Government-Mandated Project Labor Agreements

Overview

Anti-competitive and costly government-mandated project labor agreements end open, fair and competitive bidding on contracts to build taxpayer-funded construction projects. Government-mandated PLAs discourage merit shop contractors from bidding on taxpayer-funded construction contracts and drive up costs by 12% to 20%, which results in fewer infrastructure improvements and reduced construction industry job creation.

ABC Supports:

  • The Fair and Open Competition Act (H.R.1209/S.537), introduced by Rep. James Comer, R-Ky., and Sen. Todd Young, R-Ind., which would prevent the government from mandating a PLA as a condition of winning federal or federally assisted construction contracts.
  • Legislative or executive measures to preserve fair and open competition on public construction contracts requiring government neutrality regarding a contractor’s use of a PLA.
  • Federal and federally assisted construction contracts awarded based on sound and credible criteria, such as quality of work, experience and cost—not a company’s union affiliation or willingness to execute a PLA.

ABC Opposes:

  • Government-mandated PLAs and discriminatory PLA preferences on federal and federally assisted construction projects via President Biden’s Executive Order 14063 and related regulations and policies.
  • Claims by PLA proponents that government mandates and preferences for PLAs will improve the economy and efficiency in federal, state or local government contracting.

Background

A PLA is a project-specific collective bargaining agreement with multiple unions that is unique to the construction industry. The National Labor Relations Act permits construction employers to execute a PLA voluntarily, but when a PLA is mandated by a government agency, construction contracts can be awarded only to contractors and subcontractors that agree to the terms and conditions of the PLA.

Typically, PLAs force contractors to recognize unions as the representatives of their employees on a job; use the union hiring hall to obtain workers; hire apprentices exclusively through union apprenticeship programs; pay fringe benefits into union-managed benefits and multi-employer pension programs; and obey the unions’ restrictive and inefficient work rules and job classifications. PLAs force employees to pay union dues, accept unwanted union representation and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefits plans.

On Feb. 4, 2022, President Biden signed Executive Order 14063, which requires PLAs on all federal construction contracts of $35 million or more, with limited and rare exceptions.

On Dec. 18, 2023, President Biden announced a final rule implementing the PLA mandate on federal projects over $35 million .and the related Dec. 18, 2023, White House Office of Management and Budget Memo.  ABC issued a statement in response to the President’s announcement expressing plans to challenge the new rule in court:

Effective Jan. 22, 2024, the Biden rule replaced President Obama’s Feb. 2, 2009, Executive Order 13502 and related regulations, which encouraged federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total value on a case-by-case basis, and permitted states and localities to mandate PLAs on federally assisted projects. Federal agencies are now requiring every prime contractor and subcontractor on a federal construction project of $35 million or more performed within the United States to sign a PLA as a condition of winning a taxpayer-funded contract.

Prior to this, on Oct. 18, 2022, ABC filed extensive formal comments in response to the FAR Council’s proposed rule.

ABC’s opposition to the FAR Council’s proposed rule was shared by more than 50 members of the U.S. House and Senate, 19 Republican governors and a diverse coalition of construction industry, small business and taxpayer advocates urging the administration to withdraw its proposed rule and other Biden administration schemes pushing government-mandated PLAs on state and local government construction projects receiving federal assistance via $260 billion in federal agency infrastructure grant programs (visit abc.org/PLAGrants to learn more).

Learn more about government-mandated PLAs and Biden administration pro-PLA policies via ABC’s 2024 FAQ document and coalition website at BuildAmericaLocal.com.

According to a September 2022 survey of ABC contractor members, 98% oppose this proposed rule. Additionally, 97% said a construction contract that required a PLA would be more expensive compared to a contract procured via fair and 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 with labor unions and 97% of respondents said that government-mandated PLAs decrease economy and efficiency in government contracting.

ABC also issued an action alert that members can use to urge members of Congress to cosponsor the Fair and Open Competition Act to help fight the final rule and restore fair and open competition on federal and federally assisted construction projects.

Previously, the Obama administration repealed former President George W. Bush’s Executive Orders 13202 and 13208, which maintained government neutrality in federal contracting from 2001 to 2009 by prohibiting the government from requiring contractors to adhere to a government-mandated PLA as a condition of winning more than $147 billion worth of federal construction contracts and hundreds of billions of dollars’ worth of federally assisted construction contracts.

In response to the threat of Obama administration PLA requirements, 29 states enacted legislation or executive orders restricting PLA requirements and preferences on state and local projects since 2011. Currently, 25 states have measures similar to the Bush orders that guarantee fair and open competition on taxpayer-funded construction projects.

Contracts subject to government-mandated PLAs steer work to unionized contractors and their unionized workforces, which comprise just 10.7% of the U.S. private construction workforce, according to 2024 U.S. Bureau of Labor Statistics data. Therefore, PLA requirements deny opportunity to almost 9 out of 10 of the nation’s private construction workers.

PLA requirements and PLA preferences on taxpayer-funded contracts expose procurement officials to intense political pressure, disrupt local collective bargaining agreements, stifle competition, create contracting and construction delays and legal challenges and prevent taxpayers from receiving the best possible construction product at the best possible price.