No Agreement On Project Labor Agreement Order

Biden EO mandating PLAs on $35 million and up federal construction projects draws ire and applause.

Long controversial construction project labor agreements (PLAs) are back in the news with President Biden’s recent executive order requiring them on more federal projects, clashing with vigorous responses by construction industry interests.

The February 9 executive order targeting federal projects above $35 million was followed a week later by a formal letter of opposition and vow to fight it from groups including Associated Builders and Contractors (ABC) and Independent Electrical Contractors (IEC). Yet other groups applauded the move, including the National Electrical Contractors Association (NECA), which sent representatives to the signing.

Industry reaction

In a formal statement attributed to CEO David Long, NECA said expanding requirements for PLAs as government infrastructure spending ramps up will help increase the odds of better overall outcomes in these critical projects.

“This order prioritizes safety, value, quality, and on-time delivery of our federal projects, built with a highly skilled and trained workforce — all areas in which NECA contractors exceed their competitors,” the statement read. “This ensures American tax dollars are going toward federal construction projects that will be completed at the highest standard.”

Opponents balk at that assessment, saying the opposite is true — that PLAs are on balance demonstrably harmful, primarily because their bias favoring unionized labor limits competition and raises construction costs. They say PLAs, which generally establish the terms and conditions of employment for the project and require all contractors to adhere to them, effectively exclude millions of non-union contractors and workers.

In its formal statement, IEC says its merit shop members could be “prevented from partnering with the federal government to build back our nation’s infrastructure at a fair price to the American taxpayer,” and that the order would “exacerbate workforce shortages and limit opportunities for small contractors.”

In its response, ABC asserted that the expanded use of PLAs would have the effect of raising costs of upcoming federal infrastructure projects by 12-20% due to the exclusion of merit shop contractors and added costs associated with union-friendly contracts. Proponents of PLAs counter that the big picture shows agreements produce more evenly spread benefits that make them a net positive force in construction planning and execution.

The road ahead

With the order in place, opponents are now turning to the playbook for countering the administration. Since the order puts in motion a process of formalizing its particulars, they’re now looking for opportunities to blunt its impact. Ben Brubeck, ABC vice president of regulatory, labor, and state affairs says he’s heartened by indications that federal agency contracting officers privately express dismay over the order and have characterized it as “a terrible idea.” With ABC contractors having won about half of all federal contracts over $25 million in recent years, Brubeck says his members are nervous about the impact of what’s coming and are looking to ABC to aggressively counter the order, which the group recently posted a primer on.

“We’re going to wait to see what the proposed rule looks like, but all options are on the table,” he says. “We’ll look at litigation or legislative solutions and participating in the regulatory environment to push back on this.”

Jason Todd, IEC vice president of government affairs, says there is cause for some optimism.

“The final rules related to the executive order will likely dictate the direction IEC and others that oppose it can take to push back against it,” he says. “In the meantime, IEC continues to promote the Fair and Open Competition Act (FOCA) in Congress, which would prevent this order from ultimately taking effect. While IEC remains hopeful its members will have the opportunity to implement the infrastructure bill, it’s disappointed with the message the administration is sending to 87% of the construction industry, that it’s not welcome to partner with the federal government on these important projects.”