April 2022 Update: ABC’s Fight Against Government-Mandated Project Labor Agreements Continues

0 April 6, 2022  Featured, Federal Construction

Since President Biden signed Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects, on Feb. 4, 2022, mandating project labor agreements on federal construction projects of $35 million or more, numerous lawmakers and taxpayer and business groups have renewed fierce opposition to the Biden administration’s push for government-mandated PLAs on both federal and federally assisted public works projects.

Government-mandated PLAs needlessly increase the cost of construction by 12% to 20%, reduce competition from contractors employing 87.4% of the construction industry workforce and steal up to 34% of wages from the few nonunion workers allowed to work on a PLA jobsite.

Following the passage of the $1.2 trillion Infrastructure Investment and Jobs Act infrastructure bill­­—and other measures providing hundreds of billions of dollars for federal, state and local government-procured construction contracts funded by taxpayers’ dollars—the construction industry and taxpayer advocates are poised for an advocacy battle with construction trade unions and other pro-PLA advocates and lawmakers. It will determine the fate of billions of dollars’ worth of construction contracts and new jobs for millions of construction workers in the industry.

ABC slammed the Biden EO in a Feb. 3 statement picked up in dozens of publications nationwide: “This anti-competitive and costly executive order rewards well-connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.”

A Feb. 9 ABC op-ed in The Wall Street Journal laid out arguments against the Biden administration’s policy and concluded, “Taxpayers would be best served by the adoption of inclusive, win-win policies that help America’s construction industry realize the potential of the Infrastructure Investment and Jobs Act of 2021. We can’t rebuild our nation’s crumbling infrastructure effectively, increase accountability and reduce waste with PLAs.”

On Feb. 15, ABC and a coalition of 15 organizations representing tens of thousands of companies and millions of employees in the construction industry sent a letter to President Biden opposing EO 14063 and additional “policies encouraging PLAs on federally assisted projects via grant programs administered by federal agencies for state and local governments.” The coalition urged the White House to support “inclusive, win-win policies that welcome all of America’s construction industry to compete to rebuild our nation’s infrastructure, increase accountability and reduce waste and favoritism in the procurement of federal and federally assisted construction projects.”

On Feb. 28, ABC and a coalition of 19 organizations from the construction industry and the business community sent a letter to Congress in support of the Fair and Open Competition Act (S. 403/H.R. 1284), which would restrict government-mandated PLAs on federal and federally assisted construction projects. Similar pro-taxpayer legislation has been enacted in 24 states.

On March 7, Sen. Todd Young, R-Ind., led a group of 42 Senate Republicans in sending a letter to President Biden opposing EO 14063, saying that “a fair and open bidding process for federal construction projects would guarantee the best value for hardworking taxpayers located in all geographies and regions across the United States.”

On March 8, Rep. Ted Budd, R-N.C., and 59 House members signed a letter to President Biden saying that PLA mandates and preferences will “deny critical construction jobs to local workers and small businesses,” urging the White House to refrain from “attaching strings to infrastructure funding that create discriminatory barriers to recovery.”

On April 6, ABC announced it sent a letter to the White House signed by more than 1,200 ABC member contractors and chapters in opposition to the Biden administration’s pro-PLA policies. The Washington Post covered the letter in a April 14 column as did Fox Business News during this April 18 segment.

April 25, 16 GOP governors sent a letter to the White House opposing the Biden administration’s pro-PLA policies impacting federal and federal assisted construction projects in their states. ABC issued a press release supporting the letter.

ABC has long been a leader in opposing government PLA mandates and preferences on taxpayer-funded construction projects procured by local, state and federal governments.

ABC will continue to lead the fight against this anti-competitive and costly EO—and other separate Biden administration policies pushing PLA mandates on federally assisted contracts—with every legal, legislative, public relations, regulatory, grassroots and educational tool in our advocacy toolbox.

Learn more about government-mandated PLAs and Biden administration pro-PLA policies via ABC’s new FAQ document and coalition website at BuildAmericaLocal.com. Urge lawmakers to cosponsor federal legislation restricting government-mandated PLAs on federal and federally assisted construction projects via this ABC grassroots campaign.

ABC’s Fight Against Government-Mandated PLAs 2009 to the Present

In February 2009, President Obama signed Executive Order 13502, which encourages federal agencies to mandate PLAs 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 policy 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 composed 87.4% of the U.S. construction industry in 2021.

Industry experts feared the policy would result in hardworking taxpayers needlessly paying nearly 20% more per federal contract procured with a PLA requirement. Faced with finite building budgets, the order would effectively 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 the Obama administration’s controversial pro-PLA policy, and the campaign continues to produce impressive results.

ABC’s campaign helped prevent PLA mandates and preferences on more than 99% of federal contracts exceeding $25 million during fiscal years 2009-2021, preventing PLA requirements on 2,063 contracts worth a total of almost $127.5 billion so all qualified firms could fairly compete to win these contracts.

ABC contractors have taken advantage of a level playing field. During fiscal years 2009-2021, ABC member prime contractors won 57% of the value of large-scale federal contracts subject to Obama’s pro-PLA EO 13502. In total, ABC members have won 1,061 contracts (51%) valued at $73.46 billion (57%) from fiscal years 2009-2021.

Effective Tactics to Combat Government-Mandated PLAs on Federal and Federally Assisted Construction Projects

Legal tactics proved effective at stopping federal PLA mandates before and after  regulations implementing Obama’s EO 13502 went into effect in May 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 most recent GAO bid protest 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 also resulted in 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 drew three times as many bidders and bid prices that were 16% less than when the project was bid with a PLA mandate a few months prior. The PLA-free bidding saved taxpayers more than $6.2 million and allowed a local firm with local workers to build the project on time and on budget to the satisfaction of the DOL.

This is one example of numerous federal and federally assisted construction projects subjected to government-mandated PLAs that have resulted in increased costs and reduced competition and undermined promises by PLA proponents that PLA schemes deliver on-time, on-budget, safe, strike-free outcomes with an inclusive construction industry workforce.

Helping merit shop contractors respond to more than 500 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 government-mandated PLAs. While ABC has asked the White House and Congress to reform the time-consuming federal agency PLA survey process, a robust response from the merit shop contracting community has resulted in no PLA requirements on any surveyed projects, to date.

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

Since President Obama issued EO 13502 in 2009, 26 states responded to the threat of discriminatory PLA mandates and preferences by enacting Fair and Open Competition Act legislation prohibiting government-mandated PLAs on state and local taxpayer-funded construction projects to some degree to send a message to the federal government that PLA mandates are not welcome on local projects.

Unfortunately, some states rolled back common-sense FOCA measures following Democratic party takeovers of state government, bringing the total number of current states with active pro-taxpayer FOCA measures to 24.

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 $781.5 billion worth of construction capital outlay through the end of 2020.

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 procured by state and local governments.

However, these state and local laws and ordinances do not prevent PLA mandates and preferences required by federal agencies procuring direct federal government construction contracts subject to federal law.

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 states and markets.

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

In addition, some Obama administration federal agencies like the U.S. Department of Housing and Urban Development and U.S. Department of Transportation 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 February 2022 report, state and local lawmakers mandated PLAs on 606 state and local construction projects (totaling an estimated $15.875 billion) that received federal assistance and formal approval from the FHWA from 2010 to Feb. 2022.

While ABC’s campaign against anti-competitive PLA 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 harms qualified merit shop contractors and their skilled trades employees.

According to a model developed by ABC, every $1 billion of overall construction spending requires 3,900 construction jobs.

The construction industry will need to attract nearly 650,000 additional workers on top of the normal pace of hiring in 2022 to meet the industry demand for labor.

In the face of a skilled labor shortage, supply chain disruptions, material shortages and a 24% rise in year-over-year construction input costs, lawmakers need to be doing all they can to maximize taxpayer investments in infrastructure while helping all construction workers find quality jobs to rebuild their communities and America.

However, Biden administration policies independent of EO 14063 promoting the use of PLAs on certain federally assisted construction projects will stoke inflation and undermine federal taxpayer investments in water, energy and communication utilities, as well as roads, bridges, transportation hubs, affordable housing and schools. Federal dollars distributed to state and local governments via multiple grant programs administered by the departments of Treasury, Transportation, Agriculture and Interior encourage state and local applicants to mandate PLAs on water, sewer, broadband, offshore wind, energy and infrastructure projects.

In addition, a Feb. 7 White House Task Force on Worker Organizing and Empowerment report makes a number of new policy recommendations to expand PLAs onto federally assisted projects and other federal contracting opportunities that the Biden administration may implement in the future.

President Biden means it when he says he intends to be the most pro-union president in history. When it comes to PLA schemes, that’s a bad deal for taxpayers, free enterprise, America’s infrastructure and experienced small businesses and workers in the construction industry not affiliated with unions.

Corrupt Government-Mandated PLAs Rig the Bidding Process

Problematic, anti-competitive terms in government-mandated PLAs require contractors to:

  • Use union hiring halls to obtain most or all workers instead of their existing workforce.
  • Obtain apprentices exclusively from union apprenticeship programs.
  • Follow inefficient union work rules.
  • Pay into union benefit and multiemployer pension plans that the few/limited number of nonunion employees permitted on the PLA project will be unable to access unless they join a union and vest in these plans.

Research estimates that nonunion employees on PLA projects suffer an estimated 34% reduction in their compensation and contractors pay an extra 35% in benefits costs to cover PLA wage theft to union benefits plans, making merit shop firms less competitive against unionized firms. In addition, the limited number of nonunion workers permitted on a PLA project are forced to join a union and/or pay union dues as a condition of employment.

The practical impact of government-mandated PLAs is that they discourage competition from qualified and local contractors and their skilled employees who want nothing more than to pursue their career dreams, provide for their families and rebuild their communities.

Contracts subject to government-mandated PLAs steer work to benefit union-signatory contractors and well-connected construction unions favored in PLAs. Those unions use their members’ dues to support the political campaigns of candidates who pledge to push PLA mandates on taxpayer-funded projects that deny opportunities to the more than 87% of U.S. private construction workers who choose not to join a union.

Potential PLA mandates on taxpayer-funded contracts expose officials to intense political pressure, as unions spend millions to secure a monopoly on public works construction projects.

According to public filings, in the 2019-2020 election cycle, the 14 construction trade unions affiliated with the North America’s Building Trades Unions disbursed nearly $66 million in federal PAC dollars to federal, state and local candidates, committees, joint fundraising committees, national state and local parties and various other expenses.

These PACs contributed almost $15 million to federal candidates, and $13.51 million—90%—went to Democratic candidates.

Continuing the #NoPLAs Fight in 2022

ABC and a diverse coalition of organizations will continue to prioritize defending fair and open competition in public contracting during the remainder of the 117th Congress and President Biden’s term.

ABC and the coalition support the Fair and Open Competition Act (S. 403/H.R. 1284), reintroduced in the 117th Congress by Sen. Young and Rep. Budd, which would restrict government-mandated PLAs on federal and federally assisted construction projects.

In 2022, 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 hardworking taxpayers about the harmful effects of special interest PLA schemes.

ABC will 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. Concerned taxpayers and the merit shop contracting community can overcome these discriminatory PLA schemes as long as stakeholders and industry leaders remain diligent, support candidates who believe in free enterprise during the critical midterm elections, engage in grassroots advocacy and continue to educate lawmakers, employees and stakeholders about this campaign until a political or legislative solution is achievable.

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