[Federal Register Volume 88, Number 245 (Friday, December 22, 2023)]
[Rules and Regulations]
[Pages 88708-88729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27736]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 7, 22, 36, and 52

[FAC 2024-02; FAR Case 2022-003; Docket No. 2022-0003, Sequence No. 1]
RIN 9000-AO40


Federal Acquisition Regulation: Use of Project Labor Agreements 
for Federal Construction Projects

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement an Executive Order 
pertaining to project labor agreements in Federal construction 
projects.

DATES: Effective January 22, 2024.

FOR FURTHER INFORMATION CONTACT: Ms. Dana Bowman, Procurement Analyst, 
at 202-803-3188 or by email at <a href="/cdn-cgi/l/email-protection#ff9b9e919ed19d9088929e91bf988c9ed1989089"><span class="__cf_email__" data-cfemail="680c090609460a071f050906280f1b09460f071e">[email protected]</span></a>, for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755 
or <a href="/cdn-cgi/l/email-protection#75322634271012261016351206145b121a03"><span class="__cf_email__" data-cfemail="9addc9dbc8fffdc9fff9dafde9fbb4fdf5ec">[email protected]</span></a>. Please cite FAC 2024-02, FAR Case 2022-003.

SUPPLEMENTARY INFORMATION: 

[[Page 88709]]

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 87 FR 51044 on August 19, 2022, to amend the FAR to 
implement Executive Order (E.O.) 14063, Use of Project Labor Agreements 
for Federal Construction Projects, issued February 4, 2022 (87 FR 7363, 
February 9, 2022). E.O. 14063 mandates that Federal Government agencies 
require the use of project labor agreements (PLAs) for large-scale 
Federal construction projects, where the total estimated cost to the 
Government is $35 million or more, unless an exception applies. 
Agencies still have the discretion to require PLAs for Federal 
construction projects that do not meet the $35 million threshold. The 
E.O. also directs the Office of Management and Budget (OMB) to issue 
implementation guidance to agencies on exceptions and reporting. The 
preamble to the proposed rule contained detailed information on the use 
of PLAs.
    DoD, GSA, and NASA received comments on the proposed rule from 
8,334 respondents.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    The final rule removes proposed text that was intended to clarify 
direction that prevented agencies from requiring a contractor or 
subcontractor to enter into a PLA with any particular labor 
organization when there were multiple signatory labor organizations 
representing the same trade. While an agency still cannot require a 
contractor or subcontractor to enter into a PLA with any particular 
labor organization, the clarifying language added to the proposed rule 
did not reflect how PLAs are established. When a PLA is established by 
one or more labor organizations for a project, all entities are 
required to enter into that PLA as there are not multiple PLAs on a 
project. As a result, the text was removed at 22.504(c), Labor 
organizations.
    The final rule also removes similar text that prevented contractors 
from requiring subcontractors to enter into a PLA with any particular 
labor organization at FAR provision 52.222-33, Notice of Requirement 
for Project Labor Agreement, and Alternates I, II, and III, and FAR 
clause 52.222-34, Project Labor Agreement, and Alternates I and II. The 
final rule text requires all subcontractors to become a party to the 
PLA negotiated by the prime contractor.

B. Analysis of Public Comments

1. Effects on Competition and Marketplace Diversity
    Comment: Numerous respondents raised concerns that the policy shift 
reflected in E.O. 14063, from discretionary use of PLAs to a mandate, 
will have a negative impact on agencies' ability to use competition to 
achieve best value for the taxpayer. A respondent raised concerns that 
even if a solicitation is open to all contractors, a Government mandate 
for use of a PLA will limit the number of competitors able or willing 
to compete on a project, especially with respect to non-unionized 
contractors and small businesses. Based upon the results of a survey 
conducted of the construction industry, a respondent indicated that 
reduced participation would increase costs to the Government and, 
ultimately, the taxpayers. Another respondent requested the Government 
remain competitively neutral to open competition and to reduce barriers 
to marketplace entrants. Similarly, another respondent requested that 
the market dictate whether businesses will be successful. Numerous 
others support ''open competition.''
    Response: Section 5 of the E.O. provides agencies with the 
authority to grant an exception, and specifically section 5(b) of the 
E.O. provides an exception to the requirement for a PLA if the 
requirement would substantially reduce the number of potential bidders 
so as to frustrate full and open competition. Agencies may consider 
criteria in FAR 22.504(d) to determine if the use of a PLA is 
appropriate for the construction project. In determining whether fair 
and reasonable pricing may be achieved, FAR 36.104(c)(2) directs 
contracting officers to undertake a current and proactive examination 
of the market conditions in the project area to determine national, 
regional, and local entity interest in participating on a project that 
requires a PLA, and to understand the availability of unions, and 
unionized and non-unionized contractors.
    While many respondents expressed concerns about competition, 
several other respondents argued that the E.O. and rule are consistent 
with competitive bidding. Several respondents cited a study of 
education construction spending indicating no statistically significant 
difference in bids between surveyed projects requiring PLAs and those 
that did not. See Emma Waitzman & Peter Philips, UC Berkeley Labor 
Ctr., Project Labor Agreements and Bidding Outcomes: The Case of 
Community College Construction in California 3, 48 (2017)).
    Comment: Some respondents were concerned that the rule limits non-
union contractors bidding on Federal projects and requested 
justification for only allowing union contractors to bid on Federal 
contracts over $35M.
    Response: Under the E.O., both union and non-union prime 
contractors and subcontractors may compete for contracts and 
subcontracts without regard to prior participation in collective 
bargaining agreements (CBAs).
    Comment: Numerous respondents asserted that the rule violates the 
requirement for full and open competition in the Competition in 
Contracting Act of 1984 (CICA) because PLAs discriminate and injure 
competition among potential bidders who are not signatories to CBAs. 
Another respondent added that the rule is arbitrary and capricious 
because it requires Federal agencies to impose PLAs on bidders or 
contractors without knowing the PLAs' terms.
    Response: The E.O. and final rule do not violate CICA, which 
generally requires full and open competition through competitive 
procedures that are best suited under the circumstances of the 
procurement, 41 U.S.C. 3301(a). CICA defines full and open competition 
as meaning ``that all responsible sources are permitted to submit 
sealed bids or competitive proposals on the procurement.'' See 41 
U.S.C. 107. Neither the E.O. nor final rule bar any responsible sources 
from submitting sealed bids or competitive proposals, nor do they 
provide a preference for contractors already a party to a CBA. Section 
4 of the E.O. requires a PLA to allow all contractors and 
subcontractors to compete without regard to whether they are otherwise 
parties to CBAs.
    The E.O. and the final rule require PLAs to contain various terms 
that guarantee against strikes, lockouts, and similar job disruptions. 
In addition, under the final rule, an agency maintains the authority to 
ensure that the PLA includes any additional terms that the agency deems 
necessary to satisfy its needs. As a result, an agency will know the 
material terms of any resulting PLA when it issues a solicitation that 
requires a PLA.
2. Cost
    Comment: Numerous respondents expressed concerns that mandatory

[[Page 88710]]

PLAs and compliance would increase the cost of construction projects 
and undermine taxpayer investments in infrastructure projects, 
resulting in fewer infrastructure improvements, less job creation, and 
higher state and local taxes. Several respondents cited studies that 
indicate the increase in cost is estimated at 12-20 percent. These 
respondents relied on two reports from the Beacon Hill Institute, which 
found that PLAs raised construction costs on Massachusetts construction 
contracts by 12 percent or raised construction costs on Connecticut 
contracts by about 20 percent. Other respondents expressed concerns 
about costs and cited a report from the New Jersey Department of Labor 
& Workforce Development, Annual Report to the Governor and Legislature: 
use of Project Labor Agreements in Public Works Building Projects in 
Fiscal Year 2008, which estimated that average costs per square foot 
were higher for PLA projects than for non-PLA projects.
    Alternatively, some respondents cited analyses that compared 
projects built with PLAs to those built without and found that there 
was no statistically significant difference in project costs after 
controlling for factors such as the size and complexity of the project. 
See, e.g., Dale Belman et al., Project Labor Agreements' Effect on 
School Construction Costs in Massachusetts, 49 Indus. Rels. 44, 60 
(2010)). Some respondents asserted that PLAs are effective mechanisms 
for providing structure and stability to construction contracts, 
controlling construction costs, ensuring efficient completion of 
quality projects, and establishing fair wages and benefits for all 
workers. Another respondent asserted that there is no reason to assume 
union workers lead to higher costs because they are typically more 
productive. Higher wage rates also may induce contractors to substitute 
capital and other inputs for labor, which would mitigate the effects of 
higher labor costs.
    Response: As expressed in the E.O., PLAs may help mitigate 
challenges to the efficient completion of quality construction 
projects, such as a shortage in the supply of labor or labor dispute 
delays. PLAs may provide structure and stability to construction 
projects by securing the commitment of all stakeholders on a 
construction project. There have been numerous studies which found that 
there is no definitive and compelling evidence to support the assertion 
that PLAs increase costs on Federal construction projects. In 2012, the 
Congressional Research Service report, R41310 Project Labor Agreements, 
studied the effects of PLAs on costs and found that the evidence was 
``inconclusive.'' A study commissioned by the Department of Labor, 
Implementation of Project Labor Agreements in Federal Construction 
Projects: An Evaluation, was conducted in 2011 and concluded that the 
research supporting the New Jersey Department of Labor and Workforce 
Development report may be misleading, because it relied on bid costs 
without taking into consideration other key variables, like geographic 
location, project type, or work site environment. Subsequent research 
revisited the Massachusetts school construction contracts discussed in 
the Beacon Hill studies and concluded that, once additional variables 
were taken into account, the effects were not statistically 
significant. Dale Belman et al., The Effect of Project Labor Agreements 
on the Cost of School Construction (2005) and Dale Belman et al., 
Project Labor Agreements' Effect on School Construction Costs in 
Massachusetts (2010). Other research, that found no statistically 
significant difference in cost between projects that utilized PLAs and 
those that did not, includes Emma Waitzman & Peter Philips, UC Berkeley 
Labor Ctr., Project Labor Agreements and Bidding Outcomes: The Case of 
Community College Construction in California (2017) and an analysis of 
130 affordable housing projects in Los Angeles, California, ``Did PLAs 
on LA Affordable Housing Projects Raise Construction Costs?'' conducted 
by Peter Philips & Scott Littlehale, (Univ. of Utah Dep't of Econ., 
Working Paper No. 2015-03, 2015).
    If it appears that a PLA will significantly raise costs on a 
particular Federal construction project and the Government could not 
obtain and determine a fair and reasonable price, the FAR would 
prohibit the award of the contract. The final rule provides an 
exception at FAR 22.504(d)(ii) in the event that market research 
indicates that requiring a PLA on a project would substantially reduce 
the number of potential offerors to such a degree that the Government 
could not meet its requirements at a fair and reasonable price.
    Comment: Numerous respondents expressed concerns that employers and 
employees will incur additional costs for fringe benefits and union 
dues that are unnecessary and duplicative. The respondents were 
concerned that non-union employees paying union dues will never realize 
the benefits provided by the unions due to union vesting standards.
    Response: Neither the E.O. nor the final rule require non-union 
employees to pay union dues or join a union. Non-union contractors are 
free to negotiate provisions in PLAs to accommodate existing fringe 
benefits. For example, a PLA may allow non-union contractors to opt out 
of contributing to health and welfare funds designated under the PLA, 
if the benefits provided by the non-union contractor are equal in value 
to those provided under the PLA.
    Comment: Numerous respondents expressed concerns that inefficient 
union work rules limit an employer's ability to effectively manage 
employee skill sets and work assignments. The respondents claim that 
union rules prohibit productivity practices employed by non-union 
contractors such as multiskilling on contracts with PLAs. Numerous 
other respondents asserted that PLAs prevent disputes and ensure a 
steady workforce. Those respondents indicate that PLAs provide several 
important benefits when coordinating work performed by multiple 
contractors on complex projects, such as uniform work rules and project 
schedules, expeditious dispute resolution, craft and subcontractor 
jurisdictional alignment, and project scheduling trade sequencing.
    Response: Generally, PLAs govern the work rules for all contractors 
and subcontractors on a project, regardless of whether the contractor 
or subcontractor has previously been party to a collective bargaining 
agreement. Contractors can negotiate PLAs that include flexibility in 
how work is assigned or to allow exceptions to generally applicable 
work rules to meet unique needs.
    Comment: Numerous respondents expressed concerns that the proposed 
rule will increase the cost to the taxpayer for public works projects 
passed by Congress, such as those funded under the Infrastructure 
Investment and Jobs Act (IIJA) of 2021, which did not include PLA 
requirements. Another respondent is concerned that the PLA requirement 
contradicts the Congressional intent in the IIJA.
    Response: The majority of projects funded by the IIJA will be 
conducted under federally funded grants, rather than FAR-based 
contracts. This final rule applies to FAR-based contracts; however, 
nothing in this rule or the IIJA precludes contractors working on 
grant-funded projects from entering into PLAs.
    Comment: A respondent expressed concerns that the Government has 
not provided data on the costs or benefits of the PLA mandate. The 
respondent is concerned that the data does not justify

[[Page 88711]]

that the use of PLAs will promote economy and efficiency. Another 
respondent stated analysis based on information obtained via the 
Freedom of Information Act disproves the reasoning used in the E.O. 
that PLAs promote economy and efficiency.
    Response: The E.O., as implemented in the final rule, reflects the 
President's judgment that large-scale construction projects may pose 
special challenges to efficient and timely procurement and that the 
increased use of PLAs may help address those challenges. (Section 1 of 
the E.O.) For example, because construction employers typically lack a 
permanent workforce, those employers may face difficulties predicting 
labor costs while bidding on contracts and securing a steady supply of 
skilled labor to complete those projects on time and on budget. 
Moreover, because construction projects typically involve multiple 
employers working on a single location, a labor dispute involving one 
employer can delay an entire project. A lack of coordination among 
various employers, or inconsistent or uncertain terms and conditions of 
employment among various groups of workers, can also create friction 
and disputes in the absence of an agreed-upon resolution mechanism. 
These problems tend to be especially pronounced on large-scale 
projects, which tend to be more complex and of longer duration. For 
these reasons, expanding the use of PLAs is expected to promote the 
economy and efficiency of Federal contracting by promoting efficient 
and timely completion of projects by skilled labor. Given these 
challenges, use of a PLA can further economy and efficiency in Federal 
contracting by increasing coordination amongst multiple employers and 
trade unions, preventing costly labor disputes, promoting labor 
management stability, improving reliable access to skilled labor 
(including by promoting equity), and bolstering contractors' compliance 
with employment law.
    Expanding the use of PLAs on a large-scale Federal construction 
project can be particularly beneficial to the economy and efficiency of 
Federal contracting amidst a challenging construction labor market. As 
the Supreme Court explained in Boston Harbor, Congress expressly 
authorized PLAs in section 8(f) of the National Labor Relations Act 
(NLRA) ``to accommodate conditions specific to that industry'' 
including ``the contractor's need for . . . a steady supply of skilled 
labor.'' Bldg. & Constr. Trades Council v. Associated Builders & 
Contractors of Mass./R.I., Inc. (``Boston Harbor''), 507 U.S. 218, 
231(1993).
    Today, the construction industry faces a significant nationwide 
labor shortage. See, e.g., Garo Hovnanian, Ryan Luby, and Shannon 
Peloquin, Bridging the labor mismatch in US construction (2022). 
Meanwhile, demand for construction workers' skilled labor is only 
projected to grow. The Department of Labor projects, on average, that 
there will be 646,100 job openings in the construction and extraction 
occupations every year over the coming years. See, Bureau of Labor 
Statistics, Construction and Extraction Occupations, Dep't of Labor 
(Sept. 6, 2023). Measures that promote a steady supply of skilled labor 
are expected to improve the economy and efficiency of Federal 
contracting in the modern labor market.
    PLAs can help reduce the effects of the construction labor shortage 
on Federal contractors' projects in several ways. First, PLAs can 
attract more high-skilled workers to Federal construction projects by 
providing higher compensation for craft positions. Although both union 
and non-union contractors reported difficulty filling job openings for 
craft workers in 2021, after the pandemic-related disruptions to the 
construction labor market, union contractors were 14 percent less 
likely to struggle to fill craft positions. See Frank Manzo IV, Larissa 
Petrucci, & Robert Bruno, Ill. Econ. Policy Inst., The Union Advantage 
During the Construction Labor Shortage (2022). Second, PLAs provide 
access to union hiring halls, which can help ensure a steady supply of 
skilled labor. The same study found that union contractors were 21 
percent less likely than non-union contractors to experience delays in 
completing projects due to labor shortages. This recent data is 
consistent with the Department of Labor (DOL) 2011 study, 
Implementation of Project Labor Agreements in Federal Construction 
Projects: An Evaluation, which found that a PLA reached by New York 
City schools on a construction contract helped avert skilled labor 
shortages over the course of the 5-year construction program. The study 
found that there were ``no instances of shortages in skilled labor on 
any of the'' city schools' projects, ``although such shortages occurred 
regularly elsewhere in the city during this same period.'' Non-union 
contractors are also more likely than union contractors to report 
struggling to hire qualified craft workers, suggesting that PLAs can 
promote high-quality, as well as on-time, construction of Federal 
projects. This final rule is expected to help the Federal Government 
efficiently complete important projects in a challenging construction 
market.
    A study also found that using PLAs on Federal construction projects 
may reduce turnover and absenteeism. There is less turnover among craft 
workers working under CBAs than those that are not. See Frank Manzo IV, 
Larissa Petrucci, & Robert Bruno, Ill. Econ. Policy Inst., The Union 
Advantage During the Construction Labor Shortage (2022). Studies 
suggest that unionized workplaces may be safer than non-union 
workplaces, meaning that PLAs may promote productivity by preventing 
absenteeism or job losses due to workplace injuries. See, e.g., Alison 
D. Morantz, Coal Mine Safety: Do Unions Make a Difference, Indus. & 
Labor Relations Review (2012).
    Because all employers on a PLA are required to enter the same 
agreement with coordinated work rules, PLAs can streamline 
administration of large-scale construction projects. On complex 
projects without a PLA, contractors may work with multiple trade unions 
and, as a result, may struggle to coordinate multiple collective 
bargaining agreements providing for different start times, break times, 
rules governing overtime, holidays, and dispute resolutions procedures. 
Those differences can create undue costs, delays, and inefficiencies in 
Federal construction projects which can be effectively addressed 
through a PLA. As a study commissioned by the Department of Labor 
explained, uniform work rules on PLAs promote efficiency, productivity, 
and cost savings. See Dep't of Labor, Implementation of Project Labor 
Agreements in Federal Construction Projects: An Evaluation (2011). 
Moreover, the study concluded, by standardizing the terms and 
conditions of employment at the outset of a project, PLAs can promote 
predictability of project costs. Id. at 3-4. For example, a four-year 
PLA used by the New York City School Construction Authority (NYCASA) to 
rehabilitate and renovate city schools saved $221 million dollars over 
a five-year PLA by standardizing construction workers' shifts. Id. at 
4-5.
    The E.O. requires PLAs on Federal construction projects to contain 
no-strike and no-lockout clauses. As a result, this requirement is 
expected to prevent costly delays associated with labor disputes. 
According to the 2011 DOL study, during the period covered by the 
NYCASA PLA, a strike by a trade union resulted ``in a shutdown of 
numerous large construction projects across the City and substantial 
delay and related costs'' to parties involved--while construction on 
the projects

[[Page 88712]]

covered by NYCASA's PLA continued uninterrupted. An audit analyzing the 
results of the NYCASA PLA found that there was ``no disruption of work 
or threat of strike on any of the projects'' covered by the PLA ``at 
any time'' that the PLA was in effect.
    For these reasons and others, the final rule reflects the language 
provided in section 1 of the E.O., which states that the increased use 
of PLAs on large-scale construction projects can help address special 
challenges to efficient and timely Federal procurement. Finally, when 
an agency determines that a PLA requirement would not advance the 
Government's interests in achieving economy and efficiency, the agency 
may, on a case-by-case basis, utilize an exception provided in section 
5 of the E.O.
3. Procurement Delays
    Comment: Some respondents expressed concerns that mandatory PLAs 
will cause procurement delays, contradicting the rule's stated 
objective, to ``promote economy and efficiency'' in the administration 
and completion of Federal construction projects. These respondents 
assert that use of PLAs may result in costly bid protests, litigation, 
and other delays.
    Response: While procurement delays may be caused by numerous other 
factors, there is no conclusive evidence to support that specifically 
requiring a PLA will be the sole reason for additional delays or 
litigation. Rather, the final rule reflects the judgment that the 
overall effect of PLAs is expected to promote timely construction of 
Federal projects. Section 1 of the E.O. states that expanding the use 
of PLAs will help prevent delays by preventing costly labor disputes on 
Federal construction projects, promote a reliable stream of skilled 
labor on Federal projects, and promote coordination across multiple 
employers and unions. For example, a PLA executed by the New York City 
School Construction Authority (NYCASA) to rehabilitate and renovate 
city schools helped avert substantial delays in construction. See Dep't 
of Labor, Implementation of Project Labor Agreements in Federal 
Construction Projects: An Evaluation (2011). During the period covered 
by the PLA, a strike by a trade union resulted ``in a shutdown of 
numerous large construction projects across the City and substantial 
delay and related costs'' to parties involved--while construction on 
the projects covered by NYCASA's PLA continued uninterrupted. An audit 
analyzing the results of the PLA found that there was ``no disruption 
of work or threat of strike on any of the projects'' covered by the PLA 
``at any time'' that the PLA was in effect and that ``there were no 
instances of shortages in skilled labor on any of the NYCASA projects'' 
covered by the PLA--although similar shortages ``occurred regularly'' 
on other projects in the same city during the same time period. Id. 
Another study of school construction projects in San Diego found that 
``project delays are considerably lower'' on projects covered by a PLA. 
Richard Parker & Louis Rea, San Diego Unified School District, San 
Diego Unified School District Project Stabilization Agreement: A Review 
of Construction Contractor and Labor Considerations iii (2011).
    One study found that union contractors were 14 percent less likely 
than non-union contractors to struggle to fill craft positions and 21 
percent less likely than non-union contractors to experience delays in 
completing projects due to labor shortages. See Frank Manzo IV, Larissa 
Petrucci, & Robert Bruno, Ill. Econ. Policy Inst., The Union Advantage 
During the Construction Labor Shortage 5 (2022).
    Comment: A respondent is concerned that there are no meaningful 
criteria to grant exceptions; therefore, agency decisions will be 
inherently arbitrary and capricious and will delay construction 
projects.
    Response: The rule reflects specific criteria provided in section 5 
of the E.O, under which an agency may grant an exception. The rule 
provides additional details to ensure agency decisions comply with the 
E.O.
4. Effects on Workforce
    Comment: Many respondents commented on the rule's likely impact on 
non-unionized contractors. Some respondents asserted that PLAs don't 
discourage or prevent non-union contractors from participating on 
projects with PLAs. However, another respondent expressed concerns that 
non-union contractors will not bid on projects that mandate a PLA since 
it requires that they recognize the union as the representative of 
their employees (without their input) on that job, and could require 
them to use the union hiring hall to obtain most or all construction 
labor, exclusively hire apprentices from union programs, follow union 
work rules, and pay into union benefit and multi-employer pension 
plans. While not specifically stating that it would prevent bidding on 
work, several other respondents expressed similar concerns. Numerous 
respondents were concerned that non-union contractors represent the 
vast majority of construction contractors in the country and their 
unwillingness to compete will potentially limit the Government's access 
to the best available contractors for a given construction project.
    Response: Neither the E.O. nor the final rule preclude non-union 
contractors from bidding on projects requiring a PLA. Non-union 
contractors who choose to enter a project-specific PLA may do so 
without becoming a union employer for purposes of other projects. The 
E.O. expressly states that a PLA shall ``allow all contractors and 
subcontractors on the construction project to compete for contracts and 
subcontracts without regard to whether they are otherwise parties to 
collective bargaining agreements.'' This language is reflected in the 
final rule. The DOL website contains useful information about the 
operation of PLAs. See https://www.dol.gov/general/good-jobs/project-labor-agreement-resource-guide.
    Studies and court cases have shown that PLAs can have significant 
non-union contractor participation. One study noted that on the Boston 
Harbor project, the subject of the Supreme Court's decision in Bldg. & 
Constr. Trades Council v. Associated Builders & Contractors of Mass./
R.I., Inc. 507 U.S. 230, 231 (1993), 102 of 257 subcontractors were 
nonunion, notwithstanding that as much as three quarters of Boston 
construction contractors were unionized. See Robert W. Kopp & John 
Gaal, The Case for Project Labor Agreements, Constr. Law., (1999); see 
also Associated Builders & Contractors, Inc., S. California Chapter v. 
Metro. Water Dist. of S. California, 69 Cal. Rptr. 2d 885, 888 (Ct. 
App. 1997).
    The E.O. and the rule contain an exception for solicitations where 
a market analysis suggests that there will not be sufficient bidders so 
as to frustrate full and open competition.
    Comment: Numerous respondents stated that the proposed rule 
discriminates against non-union employees, placing non-union general 
contractors and subcontractors at a significant competitive 
disadvantage. A respondent explained that the requirement for offerors 
to negotiate with labor unions--a party with which the offeror has no 
authority to compel negotiations--effectively grants labor unions the 
power to prevent certain offerors from submitting an acceptable offer.
    Response: PLAs have been used successfully for decades in 
construction projects in all parts of the United States, and there is 
no data to suggest that parties have been systematically unable to 
negotiate PLAs because of bad-faith bargaining by unions. Since the 
final rule applies to large-scale Federal

[[Page 88713]]

construction projects, the Government assumes that there is a 
significant economic incentive for both the union and the prospective 
offeror to reach agreement on a PLA.
    Comment: Numerous respondents expressed concerns that mandatory 
PLAs will exacerbate nationwide labor shortages in the construction 
industry because unions will only hire from union halls/union 
apprenticeship programs and the majority of the workforce has opted not 
to join unions. Numerous respondents were similarly concerned that PLAs 
prevent the use of a contractor's current workforce, requiring the use 
of union members hired out of local union halls.
    Response: The Government does not expect PLAs to negatively impact 
the outcome of the current nationwide labor shortage. Research 
indicates that the skilled labor shortage is less severe among union 
contractors than non-union contractors. One report revealed that union 
contractors are 14 percent less likely to experience difficulty in 
filling craft worker positions and 21 percent less likely to experience 
delays in project completion times due to labor shortages than non-
union contractors. See Frank Manzo IV, Larissa Petrucci, & Robert 
Bruno, Ill. Econ. Policy Inst., The Union Advantage During the 
Construction Labor Shortage 5 (2022). Use of PLAs is expected to help 
the Government efficiently complete projects in a tight construction 
labor market. While many PLAs do require contractors to use the union's 
hiring hall for referrals, they do not necessarily prevent the use of a 
contractor's workforce. The union hiring halls are legally required to 
refer workers to the project without regard to whether the workers are 
union members. Ultimately, the contractor retains the right to decide 
whom to hire.
    Comment: Some respondents expressed concerns that unions negatively 
impact local labor markets by bringing in non-local union labor rather 
than hiring locally. Numerous respondents were concerned that PLA 
mandates will result in more contract awards to union-signatory 
contractors whose employees are union members at the expense of 
taxpayers, fair and open competition, and local workers and businesses. 
Alternately, some respondents indicated that PLAs can benefit local 
labor markets by including local recruitment and hiring goals 
specifically targeting historically marginalized workers intended to 
expand the pool of skilled workers and promote diverse economic 
development. Participation in registered apprenticeship programs and 
pre-apprenticeship programs will also help to recruit women, people of 
color, and other underrepresented individuals into the construction 
industry.
    Response: While unions have the ability to recruit skilled workers 
nationally to address local skilled labor shortages, the intent of the 
policy implemented in this rule is not to replace local workers for the 
sole purpose of employing union members. PLAs can offer opportunities 
to grow and train the local workforce, specifically targeting 
underrepresented individuals.
    Comment: Numerous respondents expressed concerns that PLAs can 
interfere with existing CBAs that contractors have already negotiated 
with unions.
    Response: Many PLAs include a ``supremacy clause'' that 
incorporates the individual CBAs of the trades by reference and 
supersedes any other labor agreement that might otherwise apply to the 
project. Use of the supremacy clause can be an important benefit of a 
PLA on long term projects because individual CBAs may expire and need 
to be re-negotiated during the project. The terms of the PLA would take 
over to prevent work stoppages and other jobsite delays.
    Comment: A respondent asserted PLAs will mitigate increasing 
requests for equitable adjustments caused by workers walking off the 
job for higher pay.
    Response: PLAs prevent work stoppages and other job disruptions. As 
a result, projects covered by PLAs can continue without additional 
costs or delays.
    Comment: A respondent asserted that non-union entities produce 
better quality construction, pay employees, and provide benefits that 
are as good, or better than union shops. Another respondent asserted 
that employees do not want or need a union that will not give them 
additional benefits beyond what they have and will require them to pay 
dues. Alternatively, a respondent asserted that PLAs establish wages, 
benefits, and other terms of employment across an entire project and 
have been used in both the public and private sector for the better 
part of a century.
    Response: Non-union contractors may negotiate with the union that 
is party to the PLA to opt out of certain terms, especially when 
current benefits are equivalent to those provided by the union. As a 
general matter, the U.S. Department of the Treasury report, Labor 
Unions and the U.S. Economy (2023) indicates that the costs of union 
dues or fair-share fees to workers is typically offset by increased 
wages and fringe benefits. In addition, for both contractors and for 
unions, the benefits of a PLA go beyond wages and fringe benefits. A 
PLA establishes work schedules for all contractors, ensures efficient 
utilization of labor, prevents job disruptions, and provides mutually 
binding procedures for resolving disputes.
    Comment: Several respondents indicated that expanded use of PLAs 
will support workforce quality, safety, and stability, and help 
guarantee on-target and on-budget completion of projects that employ 
thousands of workers across various trades and industries. PLAs promote 
safe, timely, cost-effective execution of the most complex and national 
security conscious construction projects yet designed. In contrast, a 
respondent asserted that in the period from 2001 to 2009 during which 
PLA requirements were prohibited for Federal contracts and grants, 
there were no reports of widespread cost overruns, delays, strikes, or 
poor-quality construction on Federal projects attributable to the lack 
of a government-mandated PLA, indicating that PLA mandates are not 
needed to ensure economy and efficiency in government contracting. 
Another respondent asserted there is no evidence to support claims that 
PLAs guarantee better safety, quality, or construction delivery.
    Response: Expanded use of PLAs is expected to support safe, on-
time, efficient, and high-quality construction, in part by helping to 
secure a skilled workforce for Federal construction projects. Ensuring 
compliance with workplace laws on Federal construction projects has 
many important benefits to economy and efficiency for covered projects, 
including attracting skilled workers, reducing labor conflict and 
disruption, reducing turnover, and preventing workplace injuries.
    One study found that union contractors (who are more likely to work 
on PLA-covered projects) have stronger safety records than non-union 
contractors. The study looked at more than 37,000 Occupational Safety 
and Health Administration (OSHA) inspections in the construction 
industry and estimated that union worksites were 19 percent less likely 
to have OSHA violations than non-union worksites. When OSHA inspections 
do uncover OSHA violations at unionized worksites, those worksites have 
34 percent fewer violations per inspection that non-unionized 
worksites. See Frank Manzo IV, Michael Jekot, and Robert Bruno, Ill. 
Econ. Policy Inst., The Impact of Unions on Construction Worksite 
Health & Safety (2021). PLAs

[[Page 88714]]

may improve workplace safety by ensuring that construction workplaces 
have more apprentice-trained journeyworkers with critical safety 
skills. A study conducted in California found that construction 
contractors employing more apprentice-trained journeyworkers 
experienced significantly lower rates of injuries. See Emma Waitzman & 
Peter Philips, UC Berkeley Labor Ctr., Project Labor Agreements and 
Bidding Outcomes: The Case of Community College Construction in 
California 10, 16 (2017). Improving worker safety is especially urgent 
in the construction industry, which has the second-highest number of 
occupational deaths of any industry in the United States. See Bureau of 
Labor Statistics, National Census of Occupational Injuries in 2021, 
USDL-22-2309 (2022).
    Comment: A respondent asserted that PLAs are more advantageous than 
regular ``pre-hire'' agreements because they can systematize labor 
relations across multiple trades, contractors and subcontractors.
    Response: While PLAs can cover large, multi-year projects with 
multiple unions, PLAs can also cover any construction project, 
regardless of size, when only one union is involved.
    Comment: A respondent expressed concerns that PLAs can blur the 
line between employer and employee, which could result in ``co-
employment issues.'' The respondent also suggested that PLAs will 
remove an important differentiating factor between subcontractors and 
will deter their engagement when they cannot negotiate the terms and 
conditions for their own employees. The respondent asked whether prime 
contracts will include terms related to ``co-employment risks'' when 
utilizing a mandated PLA.
    Response: In Federal contracts, prime contractors are already 
responsible for every subcontractor's performance and compliance with 
the requirement to pay workers a prevailing wage under the Davis-Bacon 
Act (see FAR clause 52.222-11). Contractors can and do select 
subcontractors based upon criteria other than wage rates, such as 
subcontractor's records of experience, quality, safety, timeliness, or 
any other metric deemed critical to the success of the project.
    Comment: Numerous respondents expressed concerns that specialists 
in the construction field employed by foreign firms would be unwilling 
to sign a PLA.
    Response: The E.O. and final rule apply equally to foreign firms 
participating on a project within the United States that requires a 
PLA. The rule assumes that certain conditions that may impact the 
Government's interests in achieving economy and efficiency would be 
known prior to the performance of market research. Based upon those 
conditions and/or results of market research, the agency may determine 
that an exception would apply.
    Comment: Numerous respondents expressed concerns that union 
apprenticeship requirements and completion rates would mean that it 
would take more than 14 years for all government-registered 
construction industry apprenticeship program completers to fill the 
estimated 650,000 vacant construction jobs needed just in 2022. These 
respondents argue that excluding the non-union workforce development 
practices and systems already in place exacerbates the skilled labor 
shortage by steering work to participants in union-affiliated, 
Government-registered apprenticeship programs at the expense of 
contractors that engage in alternative workforce development efforts. 
Alternatively, several respondents asserted that PLAs promote equitable 
development of a skilled workforce by supporting privately funded union 
training programs. Another respondent asserted higher skilled trades 
require the workforce development and skill training of the union-
sector joint apprenticeship system to build and maintain the skill base 
of the industry.
    Response: E.O. 14063 does not impose a requirement for union-
affiliated apprenticeship programs, as both union and non-union 
contractors can participate on projects with a PLA. Neither the E.O. 
nor the rule require employers to use apprentices from union-affiliated 
and/or Government-registered apprenticeship programs. Non-union 
contractors may negotiate with the union that is party to the PLA to 
use their own apprenticeship programs during the project.
    The number of apprenticeships programs and the number of 
apprentices graduating from those programs has been steadily 
increasing. In the ten-year period from 2013 to 2023, the number of 
workers enrolled in an apprenticeship program nearly doubled from 
286,069 to 581,110. The number of women in these programs nearly 
quadrupled from 24,594 to 83,254. See Data and Statistics, ETA.gov 
(2023).
5. Compliance With Law
    Comment: Several respondents asserted that PLAs are a deterrent to 
violations of various worker protection laws and protect against common 
workplace abuses to include worker misclassification, employment 
status, and wage theft. They asserted that PLAs ensure workers receive 
fair wages and benefits, which includes participation in federally-
mandated programs such as Social Security and Medicare.
    Response: Use of PLAs may help reduce the risk of noncompliance 
with labor laws in the construction industry under Federal construction 
projects. The presence of unions on construction work sites is expected 
to result in increased oversight, protection against retaliation, and 
grievance procedures that promote compliance with such laws and protect 
workers who raise concerns about an employer's conduct. Empirical 
research shows that union coverage generally is associated with fewer 
violations of employment law and suggests that unionization fosters 
reporting violations of law to enforcement agencies. See Ioana 
Marinescu, Yue Qiu, & Aaron Sojourner, Wage Inequality & Labor Rights 
Violations (National Bureau of Economic Research., Working Paper No. 
28475, February, 2021).
    Comment: A respondent urged the Council to amend the proposal to 
explicitly confirm that parties involved in PLA negotiations shall 
never be required to reach an agreement with unions but should be 
required only to engage in good faith bargaining to impasse, consistent 
with the requirements of the NLRA.
    Response: Unless an exception is authorized, section 3 of the E.O. 
requires every contractor or subcontractor engaged in construction on 
the project to agree, for that project, to negotiate or become a party 
to a PLA with one or more appropriate labor organizations. Agencies 
will consider all relevant circumstances in determining whether an 
exception is authorized.
    Comment: A respondent expressed concern that the rule interferes 
and discriminates against the rights of construction contractors and 
employees under NLRA. That respondent also argued that the E.O. is 
preempted by the NLRA ``because it is not limited in its scope to a 
single project.'' Similarly, another respondent is concerned that the 
PLA rule is subject to challenge under labor law conflict preemption 
principles because it conflicts with policies in the NLRA which 
protects the rights of employees to refrain from union representation. 
By contrast, other respondents noted that PLAs are expressly authorized 
by section 8(f) of the NLRA and were unanimously upheld by the Supreme 
Court in Building & Constr. Trades Council v. Associated Builders & 
Contractors of

[[Page 88715]]

Mass. (Boston Harbor), 507 U.S. 218, 227-30 (1990).
    Response: The E.O. and final rule are not preempted by the NLRA, 
nor do they unlawfully interfere with or discriminate against the 
rights of contractors or employees. PLAs are expressly authorized in 
section 8(f) of the NLRA. Section 4(f) of the E.O. expressly requires 
any PLA reached under it to allow contractors and subcontractors to 
compete for work on the project without regard for their union status. 
The E.O. also requires that PLAs reached under its authority fully 
conform to all statutes, including the NLRA which prohibits the use of 
union hiring halls in a manner that discriminates against non-union 
workers.
    The E.O. as implemented in this final rule is not preempted by the 
NLRA because it reflects the Government's interests in efficient 
procurement of goods and services. The NLRA does not preempt Government 
agencies from reaching PLAs where the Government is acting as a 
``market participant'' protecting its proprietary interests, rather 
than as a regulator. Boston Harbor, 507 U.S. at 227-30. The Government 
is acting in its role as a market participant by establishing a 
presumption in favor of PLAs to advance the economical and efficient 
use of Government funds--including, by promoting quality assurance, 
efficient and on-time completion, and stability. Courts have repeatedly 
found that uses of similar agreements in Government-funded projects are 
not preempted under the NLRA. For example, in Airline Service Providers 
Association v. Los Angeles World Airports, 873 F.3d 1074 (9th Cir. 
2017), an appellate court held that a requirement that contractors 
enter labor peace agreements was not preempted by the NLRA. In another 
case, an appellate court held that a city requirement that parties 
receiving certain tax benefits use a neutrality agreement and no-strike 
agreement was not preempted by the NLRA because the conditions were 
tailored to protect the city's proprietary interest. See Hotel 
Employees & Restaurant Employees Union v. Sage Hospitality, 390 F.3d 
206 (3rd Cir. 2004). In addition, the Government may also prohibit 
Federal agencies from requiring the use of PLAs because the Government 
acts in its proprietary capacity when it does so. See Bldg. and Constr. 
Trades Dep't, AFL-CIO v. Allbaugh, 295 F.3d 28, 34-36) (D.C. Cir. 
2002).
    While the NLRA does not provide a right to refrain from union 
``representation,'' the NLRA does allow employees to choose not to 
become union members. Non-members may opt not to pay union dues and 
instead pay agency fees covering only the share of dues used directly 
for representation, such as for collective bargaining or grievance 
procedures. However, under Section 9(a) of the NLRA, a union is the 
``exclusive'' representative for all employees in that unit. Similarly, 
under the NLRA, a union has a duty of fair representation to all 
employees, regardless of whether they are union members or not. As a 
result, the NLRA provides workers a right to opt out of union 
membership, but not union representation.
    Although the E.O. and final rule addresses more than one project, 
the rule is not preempted by the NLRA. Section 5 of the E.O. 
establishes a presumption in favor of PLAs, but also contemplates a 
case-by-case analysis in which agencies may grant exceptions to that 
presumption where a PLA would not advance the Government's proprietary 
interests.
    Comment: A respondent expressed concern that the rule interferes 
and discriminates against the rights of construction contractors and 
employees under the Employee Retirement Income Security Act of 1974 
(ERISA) by ``taking nonunion workers pay for the benefit of union 
pension plans without just compensation.'' The respondent also 
suggested that the rule conflicted with the National Apprenticeship 
Act, which the respondent wrote prohibits ``union versus non-union 
discrimination.''
    Response: The final rule does not interfere with employees' or 
contractors' rights under ERISA or the National Apprenticeships Act. 
PLAs reached under the E.O. and the final rule must conform to all 
applicable statutes, including ERISA and the National Apprenticeships 
Act. The possibility that non-union workers may contribute to benefit 
plans for which they may or may not ultimately vest does not violate 
ERISA, which permits and regulates defined benefit plans that do not 
vest immediately (29 U.S.C. 1053). In addition, ERISA does not bar 
government entities from establishing bidding conditions, e.g., 
requiring a PLA, related to benefit programs when those entities act as 
market participants.
    The National Apprenticeship Act does not prohibit PLAs or prohibit 
contractors from entering into CBAs that require the use of a 
particular apprenticeship program, as long as that program is 
appropriately registered where required. Neither the E.O. or final rule 
specify or limit PLA provisions regarding apprenticeship programs, 
which may be the subject of bargaining between the parties to the 
agreement within the bounds of applicable law.
    Comment: A respondent suggested that this final rule is unnecessary 
because existing Federal law and enforcement by agencies like the 
Occupational Health and Safety Administration is sufficient to 
guarantee workers' rights, fair pay, and safety.
    Response: Ensuring compliance with workplace laws on Federal 
construction projects has many important benefits to economy and 
efficiency for covered projects, including attracting skilled workers, 
reducing labor conflict and disruption, reducing turnover, and 
preventing workplace injuries. Despite Federal and local protections 
for construction workers and ongoing enforcement efforts by the 
Department of Labor and others, construction remains one of the 
country's most high-violation industries. See U.S. Department of Labor, 
Wage & Hour Division, Low-Wage, High-Violation Industries (2022) at 
https://www.dol.gov/agencies/whd/data/charts/low-wage-high-violation-industries. For example, a study (``An Empirical Methodology to 
Estimate the Incidence and Costs of Payroll Fraud in the Construction 
Industry,'' dated January 2020, http://www.nasrcc.org/wp-content/uploads/2021/03/Wage-and-Tax-Fraud-Report.pdf) conducted on this topic 
estimates that up to one in five construction employees are 
misclassified as independent contractors, costing those workers at 
least $811 million in unpaid overtime and premium pay in 2017 alone. 
Additionally, the U.S. Department of Labor, Bureau of Labor Statistics 
News Release USDL-22-2309 (https://www.bls.gov/news.release/pdf/cfoi.pdf) revealed that Construction workers are also particularly 
vulnerable to health and safety violations: the industry has the 
second-highest number of occupational deaths of any industry in the 
United States.
6. Impact on Small Business
    Comment: A respondent encouraged the Council to re-evaluate the 
excessive cost of compliance on small entities and explore alternatives 
to this rulemaking as it relates to small entities under the Regulatory 
Flexibility Act. Numerous respondents expressed concerns that the rule 
does not adequately calculate the disparate negative economic impact 
and expensive compliance costs shouldered by Federal small business 
general contractors and subcontractors, noting that the number of small 
businesses awarded Federal construction contracts declined 60 percent 
from 2010 to 2020.

[[Page 88716]]

    Response: Unless an exception in section 5 of the E.O. applies, 
there are no alternatives that would reduce the impact on or exempt 
small entities from its requirements. The impact of the rule is updated 
to take into consideration the numerous public comments regarding the 
burden calculations. OMB and DOL will work with the Small Business 
Administration (SBA) to determine the best way to help small entities 
in understanding how to negotiate or participate in a construction 
project with a PLA.
    Comment: Numerous respondents expressed concerns about the 
complexity and cost burdens associated with the rule. The respondents 
were concerned that PLAs will create a barrier to entry for many small, 
minority, and women-owned businesses, which will also negatively impact 
agency achievement of socio-economic and small business contracting 
goals. Some were concerned that these entities will choose to work on 
commercial projects rather than those that require PLAs.
    Response: OMB and DOL intend to work with SBA to determine the best 
way to help small entities in understanding how to negotiate or 
participate in a construction project with a PLA.
    Comment: A respondent recommended consideration of a requirement 
relieving a small business from having to join a union if it agrees to 
pay the prevailing wages and other benefits established in union 
negotiation. The respondent suggested that removal of this mandatory 
requirement would allow the Federal Government to achieve its objective 
with the PLA but at less cost to the small business.
    Response: Neither the E.O. nor the final rule require any entity, 
regardless of size, to join a union. Contractors and subcontractors may 
negotiate with the union that is party to the PLA to opt out of certain 
terms, to include when current benefits are equivalent to those 
provided by the union.
    Comment: A respondent recommended modifying the rule to reflect the 
diminishing cost-benefit to small firms by providing for a threshold 
contract value for covered subcontractors. The respondent stated that a 
proper cost-benefit analysis would show that a small firm that has only 
a few contracts per year will absorb a higher cost of compliance than a 
firm with multiple yearly contracts. Thus, this rule will have a 
negative economic impact on a substantial number of smaller firms, 
demonstrating why the mandatory flow down cutoff has merit. The 
respondent expressed concerns that the rule requires small business 
subcontractors to comply with the mandatory flow down but does not 
allow the small business to utilize the contracting agency resources to 
resolve disputes that may occur during contract performance.
    Response: The E.O. does not provide a threshold for subcontractor 
participation. The E.O. requires that all subcontractors agree to 
become a party to the PLA negotiated by the prospective offeror or 
prime contractor in order to participate on the project unless an 
exception applies. Providing relief above a certain threshold for 
smaller dollar subcontracts could unintentionally frustrate the 
benefits of a PLA, which depend on the participation of all contractors 
and subcontractors working on the contract being part of the PLA. The 
final rule assumes that subcontractors will work with prospective 
offerors or the prime contractor to ensure terms and conditions are 
negotiated into a PLA prior to deciding to participate on a project 
that requires a PLA. PLAs are intended to prevent disputes and provide 
an avenue for quick resolution.
    Comment: A respondent was concerned that small entity annual 
receipts would increase due to increased labor costs, which will result 
in the small entity outgrowing the size standard for the North American 
Industry Classification System (NAICS) to qualify for small business 
set-asides and recommends that such set-asides be exempt from PLAs.
    Response: While construction costs do fluctuate over time, there is 
no evidence to support that PLAs specifically will increase costs and 
cause a small entity to outgrow the size standard for the associated 
NAICS code. See section II. B. 2 of the Preamble for the discussion of 
Costs related to the use of PLAs.
    Comment: A respondent asserted that unions require a bond and other 
types of requirements that eliminate small companies.
    Response: This rule does not amend or impose new bond requirements. 
40 U.S.C. chapter 31, subchapter III, Bonds (formerly known as the 
Miller Act) requires performance and payment bonds, or an alternative 
payment protection, for any Federal construction contract exceeding 
$150,000 unless an exception applies. The bonds protect the 
Government's interests but also contain payment protections that are 
beneficial for subcontractors.
    Comment: A respondent was concerned that the rule will discourage 
small business from bidding on covered Federal construction contracts 
and thereby impose obstacles on the use of small business preferences 
required by Federal agencies in violation of the Small Business Act (15 
U.S.C. 637(d)).
    Response: The final rule does not change the use of small business 
preferences in procurements subject to the Small Business Act. 
Implementation of the rule is not expected to impact the Government's 
ability to achieve its small business goals. For fiscal year 2022, the 
Federal Government reached 104.05 percent of its small business 
contracting goals. PLAs can be helpful to small businesses by providing 
them with a level playing field and access to expanded skilled labor 
pools, while streamlining project administration and the negotiation of 
workplace terms and conditions.
7. Alternative Approaches
    Comment: A respondent recommended agencies include a provision to 
establish a Community Workforce Agreement (CWA) approach in 22.504(c) 
to promote diversity and inclusion, and local resident business 
opportunities.
    Response: A CWA is an agreement that may be negotiated and 
incorporated as part of a PLA. A CWA may help agencies and prime 
contractors meet small business subcontracting goals and other 
objectives. The final rule permits, but does not require, CWAs. This is 
consistent with the language of the E.O. and provides appropriate 
flexibility for the parties to take unique local needs into 
consideration when negotiating PLAs on a project-by-project basis.
    Comment: A respondent recommended requiring PLAs to include a 
``core employee'' provision, which would allow non-union contractors to 
use their own employees without those employees registering with a 
union's hiring hall.
    Response: Non-union contractors are currently able to negotiate 
core employee provisions in PLAs. Even when a PLA does not include a 
``core employee'' provision, the PLA will not prevent using the 
contractor's workforce. If the union that is a party to a PLA operates 
an exclusive hiring hall, a non-union contractor's workers may register 
with that hiring hall for referrals to the project. If there is a non-
exclusive hiring hall, contractors may hire their prior workers without 
those workers registering for a referral.
    Comment: Some respondents requested that this final rule require 
that agencies use PLAs on projects that fall under the $35M threshold 
in certain circumstances. Alternatively, another respondent requested 
the rule eliminate

[[Page 88717]]

the option to use PLAs on small projects because of the respondent's 
concern about potential impacts on small and diverse businesses.
    Response: The rule implements section 7 of the E.O., which allows 
an agency to require the use of a PLA in circumstances where the total 
cost to the Federal Government is less than that for a large-scale 
construction project if appropriate.
    Comment: A respondent recommended that the rule consider exceptions 
for contractors regarding health and welfare plans if (1) a non-union 
contractor provides those benefits already and if less than the union 
benefits, the contractor should pay the employee the difference; (2) if 
the pension plan or healthcare fund is less than 70 percent funded 
based upon the most recent 5500 filings, the non-union contractor may 
pay the difference directly to employees; or (3) if a contractor would 
incur a pension withdrawal liability that exceeds the payments they are 
to make during the contract, exclude them from becoming a party to it 
and pay the employees instead.
    Response: Non-union contractors may negotiate the recommended 
alternatives with the union that is party to the PLA.
    Comment: Some respondents suggested there were other methods to 
ensure projects are completed on time and that there is no evidence 
that PLAs improve performance. Another respondent suggested that a 
series of alternative requirements would achieve the Government's goals 
such as: requiring contractors to reach agreements with private sector 
hiring agencies to meet workforce needs; requiring contractors to reach 
``labor compensation agreements'' for the project; requiring contracts 
to use all non-union labor; or requiring contracts to have ``dispute 
resolution agreements.''
    Response: The respondent's proposed alternatives would be 
inconsistent with the E.O., which reflects the President's judgment 
that PLAs are often effective in preventing special challenges to 
efficient and timely procurement related to large-scale construction 
contracts. This judgment is consistent with published research showing 
the benefits of PLAs and the long history of PLA use in the private and 
public sector. Federal agencies have used PLAs on large-scale Federal 
construction projects, dating back to the use of PLAs on Tennessee 
Valley Authority projects in the 1930s. PLAs can provide many 
advantages, including: eliminating risks of labor disruptions during 
the construction period; access to reliable skilled labor through union 
hiring halls and additional procedures to meet workforce needs in a 
timely fashion; and uniform work rules promoting efficiency. Dep't of 
Labor, Implementation of Project Labor Agreements in Federal 
Construction Projects: An Evaluation (2011). Research has shown that 
there are advantages and potential drawbacks of PLAs, but supports the 
conclusion that PLAs can advance the Government's interest in efficient 
Federal contracting.
    Many of the alternatives proposed by the respondent (such as a 
Federal Government requirement that contractors use non-union labor, 
requiring agreements with staffing agencies rather than union hiring 
halls to fill time-sensitive needs for limited skilled craft labor, or 
requiring contractors to reach ``labor compensation agreements'') are 
relatively untested and unstudied. Without additional research, there 
is no way to determine whether the respondent's proposed alternatives 
would provide benefits that exceed the benefits provided by this final 
rule. PLAs provide many demonstrated, mutually-reinforcing benefits to 
the Federal Government's ability to achieve its goals in large 
construction projects. The final rule is preferable to alternatives 
that, whether individually or together, only seek to achieve a subset 
of the goals provided by PLAs.
    Comment: A respondent asserted that the Government's interests in 
economy and efficiency would be best served by pausing the proposed 
rule, gathering and analyzing data to justify a reasonable threshold 
for requiring PLAs, and then revising any proposed rule.
    Response: The E.O. reflects the judgment that a presumption in 
favor of PLAs on projects with an estimated cost of $35 million or more 
would promote efficient Federal contracting. The final rule provides 
for a case-by-case analysis to determine whether an exception to the 
general PLA requirement is authorized, including where application of 
the requirement would not promote economy and efficiency. As a result, 
it is unnecessary to pause the publication of the final rule.
    Comment: Some respondents requested that regulations and guidance 
afford states and localities maximum regulatory flexibility, free from 
anti-competitive and costly pro-PLA policies, in order to deliver more 
value to taxpayers and create opportunities for all, including small 
businesses.
    Response: The final rule applies to FAR-based contracts awarded by 
the Federal Government. The rule does not apply to grants or contracts 
awarded by states or localities.
    Comment: A respondent urged the Council to implement regulations 
that include the best trade workers in the region to participate in 
Federal construction projects. Some respondents suggested maintaining 
the current policy established by E.O. 13502, which was issued in 2009 
and authorized Federal agencies to require PLAs for large-scale 
construction projects on a case-by-case basis, considering factors like 
geographical location, construction market conditions, and the 
availability of skilled labor. One respondent asserted that the 
reliance interests of current contractors had not been adequately 
considered in adopting the change in policy under E.O. 14063. By 
contrast, some respondents argued that the current policy has led to an 
underutilization of PLAs and that the proposed rule, if finalized, 
would better advance the Federal Government's interests in achieving 
economy and efficiency in Federal procurement. Another respondent 
argued that E.O. 13502 has not achieved its goals because, under the 
current policy, some agencies do not sufficiently consider the benefits 
of adopting PLAs.
    Response: Neither the E.O. nor the final rule prevent the best 
trade workers in the region from participating in any Federal 
construction project. Section 10 of the E.O. provides that, upon the 
effective date of this final rule, E.O. 13502 is revoked. The final 
rule reflects the language in section 1 of the E.O. which states that 
large-scale construction projects pose special challenges to the 
efficient and timely procurement for the Federal Government. 
Additionally, the increased use of PLAs can help address those 
challenges. The E.O. provides that expanding the use of PLAs will help 
prevent costly labor disputes that delay Federal construction projects, 
ensure a reliable stream of skilled labor, and promote coordination 
across multiple employers and unions.
    While current policy permits agencies to use PLAs on construction 
projects, PLAs have only been used on a small number of Federal 
projects. According to data collected by OMB, under current policy 
approximately 2,000 contracts were eligible for a PLA between 2009 and 
2021, but PLAs were only required 12 times. This E.O. now requires the 
use of PLAs in connection with large scale construction projects unless 
an exception applies to promote economy and efficiency in Federal 
procurement. This is expected to expand the use of PLAs by Federal 
agencies and help agencies achieve construction goals

[[Page 88718]]

more effectively in the context of the nationwide skilled labor 
shortage in the construction industry.
    While the respondent asserted that contractors have reliance 
interests in ``the principle of government neutrality in procurement,'' 
they did not explain why the prior policy generated legally cognizable 
reliance interests. The respondent did not specify what actions they 
may have taken in reliance on the prior policy under E.O. 13502 that 
they would not have taken if they had known the policy would change.
    E.O. 14063 and the final rule apply prospectively and do not apply 
to or affect existing contracts already entered into by contractors. 
Both the E.O. and the rule apply only to new solicitations that are 
entered into on or after the effective date of this final rule. (See 
FAR 1.108(d) Application of FAR changes to solicitations and 
contracts.) Contractors will be able to decide whether or not to bid on 
contracts covered by the rule and to adjust their bidding strategy if 
necessary in response to any PLA requirement in the solicitation. 
Accordingly, while the Councils must implement the new requirements of 
the E.O. and do not have the discretion to depart from the mandate of 
the order, any reliance interests are outweighed by the benefits of 
this final rule.
8. Exclusion of Professional Engineering Services/Brooks Act
    Comment: Several respondents expressed concern that the rule may be 
construed to require employees of professional engineering firms that 
perform various architectural and engineering professional services to 
become a party to a PLA. The respondents requested the rule exclude 
architectural and engineering services because such services are 
separate and distinct from construction services as recognized in 40 
U.S.C. chapter 11, the Brooks Architect Engineer Act.
    Response: Section 3 of the E.O. that applies the PLA requirement to 
contractors or subcontractors ``engaged in construction on the 
project'' excludes professional architecture and engineering services 
that are covered by the Brooks Architect Engineer Act. Given the 
distinction in FAR part 36 between construction and architect engineer 
contracts, architect engineer contracts issued under FAR subpart 36.6 
are not covered by this rule.
9. Laws Associated With Rulemaking
    Comment: Some respondents expressed concerns that the proposed rule 
fails to estimate the additional costs imposed on the public or the 
Government and claims that the lack of more comprehensive cost 
estimates violates the Administrative Procedure Act (APA). Some 
respondents asserted the proposed rule violates the arbitrary and 
capricious standards of the APA.
    Response: The procedural rulemaking requirements of the APA do not 
apply to matters relating to public property, loans, grants, benefits, 
or contracts (see 5 U.S.C. 553(a)). This rulemaking is instead governed 
by 41 U.S.C. 1707, the OFPP Act. The proposed rule requested input from 
the public in response to the burden estimates, and the recommendations 
provided by the public have been considered in developing the final 
rule.
    Comment: A respondent challenged the sufficiency of the legal 
authority used in the preamble for the proposed rule, 40 U.S.C. 121(c), 
10 U.S.C. chapter 137, and 51 U.S.C. 20113. The respondent claimed that 
as a result, the proposed rule does not comply with 5 U.S.C. 553(b)(2). 
The respondent claimed a statutory provision authorizing an agency head 
to engage in rulemaking does not give the agency the power to adopt a 
particular regulation.
    Response: The APA (5 U.S.C. 553) does not apply to this rulemaking. 
The legal authority for the Federal Acquisition Regulations System is 
40 U.S.C. 121(c), 10 U.S.C. chapter 4, and 10 U.S.C. chapter 137 legacy 
provisions (see 10 U.S.C. 3016), and 51 U.S.C. 20113 because Congress 
has specified that those are the authorities under which DoD, GSA, and 
NASA ``shall jointly issue and maintain'' the FAR (41 U.S.C. 
1303(a)(1)).
    Comment: A respondent stated that the rule exceeds the authority of 
the executive branch under the Federal Property and Administrative 
Services Act, Federal procurement and labor laws, and the major 
questions doctrine. Another respondent stated that these requirements 
should not be extended to other projects without an act of Congress.
    Response: While DoD, GSA, and NASA do not believe that this 
rulemaking implicates major questions principles, the E.O. and this 
final rule are a proper exercise of the executive branch's authority 
under the Federal Property and Administrative Services Act of 1949 (the 
Act) in any event. The Act authorizes the President ``to prescribe 
policies and directives that the President considers necessary to carry 
out'' the Act, as long as those policies are ``consistent'' with the 
Act (40 U.S.C. 121(a)). The E.O. and this final rule ``carry out'' and 
are ``consistent'' with the Act, including, for example, its provisions 
directing GSA to ``prescribe policies and methods for executive 
agencies regarding the procurement and supply of personal property and 
nonpersonal services and related functions'' (40 U.S.C. 501(b)(2)(A)); 
its requirements to ``implement the [congressional] policy'' that 
agencies ``achieve, on average, 90 percent of the cost, performance, 
and schedule goals established for major acquisition programs of the 
agency'' (41 U.S.C. 3103(a), (c)); its direction that agencies award 
contracts promptly to responsible sources whose proposals are most 
advantageous to the Federal Government, considering only cost or price 
and the other factors including in the solicitation (41 U.S.C. 3703; 
see 40 U.S.C. 111); and its stated objective of providing ``the Federal 
Government with an economical and efficient system'' for procurement 
activities, including ``[p]rocuring and supplying property and 
nonpersonal services'' (40 U.S.C. 101). Additionally, support for this 
rule is provided under the Act by provisions authorizing GSA to 
``prescribe policies and methods for executive agencies regarding the 
procurement and supply of personal property and nonpersonal services 
and related functions (40 U.S.C. 501(b)(2)(A); see also 40 U.S.C. 
121(c); 41 U.S.C. 1303).
    The E.O. is also consistent with the longstanding, early, and 
consistent interpretation of the Procurement Act by several Presidents. 
The E.O. and rule reflect a decades-long tradition of executive orders 
across multiple Administrations that have invoked the Act to 
``establish[ ] the policy of the Government with regard to the use of 
PLAs in Federal and federally funded construction contracts.'' See 
Bldg. & Const. Trades Dept., AFL-CIO v. Allbaugh, 295 F.3d 28, 30 (D.C. 
Cir. 2002). For example, E.O. 13302 (2001) provided that agencies could 
neither require nor prohibit the use of a PLA and was upheld on appeal 
by the D.C. Circuit. Presidents have also exercised their authority to 
prohibit agencies from using PLAs, see E.O. 12818 (1992), to revoke 
that prohibition, see E.O. 12836 (1993), and to encourage the use of 
PLAs, see E.O. 13502 (2009). ``[L]ongstanding practice'' is a strong 
indication that the E.O. as implemented in this final rule, like 
earlier applications of the President's authority, ``falls within the 
authorities that Congress has conferred upon him.'' See, e.g., Biden v. 
Missouri, 142 S. Ct. 647, 652 (2022).
    Comment: A respondent claimed the rule violates the Congressional 
Review Act because the rule will cost more than $100 million and 
asserted that the proposed rule incorrectly stated that

[[Page 88719]]

this is not a major rule under 5 U.S.C. 804. Another asserted the rule 
is subject to the Congressional Review Act, and questions why the rule 
is subject to E.O. 12866 but is not a major rule.
    Response: The Congressional Review Act requires submission of all 
interim and final rules, regardless of dollar value, to each House of 
the Congress and to the Comptroller General of the United States, as 
provided in section VI of the proposed rule (87 FR 51044). This final 
rule will be submitted in accordance with the Congressional Review Act. 
The determination of whether a rule is a major rule is made by the 
Office of Management and Budget's Office of Information and Regulatory 
Affairs (OIRA) (see Section VI of this preamble). OIRA also makes the 
determination whether or not a rule meets the threshold at section 3(f) 
of E.O. 12866.
    Comment: A respondent asserted that the rule violates the 
Regulatory Flexibility Act because the FAR Council failed to consider 
the proposed rule's deleterious effect on small businesses that are 
deprived of business because they refuse to enter, or cannot enter, a 
PLA.
    Response: The rule complies with the Regulatory Flexibility Act. 
The proposed rule examined the impact of the proposed rule on small 
businesses, small governmental jurisdictions, and small organizations. 
The rule solicited comments from the public pertaining to the estimated 
burden which was used to inform the final rule. The rule allows all 
contractors and subcontractors to compete for contracts and 
subcontracts without regard to whether they are otherwise parties to a 
CBA.
10. Exceptions
    Comment: Some respondents recommended that the final rule should 
insert ``Federal'' before statute and law to ensure state laws are not 
used to bypass PLA requirements.
    Response: The final rule adopts this change because state and local 
statutes and regulations cannot regulate Federal procurement. See 
United States v. Georgia Pub. Serv. Comm'n, 371 U.S. 285, 292 (1963).
    Comment: A respondent asserted that PLAs make several of the 
exceptions provided in the E.O. unnecessary. For example, the 
respondent recommended deleting the exception for a PLA not achieving 
economy and efficiency because economy and efficiency has been improved 
with PLAs on large industrial projects with many contractors and 
subcontractors. The respondent also asserted that the exception for 
reduction in competition is also unnecessary.
    Response: The final rule implements the exceptions provided in 
Section 5 of the E.O.
    Comment: Some respondents recommended that the rule require 
agencies to post approved exemptions to public websites before the 
solicitation date and allow a limited time to request reconsideration 
of the exemption decision before the solicitation is issued.
    Response: The final rule implements section 6 of the E.O., which 
requires agencies to publish data and descriptions of the waivers 
granted on a centralized public website by the solicitation date to the 
extent permitted by law and consistent with national security and 
executive branch confidentiality interests.
    Comment: A respondent was concerned that the one-trade exception 
will be misapplied.
    Response: The contracting workforce will be provided training to 
ensure accurate application of the regulations in accordance with 
section 9 of the E.O, including 22.504(d)(1)(i)(B).
    Comment: Some respondents recommended that the exceptions be very 
narrow and only utilized after a transparent decision-making process. A 
respondent was concerned that senior procurement executives will simply 
check a box to avoid a PLA.
    Response: Exceptions will only be authorized in accordance with the 
direction in section 5 of the executive order.
    Comment: A respondent stated that the proposed rule does not 
contain an exception for when inclusion of a PLA demand would impede 
economy and efficiency; a PLA could well have such an effect without 
triggering any of the clauses of the proposed exceptions. For example, 
agencies could choose a PLA bid that is twice as expensive as an 
otherwise similar bid that does not include a PLA. An exception from 
the PLA mandate should apply if it can be demonstrated that the mandate 
would increase construction costs by a substantial amount, for example 
by 15 percent or more. The respondent recommended additional 
exceptions: (1) if one or more contractors cannot obtain a stable 
workforce, (2) if contractors show that a PLA would increase their 
price by 5 percent or more and that not using a PLA would not 
negatively impact quality, timeliness, and safety, (3) if all 
contractors can sign the agreement that meet 2 terms of the PLA 
mandate, including the non-strike and procedures for disputes, and (4) 
if requiring a PLA reduces the number of qualifying bids below a 
certain threshold that would signal a lack of competition.
    Response: The E.O. and final rule include several exceptions at FAR 
22.504(d) that could be used to address the respondent's concerns. In 
addition to the exception specifically for economy and efficiency, 
market research will be used to determine whether a PLA would reduce 
competition to such a degree that it would not allow for a fair and 
reasonable price.
    Comment: Some respondents requested the urgent and compelling 
limitation reflect that requiring a PLA on the project would result in 
serious injury, financial or other, to the Government.
    Response: Agencies may grant an exception based upon a specific 
written explanation as provided under Section 5 of the E.O., including 
any exception based on unusual and compelling urgency.
    Comment: A respondent requested that agencies find it inappropriate 
to characterize a project as short-term if data concerning the 
completion rates of similar Federal projects in terms of construction 
type (e.g., work on GSA-managed buildings) and competing activities in 
the vicinity demonstrate that such projects are not generally completed 
in the calendar year in which the project commences.
    Response: Each project is evaluated on a case-by-case basis to 
determine if the project duration or lack of operational complexity 
would qualify for an exception under section 5 of the E.O.
    Comment: A respondent was concerned that the language omits key 
details of the E.O. with regard to potential exceptions, rendering them 
so broad that contracting officers can continue to disregard this 
guideline.
    Response: The rule implements the exceptions provided in the E.O. 
The rule provides additional explanations to ensure agencies apply an 
exception appropriately.
    Comment: A respondent requested the senior official referenced in 
section 5 of the E.O. to be the agency head and not the senior 
procurement executive.
    Response: FAR 2.101 identifies the senior procurement executive as 
the responsible official for management direction of the acquisition 
system in an executive agency (41 U.S.C. 1702(c)).
    Comment: A respondent expressed concerns that the lack of agency 
experience with PLAs will cause contractors to price additional risk 
into projects with PLAs.

[[Page 88720]]

    Response: Agencies will receive training on the use of PLAs in 
accordance with section 9 of the E.O.
    Comment: A respondent supported the requirement that exceptions 
must be granted by the solicitation date as opposed to after a 
solicitation has been issued with a PLA requirement. The respondent 
also wanted the FAR to expressly state that a PLA cannot be required 
after a solicitation has been issued.
    Response: The rule requires agencies to grant an exception prior to 
the issuance of the solicitation (see 22.504(d)(3)) in accordance with 
section 5 of the E.O.
11. Definitions
    Comment: A respondent recommended that the rule add a geographical 
definition of market because construction workers are mobile.
    Response: Contracting officers will determine the applicable market 
based upon the project requirements.
    Comment: A respondent recommended that the FAR clearly provide that 
whether the union with which a PLA has a membership or affiliation in a 
building trade construction council cannot be considered in bidding or 
the acceptance of bids on a PLA covered by E.O. 14063 or the proposed 
FAR rule.
    Response: A union does not need to have membership or affiliation 
in a building trade construction council to become a party to a PLA 
when required for a construction project. Regardless of whether a PLA 
is required at the time of proposal submittal, award or postaward, all 
contractors working on the project are required to become a party to 
the PLA. However, the E.O. does require that the PLA be with a ``labor 
organization,'' which is defined as one in which ``building and 
construction employees are members, as described in 29 U.S.C. 158(f).''
    Comment: A respondent requested removal of proposed text at FAR 
22.504(c), which prevented agencies from requiring contractors and 
subcontractors to enter into a PLA with a particular labor organization 
when there were multiple labor organizations representing the same 
trade, because it is redundant, and the respondent recommended using 
the E.O. language. Another respondent stated that by its very nature, a 
PLA is an agreement through which the contractor requires 
subcontractors to enter into an agreement with a particular labor 
organization. By signing the PLA, the subcontractors enter into an 
agreement with all the signatories to the agreement, not with any 
particular labor organization.
    Response: The final rule text has been revised to adopt this 
recommendation at FAR 22.504(c) with conforming changes in FAR 
solicitation provision 52.222-33, Notice of Requirement for Project 
Labor Agreement and FAR contract clause 52.222-34, Project Labor 
Agreement. See section II, paragraph A of the preamble.
    Comment: A respondent supported the final rule's alignment of the 
definition of the term ``labor organization'' in the rule with the 
discussion of PLAs in section 8(f) of the NLRA, which defines PLAs 
(pre-hire agreements) as agreements with ``a labor organization of 
which building and construction employees are members.'' See 29 U.S.C. 
158(f). The respondent, however, suggested that the final rule 
definition of ``labor organization'' should also require that the labor 
organization ``itself, its parent, or parent's affiliates establish, 
maintain, or participate in a registered apprenticeship program in the 
construction industry.'' The respondent stated that this language 
reinforces the registered apprenticeship programs that are regulated by 
DOL or a state apprenticeship program. Another respondent recommended 
that the rule revise the definition of labor organization to delete the 
word ``building'' so that it reads a labor organization ``of which 
construction employees are members'' instead of ``of which building and 
construction employees are members.''
    Response: The rule implements the definition provided in the E.O., 
which is consistent with the description of PLAs in section 8(f) of the 
NLRA.
    Comment: A respondent expressed support for the proposed rule's 
inclusion of the term ``structures'' in the rule's definition of 
``construction,'' as consistent with the language of the E.O. and the 
FAR generally. Another respondent recommended replacing the E.O. 
definition of construction with language from the coverage provisions 
of the Davis-Bacon Act (40 U.S.C. 3142(a)) because the scope of those 
coverage provisions is widely accepted and understood. The respondent 
stated that the new definition in the E.O. increases opportunities for 
ambiguity.
    Response: The final rule implements the definition provided in the 
E.O. The scope of coverage of Federal construction projects under the 
E.O. and the Davis-Bacon Act are not identical, and there may be work 
that is not covered under the Davis-Bacon Act that is covered under the 
E.O. Agencies ultimately must make independent determinations under the 
E.O. of whether a contract is for ``construction'' or whether a 
subcontractor is ``engaged in construction'' such that they are 
required to be a party to a PLA.
12. Market Research
    Comment: A respondent recommended that labor organizations be 
consulted when applying the market exception because they can provide 
information on available contractors, workers, etc. The respondent also 
suggested adding ``Construction labor organizations that have 
geographical jurisdiction where the project is to be located shall be 
consulted on current market conditions, including, but not limited to, 
the availability of contractors and labor, potential bidders and the 
degree of unlawful employment practices.'' Additional respondents 
recommended that agencies confer with union and non-union contractor 
associations and labor unions during market research to determine 
whether certain exceptions apply.
    Response: The E.O. requires contracting officers to perform an 
inclusive market analysis. The FAR currently requires agencies to 
conduct market research in FAR part 10 and, specific to construction, 
in part 36.
    Agencies may use various tools to examine market conditions 
described in FAR part 10. Agencies generally confer with interested 
parties using sources sought notices and advance notices for 
construction contracts (see FAR 36.211 and 36.213-2). These notices are 
primarily published on the Government-wide point of entry (GPE) at 
www.sam.gov, which is accessible from a computer or mobile device 
connected to the internet. Also, agencies may be required by statute to 
publicize contract opportunities to increase competition, broaden 
industry participation in meeting Government requirements, and to 
assist small business concerns in obtaining contracts and subcontracts 
(see 5.002 and FAR subparts 5.1 and 5.2).
    The GPE is available to the public, including union and non-union 
contractor associations and labor unions, through the internet without 
having to register as a potential offeror. It is also used to reach as 
many interested parties as practicable and offers extensive search 
functionality which allows the user to identify Governmentwide business 
opportunities at all phases. Those interested in participating in 
market research for construction projects can simply select ``sources 
sought'' under notice type and proceed to filter on additional factors 
such as organization or place of

[[Page 88721]]

performance. The user may then respond directly to the contracting 
officer conducting market research.
    Comment: A respondent did not support language requiring a 
contracting officer to ascertain interest and availability of union and 
non-union contractors during market research surveys. The respondent 
suggested that it would be inappropriate to analyze whether contractors 
are union or non-union given that the E.O. allows contractors and 
subcontractors to compete for contracts and subcontracts without regard 
to whether they are otherwise parties to collective bargaining 
agreements. The respondent stated that surveys taken as part of market 
research have been used to undermine the process of fairly ascertaining 
overall contractor interest. As a result, the respondent urged that 
contractor interest include all contractors with no requirement for a 
certain segment of the industry to be included in the responses. Some 
respondents asserted agency efforts for market research on PLAs have 
been flawed because standard methods of publicizing contract 
opportunities, such as Fedbizopps, only reach contractors seeking work 
opportunities and the contracting community and not unions. Further, 
historically, many of the market survey questions about PLAs were not 
aimed at the particular market but asked generic questions about 
general attributes of PLAs. Documentation regarding the consideration 
of a PLA was nothing more than checking a box. Another respondent 
expressed concern that an examination of contractors' ``interest'' in 
working under a PLA will not yield reliable information about whether 
there will be sufficient competition. The respondent claimed that non-
union contractors consistently assert in responses to market research 
that they have no ``interest'' in participating in projects conducted 
under PLAs and that they will not bid for such work; however, when 
actually presented with the opportunity to work on a large public works 
project, non-union contractors step forward.
    Response: The language in FAR 36.104(c)(2) referencing the 
availability of both union and non-union contractors is not intended to 
suggest that only union contractors can or will bid on projects where a 
PLA is required. Rather, it is intended to assist with implementing the 
E.O.'s requirement that an exception be based on an ``inclusive'' 
market analysis. Contractors may bid on projects subject to this final 
rule regardless of whether they are otherwise party to CBAs, and 
available evidence suggests that non-union contractors do bid on 
projects with PLAs.
    The goal of market research in the context of the E.O. and this 
final rule is to determine whether requiring a PLA would substantially 
reduce the number of potential offerors to such a degree that the 
Government could not meet its requirements at a fair and reasonable 
price. While the language of FAR 36.104(c)(2) seeks information about 
contractor ``interest,'' a potential bidder's claim that they are 
disinterested in bidding on projects with PLAs, alone, would not 
necessarily justify the exercise of an exception, in particular where 
other information suggests that a sufficient number of offers would be 
received.
    Agencies conduct market research using the various tools and 
techniques in FAR 10.002, inclusive of direct communication with 
industry via online communication, interchange meetings, or pre-
solicitation conferences, as needed and applicable. The final rule 
provides additional direction at FAR 36.104(c)(2) for projects that may 
require a PLA.
    Use of the GPE at www.sam.gov to publish a sources sought notice is 
the primary method used and allows all interested parties equal access 
to the Government's market research efforts. All entities interested in 
contracting with the Government understand that the GPE is the 
statutory source for dissemination of contracting opportunities, to 
include notifications or announcements of future opportunities. Union 
and labor organizations are not precluded from searching and monitoring 
www.sam.gov as all other interested parties do, nor are unions 
prevented from responding to market research or sources sought notices. 
Union and labor organization utilization of the GPE at www.sam.gov to 
respond to market research or sources sought notices will help to 
inform contracting officer's determinations.
    Comment: Some respondents recommended that the market research text 
under 36.104(c)(2) be revised to state that ``Contracting officers 
conducting market research for Federal construction contracts shall 
ensure that the procedures at 10.002(b)(1) involve a current and 
proactive examination of the market conditions in the project area to 
determine the availability of local, regional and national unions and 
contractors to participate in a project that requires a PLA. The 
contracting officer may use market research conducted within 18 months 
before the award of the construction contract only if the current and 
proactive examination of market conditions demonstrates that the 
information is still current, accurate and relevant. Contracting 
officers may coordinate with agency labor advisors, as appropriate.''
    Response: Market research is conducted during acquisition planning 
to establish the most suitable approach to meeting an agency's needs. 
The direction at 10.001 and 10.002 currently provide sufficient 
guidance to contracting officers on the conduct and use of market 
research to inform a particular procurement. The final rule, at FAR 
36.104(c)(2), adds specific direction for contracting officers for use 
in conjunction with FAR part 10 guidance, when a large-scale 
construction contract is contemplated.
    Comment: A respondent recommended market research and requests for 
information use a standard set of questions with consistent formatting 
for contractors to use and to give contractors at least 2 weeks to 
respond. Another respondent recommended that the rule standardize PLA 
surveys for interested parties to comment and an automated system to 
process the inputs.
    Response: While the Government understands and appreciates the 
interest in consistency when conducting market research, it is not 
possible to create a standard set of questions that will result in 
sufficient information for every size and type of construction project. 
Also, while there may be some elements of PLA surveys that can be 
standardized, the Government believes the uniqueness of each project 
and other elements like locality does not lend itself to a standardized 
document.
13. Application to Indefinite Delivery Indefinite Quantity (IDIQ) 
Contracts
    Comment: A respondent asserted that IDIQ contracts are unusual but 
agrees that the PLA requirement should be associated with the award of 
a particular order.
    Response: Data indicates that IDIQ contracts for multiple projects, 
regions, and types of construction are more frequently used than 
definitive contracts Governmentwide. The rule acknowledges that orders 
are primarily project- and location-specific, making the application of 
a PLA requirement appropriate at the order level.
    Comment: Some respondents requested that the $35 million value 
should be applied at the IDIQ base contract level, not to individual 
orders.
    Response: IDIQ contracts are often used for multiple, distinct 
construction projects in varied markets. As a result, there may be 
differing markets within the scope of the IDIQ, which could make one 
overarching PLA

[[Page 88722]]

inappropriate. Agencies are not precluded from requiring one PLA, but 
they should do so based upon market research.
14. Burden Estimates
    Comment: A respondent asserted that the rule overestimates the 
costs of negotiating PLAs under the rule because PLAs are standardized 
in many markets, so they may not need to be negotiated from scratch.
    Response: The rule assumes that most PLAs will be negotiated from 
scratch because PLAs have not been mandated prior to this E.O. 
Historical data does not support any other assumption.
    Comment: A respondent stated the statistical process followed by 
the Government is generally reasonable but stated that assumptions and 
outcomes cannot be effectively evaluated. The respondent stated that it 
would be surprising if the actual totals were an order of magnitude 
larger than provided in the proposed rule. The respondent supported the 
Government's assumption that there are 4 bidders. The respondent also 
believed that the focus on total costs versus additional costs is 
appropriate. The respondent questioned the 20 percent assumption for 
small businesses because the Government has historically awarded 15 
percent of its contracts to small businesses, which would drop the 
estimate to 18 to 32 small businesses. The respondent offered that 
according to USAspending.gov, since 2008 9.7 percent of prime 
construction projects of $35 million or more went to small businesses. 
The respondent also stated that if the Government had used wage data 
from the construction industry, it would have reduced estimates.
    Response: The rule uses the fiscal years 2019, 2020, and 2021 data 
from the Federal Procurement Data System (FPDS) to establish the 
estimates. The impact of the rule has been adjusted to reduce the 
percentage of large scale construction contracts awarded to small 
entities to 15 percent.
    Comment: Several respondents questioned the number of 
subcontractors used in the estimated impact of the rule. Respondents 
recommended using ranges of 8 to 10 or 15 to 20 based upon the size of 
the project. The increase will likely reflect a greater negative impact 
on subcontractors and small businesses.
    Response: The impact of the rule is revised to account for an 
increased number of subcontractors for each project subject to the PLA 
requirements.
    Comment: A respondent stated that the cost review should have taken 
into account that some exceptions may be denied, or it should be 
clarified that it only considers approved requests.
    Response: The rule does not differentiate between the number of 
exceptions submitted, approved, or denied because the preparation, 
submittal, and review of an exception would occur regardless of whether 
an exception was approved or denied.
    Comment: A respondent recommended the total estimated costs be 
defined as ``all estimated costs incurred for completion of the 
construction project, including, but not be limited to site 
acquisition, preconstruction environmental work, site preparation, 
design (including architectural, engineering, and other professional 
costs), labor costs, construction equipment, construction management, 
inspection, relocation, and refurbishing.'' The respondent asserted a 
standard definition would be beneficial to contracting agencies.
    Response: Total estimated costs for purposes of this rule are only 
those associated with the PLA rule definition for construction at 
22.502 and 52.222-3. While a construction estimate may include the cost 
of design for a project for which a design-build contract is 
contemplated, professional services provided by architecture and 
engineering firms are not subject to PLA requirements.
    Comment: A respondent believed the estimate of the percentage of 
contracts that will be exempt appears to be a misconception of the 
mandate. Exemption of up to half the covered projects is clearly 
inconsistent with a requirement that contracting agencies use PLAs.
    Response: The rule takes into account the potential exceptions that 
are provided in the E.O. DoD, GSA, and NASA have estimated the 
potential use of the exceptions with the knowledge that the market will 
influence whether a PLA is in the best interest of the Government.
    Comment: Some respondents asserted the rule vastly underestimates 
the economic impact. Another respondent asserted the cost impact of the 
rule needs to be adjusted upwards. The respondent asserts that on 
average an experienced company takes 400 hours to negotiate a PLA, but 
that estimate does not include the hours needed to draft and revise the 
PLA, negotiate economic terms, factor economic terms into proposal 
pricing, obtain legal review, coordinate with prospective 
subcontractors, or factor in hours spent by other parties to the PLA. 
The respondent recommended the total hour estimates to negotiate a PLA 
be increased to at least 500 hours to provide a more reflective cost 
estimate.
    Response: The final rule contains updated burden estimates in 
response to public comments.
    Comment: A respondent expressed concern that the attorney hourly 
rate is underestimated.
    Response: The rule uses Bureau of Labor Statistics (BLS) National 
Occupational Employment and Wage Estimates for May 2021 as the basis 
for the legal participants' hourly rates.
15. PLA Submittal
    Comment: Several respondents recommended that the final rule 
require PLAs to be submitted before contract award, eliminating the 
third option which allows submittal after award. Another respondent 
recommended that PLAs be submitted before a final contract award so 
that contracting agencies can confirm bidder eligibility and influence 
PLA content. Another respondent was concerned that postaward submittals 
will not ensure that a project will be covered by a PLA.
    Response: The final rule permits the submittal of PLAs with an 
offer, prior to award, or after award. Contracting officers have the 
discretion to select the most appropriate option for the particular 
procurement.
    Comment: A respondent recommended that paragraph (e) be removed 
from 52.222-33 and the Alternate 1, and substitute para (b) of 
Alternate II. Because PLA negotiations take on average 90 days, an 
offeror would not be able to submit a PLA with its offer. This would 
favor affiliated companies and disincentivize non-affiliated ones from 
participation. This would reduce efficiency and Government selection in 
a fair bidding process. The respondent asserted postaward alternatives 
in 52.222-33 would better suit and satisfy the reality of the days 
taken to negotiate PLAs.
    Response: The rule allows the contracting officer to determine, 
based upon market research, when to require the submittal of a PLA. The 
rule provides options for contracting officers to choose from.
16. Implementation
    Comment: A respondent questioned whether the rule would be 
immediately implemented into all applicable construction contracts or 
only newly awarded applicable construction contracts.
    Response: The final rule will be effective 30 days after 
publication. OIRA has determined that this rule is not a major rule. 
According to FAR 1.108(d), Application of FAR changes to

[[Page 88723]]

solicitations and contracts, FAR changes apply to solicitations on or 
after the effective date of the change, unless otherwise specified.
    Comment: A respondent questioned how the rule will address 
different geographical locations within the United States where the 
construction industry does not use PLAs and where organized labor is 
less common.
    Response: In addition to the market research conducted under FAR 
part 10, the final rule requires contracting officers to conduct an 
inclusive market analysis to evaluate whether a PLA requirement for any 
particular project would advance the Government's interests in 
accordance with the E.O. This inclusive market analysis must consider 
the market conditions in the project area and the availability of 
unions, and unionized and non-unionized contractors.
    Comment: A respondent recommended the council evaluate the need for 
a PLA on a project-by-project basis, prioritize flexibility, provide 
for standardized solicitations, general waivers, and keep the waiver 
authority at the current level and NOT raise it to the senior 
procurement executive.
    Response: The rule requires agencies to evaluate the feasibility of 
a PLA based upon market research and other considerations on a project-
by-project basis. Solicitations and contracts for construction are 
generally standardized using the procedures authorized in FAR part 36, 
however requirements are specific to the particular project. The rule 
interprets the senior official referenced in the E.O. to be the Senior 
Procurement Executive as the responsible official for management 
direction of the acquisition system (see 2.101).
17. Negotiations
    Comment: A respondent was concerned that the rule does not clearly 
prohibit an agency from engaging in PLA negotiations. The respondent 
asserted that the PLA should be negotiated solely and directly by 
contractors with employees working on the PLA project and the labor 
unions representing workers on the PLA project, as they are the only 
parties explicitly authorized to enter into a PLA agreement under the 
NLRA. The respondent also requested that the rule clarify that a PLA 
may not be unilaterally written by a labor organization or negotiated 
by parties who will not be employing workers on the project.
    Response: PLAs are pre-hire agreements negotiated solely between 
labor unions and contractors working on a specific project. The 
Government does not participate nor is it a signatory to the PLA.
18. Out of Scope
    Comment: A respondent recommended that the Government invest in 
workforce development training for the skilled trades at the high 
school level.
    Response: This comment is outside the scope of this rule.
    Comment: A respondent recommended formalizing the U.S. Army Corps 
of Engineer's PLA Survey process for all Federal agencies executing 
construction.
    Response: This comment is outside of the scope of this rule because 
policy guidance will be developed separately by OMB.
    Comment: A respondent requested the Council lessen barriers and 
increase opportunities for U.S.-owned and-operated construction firms 
to build with the Federal Government.
    Response: This comment is out of scope of the rule.
    Comment: A respondent requested the passage by Congress of the Fair 
and Open Competition Act (H.R. 1284) that would prohibit Federal 
construction contracts from requiring or prohibiting PLAs.
    Response: This comment is out of scope of the rule.
    Comment: A respondent assumed that agencies estimated their costs 
based on contracts that did not use a PLA because 99.4 percent of their 
projects did not use a PLA. The rule does not specify how agencies must 
estimate the cost of projects. Consequently, the agencies should either 
(1) require estimated project costs to be based on fair market costs or 
(2) apply an exception to bids of $35 million or less, regardless of 
the agencies initial estimated cost of the project.
    Response: The development of independent Government cost estimates 
for construction contracts is out of scope of this rule.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), or for Commercial Services

    This rule amends the provision at FAR 52.222-33 and the FAR clause 
at 52.222-34. However, this rule does not impose any new requirements 
on contracts at or below the SAT or for commercial products, commercial 
services, and COTS items. Since the provision and clause apply to 
large-scale Federal construction contracts, neither would apply to 
acquisitions at or below the SAT or to acquisitions for commercial 
products, commercial services, and COTS items.

IV. Expected Impact of the Rule

    A PLA 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 and is an 
agreement described in 29 U.S.C. 158(f). PLAs are a tool that can be 
used to provide labor-management stability and ensure compliance with 
laws and regulations such as those governing safety and health, equal 
employment opportunity, labor and employment standards, and others. 
Requiring a PLA means that every contractor and subcontractor engaged 
in construction on the project agree, for that project, to negotiate or 
become a party to a PLA with one or more labor organizations.
    Currently, the regulations at FAR subpart 22.5 encourage the use of 
PLAs for large-scale Federal construction projects, which is defined as 
projects with a total cost of $25 million or more. According to the 
data collected by OMB, between the years of 2009 and 2021, there was a 
total of approximately 2,000 eligible contracts and the requirement for 
a PLA was used 12 times. Based on the data, on average there are 
approximately 167 eligible awards annually and approximately one award 
that includes the PLA requirement.
    This rule implements E.O. 14063, Use of Project Labor Agreements 
for Federal Construction Projects, which requires the use of PLAs in 
large-scale Federal construction projects unless an exception applies. 
In accordance with the E.O., the definition of ``large-scale Federal 
construction projects'' is amended from $25 million or more to $35 
million or more. Based on FPDS data from fiscal year 2019 through 
fiscal year 2021, the average number of construction awards, including 
orders against IDIQ contracts valued at $35 million or more, were 
approximately 119 annually. The average value of each award is 
approximately $114 million.
    In accordance with the E.O., this rule provides exceptions to the 
requirement to use PLAs for large-scale Federal construction projects. 
Exceptions must be based on at least one of the conditions listed at 
FAR 22.504(d). These conditions include when the requirement for a PLA 
would not advance the Federal Government's interests; where market 
research indicates a substantial reduction in competition to such a 
degree that adequate competition at a fair and

[[Page 88724]]

reasonable price could not be achieved; or where the requirement would 
be inconsistent with other statutes, regulations, E.O.s, or 
Presidential memoranda. There is no data on the number of exceptions 
that may be granted since the mandate and associated exceptions are 
new. It is possible there may be a higher usage of exceptions in the 
initial year as industry and the Government work to implement the 
requirement. Considering the lack of available data on the proposed 
exceptions, it is estimated that exceptions may be granted for 10 
percent to 50 percent of covered contracts; in other words, an 
estimated 60 to 107 construction contract awards may require PLAs.
    The current FAR provision at 52.222-33, Notice of Requirement for 
Project Labor Agreement, provides a basic provision and 2 alternative 
provisions from which the contracting officer can select. The provision 
selected identifies whether all offerors, the apparent successful 
offeror, or the awardee must provide a copy of the PLA. There is no 
historical data on the selection of alternatives. Therefore, it is 
assumed each alternative will apply one third of the time. This implies 
one third of affected solicitations will require all offerors to 
provide a PLA, and two thirds of affected solicitations will only 
require one entity (apparent successful offeror or awardee) to provide 
a PLA.
    To estimate the number of offerors that would be required to 
provide a PLA, the Government estimates an average of 4 offers would be 
submitted per award; i.e., an estimated 80 to 144 offerors (20 to 36 
awards * 4 offers). Therefore, the total number of estimated entities 
that would be required to submit PLAs at the prime contract level is 
120 to 215 entities (40 to 71 apparent successful offerors or awardees 
+ 80 to 144 offerors). The final rule reduces the estimated percentage 
of entities assumed to be small entities from 20 to 15 percent in 
response to public comments and updated analysis of FPDS data. As a 
result, approximately 18 to 32 small entities and 102 to 183 large 
entities may be required to submit PLAs.
    For the estimated 120 to 215 entities that will be required to have 
a PLA to submit an offer or perform a contract, generally the entity 
will negotiate the terms and conditions of the PLA with one or more 
union(s). It is assumed an entity will require a total of 5 
participants, the owner or a senior executive, legal counsel, a project 
manager, and 1 to 2 labor advisors, depending on the size of the 
workforce, to support the negotiations. In response to public comments, 
the final rule revises the scope and estimated hours required for each 
party involved in the negotiation of a PLA. Public comments indicated 
that, in addition to the negotiation of a PLA discussed in the proposed 
rule, entities performed several other requirements necessary to 
develop and ultimately implement a PLA. Taking those additional tasks 
into consideration, the final rule increases the estimated hours from 
40 to 80 hours to 100 to 200 hours for each party involved in the 
development, negotiation, and implementation of a PLA between a prime 
contractor and a union.
    According to the Bureau of Labor Statistics (BLS) National 
Occupational Employment and Wage Estimates for May 2021, the mean 
hourly wage for General and Operations Managers is $55.41/hour, $71.17 
for Lawyers, and $102.41 for Chief Executives. To reflect the variety 
of labor categories necessary to estimate the impact, a mean hourly 
rate of $76.33 is used for this calculation. The current BLS factor of 
42 percent is applied to the mean wage to account for fringe benefits 
and an additional 12 percent overhead factor is applied (see Attachment 
C of OMB Circular A-76 Revised issued May 29, 2003), for a total loaded 
wage of $121.40/hour ($76.33 * 142 percent * 112 percent).
    It is estimated that 1 hour is required by one member of the 
contractor's workforce to submit the PLA to the Government on behalf of 
the contractor. Using the BLS wage estimates for Office and 
Administrative Support Occupations, the mean hourly rate for submitting 
the PLA is estimated to be $33.21 (20.88 * 142 percent * 112 percent). 
The total estimated impact for the development, negotiation, 
submission, and implementation of a PLA in response to a Government 
contract is $7.28 to $26.10 million (120 to 215 entities *((5 
participants * 100 to 200 hours * $121.40) + (1 person * 1 hour * 
$33.21)). Taking midpoints of each range implies a primary estimate of 
$16.69 million.
    The requirement for a PLA flows down to subcontractors through FAR 
clause 52.222-34, paragraph (c). There is no data source that 
identifies the number of subcontractors per contract; however, based 
upon public comments, the final rule increases the estimated number of 
subcontractors from 2 to an average of 14 for each contract. As a 
result, the final rule estimates that the requirements of a PLA will 
apply to approximately 1,680 to 3,010 subcontractors (120 to 215 * 14).
    Subcontractors may, in certain circumstances, participate in 
discussions with a prospective offeror regarding desired PLA-specific 
conditions, such as core employee provisions or the opting out of 
certain union fees, prior to agreeing to perform as a subcontractor for 
a specific project. While subcontractors do not negotiate the PLA 
directly with the union, they will ultimately need to review the terms 
and sign on to the PLA negotiated by the prospective offeror or prime 
contractor in order to participate on the project. Based upon public 
comments, the final rule acknowledges that an attorney will most likely 
participate in any discussions with the prospective offeror and 
ultimately the review of the negotiated PLA. As a result, the number of 
participants on behalf of the subcontractor is increased from 2 to 3, 
the owner, project manager, and an attorney. In addition, the final 
rule increases the estimated number of hours required for the 
subcontractor's participants to review and implement the PLA. As a 
result, the estimated number of hours is increased to 2.5 to 25 hours.
    Based upon the previously provided BLS data, a total loaded wage of 
$121.40 reflects the variety of labor categories necessary to estimate 
the impact of the proposed rule on subcontractors. The total estimated 
impact for subcontractors participating in discussions with prospective 
offerors, reviewing, implementing, and complying with a PLA in response 
to a government contract is estimated to be $1.53 to $27.41 million 
(1,680 to 3,010 subcontractors *(3 participants * 2.5 to 25 hours * 
$121.40)). Taking midpoints of each range implies a primary estimate of 
$ 14.47 million. The total annual estimated impact for prime 
contractors and subcontractors to develop, review, negotiate, submit, 
implement, and comply with a PLA in response to a government contract 
is estimated to be $8.81 million to $53.51 million.
    For the Government, contracting officers will continue to conduct 
market research and consider factors to support a decision to use, or 
not to use, PLAs in large-scale construction projects. There will 
continue to be instances in which the use of PLAs will benefit the 
Government and others where it is not feasible to use PLAs. This rule 
establishes new procedures for the contracting officer to request an 
exception to the requirement to use PLAs. The new procedures require 
the contracting officer to prepare a written explanation to request an 
exception and route the request for approval by the senior procurement 
executive. The act

[[Page 88725]]

of preparing and routing an exception request is typically performed by 
a contract specialist customarily at the GS-12 step 5 level and is 
estimated to take an average of 2 hours. The hourly rate of $65.77 is 
based upon the Office of Personnel Management (OPM) Table for the Rest 
of the United States, effective January 2022, for a GS-12 step 5 
employee ($43.10 per hour) plus a 36.25 percent factor to account for 
fringe benefits in accordance with current OMB memorandum M-08-13 and a 
12 percent overhead factor (see Attachment C of OMB Circular A-76 
Revised issued May 29, 2003). As stated previously, the estimated 
number of exception requests per year is between 12 and 60; therefore, 
the anticipated cost for preparing and routing requests is $1,578 to 
$7,892 (12 to 60 exceptions * 2 hours * $65.77). Taking midpoints of 
each range implies a primary estimate of $4,735.
    The review of the exception request is expected to be performed at 
the GS-15 level or higher and may involve more than one level of review 
prior to approval or rejection. This process is estimated to take 
approximately 4 hours. The hourly rate of $108.71 is based upon OPM 
Table for the Rest of the United States, effective January 2022, for a 
GS-15 step 5 employee ($71.24 per hour) plus the 36.25 percent factor 
to account for fringe benefits and a 12 percent factor for overhead. 
The estimated cost for review and approval is between $5,218 to 26,090 
(12 to 60 exceptions * 4 hours * $108.71). Taking the midpoint of the 
range implies a primary estimate of $15,654. The total annual estimated 
cost to prepare, route, review, and approve requests for exceptions is 
estimated to be $6,796 to $33,982.
    The annual total estimated impact of PLAs to the public and 
Government is estimated to be $8.87 million to $53.54 million.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993.

VI. Congressional Review Act

    Pursuant to the Congressional Review Act, DoD, GSA, and NASA will 
send this rule to each House of the Congress and to the Comptroller 
General of the United States. The Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget has determined 
that this rule does not meet the definition in 5 U.S.C. 804(2).

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601-612. The FRFA is summarized as follows:

    DoD, GSA, and NASA are amending the Federal Acquisition 
Regulation (FAR) to implement Executive Order (E.O.) 14063, Use of 
Project Labor Agreements for Federal Construction Projects, dated 
February 4, 2022, which mandates that Federal Government agencies 
require the use of project labor agreements (PLAs) for large-scale 
Federal construction projects (total estimated value of $35 million 
or more), unless an exception applies. Agencies still have the 
discretion to require PLAs for Federal construction projects that do 
not meet the $35 million threshold.
    The objective of the rule is to implement the E.O. 14063 change 
in policy from discretionary use to requiring the use of PLAs for 
Federal construction projects valued at $35 million or more, unless 
an exception applies.
    Significant issues raised by the public in response to the IRFA 
are as follows:
    Comment: Numerous respondents expressed concerns about the 
burden on small entities associated with the use of PLAs. Several 
respondents indicated that the burden estimates were significantly 
understated in terms of the number of subcontractors impacted and 
the hours necessary to negotiate and establish a PLA. The 
respondents were also concerned that the additional complexity and 
costs associated with a PLA would create a barrier to entry for 
small entities.
    Response: In response to public comments, the burden estimates 
are revised for all entities, to include the number of 
subcontractors and hours required to implement a PLA at both the 
prime contractor and subcontractor level. Additional analysis of 
subcontractor data also resulted in an increase in the estimated 
number of subcontractors assumed to be small entities.
    The Office of Management and Budget (OMB) and the Department of 
Labor (DOL) intend to work with the Small Business Administration 
(SBA) to determine the best way to help small entities in 
understanding how to negotiate or participate in a construction 
project with a PLA.
    Comment: Several respondents are concerned that PLAs will create 
a barrier to entry for many small, minority, and women-owned 
businesses. The respondents are also concerned that the rule will 
discourage small businesses from bidding on covered Federal 
construction contracts and thereby impose obstacles on the use of 
small business preferences required by Federal agencies in violation 
of the Small Business Act (15 U.S.C. 637(d)).
    Response: The final rule does not change the use of small 
business preferences in procurements subject to the Small Business 
Act. PLAs may help small businesses by providing them with a level 
playing field and access to expanded skilled labor pools, while 
streamlining project administration and the negotiation of workplace 
terms and conditions. The E.O. and final rule provides an exception 
if a PLA requirement would be inconsistent with statutes and 
regulations. OMB and DOL intend to work with SBA to determine the 
best way to help small entities in understanding how to negotiate or 
participate in a construction project with a PLA.
    DoD, GSA, and NASA considered the public comments in the 
development of the final rule; however, no changes were made to the 
FAR text in response to the comments.
    The Chief Counsel for Advocacy of the Small Business 
Administration submitted comments dated October 18, 2022, in 
response to the proposed rule published August 19, 2022, 
implementing Executive Order 14063, Use of Project Labor Agreements 
for Federal Construction Projects.
    The following were the Office of Advocacy's chief concerns:
    Comment: The Office of Advocacy encouraged the Council to re-
evaluate the excessive cost of compliance of this mandatory rule on 
small entities and encouraged the FAR Council to explore 
alternatives to this rulemaking as it relates to small entities.
    Response: An analysis of the rule's impact on small entities was 
conducted and updated for the final rule, the results are included 
in the preamble under section IV, Expected Impact of the Rule. The 
E.O. requires the use of PLAs on large scale Federal construction 
projects unless an exception applies. The exceptions in section 5 of 
the E.O. do not include entity size, therefore there are no 
alternatives available that would reduce the impact on or exempt 
small entities from its requirements. However, the E.O. and final 
rule do provide an exception if a PLA requirement would be 
considered inconsistent with statutes and regulations.
    OMB and DOL intend to work with SBA to determine the best way to 
help small entities in understanding how to negotiate or participate 
in a construction project with a PLA.
    Comment: The Office of Advocacy encouraged the Council to 
consider a requirement relieving a small business from having to 
join a union if it agrees to pay the prevailing wages and other 
benefits established in union negotiation. The Office of Advocacy 
also suggested that removal of this mandatory requirement would 
allow the Federal Government to achieve its objective with the PLA 
but at less cost to the small business.
    Response: Neither the E.O. nor the final rule require any 
entity, regardless of size, to join a union. Contractors and 
subcontractors

[[Page 88726]]

may negotiate with the union that is party to the PLA to opt out of 
certain fees, to include when current benefits are equivalent to 
those provided by the union.
    Comment: The Office of Advocacy contended that the mandatory 
requirement for a PLA means that every contractor on a Federal 
construction contract, regardless of size, must agree to negotiate 
or become a party to a PLA with one or more labor organizations. 
This creates a mandatory flow down requiring all affected small 
businesses to join a union, regardless of size or dollar value of 
the subcontract. This flow down will have a detrimental cost impact 
on those small entities. The rule requires small business 
subcontractors to comply with the mandatory flow down but does not 
allow the small business to utilize the contracting agency resources 
to resolve disputes.
    Response: The E.O. requires all contractors and subcontractors 
to agree to become a party to a PLA to participate on a large scale 
Federal construction project, unless an exception applies. Neither 
the E.O. nor the final rule requires any entity, regardless of size, 
to join a union. Contractors and subcontractors may negotiate terms 
and conditions with the union on a range of topics to include 
dispute resolution procedures, fringe benefits, and union dues.
    Comment: The Office for Advocacy encouraged modifying the rule 
to reflect the diminishing cost-benefit to small firms by providing 
for a threshold contract value for covered subcontractors because 
additional analysis would show that a small firm that has only a few 
contracts per year will absorb a higher cost of compliance than a 
firm with multiple yearly contracts.
    Response: The E.O. requires the use of PLAs on large scale 
Federal construction projects unless an exception applies. The E.O. 
does not provide a threshold for subcontractor participation, 
therefore there is no legal authority to provide such a threshold. 
The E.O. applies the PLA requirements to all contractors and 
subcontractors, regardless of size.
    An analysis of the rule's impact on all entities was conducted 
and updated for the final rule, and the results are included in the 
preamble under section IV, Expected Impact of the Rule. 
Corresponding updates are made to the burden estimates for small 
entities.
    Comment: The Office of Advocacy contends that the rule conflicts 
with the Administration's goal to reduce economic barriers for small 
businesses that wish to enter the Federal marketplace as provided in 
its announcement on December 2, 2021, ``Biden-Harris Administration 
Announces Reforms to Increase Equity and Level the Playing Field for 
Underserved Small Business Owners.'' If this rule is finalized, it 
will place a greater burden on Federal agencies to meet their annual 
statutorily required small business goals.
    Response: To support the administration's goals to increase 
small entity participation in the Federal marketplace, and in this 
particular market, OMB and DOL intend to work with SBA to determine 
the best way to help small entities in understanding how to 
negotiate or participate in a construction project with a PLA.
    Comment: The Office of Advocacy requests that the rule include 
burden estimates for hiring an additional recordkeeper for each 
small entity subcontractor, similarly to the additional recordkeeper 
for small entity prime contractors.
    Response: The burden estimates do not provide for the hiring of 
additional recordkeepers at the prime or subcontractor level, 
regardless of business size. The rule assumes that each entity will 
utilize existing employees.
    DoD, GSA, and NASA considered the Office of Advocacy comments 
and conducted a thorough analysis of the authorities provided in the 
E.O. As a result, no changes were made to the final rule in response 
to the comments.
    This final rule applies the requirement for PLAs to all 
construction projects valued at $35 million or more, unless an 
exception applies. However, it does not change the discretionary use 
of PLAs for projects that do not meet the $35 million threshold. As 
a result, small entities may be required to negotiate and become a 
party to a PLA, as a prime or subcontractor.
    Data generated from the Federal Procurement Data System for 
fiscal years 2019, 2020, and 2021 has been used as the basis for 
estimating the number of unique small entities expected to be 
affected by the change from discretionary to mandatory use of PLAs 
for large-scale construction projects. An examination of this data 
reveals that the Government issued an average of 119 large-scale 
construction awards annually. Of those 119 awards, an average of 15 
percent were awarded to an average of 16 unique small entities 
annually.
    It is estimated that 60 to 107 of the 119 large-scale 
construction awards will require a PLA. An estimated one third of 
affected solicitations will require all offerors to provide a PLA, 
and two thirds of affected solicitations will only require one 
entity (apparent successful offeror or awardee) to provide a PLA. 
Therefore, the total number of estimated entities that would be 
required to submit PLAs at the prime contract level is 120-215 
entities (40-71 apparent successful offerors or awardees + 80-144 
offerors).
    It is estimated, that under the new PLA requirements, the number 
of small entities impacted by the rule is 15 percent of the 120-215 
entities. Therefore, it is estimated that approximately 18-32 small 
entities will be required to submit a PLA.
    DoD, GSA, and NASA acknowledge there is no data source that 
identifies the number of subcontractors per contract; however, based 
upon public comments, the final rule estimates that each of the 
entities required to submit PLAs may have approximately 14 
subcontractors; i.e., 1,680 to 3,010 subcontractors (120 * 14) to 
(215 * 14). In addition, the final rule increases the percentage of 
subcontractors estimated to be small entities to 80 percent. As a 
result, it is estimated that 80 percent or 1,344 to 2,408 of the 
subcontractors are small entities (1,680 * 0.80) (3,010 * 0.80).
    Based upon this updated analysis, the number of small entities 
that may be required to negotiate or become a party to a PLA is 
approximately 1,362 to 2,440 annually (18 + 1,344) (32 + 2,408). 
These numbers may fluctuate based on the use of discretionary PLAs, 
any exceptions granted to the required use of a PLA, or whether the 
PLA is required for all offerors, the apparent successful offeror, 
or the awardee.
    When a PLA is required, the successful offerors are required to 
maintain the PLA in a current state throughout the life of the 
contract. Each of the estimated 18 to 32 small entities awarded 
prime contracts may require 1 recordkeeper to maintain a PLA through 
the life of the contracts.
    There are no alternative approaches that are consistent with the 
stated objectives of the executive order.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VIII. Severability

    If any provision of this rule, or the application of such provision 
to any person or circumstance, is stayed or held to be invalid, the 
remainder of this rule and its application to any other person or 
circumstance shall not be affected thereby. If this rule or E.O. 14063 
is stayed or held invalid in its entirety, DoD, GSA, and NASA intend 
that provisions of the FAR implementing E.O. 13502 as those provisions 
existed prior to issuance of this final rule (i.e., subpart 22.5, and 
sections 52.222-33 and -34) would remain in effect.

IX. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies to the 
information collection described in this rule. Changes to the FAR 
resulted in an increase to the paperwork burden previously approved 
under Office of Management and Budget (OMB) Control Number 9000-0066, 
Certain Federal Acquisition Regulation Part 22 Labor Requirements.

List of Subjects in 48 CFR Parts 1, 7, 22, 36, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 7, 22, 36, and 
52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 7, 22, 36, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. 
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 
20113.

[[Page 88727]]

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

0
2. In section 1.106 amend the table by:
0
a. Removing the entry for FAR segment ``22.5''; and
0
b. Adding in numerical order entries for ``52.222-33'' and ``52.222-
34''.
    The additions read as follows:


1.106  OMB approval under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                            OMB control
                       FAR segment                              No.
------------------------------------------------------------------------
 
                                * * * * *
52.222-33...............................................       9000-0066
52.222-34...............................................       9000-0066
 
                                * * * * *
------------------------------------------------------------------------

* * * * *

PART 7--ACQUISITION PLANNING

0
3. Amend section 7.103 by revising paragraph (x) to read as follows:


7.103  Agency-head responsibilities.

* * * * *
    (x) Ensuring that agency planners use project labor agreements when 
required (see subpart 22.5 and 36.104).
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
4. Revise section 22.501 to read as follows:


22.501  Scope of subpart.

    This subpart prescribes policies and procedures to implement 
Executive Order 14063, Use of Project Labor Agreements for Federal 
Construction Projects, dated February 4, 2022 (3 CFR, 2023 Comp., pp 
335-338).

0
5. Amend section 22.502 by revising the definitions of 
``Construction'', ``Labor organization'', and ``Large-scale 
construction project'' to read as follows:


22.502  Definitions.

* * * * *
    Construction means construction, reconstruction, rehabilitation, 
modernization, alteration, conversion, extension, repair, or 
improvement of buildings, structures, highways, or other real property.
    Labor organization means a labor organization as defined in 29 
U.S.C. 152(5) of which building and construction employees are members.
    Large-scale construction project means a Federal construction 
project within the United States for which the total estimated cost of 
the construction contract to the Federal Government is $35 million or 
more.
* * * * *

0
6. Revise section 22.503 to read as follows.


22.503  Policy.

    (a) Executive Order (E.O.) 14063, Use of Project Labor Agreements 
for Federal Construction Projects, requires agencies to use project 
labor agreements in large-scale construction projects to promote 
economy and efficiency in the administration and completion of Federal 
construction projects.
    (b) When awarding a contract in connection with a large-scale 
construction project (see 22.502), agencies shall require use of 
project labor agreements for contractors and subcontractors engaged in 
construction on the project, unless an exception at 22.504(d) applies.
    (c) An agency may require the use of a project labor agreement on 
projects where the total cost to the Federal Government is less than 
that for a large-scale construction project, if appropriate.
    (1) An agency may, if appropriate, require that every contractor 
and subcontractor engaged in construction on the project agree, for 
that project, to negotiate or become a party to a project labor 
agreement with one or more labor organizations if the agency decides 
that the use of project labor agreements 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.
    (2) Agencies may consider the following factors in deciding whether 
the use of a project labor agreement is appropriate for a construction 
project where the total cost to the Federal Government is less than 
that for a large-scale construction project:
    (i) The project will require multiple construction contractors and/
or subcontractors employing workers in multiple crafts or trades.
    (ii) There is a shortage of skilled labor in the region in which 
the construction project will be sited.
    (iii) Completion of the project will require an extended period of 
time.
    (iv) Project labor agreements have been used on comparable projects 
undertaken by Federal, State, municipal, or private entities in the 
geographic area of the project.
    (v) A project labor agreement will promote the agency's long term 
program interests, such as facilitating the training of a skilled 
workforce to meet the agency's future construction needs.
    (vi) Any other factors that the agency decides are appropriate.
    (d) For indefinite-delivery indefinite-quantity (IDIQ) contracts 
the use of a project labor agreement may be required on an order-by-
order basis rather than for the entire contract. For an order at or 
above $35 million an agency shall require the use of a project labor 
agreement unless an exception applies. See 22.504(d)(3) and 
22.505(b)(3).

0
7. Amend section 22.504 by--
0
a. Removing from paragraph (b) introductory text the words ``The 
project'' and adding the words ``A project'' in their place;
0
b. Revising paragraph (c); and
0
c. Adding paragraph (d).
    The revision and addition read as follows.


22.504  General requirements for project labor agreements.

* * * * *
    (c) Labor organizations. An agency may not require contractors or 
subcontractors to enter into a project labor agreement with any 
particular labor organization.
    (d) Exceptions to project labor agreement requirements--(1) 
Exception. The senior procurement executive may grant an exception from 
the requirements at 22.503(b), providing a specific written explanation 
of why at least one of the following conditions exists with respect to 
the particular contract:
    (i) Requiring a project labor agreement on the project would not 
advance the Federal Government's interests in achieving economy and 
efficiency in Federal procurement. The exception shall be based on one 
or more of the following factors:
    (A) The project is of short duration and lacks operational 
complexity.
    (B) The project will involve only one craft or trade.
    (C) The project will involve specialized construction work that is 
available from only a limited number of contractors or subcontractors.
    (D) The agency's need for the project is of such an unusual and 
compelling urgency that a project labor agreement would be 
impracticable.
    (ii) Market research indicates that requiring a project labor 
agreement on the project would substantially reduce the number of 
potential offerors to such

[[Page 88728]]

a degree that adequate competition at a fair and reasonable price could 
not be achieved. (See 10.002(b)(1) and 36.104). A likely reduction in 
the number of potential offerors is not, by itself, sufficient to 
except a contract from coverage under this authority unless it is 
coupled with the finding that the reduction would not allow for 
adequate competition at a fair and reasonable price.
    (iii) Requiring a project labor agreement on the project would 
otherwise be inconsistent with Federal statutes, regulations, Executive 
orders, or Presidential memoranda.
    (2) Considerations. When determining whether the exception in 
paragraph (d)(1)(ii) of this section applies, contracting officers 
shall consider current market conditions and the extent to which price 
fluctuations may be attributable to factors other than the requirement 
for a project labor agreement (e.g., costs of labor or materials, 
supply chain costs). Agencies may rely on price analysis conducted on 
recent competitive proposals for construction projects of a similar 
size and scope.
    (3) Timing of the exception--(i) Contracts other than IDIQ 
contracts. The exception must be granted for a particular contract by 
the solicitation date.
    (ii) IDIQ contracts. An exception shall be granted prior to the 
solicitation date if the basis for the exception cited would apply to 
all orders. Otherwise, exceptions shall be granted for each order by 
the time of the notice of the intent to place an order (e.g., 
16.505(b)(1)).

0
8. Revise section 22.505 to read as follows.


22.505  Solicitation provision and contract clause.

    When a project labor agreement is used for a construction project, 
the contracting officer shall--
    (a)(1) Insert the provision at 52.222-33, Notice of Requirement for 
Project Labor Agreement, in solicitations containing the clause 52.222-
34, Project Labor Agreement.
    (2) Use the provision with its Alternate I if the agency will 
require the submission of a project labor agreement from only the 
apparent successful offeror, prior to contract award.
    (3) Use the provision with its Alternate II if an agency allows 
submission of a project labor agreement after contract award except 
when Alternate III is used.
    (4) Use the provision with its Alternate III when Alternate II of 
52.222-34 is used.
    (b)(1) Insert the clause at 52.222-34, Project Labor Agreement, in 
solicitations and contracts associated with the construction project.
    (2) Use the clause with its Alternate I if an agency allows 
submission of the project labor agreement after contract award except 
when Alternate II is used.
    (3) Use the clause with its Alternate II in IDIQ contracts when the 
agency will have project labor agreements negotiated on an order-by-
order basis and anticipates one or more orders may not use a project 
labor agreement.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

0
9. Amend section 36.104 by adding paragraph (c) to read as follows:


36.104  Policy.

* * * * *
    (c)(1) Agencies shall require the use of a project labor agreement 
for Federal construction projects with a total estimated construction 
cost at or above $35 million, unless an exception applies (see subpart 
22.5).
    (2) Contracting officers conducting market research for Federal 
construction contracts, valued at or above the threshold in paragraph 
(c)(1) of this section, shall ensure that the procedures at 
10.002(b)(1) involve a current and proactive examination of the market 
conditions in the project area to determine national, regional, and 
local entity interest in participating on a project that requires a 
project labor agreement, and to understand the availability of unions, 
and unionized and non-unionized contractors. Contracting officers may 
coordinate with agency labor advisors, as appropriate.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
10. Amend section 52.222-33 by--
0
a. Revising the date of the provision;
0
b. Revising paragraphs (a) and (b);
0
c. Removing from paragraph (c) introductory text ``Consistent with 
applicable law, the project'' and adding ``The project'' in its place;
0
d. Removing from paragraph (c)(1) ``offeror and all'' and adding 
``Offeror and'' in its place;
0
e. Removing from paragraph (c)(2) ``offeror'' and adding ``Offeror'' in 
its place;
0
f. Removing from paragraph (d) ``this contract'' and adding ``the 
resulting contract'' in its place;
0
g. Removing from paragraph (e) ``offeror'' and adding ``Offeror'' in 
its place;
0
h. In Alternate I:
0
i. Revising the date;
0
ii. Removing from the introductory text ``22.505(a)(1)'' and ``clause'' 
and adding ``22.505(a)(2)'' and ``provision'' in their places, 
respectively; and
0
iii. Revising paragraph (b);
0
i. In Alternate II:
0
i. Revising the date;
0
ii. Removing from the introductory text ``22.505(a)(2)'' and ``clause'' 
and adding ``22.505(a)(3)'' and ``provision'' in their places, 
respectively; and
0
iii. Revising paragraph (b); and
0
j. Adding Alternate III.
    The revisions and addition read as follows:


52.222-33  Notice of Requirement for Project Labor Agreement.

* * * * *

Notice of Requirement for Project Labor Agreement (Jan 2024).

    (a) Definitions. As used in this provision, the following terms are 
defined in clause 52.222-34, Project Labor Agreement, of this 
solicitation ``construction,'' ``labor organization,'' ``large-scale 
construction project,'' and ``project labor agreement.''
    (b) Offerors shall--
    (1) Negotiate or become a party to a project labor agreement with 
one or more labor organizations for the term of the resulting 
construction contract; and
    (2) Require its subcontractors to become a party to the resulting 
project labor agreement.
* * * * *
    Alternate I (Jan 2024) * * *
    (b) The apparent successful offeror shall--
    (1) Negotiate or become a party to a project labor agreement with 
one or more labor organizations for the term of the resulting 
construction contract; and
    (2) Require its subcontractors to become a party to the resulting 
project labor agreement.
* * * * *
    Alternate II (Jan 2024) * * *
    (b) If awarded the contract, the Offeror shall--
    (1) Negotiate or become a party to a project labor agreement with 
one or more labor organizations for the term of the resulting 
construction contract; and
    (2) Require its subcontractors to become a party to the resulting 
project labor agreement.
    Alternate III (Jan 2024). As prescribed in 22.505(a)(4), substitute 
the following paragraph (b) in lieu of paragraphs (b) through (e) of 
the basic provision:
    (b)(1) If awarded the contract, the Offeror may be required by the 
agency to negotiate or become a party to a project labor agreement with 
one or more labor organizations for the term of

[[Page 88729]]

the order. The Contracting Officer will require that an executed copy 
of the project labor agreement be submitted to the agency--
    (i) With the order offer;
    (ii) Prior to award of the order; or
    (iii) After award of the order.
    (2) The Offeror shall require its subcontractors to become a party 
to the resulting project labor agreement for the term of the order.

0
11. Amend section 52.222-34 by--
0
a. Revising the date of the clause;
0
b. Adding in alphabetical order definitions for ``Construction'' and 
``Large-scale construction project'' and revising the definition 
``Labor organization'' in paragraph (a);
0
c. Removing from paragraph (b) ``this contract in accordance with 
solicitation provision 52.222-33, Notice of Requirement for Project 
Labor Agreement'' and adding ``the contract'' in its place;
0
d. Removing from paragraph (c) ``all subcontracts'' and adding 
``subcontracts'' in its place;
0
e. In Alternate I:
0
i. Revising the date and paragraph (b);
0
ii. Removing from paragraph (c) introductory text ``Consistent with 
applicable law, the project'' and adding ``The project'' in its place;
0
iii. Removing from paragraph (c)(1) ``and all'' and adding ``and'' in 
its place;
0
iv. Removing from paragraph (c)(4) ``the project'' and adding ``the 
term of the project'' in its place; and
0
v. Removing from paragraph (f) ``clause in all subcontracts'' and 
adding ``clause in subcontracts'' in its place; and
0
f. Adding Alternate II.
    The revisions and additions read as follows:


52.222-34  Project Labor Agreement.

* * * * *

Project Labor Agreement (Jan 2024)

    (a) * * *
    Construction means construction, reconstruction, rehabilitation, 
modernization, alteration, conversion, extension, repair, or 
improvement of buildings, structures, highways, or other real property.
    Labor organization means a labor organization as defined in 29 
U.S.C. 152(5) of which building and construction employees are members.
    Large-scale construction project means a Federal construction 
project within the United States for which the total estimated cost of 
the construction contract(s) to the Federal Government is $35 million 
or more.
* * * * *
    Alternate I (Jan 2024) * * *
    (b) The Contractor shall--
    (1) Negotiate or become a party to a project labor agreement with 
one or more labor organizations for the term of this construction 
contract; and
    (2) Submit an executed copy of the project labor agreement to the 
Contracting Officer as required in the solicitation.
* * * * *
    Alternate II (Jan 2024). As prescribed in 22.505(b)(3), substitute 
the following paragraphs (b) through (f) for paragraphs (b) through (f) 
of the basic clause:
    (b) When notified by the agency (e.g., by the notice of intent to 
place an order under 16.505(b)(1)) that this order will use a project 
labor agreement, the Contractor shall negotiate or become a party to a 
project labor agreement with one or more labor organizations for the 
term of the order. The Contracting Officer shall require that an 
executed copy of the project labor agreement be submitted to the 
agency--
    (1) With the order offer;
    (2) Prior to award of the order; or
    (3) After award of the order.
    (c) The project labor agreement reached pursuant to this clause 
shall--
    (1) Bind the Contractor and subcontractors engaged in construction 
on the construction project to comply with the project labor agreement;
    (2) Allow all contractors and subcontractors to compete for 
contracts and subcontracts without regard to whether they are otherwise 
parties to collective bargaining agreements;
    (3) Contain guarantees against strikes, lockouts, and similar job 
disruptions;
    (4) Set forth effective, prompt, and mutually binding procedures 
for resolving labor disputes arising during the term of the project 
labor agreement;
    (5) Provide other mechanisms for labor-management cooperation on 
matters of mutual interest and concern, including productivity, quality 
of work, safety, and health; and
    (6) Fully conform to all statutes, regulations, Executive orders, 
and agency requirements.
    (d) Any project labor agreement reached pursuant to this clause 
does not change the terms of this contract or provide for any price 
adjustment by the Government.
    (e) The Contractor shall maintain in a current status throughout 
the life of the order any project labor agreement entered into pursuant 
to this clause.
    (f) Subcontracts. For each order that uses a project labor 
agreement, the Contractor shall--
    (1) Require subcontractors engaged in construction on the 
construction project to agree to any project labor agreement negotiated 
by the prime contractor pursuant to this clause; and
    (2) Include the substance of paragraphs (d) through (f) of this 
clause in subcontracts with subcontractors engaged in construction on 
the construction project.

[FR Doc. 2023-27736 Filed 12-21-23; 8:45 am]
BILLING CODE 6820-EP-P


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