Diverse Coalition Supports Fair and Open Competition Legislation, Opposes Government-Mandated Project Labor Agreements

0 February 25, 2021  Featured, Federal Construction

ABC and a diverse coalition of 17 construction industry and business associations sent a letter to the U.S. House and Senate in strong support of the Fair and Open Competition Act (H.R. 1284/S. 403), which was introduced Feb. 24 by Sen. Todd Young (R-Ind.) and Rep. Ted Budd (R-N.C.).

An ABC  Feb. 24 ABC press release applauded the introduction of FOCA, which encourages more qualified construction companies to compete for federal and federally funded construction projects, providing value for hardworking taxpayers while benefiting the construction industry.

FOCA was introduced as the Biden administration is signaling its support for more government-mandated project labor agreements on federal and federally assisted construction projects funded by hardworking taxpayers. FOCA would prevent 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.

ABC also sent a Feb. 4 letter to President Biden expressing concerns about government-mandated PLAs and the “expansion of existing policies that needlessly limit competition and increase costs on taxpayer-funded federal and federally assisted construction projects.”

The ABC-supported FOCA legislation was introduced in the Senate with Sen. Tim Scott (R-S.C.) and with the support of 37 original cosponsors in the U.S. House of Representatives.

ABC members and construction industry stakeholders can take action to urge their elected representatives to sign on as a cosponsor in the 117th Congress via the ABC Action grassroots advocacy tool here.

In addition, a National Taxpayers Union-led coalition of a dozen taxpayer, free market, and consumer advocate groups sent Congress a letter of support for FOCA.

Both letters are reprinted below.

February 24, 2021

U.S. Senate                                          U.S. House of Representatives
Washington, DC  20510                       Washington, DC  20515

Dear Senator/Representative:

The diverse group of construction and business associations undersigned below writes in strong support of Sen. Todd Young (R-Ind.) and Rep. Ted Budd’s (R-N.C.) Fair and Open Competition Act (H.R. 1284/S. 403).

The Fair and Open Competition Act would prevent federal agencies and recipients of federal assistance from requiring or encouraging contractors to sign a controversial project labor agreement as a condition of winning a federal or federally assisted taxpayer-funded construction contract.

A PLA is a jobsite-specific collective bargaining agreement unique to the construction industry that typically requires companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain most or all construction labor, exclusively hire apprentices from union programs, follow union work rules and pay into union benefit and multi-employer pension plans that nonunion employees will be unlikely to access. This forces employers to pay “double benefits” into their existing plans and union plans and places firms opposed to these costly provisions at a significant competitive disadvantage. In addition, PLAs typically require construction workers to pay union dues and/or join a union if they want to receive union benefits and work on a PLA project.

When mandated by government agencies and lawmakers, PLAs can interfere with existing union collective bargaining agreements. In addition, PLA mandates unfairly discourage competition from quality nonunion contractors and their employees, who comprise 87.3% of the private U.S. construction industry workforce, according to the most recent U.S. Bureau of Labor Statistics data.[1]

President Obama’s Feb. 6, 2009, Executive Order 13502 encourages federal agencies, on a case-by-case basis, to require PLAs on federal construction projects exceeding $25 million in total value and permits states and localities to mandate PLAs on federally assisted projects[2] in order to “promote the economy and efficiency in federal procurement.”

However, multiple studies of hundreds of taxpayer-funded school construction projects found that PLA mandates increase the cost of construction by 12% to 20% compared to similar non-PLA projects.[3] In addition, recent government-mandated PLAs on federal and federally assisted projects have resulted in litigation, reduced competition, increased costs, needless delays and poor local hiring outcomes. Simply put, hardworking taxpayers are getting less and paying more when PLAs are encouraged or mandated during the procurement of federal and federally assisted construction projects.

Additionally, the federal government’s current pro-PLA mandate policy and related regulations have exposed federal agency procurement officials to intense political pressure from special interest groups and politicians to mandate PLAs on federal and federally assisted projects, even when they are not appropriate.

The Fair and Open Competition Act seeks to counteract potential special-interest favoritism by prohibiting federal agencies and recipients of federal assistance from mandating PLAs and implementing PLA preferences. However, this legislation would allow federal agencies to award contracts to businesses that voluntarily utilize PLAs before or after a fair and open competitive bidding process, a common industry practice permitted by the National Labor Relations Act.

A total of 25 states have passed measures similar to the Fair and Open Competition Act in order to curb waste and favoritism in the procurement of construction projects and ensure taxpayer dollars are spent responsibly by letting the market determine if a PLA is appropriate.

The undersigned organizations support fair and open competition and oppose government-mandated PLAs on federal and federally assisted projects because hardworking taxpayers deserve more efficient and effective policies that will encourage all qualified contractors and their skilled workforce to compete to build long-lasting, quality projects at the best price.

According to economic models,[4] every $1 billion in extra overall construction spending generates an average of at least 6,500 construction jobs, and every $1 billion in extra construction spending on infrastructure generates an average of at least 3,300 construction jobs. As the construction industry faces a 9.4% unemployment rate[5] due to the recession caused by the COVID-19 pandemic and America’s infrastructure faces an estimated $2.6 trillion investment gap by 2029,[6] lawmakers need to do everything possible to maximize taxpayer investments in infrastructure while helping all construction workers find quality jobs to rebuild their communities.

If you would like to promote fairness, efficiency and transparency in government contracting, please contact Nancy Martinez (nancy_martinez@young.senate.gov) in Sen. Todd Young’s office and Charlie Hobbs (Charlie.Hobbs2@mail.house.gov) in Rep. Ted Budd’s office and ask to cosponsor the Fair and Open Competition Act.

Your opposition to any legislative language promoting controversial government-mandated PLAs on future infrastructure and spending bills, coupled with your support of the Fair and Open Competition Act, will 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 federal and federally funded contracts throughout the construction industry.

Sincerely,

American Council of Engineering Companies
American Fire Sprinkler Association
American Pipeline Contractors Association
American Road and Transportation Builders Association
Associated Builders and Contractors
Business Coalition for Fair Competition
Construction Industry Round Table
Electronic Security Association
Independent Electrical Contractors
National Association of Home Builders
National Black Chamber of Commerce
NFIB
National Ready Mixed Concrete Association
National Utility Contractors Association
Power and Communication Contractors Association
Small Business and Entrepreneurship Council
United States Hispanic Chamber of Commerce

[1]See bls.gov Union Members Summary. Jan. 22, 2021, https://www.bls.gov/news.release/union2.nr0.htm.
[2]Executive Order 13502, Use of Project Labor Agreements for Federal Construction Projects, signed Feb. 6, 2009, (https://www.govinfo.gov/content/pkg/FR-2009-02-11/pdf/E9-3113.pdf) and related FAR Case 2009-005, effective May 13, 2010 (https://www.regulations.gov/docket?D=FAR-2009-0024).
[3]See multiple studies measuring the impact of PLAs on school construction in Connecticut, Massachusetts, New York and Ohio by the Beacon Hill Institute (http://beaconhill.org/labor-economics/); an October 2010 report by the New Jersey Department of Labor and Workforce Development, Annual Report to the Governor and Legislature: Use of Project Labor Agreements in Public Works Building Projects in Fiscal Year 2008 (https://www.nj.gov/labor/forms_pdfs/legal/2010/PLAReportOct2010.pdf); and a 2011 study by the National University System Institute for Policy Research, Measuring the Cost of Project Labor Agreements on School Construction in California (http://www.nusinstitute.org/assets/resources/pageResources/Measuring-the-Cost-of-Project-Labor-Agreements-on-School-Construction-in-California.pdf).
[4] https://abc.org/News-Media/Newsline/entryid/17036/the-construction-industry-needs-to-hire-an-additional-550-000-workers-in-2020.
[5] BLS construction industry unemployment rate for January 2021, https://www.bls.gov/iag/tgs/iag23.htm.
[6] See ASCE’s 2021 report, Failure to Act: Economic Impacts of Status Quo Investment Across Infrastructure Systems.

View NTU-led coalition letter of support for the Fair and Open Competition Act as PDF

February 24, 2021
The Honorable Todd Young
United States Senate
Washington, D.C. 20510
The Honorable Ted Budd
United States House of Representatives
Washington, D.C. 20515
Dear Senator Young and Representative Budd,
On behalf of the undersigned organizations, representing a diverse coalition of taxpayer, free market, and consumer advocates, we write to express our strong support for your legislation, the “Fair and Open Competition Act” or FOCA. This important legislation would prevent federal agencies from requiring costly Project Labor Agreements (PLAs) as a condition of winning federally assisted construction contracts. We are proud to endorse the Fair and Open Competition Act and we urge all lawmakers to cosponsor this legislation.
As you know, government-mandated PLAs require contractors to sign a collective bargaining agreement with workers as a requirement to work on some federally assisted construction projects. These agreements typically require contractors to adhere to union wage scales, hire union labor, follow union work rules, and pay into union benefit plans that other non-union employees will be unlikely to tap into. As a result, contractors who use non-union workers and often make lower-cost bids are effectively locked out of the process.
In their current form, these rules curb fair competition in America’s labor market and result in more expensive government projects for which taxpayers must foot the bill. Consequently, these agreements artificially increase the construction costs of public infrastructure projects, wasting billions in taxpayer dollars. An array of academic studies indicate that these economically flawed agreements produce construction projects that are up to 18 percent more expensive than comparable non-PLA projects. Taxpayers deserve to have their tax dollars spent in a cost-effective way to ensure each dollar’s value is maximized, not wasted or used to bankroll union political activities.
Thankfully your legislation is a win-win for taxpayers and businesses who choose to do business with the federal government. If enacted, the FOCA would end this onerous policy and bring market principles back to the federal bidding process for infrastructure projects. While more work remains ahead to lower burdens on American contractors and businesses, this legislation makes unmistakable progress to lower costs, increase competition, and advance new opportunities for all workers.
In our view, the FOCA is a prudent way to maximize every taxpayer dollar spent on infrastructure projects while also leveling the playing field for workers and builders. We look forward to helping you enact this legislation.
Sincerely,
National Taxpayers Union
60 Plus Association
American Consumer Institute
Americans for Prosperity
Americans for Tax Reform
Consumer Action for a Strong Economy
Council for Citizens Against Government Waste
Center for Individual Freedom
Freedom Works
Heritage Action
Less Government
Open Competition Center

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