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.

On Feb. 6, 2009, President Obama issued Executive Order 13502, which encourages federal agencies, on a case-by-case basis, to require PLAs on federal construction contracts exceeding $25 million in total cost.The order also permits state and local government recipients of federal assistance to mandate PLAs on state and local public works projects funded by taxpayers.

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. 1284/S. 403) and/or other legislative measures in the 117th Congress that would restore fairness and neutrality in government contracting and put an end to Executive Order 13502. Doing so will foster vigorous competition, reduce construction costs, provide value for taxpayers and allow all of the construction industry—including veterans, minorities, women and local workers—to compete for jobs on construction projects in their own communities built with their own tax dollars. Ask your lawmakers to cosponsor FOCA legislation via the ABC Action Center.

ABC’s 117^th Congress issue brief on Government-Mandated Project Labor Agreements.

ABC urges lawmakers to support the Fair and Open Competition Act (H.R. 1284/S. 403) introduced by Rep. Ted Budd (R-N.C.) and Sen. Todd Young (R-Ind.), which prevents federal agencies and recipients of federal funding from requiring contractors to sign controversial government-mandated project labor agreements as a condition of winning federal or federally assisted construction contracts. These bills will ensure that taxpayers get the best possible construction project at the best possible price. If signed into law, it will ensure robust competition on taxpayer-funded construction projects, create more opportunities for small and disadvantaged businesses and create construction industry jobs for all Americans.

Resources:  

• • Feb. 24, 2021, ABC press release ABC Applauds Bill to Increase Fair and Open Competition on Taxpayer-funded Construction Contracts
• • Feb 24, 2021, coalition letters supporting FOCA: Diverse Coalition Supports Fair and Open Competition Legislation, Opposes Government-Mandated Project Labor Agreements
• • Sens. Todd Young (R-Ind.) and Tim Scott's (R-S.C.) Feb, 24, 2021, FOCA press release: Young, Scott Reintroduce Bill to Protect Taxpayer Dollars in Government Contracting, Organizations Join in Support
• • Rep. Ted Budd (R-N.C.) and Rep. Moolenaar's (R-Mich.) Feb. 24, 2021 FOCA press release: Rep. Ted Budd Introduces Fair & Open Competition Act
• • Write your lawmakers in support of FOCA through the ABC Action grassroots advocacy tool.
• • ABC’s 117^th Congress issue brief on Government-Mandated Project Labor Agreements..

On February 6, 2009, President Obama signed Executive Order 13502, Use of Project Labor Agreements for Federal Construction Projects.

The order encourages federal agencies, on a project-by-project basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost. In addition, the order's regulations permit (it does not require) private, state and local recipients of federal assistance to mandate PLAs. The 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:

• ABC National's Comments on Proposed Rule FAR Case 2009-005
• ABC Member Survey Supplementing Main ABC Comments
• ABC National Comments Specifically Addressing the Economic Impact of the FAR Rule on Small Businesses and Violation of the Regulatory Flexibility Act
• Surveys Demonstrating PLA Mandates Reduce Competition

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)

• CURRENT: Procurement Instruction Letter (PIL) 2011-01-R1, USACE Policy Relating to the Use of Project Labor Agreements for Federal Construction Projects (Dec. 16, 2011).
• Procurement Instruction Letter (PIL) 2011-01, USACE Policy Relating to the Use of Project Labor Agreements (PLAs) for Federal Construction Projects (Oct. 15, 2010).

Naval Facilities Engineering Command (NAVFAC)

• NAVFAC's memo Naval Facilities Engineering Command (NAVFAC) Use of Project Labor Agreements In Construction Contracts to NAVFAC Commanders, Commanding Officers, BLL's SLL's and Acquisition Directors (Feb. 8, 2011).
• NAVFAC's proposed rule comment on FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects.

Department of Veterans Affairs

• The VA's Office of Acquisition and Logistics Information letter IL 001AL-10-11 (July 15, 2010)

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.

• GSA Public Building Service (PBS) Procurement Instructional Bulletin 11-05 (Aug. 2, 2011)
• GSA PBS Procurement Instructional Bulletin (PIB) 10-04 Revision 1 (Sept. 24, 2010)
• GSA PBS Procurement Instructional Bulletin (PIB) 10-04 (April 30, 2010)
• GSA PBS Procurement Instructional Bulletin (PIB) 09-02 (August 11, 2009)

Federal Agency Decision-Making Process

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 1,877 contracts worth a total of almost $116.1 billion (there were just 12 government-mandated PLAs on an estimated $1.25 billion worth of projects FY2009-FY2020). ABC contractors have taken advantage of a level playing field. During FY2009-FY2020, ABC member prime contractors won 57.52% of the value of large-scale federal contracts subject to Obama’s pro-PLA Executive Order 13502. In total, ABC members have won 976 contracts valued at $67.5 billion FY2009-FY2020.

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 January 2021 report, state and local lawmakers mandated PLAs on 513 state and local construction projects (totaling an estimated $12.88 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.

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.

A Feb. 17, 2021, TruthAboutPLAs.com blog post, 2021 Update: Courts Rule in Favor of #NoPLAs Laws Promoting Fair and Open Competition, provides an overview of important PLA-related legal cases such as Boston Harbor (1993) and Allbaugh (2002), as well as unsuccessful challenges to ABC-supported state FOCA laws restricting government-mandated PLAs.

During President Obama’s first term, federal contractors (with assistance from ABC) filed five bid protests with the Government Accountability Office against PLAs mandated by federal agencies. Each bid protest resulted in the federal agency removing the PLA mandate in the face of the protest. A Jan. 22, 2013, TruthaboutPLAs.com blog post, Legal Challenges Against Federal Government-Mandated Project Labor Agreements During President Obama's First Term, summarizes these legal tactics to fight government-mandated PLAs and President Obama's Executive Order 13502.

Did you know that government-mandated PLAs drive up the cost of construction projects? By unnecessarily limiting bidders and following outdated and inefficient union work rules, researchers have found PLAs consistently and unnecessarily drive up costs on constructions projects. Analysis of numerous academic studies of public construction projects already subject to government-determined prevailing wage laws indicate PLAs increase the cost of construction by 12% to 20% when compared to similar projects not subject to government-mandated PLAs.

TheTruthAboutPLAs.com tracks developments with PLA research here and provides a comprehensive list of PLA studies, research and related blog posts here.

A report by ABC general counsel Maury Baskin, Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition), documents the numerous broken promises and mishaps on government-mandated PLA construction projects, such as the infamous Big Dig in Boston.

Likewise, TheTruthAboutPLAs.com tracks subsequent PLA failures like Seattle's Highway 99 tunnel project and other federal, state and local projects around the country.

Finally, TheTruthAboutPLAs.com has documented in the following linked blog posts, how government-mandated PLAs do not guarantee a safe jobsite, nor do PLA mandates ensure compliance with labor laws or better local hiring outcomes for the construction workforce. Some courts have found PLA mandates violate state and federal competitive bidding laws. In fact, some unions and unionized contractors oppose government-mandated PLAs. It might be why unions have engaged in strikes on PLA projects, calling into question the value of typical PLA promises.

In contrast, merit shop workers do not strike, yet they are discouraged from working on PLA projects because they typically have to pay union dues, join a union and/or have fringe benefits like pension contributions earned during the life of a PLA project forfeited into union plans unless they join a union. This report shows how PLA schemes result in a windfall for union benefit plans and increase the cost of construction for nonunion firms, while subjecting nonunion and union construction workers to wage theft of an estimated 20% of total compensation. An expansion on those findings from a more recent report from 2021 finds that nonunion workers on PLA projects could forfeit up to 34% of their paychecks to union dues and benefit plans.

Government-mandated PLAs remain a scheme to advance the interests of PLA proponents and union bosses at the expense of taxpayers, the contracting community and governments seeking quality construction services.

In contrast, qualified ABC member contractors and their skilled employees safely build world-class taxpayer-funded construction contracts on-time and on-budget without government-mandated PLAs because open competition works. It's the best way to deliver to taxpayers the best possible construction project at the best possible price.

Get the Truth About Government-Mandated Project Labor Agreements here.