Include All of America’s Construction Industry in Building Infrastructure
I write in support of the Fair and Open Competition Act (S. 537/H.R. 1209), which was introduced on Feb. 27, 2023, by Sen. Todd Young, R-Ind., and Rep. James Comer, R-Ky. The legislation would encourage fair and open competition and restrict inflationary government-mandated project labor agreements and PLA preferences promoted by the Biden administration on construction contracts for federal and federally assisted infrastructure projects.
Government-mandated PLAs create a rigged bidding process because politicians steer taxpayer-funded construction contracts to special interests, needlessly increase construction costs by 12% to 20% and deny jobs to local construction industry workers and businesses due to anti-competitive language in typical PLAs. PLA schemes prevent some union members and more than 88% of the construction workforce that chooses not to belong to a union from rebuilding their own communities, create a procurement system that is not cost-effective and rob hardworking taxpayers of the value they deserve. This results in fewer construction projects and less job creation at a time when America must make effective investments in infrastructure to keep the U.S. economy competitive.
For many reasons outlined in this letter, I write in opposition to the Federal Acquisition Regulatory Council's rule implementing President Joe Biden’s Feb. 4, 2022, Executive Order 14063 requiring PLAs on federal construction contracts of $35 million or more in total value. In addition, I oppose Biden administration policies––independent of the FAR Council's rule––encouraging PLAs on federally assisted water, sewer, broadband, energy and other infrastructure projects via grant programs administered by federal agencies for state and local government applicants.
The FAR Council's Rule Is Illegal
The Biden administration’s executive actions to steer taxpayer-funded construction projects to favored unionized contractors and members of certain labor unions via PLAs fly in the face of bipartisan legislation passed by Congress that specifically does not contain these provisions. These policies also violate the Competition in Contract Act requiring “full and open competition” in the procurement of government contracts.
PLA Mandates Are Anti-Competitive
When mandated by governments, PLAs discourage quality nonunion contractors and subcontractors—which employ 88.3% of America’s construction industry as well as some unionized contractors and union members—from competing to build projects funded by taxpayer dollars.
Government-mandated PLAs require contractors to follow restrictive union work rules and hire most or all workers on a job site from specified union halls and union apprenticeship programs instead of journey-level workers and apprentices already employed by their company. That limits the pool of bidders since nonunion contractors and even some union contractors do not want to abandon their existing employees and quality control practices—key components of a safe and productive workplace—for strangers from union halls governed by unfamiliar rules.
PLA Mandates Increase Costs and Undermine Infrastructure Investment
Studies of government-mandated PLAs implemented in California, Connecticut, New York, Massachusetts, New Jersey and Ohio found they increase the cost of school construction by 12% to 20%. Likewise, a 2021 study in California found PLA mandates increased the cost of affordable housing construction by 14.5% and resulted in the construction of 800 fewer units that could have been produced with the same amount of funding without PLA mandates. America simply cannot afford such waste with distressed federal, state= and local budgets and so many infrastructures, schools, affordable housing and renewable energy construction needs.
PLAs Exacerbate the Construction Industry’s Skilled Labor Shortage
Union special interest groups that make up just 11.7% of the U.S. private construction workforce benefit from government-mandated PLA labor monopolies but do not have enough members or skilled labor to rebuild America without meaningful participation from the 88.3% of the U.S. private construction workforce that chooses not to join a labor union. Because PLAs typically require the use of apprentices exclusively from union apprenticeship programs, the truth is government-mandated PLAs will exacerbate the construction industry’s skilled labor shortage of more than half a million workers in 2023 and choke off a viable pipeline fed by government-registered apprenticeship and workforce educational programs developed by contractors, trade associations and community stakeholders not affiliated with unions.
PLA Mandates Harm America’s Small Businesses and Employees
When governments mandate PLAs, large companies and their unionized workforce have an unfair advantage and disrupt the local market at the expense of the local small businesses and their skilled construction workforce. In addition, local small, woman- and minority-owned general contractors and subcontractors will be harmed, because they are predominately nonunion and will be discouraged from competing for projects subject to special interest PLA schemes.
Pro-PLA policies fail to adequately calculate the disparate negative economic impact and expensive compliance costs shouldered by small business general contractors and subcontractors at a time when the number of small businesses awarded federal construction contracts declined 60% from 2010 to 2020.
PLA Mandates Result in Worker Wage and Benefits Theft
Skilled construction workers employed by contractors could experience wage theft due to government-mandated PLAs as nonunion workers (and some union workers) lose an estimated 34% of wages and benefits earned on a PLA project unless they accept specific union representation, join a specific union, pay membership dues and meet the union benefits plan’s vesting requirements. In addition, under PLA mandates, construction workers are typically forced to pay into union-affiliated multiemployer pension programs.
Unfortunately, many of these plans are in poor financial shape and are unreliable retirement vehicles that will ultimately cost taxpayers more money in bailouts and public assistance to participants. A PLA’s employer multiemployer contribution requirements may also expose contractors to excessive multiemployer pension plan liabilities that can bankrupt a company.
PLAs Reduce Taxpayer Investment in Infrastructure
Because of the Biden administration’s policies, federal, state and local governments mandating PLAs on public works projects will increase construction costs and decrease the value of infrastructure investments paid for by taxpayers. Overall, this will lead to fewer construction projects and fewer construction industry jobs created, and/or additional state and local tax hikes to pay for construction needs.
States Demonstrate Fair and Open Competition Works
A total of 25 states outlaw government-mandated PLAs on state, state-assisted and local public works projects to some degree, thereby ensuring fair and open competition on taxpayer-funded construction projects so the public can get the best possible construction project at the best possible price. Despite the argument made by the Biden administration in support of government-mandated PLA policies, there is no evidence from states that have restricted government-mandated PLAs that public construction projects have suffered from widespread increased costs, strikes, labor shortages, safety issues or poor quality. The Biden administration’s pro-PLA policies are a solution benefiting special interests in search of a problem.
Federal Experience Demonstrates EO 14063 Is Not Needed
President Barack Obama’s pro-PLA EO 13502 currently encourages but does not require federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total costs on a case-by-case basis. It also allows—but does not formally encourage—federally assisted projects procured by state and local governments to require PLAs under certain circumstances.
Government-mandated PLAs were rarely used on federal projects from FY2009 to FY2022—just 12 contracts valued at $1.26 billion out of 2,298 opportunities worth a total of $147 billion—illustrating that federal agencies know PLA mandates injure the economy and efficiency in federal contracting when given the option. There have been no widespread reports of federal construction projects suffering from increased costs, strikes, labor shortages, safety issues or poor quality due to a lack of government-mandated PLAs. Despite this evidence, the Biden administration’s pro-PLA policies repeal the optional Obama policy and replace it with an anti-competitive and costly blanket PLA mandate for projects of $35 million or more in most circumstances.
I call on the Biden administration and Congress to support policies like the Fair and Open Competition Act (S. 537/H.R. 1209), ensuring the equitable treatment of America’s construction workers and small and large businesses, whether union or nonunion. It’s time to abandon the Biden administration’s flawed pro-PLA policies mandating PLAs on federal construction projects and encouraging their use on federally assisted construction projects. This exclusionary and unnecessary overreach will damage economy and efficiency in government contracting and undermine taxpayer investment in billions of dollars of forthcoming public works projects needed to keep America’s economy competitive.
Protect America’s Construction Industry
I am writing to you today to urge you to support local workers and businesses. We cannot afford to play politics with America’s comeback and let government-mandated project labor agreements stand in the way.
When mandated by governments, PLAs create a rigged process that steers taxpayer-funded construction contracts to special interests. Doing so denies quality construction industry jobs to local workers and could keep a majority of construction workers from going back to work. Did you know that PLAs exclude 87% of the U.S. construction industry from rebuilding their communities?
PLAs also drive-up costs for taxpayers. We pay 12% to 20% more in construction costs when the government mandates PLAs. PLAs discourage competition from qualified contractors and lead to increased prices on public works.
As America turns the corner, we need to build top-quality projects designed to last. We need to increase accountability, transparency and oversight. We need to protect future local infrastructure investment, our hard-earned tax dollars and create more local jobs.
Please do your part to prevent government-mandated PLAs and PLA preference policies from standing in the way of our nation’s comeback and our local economy. Support all local workers and businesses as we rebuild America.