Requirement to Use Project Labor Agreements on Federal Construction Projects signed by President Biden
On February 4, 2022, President Biden signed an executive order affecting federal contractors involved in “large-scale construction contracts.”
The Executive Order on Use of Project Labor Agreements For Federal Construction Projects requires that project labor agreements (PLA) be in place before being awarded a contract by the federal government that are estimated at $35 million or more. The EO excludes projects funded by grants to non-federal agencies (state or local governments), even if such projects receive federal funding. These projects will make up for the bulk of the projects under the $1 trillion infrastructure bill.
Although the EO is effective immediately, the Federal Acquisition Regulatory (FAR) Council and the Director of the Office of Management and Budget (OMB) has until June 4, 2022, to propose regulations implementing the order.
The Order does not require that construction companies unionize or already be in a union. Instead, it binds federal construction contractors’ employees to the terms of a PLA.
Any PLA must include the following:
Bind all contractors and subcontractors on the project to the PLA.
Allow all contractors and subcontractors to compete without regard to whether they are parties to a collective bargaining agreement.
Guarantees against strikes, lockouts, and similar job disruptions.
Provide effective, prompt, and mutually binding procedures for resolving labor disputes.
Mechanisms to promote labor-management cooperation on “matters of mutual interest and concern, including productivity, quality of work, safety, and health.”
Terms that fully conform to statutes, regulations, Executive Orders and Presidential Memoranda.
The PLA requirement for large-scale construction projects also has three limited exemption scenarios. The EO will not apply if it would:
Not advance the governments interest in achieving economy and efficiency. The analysis will be based on the following:
Short-term projects
Simple projects without complexity
Projects involving one craft or trade
Projects involving specialized construction that is only available from a limited number of contractors
The need for the project is of an unusual and compelling urgency, making a PLA impracticable
Substantially reduce potential bidders for a project, by not allowing full and open competition.
Otherwise, be inconsistent with statutes, regulations, Executive Orders or Presidential Memoranda.
Earlier this week, 16 groups representing the U.S. Construction industry sent a letter to the White House opposing the executive order signed by President Biden.
"The administration's flawed rationale justifying pro-PLA policies ignores marketplace realities and broad opposition to government-mandated PLAs within the construction industry," said the letter, which was sent to the White House on February 15, 2022. The letter went on to state that the labor agreements will exacerbate the construction industry's skilled labor shortage and undermine the Biden administration's ability to meet its infrastructure, affordable housing and clean energy goals.
Without the final regulations from the FAR council & the Director of OMB, there is uncertainty as to how these regulations will be enforced. Updates on these specifics are expected to be released mid-year.