The Final Rule on Project Labor Agreements

In today’s Federal Register is the final rule, “Federal Acquisition Regulation; FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects.” The rule directs federal agencies to favor PLAs on federal building projects, agreements that will increase the costs of taxpayer-funded construction while extending the reach and resources of organized labor. Sure, just what’s needed for a construction industry where one out of four workers is unemployed.

The final rule fleshes out one of President Obama’s first executive orders, Executive Order 13502, issued Feb. 6, 2009, which revoked President Bush’s 2001 executive order which required neutrality toward PLAs. Thus, no longer will PLAs be judged on their merits; the presumption in federal contracting policy is that they are a good thing.

Tell that to the taxpayer. As the Beacon Hill Institute at Suffolk University reported last September:

By their nature, PLAs are anti-competitive since they discourage open shop firms from bidding in the first place. Previous research from the Institute has shown that PLAs add 12-18% to construction costs. Over the course of the Bush Administration, the federal government spent $147.1 billion on federal construction projects. Of that $147.1 billion, approximately $60 billion would have been subjected to President Obama’s Executive Order encouraging the use of PLAs.

Moreover, had President Obama’s Executive Order 13502 been in effect in 2008, and all federal construction projects worth $25 million or more been subject to PLAs, the cost to federal taxpayers would have increased by $1.6 to $2.6 billion.

An especially forceful critic of Project Labor Agreements is the trade association, Associated Builders & Contractors, which issued a statement Monday, “Obama Administration Issues Policy that Discriminates Against 85 Percent of the Construction Workforce.”  ABC’s National Chairman Jim Elmer, president of James W. Elmer Construction Co., in Spokane, Wash., said:

Anti-competitive project labor agreements are special interest kickback schemes that end open, fair and competitive bidding on public projects. Government-mandated PLAs are a handout to a politically connected special interest group and come at the taxpayers’ expense. PLAs can drive up the cost for public construction by nearly 20 percent, while unfairly discriminating against the more than 85 percent of the U.S. construction workforce that chooses not to join a union.

With the construction industry facing a staggering unemployment rate of 25 percent, this is the worst possible time for politics to trump sound public policy.

 

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