The Truth About Project Labor Agreements

Today, the U.S. House of Representatives will consider the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act (MilCon/VA) for Fiscal Year 2013 (H.R. 5854).

As TheTruthAboutPLAs.com reported May 21, during the full House Appropriations Committee markup of H.R. 5854, Rep. Jeff Flake (R-Ariz.) successfully offered an amendment that will prevent the federal government from prohibiting or requiring that federal contractors use project labor agreements (PLAs) on military construction projects funded by this bill.

This language, contained in Section 517 of H.R. 5854, restores fair and open competition and government neutrality toward government contractors’ labor relations on Department of Defense construction projects funded by this bill (review a breakdown of construction spending here).

A coalition of construction and business groups sent a letter to the full House in support of Section 517 of MilCon/VA bill explaining why this language is necessary:

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.”

In contrast, recent government-mandated PLAs and PLA preferences on federal projects have resulted in increased costs, delays and discrimination.  Likewise, 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.

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

Section 517 counteracts potential special interest favoritism by prohibiting federal agencies from mandating PLAs and implementing PLA preferences when issuing solicitations for construction services for projects funded by this bill.  However, it also permits federal agencies to award contracts to businesses that voluntarily enter into PLAs—a right guaranteed by the National Labor Relations Act and supported by established legal precedent.

During the Obama administration, a number of Department of Defense construction projects have been subjected to PLA mandates, or have attempted PLA mandates (here and here), discriminatory PLA preferences and onerous PLA surveys.

Freedom of Information Act requests have uncovered these examples of members of Congress, the Office of Management and Budget and political appointees within federal agencies pushing federal agencies and recipients of federal funding to mandate PLAs on construction projects.

Opposition to Fair and Open Competition Expected Today
Later today, Rep. Michael Grimm (R-NY) is expected to offer an amendment on the House floor striking Section 517 from the bill.

The coalition letter explains why striking Section 517 from the bill is bad public policy:

Section 517 will curb waste and favoritism in the procurement of federal construction projects and ensure taxpayer dollars are spent wisely by letting contractors—and therefore the free market—determine if a PLA is appropriate. We ask that you take a stand against discrimination and special interest handouts in government contracting and OPPOSE the Grimm amendment and any other amendments that attempt to strike Section 517 from H.R. 5854.

We encourage TheTruthAboutPLAs.com readers, taxpayers concerned about waste and the merit shop contracting community to write their elected officials today and urge them to oppose the Grimm amendment. Take action here.

Campaign of Misinformation in Support of Government-Mandated PLAs
Government-mandated PLA proponents have been spreading misinformation that Section 517 prevents the use of all PLAs on military construction projects.

But this is simply not true.

The non-partisan Congressional Research Service examined Section 517 and issued a memo that clarifies the effect of Section 517:

“Based on the plain language of the amendment’s text, PLAs for military construction projects would not be forbidden, as it expressly provides that “[n]one of the funds made available by this Act may be used by any Government authority …to require or prohibit … bidders … to enter into … agreements with one or more labor organizations…” (emphasis added).

CRS goes on to clarify that the language contained in the bill would, “have the effect of: (1) preventing federal agencies from mandating the use of PLAs (as Executive Order 13502 encourages) and (2) prohibiting federal agencies from giving preference to a bidder/contractor based on the signing of a PLA.”

This neutral language is similar to the language contained in President George W. Bush’s Executive Order No. 13202 and Executive Order No. 13208, which was upheld by the U.S. Court of Appeals for the District of Columbia Circuit decision in the Allbaugh case.

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. Similar language has been adopted by 14 states prohibiting government-mandated PLAs on state and state-assisted projects (learn more about the law and government-mandated PLAs here). In short, contractors can voluntarily choose to use a PLA instead of having them jammed down their throats by government agencies complicit in this crony contracting scheme.

Proponents of government-mandated PLAs won’t let the facts get in the way of the truth and have resorted to stale and shrill attacks on the merit shop community and unsubstantiated claims touting the benefits of these coercive mandates to regain lost market share for unionized contractors and create jobs primarily for union construction workers, who compose just 14 percent of the U.S. construction workforce.

They are furious because May 17, the House passed an amendment offered by Rep. Roscoe Bartlett (R-Md.) and cosponsored by Rep. Flake to the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (H.R. 4310) that prohibits federal agencies from mandating anti-competitive and costly project labor agreements (PLAs) and using PLA preferences on federal construction contracts authorized by the NDAA. It passed by a bipartisan vote of 211 to 209.

Even the White House is bending over backwards to spread misinformation and oppose Section 517. They issued this Statement of Administration Policy on H.R. 5854 yesterday (pdf):

The Administration strongly opposes problematic policy and language riders that have no place in funding legislation, including, but not limited to, the following provision in this bill:

Project Labor Agreements (PLAs).The Administration strongly opposes the provision that would effectively prohibit use of project labor agreements on Federal construction projects funded under this bill.

Vote on Grimm Amendment Expected to Be Close
The recent 211-209 passage of the Bartlett amendment to the NDAA was the first time the U.S. House passed legislation ensuring fair and open competition in federal contracting. During the first session of the 112th Congress, the House voted three times on similar measures. Each effort failed by a razor thin margin (210-210 , 207-213 and 204-203). This vote, which may be the last vote on government-mandated PLAs in the 112th Congress, is expected to be very close.

Efforts Restore Government Neutrality in Contracting
Provisions from these measures closely mirror “PLA neutral” language contained in President George W. Bush’s Executive Order No. 13202 and Executive Order No. 13208, which was upheld by the U.S. Court of Appeals for the District of Columbia Circuit decision in the Allbaugh case.

From 2001 until it was repealed by President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502, President Bush’s executive orders ensured there were no government-mandated PLAs on $147 billion worth of federal construction projects and hundreds of billions of dollars of federally assisted construction projects.

Under the Bush orders, firms were free to enter into PLAs on a voluntary basis. Research found that the government’s position of neutrality toward PLAs fostered fair and open competition and contributed to the completion of safe, on-time and on-budget projects. In short, PLA mandates were unnecessary.

Additional research suggests government-mandated PLAs can needlessly increase costs and typically force nonunion construction workers to pay union dues, join a union and receive reduced take-home pay and no benefits during the life of a PLA project unless they join a union and become vested in union benefits programs.

The Government Neutrality in Contracting Act (H.R. 735), introduced by Congressman John Sullivan (R-Okla.) and cosponsored by 176 other House members, essentially codifies into law President Bush’s executive orders ensuring fair and open competition on federal and federally assisted construction projects.  It remains in the House Oversight and Government Reform Committee and was the subject of a subcommittee hearing last year.

Studies on the increased costs and reduced competition resulting from government-mandated PLAs here and here.

TheTruthAboutPLAs.com applauds the House for passing the Bartlett amendment May 17 and and urges them to OPPOSE the Grimm amendment and any amendment striking Section 571 from H.R. 5854.

It is time for Congress to restore fair and open competition in government contracting.

Check back for updates and media coverage.

Additional Resources

CRS memo on Section 517 (May 25)
Coalition Letter Supporting Section 517 and Opposing Grimm Amendment
ABC “Key Vote” Letter Opposing Grimm Amendment and Supporting Section 517
Talking Points Opposing Grimm Amendment
Dear Colleauge Letter From Rep. Flake’s Office
The law and government-mandated PLAs vs. voluntary PLAs
White House SAP on H.R. 5854

UPDATE: Unfortunately, the Grimm Amendment was adopted 218-198. All but one Democrat and 34 GOP members opposed the Grimm amendment. There were a number of GOP absences. More analysis to follow.

UPDATE #2: Here is a copy of the House floor debate on the Grimm Amendment from the Congressional Record.

GOP legislators Cravaack (MN), Gibson (NY), Kinzinger (IL) and Meehan (PA) once again put union interests ahead of taxpayer interests (see vote on Bartlett Amendment to NDAA) and voted for the Grimm Amdt. and for the use of PLA requirements and preferences on federal and federally assisted projects.

On paper, a 218-198 vote looks like a very lopsided loss but there were 10 GOP members who opposed the Grimm Amdt. but missed the vote and five Democrats who would have voted in support of the Grimm Amdt.

GOP Members Not Voting:

Burton (IN)
Fortenberry (NE)
Guinta (NH)
Hurt (VA)
Lewis (CA)
Mack (CA)
McCarthy (CA)
Olson (TX)
Stutzman IN)
Young (FL)

Dem. Member Not Voting:

Clay (MO)
Doyle (PA)
Ellison (MN)
Slaughter (NY)
Velázquez (NY)

The key is that PLA proponents benefitted from the votes of five new GOP members who voted for the Grimm Amdt/changed their position since the last vote on the NDAA in support of PLAs: Buchanan (FL), Capito (WV), Huelskamp (KS), Renacci (OH), and Terry (NE). Some of these were mistakes (see Huelskamp’s explanation) so they should be watched extra closely and held accountable during the next vote on this issue.