Obama Signs Executive Order Encouraging Project Labor Agreements

On February 6, President Obama issued yet another labor-friendly executive order encouraging the use of project labor agreements (“PLA”s) for large-scale, federally-funded construction projects. Ostensibly to “promote economy and efficiency in Federal procurement,” the order stipulates that executive agencies, in awarding a contract in connection with a construction project costing $25 million or more, or obliging funds pursuant to such a contract, may, on a project-by-project basis:

[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.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.