Today, the Administration finalized a regulation strongly encouraging federal agencies to use project labor agreements (PLAs) on large scale federal construction contracts. The regulation is the culmination of a process that began early last year when President Obama signed an executive order ordering the procurement agencies to develop the regulation. The agencies issued a proposed regulation last year on which the Chamber commented.

By definition a PLA is a “pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project ….”

The regulation and the Executive Order on which it is based are premised on the notion that PLAs can improve efficiency in contracting by helping ensure against labor disputes and work stoppages don’t slow down federal construction contracts or drive up their costs.

Notwithstanding the very questionable premise for the PLA policy, implementation of the regulations are likely to raise some serious concerns and the final regulations do little to address the concerns we raised last year in our comments. While we are still evaluating the final proposal, among the most difficult questions remaining are how non-union contractors are to comply when an agency mandates the use of a PLA. Will the PLA force the contractor to include union-security agreements binding its employees to pay union dues? Will the contractor’s employees be required to make payments to union pension funds that they may never qualify for?

It remains to be seen whether the Executive Order or these regulations will survive a legal challenge, but clearly if they do federal construction contractors will have a host of new challenges.