The Truth About Project Labor Agreements

The U.S. House of Representatives Committee on Appropriations on May 16 passed an amendment via voice vote to the Military Construction and Veterans Affairs (MilCon/VA) Appropriations bill for fiscal year 2013 that prevents federal agencies from requiring contractors to sign anti-competitive and costly project labor agreements (PLAs) as a condition of winning federal construction contracts.

The amendment was introduced by Rep. Jeff Flake (R-Ariz.) and is similar to another amendment offered by Flake in 2011 that was approved by the committee but then later stripped out on the floor of the House via an amendment offered by Rep. Steve LaTourette (R-Oh.) in a 204-203 vote.

After today’s committee vote, ABC Vice President of Federal Affairs Geoff Burr urged Congress not repeat the same mistake.

“Merit shop contractors and their employees want nothing more than to give taxpayers and the government the best possible construction product at the best possible price, while performing the work safely and on time,” Burr said. “We call on Congress to oppose any effort that would strike this language from the bill.”

ABC also submitted a letter to the committee before the vote, pointing out that Congress must ensure construction projects funded by the bill are cost effective and administered without favoritism or discrimination. ABC noted that no language in Flake’s amendment would prevent a federal contractor from voluntarily entering into a PLA. Instead it will allow the free market to determine if a PLA is appropriate and will ensure fair and open competition on federal construction contracts.

“Rep. Flake’s amendment will eliminate inefficiencies in the federal contracting procurement process, increase competition, reduce costs and create construction jobs while protecting the public interest,” ABC wrote in the letter.

A coalition of construction and business groups also sent a letter to the committee in support of the Flake amendment highlighting concerns with the Obama administration’s pro-PLA policy:

President Obama’s Feb. 6, 2009, Executive Order 13502 encourages federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost on a case-by-case basis in order to “advance the economy and efficiency in federal contracting.”

However, studies of construction projects subject to prevailing wage laws found PLA mandates increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA projects. Recent government-mandated PLAs on federal projects have resulted in increased costs, delays and discrimination.

In addition, the executive order and related FAR regulations have exposed agency procurement officials to intense political pressure from special interest groups and politicians to mandate PLAs on federal projects even when they are not appropriate.

The Flake amendment counteracts potential special interest favoritism by prohibiting federal agencies building projects authorized by this bill from mandating PLAs and implementing PLA preferences. However, it also permits federal agencies to award contracts to businesses that voluntarily enter into PLAs in accordance with the National Labor Relations Act.

The diverse coalition includes the following groups representing both union and nonunion employers and employees:

American Council of Engineering Companies (ACEC)
Associated Builders and Contractors (ABC)
Associated General Contractors (AGC)
Business Coalition for Fair Competition (BCFC)
Construction Industry Round Table (CIRT)
Independent Electrical Contractors (IEC)
Merit Elevator Contractors Association of America (MECAA)
National Association of Women in Construction (NAWIC)
National Black Chamber of Commerce (NBCC)
National Federation of Independent Business (NFIB)
Small Business & Entrepreneurship Council (SBEC)
U.S. Chamber of Commerce
Women Construction Owners & Executives, USA (WCOE, USA)

AGC’s letter supporting the Flake amendment can be found here.

The Flake amendment language mirrors critical provisions upheld by the U.S. Court of Appeals for the District of Columbia Circuit decision in the Allbaugh case, which upheld President George W. Bush’s Executive Order No. 13202 and and Executive Order No. 13208. The Bush executive orders 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.

The Allbaugh case remains the controlling case on government-mandated PLA law and affirms that governments can mandate a position of neutrality when it comes to a contractor’s use of a PLA, as is the intent of the Flake amendment.

In the 112th Congress the House has voted three times on similar pro-fair and open competition amendments (see Roll Call 126 | Roll Call 369 | Roll Call 413). Each effort to restrict government-mandated PLAs failed by a slim margin (a 210-210 tie, 207-213, and 204-203).

During the Obama administration, a number of MilCon/VA projects have been subjected to PLA mandates, attempted PLA mandates (here and here), discriminatory PLA preferences and PLA surveys.

It is unclear when the MilCon/VA Appropriations Bill for FY 2013 will be considered on the House floor.

Check back for updates.

Update, 5/31/12: Today Rep. Michael Grimm (R-NY) is expected to offer an amendment on the House floor striking Section 517 from the bill. Learn more here.