[Federal Register Volume 75, Number 70 (Tuesday, April 13, 2010)]
[Rules and Regulations]
[Pages 19168-19179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-8118]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 7, 17, 22, and 52

[FAC 2005-41; FAR Case 2009-005; Item I; Docket 2009-0024, Sequence 1]
RIN 9000-AL31


Federal Acquisition Regulation; FAR Case 2009-005, Use of Project 
Labor Agreements for Federal Construction Projects

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

ACTION: Final rule.

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SUMMARY: GSA, DOD, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement Executive Order 
(E.O.) 13502, Use of Project Labor Agreements for Federal Construction 
Projects. The E.O. encourages the use of project labor agreements for 
large-scale Federal construction projects in order to promote economy 
and efficiency in Federal procurement.

DATES: Effective Date: May 13, 2010.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Ernest Woodson, Procurement Analyst, at (202) 501-3775. For 
information pertaining to status or publication schedules, contact the 
Regulatory

[[Page 19169]]

Secretariat at (202) 501-4755. Please cite FAC 2005-41, FAR case 2009-
005.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends the Federal Acquisition Regulation to 
implement Executive Order (E.O.) 13502, signed by President Obama on 
February 6, 2009, and published in the Federal Register at 74 FR 6985, 
February 11, 2009. The E.O. encourages Federal agencies to consider the 
use of a project labor agreement, as they may decide appropriate, on 
large-scale construction projects, where the total cost to the 
Government is $25 million or more, in order to promote economy and 
efficiency in Federal procurement. A project labor agreement is a pre-
hire collective bargaining agreement with one or more labor 
organizations that establishes the terms and conditions of employment 
for a specific construction project.
    The E.O. establishes requirements and standards that must be met by 
Federal agencies when using project labor agreements. Specifically, 
such agreements must--
    a) Bind all contractors and subcontractors on the construction 
project through the inclusion of appropriate specifications in all 
relevant solicitation provisions and contract documents;
    b) Allow all contractors and subcontractors to compete for 
contracts and subcontracts without regard to whether they are otherwise 
parties to collective bargaining agreements;
    c) Contain guarantees against strikes, lockouts, and similar job 
disruptions;
    d) Set forth effective, prompt, and mutually binding procedures for 
resolving labor disputes arising during the project labor agreement;
    e) Provide other mechanisms for labor-management cooperation on 
matters of mutual interest and concern, including productivity, quality 
of work, safety, and health; and
    f) Fully conform to all statutes, regulations, and Executive 
orders.
    E.O. 13502 is an exercise of the President's authority under the 
Federal Property and Administrative Services Act to prescribe policies 
and directives governing procurement policy ``that the President 
considers necessary to carry out'' that Act and that are ``consistent'' 
with the Act's purpose of ``provid[ing] the Federal Government with an 
economical and efficient'' procurement system. 40 U.S.C. 101, 121. 
Section 3(a) of the E.O. states that executive agencies may, on a 
project-by-project basis, require the use of a project labor agreement 
by a contractor where use of such an agreement will ``(i) advance the 
Federal Government's interest in achieving economy and efficiency in 
Federal procurement, producing labor-management stability, and ensuring 
compliance with laws and regulations governing safety and health, equal 
employment opportunity, labor and employment standards, and other 
matters, and (ii) be consistent with law.''
    Section 1 of the E.O. explains the rationale underlying the policy 
for encouraging the use of project labor agreements on large-scale 
Federal construction projects:
    a) Large-scale construction projects pose special challenges to 
efficient and timely procurement by the Federal Government. 
Construction employers typically do not have a permanent workforce, 
which makes it difficult for them to predict labor costs when bidding 
on contracts and to ensure a steady supply of labor on contracts being 
performed. Challenges also arise due to the fact that construction 
projects typically involve multiple employers at a single location. A 
labor dispute involving one employer can delay the entire project. A 
lack of coordination among various employers, or uncertainty about the 
terms and conditions of employment of various groups of workers, can 
create frictions and disputes in the absence of an agreed-upon 
resolution mechanism. These problems threaten the efficient and timely 
completion of construction projects undertaken by Federal contractors. 
On larger projects, which are generally more complex and of longer 
duration, these problems tend to be more pronounced.
    b) The use of a project labor agreement may prevent these problems 
from developing by providing structure and stability to large-scale 
construction projects, thereby promoting the efficient and expeditious 
completion of Federal construction contracts. . . .
    While the E.O.'s explicit policy focuses on large-scale 
construction contracts, section 5 states that the E.O. does not 
preclude use of a project labor agreement in circumstances not covered 
by the order, including leasehold arrangements and projects receiving 
Federal financial assistance.
    The Supreme Court has recognized that project labor agreements are 
valid pre-hire agreements under sections 8(e) and (f) of the National 
Labor Relations Act, which authorizes the use of these agreements in 
the construction industry. See Building and Construction Trades Council 
v. Associated Builders, 507 U.S. 218 (1993) (``Boston Harbor''). The 
Supreme Court has rejected arguments that project labor agreements are 
inappropriate for use by a public entity:
    There is no reason to expect these defining features of the 
construction industry to depend upon the public or private nature of 
the entity purchasing contracting services. To the extent that a 
private purchaser may choose a contractor based upon that 
contractor's willingness to enter into a prehire agreement, a public 
entity as purchaser should be permitted to do the same. Confronted 
with such a purchaser, those contractors who do not normally enter 
such agreements are faced with a choice. They may alter their usual 
mode of operation to secure the business opportunity at hand, or 
seek business from purchasers whose perceived needs do not include a 
project labor agreement.
    Boston Harbor, 507 U.S. at 231 (emphasis in original).
    Use of project labor agreements by public entities has been 
sanctioned repeatedly where agencies ensure that their actions are 
tailored to reflect their proprietary interests and do not prescribe 
how Government contractors and subcontractors handle their labor 
relations beyond performance of the specific Government construction 
project involved. See id.; Associated General Contractors of America v. 
Metropolitan Water Dist. of So. Cal., 159 F.3d 1178, 1182-84 (9th Cir. 
1998); Sheet Metal Workers Intern. Ass'n Local Union No. 27, AFL-CIO v. 
E.P. Donnelly, ----F.Supp.2d ----, 2009 WL 4667101 (D.N.J. 2009). The 
use of project labor agreements on Federal and other publicly funded 
projects, such as dams, defense installations, and atomic energy 
facilities, can be traced back many decades. The Government 
Accountability Office (GAO), in a 1998 study, described use of project 
labor agreements in connection with the construction of the Grand 
Coulee Dam in Washington State in 1938, the Shasta Dam in California in 
1940, atomic energy and defense construction projects during and after 
the Second World War, and construction at Cape Canaveral by NASA during 
the 1960s. U.S. Gen. Accounting Office Project Labor Agreements: The 
Extent of Their Use and Related Information (GAO Report), GAO/GGD-98-82 
(May 1998), at page 4. At the time GAO reviewed Federal use of project 
labor agreements in 1998, four agencies--the Department of Energy 
(DoE), DoD, the Tennessee Valley Authority (TVA), and NASA--had a total 
of 26 projects covered by project labor agreements. GAO Report at 2.
    DoE has invoked the authority of Pub. L. 85-804 to require the use 
of project labor agreements by contractors and subcontractors at 
certain of the Department's facilities. Project labor agreements have 
been, and continue to be, used at a majority of DoE's key sites,

[[Page 19170]]

including the Hanford Site in Washington State, the Savannah River Site 
in South Carolina, the Oak Ridge Reservation in Tennessee, the Nevada 
Test Site (NTS), and the Idaho National Laboratory. The project labor 
agreement at the NTS dates back to 1964.
    As of the summer of 2009, 21 of 25 DoE construction projects were, 
or were slated to be, covered by project labor agreements. Challenges 
to the use of project labor agreements at DOE sites have been 
successfully defended. See, e.g., Phoenix Engineering, Inc. v. MK-
Ferguson of Oak Ridge Co., 966 F.2d 1513, 1518-22 (6th Cir. 1992).
    Current and past DoE representatives have stated that project labor 
agreements have contributed to economy and efficiency of DoE 
construction projects, including completion of projects on time and 
within budget, by, among other things--
     Providing a mechanism for coordinating wages, hours, work 
rules, and other terms of employment across the project;
     Creating structure and stability through the use of broad 
provisions for grievance and arbitration of any disputes that may arise 
on site, including procedures for resolving disputes among the 
construction crafts;
     Prohibiting work stoppages, slowdowns, or strikes for the 
duration of a project and obligating senior union management to use 
their best efforts to prevent any threats of disruptions of work that 
might arise; and
     Ensuring expeditious access to a well trained, assured 
supply of skilled labor, even in remote areas where skilled labor would 
have otherwise been extremely difficult to find in a timely fashion.
    TVA has used project labor agreements on its construction projects 
for nearly 19 years. In the nearly 200 million man hours of work on TVA 
construction projects using project labor agreements, there have been 
no formal strikes or any organized work stoppages. The rate of injury 
on TVA projects has also been significantly reduced, especially over 
the last approximately 5 years.
    Federal use of project labor agreements has been curtailed twice 
since 1992, including most of the past decade. E.O. 12818 of October 
23, 1992 prohibited agencies from requiring the use of project labor 
agreements by any parties to Federal construction projects, although 
this bar was removed in 1993, by E.O. 12836, and a Presidential 
Memorandum was issued in 1997 to encourage the use of project labor 
agreements (see ``Use of Project Labor Agreements for Federal 
Construction Projects,'' June 5, 1997). E.O. 13202 of February 17, 2001 
and E.O. 13208 of April 6, 2001 again prevented agencies from requiring 
the use of project labor agreements. This restriction remained in 
effect from early 2001 until early 2009 when section 8 of E.O. 13502 
revoked E.O. 13202 and E.O. 13208.
    Use of project labor agreements has not been limited to Federal 
construction projects. Project labor agreements have been used at the 
State and municipal levels as well. Project labor agreements have been 
used in all 50 States and the District of Columbia. Use of project 
labor agreements at the State and local level has been connected to an 
array of construction projects covering an expanding range and size of 
projects--from schools, hospitals, roads, bridges, and police 
buildings, to convention centers, courthouses, manufacturing 
facilities, airports, power plants, transit systems, stadiums, and a 
prison. Project labor agreements have been used in connection not only 
with new construction, but also with demolition, restoration, and 
reconstruction.
    Project labor agreements have also been used by the private sector 
for a variety of construction projects that are similar in nature to 
those undertaken in the public sector, including for manufacturing 
plants, power plants, parking structures, and stadiums. For example, 
project labor agreements have been used in connection with building 
such high profile facilities as the trans-Alaska pipeline and Disney 
World. GAO Report at 4. According to one study on private sector 
experiences in California, companies wanted ``project labor agreements 
in order to meet their speed-to-market demands, and ensure against 
delays that can be caused by worker shortages, work stoppages or 
collective bargaining negotiations.'' See Kimberly Johnston-Dodds, CA 
State Library, Constructing California: A Review of Project Labor 
Agreements 59 (2001).

B. FAR Rulemaking

    Section 7 of E.O. 13502 directed GSA, DoD, and NASA to amend the 
FAR to implement the provisions of the E.O. Accordingly, GSA, DoD, and 
NASA issued a final rule in the Federal Register at 74 FR 34206, on 
July 14, 2009, rescinding FAR 36.202(d), a FAR provision that had 
prohibited agencies from requiring project labor agreements. This 
prohibition had implemented E.O. 13202 and E.O. 13208--E.O.s that were 
revoked by section 8 of E.O. 13502.
    On the same date, GSA, DoD, and NASA also published for public 
comment a proposed rule in the Federal Register at 74 FR 33953, to 
provide a new FAR subpart 22.5, Use of Project Labor Agreements for 
Federal Construction Projects, to implement the provisions of E.O. 
13502. The proposed rule--
     Stated that agencies are encouraged to consider requiring 
the use of project labor agreements in connection with large-scale 
construction projects;
     Described the general requirements for use of project 
labor agreements, including the standards that must be met by project 
labor agreements, as specified in section 4 of the E.O., which includes 
allowing any contractors and subcontracts to compete for contracts and 
subcontracts without regard to whether they are otherwise parties to 
collective bargaining agreements; and
     Created new solicitation provisions and contract clauses 
that (i) would be used in large-scale construction projects where the 
agency makes a determination that a project labor agreement will be 
required, and (ii) would give agencies the flexibility to require that 
project labor agreements be executed either prior to award from the 
apparent successful offeror or after award from the awardee.
    Based on the comments received on the proposed rule (which are 
discussed in greater detail below) and additional deliberations, GSA, 
DoD, and NASA have adopted a final rule that--
    1) Encourages agency planners to consider use of project labor 
agreements early in the acquisition process--i.e., during acquisition 
planning (FAR 7.103);
    2) Clarifies the policy for using project labor agreements to more 
closely track the terms of the E.O. (FAR 22.503(b));
    3) Identifies a number of factors that agencies may consider to 
help them decide, on a case-by-case basis, whether the use of a project 
labor agreement is likely to promote economy and efficiency in the 
performance of a specific construction project, such as whether the 
project will require multiple construction contractors and/or 
subcontractors employing workers in multiple crafts or trades or 
whether there is a shortage of skilled labor in the region in which the 
construction project will be sited (FAR 22.503(c));
    4) Makes clear that a solicitation may include project labor 
agreement requirements that are in addition to those specified in 
section 4 of the E.O., as the agency deems necessary to satisfy its 
needs (FAR 22.504(b)(6));
    5) States that an agency may specify in the solicitation, as 
appropriate to advance economy and efficiency in a given procurement, 
the terms and conditions of the project labor agreement and require the 
successful offeror to become a party to a project

[[Page 19171]]

labor agreement containing these terms and conditions as a condition of 
receiving a contract award (FAR 22.504(c)); and
    6) Modifies the proposed solicitation provisions and contract 
clauses to give agency contracting officers the additional option of 
requiring offerors to submit a copy of the project labor agreement with 
their offers (FAR 52.222-33 and 52.222-34).
    The final rule is structured to maximize an agency's ability to 
identify and successfully use project labor agreements when doing so 
promotes economy and efficiency.
     The rule encourages agency managers and members of the 
acquisition team to work together in evaluating whether to use a 
project labor agreement and to start the evaluation early in the 
planning process, so that all relevant circumstances and the needs of 
stakeholders can be fully considered in deciding what is best for the 
agency in meeting its mission.
     Consistent with the express terms of the E.O., the final 
rule preserves the flexibility agencies need to evaluate whether a 
project labor agreement is appropriate for a given construction 
project. This discretion helps to ensure that agencies will have the 
opportunity to bring their relevant experiences to bear on 
circumstances particular to a project, such as whether similar projects 
previously undertaken by the agency have experienced substantial delays 
or inefficiencies due to labor disputes or labor shortages in a 
particular locale or job classification.
     The rule helps agencies to analyze whether a project labor 
agreement may be beneficial. The factors set forth in the rule reflect 
the experience of Federal agencies, such as DOE and TVA, and other 
governmental and private sector entities, to analyze planned 
construction projects for the purpose of identifying if a project labor 
agreement is likely to promote smooth, successful, and timely 
performance of a construction project.
     The rule includes various approaches regarding when to 
submit an executed project labor agreement on a particular project 
(e.g., submission with the initial offer, after offers are submitted 
but before award, or after award), and options for specifying the 
specific terms and conditions of the project labor agreement in the 
solicitation--a practice that has been used successfully by entities 
experienced with project labor agreements. These alternatives will 
allow agencies to choose the approach that makes the most sense for 
their project and best fits with their mission.

C. Response to Comments Received on the Notice of Proposed Rulemaking

    GSA, DoD, and NASA received comments from more than 700 respondents 
on the proposed rule, which was published in the Federal Register at 74 
FR 33953 on July 14, 2009 for a comment period that originally closed 
on August 13, 2009. At the request of a respondent, the comment period 
was re-opened and extended through September 23, 2009 (74 FR 42639, 
August 24, 2009). Copies of the comments received by GSA, DoD, and NASA 
are available for review at www.regulations.gov. Approximately 650 of 
the comments were submitted in the format of one of several form 
letters, or short email that expressed opposition to the use of project 
labor agreements but did not directly address the proposed rule. 
Approximately 50 responses that were not form letters or short emails 
included roughly equal numbers supporting and opposing the use of 
project labor agreements. (In addition, about eight responses were 
neutral in their overall tone toward the use of project labor 
agreements.) Comments largely focused on (1) the exercise of agency 
discretion in deciding whether to require a project labor agreement, 
(2) the content of project labor agreements generally and the role of 
Federal agencies in developing the terms of the project labor 
agreements, and (3) the timing of entering the project labor agreement. 
As discussed above, GSA, DoD, and NASA made a number of changes to the 
rule based on public comments and additional deliberations. A summary 
description of the comments and GSA, DoD, and NASA responses and 
changes adopted in the final rule are set forth below.
    1. The Use of Discretion
    Summary of comments: Many of the respondents, including Federal 
agencies, Government contractors, labor organizations, trade 
associations, and individuals, commented on the level of discretion an 
agency should be afforded in deciding whether to require a project 
labor agreement on a particular construction project and the manner in 
which such discretion is exercised. Comments on this subject generally 
fell into one of three groups. One group of comments focused on the 
need to retain agency discretion. These comments, which were offered 
principally by Federal agencies, sought to ensure that Government 
organizations are able to bring their relevant experiences to bear on 
the circumstances particular to a project.
    A second group of comments focused on reducing discretion in favor 
of a more defined procedure that would drive agencies to particular 
outcomes. In particular, some respondents in this group wanted the rule 
to identify factors that, if met, would create a presumption in favor 
of a project labor agreement. For example, some of these respondents 
suggested that the use of a project labor agreement should be presumed 
appropriate if the project: (i) was over a certain dollar amount, such 
as $25 million, (ii) would involve two or more contractors at a single 
site, (iii) would be performed over an extended timeframe, or (iv) was 
for a certain type of requirement, such as a public work. Some of these 
respondents were particularly troubled by a statement in the proposed 
rule that the agency has ``complete discretion'' to require or not 
require a project labor agreement. Other respondents wanted the rule to 
more expressly place the burden on the agency to justify the use of 
project labor agreements. These respondents requested that the rule 
identify factors that, unless met, would prohibit use of a project 
labor agreement. For example, a project labor agreement would not be 
permitted unless the agency demonstrates that there have been labor-
related disruptions causing delays or cost overruns on similar Federal 
projects undertaken by the agency in the geographic area of the 
project.
    A third group of comments focused on identifying factors or 
standards that agencies could use to aid in their project-by-project 
consideration of whether to require a project labor agreement. Many of 
these comments were offered in response to an invitation by GSA, DoD, 
and NASA in the Federal Register notice for input on the types of 
factors that might assist agencies in giving meaningful consideration 
to the use of project labor agreements. Some comments expressed the 
concern that without meaningful factors, agency decision-making could 
become arbitrary. Many of the suggested factors focus on helping 
agencies identify circumstances where project labor agreements may be 
beneficial. Some examples include--
     Whether the project will require the services of two or 
more construction contractors or subcontractors that together employ 
workers in two or more crafts or trades;
     Whether labor disputes threaten timely completion of the 
project;
     Whether completion of the project will require an extended 
period of time (e.g., extending beyond one construction season or 
beyond the expiration date of one or more collective bargaining

[[Page 19172]]

agreements covering trades likely to be involved in the project); and
     Whether there is a need for a substantial number of 
experienced, skilled building trades and craft workers and the ability 
to obtain specialized skills through the use of hiring halls.
    Several respondents emphasized that agencies should initiate their 
consideration of project labor agreements early in the acquisition 
process, and with the input of all affected agency stakeholders, as 
this would improve the agency's ability to evaluate whether it is 
appropriate to require the use of a project labor agreement.
    Other respondents wanted to ensure that agencies document the 
decision to use, or not to use, a project labor agreement.
    Some factors offered by respondents sought to ensure that proper 
consideration would be given to the potential impact, such as impact on 
small businesses, of using a project labor agreement before the agency 
requires its use in a given construction project. At least one 
respondent recommended that agencies evaluate the legal impact of using 
a project labor agreement, including compliance with the National Labor 
Relations Act, the Employee Retirement Income Security Act, the Small 
Business Act, and the Competition in Contracting Act.
    Response: GSA, DoD, and NASA strongly support affording agencies 
discretion in the use of project labor agreements. As explained in the 
FAR Rulemaking section above, discussing the development of the 
regulation, GSA, DoD, and NASA believe this discretion is central to 
agencies' ability to improve the economy and efficiency of a Federal 
construction project. However, GSA, DoD, and NASA agree with the 
concern that the ``complete discretion'' language in the proposed rule 
is not appropriately tailored to the policies of E.O. 13502 and, for 
this reason, have deleted this language from the final rule in favor of 
language that more closely tracks the wording and structure of E.O. 
13502 in its discussion of general policy.
    GSA, DoD, and NASA disagree with the recommendations to reduce 
discretion and create inflexible presumptions favoring or disfavoring 
the use of project labor agreements. Such presumptions would be 
inconsistent with the E.O.'s emphasis, as stated in section 3(a), on 
allowing agencies to evaluate each construction effort independently 
and to decide ``on a project-by-project basis'' where use of a project 
labor agreement will ``advance the Federal Government's interest in 
achieving economy and efficiency in Federal procurement.''
    GSA, DoD, and NASA agree with the general recommendation to provide 
additional factors in the final rule that can help agencies evaluate 
whether use of a project labor agreement would be beneficial for a 
particular construction project. GSA, DoD, and NASA believe that 
flexible factors would support the E.O.'s policy of encouraging the 
consideration of project labor agreements. GSA, DoD, and NASA carefully 
reviewed the many suggestions respondents made for specific factors, 
looking for those factors, in particular, that agencies might 
reasonably apply to the facts of a given project to help determine 
whether using a project labor agreement would promote economy and 
efficiency. GSA, DoD, and NASA agreed to the following non-exhaustive 
list of factors that agencies may consider, in their discretion, in 
deciding whether a project labor agreement is appropriate for use in a 
given construction project:
    (1) The project will require multiple construction contractors and/
or subcontractors employing workers in multiple crafts or trades.
    (2) There is a shortage of skilled labor in the region in which the 
construction project will be sited.
    (3) Completion of the project will require an extended period of 
time.
    (4) Project labor agreements have been used on comparable projects 
undertaken by Federal, State, municipal, or private entities in the 
geographic area of the project.
    (5) A project labor agreement will promote the agency's long term 
program interests, facilitating the training of a skilled workforce to 
meet the agency's future construction needs.
    (6) Any other factors that the agency decides are appropriate.
    In order to preserve agency discretion, GSA, DoD, and NASA believe 
that the rule should not mandate consideration of these factors. For 
this reason, the final rule leaves an agency free to decide whether it 
will adopt some or all of the factors (or any other factor that the 
agency considers to be appropriate) as part of its own procedures. 
Similarly, how an organization structures its review team, draws upon 
agency or external resources, documents any decisions relating to the 
use of a project labor agreement, and addresses similar management 
matters is left to the discretion of each agency.
    In addition, GSA, DoD, and NASA agree with respondents who 
recommended that consideration of project labor agreements should begin 
early in the acquisition process. Early consideration will help ensure 
that relevant circumstances and the needs of stakeholders can be fully 
considered in identifying actions that would assist the agency in 
performing its mission effectively and efficiently. Accordingly, the 
final rule has been amended to encourage agency planners to consider 
the use of a project labor agreement during acquisition planning.
    The recommended additions regarding impact were not necessary, 
because the agencies are permitted to consider any factor that the 
agency considers appropriate. With respect to small business 
contracting, in particular, the policies in this rule should be read in 
conjunction with those in FAR part 19 speaking to small business 
participation.
    Finally, both proposed and final rules make clear that project 
labor agreements established pursuant to the rule ``must fully conform 
to all statutes, regulations, and Executive orders.'' Agencies 
requiring project labor agreements must therefore undertake appropriate 
legal review in implementing the rule. GSA, DoD, and NASA do not, 
however, agree with the commenter who claimed a need for an additional 
legal review process to implement the rule, apart from the process 
otherwise utilized by agencies in the course of making procurement 
determinations.
    2. Content of project labor agreement
    A number of respondents addressed the contents of project labor 
agreements. Some offered views about the requirements and issues 
addressed in a project labor agreement. Others commented on the 
Government's role in specifying the terms of a project labor agreement.
     a. Comments related to issues covered in project labor 
agreements. Some respondents requested that guidance clarify how 
project labor agreement requirements and terms handle contractors who 
are not otherwise parties to a collective bargaining agreement with 
respect to their use of existing employees, at least their core 
workers, and the extent to which such employees must contribute to 
union benefits trust funds. A number of these comments were raised in 
connection with fears that use of project labor agreements could unduly 
restrict the participation of open shop contractors in competition for 
Federal construction projects. One respondent suggested that the 
content of project labor agreements be limited to (i) a prohibition 
against union strikes, and (ii) a dispute resolution procedure for 
union contractors. Another recommended that project labor agreements 
include a targeted hiring provision. Yet another commenter

[[Page 19173]]

recommended that the proposed language requiring project labor 
agreements to ``fully conform to all statutes, regulations, and 
Executive orders'' be changed to say that project labor agreements 
shall ensure that items such as existing targeting policies, contract 
compliance requirements, outreach policies, logistical requirements for 
contractors, and other project administration elements would be 
addressed. Finally, one commenter suggested seeking amendments to the 
American Recovery and Reinvestment Act of 2009 (ARRA) and changing the 
existing FAR clause 52.222-9, Apprentices and Trainees, to provide a 
model project labor agreement for ARRA-funded projects.
    Response: With respect to the general concern raised regarding the 
participation of nonunion contractors, GSA, DoD, and NASA note that 
E.O. 13502 expressly states that all project labor agreements must 
allow all contractors and subcontractors to compete for contracts and 
subcontracts without regard to whether they are otherwise parties to 
collective bargaining agreements and this requirement is repeated in 
the final rule. Any contractor may compete for--and win--a Federal 
contract requiring a project labor agreement, whether or not the 
contractor's employees are represented by a labor union. The same 
principle of open competition would protect subcontractors as well. 
GSA, DoD, and NASA will work with the Office of Management and Budget 
(OMB), the Middle Class Task Force, the Small Business Administration 
(as many of these concerns were posed by small businesses), and others 
to assist with the development of appropriate training on these issues. 
With respect to the impact of a project labor agreement on particular 
contractors and subcontractors, GSA, DoD, and NASA have amended the 
final rule to permit agencies to fashion requirements as appropriate to 
meet their procurement needs. As explained in greater detail in the 
response to the next set of comments on the Government's role, GSA, 
DoD, and NASA have also clarified that an agency may specify the terms 
and conditions of the project labor agreement, as appropriate to 
advance economy and efficiency in procurement.
    As for the other recommendations described above, GSA, DoD, and 
NASA do not agree that the rule should be modified to address them. 
Section 4 of the E.O. specifies the minimum requirements for project 
labor agreements. The final rule reflects these considerations. 
Additional references, such as to ARRA, are not required. Further, 
specific elements such as targeted hiring and outreach policies are not 
addressed in the E.O. These matters, as appropriate, may be addressed 
in the project labor agreement, in the context of a particular project. 
As noted, language has been added to the final rule that allows 
agencies to include any additional requirements as the agency deems 
necessary to satisfy its needs.
    b. Comments regarding the Government's role in establishing the 
terms of a project labor agreement. Several respondents stated that the 
final rule should allow an agency to negotiate a project labor 
agreement, either directly or through an agent, before the solicitation 
is issued. Other respondents expressed the opposite view--i.e., that 
the Government should not participate in the negotiations of a project 
labor agreement--since the terms of the project labor agreement 
essentially address the relationship between the contractor and the 
unions.
    Response: Experiences of entities that have successfully used 
project labor agreements suggest that, in some cases, an agency may be 
able to more effectively achieve economy and efficiency in procurement 
by specifying some or all of the terms and conditions of the project 
labor agreement in the solicitation. Their experiences also suggest 
that, if the agency specifies some or all of the terms and conditions 
of the project labor agreement in the solicitation, contractors not 
familiar with project labor agreements may be better able to compete. 
For this reason, GSA, DoD, and NASA have amended the final rule to 
clarify that, as appropriate to advance the economy and efficiency in 
procurement, an agency may specify the terms and conditions of the 
project labor agreement in the solicitation and require the successful 
offeror to become a party to a project labor agreement containing these 
terms and conditions as a condition of receiving a contract award.
    Consistent with the FAR and applicable law, an agency may seek the 
views of, confer with, and exchange information with prospective 
bidders and union representatives as part of the agency's effort to 
identify appropriate terms and conditions of a project labor agreement 
for a particular construction project and facilitate agreement on those 
terms and conditions. However, agency actions must not prescribe how 
Government contractors and subcontractors handle their labor relations 
beyond performance of the specific Government contract project 
involved.
    3. Timing for submission of project labor agreement
    Summary of comments. Many respondents submitted comments regarding 
the timing of a project labor agreement's execution. (In the notice of 
proposed rulemaking, GSA, DoD, and NASA expressly sought input from the 
public on this issue.) The comments focused on three options: (i) 
require submission of project labor agreement with offer, (ii) require 
submission of project labor agreement from apparent awardee, or (iii) 
require project labor agreement before construction begins. Proponents 
of requiring submission of an executed project labor agreement (or at 
least a binding letter of understanding) with bids stated that this 
timing best ensures compliance with the requirement for project labor 
agreements (i.e., the contracting officer has documented proof before 
he or she begins evaluating offers) as well as better planning and more 
accurate pricing in offers, because the offerors will be able to 
accurately predict their labor costs. They noted that early negotiation 
and execution of the project labor agreement can best ensure that labor 
issues will not become a distraction or lead to unanticipated problems 
at the beginning of the project. Opponents raised concerns that 
requiring every offeror to negotiate a project labor agreement would 
impose a significant burden on offerors and could cause significant 
delay in contract awards.
    The pros and cons offered for requiring submission of the project 
labor agreement from only the apparent awardee were essentially the 
opposite from those offered for requiring submission with offers. Those 
who favored post-award submission felt this timing posed the smallest 
likelihood of pre-award delay and gave the contractor the greatest 
amount of time to negotiate the best project labor agreement possible. 
Critics cautioned that post-award execution of project labor agreements 
potentially undercuts key purposes of the agreement, such as addressing 
potential labor differences before they occur and receiving offers with 
more accurate pricing. Several respondents were particularly concerned 
that the language of the proposed rule, which would require the offeror 
to ``negotiate in good faith,'' does not assure that a project labor 
agreement will be reached, despite the Government having concluded that 
it should be utilized.
    Response: GSA, DoD, and NASA believe that the Government's 
procurement interests are best served by allowing agencies broad 
discretion in formulating the process and timing for the submission of 
a project labor

[[Page 19174]]

agreement. Accordingly, under the final rule, agencies may choose from 
among three options. Submission may be required: (1) when offers are 
due; (2) prior to award (by the apparent successful offeror); or (3) 
after award.
    Providing these three options allows agencies with project labor 
agreement experience to continue with the model they have found most 
effective; it also allows other agencies to craft an approach unique to 
each project, and, as experience is gained, follow best demonstrated 
practices. If an agency decides that permitting execution of the 
project labor agreement after award is the best approach, the 
contractor will be required to submit an executed copy of the agreement 
to the contracting officer. This is a change from the proposed rule, 
which only required the contractor to ``bargain in good faith.'' In the 
view of GSA, DoD, and NASA, the language of the proposed rule could 
result in a situation where the Government concluded that execution of 
a project labor agreement was in its best interest, but has no recourse 
should the project labor agreement never be executed as long as the 
contractor bargained in good faith.
    4. Other issues
    a. Comments regarding retroactive imposition of project labor 
agreements on contracts already awarded. One commenter recommended that 
the rule be clarified to prohibit agencies from pursuing a project 
labor agreement after a contract has been awarded. The commenter's 
concern relates to a scenario where the contracting agency has not 
previously informed parties that a project labor agreement was being 
considered.
    Response: GSA, DoD, and NASA agree with this concern. Any such 
action, without any prior indication that a project labor agreement was 
contemplated, could disrupt the project's schedule and impact contract 
price. FAR 1.108(d) requires that any application of a new procedure to 
existing contracts must be bilaterally negotiated and involve adequate 
consideration. Consistent with section 11 of the E.O., the final rule 
will apply to solicitations for large-scale construction projects 
issued on or after the effective date of this rule.
    b. Comments addressing the applicability of project labor 
agreements to certain contractors. Some respondents questioned the 
application of a project labor agreement to particular activities 
related to, or occupations involved with, construction projects. One 
commenter stated that the proposed rule was ``overly comprehensive'' by 
not distinguishing between contractors engaged in the construction and 
subcontractors who are not part of the construction project. Another 
commenter stated that the proposed rule failed to exclude designers, 
site engineers, surveyors and other engineering related personnel from 
its requirements. The commenter stated that the quality assurance/
quality control functions performed by such personnel would give rise 
to certain conflicts of interest if they were subject to a project 
labor agreement.
    Two respondents stated that any determination relating to the use 
of a project labor agreement under Federal contracts for projects on 
Indian reservations should take cognizance of tribal sovereignty and 
self-determination as contemplated by Pub. L. 93-638 and various 
Executive orders. Both respondents stated that the determination 
whether to use a project labor agreement should be vested in the 
affected tribe rather than the Federal agency. One commenter stated 
that a tribal-specific project labor agreement has been developed and 
that it is generally referred to as a ``Tribal Labor Agreement.'' This 
commenter recommended that the final rule reflect the unique aspects of 
Federal projects located on Indian reservations.
    Response: GSA, DoD, and NASA have clarified in the final rule that 
project labor agreements cover subcontractors engaged in construction. 
This change makes clear that employers who do not perform construction 
work need not sign the project labor agreement.
    With respect to the handling of engineering-related personnel, GSA, 
DoD, and NASA note that no other trades or crafts are referenced in 
either the E.O. or the proposed rule and believe these concerns are 
best addressed by the agency or the parties on a project-by-project 
basis.
    Regarding issues related to tribal self-determination, GSA, DoD, 
and NASA concluded that no change is required to the FAR rule. Each of 
the affected funding agencies may develop internal guidance, as 
necessary, to accommodate its unique authorities.
    c. Guidance to employers that have no relationship to labor 
organizations. One commenter stated that the proposed rule failed to 
provide guidance to employers that have no relationship with any labor 
organization. The commenter stated that the terms and conditions of 
employment common in union-represented workforces differ from the terms 
and conditions of employment common for individuals not represented by 
unions.
    Response: This issue is outside the scope of this FAR case. Such 
general guidance may be provided by individual agencies as they believe 
appropriate. However, the rule reiterates that, as provided in E.O. 
13502, contractors and subcontractors must be permitted to compete for 
contracts and subcontracts without regard to whether they are otherwise 
parties to collective bargaining agreements.
    d. Comments regarding the use of project labor agreements for 
initiatives other than large-scale Federal construction projects. A 
number of respondents recommended that the E.O.'s policy for 
encouraging the use of project labor agreements be broadened. Some 
respondents recommended that the threshold for applicable projects be 
lower than $25 million. They stated that it is common for project labor 
agreements to be used on construction projects under $25 million and 
that the total cost of a project is less significant than the factors 
referenced in the E.O. in determining whether a project labor agreement 
serves the Government's interest. Some suggested this be accomplished 
by lowering the threshold to $5 million. Others recommended that the 
definitions of ``large-scale construction project'' and ``Project labor 
agreement,'' be revised to include a construction program comprised of 
multiple projects when calculating the $25 million threshold. A few 
recommended no threshold and suggested that the rule be revised to 
require that agencies analyze all construction projects, regardless of 
value or form, to determine whether the use of a project labor 
agreement results in a more efficient procurement. Finally, a number of 
respondents addressed use of project labor agreements in connection 
with Federally-assisted projects. Most who discussed the issue favored 
the use of project labor agreements for construction contracts funded 
by Federal grants. A few respondents opposed the use of project labor 
agreements on such projects, and two questioned the legality of such 
use.
    Response: Modifying the coverage of the final rule to address 
expanded consideration of project labor agreements is outside the scope 
of this rulemaking. This rulemaking is intended to support the 
implementation of the policy set forth in section 1(b) of E.O. 13502, 
which is expressly directed at Federal acquisitions involving large-
scale construction projects. Under section 5 of the E.O., agencies are 
not precluded from using project labor agreements on projects not 
covered by the order. GSA, DoD, and NASA note that this final rule does 
not limit agencies' exercise of their authorities to require project 
labor agreements in appropriate circumstances and to the

[[Page 19175]]

extent permitted by law. Finally, with respect to recommendations 
addressing construction projects funded by Federal grants, GSA, DoD, 
and NASA note that such transactions are outside their policy 
jurisdiction and the purview of the FAR.

D. Significant rule.

    This is a significant regulatory action and, therefore, was subject 
to review under section 6(b) of Executive Order 12866, Regulatory 
Planning and Review, dated September 30, 1993. This rule is not a major 
rule under 5 U.S.C. 804.
    GSA, DoD, and NASA received a number of comments that made 
arguments in favor of declaring this rule as major. A summary of these 
comments and GSA, DoD, and NASA' response is below.
    Comment: One respondent stated that the proposed rule improperly 
declares that this rule is not a major rule under 5 U.S.C. 804, and 
thereby violates the Congressional Review Act codified therein.
    5 U.S.C. 804 defines a major rule as including any rule likely to 
result in--
    (A) An annual effect on the economy of $100,000,000 or more;
    (B) A major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or
    (C) A significant adverse effect on competition, employment, 
investment, productivity, innovation, or on the ability of the United 
States-based enterprises to compete with foreign-based enterprises in 
domestic export markets. Respondents made the following arguments:
     Project labor agreements will have significant adverse 
effect on competition.
     Project labor agreements will create major increases in 
construction costs for Federal agencies.
     Project labor agreements may have an annual impact on the 
economy of $100,000,000 or more.
     Without the benefit of a cost/benefit analysis, it is 
difficult to determine if the NPRM would satisfy the criteria of a 
major rule under paragraph A or calculate if increases are major under 
paragraph B.
    Response: OMB determines whether a rule is a major rule. OMB has 
not determined this rule to be a major rule.
    The purpose of the E.O. is to further economy and efficiency in 
Federal procurement--in particular large-scale construction contracts. 
Specifically, agencies are encouraged to consider requiring the use of 
a project labor agreement in large-scale construction projects, if use 
of such an agreement will advance the interest of the Federal 
Government in achieving economy and efficiency. Consistent with the 
express terms of the E.O., including section 5, which states that the 
order ``does not require an executive agency to use a project labor 
agreement on any construction project,'' the final rule preserves the 
flexibility agencies need to evaluate whether a project labor agreement 
is appropriate for a given construction project. Simply put, the use of 
project labor agreements by Federal agencies is voluntary. As explained 
in the preamble to the notice of proposed rulemaking, GSA, DoD, and 
NASA estimate about 30 project labor agreements will be formed per year 
(Federal Register at 74 FR 33955, July 14, 2009). Based on this 
estimate, GSA, DoD, and NASA expect that any increased construction 
costs associated with the use of project labor agreements under the 
rule will be less than the $100 million threshold for a major rule.
    Furthermore, this is not rulemaking (such as is promulgated, for 
example, by the Environmental Protection Agency) that will impose 
mandatory standards that may result in higher costs on entities, 
without any reimbursement. These are acquisition regulations. Applying 
for a Government contract is a voluntary act. In addition, as further 
explained in the Regulatory Flexibilty Analysis section below, bids on 
a project for which a project labor agreement is required may include 
anticipated costs associated with a contractor's compliance with 
project labor agreement requirements. These costs would be included in 
the price of the contract awarded to the successful bidder.

E. Regulatory Flexibility Analysis.

    Many respondents commented on the Regulatory Flexibility Act and 
the perceived impact on small businesses.
    1. Violation of the Regulatory Flexibility Act.
    Comments: Many respondents stated that the failure to perform an 
Initial Regulatory Flexibility Analysis violated the Regulatory 
Flexibility Act. One respondent further objected that the findings lack 
the level of quality that would permit their dissemination and use as 
the basis of the policy that GSA, DoD, and NASA are proposing to set 
through this rulemaking, as required by section 515 of the Data Quality 
Act (Pub. L. 106-554). One respondent criticized GSA, DoD, and NASA for 
failing to certify that the rule would not have a substantial adverse 
economic impact on a significant number of small entities.
    Some respondents took issue with the statement in the Federal 
Register preamble to the proposed rule that this rule is not expected 
to have a significant impact on a substantial number of small entities. 
These respondents pointed out that many small entities perform work as 
subcontractors on projects whose total cost exceeds $25 million. One 
respondent cited comments of individual prime contractors that have 
performed contracts in the $25 million plus range as to the percentage 
of awards to small business subcontractors, the majority of whom are 
non-union. This respondent cited a particular example in which a prime 
contractor subcontracted to small businesses more than 50 percent of 
the dollar value of prime construction contracts that exceed $25 
million. The respondent stated that these numbers are typical of many 
other association members.
     Many respondents stated that the rule will have a substantial 
harmful economic impact. Specifically, they stated that:
     The impact on all subcontracts on such projects, no matter 
how small, will be harmful due primarily to discrimination against non-
union subcontractors and increased costs.
     The project labor agreement will increase the costs of the 
small non-union subcontractor by at least 25 percent or more.
     The project labor agreement requirement will impact ``even 
small employers who will likely have no labor relations staff who can 
navigate a project labor agreement.''
     Small businesses will be put out of business because they 
will not be able to afford the costs associated with this rule.
     Use of project labor agreements will make it more 
difficult for small non-union businesses to compete.
    Response: Consistent with the requirements of the Regulatory 
Flexibility Act, GSA, DoD, and NASA are committed to performing 
analyses and identifying alternatives, whenever feasible, to mitigate 
the impact of acquisition rules on small businesses and regularly work 
with the Small Business Administration to this end. As explained below, 
GSA, DoD, and NASA believe that amendments made to the final rule allow 
agencies to fashion requirements as appropriate to meet their 
procurement needs and ameliorate concerns about the impact of a project 
labor agreement on particular contractors and subcontractors, including 
small businesses.
    GSA, DoD, and NASA do not certify that a rule will not have a 
significant

[[Page 19176]]

economic impact on a substantial number of small entities until after 
receipt and analysis of public comments on a rule.
    GSA, DoD, and NASA did not perform an Initial Regulatory 
Flexibility Analysis on this rule, because GSA, DoD, and NASA did not 
expect that the rule would have a significant economic impact on a 
substantial number of small entities for the reasons stated in the 
Federal Register preamble to the proposed rule, namely that the rule is 
discretionary in nature and the its application is tied to large scale 
construction projects over $25 million that are likely to be performed 
by large businesses. It is only the prime contractor that negotiates 
the project labor agreement and submits the project labor agreement to 
the Government.
    The Data Quality Act is more commonly applied to significant 
information disseminated by Government agencies such as statistical 
information (e.g., National Weather Service or Bureau of Labor 
Statistics); information about health, safety, and environmental risks 
that they collect from regulated entities; or findings of scientific 
research or technical information that Government agencies create or 
obtain in the course of developing regulations, often involving 
scientific, engineering, and economic analysis (for example, an 
analysis of the risk to health to support a change to clean air or 
water standards). Although neither the law nor the OMB Guidance are 
limited to ``important'' information, the OMB guidance states that the 
more important the information, the higher the quality standards to 
which it should be held. The OMB Guidance also states that agencies 
should apply the guidelines in a ``common-sense and workable'' manner. 
In this case, the information provided was not the basis for the 
proposed rule (which is based on the E.O.), but was only used in the 
decision of whether to prepare and submit an Initial Regulatory 
Flexibility Analysis.
    As stated in the preamble to the proposed rule, according to the 
Federal Procurement Data System, in FY 2008 300 large-scale 
construction contracts, totaling $31,685,574,596 were awarded. Of 
these, 17 were made to small businesses, totaling $591,269,508 (average 
of $34,780,558 per contract). The small business size standard for 
general building and heavy construction contractors is $33.5 million. 
Most prime contractors for such projects are large businesses, but the 
majority of the subcontractors under these large-scale contracts will 
be small businesses. Since the publication of the proposed rule, GSA, 
DoD, and NASA have updated averages, to include FY 2009 information: 
The 2 year average is a total of 246 contracts per year, with 14 of the 
prime contractors being small businesses. However, GSA, DoD, and NASA 
continue to maintain the estimate made in the proposed rule of about 30 
project labor agreements per year (that would now be 12.2 percent of 
all large-scale construction contracts).
    The impact on non-union small businesses is not likely to be as 
much as feared by many of the respondents. GSA, DoD, and NASA reviewed 
a major project by the Massachusetts Water Resource Authority, which 
used a project labor agreement. Of the 257 subcontractors, 102 were 
reportedly open shop subcontractors (nearly 40 percent).
    The rule clearly states that all contractors and subcontractors 
must be allowed to compete for contracts and subcontracts without 
regard to whether they are otherwise parties to collective bargaining 
agreements. It is not up to the small business subcontractor to 
negotiate a project labor agreement; it only needs to sign on to the 
project labor agreement negotiated by the prime contractors. When a 
prime contractor makes an offer to perform work on a fixed-price 
construction contract, the contractor includes amounts to cover the 
costs it expects to incur, including anticipated costs of complying 
with project labor agreement requirements, plus profit in its offered 
price. Subcontractors also include their anticipated costs in their 
offered price. The anticipated costs, therefore, would be included in 
the payment by the Government of the prime contract fixed price.
    GSA, DoD, and NASA cannot determine in the abstract what the 
effects of a particular project labor agreement will be on all the 
affected parties. However, GSA, DoD, and NASA have amended the final 
rule to permit agencies to include requirements as the agency deems 
necessary to satisfy its procurement needs. GSA, DoD, and NASA have 
also clarified that an agency may specify the terms and conditions of 
the project labor agreement, as appropriate to advance economy and 
efficiency. These flexibilities, which are consistent with the 
discretion anticipated in the E.O. ensure that agencies will have the 
opportunity to bring their relevant experiences to bear on 
circumstances particular to a project and take appropriate steps to 
ameliorate impact on contractors and subcontractors, including small 
businesses.
    2. Suggested remedies.
    Comment: One respondent recommended that the final rule establish a 
threshold below which any qualified bidder can participate, regardless 
of the bidder's agreement, or lack of agreement, to a project labor 
agreement. Many respondents requested that the proposed rule should be 
rescinded so that a regulatory flexibility analysis can be performed.
    Response: The project labor agreement requires all construction 
subcontractors to follow the same rules; it would defeat the purpose of 
the project labor agreement to exempt subcontractors below a given 
threshold.
    It is not necessary to rescind the proposed rule, because GSA, DoD, 
and NASA do not believe this final rule will have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act based on the responses 
provided above.
    3. Request for separate submission from small entities.
    Comments: One respondent was under the impression that the Federal 
Register preamble to the proposed rule required filing of separate 
comments with regard to Regulatory Flexibility Analysis. The respondent 
stated that there is no basis for the requirement to file such comments 
separately and objected to this process.
    Another respondent raised the same issues as the other respondent, 
and also stated that GSA, DoD, and NASA are obliged to consider 
comments from all entities, not just small entities; and assumed that 
the reference to section 5 U.S.C. 610 must be in error.
    Response: The statement that GSA, DoD, and NASA will consider 
comments from small entities on affected subparts in accordance with 5 
U.S.C. 610 was not intended to affect the response by entities with 
regard to the impact of this particular rule on small entities. 5 
U.S.C. 610 addresses the periodic review of existing rules. The intent 
of the Federal Register statement was to gather separate information 
from small entities with regard to the impact on small businesses of 
any existing regulations in parts 2, 17, 22, 36, and 52--i.e., not the 
current proposed rule. This request was supposed to be separate from, 
and in addition to, the request for comments on the regulatory 
flexibility impact of the proposed rule.

F. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant

[[Page 19177]]

economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The 
rule clearly states that all contractors and subcontractors must be 
allowed to compete for contracts and subcontracts without regard to 
whether they are otherwise parties to collective bargaining agreements. 
It is not up to the small business subcontractor to negotiate a project 
labor agreement; it only needs to sign on to the project labor 
agreement negotiated by the prime contractor. Also, as explained in the 
Regulatory Flexibility Analysis section, above, when a prime contractor 
makes an offer to perform work on a fixed-price construction contract, 
the contractor includes amounts to cover the costs it expects to incur, 
including anticipated costs of complying with project labor agreement 
requirements, plus profit in its offered price. Subcontractors also 
include their anticipated costs in their offered price. The anticipated 
costs, therefore, would be included in the payment by the Government of 
the prime contract fixed price.
    GSA, DoD, and NASA cannot determine in the abstract what the 
effects of a particular project labor agreement will be on all the 
affected parties, but have sought to structure the rule to maximize an 
agency's ability to use its discretion to identify when using project 
labor agreements promotes economy and efficiency. Such circumstances 
should typically benefit both the Government and contractors, such as 
by providing mechanisms for labor-management cooperation on matters of 
mutual interest and concern, including productivity, quality of work, 
safety, and health, and setting forth effective, prompt, and mutually 
binding procedures for resolving labor disputes arising during the 
project labor agreement.

G. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
final rule contains information collection requirements. Accordingly, 
the Regulatory Secretariat received the preapproval for a new 
information collection, OMB Control No. 9000-0175, concerning use of 
project labor agreements for Federal construction projects, to the 
Office of Management and Budget under 44 U.S.C. Chapter 35, et seq. 
Public comments concerning this request were invited through a 
subsequent Federal Register notice that was published in the Federal 
Register at 75 FR 13765, March 23, 2010.
    Comments on the proposed information collection requirement:
    One respondent stated that the data is largely arbitrary and 
capricious and should not be relied upon for any presumed target for 
expected use of project labor agreements. The respondent expressed the 
following concerns:
    1. The estimate may be used by the Government or outside 
organizations to establish benchmarks or unsupportable goals for the 
use of project labor agreements.
    2. The estimate appears to be unrealistically low, not based on 
valid assumptions and methodology.
    However, the respondent acknowledges that the collection of the 
project labor agreements is necessary to determine whether the 
contractor has achieved the required project labor agreement as stated 
in the draft solicitation provisions.
    Another respondent questioned the estimate that only 10 percent of 
contracts that meet or exceed the $25M threshold will be determined to 
be appropriate for a project labor agreement. According to the 
respondent, every contract exceeding $25M might in fact be covered.
    Response: The initial estimates for a new information collection 
requirement are of necessity just that--estimates. They are based on 
the best information available, but must rely on the recommendations of 
Government experts. These numbers are never used to establish 
benchmarks or goals.
    More specifically, with regard to the number of hours per response, 
not every burden is an information collection requirement. The time 
associated with negotiating a project labor agreement is a direct 
result of the E.O., but it is not an information collection 
requirement. The only information collection requirement imposed by 
this rule is the requirement to provide a copy of the project labor 
agreement to the contracting officer. The Federal Register preamble to 
the proposed rule specifically stated that the estimated response time 
of one hour covered only the time that it would take to submit the 
information to the Government.
    With regard to the number of respondents, we expect that better 
information will become available through the information that OMB is 
collecting from the agencies on the use of project labor agreements.
    Therefore, GSA, DoD, and NASA have changed the estimated burden 
hours associated with this information collection requirement, to 
account for the addition of the new option allowing agencies to require 
submission of the project labor agreement by all bidders with the 
offer.

List of Subjects in 48 CFR Parts 2, 7, 17, 22, and 52

    Government procurement.

    Dated: April 2, 2010.
Al Matera,
Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 7, 17, 22, and 52 
as set forth below:

0
1. The authority citation for 48 CFR parts 2, 7, 17, 22, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS


2.101  [Amended]

0
2. Amend section 2.101 in paragraph (b)(2) in the third sentence of the 
definition ``Construction'' by removing the words ``personal property'' 
and adding ``personal property (except that for use in subpart 22.5, 
see the definition at 22.502)'' in its place.

PART 7--ACQUISITION PLANNING

0
3. Amend section 7.103 by redesignating paragraph (v) as paragraph (w), 
and adding a new paragraph (v) to read as follows:


7.103  Agency-head responsibilities.

* * * * *
    (v) Encouraging agency planners to consider the use of a project 
labor agreement (see subpart 22.5).
* * * * *

PART 17--SPECIAL CONTRACTING METHODS

0
4. Amend section 17.603 by adding paragraph (c) to read as follows:


17.603  Limitations.

* * * * *
    (c) For use of project labor agreements, see subpart 22.5.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
5. Amend section 22.101-1 by revising paragraph (b) to read as follows:


22.101-1  General.

* * * * *
    (b)(1) Agencies shall remain impartial concerning any dispute 
between labor and contractor management and not undertake the 
conciliation, mediation, or arbitration of a labor dispute. To the 
extent practicable, agencies should

[[Page 19178]]

ensure that the parties to the dispute use all available methods for 
resolving the dispute, including the services of the National Labor 
Relations Board, Federal Mediation and Conciliation Service, the 
National Mediation Board and other appropriate Federal, State, local, 
or private agencies.
    (2) For use of project labor agreements, see subpart 22.5.
* * * * *

0
6. Add subpart 22.5, consisting of sections 22.501 through 22.505, to 
read as follows:

Subpart 22.5--Use of Project Labor Agreements for Federal 
Construction Projects

Sec.
22.501 Scope of subpart.
22.502 Definitions.
22.503 Policy.
22.504 General requirements for project labor agreements.
22.505 Solicitation provision and contract clause.

Subpart 22.5--Use of Project Labor Agreements for Federal 
Construction Projects


22.501  Scope of subpart.

    This subpart prescribes policies and procedures to implement 
Executive Order 13502, February 6, 2009.


22.502  Definitions.

    As used in this subpart--
    Construction means construction, rehabilitation, alteration, 
conversion, extension, repair, or improvement of buildings, highways, 
or other real property.
    Labor organization means a labor organization as defined in 29 
U.S.C. 152(5).
    Large-scale construction project means a construction project where 
the total cost to the Federal Government is $25 million or more.
    Project labor agreement means 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).


22.503  Policy.

    (a) Project labor agreements are a tool that agencies may use to 
promote economy and efficiency in Federal procurement. Pursuant to 
Executive Order 13502, agencies are encouraged to consider requiring 
the use of project labor agreements in connection with large-scale 
construction projects.
    (b) 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--
    (1) 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
    (2) Be consistent with law.
    (c) Agencies may also consider the following factors in deciding 
whether the use of a project labor agreement is appropriate for the 
construction project:
    (1) The project will require multiple construction contractors and/
or subcontractors employing workers in multiple crafts or trades.
    (2) There is a shortage of skilled labor in the region in which the 
construction project will be sited.
    (3) Completion of the project will require an extended period of 
time.
    (4) Project labor agreements have been used on comparable projects 
undertaken by Federal, State, municipal, or private entities in the 
geographic area of the project.
    (5) 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.
    (6) Any other factors that the agency decides are appropriate.


22.504  General requirements for project labor agreements.

    (a) General. Project labor agreements established under this 
subpart shall fully conform to all statutes, regulations, and Executive 
orders.
    (b) Requirements. The project labor agreement shall--
    (1) Bind all contractors 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) Include any additional requirements as the agency deems 
necessary to satisfy its needs.
    (c) Terms and conditions. As appropriate to advance economy and 
efficiency in the procurement, an agency may specify the terms and 
conditions of the project labor agreement in the solicitation and 
require the successful offeror to become a party to a project labor 
agreement containing these terms and conditions as a condition of 
receiving a contract award. An agency may seek the views of, confer 
with, and exchange information with prospective bidders and union 
representatives as part of the agency's effort to identify appropriate 
terms and conditions of a project labor agreement for a particular 
construction project and facilitate agreement on those terms and 
conditions.


22.505  Solicitation provision and contract clause.

    For acquisition of large-scale construction projects, if the agency 
decides pursuant to this subpart that a project labor agreement will be 
required, the contracting officer shall--
    (a) Insert the provision at 52.222-33, Notice of Requirement for 
Project Labor Agreement, in all solicitations associated with the 
construction project.
    (1) Use the provision with its Alternate I if the agency decides to 
require the submission of a project labor agreement from only the 
apparent successful offeror, prior to contract award.
    (2) Use the provision with its Alternate II if an agency allows 
submission of a project labor agreement after contract award.
    (b)(1) Insert the clause at 52.222-34, Project Labor Agreement, in 
all 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.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Add sections 52.222-33 and 52.222-34 to read as follows:


52.222-33  Notice of Requirement for Project Labor Agreement.

    As prescribed in 22.505(a)(1), insert the following provision:
    NOTICE OF REQUIREMENT FOR PROJECT LABOR AGREEMENT (May 2010)
    (a) Definitions. ``Labor organization'' and ``project labor 
agreement,'' as used in this provision, are defined in the

[[Page 19179]]

clause of this solicitation entitled Project Labor Agreement.
    (b) Consistent with applicable law, the offeror shall negotiate a 
project labor agreement with one or more labor organizations for the 
term of the resulting construction contract.
    (c) Consistent with applicable law, the project labor agreement 
reached pursuant to this provision shall--
    1) Bind the offeror and all subcontractors engaged in construction 
on the construction project to comply with the project labor agreement;
    (2) Allow the offeror and all 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 provision 
does not change the terms of this contract or provide for any price 
adjustment by the Government.
    (e) The offeror shall submit to the Contracting Officer a copy of 
the project labor agreement with its offer.
    (End of Provision)
    Alternate I (May 2010). As prescribed in 22.505(a)(1), substitute 
the following paragraphs (b) and (e) for paragraphs (b) and (e) of the 
basic clause.
    (b) The apparent successful offeror shall negotiate a project labor 
agreement with one or more labor organizations for the term of the 
resulting construction contract.
    (e) The apparent successful offeror shall submit to the Contracting 
Officer a copy of the project labor agreement prior to contract award.
    Alternate II (May 2010). As prescribed in 22.505(a)(2), substitute 
the following paragraph (b) in lieu of paragraphs (b) through (e) of 
the basic clause:
    (b) Consistent with applicable law, if awarded the contract, the 
offeror shall negotiate a project labor agreement with one or more 
labor organizations for the term of the resulting construction 
contract.


52.222-34  Project Labor Agreement.

    As prescribed in 22.505(b)(1), insert the following clause:
    PROJECT LABOR AGREEMENT (May 2010)
    (a) Definitions. As used in this clause--
    Labor organization means a labor organization as defined in 29 
U.S.C. 152(5).
    Project labor agreement means 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).
    (b) The Contractor shall maintain in a current status throughout 
the life of the contract the project labor agreement entered into prior 
to the award of this contract in accordance with solicitation provision 
52.222-33, Notice of Requirement for Project Labor Agreement.
    (c) Subcontracts. The Contractor shall include the substance of 
this clause, including this paragraph (c), in all subcontracts with 
subcontractors engaged in construction on the construction project.
    (End of Clause)
    Alternate I (May 2010). As prescribed in 22.505(b)(2), substitute 
the following paragraphs (b) through (f) for paragraphs (b) and (c) of 
the basic clause:
    (b) Consistent with applicable law, the Contractor shall negotiate 
a project labor agreement with one or more labor organizations for the 
term of this construction contract. The Contractor shall submit an 
executed copy of the project labor agreement to the Contracting 
Officer.
    (c) Consistent with applicable law, the project labor agreement 
reached pursuant to this clause shall--
    (1) Bind the Contractor and all subcontractors engaged in 
construction on the construction project to comply with the project 
labor agreement;
    (2) Allow the Contractor and all 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 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 provision 
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 contract the project labor agreement entered into 
pursuant to this clause.
    (f) Subcontracts. The Contractor shall 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 shall include the substance of paragraphs (d) through 
(f) of this clause in all subcontracts with subcontractors engaged in 
construction on the construction project.
[FR Doc. 2010-8118 Filed 4-12-10; 8:45 am]
BILLING CODE 6820-EP-S