The overall goal of the agency is to provide an adequate deterrent to employers with increased penalties.  The average penalty for serious violations will be increased from $1,000 to an average of $3,000 – $4,000 according to the changes.  The following are the most significant changes to the calculation system:

• An employers’ history of violations will expand from three years to five years.
• 10 percent increase in their penalties for employers (up to the maximum) for employers who have been cited for any high-gravity, serious, willful or repeat violations, or have been cited for a failure to abate notice in the previous five years.
• The time period for repeated violations will be increased from three to five years.
• Area directors are authorized to offer up to a 30 percent penalty reduction to employers at an informal conference.
• Where circumstances warrant, at the discretion of the area director, high-gravity serious violations related to standards identified in the Severe Violator Enforcement Program (SVEP) will no longer need to grouped or combined, but can cited as separate violations, each with its own proposed penalty.
• No size reduction will be applied to employers with 251 or more employees.
• 10 percent reduction for employers with a strategic partnership agreement will be eliminated.

The impact of these administrative changes will significantly impact the current settlement process as the agency moves to full implementation.

Under this program, building inspectors would notify OSHA when they observe, during the course of their work, unsafe work conditions. OSHA, in turn, would send a federal agency compliance officer to that workplace for a safety inspection.

Secretary of Labor Hilda L. Solis has sent letters to the mayors of the selected cities, proposing that OSHA work with and train local building inspectors on hazards associated with the four leading causes of death at construction sites: falls; electrocution; being crushed or caught between objects; and being struck by moving machinery or objects.

OSHA seeks to partner with building inspectors in the following cities:

• Austin, Texas
• Boise, Idaho
• Cincinnati
• Concord, N.H.
• Greenwood Village, Colo.
• Madison, Miss.
• Atlanta metropolitan area
• Newark, N.J.
• Oakland, Calif.
• Washington, D.C.
• Wichita, Kan.

The following are the dates and locations for the stakeholder meetings:

• June 3, 2010, 8:30 a.m. to 4:30 p.m., in East Brunswick, NJ.
• June 10, 2010, 8:30 a.m. to 4:30 p.m., in Dallas, TX.
• June 29, 2010, 8:30 a.m. to 4:30 p.m., in Washington, DC.

The deadlines for confirmed registration at each meeting are May 20, May 27, and June 15, 2010 respectively.  To submit your notice of intent to participate in one of the scheduled meetings click here.

The rule implements the executive order’s stated policy to “encourage” executive agencies to “consider” requiring the use of project labor agreements in connection with large-scale construction projects, which are defined as projects with a total cost to the federal government of $25 million or more.  Mimicking the Executive Order, the rule provides that an agency “may” require that every construction contractor and subcontractor on a particular project agree to negotiate or become a party to a PLA if the agency decides that use of a PLA will (1) advance the 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 the law.  The rule adds several other factors that agencies may consider in their project-by-project evaluation of whether a PLA is appropriate, but it neither requires the agencies to consider those factors nor limits their consideration to those factors.  The added factors include whether:

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. PLAs have been used on comparable projects undertaken by federal, state, municipal, or private entities in the geographic area of the project;
5. A PLA 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; and
6. Any other factors that the agency decides are appropriate.

If an agency decides that it will impose a PLA, then the rule provides the agency with three options for going forward.  The agency may require submission of an executed PLA (1) when offers are due; (2) prior to award, by the apparent successful offeror; or (3) after award.  If the agency decides to permit execution of the PLA after award, then the contractor “will be required to submit an executed copy of the agreement to the contracting officer.”  This is a troubling change from the proposed rule, which required only that the contractor “bargain in good faith to a PLA.”  Requiring settlement of a contract rather than just good-faith bargaining may give the unions involved extraordinary bargaining leverage, as the contractor must execute a PLA or it will be in breach of its contract with the government.

Moreover, the rule allows agencies to include in the contract solicitation specific PLA terms and conditions and to require the successful offeror to become a party to a PLA containing those terms and conditions.  This is another troubling change from the proposed rule, which expressly prohibited the contracting agency from participating in the negotiations of any PLA.  The final rule notes that that the agency “may seek the views of, confer with, and exchange information with prospective bidders and union representatives” in its efforts to identify appropriate terms and conditions and to facilitate agreement on those terms and conditions.

Every PLA must meet certain minimum requirements like those established in the executive order:

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.

Yet another disconcerting change from the proposed rule is the final rule’s clarification  that any PLA executed pursuant to the rule will not change the terms of the government contract or provide for any price adjustment by the government, even if negotiated after contract award

On a positive note, the final rule clarifies that agencies must notify contractors of a PLA mandate prior to contract award and that they are prohibited from initiating a PLA mandate after contract award.  The FAR Council also encouraged agencies to make their evaluations about whether to impose a PLA mandate early in each project’s planning process.

The final rule is expressly limited to direct federal contracts over $25 million, as covered in the executive order.  The FAR Council did not (and could not) expand coverage to projects below that cost threshold or to federally funded projects, although it points out that the executive order states that agencies are not precluded from using PLAs on projects not covered by the order.

“We appreciate that the administration accepted our counsel to avoid retroactively imposing government-mandated labor agreements once contracts have already been awarded,” responded AGC Chief Executive Officer Stephen Sandherr .  However, we continue to strongly oppose any effort by government officials, who often have little or no experience in construction labor relations, to undermine existing relationships between contractors and construction workers by imposing project labor agreements.  Any comprehensive review of existing construction worker benefits and current federal contracting guidelines will prove that government mandated labor agreements are as unnecessary as they are costly and counterproductive.  That is why we will continue to encourage agency officials to exercise the broad latitude provided by these rules to avoid imposing these agreements.”

The final piece of legislation includes funding for the Corps of Engineers of $5.4 billion, $43 million above FY 2009 and $320 million above the administration’s 2010 request. The agreement includes $2.4 billion, $198 million above 2009, to address more than $1 billion in the backlog of operations and maintenance for navigation infrastructure that is critical to the U.S. economy.

The bill also includes $2 billion for construction projects, $313 million above the request, and $160 million for investigations, $60 million above the request, “to plan and design America’s next generation of water resource infrastructure.”

Finally, the bill provides $1.13 billion to the Interior Department, $67 million above the request and $12 million above 2009, to continue to support and improve the nation’s water infrastructure, including $1.1 billion for the Bureau of Reclamation for dams, canals, water treatment and conservation, and rural water projects. The full text of the law can be accessed here.

Further details are included in the Conference Report.