The Biden administration and U.S. Department of Treasury have taken another unfortunate step promoting controversial, anti-competitive and costly government-mandated project labor agreements, local hire and Davis-Bacon/prevailing wage policies on federally assisted taxpayer-funded construction projects.

On May 10, the U.S. Department of the Treasury released an interim final rule on the $350 billion worth of federal funding for state and local fiscal recovery allocated in the American Rescue Plan, which was signed into law by President Joe Biden on March 11.

As part of the interim final rule, Treasury released a fact sheet detailing how this money can be used to offset state and local budget shortfalls, support COVID-19 response efforts and address economic stabilization for households and businesses.

Notable guidance discussing how funding can be used for eligible construction projects, including broadband, water and sewer infrastructure, is addressed in the fact sheet and in the interim final rule and contains troubling language promoting the use of government-mandated PLAs, local hire and Davis-Bacon/prevailing wage regulations:

“It is important that necessary investments in water, sewer, or broadband infrastructure be carried out in ways that produce high-quality infrastructure, avert disruptive and costly delays, and promote efficiency. Treasury encourages recipients to ensure that water, sewer, and broadband projects use strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions, not only to promote effective and efficient delivery of high-quality infrastructure projects but also to support the economic recovery through strong employment opportunities for workers. Using these practices in construction projects may help to ensure a reliable supply of skilled labor that would minimize disruptions, such as those associated with labor disputes or workplace injuries.

“To provide public transparency on whether projects are using practices that promote on-time and on-budget delivery, Treasury will seek information from recipients on their workforce plans and practices related to water, sewer, and broadband projects undertaken with Fiscal Recovery Funds. Treasury will provide additional guidance and instructions on the reporting requirements at a later date.”

Treasury Language Will Create Confusion, But Does Not Mandate Labor Requirements

“To be clear, this is not a mandate requiring states and localities to use controversial PLAs and other pro-labor provisions as a condition of accessing federal ARP money for applicable water, sewer, broadband and other infrastructure projects,” said Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs. “However, the practical impact of this language is unknown at this time. State and local governments and construction industry stakeholders will have to wait for additional Treasury guidance and rulemaking about reporting requirements at a date to be determined to alleviate any questions or confusion.”

“The latest effort by the Biden administration to steer public works construction projects to unionized contractors and union labor at the expense of taxpayers and fair and open competition on federally assisted projects is sure to create confusion for state and local governments,” said Brubeck. “It will also harm local construction workers and small businesses not affiliated with trade unions from rebuilding their communities and benefiting from federal investment in state and local construction projects.”

On May 17, the Federal Register published the Treasury’s interim final rule and is giving respondents until July 16 to submit comments in response to the rulemaking.

Learn more about the Treasury rulemaking and stay tuned for additional insights from ABC National about ways stakeholders can engage in regulatory, advocacy and legal strategies to ensure fair and open competition on federally assisted construction projects.

Corrupt Government-mandated PLAs Rig the Bidding Process

Government-mandated PLAs rig the bidding process to discourage experienced nonunion and some union contractors and their qualified workforce from competing to build transformational taxpayer-funded projects. They also deny well-paying local jobs to the more than 87% of U.S. construction industry workers who choose not to affiliate with unions.

Problematic terms in government-mandated PLAs discourage competition by forcing contractors to:

• Use union hiring halls to obtain most or all workers instead of their existing workforce.
• Obtain apprentices exclusively from union apprenticeship programs.
• Follow inefficient union work rules.
• Pay into union benefit and multi-employer pension plans that the few nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans.
• Require their existing workforce to accept union representation, pay union dues and/or join a union as a condition of employment and receiving benefits on a PLA jobsite, resulting in an estimated 20% hit to the paychecks of local craft professionals.

Taxpayers and industry stakeholders should be deeply concerned that the 117^th Congress and the Biden administration will expand the use of government-mandated PLAs on federal and federally assisted construction projects.

Treasury’s pro-PLA language is consistent with language in the Biden administration’s March 31 release of the American Jobs Plan, an outline of $2.25 trillion of government spending that includes investments in infrastructure and clean energy that the administration wants to be built with union labor at the expense of the 87% of the construction workforce that freely chooses not to join a union.

In response, ABC has raised concerns about the AJP’s tax hikes on small businesses and language calling on Congress to pass the ABC-opposed Protecting the Right to Organize Act and tie controversial government-mandated PLAs to federal investments in infrastructure via forthcoming legislation.

On May 5, ABC and a coalition of 16 industry and employer groups sent a letter to President Biden raising concerns about the administration’s direct expansion and support of legislative policies encouraging or requiring controversial government-mandated project labor agreements on federal and federally assisted construction projects.

“Simply put, the Biden administration cannot meet its infrastructure, affordable housing and clean energy agenda without strong participation from the construction industry directly harmed by anti-competitive and costly government-mandated PLA policies,” said the coalition letter.

The coalition also launched a website, BuildAmericaLocal.com, to educate the public about government-mandated PLAs on federal and federally assisted construction projects and stakeholders can write their elected officials in support of fair and open competition.

In an April 28 op-ed published in The Hill, titled America can build back better through fair and open competition, ABC pushed back on controversial provisions in the AJP that would harm the merit shop contracting community:

“At a time when our economy is showing signs of recovery, the Biden administration and Congress should support policies that help bring our economic engine roaring back to life. Fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities and jobs for all qualified local small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster.”

ABC and the coalition are monitoring the Biden administration’s executive actions, federal agency policies and legislation introduced in the 117^th Congress that might promote government-mandated PLAs and exclude quality contractors and 87% of the construction industry from competing to win contracts to build construction projects funded and authorized in forthcoming spending and infrastructure legislation.

ABC and the coalition also support the Fair and Open Competition Act (S. 403/H.R. 1284), reintroduced in the 117^th Congress by Sen. Todd Young (R-Ind.) and Rep. Ted Budd (R-N.C.), which would restrict government-mandated PLAs on federal and federally assisted construction projects.

In a Feb. 24 press release, ABC applauded the introduction of the bill that would encourage more qualified construction companies to compete for federal and federally funded construction projects, providing value for hardworking taxpayers while benefiting the construction industry.

After the bill was introduced, an ABC-led coalition of 17 construction industry and business associations sent a letter to Congress in support of the bill, urging them to immediately pass this legislation.

ABC encourages ABC chapters, members and industry stakeholders to participate in a grassroots campaign urging their U.S. House and Senate lawmakers to sign on as a co-sponsor of FOCA in the 117^th Congress.

ABC members can learn more about ABC’s historical efforts opposing government-mandated PLAs, ABC’s current campaign and the coalition’s campaign in support of fair and open competition benefiting taxpayers and the local construction industry.