The Truth About Project Labor Agreements

The federal government is one step closer to issuing a regulatory rules that promote project labor agreements (PLAs) on federal construction projects costing more than $25 million. It’s a controversial White House gift to Big Labor that may increase federal construction costs and will reduce competition from quality nonunion contractors and their skilled employees. 

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.