PLA Archives: White House Executive Orders Concerning Project Labor Agreements

0 June 25, 2009  Federal Construction, Uncategorized

After reading our previous posts on President Obama’s Executive Order 13502, a reader contacted me with concerns about Section 7 of Obama’s Executive Order 13502, which asks the Secretary of Labor, OMB Director and other Obama administration officials to make recommendations about the broader use of government-mandated project labor agreements (PLAs) on federal and federally assisted construction projects.

The reader — a union contractor — was concerned that Obama officials would require PLAs on federal and federally assisted projects, which might include local and state-funded projects that receive a portion of their funding from federal grants, loans or some other form of federal financial assistance. The union contractor complained that PLAs disrupt existing local collective bargaining agreements between contractors and unions and the 14 percent to 18 ercent added costs of a government-mandated PLA could strain tight local and state construction budgets and kill new construction industry jobs and opportunities to bid on construction projects that would get built if not for increased costs resulting from PLAs.

In short, the contractor was opposed to PLA mandates, despite the fact that union contractors have an advantage over merit contractors on PLA projects. This opposition is not uncommon.

Next the contractor asked if previous Presidents had taken a position on government-mandated PLAs to see if we could predict what the Obama Administration is likely to do with Section 7 of Executive Order 13502.

Perhaps we can revisit the past to predict the future of PLAs in the Obama White House. It is time for a history lesson on White House executive orders concerning government-mandated PLAs.

The use of government-mandated PLAs on federal construction projects has become a game of political ping pong since the early 1990s, with policy changing depending on which party is in the White House.

Since the 1990s, GOP Presidents oppose government-mandated PLAs while Democrat Presidents advocate their use.

President George H.W. Bush’s October 23, 1992 Executive Order 12818, “Open Bidding on Federally Funded Construction Projects” was the first serve in this ping pong match in response to the ongoing proceedings of the Boston Harbor court case. Executive Order 12818 prohibited federal agencies from requiring PLAs on federal construction projects.

President Clinton’s Feb. 1, 1993 Executive Order 12836, “Revocation of Certain Executive Orders Concerning Federal Contracting” rescinded George H.W. Bush’s Executive Order 12818. (Here is the White House signing statement).

After receiving significant support (reportedly $100 million in campaign contributions) from Big Labor during his successful effort for a second White House term, President Clinton attempted to implement a pro-PLA executive order that ordered federal agencies to determine if a PLA would “advance the government’s procurement interest[s]” on federal construction projects and then implement them on a project-by-project basis.

However, that executive order was never signed.

The GOP-controlled Senate pledged to block Clinton’s Secretary of  Labor nominee Alexis Herman in response to White House give-aways to Big Labor such as Clinton’s proposed pro-PLA executive order and other pro-labor policies.

(Check out these GOP memos opposing PLAs from the Senate Republican Policy Committee and House Republican Conference. Now compare that to the RNC’s response to President Obama’s Feb. 6, 2009 pro-PLA Executive Order.)

The Senate Committee on Labor and Human Resources held a hearing on the “Proposed Executive Order on Project Labor Agreements” April 30, 1997.   (Here is testimony from ABCAGC and the U.S. Chamber of Commerce).

After intense political pressure, Clinton cut a deal with the GOP Congress. Herman’s nomination was approved and Clinton softened his stance on PLAs by issuing a Presidential Memo on Project Labor Agreements June 5, 1997. The memo only encouraged the use of PLAs on projects over $5 million (and did not extend to federally assisted projects) and the directive expired after Clinton left office as opposed to extending into another White House administration like an executive order.

Critics of the compromise maintained that Clinton didn’t offer much of a concession in the compromise because the government was free to mandate PLAs on a case-by-case basis, while supporters felt it prevented the widespread use of PLA mandates on federal and federally assisted projects.

However, few projects were conducted under government mandated PLAs because the regulatory process that established the rules in which the federal government could require and use PLAs delayed implementation of the Clinton memo. In addition, few federal agencies opted to mandate PLAs on federal construction projects, as documented in this May 5, 1998 U.S. Government Accounting Office (GAO) Report: Project Labor Agreements: The Extent of Their Use and Related Information.

The GAO report found that it is nearly impossible to show any savings or increased quality derived from the use of government-mandated PLAs.

Perhaps that is why few government agencies used them during the Clinton era and it certainly questions the justifications cited in President Obama’s Executive Order 13502 encouraging the use of PLA mandates on federal projects exceeding $25 million in total cost.

As an aside, it should also be noted that the GAO report failed to make the distinction between projects subject to government-mandated PLAs (government-mandated PLAs are opposed by ABC) and projects where contractors voluntarily entered into a PLA (i.e., where a PLA was not imposed by the government and contractors voluntarily entered into these agreements. ABC has traditionally taken a neutral position about voluntary PLAs because free and open competition has taken place).

On February 17, 2001, President George W. Bush signed Executive Order No. 13202, “Preservation of Open Competition and Government Neutrality Towards Government Contractors’ Labor Relations on Federal and Federally Funded Construction Projects.”

This executive order declared that neither the federal government, nor any agency acting with federal assistance, shall require or prohibit construction contractors to sign union agreements as a condition of performing work on government construction projects.

On April 6, 2001, the Bush Administration amended Executive Order No. 13202 with Executive Order No. 13208, which exempts any project which has had at least one contract awarded with a PLA from Executive Order 13202.

The Bush order was challenged by PLA proponents in a lengthy legal case, Building and Construction Trades Department, AFL-CIO et al., v. Joe M. Allbaugh, Director, Federal Emergency Management Agency, et al., In Jan. 2003, the U.S. Supreme Court denied certiorari in the case: upholding the U.S. Court of Appeals for the District of Columbia Circuit decision which upheld President Bush’s executive order 13202.

Between 2001 and its repeal in 2009, Executive Order 13202 ensured that at least $147.1 billion worth of federal construction projects was bid without discriminatory and wasteful government-mandated PLAs.  The actual value of construction projects protected by Executive Order 13202 is exponentially larger, as the above figure does not include local, state and private construction spending from 2001-2008 that received federal funding or assistance and were prohibited from mandating PLAs via protections from Executive Order 13202 and 13208.

So that brings us back to President Obama signing Executive Order 13502 on Feb. 6, 2009 — and the original question posed by a reader/union contractor concerning Section 7 of Executive Order 13502.

It is difficult to predict what the Obama administration will recommend concerning broader use of PLAs by looking at previous PLA related executive orders.

However, we do know from history that a blanket PLA requirement policy on federal construction projects is unprecedented and would likely be subject to a legal challenge in violation of the National Labor Relations Act and other federal procurement laws. In addition, PLAs have not been encouraged or mandated on federally assisted state and local construction contracts via executive order and such an effort would likely be subject to a legal challenge. strongly believes that taxpayers and government procurement officials would benefit from no expansion of the executive order onto federally-assisted projects (via Section 7 of Executive Order 13502). Taxpayers would benefit from regulations and legislation prohibiting or limiting the number of government-mandated PLAs on federal and federally assisted construction projects.  The government should remain neutral and allow contractors to decide whether a PLA is appropriate and let the competitive bidding process determine which contractor and tradespeople can deliver the best possible product at the best possible price to taxpayers.

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