New Executive Order Requires Project Labor Agreements on Large Federal Construction Projects

On Friday, February 4, 2022 President Joe Biden signed Executive Order 14063, requiring project labor agreements (PLA) for all federal construction projects costing more than $35 million. PLAs are agreements between contractors and one or more labor organizations that establish the terms and conditions of employment, such as wage rates and benefits, for specific construction projects. Because of their project-based specificity, the terms and conditions of a PLA often (depending upon the PLA’s terms) supersede the provisions of an existing, but more geographically generalized, area collective bargaining agreements (CBA).

The order takes effect immediately and will apply to many of the projects funded by the recent infrastructure bill. Though seemingly sweeping in nature, the order provides several exceptions. For example, the order excludes projects funded by grants to non-federal agencies. In addition, PLA may not be required when it “would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement.” This requires officials to consider, among other things, whether:

• 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 project labor agreement would be impracticable.

In addition to this broad fiscal- and efficiency-based exception, a PLA also need not be implemented in certain situations where it “would substantially reduce the number of potential bidders” or “would otherwise be inconsistent with” other federal law and policy. Though the order applies to only “direct federal procurement, which excludes construction projects financed through grant dollars to non-federal entities,” the Biden administration estimates that it nevertheless could affect up to $262 billion of federal government construction funding and nearly 200,000 workers.

President Biden’s executive order represents a historic use of executive power to mandate the use of PLAs. While policy in this realm often shifts with the current presidential administration, no previous president required PLAs on federal construction projects. In 2009, President Barack Obama signed an executive order rescinding a Bush administration executive order prohibiting the use of PLAs for construction projects with federal funding. President Obama’s order requested — but did not require — that federal agencies consider mandating the use of PLAs on federal construction projects costing $25 million or more. President Trump never withdrew the Obama-era order or passed his own.

Union and non-union contractors should be on alert when engaged to work on large, federal projects and should consult with labor counsel to better understand the implications of the PLA requirement on applicable projects. If you have any questions about how your existing CBAs or future bargaining obligations may be affected by this new executive order, please contact an attorney on the Faegre Drinker labor management relations team.