AGC Submits Comments on Proposed Rule Encouraging Federal Agencies to Consider PLAs

The proposed rule implementing President Obama's executive order encouraging federal contracting agencies to consider imposing project labor agreements (PLAs) on large-scale construction projects fails to substantiate the asserted rationales for mandatory PLAs, fails to require an adequate analysis as a condition precedent to imposing a PLA, and should not be expanded to cover federally assisted projects, AGC told the Federal Acquisition Regulation (FAR) Council in comments submitted on August 13. The proposed rule implements the executive order's policy of encouraging (but not requiring) contracting agencies to consider (but not necessarily adopt) a PLA requirement on large-scale construction projects (defined as projects with a total cost to the federal government of $25 million or more) on a project-by-project basis where the use of PLAs will advance the government's interests in achieving economy and efficiency in federal procurement, in producing labor-management stability, and in ensuring compliance with workplace laws and regulations, and where PLA use is consistent with law.  The executive order expressly leaves to the contracting agency discretion to decide whether or not to require a PLA.  It also directs the director of the Office of Management and Budget to work with the Secretary of Labor and other officials to provide recommendations to the President on whether to broaden the application of PLAs on both construction projects awarded under federal contracts and construction projects receiving federal financial assistance. While AGC neither supports nor opposes PLAs per se, AGC strongly opposes is government-mandated PLAs (GMPLAs) on any publicly funded construction project.  AGC is committed to free and open competition in all public markets and believes that publicly financed contracts should be awarded without regard to the labor relations policy of the contractor.  AGC believes that a public owners should not mandate the use of a PLA that would compel any firm to change its labor policy or practices in order to compete for or to perform work on a publicly financed project.  AGC further believes that the proper parties to determine whether to use a PLA and to negotiate the terms of a PLA on any project are the employers that employ workers covered by the agreement and the labor organization representing workers covered by the agreement, rather than the public owner or its representative. AGC commented that neither the executive order nor the proposed rule provides support for the assertion that GMPLAs promote economy and efficiency in federal procurement, and pointed out that GMPLAs can actually drive up costs both by effectively restraining competition and, more directly, by imposing additional business costs on contractors that may be passed along to the government.  AGC also challenged the assertion that GMPLAs help prevent and resolve workplace disputes and problems arising from the lack of coordination among multiple employers, noting that the imposition of a PLA does not guarantee that there will be no work stoppages or fully protect against the effects of work stoppages, and that a GMPLA can actually lead to jobsite friction as much as can provide dispute resolution mechanisms. If the Administration insists on giving contracting agencies the authority to impose PLAs, AGC further commented, then the FAR Councils should require the agencies to conduct a thorough analysis to determine that a PLA mandate is appropriate for the project as a precondition to exercising that authority. Contracting officers should be required to make objective determinations, based on empirical evidence, that a PLA mandate would advance each of the government's interests better than without the mandate. Finally, AGC urged the Administration not to broaden the application of the policy to federally assisted construction contracts or otherwise.  Expansion would likely restrain competition, increase costs, constitute an unfunded mandate, and lead to even more litigation, AGC explained. Although comments were originally due on August 13, the FAR Council on August 24 announced that it was reopening the comment period for an additional 30 days.  Interested parties should submit written comments to the Regulatory Secretariat on or before September 23, 2009, for their comments to be considered. For more information, contact Denise Gold, Associate General Counsel, at (703) 837-5326 or goldd@agc.org, or Marco Giamberardino, Senior Director, Federal and Heavy Construction Division, at (703) 837-5325 or giamberm@agc.org.