final rule published in the Federal Register on April 13, 2010, directs federal agencies to favor project labor agreements on federal construction projects larger than $25 million. The rule implements Executive Order 13502, signed by President Obama weeks after taking office. The rule will take effect on May 13, 2010.

Project labor agreements are pre-hire collective bargaining agreements with one or more labor organizations that establish the terms and conditions of employment for a specific construction project. Under the agreements, unions will have the ability to bargain over wages, hours, and work rules. In return, they must agree not to strike or engage in similar work disruptions.

The Executive Order states that when awarding any contract in connection with a large-scale construction project, or obligating funds pursuant to such a contract, executive agencies may require the use of a project labor agreement on a project-by-project basis 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.

As stipulated in the Executive Order, if a project labor agreement is in place it binds all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents; allows all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; contains guarantees against strikes, lockouts, and similar job disruptions; sets forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the project labor agreement; provides other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and conforms to all statutes, regulations, and executive orders.