On February 6, 2009, President Obama signed Use of Project Labor Agreements for Federal Construction Projects, the latest in a series of executive orders affecting labor relations on covered construction projects. The order encourages — but does not require — executive agencies to consider using project labor agreements in connection with "large-scale construction projects" — construction projects where the total cost to the federal government is $25 million or more — involving the construction, rehabilitation, alteration, conversion, extension, repair or improvement of building, highways or other real property. A "project labor agreement" is any pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.

Companies involved in federal construction projects with executive agencies can expect to see an increased use of project labor agreements.

Purpose. The order was issued in response to the "special challenges to efficient and timely procurement" faced by the federal government during certain construction projects. For example, the order states that construction employers without a permanent workforce often face difficulties when forecasting labor costs for bidding on contracts. In addition, the order notes that because construction projects typically involve multiple employers at a single location, labor disputes involving just one employer can delay an entire project. The order also explains that the lack of coordination or uncertainty about the terms and conditions of employment among multiple employers on a project can lead to friction and disputes among workers.

Scope. The "executive agencies" that are encouraged to implement these project labor agreements include (1) executive departments (e.g., the Department of State, Department of Transportation, Department of Homeland Security, etc.); (2) corporations owned or controlled by the United States government; and (3) any establishment in the executive branch (other than the United States Postal Service or the Postal Regulatory Commission) that is not an executive department, military department, government corporation or part thereof, or part of an independent establishment.

These executive agencies retain discretion over whether to implement project labor agreements on a project-by-project basis. If appropriate, the executive agency may require that every contractor or subcontractor on the project agree (for purposes of that project) to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations. The order does not require, however, that contractors or subcontractors enter into project labor agreements with particular labor organizations. If an executive agency implements a project labor agreement, the agreement will bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents. Additionally, the agreements would allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements. Furthermore, the agreement would contain guarantees against strikes, lockouts, and similar job disruptions, and set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the project labor agreement.  

Future action. The Federal Acquisition Regulatory Council (FARC) is directed to take whatever action is required to amend the Federal Acquisition Regulation within 120 days of the order (June 6, 2009). The order will apply to all solicitations for contracts issued on or after FARC amends the Federal Acquisition Regulation. President Obama has directed the director of the Office of Management and Budget, in consultation with the secretary of labor, to make recommendations about whether broader use of project labor agreements with respect to both construction projects undertaken under federal contracts and construction projects receiving federal financial assistance, would help to promote the economical, efficient and timely completion of such projects. These recommendations are to be provided to President Obama within 180 days of the order (i.e., August 5, 2009).