On February 4, 2022, President Biden signed an Executive Order on the use of project labor agreements (“PLA”) on federal construction projects. The Order will not go into effect until the Federal Acquisition Regulatory Council drafts regulations, which must be issued by June 4, 2022.
President Biden’s executive order is making good on his promise to be the most “union friendly” president in history and could impact over $262 billion in federal contracting. The executive order explains that its purpose is to avoid challenges unique to construction project, including: 1) construction employers do not typically have a permanent workforce, making it difficult to predict labor costs; and 2) labor disputes with one employer causes construction delays on the entire project.
Trade organizations, such as Associated General Contractors (“AGC”) and Associated Builders and Contractors (“ABC”) adamantly disagree. ABC noted that it is hard to explain why the President would choose to impose government mandated project labor agreements to solve problems that don’t exist. ABC’s research has also shown that PLAs increase construction costs by twelve to twenty percent and PLAs are bad public policy because they effectively exclude nearly ninety percent of construction workers who choose not to join a union.
The executive order does not require contractors to unionize. Instead, it only binds a federal construction contractor’s employees to the terms of a PLA, including (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; (3) mechanisms for labor-management cooperation on “matters of mutual interest and concern, including productivity, quality of work, safety, and health”; and (4) incorporating federal law, regulations, executive orders, and Presidential Memoranda into the contract.
Finally, the executive order does not apply to work funded by grants to non-federal agencies, which includes the bulk of the projects funded under the Infrastructure Investment and Jobs Act. So, projects undertaken by states and local governments using funds from the Infrastructure Investment and Jobs Act will not have to include a PLA.
If you have questions about President Biden’s executive order, we recommend you contact an experienced construction attorney.