Use of Project Labor Agreements in Federal Construction Projects

On December 22, 2023, the Department of Defense, General Services Administration (GSA), and National Aeronautics and Space Administration issued a final rule on Executive Order (EO) 14063 mandating contractors and subcontractors to negotiate collective bargaining agreements with unions on “large-scale federal construction projects” or federal construction projects valued at $35 million or more. The specified term for this collective bargaining agreement is a project labor agreement (PLA). (Note: agencies may require PLAs on federal construction projects valued at less than $35 million at their discretion.)  

PLAs are pre-hire agreements negotiated between construction unions and contractors that define employment terms for a specific project. Key provisions within these agreements that mutually obligate both unions and contractors include no-strike clauses, no-lockout clauses, and comprehensive arbitration procedures. PLAs also identify wages and fringe benefits for union employees, which will still need to meet or exceed those identified by the Department of Labor in the Davis-Bacon Act, last updated in October 2023. Negotiation of PLAs occurs on a case-by-case basis and may encompass additional clauses.  

EO 14063 amends the definition of “large-scale federal construction projects” from $25 million to $35 million. Based on historical GSA Federal Procurement Data System data, approximately 119 contracts will meet this definition annually. In EO 14063, the Biden administration asserted that PLAs provide structure and stability to large-scale construction projects, where labor disputes can threaten the efficiency of federal contractors’ work. 

The final rule contains two significant changes. First, if one or more labor unions establish a PLA on a specific project, all entities must enter into that PLA, as multiple PLAs on one project are prohibited. However, agencies still cannot dictate which labor organization a contractor enters a PLA with. Second, subcontractors are now required to adhere to the PLA negotiated by the prime contractor.  

The final rule became effective on January 22, 2024. The government asserted that PLAs can help mitigate challenges including labor shortages and project delays by increasing coordination among multiple employers and trade unions, preventing labor disputes, promoting labor management stability, and improving reliable access to skilled labor; and asserts that no compelling evidence currently exists that PLAs increase costs on federal construction projects.  

Contractors and subcontractors engaged in federal construction projects should assess the implications of this rule on their labor operations, such as labor and cost to administer the PLA, and any other measures required to meet compliance requirements. Adhering to this rule is important to ensure that contractors and subcontractors comply with the latest regulations related to PLAs. 

Find the Final Ruling here:  Federal Acquisition Regulation: Use of Project Labor Agreements for Federal Construction Projects