ABC Opposes Government-Mandated PLAs and PLA Preferences on Federal and Federally Assisted Construction Projects
Hardworking taxpayers deserve efficient and effective policies that will encourage all qualified contractors to compete to build long-lasting, quality projects at the best price. Government-mandated project labor agreements discourage quality contractors and the more than 87% of U.S. construction workers who choose to not join a union from bidding and working on projects in their own communities.
Learn more about President Biden’s Feb. 4, 2022, Executive Order 14063, which requires PLAs on federal contracts of $35 million or more, and ABC’s reaction to the Aug. 19 proposed rule from the FAR Council on EO 14063.
In addition, see how merit shop stakeholders, taxpayer advocates, U.S. House and Senate lawmakers, and governors (April 26 letter) are pushing back on the proposed rule and other Biden administration schemes to encourage PLA mandates on state and local projects receiving federal assistance via federal agency grant programs for infrastructure projects procured by state and local governments. Learn more about government-mandated PLAs and Biden administration pro-PLA policies via ABC’s new FAQ document and coalition website at BuildAmericaLocal.com. Fight these discriminatory and costly policies by urging lawmakers via this ABC grassroots campaign to cosponsor federal legislation, the Fair and Open Competition Act (S. 403/H.R. 1284) introduced by Sen. Todd Young, R-Ind., and Rep. Ted Budd, R-N.C, which prohibits government-mandated PLAs on federal and federally assisted projects and helps taxpayers get the best possible product at the best possible price..
Once final, the Biden proposal will replace President Obama’s Feb. 2, 2009, Executive Order 13502, which encourages federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total value on a case-by-case basis, and permits states and localities to mandate PLAs on federally assisted projects. ABC estimates the final Biden proposal will affect as many as 120 federal contracts valued at $10 billion, which is approximately 40% of the value of federal construction put in place on an annual basis.
As discussed in this Feb. 4, 2021, letter to the Biden administration, ABC supports fair and open competition and opposes government-mandated PLAs on federal and federally assisted projects because taxpayers deserve more. We need more accountability, not less. We need more competition, not less. We need more value for the dollar, not less.
Since 2009, ABC has executed a successful campaign against Executive Order 13502 and government-mandated PLAs in federal contracting through effective legislative, political, legal and public relations strategies.
Learn how ABC has been successfully fighting federal government-mandated PLAs since 2009
However, the fight against PLA mandates and PLA preferences on direct federal contracts is a costly endeavor negatively impacting taxpayers, federal agencies and the contracting community. Unfortunately, when state and local recipients of federal money and assistance mandate PLAs on projects in your community, taxpayers are getting less construction projects for more money and qualified contractors and their skilled employees are the victims of discrimination if they cannot compete under a typical PLA.
It is important for lawmakers to support the Fair and Open Competition Act H.R.1209/S.537), which would prevent the federal government from mandating PLAs as a condition of winning federal or federally assisted construction contracts. It received 79 co-sponsors in the House and 23 in the Senate in the 118th Congress so far. ABC members are encouraged to visit the ABC Action Center and urge their members of Congress to support FOCA.
ABC’s priority issue brief on Government-Mandated Project Labor Agreements.
Learn more about President Biden’s Feb. 4, 2022, Executive Order 14063, which requires PLAs on federal contracts of $35 million or more, and ABC’s reaction to the Aug. 19 proposed rule from the FAR Council on EO 14063.
On October 19, 2022, Associated Builders and Contractors submitted more than 40 pages of comments to the Federal Acquisition Regulatory Council calling on the Biden administration to withdraw the controversial proposed rule. ABC’s opposition is joined by more than 50 members of the U.S. Senate and House, 18 Republican governors and a diverse coalition of construction industry, small business and taxpayer advocates urging the administration to withdraw President Biden’s Feb. 4, 2022, Executive Order 14063, the Aug. 19 proposed rule and additional policies promoting PLA mandates on federal and federally assisted construction projects.
ABC identified numerous problems with the proposed rule:
- • Government-mandated PLAs required by the proposed rule will increase costs and reduce competition by deterring the majority of construction contractors and their employees, including small and disadvantaged businesses, from bidding or performing work on government contracts.
- • PLA mandates force contractors to replace most or all existing employees with workers from union hiring halls and require companies to obtain apprentices from union apprenticeship programs, undermining workforce development strategies.
- • PLA mandates force employees to join a union and/or pay union dues/fees as a condition of employment and force contractors to pay employee benefits into union plans, exposing workers to wage theft of 34% of their paychecks and employers to significant multiemployer pension plan liabilities.
- • PLA mandates are likely to decrease hiring of local, minority, women, veteran and reentering construction workers and small, minority, women, veteran and disadvantaged business enterprises.
This proposed rule violates numerous federal laws, including the Competition in Contracting Act, the Congressional Review Act, the Federal Property Administrative Services Act, the Administrative Procedure Act and the Small Business Act and will expose the Biden administration and federal construction projects to costly litigation.
Once final, the Biden proposal will replace President Obama’s Feb. 2, 2009, Executive Order 13502, which encourages federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total value on a case-by-case basis, and permits states and localities to mandate PLAs on federally assisted projects. ABC estimates the final Biden proposal will affect as many as 120 federal contracts valued at $10 billion, which is approximately 40% of the value of federal construction put in place on an annual basis.
The Obama order also repealed President George W. Bush's Executive Orders 13202 and 13208, which prohibited PLA mandates on federal and federally assisted projects from 2001-2009.
ABC and other industry groups were critical of a July 10, 2009, White House Office of Management and Budget (OMB) memo M-09-22 to federal agency heads implementing the Obama order in advance of a FAR proposed rule.
July 14, 2009, the federal register published a notice for proposed rulemaking for FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects. ABC and ABC members and employees submitted the following comments to the FAR's proposed rule:
April 12, 2010, the official White House blog posted a piece by Jared Bernstein, Middle Class Task Force Chair and Chief Economic Advisor to the Vice President, called Project Labor Agreements: A Better Deal for All, in defense of President Obama's pro-PLA policies.
On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule, effective May 13, 2010, implementing President Obama's February 6, 2009, pro-PLA Executive Order 13502, The OMB also issued a memo, Implementation of New Regulatory Coverage on Project Labor Agreements, to federal agency Chief Acquisition Officers and Senior Procurement Executives, encouraging them to use PLAs whenever possible and requesting that they report their agency's PLA activity to the OMB on a quarterly basis.
On April 21, 2010, ABC National released, The Final Rule Implementing the PLA Executive Order: Why It Should Be Challenged, by ABC general counsel Maurice Baskin. This document lays out ABC's arguments that the regulations violate federal procurement laws; discriminate against the vast majority of the private construction workforce and many small and large businesses; and harm taxpayers. Many of these arguments echo comments ABC, ABC members and other industry groups made during the proposed rulemaking process.
Since the FAR's final rule was finalized, federal agencies procuring direct federal contracts have issued the following specific guidance memos and policies implementing the final rule into their agency procurement policies:
U.S. Army Corps of Engineers (USACE)
Naval Facilities Engineering Command (NAVFAC)
Department of Veterans Affairs
General Services Administration
The GSA has instituted a discriminatory blanket pro-PLA policy that allows firms to submit a PLA offer, a non-PLA offer, or both with their bid. However, firms that submit a PLA offer receive extra credit (usually 10%) from the GSA in the technical evaluation factor section of their offer via the best value procurement process the GSA uses to award contracts. Contractors have complained to Congress this is a de facto PLA mandate in many markets and is reducing competition and increasing costs. The GSA's pro-PLA policy has led to delays, increased costs, and poor local hiring outcomes. Learn more here and below are various versions of GSA's PLA policy.
Federal Agency PLA Decision-Making Process Under Obama Order
Since President Obama's EO is not a blanket PLA requirement, federal agencies use a variety of tools and policies to determine if a PLA is appropriate on a project exceeding $25 million in total costs. The GSA has a controversial blanket PLA preference policy, while other agencies (USACE, NAVFAC and VA) issue formal surveys to the federal contracting community on Sam.gov to see if a PLA is supported by the contracting community. Some agencies (DOL, VA and GSA) hire expensive consultants to produce studies, while others call federal contractors directly and use this information to inform their final PLA determination. The decision-making process even varies between regional offices in each federal agency and the process requires an excessive investment of time and resources from the federal contracting community.
Of note, no PLAs have been mandated by federal agencies on federal contracts subjected to federal agency PLA surveys during the Obama and Trump administrations, suggesting the marketplace finds limited value in PLA mandates and preferences. In fact, from FY2009-FY2020, there were no PLA mandates on 99% of federal contracts exceeding $25 million, meaning all qualified firms could fairly compete on 2, 075 contracts worth a total of almost $1129 billion (there were just 12 government-mandated PLAs on an estimated $1.25 billion worth of projects FY2009-FY2021). ABC contractors have taken advantage of a level playing field. During FY2009-FY2021, ABC member prime contractors won 57% of the value of large-scale federal contracts subject to Obama’s pro-PLA Executive Order 13502. In total, ABC members have won 1,061 contracts valued at $73.46 billion FY2009-FY2021.
Federally Assisted Projects Exposed to PLA Mandates
In addition to PLA requirements on direct federal contracts, President Obama's Executive Order 13502 has led to PLA mandates on billions of dollars worth of federally assisted projects procured by private entities and state and local governments.
For example, according to a U.S. DOT Federal Highway Administration Feb. 2022 report, state and local lawmakers mandated PLAs on 606 state and local construction projects (totaling an estimated $15.875 billion) that received federal assistance and formal approval from the FHWA.
While the order does not require recipients of federal assistance to mandate PLAs, federal agencies under the Obama administration like the DOT, Housing and Urban Development (HUD), and Department of Energy (DOE) have been inappropriately encouraging their funding recipients to mandate PLAs.
For example, this “Project Labor Agreement Announcement” memo emailed on February 18, 2011, to an unknown number of state and local government agencies from Peter Rogoff, a political appointee of the Obama Administration who serves as the head of the Federal Transportation Administration (FTA) (an agency of the U.S. DOT), strongly encourages the use of PLAs.
However, the FTA issued a document, FTA Guidance – Project Labor Agreements (issued 6/21/10), available here. The FTA Guidance document makes it clear recipients of FTA funding are not required to mandate or enter into PLAs. It also says recipients of FTA money do not have to seek FTA approval of the PLA, should they choose to mandate a PLA. In contrast, the U.S. DOT FHWA Administrator Victor Mendez issued a May 7, 2010, Interim Guidance on the use of Project Labor Agreements memo (pdf). While it only applies to FHWA projects, the FHWA requires recipients of FHWA assistance to submit the local PLA mandate to FHWA for approval.
In short, stakeholders are confused why two different agencies within the U.S. DOT have different requirements when approving local/state PLAs on projects receiving assistance from the DOT..
Of note, the Biden administration’s DOT announced Feb. 17, 2021, it is encouraging the use of government-mandated PLAs on federally assisted construction projects funded through the FY2021 INFRA grant program administered by the DOT’s Build America Bureau. This was the first of many NOFO’s promoting PLAs on federally assisted projects, which can all be found at www.abc.org/PLAgrants.
Conclusion
The regulations implementing President Obama's pro-PLA Executive Order 13502 has led to increased costs, reduced competition, discrimination, delays, litigation, construction defects and poor local hiring outcomes on billions of dollars of direct federal construction contracts and federally assisted contracts. This bad public policy results in taxpayers receiving four schools, roads, bridges and hospitals for the price of five. Fair and open competition is the only way to ensure taxpayers get the best possible product at the best possible price. The Biden administration’s proposal will be even more detrimental to taxpayers and construction industry stakeholders