Mandates on PLAs for Federal Projects
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Key Details: On February 4, President Biden signed Executive Order (EO) 14063, titled “Executive Order on the Use of Project Labor Agreements for Federal Construction Projects.” Under this EO, certain federal construction contractors and subcontractors are required to negotiate or to become party to a Project Labor Agreement (PLA) with at least one appropriate labor organization. This EO will impact over $260 billion federal construction large-scale contracts and around 200,000 workers.

What is a PLA and How Will it Help?

Under this EO, PLA means “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).” This PLA is intended to prevent the challenges related to large-scale construction projects. The challenges highlighted in the EO include:

  • Construction employers lacking a permanent workforce and a steady supply of labor.
  • Difficulty in predicting labor costs.
  • Labor disputes and delays resulting from multiple employers working at a single location.
  • Little coordination among employers resulting in friction.

Per the EO, the challenges above threaten the efficiency and completion of certain construction contracts and are further magnified on large-scale projects. Therefore, this PLA mandate aims to alleviate these issues and provide stability to construction contracts through using dispute-resolution processes and prohibiting work stoppages. Furthermore, commitment of all stakeholders will be secured on projects, advancing the interests of project owners.

What Contracts Does This Apply to & What are the Exceptions?

This PLA requirement will apply to large-scale construction projects and includes contracts that have a total estimated cost of $35 million or more. This may become subject to an inflation adjustment.

The EO has also authorized a “senior official within an agency” who can grant an exception to this PLA requirement. However, a written explanation must be presented describing one of the three circumstances that exist that warrants an exception. Exceptions may be considered when requiring the PLA will:

-“Not advance the Federal Government’s interest in achieving economy and efficiency in Federal procurement.” This determination is based on:

  • Project duration and complexity  
  • Involvement of only one craft or trade  
  • Involvement of specialized construction work  
  • Whether a PLA would be impracticable  

-“Substantially reduce the number of potential bidders so as to frustrate full and open competition.”

-“Be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda.”

PLA Reporting Requirements

Under Sec. 6 of the EO, agencies will publish on a centralized public website any data that shows the use of project labor agreements on applicable large-scale construction projects. Descriptions of exceptions granted will also be published. Agencies will also report to the Office of Management and Budget (OMB) their use of PLAs or exceptions on a quarterly basis.

Effective Date for PLAs

The EO is effective immediately and will apply to all solicitations for contracts that are issued on or after the effective date of the final regulation issuance by the FAR (Federal Acquisition Regulation) Council. Furthermore, the EO has directed the FAR Council to propose regulations on the implementation of the provisions within 120 days.

Conclusion

Federal construction contractors are strongly encouraged to review the provisions under the EO to understand implementation requirements and to begin complying with these regulations to the extent permitted by law before and when the FAR Council issues a final regulation. Contractors are further encouraged to track updates as the FAR Council goes through the rule-making procedure as certain ambiguities may be clarified and to speak with an expert to better understand the implications of the PLA. For more information, contact Ryan & Wetmore.

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