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LABOR & EMPLOYMENT LAW — 02/10/09

Obama issues Executive Order encouraging agencies to use project labor agreements

Executive agencies are encouraged to consider requiring the use of project labor agreements in construction projects that will cost the federal government $25 million or more under an Executive Order (EO) issued by President Barack Obama on February 6, 2009.

Project labor agreements are pre-hire collective bargaining agreements reached between contractors and unions which establish the terms and conditions of employment for a specific construction project. Obama's directive states the use of project labor agreements would "promote economy and efficiency in Federal procurement."

Obama's EO revokes Executive Orders issued by former President George Bush, including EO 13202, "Preservation of Open Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction Projects," issued on February 17, 2001, and EO 13208, which amended EO 13202, issued on April 6, 2001.

President Obama issued the EO on the "Use of Project Labor Agreements for Federal Construction Projects" pursuant to his authority under the Federal Property and Administrative Services Act, 40 U.S.C. 101 et seq.

Purpose of EO. "Large-scale construction projects pose special challenges to efficient and timely procurement by the Federal Government," the Executive Order states. "Construction employers typically do not have a permanent workforce, which makes it difficult for them to predict labor costs when bidding on contracts and to ensure a steady supply of labor on contracts being performed. Challenges also arise due to the fact that construction projects typically involve multiple employers at a single location.

"A labor dispute involving one employer can delay the entire project. A lack of coordination among various employers, or uncertainty about the terms and conditions of employment of various groups of workers, can create frictions and disputes in the absence of an agreed-upon resolution mechanism. These problems threaten the efficient and timely completion of construction projects undertaken by Federal contractors. On larger projects, which are generally more complex and of longer duration, these problems tend to be more pronounced.

"The use of a project labor agreement may prevent these problems from developing by providing structure and stability to large-scale construction projects, thereby promoting the efficient and expeditious completion of Federal construction contracts."

Provisions. The EO provides that, 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 if doing so would 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. If an agency determines the use of a project labor agreement would satisfy these criteria, the agency may require that every contractor or subcontractor on the project agree, for that project, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.

The EO does not require an executive agency to use a project labor agreement on any construction project. Neither does it preclude an agency from using a project labor agreement in circumstances that are not covered by this order, such as leasehold arrangements and projects receiving Federal financial assistance.

Contractors and subcontractors are not required under the EO to enter into a project labor agreement with any particular labor organization.

Agreement criteria. Any project labor agreement reached pursuant to the EO must:

• 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.

Implementation. The Federal Acquisition Regulatory Council is instructed to take necessary action to implement the EO within 120 days of its issuance.

Obama also has instructed the Director of the Office of Management and Budget (in consultation with the Secretary of Labor and with other officials as appropriate) to provide recommendations within 180 days 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.

The EO is effective immediately; it applies to all solicitations for contracts issued on or after the effective date of the action taken by the FAR Council.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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