Sources: Associated Builders and Contractors, Associated General Contractors of America, Washington, D.C.
Merit shop and union contractors’ top national representatives will seek court action in response to a final Federal Acquisition Regulatory Council rule, Federal Acquisition Regulation: Use of Project Labor Agreements for Federal Construction Projects. Effective December 2023, it implements an early-2022 White House executive order requiring federal construction contracts of $35 million or more to be subjected to project labor agreements. Administration officials see the mandate affecting about 120 contracts valued at $10 billion to $14 billion per year.
PLAs steer taxpayer-funded public works contracts to union-signatory contractors, granting union workers a monopoly on jobs bound by rule, Associated Builders and Contractors contends. Associated General Contractors of America concurs in principle, while also citing surveys indicating how government-mandated PLAs hamper minority and women owned subcontractor hiring.
“The burdensome, inflationary and anti-competitive PLA mandate will needlessly raise costs,” says ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Absent a successful legal challenge, this executive overreach will reward powerful special interests with government construction contracts at the expense of taxpayers and the principles of free enterprise and fair and open competition in government procurement. ABC will continue to fight on behalf of quality, experienced contractors harmed by this rule and the 88.3 percent of America’s construction industry who have made the choice not to belong to a union and want a fair opportunity to participate in federal construction projects. [ABC will] challenge this scheme in the courts on behalf of taxpayers and the majority of the construction industry.”
“Government-mandated project labor agreements undermine the collective bargaining process by imposing a separate agreement in a specific region that applies only to a limited number of construction firms and unions,” adds AGC CEO Stephen Sandherr. “Imposed PLAs undercut the benefits of collective bargaining agreements that were negotiated in good faith between employers and labor union, and will likely prompt many firms to think twice about participating in the bargaining process in the future. We plan to challenge this rule in court so our members can continue to build infrastructure, diversify their ranks, and give taxpayers the best possible value.”
ABC and AGC reinfore criticism of the White House and Federal Acquisition Regulatory Council action with hard numbers gleaned from the records of recent PLA-bound federal projects. Government-mandated PLAs increase construction costs to taxpayers by 12 percent to 20 percent, ABC argues. Of nearly 2,500 large-scale federal projects booked from FY 2009 to FY 2023 and subject to an earlier White House executive order promoting PLAs, federal agency contracting officers chose to require PLAs on just 12 of the jobs, the group notes, adding, “There were no reports of widespread cost overruns, delays, labor unrest or poor-quality construction on $164.4 billion worth of non-PLA projects, indicating that PLA mandates are not needed to ensure economy and efficiency in government contracting.”
In a parallel finding from a Department of Defense analysis of federal construction projects where a White House-encouraged PLA could have been imposed, AGC reports that more than 99 percent involved “nonpartisan federal officials [finding] no benefit to taxpayers from imposing one.”