Governor Tina Kotek issued Executive Order No. 24-31 on December 18, 2024, establishing new requirements for state-funded construction projects in Oregon. The order is effective immediately and applies to all solicitations for contracts and contracts awarded on or after December 18, 2024, however, solicitations and contracts planned for advertisement – but not yet awarded – may exercise the exemption noted below.
In summary, the order mandates the use of Project Labor Agreements (PLAs) for certain construction, reconstruction, and major renovation projects, and it introduces specific guidelines aimed at ensuring compliance. Contractors and subcontractors involved in public projects should review and become familiar with these requirements.
The order applies to construction projects funded by any state agency where labor costs constitute 15 percent or more of the total construction, reconstruction, or major renovation project costs. It requires contractors and subcontractors engaged in these qualifying projects to either negotiate or become a party to a PLA with appropriate labor organizations before starting work.
Although the language of the order seemingly applies to all state funded projects, Governor Kotek clarified through the order’s FAQ sheet that in order for the order to apply, the state must be a contracting authority, and the improvement must be owned by the state. Governor Kotek further clarified that 15 percent of project costs means onsite labor. Offsite labor costs are specifically excluded from the 15 percent in question.
A PLA is a pre-hire collective bargaining agreement that outlines the terms and conditions of employment for all workers on a particular project. PLAs required under this executive order must include provisions that prohibit strikes, lockouts, or other labor disruptions. They must also establish binding procedures for resolving disputes which arise during the term of the PLA and must foster collaboration between labor and management on matters of productivity, safety, and quality. All agreements must comply with state and federal laws and must be inclusive of both open-shop and local firms.
The executive order also sets requirements for the state agencies. Its goal being to ensure state agencies advance equity in state-funded construction projects. Thus, agencies must set targets for the participation of businesses certified by Oregon’s Certification Office for Business Inclusion and Diversity (COBID) and consequently meet or exceed the baseline utilization rate reported in the 2023 State of Oregon Disparity Study, or approved agency specific disparity study. Additionally, agencies must track utilization of COBID and/or Disadvantaged Business Enterprise firms. Similarly, agencies must report utilization data to the Department of Administrative Services on an annual basis using a payroll system or equivalent tool for tracking.
The order states that the Governor’s Office will conduct biannual reviews to assess the state’s performance against the order’s objectives and issue recommendations for corrective measures if necessary.
Certain projects may be exempt from these requirements. Exemptions include projects: where state funds are not directly or indirectly used (beyond incidental participation or related to design or inspections), the reason for construction is of an emergency, is a minor alteration or repair, construction is for maintenance that is necessary to preserve a public improvement, or the project is of short duration, limited complexity, or only involves one craft or trade. Agency directors may also request specific exemptions from the Governor prior to solicitation.
Executive Order No. 24-31 marks a significant development in how state-funded construction projects in Oregon will be managed moving forward. Contractors and subcontractors are encouraged to carefully review the details of the order, understand its applicability, and comply with its requirements.