR 31.205-21(b) still makes contractor persuader costs unallowable. Sources: Current Federal Register executive order disposition table: 2009; Executive Order 13494: signed Federal Register text; Current FAR 31.205-21: Labor relations costs; Executive Order 13517, October 30, 2009.
What does Executive Order 13494 do?
EO 13494 declared that federal procurement should not reimburse contractor expenses aimed at persuading employees to exercise or not exercise collective-bargaining rights. It preserved reimbursement for maintaining satisfactory labor relations and required acquisition rules defining the boundary.
Covered persuader expenses include preparing materials, hiring counsel or consultants, holding meetings and using managers’ or supervisors’ work time to urge employees for or against organizing or collective bargaining. Ordinary contract negotiation and administration costs remain a separate allowable category, except for the excluded persuasion activity. The distinction is between what may be charged to the government and what a contractor may lawfully pay for itself. FAR 31.205-21(a)–(b).
EO 13517 replaced section 3 on October 30, 2009 to clarify that otherwise allowable labor-relations expenses do not include the persuasion activities excluded elsewhere in the order. That clarification did not revoke the policy or create a general ban on employer or union speech. EO 13517, section 2.
Before and after
Before the order
Contract accounting rules did not contain this order’s express government-wide persuader-cost policy.
After the order
Specified persuader costs became unallowable under covered contracts. The implementing rule did not impose a separate Paperwork Reduction Act information-collection requirement.
Signing was not the trigger for rewriting every existing contract. Section 8 tied implementation to contracts resulting from solicitations issued on or after the FAR Council’s implementing action became effective. The final rule’s effective date was December 2, 2011. A contractor therefore needs the applicable contract and solicitation history as well as the cost category. EO 13494, section 8; Final rule, dates and applicability.
Who had to do what
| Agency or official | Direction | Timing |
|---|---|---|
| Federal Acquisition Regulatory Council | Adopt implementing rules or orders, minimize compliance costs and preserve advocacy for which contractors do not claim reimbursement. | Original direction within 150 days of January 30, 2009; actual proposal and final-rule dates are separate evidence. |
| Each contracting department or agency | Exclude covered persuasion costs; retain qualifying ordinary labor-relations expenses; provide requested assistance and information to the Council. | Cooperation as requested; cost implementation for contracts from solicitations issued on or after the implementing action’s effective date. |
| Contractors submitting covered billings, claims or proposals | Exclude covered persuader expenses from charges to the government; lawful advocacy may be paid without federal reimbursement. | When submitting costs under covered contracts; no separate disclosure form mandated by this rule. |
Signed order, sections 2–8; Actual FAR implementation. The original 150-day direction does not establish timely delivery of the later rule.
What happened next
EO 13494 was signed and took immediate effect; contract applicability depended on implementing action. Official source.
The order was published at 74 FR 6101. Official source.
EO 13517 clarified the labor-relations cost allowance by replacing section 3; publication followed November 5. Official source.
DoD, GSA and NASA published the proposed FAR rule, as recorded in the final rule’s background. Official source.
The FAR Labor Relations Costs final rule was published at 76 FR 68040. Official source.
The final rule took effect for contracts arising from solicitations issued on or after this date. Official source.
Legal and source detail
How it works legally
The order relies on presidential procurement authority. It changes cost allowability, not National Labor Relations Act rights, and expressly preserves contractor activity paid without federal reimbursement.
Sources by type
If a source is unavailable, first check the cited publisher or another official repository. The cited publisher remains the authority.
Primary and official sources
Orders, laws, court records and official implementation material.
How we checked this
Last checked against the sources above on October 16, 2026. How we research →