Background:

Project labor agreements or PLAs are pre-hire contracts establishing the terms and conditions of employment between unions and an employer. They authorize signatory unions to enforce standardized minimum collective bargaining provisions and to negotiate additional trade-specific provisions as the bargaining representative for workers employed within the project scope by contractors and subcontractors.

While PLAs do not explicitly prohibit nonunion offers for covered projects, they require adherence to provisions with operational and cost implications so burdensome for nonunion firms that nonunion bids are effectively precluded. Because PLAs prevent otherwise qualified bidders from competing for covered projects, they substantially increase taxpayer costs.

PLAs significantly complicate nonunion contractors’ preparation of bids, as essential terms and conditions of employment, work rules and other fundamental parameters for the project price are generally not established within the text of the PLA, but rather incorporated by reference to separate nonpublic union agreements. Government-mandated PLAs generally provide unions with a first right of refusal to determine which contractors can bid on public projects, effectively privatizing public procurement.

PLAs generally require contractors to staff projects via union hiring halls and prohibit or rigorously limit employment of nonunion workers, including apprentices, for covered work. These restrictions prevent contractors from confidently pricing complex work with an unfamiliar workforce. PLAs generally standardize union work rules that significantly limit the diversity of tasks performable by workers, inflating the labor intensity of the project and undermining nonunion bidders’ productivity advantages. PLAs further require contractors’ agreement to deduct from wages or otherwise tender unspecified financial payments to union pension and benefit trust funds, duplicating nonwage labor costs for nonunion contractors simultaneously obligated to sustain employer contributions to separate nonunion plans.

PLAs generally obligate general contractors to guarantee all subcontractors’ adherence in the terms of the PLAs, significantly restricting the availability of nonunion subcontractors and thereby increasing project costs. For example, a 2024 RAND Corporation study found PLAs increased costs on $1.2 billion in affordable housing in Los Angeles County by 21%, or the equivalent of 1 out of every 5 units that could have been built without a PLA.

Desired Outcome:

ABC urges President Trump to rescind President Biden’s Executive Order 14063, which requires PLAs on federal projects of $35 million or more, and to issue a new executive order ensuring that federal and federally assisted contracts are awarded through a fair and competitive bidding process that allows all qualified contractors to compete on a level playing field based on merit, experience, quality and safety to deliver the highest-quality projects at the best cost. ABC further urges Congress to pass the Fair and Open Competition Act (H.R. 2126/S.1064) to prohibit mandatory PLAs on federal and federally funded projects. ABC estimates that elimination of federal PLA requirements and incentives would yield $10 billion in annual taxpayer savings.