The Truth About Project Labor Agreements

On Sept. 7, the Federal Acquisition Regulatory Council’s final rule on the Use of Project Labor Agreements for Federal Construction Projects, which would mandate anti-competitive and inflationary project labor agreements on large-scale federal construction contracts, arrived at the Office of Management and Budget’s Office of Information and Regulatory Affairs for review. This is the final step before the rule will be published in the Federal Register with a future effective date.

11/30/23 UPDATE: The final rule cleared OIRA review on 11/30/23, suggesting its formal release and publication in the federal register will happen in the immediate future. On Nov. 15, House Democrats of the Labor Caucus sent a letter to the FAR Council urging them to issue the final rule by Dec. 7.

The rule will finalize a proposed rule released by the FAR Council on Aug. 19, 2022, which mandates the use of PLAs on all federal construction contracts of $35 million or more. The proposal is a direct result of President Joe Biden’s Feb. 4, 2022, Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects, which directed the FAR Council to mandate PLAs on large federal construction projects. Details on the final rule are not yet available, but it is expected to closely match the proposal.

ABC previously strongly criticized the proposed rule in a statement: “ABC calls for the immediate withdrawal of this illegal proposed rule and its imposition of anti-competitive and inflationary government-mandated PLAs on federal contracts,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “PLA mandates undermine economy and efficiency in federal contracting, increase construction costs by 12% to 20%, create project delivery delays and discriminate against nonunion contractors and workers, who comprise 87.4% of the construction workforce.

ABC actively opposed the proposed rule, including with the following actions:

• Submitting more than 40 pages of comments outlining how the proposed rule will increase costs, reduce competition and harm taxpayers
• Rallying over 2,500 ABC members to submit comments in opposition to the proposed rule
• Building opposition to the rule from 50 members of the U.S. Senate and House, 18 Republican governors and a diverse coalition of construction industry, small business and taxpayer advocates
• Conducting a September 2022 member survey demonstrating nearly unanimous opposition among ABC members, including small and disadvantaged businesses
• Strongly supporting the Fair and Open Competition Act (H.R. 1209/S. 537), which prohibits government-mandated PLAs on federal and federally assisted projects and has more than 109 cosponsors in the U.S. House and 25 cosponsors in the U.S. Senate. Stakeholders can write their lawmakers and encourage them to cosponsor FOCA via this grassroots campaign.

Once finalized, this proposal will replace President Barack Obama’s 2009 Executive Order 13502, which encourages, but does not require, 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. As reported extensively by TheTruthAboutPLAs.com, government-mandated PLAs were used on less than 1% of all eligible federal construction contracts during the life of the Obama policy, and a number of federal and federally assisted construction projects have experienced needless delays, reduced competition, poor local hiring outcomes, accidents, increased costs and exposed the few nonunion workers allowed to work on a PLA jobsite to wage theft of up to 34% of wages earned during the life of the project.

The Biden administration expects its proposed rule to apply to about 120 federal contracts valued at $10 to $14 billion per year.

Stakeholders can schedule a meeting with OIRA and express concerns about the flawed proposal.

Publication of the final rule is expected before the end of the year.