The final rule to implement President Obama’s executive order on project labor agreements (PLAs) into federal procurement regulations was sent to the Office of Management and Budget (OMB) March 16 for final review. OMB has up to 90 days, with a possible extension, to review the final rule before it is published becomes a formal rule, however a final or an interim final rule could be issued at any time.
On Feb 6, 2009, President Obama issued
Executive Order 13502, which promotes PLAs on federal construction projects costing more than $25 million. Experts agree that the executive order may increase federal construction costs and will reduce competition from quality nonunion contractors and their skilled employees.
According to a September 2009
study by The Beacon Hill Institute (BHI), PLAs significantly increase construction costs on federal projects without adding benefits for taxpayers. The study found that if President Obama’s Executive Order 13502 were in effect in 2008, federal construction costs would have increased an additional $1.6 billion to $2.6 billion.
ABC members expressed their individual concerns by filing 906 comments opposing the proposed rule implementing Executive Order 13502 when the Federal Acquisition Regulation (FAR) released it in July 2009. ABC members argued that their companies would be discouraged from bidding on projects because PLAs discriminate against their employees and their employees said that under PLAs, they would be forced to pay union dues; they would not benefit from employer contributions into union pension plans unless they were to join a union; and they may be denied employment altogether under union hall hiring requirements.
An October 2009 report by Dr. John R. McGowan validates the concerns of ABC members, having found that employees of nonunion contractors forced to perform under government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.
The McGowan
report found that had President Obama's pro-PLA Executive Order 13502 applied to applicable federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements likely would have ranged from $230 million to $767 million per year. Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million, depending on the assumptions made for companies executing contracts via PLAs. In total, the move to PLAs would cost nonunion workers and their employers $414 million to more than $1.38 billion annually.
For more information about PLAs and updates about Executive Order 13502, visit
www.TheTruthAboutPLAs.com or
www.abc.org/pla.