FHWA Issues Guidance to States on Use of Project Labor Agreements

The Federal Highway Administration (FHWA) issued guidance to state DOTs advising them on implementation of President Obama's Executive Order 13502 encouraging the use of Project Labor Agreements (PLAs). The order specifically permits the use of PLAs on projects receiving federal financial assistance, including the federal-aid highway program. While the order directs the Office of Management and Budget (OMB) to issue guidance on the use of PLAs on federally-assisted projects, OMB has not yet acted. FHWA indicates that following issuance of guidance by OMB new FHWA guidance may be necessary. Generally the guidance states that a decision to use a PLA is a state determination. FHWA will consider the request for the use of a PLA as part of its normal review of project requirements. The use of a PLA may be approved if the state DOT has made a reasonable showing that the use of the PLA on the project will advance the interests of the government. While the Order only applies to projects with a total cost of more than $25 million, FHWA indicates that PLAs can be used on projects below that threshold. FHWA spells out the factors that will be considered to determine if a PLA is in the governments interest, include: size of project, importance of the project timeline; risk of labor unrest on the project; impact of labor unrest on users; cost of delays caused by labor disruption; availability of labor with appropriate skills.  A PLA that a state wishes to include in a contract must meet the following criteria to gain FHWA approval:  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 PLA; e) Provide other mechanisms for labor-management cooperation on matters of mutual concern, including productivity, quality of work, safety, and health; and f) Fully conform to all statutes, regulations and Executive Orders.