(CNSNews.com) – A federal commission has yet to enact a year-old executive order that President Barack Obama thinks will avoid labor unrest but one that critics say discriminates against non-union companies and non-union workers in federal contracting.
The construction industry, one of the hardest hit industries from the economic downturn, is speaking out against enactment of the executive order. While unemployment is 9.7 percent nationwide, it is 18.7 percent in the construction industry.
Brett McMahon, vice president of the Miller & Long concrete construction firm in Bethesda, Md., said the company is anxious over what will happen if the executive order is enacted.
“This would make it virtually impossible for non-union contractors to work on a job, more precisely for non-union construction workers to even get a job,” McMahon told CNSNews.com. “Project Labor Agreements would require 25- to 30-page long collective bargaining agreements.”
Only 15.6 percent of American private contracting workers are unionized, according to the U.S. Bureau of Labor Statistics.
Project Labor Agreements (PLA) could require any construction firm with a federal contract to obtain workers through union “hiring halls” or a centralized dispatch service, as opposed to just using their own workforce.
The executive order defines a PLA as a “pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.”
Obama signed Executive Order 13502 on Feb. 6, 2009. The order would apply the PLAs to federal construction projects that cost $25 million or more. The apparent reasoning behind the order is that because most large projects have several contractors and subcontractors involved, a single labor agreement covering all companies involved in the project will prevent inefficiencies and delays.
But construction industry groups, such as the Associated Builders and Contractors, say that the rule will inject inefficiencies into the projects.
The executive order states, “Construction employers typically do not have a permanent workforce, which makes it difficult for them to predict labor costs when bidding on contracts and to ensure a steady supply of labor on contracts being performed. Challenges also arise due to the fact that construction projects typically involve multiple employers at a single location. A labor dispute involving one employer can delay the entire project.”
However, the Federal Acquisition Regulatory Council (FAR), which is charged with final enactment of the rule, is still reviewing the matter. The FAR Council is made up of members from the Office of Management and Budget (OMB), the Department of Defense, the General Services Administration and NASA.
FAR Council Chairwoman Lesley Field, the acting administrator for federal procurement policy at the OMB, could not be reached for comment last week, nor could three other FAR Council members.
The executive order further states, “The use of a project labor agreement may prevent these problems from developing by providing structure and stability to large-scale construction projects, thereby promoting the efficient and expeditious completion of federal construction contracts. Accordingly, it is the policy of the federal government to encourage executive agencies to consider requiring the use of project labor agreements in connection with large-scale construction projects in order to promote economy and efficiency in Federal procurement.”
McMahon said the premise of the executive order is false.
“They say contractors don’t have their own workforces and just hire by the job,” McMahon said. “That’s not true. Most contractors, particularly those working on projects that are $25 million, overwhelmingly currently employ their own workers.”
A PLA might put a construction firm in the position of having workers that are not part of its own workforce on a job to be eligible for a federal contract. With half of the cost of a project coming from labor, it is best for a firm to be familiar with its workers, McMahon said.
“As a businessman, it’s one thing to have the numbers on the page,” he said. “What you really need to know is how productive everybody is. You can’t get a brand new team and expect to win the playoff game.”
Even if the contractor brings some of his own people onto a job, they would still be part of the required collective bargaining agreement. As a result, the contractor may be required to pay union dues, said McMahon.
The PLAs will drive up the cost of construction projects and make projects less efficient, said Gus Perea, president of Adams-Bickel construction in Collegeville, Pa.
“We’ve been seeing the paying back of a long standing debt from Congress and now the executive branch,” Perea told CNSNews.com. “It’s got to be payback. What else can it be? The government should encourage competitive bidding and pricing.”
The executive order does not mandate that an executive agency use the PLAs. But it says, “the agency may, if appropriate, require that every contractor or subcontractor on the project agree, for that project, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.”
The order further states that PLAs would, “(a) bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents; (b) allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (c) contain guarantees against strikes, lockouts, and similar job disruptions; (d) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the project labor agreement; (e) provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (f) fully conform to all statutes, regulations, and Executive Orders.”
When Obama signed the order last year, Teamsters President Jimmy Hoffa praised the step, saying, “This is yet another reason for working families to be grateful that we have a champion in the White House.”
M. Kirk Pickerel, president and CEO of the Associated Builders and Contractors, criticized the order last year, saying, “Union-only PLAs drive up costs for American taxpayers while unfairly discriminating against 84 percent of U.S. construction workers who choose not to join a labor union. All taxpayers should have the opportunity to compete fairly on any project funded by the federal government.”
Further, “construction contracts subject to union-only PLAs are designed to be awarded exclusively to unionized contractors and their all-union workforces,” said Pickerel. “Absent the economic benefits of competitive bidding, union-only PLAs are known to increase construction costs between 10 percent and 20 percent and discriminate against minorities, women and qualified construction workers who have traditionally been excluded from union membership.”