AGC suit states union, nonunion contractor case against federal PLA mandate

Sources: Associated General Contractors of America, Washington, D.C.; CP staff

An Associated General Contractors of America and Louisiana AGC chapter lawsuit filed in U.S. District Court for the Western District of Louisiana challenges the Federal Acquisition Regulatory Council’s late-2023 final rule, per February 2022 White House executive order, mandating project labor agreements (PLA) on major federal construction work. The White House lacks the authority to impose sweeping labor policies that undermine union contractors’ current labor agreements and discriminate against open shop contractors, plaintiffs argue. They ask the court to declare that the Council’s action exceeds statutory authority and violates the Constitution; issue an order vacating the final rule; and, permanently enjoin the Council and White House from further implementing or enforcing the final rule, or from taking any other action to implement the executive order. 

“This new regulation is an unlawful solution in search of a nonexistent problem,” affirms AGC CEO Stephen Sandherr. “Current law prohibits the president from unilaterally imposing labor and employment terms that would disrupt existing agreements for union contractors and exclude open shop firms from competing for federal projects.”

The Council mandate applies to all federal construction projects valued at or above $35 million. Government-mandated PLAs require a contractor to negotiate with unions, regardless of whether they have ongoing relationships with the organizations. PLAs give organized labor groups immense leverage to set terms and conditions, AGC observes, as the contractor is required to have an agreement as a condition of being awarded the project—thereby allowing unions to impose more costly work rules and practices.

In their legal filing, plaintiffs contend that issuance of the PLA order violates “the separation-of-powers principles at the heart of our constitutional system. The enactment of a rule that bars Contractors from competition for Large-Scale Federal Projects unless they sign a collective bargaining agreement is an inherently legislative function, a function that remains exclusively ‘with the people’s elected representatives’ under Article I of the Constitution.” Current laws governing federal procurement do not provide the chief executive with the authority to impose labor policies as a precondition for securing projects, they add. 

“This regulation punishes firms that have already entered into a collective bargaining agreement with construction unions, discriminates against open shop firms and their employees and deprives taxpayers of the benefits of open competition,” Sandherr concludes.

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