On February 4, 2022, President Joe Biden signed an Executive Order on Use of Project Labor Agreements for Federal Construction Projects (the “Executive Order”)1, which will require the use of project labor agreements (“PLAs”) on large-scale federal construction projects with a total estimated cost to the federal government of $35 million or more.
A PLA is a collective bargaining agreement that applies to a specific construction project and lasts only for the duration of the project. PLAs are primarily designed to reduce jurisdictional disputes among unions and between union and non-union contractors through binding procedures to resolve labor disputes that may arise during the course of a project. Most PLAs include provisions barring unions from striking and contractors from locking out workers. Moreover, PLAs typically require that workers hired for a project be referred through union hiring halls, that non-union workers pay union dues while working on a project, and that contractors adhere to union rules regarding working conditions.
While the Executive Order is effective immediately, it applies only to solicitations issued after the effective date of the final regulations issued by the Federal Acquisition Regulatory (“FAR”) Council. The FAR Council has 120 days to propose regulations implementing the provisions of the Executive Order. There is usually a substantial period of time between publication of proposed regulations, evaluation of public comments, and publication of final regulations.
By requiring the use of PLAs, the Biden Administration aims to “alleviate the management and coordination challenges that can stymie progress on major construction projects.”2 White House officials say the Executive Order “could affect $262 billion in federal government construction contracting and improve job quality for the nearly 200,000 workers employed on federal construction contracts.”3
Currently, FAR regulations permit, but do not require, the use of PLAs on federal construction projects of $25 million or more under Executive Order 13502. President Biden’s Executive Order revokes Executive Order 13502, effective on the date that the final FAR regulations are published.
Requirements of PLAs
According to Section 4 of the Executive Order, PLAs must:
- Bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents;
- Allow all contractors and subcontractors on the construction project to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements;
- Contain guarantees against strikes, lockouts, and similar job disruptions;
- Set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement;
- Provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and
- Fully conform to all statutes, regulations, Executive Orders, and Presidential Memoranda.
Exception to the PLA Requirement
The Executive Order applies to all federal government contracts awarded by “an executive department or agency, including independent establishments.”4 However, Section 5 of the Executive Order provides senior public agency officials with the right to grant an exemption to the PLA requirement. In order to secure an exemption, the senior official must provide a specific written explanation detailing why at least one of the following circumstances exists:
- Requiring a PLA on the project would not advance the federal government’s interests in achieving economy and efficiency in federal procurement because: (a) the project is of short duration and lacks operational complexity; (b) the project will involve only one craft or trade; (c) the project will involve specialized construction work that is available from only a limited number of contractors or subcontractors; (d) the agency’s need for the project is of such an unusual and compelling urgency that a PLA would be impracticable; or (e) the project implicates other similar factors deemed appropriate in the implementing FAR regulations or guidance.
- Based on an inclusive market analysis, requiring a PLA on the project would substantially reduce the number of potential bidders so as to frustrate full and open competition.
- Requiring a PLA on the project would otherwise be inconsistent with statutes, regulations, executive orders, or presidential memoranda.5
According to Section 6 of the Executive Order, federal agencies are now required to publish, on a centralized public website, data showing the use of PLAs on their large-scale construction projects, as well as descriptions of the exemptions granted under Section 5 of the Order. Federal agencies will also be required to report this information on a quarterly basis to the Office of Management and Budget.6
2FACT SHEET: President Biden Signs Executive Order to Boost Quality of Federal Construction Projects | The White House, https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/03/fact-sheet-president-biden-signs-executive-order-to-boost-quality-of-federal-construction-projects/.
4Executive Order 14063, Section 2(d).
5Id at Section 5.
6Id at Section 6.
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