President Joe Biden will today sign an executive order that, according to the White House Fact Sheet, “will make federal procurement more economical and efficient by improving coordination and minimizing disruptions on large federal construction projects.”
Tomorrow, the President will sign an Executive Order to improve timeliness, lower costs and increase quality in federal construction projects. Federal construction projects span the country – from the maintenance of nuclear sites to base construction to waterways and flood projects. By requiring the use of project labor agreements (PLAs) on federal construction projects above $35 million, the Order will help alleviate the management and coordination challenges that can stymie progress on major construction projects. This helps projects get completed on time and helps the government get the best value for taxpayers’ dollars.
However, industry associations such as the Associated General Contractors of America and Associated Builders and Contractors are speaking out against the order, saying the labor agreements will inflate construction costs and discriminate against most workers.
The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, issued the following statement today in response to President Biden’s new executive order seeking to impose project labor agreements on many federal construction projects:
“It is hard to explain why the President would choose to impose government mandated project labor agreements to solve a problem that doesn’t exist. Construction workers are among some of the highest paid workers in the economy, earning ten percent more than the average worker in the U.S. Their pay rates have continued to climb 5.1 percent as labor shortages have made this a workers’ market.
“Government-mandated project labor agreements undermine the collective bargaining process by imposing a separate agreement in a specific region that applies only to a limited number of construction firms and unions. These imposed PLAs undercut the benefits of the collective bargaining agreements that were negotiated in good faith between employers and labor union and will likely prompt many firms to think twice about participating in the bargaining process in the future.
“Imposing project labor agreements also discriminates against the more than 85 percent of construction workers who choose not to belong to a union. That is because open shop firms that are subjected to a project labor agreement are required to pay both their employees’ benefits and those of the unions involved in the agreement. Since few firms can be competitive while paying two sets of benefits, the order effectively locks out most workers from participating in federal construction projects.
“Limiting the number of firms that can compete for federal construction projects and imposing agreements that are often more costly than existing collective bargaining arrangements will inflate the cost of construction projects at a time when firms are already struggling with labor shortages and skyrocketing materials prices. It also undermines the bipartisan spirit of the new infrastructure bill.
“Career civil servants also do not see the benefits of imposing these kinds of agreements. A recent analysis of federal construction procurement decisions by the Department of Defense during the Obama administration that we obtained via a Freedom of Information Act request – during a time when federal officials were being pressured by a similar executive order – found that in 99.4 percent of construction projects where a PLA could have been imposed, nonpartisan federal officials found no benefit to taxpayers from imposing one.
“Excluding the vast majority of construction workers, inflating the cost of federal construction, and working against the interests of taxpayers is bad politics and even worse policy. Which is why we will explore every possible avenue as we push back against this needless and economically damaging new executive order.”
Meanwhile, the Associated Builders and Contractors yesterday made this statement:
“President Biden’s new policy will not help America ‘Build Back Better;’ instead, it will exacerbate the construction industry’s skilled workforce shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “This anti-competitive and costly executive order rewards well-connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.
“Research has demonstrated that government-mandated PLAs increase construction costs by 12% to 20%, which results in fewer construction projects and improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects—and the creation of fewer jobs,” said Brubeck. “PLAs steer contracts to unionized contractors and workers at the expense of the best-quality nonunion contractors and workers who want to compete fairly at a price best for taxpayers.
“PLA mandates are bad public policy because they effectively exclude the nearly 9 out of 10 U.S. construction workers who choose not to join a union from building taxpayer-funded construction projects,” said Brubeck. “These controversial agreements hold a third of employees’ compensation for ransom unless they join a union, pay union fees and prop up struggling union pension plans. PLAs also create excessive cost burdens and risks for high-performing nonunion contractors, which built more than half of the federal government’s large-scale construction projects during the past decade and are more likely to be small, women- and/or minority-owned businesses.
“Because 87.4% of the construction workforce does not belong to a union and the construction industry faced a skilled labor shortage of 430,000 people in 2021 alone, the Biden administration would be best served by promoting inclusive, win-win policies that welcome all of America’s construction industry to realize the potential of the recently passed Infrastructure Investment and Jobs Act to rebuild our nation’s crumbling infrastructure, increase accountability and competition and reduce waste and favoritism in the procurement of public works projects,” said Brubeck.
Tagged with ABC, AGC, construction