President Biden issued an Executive Order (“EO”) mandating the use of Project Labor Agreements (“PLA”) for “large scale” construction contracts. See EO 14063 (Feb. 4, 2022). This order continues his effort to make good on his promises to enhance worker rights and increase the potency of labor unions under his administration.

A PLA is a collective bargaining agreement (“CBA”) between one or more contractors and one or more labor organizations that establish the terms and conditions of employment for a specific construction project. Once the PLA is in place, then all contractors who are awarded contracts on that construction project are subject to and bound by the PLA (even though they might not be signatories to the PLA).

President Biden’s Executive Order essentially puts teeth in a similar EO (No. 13502) issued in 2009 by President Obama. The Obama EO remains in force today and presently is ensconced in the Federal Acquisition Regulations (“FAR”) at 48 CFR, subpart 22.5 (setting forth policy and authority for PLAs) & §§ 52.222-33 & 52.222-34 (contract clauses implementing PLA requirement). The Obama order “encourages” executive agencies to consider requiring the use of PLAs for “large scale construction projects.” A “large scale” construction project is one where the total cost to the Government is $25 million or more (that is the cost of the entire project, not an individual contract). Contracting agencies were not required to mandate PLAs; however, they could on a case-by-case basis if they found a PLA would “be consistent with law” and “advance the Federal Government's interest in achieving economy and efficiency in Federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters.” EO 13502 § 3(a).

President Biden’s EO upgrades this preference to a requirement once the cost to the Government of a construction contract exceeds $35 million. Rather than being a case-by-case determination, the Administration has determined that an across-the-board PLA mandate for large scale projects will “promote economy and efficiency in Federal procurement.”

The use of PLAs for federal construction projects dates back to the 1950s in which their use was adopted as a tool for eliminating labor force tensions on projects at various missile sites and the Kennedy Space Center. NASA and the Department of Defense repeatedly encountered work stoppages caused when nonunion workers walked off the job to secure pay and benefits available to employees at unionized contractors enjoyed. Relying upon statutory authority permitting the Government to enter into contracts and modifications whenever the national defense would be “facilitated,” DoD and NASA made use of PLAs to unionize entire projects thereby eliminating the strife inherent when union and nonunion contractors work side-be-side on a project.

I recall this history because the current Executive Order’s statement of policy essentially parrots the 1950s era rationale. However, we are unaware of any successful challenges to the use of PLAs pursuant to the “national defense” authority invoked by DoD or NASA then or since. We also are unaware of whether the use of PLAs actually achieved their stated purposes. Hence, we wonder whether this rationale will stand up under current conditions. Given the plethora of challenges to the Biden Administration’s vaccine mandate and federal contractor minimum wage executive order, we fully expect that the rationale will be put to the test.

Setting aside whether it will go into effect, the EO applies, as noted above, to all “large-scale construction projects,” which are federal construction projects in the US in which “the total estimated cost of the construction contract to the federal government is $35 million or more,” an amount that can be adjusted down the road. Notably, this EO focuses the cost inquiry on the cost of the contract, not the project’s total cost to the Government as is the case under the Obama EO. “Construction” is defined to mean “construction, reconstruction, rehabilitation, modernization, alteration, conversion, extension, repair, or improvement of buildings, structures, highways, or other real property.” Absent an exception, “agencies” are directed to require contractors and subcontractors on the project to “negotiate or become a party to” a PLA for that project “with one or more appropriate labor organizations” (i.e., ones in “which building and construction employees are members”).

PLAs in fulfillment of the EO’s requirements must “bind all contractors and subcontractors” in all relevant solicitation provisions and contract documents. The PLA must allow contractors and subcontractors to “compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements.” The PLA must also, among other things, “contain guarantees against strikes, lockouts, and similar job disruptions,” and establish “binding procedures for resolving labor disputes arising during” the term of the PLA.

Senior agency officials may exclude particular projects from this mandate if they provide a written explanation before the solicitation date if a PLA would not advance the Government's interests if the project: is short and not complex; involves only one craft or trade; is specialized construction work performed by limited numbers of contractors; is an urgent need in which a PLA would not be practicable; or is subject to exception for “other similar factors” set forth in upcoming regulations or guidance. Exceptions also might be appropriate if a market analysis establishes that a PLA requirement would frustrate full and open competition or, as a catch-all, a PLA requirement “would otherwise be inconsistent with statutes, regulations, Executive Orders or Presidential Memoranda.”

For now, agencies are “strongly encouraged” to require PLAs (presumably as before). The EO will go into full effect and be applicable to solicitations issued after final regulations are published. The FAR Council is directed to issue proposed regulations for comment within 120 days of the order; however, no further deadlines are imposed. In other words, it could be a while before PLAs become required instead of merely being encouraged.