From 2001 until Feb. 6, 2009 Executive Order 13202 protected at least $147.1 billion worth of federal construction projects from discriminatory and costly government-mandated project labor agreements (PLAs).

In addition, the order prohibited PLAs on hundreds of billions of dollars worth of federally-assisted construction projects across the country. Federally-assisted projects are local, state or private construction projects that receive a federal grant, loan, tax-break or other form of financial assistance.

Unfortunately,  the practice of guaranteeing free and open competition on federal and federally-assisted construction projects ended when President Obama signed Executive Order 13502, which repealed Executive Order 13202 and encourages federal agencies to require PLAs on projects valued at more than $25 million.

While the construction industry waits for a final rule from the FAR Council implementing Executive Order 13502 into federal procurement standards, it is important to remember that the Obama Administration is evaluating ways to expand the executive order and government-mandated PLAs, which will open the door to waste and government corruption in federal contracting, as directed by Section 7 of Executive Order 13502.

Section 7. The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6, 180 days sets the deadline at Aug. 5 but an order hasn't been issued]

It is clear that Secretary of Labor Hilda Solis is a proponent of PLAs. At the Sept. 14, 2009 AFL-CIO Convention in Pittsburgh, PA, she reaffirmed her support of these special interest giveaways that will kill jobs and exclusively benefit Big Labor while harming American taxpayers, workers and businesses.

“Not only do the President and I support Employee Free Choice Act, we are strong supporters of Project Labor Agreements.

We know that they are a win-win: good for workers and for contractors Project Labor Agreements improve the economy and efficiency of construction projects.

President Obama issued an executive order encouraging the use of PLA’s for large federally funded projects, and we have been working very hard at DOL with Vice President Biden and the Middle Class Task Force to ensure that Project Labor Agreements are really encouraged and used.

Project Labor Agreements help make Good Jobs!”

Office of Management and Budget (OMB) Director Peter Orszag is a fan of PLAs too. July 10 he signed an OMB memo encouraging federal agnecies to require PLAs despite the fact that the FAR Council had only issued a proposed rule implementing Executive Order 13502.

“Accordingly, in light of the benefits that PLAs may offer to Federal agencies in construction projects, agencies are encouraged, during this interim period prior to the FAR Council’s issuance of its final rule, to consider the value of PLAs on a project-by-project basis, and to require the use of PLAs in appropriate circumstances and to the extent permitted by law.”

Despite their clear support for government-mandated PLAs, in May, senior Obama Administration officials graciously invited ABC National to a White House meeting to hear a contrasting perspective on the expansion of government-mandated PLAs and Executive Order 13502 via Section 7.   ABC National representatives made a strong case that expansion of Executive Order 13502 was not in the best interest of good government, taxpayers, construction procurement officials, or 84.6 percent of the U.S. construction workforce (those who do not belong to a union) and their employers.

States and local communities should take interest in the expansion of Executive Order 13502 via Section 7. Accepting federal assistance for construction projects with attached strings that favor Big Labor could bust strained budgets. Will states and local communities swallow the 18 percent PLA premium? Can they afford to build four schools, hospitals, bridges and courthouses for the price of five? 

A PLA mandate on federally-assisted projects will also cost jobs. The impact of higher labor costs on finite budgets translates into fewer construction projects. Less building means less jobs in an industry that has shed close to one million jobs in the last 12 months and has a national unemployment rate flirting with 20 percent.

In addition, will local and state government understand that PLAs give preference to out-of-state union members ahead of local and qualified nonunion employees? PLA projects in areas with low union density and market share often fall victim to this boneheaded fiscal policy, as local nonunion employees will continue to rely on state services and not pay into the local tax base while out-of-state union members raid jobs through local union hiring halls.

Finally, it is discriminatory and shortsighted public policy for states and communities to tell skilled nonunion labor they can’t work on these projects unless they agree to pay union dues and lose employer contributions to union benefit and pension plans for the life of a PLA project – typical real world consequences of PLAs on nonunion labor and key reasons why nonunion contractors rarely bid on PLA projects.

The public, elected officials, media and construction workforce must realize there is a lot at stake with the expansion of Executive Order 13502 via Section 7.