Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

In awarding any contract in connection with a large-scale construction project, or obligating funds pursuant to such a contract, executive agencies may, on a project-by-project basis, require the use of a project labor agreement by a contractor where use of such an agreement will (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, and (ii) be consistent with law.

Projects are considered “large-scale” if the total cost amounts to $25 million or more. As stipulated in the EO, if a PLA is in place, it would:

• 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 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 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, and Executive orders.

On July 14, 2009, the aforementioned federal agencies issued a final rule rescinding the section of the Federal Acquisition Regulation (FAR) that had prohibited agencies from requiring PLAs, and issued a proposed rule implementing the remaining sections of the EO. After taking into consideration more than 700 comments to that proposal, the agencies drafted a final rule that:

• Encourages agency planners to consider use of project labor agreements early in the acquisition process, i.e., during acquisition planning (FAR 7.103);
• Clarifies the policy for using project labor agreements to more closely track the terms of the EO (FAR 22.503(b));
• Identifies a number of factors that agencies may consider to help them decide, on a case-by-case basis, whether the use of a project labor agreement is likely to promote economy and efficiency in the performance of a specific construction project, such as whether the project will require multiple construction contractors and/or subcontractors employing workers in multiple crafts or trades or whether there is a shortage of skilled labor in the region in which the construction project will be sited (FAR 22.503(c));
• Makes clear that a solicitation may include project labor agreement requirements that are in addition to those specified in section 4 of the EO, as the agency deems necessary to satisfy its needs (FAR 22.504(b)(6));
• States that an agency may specify in the solicitation, as appropriate to advance economy and efficiency in a given procurement, the terms and conditions of the project labor agreement and require the successful offeror to become a party to a project labor agreement containing these terms and conditions as a condition of receiving a contract award (FAR 22.504(c)); and
• Modifies the proposed solicitation provisions and contract clauses to give agency contracting officers the additional option of requiring offerors to submit a copy of the project labor agreement with their offers (FAR 52.22233 and 52.22234).

This rule will take effect May 13, 2010, and will apply to solicitations for large-scale construction projects issued on or after this effective date.

Photo credit:  Alex Nikada

[r]equire the use of a project labor agreement by a contractor where use of such agreement will (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, and (ii) be consistent with law.

This order does not mandate or limit the use of PLAs, defined in the order as “pre-hire collective bargaining agreement[s] with one or more labor organizations that establish[] the terms and conditions of employment for a specific construction project . . .” Nor does the order require any contractor or subcontractor to enter into a PLA with any particular union. However, the order requires the Director of the Office of Management and Budget (OMB), in consultation with the Secretary of Labor, to formulate recommendations as to whether broader use of PLAs “would help to promote the economical, efficient, and timely completion of such projects.” Thus, it is possible that the scope of this order could be broadened.

If a PLA is used, this agreement must “(a) bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents; (b) allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (c) contain guarantees against strikes, lockouts, and similar job disruptions; (d) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the project labor agreement; (e) provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (f) fully conform to all statutes, regulations, and Executive Orders.”

This order also revokes the orders issued by former President Bush that prohibited federal agencies from making the use of a PLA a bid specification on a federal construction project.

It is no surprise that organized labor, which has been lobbying in favor of revoking Bush’s policies, is pleased with Obama’s latest order. The construction industry, on the other hand, is critical of this move, claiming that it will penalize those contractors and their employees who have chosen not to join unions. The practical impact of this order cannot be predicted until the OMB and the Secretary of Labor have finalized their recommendations.