On Feb. 4, President Biden signed Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects, which mandates the use of project labor agreements on federal construction projects of $35 million or more in value. The media coverage of this proposal has not been favorable.
ABC slammed the order in a statement: “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,” said Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs.
ABC also said that the new policy will exacerbate the construction industry’s skilled workforce shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople.
ABC’s statement and coalition opposition to the proposal was included in national coverage from Fox Business TV, Reuters, The Hill, Daily Caller, Washington Post, The Epoch Times, The Washington Times, NewsNation USA, Engineering News-Record, GovExec and Construction Dive, in addition to local coverage generated by chapters. ABC Illinois’s letter to the editor about the impact of the EO was published in The Telegraph, saying, “We cannot effectively rebuild our nation’s crumbling infrastructure, increase accountability, and reduce waste with anti-competitive and costly union-only PLAs. Come election time, voters will remember.”
A Feb. 9 ABC opinion piece on the policy published in The Wall Street Journal said, “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.”
Here is what you need to know about Executive Order 14063:
- The EO directs federal agencies to require PLAs on “federal construction projects within the United States for which the total estimated cost of the construction contract to the federal government is $35 million or more.”
- Senior federal agency officials may grant an exception to the PLA requirement only under a very narrow set of circumstances.
- The EO will trigger a Federal Acquisition Regulatory Council rulemaking. A proposed rule must be issued within 120 days of publication of the EO in the Federal Register. ABC will comment on the proposed rule and help ABC members do the same. A final rule will be issued after the FAR Council evaluates proposed rule comments from stakeholders and finalizes an effective date.
- Once issued, the final rule will rescind and replace President Obama’s pro-PLA EO 13502 and related FAR Council regulations.
- The order directs the departments of Defense and Labor, along with the Office of Management and Budget, to design “a training strategy for agency contracting officers to enable those officers to effectively implement this order.” In addition, “within 180 days of the date of the publication of proposed regulations,” they “shall provide a report to the Assistant to the President for Economic Policy and Director of the National Economic Council on the contents of the training strategy.”
- ABC anticipates federal contracting officers to be under tremendous pressure to mandate PLAs and the training to limit their ability to rightfully opt out of requiring PLAs.
- The EO does not affect federally assisted projects, although federal agencies like the departments of Transportation, Treasury, Interior and Agriculture have already been pushing PLAs on federally assisted construction projects through grant applications and other tactics independent of this EO, drawing the ire of GOP governors.
- According to the text of the order, “This order shall be effective immediately and shall apply to all solicitations for contracts issued on or after the effective date of the final regulations issued by the FAR Council under section 8(a) of this order. For solicitations issued between the date of this order and the effective date of the final regulations issued by the FAR Council under section 8(a) of this order, or solicitations that have already been issued and are outstanding as of the date of this order, agencies are strongly encouraged, to the extent permitted by law, to comply with this order.”
Research has demonstrated that government-mandated PLAs increase construction costs by 12% to 20%, which results in fewer construction projects and improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects. PLAs steer contracts to unionized contractors and workers at the expense of the best-quality nonunion contractors and workers who want to compete at the best price for taxpayers, said ABC. PLA mandates exclude almost 90% of the industry that choose not to join a union from being a part of taxpayer-funded construction.
ABC suspects the EO, at least on paper, is attempting to make it much more difficult to defeat federal PLA threats. Contracting officers can opt out of requiring a PLA only under a very narrow set of circumstances.
However, it may take some time until the details and ultimate impact of the Biden administration’s pro-PLA policy harm the federal contracting community and taxpayers.
“The EO is effective immediately, however, it will take months for a forthcoming rulemaking by the Federal Acquisition Regulatory Council to issue a final rule that will replace the federal government’s existing pro-PLA policy and incorporate the new Biden policy into new federal contracts,” said Brubeck. “In the interim, it is possible that federal agencies will try to mandate PLAs immediately and ABC will be there to fight them, as we have successfully done on almost 2,000 large-scale federal contracts totaling more than $130 billion since 2009.”
ABC is evaluating legal options to challenge the EO policy and individual PLAs on federal construction contracts.
ABC has already activated a grassroots campaign, including an action alert urging members of the U.S. House and Senate to co-sponsor the Fair and Open Competition Act (H.R. 1284/S. 403), which would prevent the federal government from mandating PLAs as a condition of winning federal or federally assisted construction contracts. ABC members are encouraged to visit the ABC Action Center and urge their members of Congress to support FOCA. In addition, visit BuildAmericaLocal.com, the construction industry coalition.