Coalition Questions Project Labor Agreement Scheme in CHIPS Funding for Semiconductor Plant Construction
On March 7, a diverse group of 17 construction and business associations urged the U.S. Department of Commerce to ensure taxpayer investments in the semiconductor industry are not needlessly constrained by anti-competitive and inflationary project labor agreement schemes imposed through after-the-fact regulatory action by the Biden administration.
According to the coalition letter, a project labor agreement preference policy in the Department of Commerce’s grant program could undermine congressional authority; exacerbate a shortage of construction industry skilled labor; discourage competition from quality large, small and disadvantaged construction businesses; and needlessly increase construction costs for applicants at the expense of taxpayers and national trade and security objectives.
As the construction industry awaits a controversial final rule to mandate PLAs on federal construction contracts of $35 million or more, Congress is pushing back on the administration’s proposal with the Fair and Open Competition Act (H.R. 1209/S. 537), which would prevent federal agencies and recipients of federal assistance from requiring or encouraging contractors to sign a discriminatory PLA as a condition of winning a federal or federally assisted taxpayer-funded construction contract. Government-mandated PLAs discriminate against nonunion contractors and workers, who comprise a record high 88.3% of the U.S. private construction industry workforce.
“The coalition is disappointed that yet another effort by the Biden administration is pushing inflationary PLA schemes on federally assisted projects that may exacerbate the construction industry’s skilled labor shortage of more than half a million,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “ABC has tracked pro-PLA language in more than $100 billion worth of federal agency grant programs for state and local government infrastructure projects during the last two years, which is troubling enough. However, this is the first time PLA preferences have been expanded to purely private construction via the federal tax code.”
The coalition also seeks clarity about the alternative to the controversial pro-PLA policy in the CHIPS Incentives Program’s Commercial Fabrication Facilities Notice of Funding Opportunity.
“While the coalition vehemently opposes the PLA preference policy in the notice, we appreciate its inclusion of an alternative policy in the form of workforce continuity plans and are seeking further clarity from Commerce,” said Brubeck. “It is unclear if this alternative is workable for CHIPS recipients and their contractors or if Commerce will penalize applicants who do not require PLAs.”
Stakeholders can track more than $228 billion worth of federal grants for private, state and local infrastructure projects containing pro-PLA language at www.abc.org/PLAgrants.
Department of Commerce CHIPS Act Implementation and Funding
On Sept. 6, 2022, the Department of Commerce announced its strategy for the distribution of $50 billion in new funding provided by the CHIPS Act of 2022, which is aimed at boosting the domestic semiconductor industry.
The law will be implemented through a new Chips for America program established at the DOC, with funding documents to be released by February 2023. The plan includes significant funding for the construction and expansion of manufacturing facilities dedicated to the production, testing and assembly of semiconductors. The plan notes that Davis-Bacon prevailing wage requirements will apply to all CHIPS-funded construction projects. ABC opposed the inclusion of prevailing wage requirements in semiconductor legislation through letters, action alerts and advocacy to Congress, and will continue to oppose the expansion of unnecessarily costly and burdensome Davis-Bacon requirements.
The DOC released an executive summary of the implementation strategy as well as the full paper.
On Feb. 28, 2023, the Commerce Department’s National Institute of Standards and Technology’s CHIPS Incentives Program––Commercial
Fabrication Facilities––Notice of Funding Opportunity 2023-NIST-CHIPS-CFF-01, was released (see page 21 for the problematic pro-PLA language and the PLA alternative language on page 53 and 54, under part b. Construction Workforce Plan).
Stakeholders are encouraged to review the Department of Commerce NIST FAQs for more information.
Further updates will be posted to the department’s chips.gov website.