FAR 22.503—Policy.
Plain-English Summary
FAR 22.503 states the Government’s policy on when agencies must or may require project labor agreements (PLAs) for Federal construction work. It implements Executive Order 14063 and explains the core rule for large-scale construction projects: agencies must require PLAs for contractors and subcontractors performing construction unless a regulatory exception applies. The section also gives agencies discretion to require PLAs on smaller construction projects when doing so would advance economy and efficiency, labor-management stability, and compliance with labor, safety, health, equal employment opportunity, and related laws. It identifies the factors agencies may consider when deciding whether a PLA is appropriate on a non-large-scale project, including project complexity, labor shortages, duration, prior use of PLAs, and long-term program needs. Finally, it addresses IDIQ contracts by allowing PLA requirements to be imposed at the order level rather than for the entire contract, and it establishes a mandatory PLA rule for orders at or above $35 million unless an exception applies. In practice, this section determines when PLA planning must occur, how solicitation and contract requirements are structured, and when contractors and subcontractors must be prepared to negotiate or join a PLA before performing construction work.
Key Rules
PLA required on large projects
For contracts connected to a large-scale construction project, agencies must require use of a project labor agreement for contractors and subcontractors engaged in construction, unless an exception in FAR 22.504(d) applies. This is the default mandatory rule for covered large projects.
Discretion on smaller projects
Agencies may require a PLA on construction projects below the large-scale threshold if appropriate. The agency must determine that the PLA would support economy and efficiency, labor-management stability, and compliance with applicable laws, and that the requirement is consistent with law.
Factors for deciding appropriateness
When considering a PLA on a smaller project, agencies may evaluate project complexity, local skilled labor shortages, extended performance time, prior PLA use on comparable projects, long-term program benefits such as workforce development, and any other relevant factors the agency identifies.
IDIQ orders may be separate
For IDIQ contracts, the PLA requirement may be applied order by order instead of to the entire base contract. This allows the agency to tailor PLA use to the specific construction order rather than imposing it universally across all future orders.
Mandatory PLA for large IDIQ orders
For an IDIQ order at or above $35 million, the agency shall require a PLA unless an exception applies. This means the order value, not just the base contract, can trigger a mandatory PLA requirement.
Exceptions still control
Even where a PLA would otherwise be required, the agency must check whether an exception under FAR 22.504(d) applies. The policy section does not eliminate exceptions; it works together with the exception framework.
Responsibilities
Agency
Implement E.O. 14063 by requiring PLAs on covered large-scale construction projects, evaluate whether PLAs are appropriate on smaller projects, consider the listed decision factors, and apply PLA requirements at the IDIQ order level when appropriate. The agency must also ensure any PLA requirement is consistent with law and account for applicable exceptions.
Contracting Officer
Structure solicitations and awards to include PLA requirements when the policy applies, determine whether an exception prevents use of a PLA, and apply the correct rule for IDIQ orders, including the mandatory requirement for orders at or above $35 million unless an exception applies.
Contractor
If a PLA is required, ensure the prime contractor is prepared to negotiate or become a party to the PLA as required by the solicitation and contract, and flow the requirement to covered subcontractors engaged in construction on the project.
Subcontractor
Comply with the project labor agreement when engaged in construction on a covered project, including any obligations to negotiate, join, or operate under the PLA as required by the project arrangement.
Labor Organizations
Participate in PLA negotiations or administration where the agency requires contractors and subcontractors to negotiate or become parties to a PLA with one or more labor organizations.
Practical Implications
Agencies must plan early for PLA use because the requirement affects acquisition strategy, solicitation language, and contractor pricing and labor planning.
For contractors, a PLA can change workforce sourcing, union coordination, schedule assumptions, and subcontracting arrangements, so it should be identified before bid or proposal submission.
A common pitfall is assuming PLAs are only for the largest projects; FAR 22.503 also allows discretionary use on smaller projects and requires order-level analysis for IDIQ work.
Another frequent issue is overlooking the $35 million threshold for IDIQ orders, which can trigger a mandatory PLA even when the base IDIQ contract itself is not subject to a blanket PLA requirement.
Both agencies and contractors should verify whether an exception under FAR 22.504(d) applies, because the policy rule is not absolute and the exception analysis can change the procurement approach.
Official Regulatory Text
(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).