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Executive Order on PLAs Provokes Firestorm of Comment

Oct. 19, 2022
Proposed rule that would require project labor agreements on federal construction contracts of $35 million or more draws strong opposition and support.

The comment period for a Notice of Proposed Rulemaking (NPRM) for Executive Order 14063 closed this week. The more than 8,300 comments lay out strong, conflicting opinions between merit shop and union shop contractors and their respective allies in both government and industry. Associated Builders and Contractors has called for the order's immediate withdrawal, with unions, in contrast, expressing support.

The new Executive Order (EO) if implemented would require Project Labor Agreements (PLAs) on federal construction projects of $35 million or more. This would revoke an earlier EO from the Obama era which encouraged—but did 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.

A PLA is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. As a condition of being awarded a contract, the contractor must sign the negotiated PLA with the relevant union organizations.

Opposition from ABC

“[Associated Builders and Contractors] 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 in a statement issued October 19. “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.

“The Biden administration’s rule will only exacerbate significant headwinds the U.S. construction industry faces: severe supply chain disruptions, unprecedented materials cost inflation of 40.5% since the onset of the COVID-19 pandemic, declining investment and a widespread skilled workforce shortage,” continued Brubeck. “ABC strongly urges the [Federal Acquisition Regulatory] Council to immediately withdraw the proposed rule to efficiently provide taxpayers with the best possible construction product at the best possible price and provide all construction industry stakeholders with a fair opportunity to compete for taxpayer-funded construction projects.”

Associated Builders and Contractors is a national construction industry trade association established in 1950  representing more than 21,000 members. ABC is strongly grounded on the merit shop philosophy as the best way to win work, and to safely deliver value to their customers.

According to a September 2022 surveyof ABC contractor members, 98% oppose the proposed rule. 97% said a construction contract that required a PLA would be more expensive compared to a contract procured via open competition; 99% said they were less likely to bid on a taxpayer-funded construction contract if the bid specifications required the winning firm to sign a PLA; 97% of respondents said that government-mandated PLAs decrease economy and efficiency in government contracting.

In the statement, ABC said their opposition was joined by a diverse coalition of construction industry, small business and taxpayer advocates, as well as18 Republican governors and 50 members of the U.S. Senate and House.

Support From UA

The United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, commonly known as the United Association (UA), is a labor union representing over 359,000 skilled craft persons. 

In their 73-page comment on the EO, signed by Ellen O Boardman, UA General Counsel, the association asserts that the new federal PLA policy will not only benefit project delivery on immediate mission critical facilities, but it will also advance the federal government's long-term construction procurement needs by supporting the workforce development so critically needed in the construction industry.

The statement notes that PLAs have been used extensively throughout the public and private sectors for nearly 100 years, on projects conceivably totaling in excess of 1 trillion dollars. "Unfortunately, because there is a certain amount of political controversy over using PLAs on public projects, the track record and benefits of PLA-use have sometimes been mischaracterized and misunderstood."

Much of the rest of the comment goes on to detail the use of PLAs in both the public and private sector, and how they have proven valuable in guaranteeing a skilled workforce for given projects, while ensuring timely delivery, quality control and enhanced safety.

"For these reasons," the statement reads, "it is not surprising that at least 22 PLA studies and reports have been published by universities, non-profit groups and government agencies across the country demonstrating their substantial value and increasingly important benefits."

In a statement to CONTRACTOR,Andrew Galo, UA Department of Legislative and Political Affairs, pushed back on prior statements by ABC.

"ABC’s arguments here don’t hold water," Galo said. "The lion’s share of PLAs are used in the private sector, by companies like Toyota and Walmart, who have no allegiance whatsoever to union labor. These companies use PLAs because they enable them to maximize profit and complete projects on time and under budget. In the last 18 months, $214 billion worth of projects have used PLAs—with $185 billion coming in the private sector. If PLAs truly drove up costs and cut contractors out of the process, why would so many companies invest hundreds of billions of dollars using PLAs?"

Support from MCAA, CEA

The Mechanical Contractors Association of America (MCAA), a national specialty construction industry trade association representing some 2,700 union-signatory mechanical construction and mechanical service firm employers nationwide, also weighed in. 

In a lengthy comment signed by Jim Gaffney, President Goshen Mechanical Contractors, Inc., and Chair MCAA Government Affairs Committee, and Timothy J. Brink, CEO MCAA, the Association strongly supported the EO, saying, "Long-recognized use and experience with PLAs in the private and public sectors nationwide... combined now with new objective research on union/non-union productivity on a database of some 1,550 private sector capital projects in IPA’s database over the past 20 years convincingly validates the sound purchasing policy advanced in Executive Oder 14063."

IPA stands for Independent Project Analysis, an independent construction engineering and cost consulting firm. The comment referred often to IPA data, in particular one study showing that while the open shop wages come in on average some 9.7% below the all-in union rates, various factors combine to make the union sector fully 4% more cost effective overall relative to the open shop. 

Those factors included union sector work productivity advantages, lower union craft staffing levels (10 % below the open shop) and more reliable workforce deployment with less turnover over the course of the project.

The Construction Employers of America (CEA)—a coalition of seven leading, national construction employer associations that collectively represent thousands of businesses employing more than 1.4 million skilled construction industry trades employees—also shared its comments. 

"The federal policy that PLAs promote economy and efficiency has been implemented and maintained across three consecutive Presidential Administrations. The arguments put forward against this proposal were already considered and rejected during this time," the statement read. "There is no new data that warrants displacing this longstanding, carefully considered policy determination. Moreover, major for-profit companies and state and local governments across the nation have recognized that PLAs promote economy and efficiency in completing large, critical, and complex construction projects."

Next Steps

Now that the public comment period has concluded, the EO will be sent back to the FAR Council. After reading and debating comments, the agency will determine whether to revise the proposed rule, abandon the proposal, or move forward to the final rule stage of the rulemaking process.

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