Today, the Office of the Federal Register’s Public Inspection Desk published a notice online that the Federal Acquisition Regulation (FAR) Council’s final rule implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations will be published in The Federal Register tomorrow.

Here is an advanced copy of the final rule, which will take effect May 12.

It’s a controversial White House gift to Big Labor that is likely to increase federal construction costs, reduce competition from quality nonunion contractors and their skilled employees, and deny taxpayers the accountability they deserve from government.

Nine months ago (July 14, 2009), the FAR Council issued a proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects) that will implement the content of President Obama’s Executive Order 13502 into federal procurement regulations.

The contentious proposed rule was subject to two 30-day public comment periods.  The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23.

TheTruthAboutPLAs.com readers, associations, taxpayers, contractors and hard hat employees answered our call to action in opposition to the proposed rule and submitted almost 1,000 comments to the FAR Council.  ABC National’s comments can be viewed here (www.abc.org/plastudies), and every comment submitted to the FAR Council is available for public review here.

Despite a July 10, 2009 memo from Office of Management and Budget (OMB) Director Peter R. Orszag encouraging the use of government-mandated PLAs, federal agencies and procurement officials have not successfully implemented government-mandated PLAs – partially because they have been waiting for the final rule, and partially because PLAs are bad public policy.  These special interest giveaways increase the cost of construction, discriminate against nonunion contractors and employees and are a form of government corruption.  They are not in the public’s best interest.

In fact, a 2009 independent study conducted on behalf of the U.S. Department of Veterans Affairs (VA) confirms that government-mandated PLAs will increase construction costs in numerous construction markets across the country where the VA is planning to build new facilities.

One exception to this government-wide hesitation to implement PLAs was a PLA mandated by the U.S. Department of Labor (DOL) on a Job Corps Center in Manchester, N.H. However, after ABC member North Branch Construction of Concord, N.H., with ABC support and representation, filed a protest against the PLA with the Government Accountability Office (GAO), the U.S. DOL cancelled its solicitation to construct the project.

Here is an explanation from the DOL:

The solicitation was cancelled because DOL believes that it is in the public interest for the Department to further evaluate the issues involved in the PLA requirement. The PLA requirement is a new issue to DOL.

The development was a win for taxpayers and proponents of fair and open competition.  However, the cancelled solicitation rendered the pending bid protest before the GAO moot.  A GAO ruling on the bid protest could have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

The U.S. General Services Administration (GSA) is also evaluating the use of PLAs on about $1.25 billion worth of American Recovery and Reinvestment Act-funded construction projects in seven states and Washington, D.C. To date, none of these contracts have been awarded with a PLA, although this Procurement Instructional Bulletin (PIB) 09-02 from the GSA’s Public Building Service (PBS) demonstrates that many of these projects will require contractors to submit two price proposals: one that is subject to a PLA requirement and one that is not.  The GSA attempted a similar requirement on the Washington, D.C. Lafayette Building project, but the GSA cancelled the solicitation because the GSA faced a GAO bid protest by contractors.

The GSA has hired a firm to conduct research about the feasibility of PLAs in the various markets identified in the GSA Bulletin. It is unclear if the study results will influence whether a PLA on the identified project(s) is justified.

Finally, the final rule is silent on Section 7 of Executive Order 13502, which could expand PLAs onto federally assisted construction projects. Here is more on Section 7 of Executive Order 13502:

The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6; 180 days sets deadline at Aug. 5, but an order hasn't been issued]

We posted more information about Section 7 here.

Check back with TheTruthAboutPLAs.com this week for additional analysis and resources on the final rule.

In addition to providing commentary and links to media reports about private, local and state PLAs, TheTruthAboutPLAs.com will continue to educate the public about the status of Executive Order 13502 and special interest handouts in federal contracting via government-mandated PLAs.

Nonunion workers and private companies could be forced into absorbing the financial liabilities of underfunded union pension plans, thanks to pending health care mandates and an executive order that could be finalized this year, policy analysts and trade group representatives have concluded.

Even as unions continue to market themselves to new members on the basis of generous pension programs, government figures show these plans are performing poorly in comparison with retirement packages that operate beyond the orbit of organized labor.

In addition, unions are pushing the Obama administration on project labor agreements (PLAs), which, among other things, will give their pension plans new sources of outside funding – nonunion workers on government contracts worth more than $25 million.

Here is what the article says about PLAs.

Next up after health care could be final approval of an executive order that calls for multi-employer, multi-union PLAs to be used when federal construction projects exceed $25 million. PLAs stipulate that projects be awarded to contractors and subcontractors who agree to recognize unions as representing their employees during that particular job.

Although nonunion contractors are permitted to bid on PLA projects, the reality is that the projects are awarded almost exclusively to unionized contractors, critics point out. Only 15.6 percent of the nation’s private construction work force is unionized, Labor Department statistics show. This means PLAs could be used to discriminate against the more than eight out of 10 construction workers who are not part of a union.

Moreover, PLAs typically require contractors to participate in multi-employer union pension plans. This arrangement puts nonunion contractors at a financial disadvantage because they must pay for the union plan and for their existing company plan, the Associated Builders and Contractors points out in its analysis of the Obama order.

Individual workers also could lose out because they must surrender their nonunion plans and become vested with the union before receiving any benefits, the Associated Builders and Contractors argues.

Another disadvantage to private companies concerns the “withdrawal liabilities” they may be forced to cover as pensions erode, John R. McGowan, an accounting professor with St. Louis University, has warned in a study that examines the impact of PLAs.

Employers that are tied in with collectively bargained agreements are obligated to cover costs for underfunded union pensions when other contractors drop out, according to the study.

Tommy Vietor, the assistant White House press secretary who handles labor issues, did not respond to requests for comment on the PLA issue and the status of Mr. Becker.

The Federal Acquisition Regulation Council has not issued a final ruling on the PLA order, which may account for why it has received scant attention. The council is responsible for issuing rules that officially enshrine executive orders into the federal procurement process. The public comment period for the PLA rule was closed Sept. 24.

Meanwhile, the General Services Administration has listed 10 projects across the country that could be eligible for PLAs, including three in Washington, D.C.

“We are collectively amazed that there has been no movement on this rule yet,” said Brett McMahon, an Associated Builders and Contractors representative who is also vice president of Miller & Long, a Maryland-based concrete construction company. “But because the executive order was crafted so poorly, it has raised a lot of legal questions.”

Read the entire article here.

The Hudson Institute study by Diana Furchtgott-Roth and economist Andrew Brown,“Comparing Union-Sponsored and Private Pension Plans,” is helpful in understanding the connection between the health of union pension plans and various handouts policies Big Labor is pushing in Washington, D.C. that are also a solution to their pension and declining membership problems.

“Our report reveals why organized labor is so eager to gain new members through proposed legislation like the Employee Free Choice Act – they need to help bankroll these failing pension plans with new dues-paying members,” said Ms. Furchtgott-Roth.

What are your thoughts on Big Labor’s manipulation of the government to pass laws and rules that increase union membership and bailout union pension plans?

Today a notice was published online stating that a rule by the Federal Acquisition Regulation (FAR) Council that will implement President Obama’s Feb. 6, 2009 pro-PLA Executive Order 13502 into federal procurement regulations was sent over to the Office of Management and Budget (OMB) on March 16, 2010 for final review.

Executive Order 13502: Obama's Gift to Big Labor. Image by Elaine Natario courtesy of The Boston Globe, "Obama kowtows to labor unions," 10/07/09.

Under Executive Order 12866 regulatory review, OMB has up to 90 days to review the rule. When it has been approved, OMB will move it from “under review” to “review completed” here and it will become an interim final rule or a final rule: http://www.reginfo.gov/public/do/eoPackageMain.

Update: On March 23, the Federal Register issued a request for public comments on the paperwork burden the interim final rule or final rule will have on contractors where the government has required a PLA. The document is notable because it provides a sneak peak of a provision in the interim final rule or final rule. On March 26, the OMB completed review of the rule and sent it back to the FAR Council where it will either be revised or published soon in the Federal Register.

Eight months ago (July 14, 2009) the FAR Council issued a proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects) that will implement the content of President Obama’s Executive Order 13502 into federal procurement regulations.

The contentious proposed rule was subject to two 30-day comment periods during which the public could submit comments related to the proposed rule. The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23.

TheTruthAboutPLAs.com readers, associations, taxpayers, contractors and hard hat employees answered our call to action in opposition to the proposed rule and submitted almost 1,000 comments to the FAR Council.  ABC National’s comments can be viewed here (www.abc.org/plastudies), and every comment submitted to the FAR Council is available for public review here.

Despite a July 10, 2009 memo from OMB Director Peter R. Orszag encouraging the use of government-mandated PLAs, federal agencies and procurement officials have not successfully implemented government-mandated PLAs, partially because they have been waiting for the final rule, and partially because PLAs are bad public policy.  These special interest giveaways increase the cost of construction, discriminate against nonunion contractors and employees and are a form of government corruption.  They are not in the public interest.  

In fact, a 2009 independent study conducted on behalf of the U.S. Department of Veterans Affairs (VA) confirms that government-mandated PLAs will increase construction costs in numerous construction markets across the country where the VA is planning to build new facilities.

One exception to this government-wide hesitation in implementing PLAs was a PLA mandated by the U.S. Department of Labor (DOL) on a Job Corps Center in Manchester, N.H.  However, after a protest was filed against the PLA with the Government Accountability Office (GAO) by ABC member North Branch Construction of Concord, N.H., with ABC support and representation, the U.S. DOL cancelled its solicitation to construct the project.

Here is an explanation from the DOL:

The solicitation was cancelled because DOL believes that it is in the public interest for the Department to further evaluate the issues involved in the PLA requirement. The PLA requirement is a new issue to DOL.

The development was a win for taxpayers and proponents of fair and open competition.  However, the cancelled solicitation rendered the pending bid protest before the GAO moot.  A GAO ruling on the bid protest could have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

The U.S. General Services Administration (GSA) is also evaluating the use of PLAs on about $1.25 billion worth of American Recovery and Reinvestment Act-funded construction projects in seven states and Washington, D.C. To date, none of these projects has been awarded with a PLA, although this Procurement Instructional Bulletin (PIB) 09-02 from the GSA’s Public Building Service (PBS) demonstrates that many of these projects will require contractors to submit two price proposals — one that is subject to a PLA requirement and one that is not.  The GSA attempted such a requirement on the Washington, D.C. Lafayette Building project, but the solicitation was cancelled as the GSA faced another bid protest by contractors before the GAO.

The GSA has hired a firm to conduct research about the feasibility of PLAs in the various markets identified in the GSA Bulletin and the results likely will be revealed in early 2010. It is unclear if those results will influence whether or not a PLA on the identified project(s) is justified.

Finally, there has been no movement on Section 7 of Executive Order 13502. Here is more on Section 7:

The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6; 180 days sets deadline at Aug. 5, but an order hasn't been issued]

We posted more information about Section 7 here.

In addition to providing commentary and links to media reports about private, local and state PLAs, TheTruthAboutPLAs.com will continue to educate the public about the status of Executive Order 13502 and special interest handouts in federal contracting via government-mandated PLAs.

After months of intense opposition and no comment from the White House or action by federal regulators, rumors circulated within the construction industry that the White House had quietly backed away from this discriminatory and costly special interest policy.

However, a Feb. 26, 2010 report from the White House’s Middle Class Task Force included this update on government-mandated PLAs and Executive Order 13502 (page 20):

Project Labor Agreements and Other Executive Orders

One of the first actions taken on behalf of the Middle-Class Task Force was President Obama’s signing of Executive Order (EO) 13502 encouraging executive agencies to consider using project labor agreements (PLAs) when they engage in large-scale construction projects. Project labor agreements are pre-hire collective bargaining agreements withone or more labor organizations that establish the terms and conditions of employment for a specific constructionproject. The use of a project labor agreement can provide structure and stability to large-scale construction projects. PLAs also help ensure compliance with laws and regulations governing safety and health, equal employment opportunity, and labor and employment standards. The coordination achieved through PLAscan significantly enhance the economy and efficiency of Federal construction projects.

Along withassisting the preparation and signing of the EO, the Task Force recognized that it was not enough simply to sign the EO encouraging the use of PLAs; we needed to help promote their appropriate use by agency contracting offices, most of whom had little knowledge of, or experience with, PLAs. To boost implementation of the President’s order, the Task Force convened an inter-agency PLA Working Group to provide technical assistance to agencies on PLAs. The working group currently includes the Department of Energy, the Department of Labor, the Department of Commerce, the Department of Justice, the Department of Housing and Urban Development, the Department of Agriculture, the Department of Transportation, the Department of the Interior, the Tennessee Valley Authority, the National Aeronautics and Space Administration, the General Services Administration, and the Office of Management and Budget.

Building on the Department of Energy’s successful use of PLAs to effectively coordinate large construc­tion projects, other agencies are investigating the benefits of PLAs, and we expect to see increased utilization of Project Labor Agreements in the future.

There’s no mention in the report about Section 7 of Executive Order 13502, which would push PLAs on federally-assisted projects, and there is no indication when the FAR Council will issue a final rule implementing Executive Order 13502 into procurement regulations.

However, this 1/20/10 Department of Defense document on open FAR cases provides some insight into the status of the FAR Council’s final rule on FAR Case 2009-005:

01/20/2010 DAR staff tasked Acquisition Law Team to draft final FAR rule. Report due 02/03/2010 (4th Extension).

TheTruthAboutPLAs.com remains opposed to government-mandated PLAs and Executive Order 13502 and will continue to monitor the latest news related to these backroom deals that reward Big Labor for their political support.

And as if there was ever any doubt, here is one more piece of evidence demonstrating that Big Labor’s special interests are behind Executive Order 13502. 

The Dec. 11, 2008  AFL-CIO Recommendations for the Obama Administration related to Procurement and Regulatory Policy, posted at the Obama-Biden Transition Project’s website, calls for the following:

Project Labor Agreements. The new administration should immediately repeal Executive Order 13202 as amended by E.O. 13208. The Executive Orders, signed on February 17 and April 8, 2001, respectively, revoked Executive Order 12836 of February 1, 1993, as well as the Presidential memorandum of June 5, 1997 entitled “Use of Project Labor Agreements for Federal Construction Projects.”These executive orders should be immediately revoked, and at a later date a new executive order should be issued promoting appropriate use of project labor agreements on federal and federally-funded construction projects.

It is amazing to see how many of those recommendations have already been implemented (E.O. 13494, E.O. 13496, E.O. 13495, Buy American Provisions in government contracts ARRA, T-1 rule revision) or are being reviewed by the White House (responsible contractor policy).