“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”

-- Friedrich August von Hayek
 

Back on February 9, 2022, the Biden Administration published a new Executive Order (“EO”) 14063 on the use of Project Labor Agreements (“PLAs”) on Federal construction projects. See 87 Fed. Reg. 7363. The new EO is intended to supersede the voluntary Obama-era PLA rules with new rules that make PLAs mandatory for large scale federal construction projects (i.e., projects equalling or exceeding $35,000,000). See discussion at https://www.awrcounsel.com/blog/2022/12/12/tgiynmoxt3dikxtcwpyw658zsjw4f4?rq=PLA%20.

No longer would agency officials have discretion to ignore the PLA provisions. And the PLA provisions would apply to Indefinite Quantity Indefinite Delivery (“IDIQ”) and Architect-Engineering (“A-E”) contracts as well. A PLA is 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. The Biden Administration proposed regulations were issued on August 19, 2022. See 85 Fed. Reg. 51044. The comment period ended October 18, 2022.

On December 18, 2023, the Biden Administration announced that it was issuing final rules implementing the EO on PLAs. See https://www.whitehouse.gov/omb/briefing-room/2023/12/18/fact-sheet-biden-harris-administration-announces-action-to-support-economic-and-efficient-construction-projects-while-creating-good-paying-and-union-jobs/ The new rules were published in the Federal Register at   https://www.federalregister.gov/documents/2023/12/22/2023-27736/federal-acquisition-regulation-use-of-project-labor-agreements-for-federal-construction-projects#:~:text=9%2C%202022).-,E.O.,more%2C%20unless%20an%20exception%20applies. The Biden Administration also announced a companion guidance document to provide important information to Federal agencies. As noted in the press release:

The PLA final rule could provide nearly 200,000 workers on Federal construction projects the benefit of collectively bargained wages, benefits, and safety protections regardless of union membership.  It is estimated that the rule will result in the Federal Government requiring PLAs on a majority of large Federal contracts.

Id.

Accordingly, get ready to negotiate your PLAs for federal construction projects of $35M or more. And note that the government may require PLAs for even lower priced projects. Yes, Government procurement folks can seek an exemption under the rules if the cost is too high or competition is adversely affected. But the reality is that they probably won’t do so.

Notwithstanding the Biden Administration’s defense of the EO set forth in the regulatory preamble -- pushing back on claims it will be costly -- it is rather obvious that the intention here is to require even higher wages be paid on these federal construction projects (i.e., Davis-Bacon wages are not enough). When it comes to higher wages for construction workers, this Administration thinks , as Mae West once said, “Too much of a good thing is wonderful.” But inevitably, mandatory PLAs will add to  the budgetary issues facing the Federal Government and will feed wage inflation. As I said before, there is no free lunch.