Biden Executive Order to Require Project Labor Agreements for Federal Procurement Construction Projects, and More
Once again the President has invoked the Federal Property and Administrative Services Act as the authority for an Executive Order “to promote economy and efficiency.” In his latest Executive Order (EO) issued on Friday, February 4, 2022, President Biden mandated that all federal procurement construction projects valued at $35 million or more must use a Project Labor Agreement (PLA).
By requiring a PLA, the President would place considerable power over the terms and conditions of a performing a federal construction contract in the hands of unions. Under the EO, PLAs are defined as
a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).
Since the EO will apply the PLA mandate to “large-scale construction projects,” it is likely that any PLA will require the involvement of multiple unions and labor organizations to negotiate the specifications, terms and conditions of the project for the various trades that will be working at the site. The EO requires that the PLA “contain guarantees against strikes, lockouts, and similar job disruptions” and set out binding procedures for the resolution of labor disputes arising during the term of the PLA. Notably, the EO would effectively appear to bypass the role and authority of federal agencies in certain key areas as the EO provides that PLAs will “provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health.” Such a collectively bargained PLA then would bind all federal contractors and subcontractors on the project to the contractor-union negotiated specifications, terms and conditions for performance of the project. The EO in fact states that it will require “every contractor or subcontractor engaged in construction on the project to agree, for that project, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.” Nowhere does it say that the federal procuring agency will be involved in this process or otherwise have any say in what is actually negotiated and placed in the PLA. The agency’s only role is to identify those projects where PLAs will be mandatory.
The EO allows for some exceptions to requiring a PLA in projects that (a) are found not to advance the federal government’s interests in achieving economy and efficiency; (b) market analysis shows the PLA would frustrate full and open competition by substantially reducing the number of potential bidders on the project; or (c) would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda. In contrast, the EO also allows agencies to expand the requirement of a PLA beyond procurements of large construction projects, to smaller construction projects, as well as construction projects “receiving any form of Federal financial assistance (including loan guarantees, revolving funds, tax credits, tax credit bonds, and cooperative agreements).”
The EO also directs the creation of a reporting regime for making public the data on the use of PLAs, as well as descriptions of any exceptions granted.
While the White House estimated that this EO will apply to $262 billion of federal construction contracts and impact nearly 200,000 workers, the total is likely to go much higher and the impact much broader once projects under the $1.2 trillion Infrastructure Investment and Jobs Act of FY 2021 are commenced.
Federal law requires that there be rulemaking notice and comment and impact analyses performed for issuance of FAR procurement rules. The EO gives the FAR Council 120 days to propose regulations to implement this EO, and the Office of Management and Budget (OMB) is directed, to the extent permitted by law, to issue guidance on the exception and reporting provisions of the EO. We can expect that there will be a number of comments filed in the future by trade associations, contractors, and other industry groups once the FAR Council issues a proposed rule. Those potentially affected by the EO and implementing regulations and guidance should watch out for opportunities to provide their input not only during the forthcoming FAR rulemaking processes and OMB activities, but also through other routes since the EO seeks to extend the required use of PLAs – and therefore the role of trade associations and unions — far beyond federal procurements to grants, tax credits, loans, and other agreements, implicating not just federal projects, but other projects receiving some form of federal assistance.
Contact the author or your Stinson counsel if you have questions about this advisory.
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