By: William F. Bresee, Esq.
On February 4, 2022, in what may be seen as a boon to labor unions, President Biden executed an Executive Order mandating the use of project labor agreements (“PLAs”) on “large-scale” Federal construction projects (those with an estimated total cost of $35 million or more) unless a senior official within the contracting Federal agency grants an exemption from the requirement under specified circumstances listed in the Executive Order. The Executive Order will apply to solicitations issued on or after the effective date of final regulations issued by the Federal Acquisition Regulatory Council (“FAR Council”), which is directed to issue proposed regulations within 120 days of the date of the Executive Order. The Executive Order also revokes Executive Order 13502 of February 6, 2009 (Use of Project Labor Agreements for Federal Construction Projects) as of the effective date of the final regulations issued by the FAR Council; Executive Order 13502, issued by President Obama, made use of PLAs permissive on projects of $25 million or greater and discretionary as to being appropriate in the determination of the involved agency. The Executive Order is estimated to affect $262 billion of Federal construction work.
PLAs are collective bargaining agreements between labor unions and contractors that establish the terms and conditions of employment for a specific construction project. The terms of the PLA apply to all contractors and subcontractors who successfully bid on the project, and supersede any existing union labor agreement. PLAs typically require that employees hired for the project are referred through union hiring halls, that nonunion workers pay union dues for the length of the project, and that the contractor, whether union or open shop, follow union rules on pensions, work conditions and dispute resolution.
The Executive Order requires that any PLA reached pursuant to the order:
(a) bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents;
(b) 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;
(c) contain guarantees against strikes, lockouts, and similar job disruptions;
(d) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the PLA;
(e) provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and
(f) fully conform to all statutes, regulations, Executive Orders, and Presidential Memoranda.
The Executive Order also mandates that the Departments of Defense and Labor, along with Office of Management and Budget, coordinate in designing a training strategy for agency contracting officers to enable those contracting officers to effectively implement the order.
Since issuance of the Executive Order, the use of PLAs has been opposed by a number of groups, including the Associated General Contractors, the leading association in the construction industry, and the Associated Builders and Contractors, a national construction industry trade association. The chief executive officer of the AGC asserts that the government mandate solves a problem that does not exist and discriminates against the more than 85% of construction workers choosing not to belong to a union by requiring employers to pay both their employees’ benefits and those of the unions involved in the PLA; stating further “Career civil servants also do not see the benefits of imposing these kinds of agreements. A recent analysis of federal construction procurement decisions by the Department of Defense… found that in 99.4 percent of construction projects where a PLA could have been imposed, nonpartisan federal officials found no benefit to taxpayers from imposing one.” The ABC, in responding to the issuance of the Executive Order, states “The report’s recommendations to expand the use of anti-competitive and costly project labor agreements will increase infrastructure project costs by 12% to 20%, reduce competition from the best quality public works contractors and exacerbate the construction industry’s skilled labor shortage by discriminating against the nearly 9 out of 10 members of the construction workforce who choose to be union-free.” These issues will likely be more fully discussed during the public comment period required in the regulatory process or during any industry pushback against the implementation of the Executive Order.
For any further analysis of how this action may affect your interests, or if you have any questions on this article, please feel free to contact William F. Bresee.
William F. Bresee is a partner in Leech Tishman’s Pasadena, CA office and co-leads the firm’s Construction Industry Group. He is also the leader of the Energy & Natural Resources Industry Group. Bill can be reached at 626.796.4000 x 325 or 412.261.1600 x261 or firstname.lastname@example.org. Please feel free to contact Bill with any questions you may have on this and other design and construction matters. For more information on Leech Tishman’s legal services, please visit leechtishman.com.
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