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97% of ABC Contractors Say Biden’s Government-Mandated Project Labor Agreement Policies Would Make Federal Construction More Expensive

0 October 17, 2022  Featured, Federal Construction

According to a September 2022 survey of ABC contractor members published Step. 28, 2022, 98% oppose President Biden’s proposed rule mandating project labor agreements on federal construction projects of $35 million or more. PLA schemes needlessly increase costs and exacerbate the construction industry’s skilled labor shortage because they exclude almost nine out of 10 workers from participating in these contracts.

“The overwhelming opposition to PLA mandates demonstrates that fair and open competition on federal and federally assisted infrastructure projects is a win-win for taxpayers and the U.S. economy because it ensures all Americans and qualified companies are welcome to fairly compete to rebuild America’s infrastructure,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “In contrast, the Biden administration’s proposed rule requiring government mandated PLAs on federal contracts of $35 million or more, and other policies promoting PLAs on federally assisted construction projects, will needlessly increase costs by 12% to 20% and reduce competition from quality contractors and the 87.4% of construction workers who freely choose not to join a union.”

According to the survey:

  • 97% of survey respondents said a construction contract that required a PLA would be more expensive compared to a contract procured via free and open competition.
  • 99% said they were less likely to bid on a taxpayer-funded construction contract if the bid specifications required the winning firm to sign a PLA with labor unions.
  • 97% of respondents said that government-mandated PLAs decrease economy and efficiency in government contracting.
  • 96% expected a requirement to result in less competition from subcontractors.
  • 95% of survey respondents said the requirements of government-mandated PLAs for firms to contribute to union benefits programs harm employees and 96% said they undermine investments in workforce development programs.

“Between 2009 and 2021, federal agencies mandated just 12 PLAs on 2,075 federal construction projects of $25 million or more, illustrating that when given the option, PLA mandates are unnecessary on federal construction projects,” said Brubeck. “ABC members are top federal contractors—they were awarded 57% of the value of $127 billion worth large-scale federal construction projects during this time period—but are needlessly excluded by the Biden administration’s policies promoting PLAs, which favor unionized contractors and labor.”

The majority of survey respondents said PLA mandates would either result in construction projects that are less safe (65%) or have no impact on safety (34%). Three-quarters (75%) said PLAs would result in poorer quality or have no impact on quality (24%). Fully 85% said PLA mandates decrease the likelihood of completing a project on time and on budget, with 9% saying there would be no impact.

In addition, 94% of survey respondents said a PLA would result in worse local hiring outcomes for a project. Almost 69% of respondents agreed that a PLA would decrease the hiring of women, veteran and disadvantaged business enterprises and construction workers, which have traditionally been unaffiliated with labor unions, while another 27% of respondents felt that PLAs would have no effect in hiring these disadvantaged populations and contractors.

Opposition to the Proposed Rule Is Nearly Universal Among Membership Segments

In other findings from the survey, the proposed rule is opposed by respondents who self-identified as active and potential federal contractors as well as small businesses:

  • Among active federal contractors who responded to the survey, 96% said the proposed rule would increase costs, 73% said it would decrease construction quality and 93% stated the rule would result in less competition from subcontractors.
  • Additionally, 97% of respondents who are federal contractors who self-identified as small businesses said they would be less likely to bid on contracts if the rule is finalized, potentially affecting the federal government’s small business procurement goals. 73% of small businesses stated PLAs decrease hiring of minority, women, veteran and disadvantaged business enterprises.
  • 99% of respondents who currently do not perform federal contracting said they would be discouraged from beginning to do so by the proposed rule, indicating the rule would likely suppress competition from new federal contractors if finalized.
  • In addition, 99% of respondents oppose other Biden administration policies independent of the proposed rule encouraging PLAs on federally assisted construction projects procured by state and local government with the help of federal funding allocated via competitive grant programs administered by federal agencies.

“The survey illustrates how PLA mandates undermine inclusive workforce development, hiring and small business subcontracting practices and hinder the ability of the best contractors to safely deliver taxpayer-funded construction projects on time and on budget, which is why ABC members are outraged by the Biden administration’s discriminatory policies favoring special interests,” said Brubeck. “ABC encourages concerned taxpayers, government officials and construction industry stakeholders to submit comments in opposition to the Biden administration’s proposed policy mandating PLAs on federal contracts by the Oct. 18 comment deadline via ABC’s action alert.”

The survey of ABC member contractors was conducted between Sept. 7 and 23 following the Biden administration’s Aug. 19 release of the Federal Acquisition Regulatory Council’s proposed rule (FAR Case 2022-003, Use of Project Labor Agreements for Federal Construction Projects RIN: 9000-AO40) implementing President Biden’s Feb. 4 Executive Order 14063.

Once final, the Biden proposal will replace President Obama’s Feb. 2, 2009, Executive Order 13502, which encourages federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total value on a case-by-case basis, and permits states and localities to mandate PLAs on federally assisted projects. The Biden administration expects its proposed rule to affect about 120 federal contracts valued at $10 billion per year.

The survey is consistent with past surveys of ABC membership on government-mandated PLAs.

PLA Mandates on Federally Assisted Construction Projects a Concern

ABC estimates more than $95 billion worth of federal grants for federally assisted construction projects procured by state and local governments are subject to Biden’s pro-PLA policies independent of the FAR Council’s proposed rule.

Currently, 24 states have enacted laws ensuring fair and open competition on state and local taxpayer-funded construction projects by restricting government-mandated PLAs and PLA preferences. On April 26, 18 Republican governors, led by Asa Hutchinson of Arkansas and Bill Lee of Tennessee, sent a letter to the White House opposing the Biden administration’s policies promoting government-mandated PLAs on federal and federally assisted taxpayer-funded construction projects because it “will undermine taxpayer investment in billions of dollars of forthcoming public works projects financed by the Infrastructure Investments and Jobs Act of 2021 and additional bipartisan legislation passed by Congress, all of which was signed into law free from language requiring or encouraging the use of PLAs.”

ABC and a diverse coalition of construction industry, small business and taxpayer advocates strongly oppose the Obama and Biden administration’s pro-PLA policies and have continually advocated for federal legislation, the Fair and Open Competition Act (S. 403/H.R. 1284) introduced by Sen. Todd Young, R-Ind., and Rep. Ted Budd, R-N.C, which prohibits government-mandated PLAs on federal and federally assisted projects and helps taxpayers get the best possible product at the best possible price.

Members of the U.S. House and Senate supportive of this legislation have all written letters to the White House in opposition to anti-competitive pro-PLA policies championed by the Biden administration.

About Government-Mandated PLAs

Problematic, anti-competitive terms in government-mandated PLAs typically force construction workers to join a union and/or pay union dues as a condition of employment and 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 any limited number of nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans, resulting in wage theft estimated at 34% of their paycheck.

To learn more about how corrupt government-mandated PLAs rig the competitive bidding process, hurt taxpayers and endanger plans to rebuild America’s infrastructure, visit the coalition website BuildAmericaLocal.com.

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