Last week, I wrote a blog post predicting that President Biden may be requiring project labor agreements (PLAs) on projects funded by the Infrastructure Investment and Jobs Acts, effective November 15, 2021 (link here). That prediction has now become reality.
On Friday, February 4, 2022, President Joe Biden signed Executive Order 14063 (EO 14063). EO 14063 requires PLAs on federal large-scale construction projects. A “large-scale construction project” means a federal construction project for which the total estimated cost of the construction contract is $35 million or more. Federal agencies, awarding any contract in connection with a large-scale construction project, must require every contractor or subcontractor engaged in construction on the project to agree, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations. Any project labor agreement reached pursuant to EO 14063 must:
- Bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents;
- Allow all contractors and subcontractors on the construction project to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements;
- Contain guarantees against strikes, lockouts and similar job disruptions;
- Set forth effective, prompt and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement;
- Provide other mechanisms for labor management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety and health; and
- Fully conform to all statutes, regulations, Executive Orders and Presidential Memoranda.
EO 14063 contains some exceptions to the PLA requirement. A senior official within an agency can grant an exception by providing a specific written explanation of why as least one of the circumstances described in EO 14063 exist:
- Requiring a PLA would not advance the federal government’s interests in achieving economy and efficiency in federal procurement. Such a finding must be based on the following factors:
- The project is of short duration and lacks operational complexity;
- The project will involve only one craft or trade;
- The project will involve specialized construction work that is available from only a limited number of contractors or subcontractors;
- The agency’s need for the project is of such an unusual and compelling urgency that a PLA would be impracticable; or
- The project implicates other similar factors deemed appropriate in regulations or guidance which may be issued pursuant to EO 14063.
- Based on inclusive market analysis, requiring a PLA on the project would substantially reduce the number of potential bidders so as to frustrate full and open competition.
- Requiring a PLA on a project would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda.
President Biden stated that nothing in the Executive Order prohibits an agency from voluntarily requiring a PLA even though they are not required to do so by EO 14063.
EO 14063 is effective immediately and will apply to all solicitations for contracts issued on or after regulations are issued by the Federal Acquisition Regulatory Council (FAR Council). The Order states that the FAR Council must propose implementation regulations within 120 days of, February 4, 2022.
Both union and non-union contractors should be alert to this significant new requirement for large-scale federal construction projects. Union contractors should be aware that a PLA could apply certain working conditions to the project which are not contained in the contractor’s existing collective bargaining agreement(s).
EO 14063 is a dramatic shift from the Executive Order President George H.W. Bush issued in 1992, which was rescinded by President Bill Clinton in 1993, and the Executive Order President George W. Bush signed in 2001, which was rescinded by President Barack Obama in 2009, both prohibiting the use of PLAs for federal construction projects.
Please see Phyllis Karasov’s explanation of what a PLA is here.