2020 Update: ABC’s Fight Against Government-Mandated Project Labor Agreements

0 September 22, 2020  Featured, Federal Construction, Open Competition Works, State & Local Construction

In February 2009, President Obama signed Executive Order 13502, which encourages federal agencies to mandate project labor agreements on large-scale federal construction projects exceeding $25 million in total cost on a case-by-case basis and permits recipients of federal assistance to mandate PLAs on state and local public works projects.

Many merit shop advocates and public policy professionals predicted the order would steer billions of dollars’ worth of federal and federally assisted construction contracts to unionized contractors and their all-union workforces—without true competition from qualified merit shop contractors and their nonunion employees, who compose 87.4% of the U.S. construction workforce.

Industry experts feared the executive order would result in taxpayers needlessly paying nearly 20% more per federal contract procured with a PLA requirement. Faced with finite building budgets, it would generate less public building and infrastructure improvements, and create fewer jobs for the experienced men and women employed by merit shop contractors who deliver projects safely, on time and on budget every day to the federal government.

Stakeholders turned to Associated Builders and Contractors to defend fair and open competition in federal contracting. ABC and the merit shop contracting community mobilized an aggressive campaign of effective public relations, political, legal and legislative strategies to restrict the devastating impact of anti-competitive and costly government-mandated PLAs on federal, state and local public works projects.

It has been more than a decade since ABC began its fight against Obama’s controversial pro-PLA policy, and the campaign continues to produce impressive results.

The ABC campaign helped prevent PLA mandates and preferences on nearly 99% of federal contracts exceeding $25 million from FY2009-FY2019, freeing up 1,669 contracts worth a total of almost $97.5 billion from PLA requirements so all qualified firms could fairly compete to win these contracts.

ABC contractors have taken advantage of a level playing field. From FY2009-FY2019, ABC member prime contractors won 59.33% of the value of large-scale federal contracts subject to Obama’s pro-PLA Executive Order 13502. ABC members have won 888 contracts valued at a total of $58.58 billion.

Note: This data, downloaded from USASpending.gov and cross-referenced with ABC’s membership, does not include federal contracts awarded and performed by subcontractors or federally assisted projects procured by state and local governments.

Effective Tactics

Legal tactics proved effective at stopping federal PLA mandates once regulations implementing Obama’s Executive Order 13502 went into effect in 2010.

Federal contractors, with the support of ABC, filed five Government Accountability Office bid protests against PLAs mandated by four different federal agencies on large-scale federal construction projects. In each instance, federal agencies abandoned the PLA requirements after GAO officials suggested they violate federal contracting laws in specific circumstances.

The latest legal victory against a PLA mandate on a U.S. Department of Labor Job Corps Center in Manchester, New Hampshire, was the DOL’s second failed attempt to require a PLA on the project. It was also the first apples-to-apples comparison during the Obama administration of a federal project bid with and without a PLA requirement. Advocates of fair and open competition were not surprised when in 2013, the PLA-free project experienced three times as many bidders and bid prices that were 16% less than when the project was bid with a PLA mandate, saving taxpayers more than $6.2 million and ensuring a local firm with local workers was awarded the contract.

Helping merit shop contractors respond to more than 475 surveys issued by federal agencies to determine if a PLA is appropriate for a federal project has been another effective strategy in the fight against PLAs. While ABC has asked the White House and Congress to reform to the time-consuming federal agency PLA survey process, a robust response from the merit shop contracting community resulted in no PLA requirements on any surveyed projects, to date.

More importantly, ABC’s campaign prevented the expansion of Executive Order 13502 onto federal projects costing less than $25 million, as well as thwarted an additional push for costly PLA mandates on private, state and local projects receiving federal assistance.

Since Obama issued Executive Order 13502 in 2009, 27 states have responded to the threat of discriminatory PLA mandates and preferences by enacting Fair and Open Competition Act  legislation or executive orders prohibiting government-mandated PLAs on state, local and publicly funded construction projects to some degree.

Unfortunately, some of these states have rolled back common-sense FOCA measures following Democratic party takeovers of state government, bringing the total number of current states to enact pro-taxpayer FOCA measures to 25.

To date, all legal challenges to state and federal FOCA policies ensuring government neutrality in public works contracting have failed.

ABC’s efforts to enact state FOCA laws prevented government-mandated PLAs on $633 billion worth of construction capital outlay through the end of 2019.

In addition, dozens of communities across the country have also enacted similar FOCA laws.

These efforts ensure a level playing field, increase competition, reduce costs and eliminate cronyism in public works contracting at the local and state level.

Government-mandated PLAs Remain a Threat To Free Enterprise

Despite the campaign’s track record of success, government-mandated PLAs remain a threat to free enterprise and fair and open competition in certain markets.

Some states and municipalities controlled by union-friendly Democrats have enacted legislation or executive orders pushing the use of PLAs on state, state-assisted and local public works projects, shutting out qualified contractors on certain public works contracts in states such as Hawaii, California, Washington, Illinois, New York, New Jersey and Connecticut—and major municipalities including New York City, Philadelphia, Chicago, Los Angeles and Honolulu—from opportunities to rebuild their own communities.

In addition, some Obama administration federal agencies  like HUD and DOT encouraged state and local governments to require PLAs on billions of dollars worth of state and local projects receiving federal money and other forms of federal assistance.

It is unclear how many federally assisted contracts have suffered from PLA mandates, but snapshots of data demonstrate it is significant.

For example, according to a DOT Federal Highway Administration January 2020 report, state and local lawmakers mandated PLAs on 446 state and local construction projects (totaling an estimated $11.671 billion) that received federal assistance and formal approval from the FHWA.

While ABC’s campaign against these anti-competitive schemes on federal projects has been largely successful, lawmakers requiring and encouraging the use of special interest-favoring PLA mandates on non-federal projects continues to cost taxpayers a fortune and harm qualified merit shop contractors and their skilled trades employees.

Continuing the #NoPLAs Fight

Throughout the Trump administration, ABC and a diverse coalition of organizations have continued to make defending fair and open competition in public contracting a top priority.

In the 116th Congress, ABC and the coalition have been a strong supporter of federal legislation called the Fair and Open Competition Act (H.R. 1858/S. 907), introduced by Rep. Ted Budd (R-N.C.) and Sen. Todd Young (R-Ind.), which prevents federal agencies and recipients of federal funding from requiring contractors to sign controversial PLAs as a condition of winning federal or federally assisted construction contracts.

Unfortunately, House Democrats controlling the House agenda will make sure this bill does not pass. In fact, House Democrats have been pushing for PLAs on infrastructure projects, but the Republican-controlled U.S. Senate has blocked such anti-competitive measures from becoming law.

Because FOCA is a win-win for taxpayers and the U.S. economy and it creates an inclusive policy allowing all U.S. workers and all qualified companies to fairly compete to rebuild America’s infrastructure, more than 100 lawmakers cosponsored FOCA (H.R. 1552/S. 622), introduced by Rep. Dennis Ross (R-Fla.)  and Sen. Jeff Flake (R-Ariz.) in the 115th Congress and it was reported favorably out of the House of Representatives Oversight and Government Reform Committee, but never received a formal vote on the floor.

Following the Nov. 3 elections, if a merit shop majority takes over the House and increases numbers in the Senate, it improves the odds of FOCA becoming law. However, FOCA is more likely to be implemented via executive action by the White House.

ABC and a coalition of stakeholders have urged President Trump and Congress to eliminate government-mandated PLAs on federal and federally assisted projects. Coalition letters have stressed that such reform would create a level playing field in the procurement of government construction contracts, increase competition, curb construction costs and help small businesses grow.

Unfortunately, the Trump administration has yet to rescind Obama’s Executive Order 13502 and replace it with pro-taxpayer and pro-infrastructure FOCA policies like President Bush’s Executive Orders 13202 and 13208.

However, the Trump administration has not mandated PLAs on any federal projects and has not encouraged their use or expanded the Obama administration’s pro-PLA policy in any way.

No matter who is in the White House or Congress, ABC will continue to implement effective legislative, legal and regulatory strategies complemented by communications and grassroots campaigns to educate federal agency procurement officials, lawmakers, industry stakeholders, the media and taxpayers about the harmful effects of special interest PLA schemes.

ABC will always fight for federal, state, and local policies that create a level playing field in the procurement of government construction contracts, increase competition, help small businesses grow, curb construction costs and spread the job-creating benefits of taxpayer- funded contracts throughout the entire construction industry.

But we cannot do it alone. The merit shop contracting community can overcome these discriminatory PLA schemes as long as industry leaders remain diligent, support candidates who believe in free enterprise, and continue to educate lawmakers, employees and stakeholders about this campaign until a political or legislative solution is achievable.

Leave us some thoughts or comments below. We would love to hear from you.

Come back for a look at how the 2020 elections might shape federal, state and local PLA policy.

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