On Dec. 22, the Biden administration published the long-awaited Federal Acquisition Regulatory Council’s final rule, Use of Project Labor Agreements for Federal Construction Projects, implementing President Joe Biden’s Executive Order 14063, which requires federal construction contracts of $35 million or more to be subjected to controversial project labor agreements.
On Dec. 18, ABC issued a statement in response to the White House announcement of the new ABC-opposed rule.
“The Biden administration’s burdensome, inflationary and anti-competitive PLA mandate rule will needlessly raise costs on taxpayer-funded construction projects and steer contracts to unionized contractors and workers,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Absent a successful legal challenge, this executive overreach will reward powerful special interests with government construction contracts at the expense of taxpayers and the principles of free enterprise and fair and open competition in government procurement.
“When mandated by governments, PLAs increase construction costs to taxpayers by 12% to 20%, reduce opportunities for qualified contractors and their skilled craft professionals and exacerbate the construction industry’s worker shortage of more than half a million people in 2023,” said Brubeck.
“ABC will continue to fight on behalf of quality, experienced contractors harmed by this rule and the 88.3% of America’s construction industry who have made the choice not to belong to a union and want a fair opportunity to participate in federal construction projects––but cannot do so because of PLA schemes.
“In addition, ABC condemns Biden administration policies independent of this rulemaking that push PLAs on competitive grant programs administered by federal agencies, affecting nearly $260 billion worth of federally assisted infrastructure projects procured by state and local governments, as well as schemes by the Biden administration to coerce private developers of hundreds of billions of dollars’ worth of clean energy and domestic microchip manufacturing projects to mandate PLAs. Biden’s PLA policies circumvent congressional intent as none of these policies were passed in funding legislation.
“ABC plans to challenge this Biden administration scheme in the courts on behalf of taxpayers and the majority of the construction industry,” said Brubeck. “In the interim, ABC will continue to oppose its special interest-favoring policy using all tools in our advocacy and legal toolbox while educating stakeholders about the negative impact of government-mandated PLAs on federal and federally assisted projects.”
ABC’s comments were picked up in dozens of industry publications and media reports.
Next Steps
The rule goes into effect on Jan. 22, 2024, and will take additional time for numerous federal agencies to implement in their procurement policies and forthcoming solicitations for construction services.
A Dec. 18, 2023, White House Office of Management and Budget memo, M-24-06, Use of Project Labor Agreements on Federal Construction Projects, provides guidance about how this rule should be implemented by federal agencies. Of note, it describes when federal contracting officers shall require a PLA in a solicitation and how the PLA requirement can be waived under limited circumstances.
ABC members and chapters are encouraged to register for an ABC members-only webinar from 2 to 3:15 p.m. ET on Wednesday, Jan. 17, 2024, where experts will discuss the rule, the OMB memo and ABC’s legal, advocacy and public relations strategies to fight federal PLA requirements.
In the interim, ABC members are encouraged to flag for ABC National’s advocacy team any solicitations with PLA requirements or pro-PLA language, as well as any federal agency PLA surveys, by emailing [email protected].
In addition, ABC members are strongly encouraged to participate in this ABC Action grassroots campaign and ask their federal lawmakers to fight the Biden administration’s pro-PLA schemes and co-sponsor the Fair and Open Competition Act (H.R. 1209/S. 537), introduced in the 118th Congress by Rep. James Comer, R-Ky., and Sen. Todd Young, R-Ind.
Background on President Biden’s Executive Order 14063
On Feb. 4, 2022, President Biden signed EO 14063, requiring federal construction contracts greater than $35 million to be subjected to PLAs. ABC blasted the EO, calling it anti-competitive for small businesses and costly for taxpayers.
On Aug. 19, 2022, the Federal Acquisition Regulatory Council issued its proposed rule implementing EO 14063.
In October 2022, ABC submitted more than 40 pages of comments to the Federal Acquisition Regulatory Council, calling on the Biden administration to withdraw its controversial proposed rule. ABC’s opposition was shared by more than 50 members of the U.S. Senate and U.S. House of Representatives, 19 Republican governors and a diverse coalition of construction industry, small business and taxpayer advocates urging the administration to withdraw its proposal and additional policies promoting PLA mandates on federal and federally assisted construction projects.
At least 8,000 stakeholders across the country––including 2,500 ABC member contractors––submitted comments opposed to this proposed rule during the 60-day comment period. 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.
The new Biden administration policy replaces President Barack Obama’s 2009 Executive Order 13502, 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.
According to government data, of the 2,499 large-scale federal construction contracts valued at $165.6 billion procured from FY 2009 to FY 2023 subject to President Obama’s pro-PLA policy, federal agency contracting officers chose to require PLAs on just 12 large-scale federal construction contracts. There were no reports of widespread cost overruns, delays, labor unrest or poor-quality construction on $164.4 billion worth of non-PLA projects during this time period, indicating that PLA mandates are not needed to ensure economy and efficiency in government contracting.
The Biden administration expects its mandatory PLA rule to affect about 120 federal contracts valued at $10 to $14 billion per year, in total.
ABC and a diverse construction industry coalition strongly support the Fair and Open Competition Act (H.R. 1209/S. 537)––reintroduced in the 118th Congress by Sen. Todd Young, R-Ind., and Rep. James Comer, R-Ky.––which prohibits government-mandated PLAs on federal and federally assisted projects and helps taxpayers get the best possible product at the best possible price.
Members of the U.S. House and Senate supportive of the Fair and Open Competition Act have written letters to the White House in opposition to anti-competitive, pro-PLA policies championed by the Biden administration.
Currently, 25 states restrict government-mandated PLAs on state, state-assisted and local construction projects to some degree, which has protected more than $1 trillion worth of taxpayer-funded construction projects since 2007. Governors also filed comments with the FAR Council and, in April 2022, expressed disappointment in White House efforts to push government-mandated PLAs on federally assisted construction projects through infrastructure grant programs administered by federal agencies.