On February 6, 2009, President Obama signed an Executive Order authorizing federal executive agencies to use project labor agreements on federal construction contracts with a total cost of $25 million or more.  The Order is effective immediately, and the Federal Acquisition Regulatory Council has been instructed to take “whatever action is required” to implement the Order within 120 days of its issuance.  The Order also repeals Executive Order 13202 issued by former President Bush in 2001, which forbade federal agencies and other recipients of federal funding to require contractors to sign union-only project labor agreements as a condition of performing work on federal projects.

The Order states that federal executive agencies, in awarding a contract in connection with a construction project costing $25 million or more, or obliging funds pursuant to such a contract, may, on a project-by-project basis:

[R]equire the use of a project labor agreement by a contractor where use of such agreement will (i) advance the Federal Government’s interest in achieving economy and efficiency in Federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters, and (ii) be consistent with law.

 “Project labor agreement" is defined as 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.”  If a federal agency determines the use of a project labor agreement would satisfy these criteria, the agency may require that every contractor or subcontractor on the project agree to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.

The stated policy behind the Order is to "promote economy and efficiency in Federal procurement." If a project labor agreement is used, the agreement must:

(a) bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents; (b) allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (c) contain guarantees against strikes, lockouts, and similar job disruptions; (d) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the project labor agreement; (e) provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (f) fully conform to all statutes, regulations, and Executive Orders.

The authority for project labor agreements may also expand further in the near term.  resident Obama has instructed the Director of the Office of Management and Budget (in consultation with the Secretary of Labor and with other officials as appropriate) to provide recommendations within 180 days about whether broader use of project labor agreements, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects.

The Executive Order does not require a federal executive agency to use a project labor agreement on any construction project. Nor does it preclude federal agency from using a project labor agreement in circumstances that are not covered by the Order, such as leasehold arrangements and projects receiving Federal financial assistance. The Order also does not require contractors and subcontractors to enter into a project labor agreement with any particular labor organization.