WASHINGTON, DC — On February 4th, President Biden is scheduled to sign an Executive Order requiring the use of project labor agreements (PLAs) on federal construction projects above $35 million. According to a White House-issued fact sheet published prior to the signing the stated intent of the order is to, "help alleviate the management and coordination challenges that can stymie progress on major construction projects. This helps projects get completed on time and helps the government get the best value for taxpayers’ dollars."
(You can read the fact sheet at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/03/fact-sheet-president-biden-signs-executive-order-to-boost-quality-of-federal-construction-projects/.)
Based on FY2021 figures, this order could affect $262 billion in federal government construction contracting involving nearly 200,000 workers on federal construction contracts. Additionally, the President’s Executive Order directs the departments of Defense and Labor, along with the Office of Management Budget, to lead a training strategy for the nearly 40,000-person strong contracting workforce on the implementation of this Order’s policy.
Associated Builders and Contractors came out in strong opposition to the Order.
“President Biden’s new policy will not help America ‘Build Back Better;’ instead, it will exacerbate the construction industry’s skilled workforce shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “This anti-competitive and costly executive order rewards well-connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.
“Research has demonstrated that government-mandated PLAs increase construction costs by 12% to 20%, which results in fewer construction projects and improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects—and the creation of fewer jobs,” said Brubeck. “PLAs steer contracts to unionized contractors and workers at the expense of the best-quality nonunion contractors and workers who want to compete fairly at a price best for taxpayers.
“PLA mandates are bad public policy because they effectively exclude the nearly 9 out of 10 U.S. construction workers who choose not to join a union from building taxpayer-funded construction projects,” said Brubeck. “These controversial agreements hold a third of employees’ compensation for ransom unless they join a union, pay union fees and prop up struggling union pension plans. PLAs also create excessive cost burdens and risks for high-performing nonunion contractors, which built more than half of the federal government’s large-scale construction projects during the past decade and are more likely to be small, women- and/or minority-owned businesses.
“Because 87.4% of the construction workforce does not belong to a union and the construction industry faced a skilled labor shortage of 430,000 people in 2021 alone, the Biden administration would be best served by promoting inclusive, win-win policies that welcome all of America’s construction industry to realize the potential of the recently passed Infrastructure Investment and Jobs Act to rebuild our nation's crumbling infrastructure, increase accountability and competition and reduce waste and favoritism in the procurement of public works projects,” said Brubeck.
The Biden administration has also recently enacted new policies encouraging government-mandated PLAs on private, state and local government construction projects receiving federal funding through the U.S. Treasury, Transportation, Agriculture and Interior departments, which has resulted in pushback by GOP governors.
ABC, Build America Local and the National Taxpayers Union have been asking lawmakers to oppose PLAs and cosponsor fair and open competition legislation (H.R. 1284/S. 403) on federal taxpayer-funded construction projects. Similar pro-taxpayer legislation has been enacted in 24 states.