Overview
FAR Subpart 22.5 implements Executive Order 14063, mandating the use of Project Labor Agreements (PLAs) for large-scale federal construction projects to promote economy, efficiency, and labor-management stability. It provides the framework for when PLAs are required, the criteria for discretionary use on smaller projects, and the specific legal requirements that a PLA must satisfy to be valid under federal law.
Key Rules
- Mandatory Threshold: Agencies must require a PLA for "large-scale construction projects," defined as federal construction projects within the United States with a total estimated cost to the government of $35 million or more.
- Discretionary Use: Agencies have the authority to require PLAs for projects costing less than $35 million if it advances the government's interest in economy, efficiency, and labor stability.
- Mandatory PLA Components: Any PLA established under this subpart must:
- Bind all contractors and subcontractors on the project.
- Allow all contractors (union and non-union) to compete for contracts.
- Contain guarantees against strikes, lockouts, and similar work disruptions.
- Set forth prompt, mutually binding procedures for resolving labor disputes.
- Provide mechanisms for cooperation on productivity, health, and safety.
- Prohibitions: Agencies are strictly prohibited from requiring contractors to enter into an agreement with a specific or particular labor organization.
- IDIQ Application: For Indefinite-Delivery Indefinite-Quantity (IDIQ) contracts, PLAs are typically required on an order-by-order basis. If a specific task order is $35 million or more, the PLA requirement applies unless an exception is granted.
Responsibilities
- Senior Procurement Executive (SPE): Responsible for granting and providing written justification for exceptions to the mandatory PLA requirement for large-scale projects.
- Contracting Officers (COs):
- Must insert the appropriate PLA provisions (FAR 52.222-33) and clauses (52.222-34) in solicitations.
- Must conduct market research to determine if a PLA will substantially reduce competition or lead to unfair pricing.
- Must ensure exceptions are granted prior to the solicitation date (or by the time of notice for IDIQ orders).
- Agencies: Must evaluate specific factors (e.g., labor shortages, project duration, complexity) when deciding whether to require a PLA on projects below the $35 million threshold.
- Contractors/Subcontractors: Must agree to negotiate or become party to a PLA as a condition of contract award and performance, regardless of their previous labor affiliation.
Practical Implications
- Market Research is Paramount: Before mandated use, the government must ensure the PLA won't eliminate so many bidders that "fair and reasonable" pricing becomes impossible. Contracting Officers will look at price fluctuations and historical data from similar projects.
- "Open Shop" Challenges: While non-union ("open shop") contractors are legally allowed to compete, they must still adhere to the PLA terms if they win. This often involves using union hiring halls or paying into union benefit funds for the duration of the project, which can impact their traditional business models.
- Administrative Lead Time: Because the SPE must sign off on exceptions for large projects, the "exception process" can become a bottleneck. Programs seeking to avoid PLAs due to "unusual and compelling urgency" must document this specifically to satisfy the SPE.
- Strategic Flexibility: The use of "Alternates" in the FAR clauses allows agencies to decide when the PLA must be submitted: with the initial offer, by the apparent successful offeror before award, or even after the contract has been awarded. This allows COs to tailor the procurement timeline to the project's risk profile.