PLAs and Proposed Federal Rules: Discretion Advised

AGC of America reports that last month the Federal Acquisition Regulation (FAR) Council issued a notice of proposed rulemaking implementing President Obama’s Executive Order 13502 by creating new FAR contract clauses to be included in Federal contracts should an agency choose to require a Project Labor Agreement (PLA) on a particular Federal construction project. Comments are due on August 13 2009.

In short the proposed rule (FAR Case 2009-005) would:

  • Provide a new FAR Subpart 22.5 Use of Project Labor Agreements for Federal Construction Projects;
  • Add a new provision at 52.222-XX Notice of Requirement for Project Labor Agreement to be included in solicitations where the agency has exercised its discretion to require a project labor agreement as prescribed at FAR 22.505(a);
  • Add a new clause 52.222-YY Project Labor Agreement to be included in contracts in accordance with FAR 22.505(b).

The proposed rule seems to implement the executive order carefully without expansion by encouraging (not requiring) agencies to consider (not necessarily adopt) a PLA requirement on large-scale construction projects (defined as projects with a total cost to the federal government of $25 million or more) on a project-by-project basis where certain criteria are met. It expressly leaves to the contracting agency discretion to decide whether or not to require a PLA. AGC is encouraging agencies to exercise this discretion prudently leaving the decision of whether to perform the work under a collective bargaining agreement up to the contractor-employers and their employees as provided under federal labor law. AGC believes that it is inappropriate for public agencies to use their contracting authority to interfere with labor relations among private employers and employees and explained that position to White House and other officials at a recent meeting about PLAs.

AGC also explained that the proper parties to negotiate any PLA are the employers and employees performing work on the covered project or their respective collective bargaining agents. The proposed rule seems to recognize this by including a provision stating that the government will not participate in the negotiations of any PLA. AGC would argue that the term “government” as used in that provision must include a construction manager that is acting as an agent of the owner-agency and that will not employ any workers covered by the PLA but it is unclear whether the Councils intended such coverage. This will be addressed in AGC comments submitted to the Councils.

The proposed rule includes standards for all PLAs issued under the rule. These include that the PLA must “allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements.” AGC intends to point out in its comments how this ostensibly fair principle is unrealistic considering the very burdensome changes that a public PLA typically imposes on an open shop contractors operations.

The Councils are also considering factors for the contracting officer to consider on a project-by-project basis in determining whether use of a project labor agreement will be in the best interest of the federal government. The Director of the Office of Management and Budget (OMB) is working with the Secretary of Labor and other officials to provide recommendations to the President on whether to broaden the application of project labor agreements on both construction projects awarded under Federal contracts and construction projects receiving Federal financial assistance to promote the economical efficient and timely completion of such projects.

The Councils welcome public comment on the factors that should be considered such as the difficulty of coordinating multiple contracts in the absence of a project labor agreement or the importance of timely project completion.

If you have suggestions on such factors that AGC should point out please let us know: Contact Marco Giamberardino at (703) 837-5325 or giamberm@agc.org or Denise Gold at (703) 837-5326 or goldd@agc.org at AGC of America.