A project labor agreement (PLA) is a collective bargaining agreement between a contractor and the building trade union on a specific construction project. PLAs are negotiated before any workers are hired, and they establish the terms of employment on a project. Executive Order (EO) 14063, issued by the Biden administration on February 2, 2022, requires PLAs on “large-scale construction projects,” defined as Federal construction projects within the United States for which the total estimated cost of the construction contract to the Federal Government is at least $35 million.
EO 14063 provides that PLAs must include specific terms. PLAs must (a) allow all contractors and subcontractors on the project to compete for project work whether or not they are otherwise unionized; (b) contain guarantees against strikes, lockouts and similar job disruptions; (c) establish mutually binding dispute resolution methods; (d) provide other mechanisms for cooperation between labor and management; and (e) fully conform to all statutes, regulations, executive orders and presidential memoranda.
All contractors and subcontractors that work on the construction project are subject to the PLA, and its terms supersede any of their existing collective bargaining agreements. Although the PLA binds all parties and applies to all workers on the construction project, it does not require that the contractor itself unionize.
Notably, the EO allows a “senior official” within an agency the discretion to grant exceptions to the requirement for PLAs when:
- Requiring a PLA on the project would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement based on certain specified factors;
- Based on market analysis, requiring a PLA on the project would substantially reduce the number of potential bidders to frustrate full and open competition; or
- Requiring a PLA on the project would otherwise be inconsistent with statutes, regulations, executive orders or presidential memoranda.
EO 14063 is a significant leap from EO 13502, a 2009 Obama administration EO that merely “encourage[d]” Federal agencies to mandate PLAs on large-scale construction projects. A final rule implementing EO 13502, effective as of May 13, 2010, granted Federal executive agencies discretion to require use of PLAs on a project-by-project basis. EO 14063 revokes EO 13502 as of the effective date of the implementing final regulations.
WHAT HAPPENS NOW?
The Federal Acquisition Regulatory Council has 120 days to propose regulations implementing EO 14063.
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McDermott Will & Emery is closely tracking developments in this matter and assisting federal contractors with strategy and compliance efforts related to these developments.
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