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.

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

The 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. 24.

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.

With one exception, federal agencies and procurement officials have not implemented government-mandated PLAs, partially because they are waiting for the final rule from the FAR Council, and partially because PLAs are bad public policy.  These special interest giveaways increase the cost of construction, are a form of government corruption and discriminate against nonunion contractors and employees.  

In fact, a recent 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.

The 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.  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 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.

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 will be posting more information about Section 7 later this week.

TheTruthAboutPLAs.com will continue to educate the public about the status of Executive Order 13502 and special interest handouts in federal contracting, as well as provide commentary and links to media reports about local, state and federal PLAs.

Interested parties can now view some of the public comments here.  Additional comments will be uploaded by the government in the coming weeks.

TheTruthAboutPLAs.com will post some of our favorite comments and provide commentary in future blog posts.

To read ABC’s comments visit www.abc.org/plastudies

To read the FAR Councils’ proposed rule, click here.

Today, ABC National released the following press release (pdf) highlighting ABC member contractors and employees’ opposition to the proposed rule and President Obama’s costly and discriminatory Executive Order 13502.

ABC MEMBERS VOICE OPPOSITION TO PRESIDENT’S PROJECT LABOR AGREEMENT EXECUTIVE ORDER

(09/24/2009)

Contact: Gail Raiman, (703) 812-2073

Gerry Fritz, (703) 812-2062

Washington, D.C. – Associated Builders and Contractors (ABC) today announced that 402 of its member companies and 504 company employees submitted a total of 906 comments to the administration in opposition to a proposed rule to implement President Obama’s Feb. 6 Executive Order 13502. The proposed rule would, for the first time, establish a policy of “encouraging” federal agencies to consider imposing union-only project labor agreements (PLAs) on federal construction projects whose total costs exceed $25 million dollars.

In comments filed with the Federal Acquisition Regulatory (FAR) Council, ABC members argued that their companies would be discouraged from bidding on projects because PLAs discriminate against their employees. Employees said that under PLAs, they would be forced to pay union dues; they would not benefit from employer contributions into union pension plans unless they were to join a union; and they may be denied employment altogether under union hall hiring requirements.

“There is no question that government-mandated project labor agreements hurt competition on construction contracts from nonunion contractors and their employees, which comprise 84 percent of the U.S. construction workforce,” said 2009 ABC National Chairman Jerry Gorski, president of Gorski Engineering, Inc., Collegeville, Pa. “When the federal government sets aside work for a favored few, the result is that hardworking taxpayers pay the price. PLAs increase the cost of construction by mandating inefficient and archaic union work rules and limit the pool of potential quality bidders, all without any increased economy or efficiency to federal procurement.”

In its own comments to the FAR Council, ABC stated that neither Executive Order 13502 nor the proposed rule provided support for the assertion that PLAs promote economy and efficiency in federal procurement. In addition, ABC’s comments argued that PLAs will dramatically reduce competition and increase costs on federal construction projects, discouraging bids from small businesses, including minority firms.

A new study released Sept. 23 by the Beacon Hill Institute (BHI), titled “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” found that PLAs significantly increase construction costs on federal projects. The BHI review of federal construction projects from 2001-2008, the years under which government-mandated PLAs were prohibited, also revealed that there were no instances in which labor disruptions occurred that resulted in significant project delays or increased costs. The study concluded that “the justifications for PLAs provided by Executive Order 13502 are unproven.” The full BHI report can be found at www.beaconhill.org.

####

Associated Builders and Contractors (ABC) is a national association with 79 chapters representing 25,000 merit shop construction and construction-related firms with two million employees.  ABC’s regulatory comments can be viewed at www.abc.org/plastudies.

It is required reading, as the piece features great quotes from ABC member contractor Brett McMahon, who  provides thoughtful insight into how PLAs impact non-union contractors and their workforce and why the popularity of PLAs is driven by politics.

Opponents of this measure, such as the Associated Builders and Contractors (ABC), say cutting out so many nonunion companies reduces competition in the bidding process and leads to higher project costs.

PLAs were issued frequently during President Bill Clinton’s administration from 1993 to 2001 but weren’t in use at all during the following eight years when George W. Bush was president. Brett McMahon, a member of the Associated Builders and Contractors’ legislative committee, said he believed PLAs comeback owes to the lavish support Mr. Obama has gotten from the labor movement.

“To cut out that type of percentage of people for no other reason than pure political payback is despicable,” Mr. McMahon said. “We’ve seen it enough from this administration. It’s really getting out of hand.”

He said organized labor now need government supports like PLAs and “card check” – a proposal Mr. Obama supports that would make unionization by secret ballot more difficult – because union pensions are in poor shape and threaten the solvency of organized labor. According to a report by the Washington, D.C.-based Hudson Institute, only about 60 percent of union pension plans are funded above 80 percent, thereby escaping being branded “at-risk.”

Some labor economists, however, contend that government entities have good reasons to pursue PLAs that have nothing to do with advantaging a particular constituency.

Ross Eisenbrey, vice president of the union-backed Economic Policy Institute, said one reason a federal agency would want to issue PLAs is that they allow the agency to take advantage of the vaunted skills of union workers.

“They’re the best-trained, most skilled workers in the occupation,” he said.

Nonunion advocates counter that union shops impose a number of drawbacks that outweigh whatever advantages they present to the agency that hires them, particularly regarding what many regard as antiquated and sometimes peculiar work rules. Those rules often govern which workers may perform tasks as simple as carrying materials and turning on machines.

As such, nonunion contractors are often able to outbid union contractors on government projects, despite the fact that prevailing-wage laws ensure that contractors must pay their workers above a certain wage.

And Mr. McMahon said some prominent PLA-governed projects don’t indicate that union shops reliably produce quality work. He noted that Massachusetts’ calamitous Big Dig, which tunneled Interstate 93 through downtown Boston, was such a project. It was several times over budget, persisted for years after its expected conclusion and resulted in a deadly ceiling collapse.

Mr. McMahon said there are legal problems with PLAs as well as practical ones and that ABC is currently reviewing its options in this regard.

“Just because it’s an executive order doesn’t mean it’s immune from legal challenge,” he said.

Be sure to read the rest of the article to get The Truth About PLAs.

This is the first time that the federal government has issued a rule with the force of law encouraging discriminatory and costly project labor agreement (PLA) requirements on federal construction projects. Serious questions have been raised about the legality of Executive Order 13502.

The same questions apply to the proposed rule which encourages the use of discriminatory and costly PLAs on construction projects costing more than $25 million, including those funded by the American Recovery and Reinvestment Act of 2009.

www.TheTruthaboutPLAs.com previously wrote about the proposed rule and curious OMB memo which supported costly and discriminatory government mandated PLAs. We urged you to get involved in the regulatory process and express to the government why PLAs will harm taxpayers, employers, employees and construction users and owners.

We thank readers of the TruthAboutPLAs.com for submitting hundreds of comments to the FAR Council.

Let’s hope that your thoughtful, passionate and accurate comments do not fall on deaf ears.

There is still time. You can submit comments on the proposed rule here until 11:59 PM EST tonight.