AGC Policy & Background Information
- AGC is Committed to Full and Open Competition for All Public Projects. AGC strongly believes that the choice of whether to adopt a collective bargaining agreement should be left to the contractor-employers and their employees, and that such a choice should not be imposed as a condition to competing for, or performing on, a publicly funded project. Government mandates and preferences for PLAs can restrain competition, drive up costs, cause delays, lead to jobsite disputes, and disrupt local collective bargaining. In cases where use of a PLA would benefit a particular project, the construction contractors otherwise qualified to perform the work would be the first to recognize that fact and to adopt a PLA voluntarily. They would also be the most qualified to negotiate the terms of such an agreement.
- Government-Mandated PLAs Can Have the Effect of Limiting the Number of Competitors on a Project. This is because government mandates for PLAs typically require contractors to make fundamental, often costly changes in the way they do business. For example, a PLA may require a contractor to recognize the local unions as the representatives of their employees on that job; use the union hiring hall to obtain workers; reintroduce inefficient work rules that have been abandoned over the course of collective bargaining; and pay into union benefit and multi-employer pension plans that nonunion employees will never be able to access, forcing non-signatory employers to pay twice for retirement and health care benefits. Such changes are impracticable for many contractors and subcontractors, particularly those not historically signatory to collective bargaining agreements.
- There is No Evidence Proving the Claim that PLAs Will Improve the Economy or Efficiency of a Project. Case studies of the economic benefits of PLAs have had varying conclusions. The Congressional Research Service recently issued a report examining many of the arguments for and against PLAs and reviewing previously published research on their economic effects. The Government Accounting Office also reported that it could not document the alleged benefits of past mandates for PLAs on federal projects and that it doubted such benefits could ever be documented due to the difficulty of finding projects similar enough to compare and the difficulty of conclusively demonstrating that performance differences were due to the PLA versus other factors.
Regulations & Guidance
Executive Order 14063 (2022)
On February 4, 2022, President Biden signed Executive Order 14063: Use of Project Labor Agreements For Federal Construction Projects. On August 18, 2022, the Federal Acquisition Regulation (FAR) Council released a proposed rule (FAR Case 2022-003) requiring every prime contractor and subcontractor to engage in negotiation or agree to project labor agreements (PLAs) on direct federal construction projects valued at $35 million or more. (AGC Memo) (AGC Press Release).
On the same day E.O. 14063 was signed, AGC issued a statement and recent analysis on federal construction procurement decisions by defense agencies during the Obama Administration. The information was obtained via a Freedom of Information Act request by AGC, disproves the reasoning set forth by the Biden Administration that government mandated PLAs promotes economy and efficiency for Federal construction projects. AGC will publicly comment on any proposed regulation, and will include its analysis in its regulatory comments. AGC published the AGC Memo: What Federal Contractors Should Know About the New PLA Proposed Rule (08/18/2022)
On December 18, the FAR Council published the final rule requiring PLAs on direct federal construction projects of $35 million or more, with limited exceptions, beginning January 22, 2024. (AGC Memo) This final rule will repeal and replace the Obama Administration’s 2009 PLA E.O (E.O. 13502). The final rule does no impact federally assisted projects (e.g. federal-aid Highway projects). When in effect, the rule will require every prime contractor and subcontractor to engage in negotiation or agreement to PLAs on the applicable federal construction projects valued at $35 million or more. On January 10, AGC filed suit in federal court to block the final rule. (AGC Press Release).
Executive Order 13502 (2009)
On February 6, 2009, President Obama issued Executive Order 13502 entitled Use of Project Labor Agreements for Federal Construction Projects. The Executive Order, which was published in the Federal Register on February 11, 2011, encourages government agencies to use PLA’s in large-scale federal construction projects where the total cost to the Government is $25 million or more. President Obama justifies the use of PLA’s in 13502 by stating that “construction employers typically do not have a permanent workforce, which makes it difficult for them to predict labor costs when bidding on contracts and to ensure a steady supply of labor on contracts being performed. Challenges also arise due to the fact that construction projects typically involve multiple employers at a single location. A labor dispute involving one employer can delay the entire project. A lack of coordination among various employers, or uncertainty about the terms and conditions of employment of various groups of workers can create frictions and disputes in the absence of an agreed-upon resolution mechanism. These problems threaten the efficient and timely completion of construction projects undertaken by federal contractors.”
To address these perceived challenges, Executive Order 13502 encourages, but does not mandate, the use of PLAs on large-scale construction projects. Rather, agencies may on a project-by-project basis, require the use of a PLA by a contractor where use of such an agreement will advance the Government’s interest in achieving economy and efficiency in federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters. If appropriate, an agency may require that every contractor or subcontractor on the project agree to negotiate or become a party to a PLA with one or more appropriate labor organizations.
The Administration issued the final rule in the Federal Register on April 13, 2010 amending the Federal Acquisition Regulation (FAR) to implement the Executive Order.
Oppose Government Mandated Project Labor Agreements (PLAs)
- The Government Neutrality in Contracting Act would ensure fairness in the federal procurement process. Efforts that would impose or favor the use of government mandated project labor agreements (PLAs) on federal and federally funded construction projects should be opposed.
- PLAs effectively compel both union and open shop contractors to alter their hiring practices, work rules, job assignments, and benefits in order to compete for or to perform work on publicly funded projects.
- There is no reliable evidence that project labor agreements improve the performance and they can even give rise to jurisdictional disputes that would not otherwise occur.
Solicitations on several federal construction projects requiring bidders to submit an executed project labor agreement (PLA) prompted AGC to write and call agency officials expressing strong concern.
The letters are the latest of AGC's continuing successful efforts to educate government agencies about PLA issues and implications. While AGC neither supports nor opposes PLAs in general, AGC strongly opposes government mandates for PLAs on publicly funded construction projects. AGC is committed to free and open competition in all public construction markets and believes that publicly-funded contracts should be awarded without regard to the lawful labor relations policies and practices of the government contractor.
AGC has sent more than150 letters opposing PLAs on federal construction projects. Examples from the most recent letters are listed below.
Project Labor Agreement Member Survey:
President Biden has begun the regulatory process which will require federal prime contractors and subcontractors to engage in negotiation or agree to project labor agreements (PLAs) on federal construction projects valued at $35 million or more. To inform the federal government and others as to the impact this regulation will have on contractors, AGC of America (AGC) conducted a Project Labor Agreement Survey. Below are summary statistics and results from the survey .
Examples of AGC Letters:
For more information or to request AGC to submit a letter please contact Isabella Armstrong.