President’s SOTU Remarks About Construction Industry Raise Questions

0 January 25, 2012  Federal Construction, Uncategorized

In last night’s State of the Union address, President Obama made some remarks about the construction industry:

“Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

“During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

“There’s never been a better time to build, especially since the construction industry was one of the hardest hit when the housing bubble burst. Of course, construction workers weren’t the only ones who were hurt…”

On behalf of the merit shop contracting community, ABC 2012 National Chairman Eric Regelin, president of Granix, LLC, Ellicott City, Md., today reacted to President Obama’s remarks:

“In his speech, the president said ‘we can restore an economy where everyone gets a fair shot, and everyone does their fair share,’” said Regelin. “Yet, one of his first official acts when he took office was to sign an executive order on project labor agreements that discriminates against the 87 percent of the nation’s construction workforce that chooses not to belong to a labor union.

“It is not clear at this point what President Obama meant when he spoke of removing red tape from construction projects, but any sincere effort to do so must involve the elimination of government-mandated project labor agreements and Davis-Bacon wage requirements on taxpayer-funded construction projects,” Regelin said.

“The president’s insistence on a so-called ‘millionaire’s tax’ to fund his various priorities will expose the 80 percent of construction firms that are taxed at the individual rate to a significant tax increase,” said Regelin. “This does not represent a ‘fair share’ that will help the economy and create jobs, but rather the president’s continued use of the nation’s job creators as his personal piggy bank.

“The nation’s construction industry continues to struggle with an unemployment rate of 16 percent – nearly twice the national average,” Regelin said. “However, the president’s only solution to fix the economy is to hand out favors to special interests and punish those who work hard and take risks.”

To view this statement, click here.

So will President Obama’s new executive order cutting red tape slowing down construction projects be helpful, or, will it be another gift to special interests?

Cartoon courtesy of the Boston Globe

It is quite possible President Obama’s new executive order is just repackaging a policy the White House announced in October 2011 to speed along the approval of 14 high priority infrastructure projects. If so, this won’t likely be controversial. It could be something else equally noncontroversial

However, there is concern President Obama will make some changes this election year to federal policy concerning government-mandated PLAs on federal and federally assisted projects. See Section 7 of Executive Order 13502, issued Feb. 6, 2009:

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, 2009, 180 days sets the deadline at Aug. 5, 2009, but a recommendation has not been publicly issued.] 

An expansion of Section 7 could decrease the current $25 million threshold when federal agencies are currently required to evaluate if a PLA mandate is appropriate on a federal construction project. More PLA mandates on smaller projects would help Big Labor at the expense of everyone else. 

Section 7 could also force pro-PLA policies on federally assisted projects built by private owners and state and local governments. An expansion could increase costs for local and state projects already suffering from difficult budget realities. It could also lead to out-of-area union workers taking jobs away from qualified nonunion construction workers in the local economy. explained the concerns with Section 7 expansion here.

Let's hope Section 7 of Executive Order 13502 is not. will be following White House policies impacting the construction industry closely.

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