Contractors: Biden’s labor agreement rule would increase costs

According to a September 2022 survey of Associated Builders and Contractors (ABC) members, 98 percent of respondents oppose President Biden’s proposed rule mandating project labor agreements (PLAs) on federal construction projects of $35 million or more. PLAs increase costs and exacerbate the construction industry’s skilled labor shortage because they exclude almost nine out of 10 workers from participating in these contracts.

“The overwhelming opposition to PLA mandates demonstrates that fair and open competition on federal and federally-assisted infrastructure projects is a win-win for taxpayers and the U.S. economy because it ensures all Americans and qualified companies are welcome to fairly compete to rebuild America’s infrastructure,” ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck says. “In contrast, the Biden administration’s proposed rule requires government-mandated PLAs on federal contracts of $35 million or more, and other policies promoting PLAs on federally assisted construction projects will needlessly increase costs by 12 percent to 20 percent and reduce competition from quality contractors and the 87.4 percent of construction workers who freely choose not to join a union.”

According to the survey:

• Ninety-seven percent of survey respondents said a construction contract requiring a PLA would be more expensive compared to a contract procured via free and open competition.
• Ninety-nine percent said they are less likely to bid on a taxpayer-funded construction contract if the bid specifications required the winning firm to sign a PLA with labor unions.
• Ninety-seven percent of respondents said that government-mandated PLAs decrease economy and efficiency in government contracting.
• Ninety-six percent expected a PLA requirement to result in less competition from subcontractors.
• Ninety-five percent of survey respondents said the requirements of government-mandated PLAs for firms to contribute to union benefits programs harm employees and 96 percent said they undermine investments in workforce development programs.

“Between 2009 and 2021, federal agencies mandated just 12 PLAs on 2,075 federal construction projects of $25 million or more, illustrating that, when given the option, PLA mandates are unnecessary on federal construction projects,” Brubeck says. “ABC members are top federal contractors—they were awarded 57 percent of the value of $127 billion worth of large-scale federal construction projects during this time period—but are needlessly excluded by the Biden administration’s policies promoting PLAs, which favor unionized contractors and labor.”

The majority of survey respondents said PLA mandates would either result in construction projects that are less safe (65 percent) or have no impact on safety (34 percent). Three-quarters (75 percent) said PLAs would result in poorer quality or have no impact on quality (24 percent). Eighty-five percent said PLA mandates decrease the likelihood of completing a project on time and on budget, with 9 percent saying there would be no impact.  

In addition, 94 percent of survey respondents said a PLA would result in worse local hiring outcomes for a project. Almost 69 percent of respondents agreed that a PLA would decrease the hiring of women, veteran and disadvantaged business enterprises and construction workers, which have traditionally been unaffiliated with labor unions, while another 27 percent of respondents felt that PLAs would have no effect in hiring these disadvantaged populations and contractors.

“The survey illustrates how PLA mandates undermine inclusive workforce development, hiring and small business subcontracting practices and hinder the ability of the best contractors to safely deliver taxpayer-funded construction projects on time and on budget, which is why ABC members are outraged by the Biden administration’s discriminatory policies favoring special interests,” said Brubeck. “ABC encourages concerned taxpayers, government officials and construction industry stakeholders to submit comments in opposition to the Biden administration’s proposed policy mandating PLAs on federal contracts by the Oct. 18 comment deadline via ABC’s action alert.”

The survey of ABC member contractors was conducted between Sept. 7 and 23 following the Biden administration’s Aug. 19 release of the Federal Acquisition Regulatory Council’s proposed rule (FAR Case 2022-003, Use of Project Labor Agreements for Federal Construction Projects RIN: 9000-AO40) implementing President Biden’s Feb. 4 Executive Order 14063.

Once final, the Biden proposal will replace President Obama’s Feb. 2, 2009, Executive Order 13502, which encourages 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. The Biden administration expects its proposed rule to affect about 120 federal contracts valued at $10 billion per year.

ABC and a diverse coalition of construction industry, small business and taxpayer advocates strongly oppose the Obama and Biden administration’s pro-PLA policies and have continually advocated for federal legislation, the Fair and Open Competition Act introduced by Sen. Todd Young, R-Ind., and Rep. Ted Budd, R-N.C, which prohibits government-mandated PLAs on federal and federally assisted projects and helps taxpayers get the best possible product at the best possible price.