House Lawmakers Ask President Trump to Eliminate Obama Policy Promoting Project Labor Agreements

0 July 24, 2018  Featured, Federal Construction

Last week, U.S. House lawmakers urged President Trump to rescind a costly Obama administration policy encouraging the use of government-mandated project labor agreements (PLAs).

The letter (pdf) signed by 44 House Republican lawmakers, urges President Trump to rescind Executive Order 13502, “which strongly encourages federal agencies, on a case-by-case basis, to consider requiring project labor agreements (PLAs) on federal construction proects exceeding $25 million in total value.”

More from the letter:

“We have strong concerns with Executive Order 13502 and believe that rescinding this negative policy is in line with your plans to cut red tape in Washington and across our government agencies.

To create the conditions for innovation and free enterprise, we must promote open competition, efficiency, fairness and equality in government contracting. Mandating, or even encouraging PLAs needlessly limits the pool of experienced and qualified bidders able to deliver the best possible product to taxpayers at the best possible price.

Reports have shown that government-mandated PLAs discourage merit shop contractors from bidding on taxpayer- funded construction contracts and drive up costs between 12 percent and 18 percent, which results in fewer infrastructure improvements and reduced construction industry job creation

…Ensuring that PLAs are not encouraged on our federal projects will send a clear message to the construction industry that this administration is committed to merit-based, cost-effective projects that provide the best benefit for hardworking taxpayers.”

Rep. Francis Rooney (R-FL) issued this statement about the letter in a July 19, 2018, joint press release with Rep. Ted Budd (R-NC):

“It is imperative the President rescinds this Executive Order. PLAs are just another example of special-interest carve-outs designed to funnel work to unionized contractors. Taxpayers are on the hook for government-mandated PLAs which drive up the cost of federally funded construction projects, sometimes as much as 18%. Government should be doing all it can to create opportunities for all Americans, and ensure taxpayer-funded infrastructure projects are procured efficiently.”

Statement from Rep. Budd (R-NC):

“This Obama-era Executive Order goes against everything the taxpayer deserves – a good bang for their buck. Research shows that PLAs can inflate federal construction costs by 12 percent to 18 percent, and this isn’t even taking into account other anti-competitive regulations. Each year the federal government collects trillions of dollars from its citizens – the least we can do is spend it efficiently. This is why I hope this letter helps the effort in getting this harmful rule rolled back.”

In January, a coalition of 14 business and construction groups wrote to President Trump asking him to rescind Executive Order 13502 and replace it with Executive Orders 13202 and 13208, which prohibit PLAs from being required on federal and federally assisted construction projects.

As mentioned in the letter from House lawmakers, 24 states have passed similar policies restricting government-mandated PLAs on state and local construction projects to some degree. Typically, these laws effectively prevent government-mandated PLAs on projects receiving federal assistance.

Unfortunately, eight states have enacted pro-PLA policies that have led to PLA mandates on federally assisted projects. Small and large contractors in pro-PLA states such as Hawaii, California, Washington, Illinois, New York, New Jersey and Connecticut, in addition to states without a formal PLA policy, have complained about being shut out of numerous state and local government-mandated PLA projects supported by federal funding. Many of these projects have experienced delays, increased costs, reduced competition, safety issues, poor local hiring outcomes and other documented problems.

It is unclear how many federally assisted contracts have suffered from state and local government-mandated PLAs, but snapshots of data demonstrate it is significant. For example, according to a U.S. Department of Transportation (DOT) Federal Highway Administration (FHWA) report of projects receiving FHWA funds from May 7, 2010, to December 11, 2017, state and local lawmakers mandated PLAs on 406 projects totaling an estimated $12.519 billion. (Note: FHWA’s previous report, issued 2/13/17, can be found here).

The Trump administration can follow the lead of 24 states and create the conditions to make America’s infrastructure great again by rescinding President Obama’s failed policy and replacing it with a win-win solution that protects taxpayers, spurs economic growth and allows all Americans to rebuild U.S. infrastructure.

In 2017, coalition members sent a letter to the Senate and a letter to the House supporting the Fair and Open Competition Act (H.R. 1552/S.622), which would also boost competition on government construction projects and reduce building costs to taxpayers by preventing governments from forcing contractors to execute controversial PLAs in order to compete to build federal and federally assisted construction contracts.

H.R. 1552, introduced in the 115th Congress by Rep. Dennis Ross (R-Fla.), has 95 cosponsors and was reported favorably out of the House Committee on Oversight and Government Reform in March 2017.

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