Project Labor Agreements May Now Be Mandated for Federal Contractors
February 25, 2009
Recently, President Obama issued an Executive Order encouraging the use of Project Labor Agreements (PLAs) for federal construction projects with a total cost to the government of $25 million or more. Although the order is effective immediately, the FAR Council has been given 120 days to take “whatever action is required” to implement it. President Obama also instructed the Director of the Office of Management and Budget, in consultation with the Secretary of Labor and other relevant officials, to assess within 180 days whether the increased use of PLAs will be beneficial to the economical, timely and efficient completion of the targeted projects. This is the fourth labor-friendly executive order issued by President Obama. For a summary of the three previously issued orders, please refer to the February 9, 2009 alert authored by Mark E. Baker.
The stated purpose of this order is to “promote the efficient administration and completion of federal construction projects.” It also mentions several underlying policy concerns, including the difficulty for contractors “to predict labor costs when bidding on contracts” and the need “to ensure a steady supply of labor on contracts being performed.” And it further notes, as support for the use of PLAs, that “construction projects typically involve multiple employers at a single location” and “a labor dispute involving one employer can delay the entire project.” This order is intended to provide structure and stability to large-scale construction projects.
Specifically, the order applies to government-funded projects for “construction, rehabilitation, alteration, conversion, extension, repair or improvement of buildings, highways or other real property” with a cost of $25 million or more. In awarding any contract in connection with such a project, or obligating funds pursuant to such a contract, executive agencies may, on a project-by-project basis, require the use of a PLA, where use of such an agreement will do the following:
(i) 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
(ii) be consistent with the law
A PLA reached pursuant to the order will bind all contractors and subcontractors on the construction project. The PLA is to contain guarantees against strikes, lockouts and similar job disruptions. It also must set forth effective, prompt and mutually binding procedures for resolving labor disputes, and provide mechanisms for labor-management cooperation on matters of productivity, quality of work, and safety and health. Finally, the PLA is to conform to all statutes, regulations and executive orders.
The order does not purport to change the typical relationship between an employer and a union. That is, it does not require an employer to enter into a PLA with any particular labor organization, nor does it obligate employers to make any specific concession to a union’s bargaining demands. However, it does require employers to reach an agreement with the union on contracts subject to PLAs. This is another step in the Obama administration’s effort to assist organized labor with respect to government contracts.
Prior to bidding on contracts subject to a PLA, it is important for employers to understand the implications the PLA may have for them going forward and for their current relationships and agreements, if any.
For more information, contact:
Ann Marie Hensler
813.227.6348
ann.hensler@hklaw.com
toll free: 1.888.688.8500
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