Biden mandates PLAs on large federal contracts

Dive Brief:

• The Biden administration announced on Monday a final rule implementing an executive order that will require project labor agreements on federal construction projects costing $35 million or more. It will likely result in PLAs being required on a majority of large federal jobs.
• President Joe Biden first enacted the rule change in February 2022, but it will not go into effect until 30 days after it is published in the Federal Register on Friday, due to formal rule change processes by the Federal Acquisition Regulatory Council. The executive order’s implementation replaces an Obama-era rule that encouraged PLAs on federal jobs, but did not mandate the practice.
• As a result, the White House estimated as many as 200,000 workers on federal construction jobs could see boosted “wages, benefits and safety protections regardless of union membership.”

Dive Insight:

Part of the goal of the executive order, according to the White House fact sheet, is to increase efficiency by having all stakeholders — contractors, subcontractors, unions or other labor groups — negotiate the terms of each project ahead of time.

The White House claims the PLAs will improve projects by:

• Eliminating project delays from labor unrest, such as strikes.
• Creating dispute resolution procedures and cooperation for labor-management disputes, such as those over safety.
• Including provisions “to support workers from underserved communities and small businesses.”
• Helping to create a steady pipeline of workers for federal projects.
• Promoting competition on government contracts so that all builders, even those who are non-union, can bid on jobs that require a PLA.

Although labor groups champion PLAs, saying they better protect workers, many builders and employer groups claim they disadvantage contractors that don’t often work with unions.

But experts told Construction Dive when Biden first signed the executive order that all subcontractors and contractors will still be able to compete for work, regardless of their experience with collective bargaining.

“This executive order is not requiring you to be a union contractor, it’s requiring you basically on a one-off basis to agree to a pre-hire collective bargaining agreement,” James Terry, partner at New York City construction law firm Zetlin & De Chiara, said at the time.

Construction groups’ reaction

On Monday, Sean McGarvey, president of North America’s Building Trades Unions, praised the implementation.

“With this latest action to strengthen economic security, labor-management relations and family-sustaining job opportunities, President Biden is yet again demonstrating his rock-solid commitment to American taxpayers and all workers — union and non-union — across the country,” McGarvey said.

Employer trade groups pushed back against the mandate.

Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors, decried the rule in a statement released Monday, calling it “burdensome, inflationary and anti-competitive,” and claiming it would raise costs on projects and steer contracts toward unionized contractors and workers. He said ABC plans to challenge the rule in court.

“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,” Brubeck said.