What You Need to Know About Project Labor Agreements and 2024 Federal Construction Changes

The Era of Change: Executive Order 14063 Unveils Project Labor Agreements for Federal Construction Projects

Buckle up, because the game has changed for non-union contractors eyeing those coveted federal construction projects! On December 22, 2023, the curtain rose on the Final Rule of Executive Order (EO) 14063 – the epic saga of “The Use of Project Labor Agreements for Federal Construction Projects.” This groundbreaking rule mandates prime contractors and subcontractors on federal projects exceeding $35 million to sign Project Labor Agreements (PLAs) if they want a shot at those lucrative contracts.

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PLAs: Employment Conditions in Federal Construction Projects

PLAs are like the pre-hire collective bargaining agreements where contractors, subcontractors, and unions come together to choreograph the perfect employment conditions for specific construction projects. Why, you ask? The ruling believes that large-scale construction projects are akin to an intricate dance, and PLAs are the flawless routine that keeps disruptions, work stoppages, strikes, and lockouts at bay.

President Bidens Vision: Executive Order 14063 Ensures Stability and Fair Treatment for Workers

“Construction employers typically do not have a permanent workforce, which makes it difficult to predict labor costs when bidding on contracts and to ensure a steady supply of labor on contracts being performed,” said President Joe Biden for EO 14063. “Challenges also arise because construction projects typically involve multiple employers at a single location, and 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 friction 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 large-scale projects, which are generally more complex and of longer duration, these problems tend to be more pronounced.”

The Clash: Opposition to EO 14063’s Mandate

The Biden Administration believes EO 14063 will provide workers on federal jobs with collectively bargained wages, benefits, and safety protections regardless of union affiliation. They said PLAs provide structure and stability to large-scale construction projects while being consistent with the promotion of small business interests.

ABC’s Battle Cry: Fighting for Fair Opportunities for Non-Union Contractors

Not everyone is happy with the new mandate and some construction affiliations disagree with the Biden Administration’s claims. The Associated Builders and Contractors (ABC) said the order will do the opposite of its intentions by increasing construction costs, reducing competition, and stealing wages from non-union workers by steering contracts to unionized businesses.

Technically non-union contractors can still compete for and win projects that are subject to PLAs, but ABC believes they will be more difficult to win. They vowed to fight the mandate in court on behalf of the more than 85% of American construction companies who choose not to be part of a union and still want a fair opportunity to participate in federal construction projects.

House Committee Warning: Executive Order 14063’s Potential Impact on Taxpayer Costs and Worker Exclusion

In May 2023 the House Committee on Oversight and Accountability and several Committee Republican lawmakers echoed the ABA saying, “This order threatens to raise taxpayer costs, cut non-union workers out of federal projects, and force right-to-work states to freeze local workers out of cooperative federal projects.”

They said studies show that PLAs exacerbate the construction industry’s worker shortage by often forcing contractors to use laborers from union hiring halls.

United Association of Union Plumbers and Pipefitters’ Support: Common-Sense Agreements for Better Outcomes

Moreover, the United Association of Union Plumbers and Pipefitters fervently supports the principles outlined in EO 14063, emphasizing the common-sense agreements as catalysts for superior outcomes. They said, “These common-sense agreements lead to better outcomes for all involved, whether you’re a project owner, contractor, or construction worker.”

According to them, these agreements not only benefit project owners but also enhance the experiences of contractors and construction workers, fostering a collaborative and mutually beneficial environment. Their endorsement adds a positive perspective to the discourse surrounding the executive order, asserting that the outlined measures are essential for the collective success of all stakeholders in federal construction projects.

Decoding EO 14063: From Proposal to Implementation

EO 14063 was signed on February 4, 2022, and was issued as a proposed rule by the Federal Acquisition Regulatory Council (FAR Council) on August 19, 2022, to hear discussion and make changes. Despite opposition and polarizing opinions, the Final Rule was implemented in December 2023 and went into effect recently on January 22, 2024.

While there may be some exceptions for circumstances like jobs with a short duration, the rule will be in force on most federal construction projects “for which the total estimated cost of the construction contract to the Federal Government is $35 million or more.”

White House’s Economic Vision: How EO 14063 Promotes Stability and Competition

A fact sheet from the White House proposes that the ruling will promote the economy by:

• Eliminating the risk of delay associated with labor unrest;
• Ensuring parties agree to dispute resolution procedures and mechanisms for labor-management cooperation on matters like safety;
• Making clear that PLAs may include other provisions designed to support workers from underserved communities and small businesses;
• Helping ensure a steady supply of skilled workers for Federal construction projects; and
• Promoting competition on Government contracts by allowing all contractors – including those who are non-union – to bid on contracts that require PLAs.

EO 14063 vs. EO 13502: A Paradigm Shift in Mandating PLAs

Executive Order (EO) 14063 replaces President Barrack Obama’s 2009 EO 13502 which encouraged but did not require, mandated PLAs on large-scale federal construction projects over $25 million. EO 14063 is expected to affect as many as 120 federal contracts valued at billions of dollars annually and affect as many as 200,000 workers.

Read more about Executive Order 14063 here: https://www.presidency.ucsb.edu/documents/executive-order-14063-use-project-labor-agreements-for-federal-construction-projects.

FAQs about Executive Order 14063 and Project Labor Agreements (PLAs)

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.