New Federal Project Labor Agreement Rule Will Prevent Most Firms From Bidding on Federal Construction Projects and Hurt Minority Firms

The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, released the following statement in response to the release of new federal rules that will soon require procurement officials to impose project labor agreements for federal construction projects valued at $35 million or more:

“Today’s proposed rules requiring procurement officials to impose project labor agreements for federal construction projects will prevent most contractors from bidding and will harm the disadvantaged firms that contracting rules are meant to help.

“As a follow-up to the executive order President Biden issued in February that seeks to impose project labor agreements on all federal construction projects worth at least $35 million, the Federal Acquisition Regulation (FAR) Council released a proposed rule (FAR Case 2022-003) today. Unfortunately, the proposed rule would cause most federal construction contractors to stop bidding on federal projects, according to a survey the Associated General Contractors of America (AGC) conducted in response to the president’s executive order.

“The survey found that nearly three-quarters of federal contractors report they will stop bidding on federal projects if the Biden administration follows through on its plans to impose government-mandated project labor agreements. While 73 percent of surveyed firms report they are currently bidding on federal construction projects valued at $35 million or more, the same percentage, 73 percent, report they would not bid on those projects if a project labor agreement were required.

“Moreover, the federal mandate will make it harder for contractors to partner with small, veteran, minority or disabled-owned firms. Government-mandated project labor agreements require every general contractor or subcontractor performing work to negotiate with or become a party to an agreement with one or more unions. Eighty-two percent of firms report this mandate will make it harder for general contractors to subcontract with small, disadvantaged businesses—such as women-owned, HUBZone, and service-disabled veteran-owned small businesses—because those firms typically are not accustomed or prepared to operate on a union basis.

“In addition to limiting competition for federal projects, the survey found that imposing project labor agreements will make it harder for firms to find enough workers to hire. Nearly 40 percent of the survey respondents operate under a collective bargaining agreement. Of these respondents, 83 percent said there are not enough union workers to guarantee completion of the project on time and on budget. Among firms that have worked on a project that involved a government-mandated project labor agreement, 67 percent said the agreement made it harder to find workers to hire.

“AGC neither supports nor opposes contractors’ voluntary use of project labor agreements on federal projects but strongly opposes any government mandate or prohibition of contractors’ use of project labor agreements. Such a choice should not be imposed as a condition to competing for, or performing on, a publicly funded project.

“The proposed rules will result in ‘build back fewer’: fewer firms, hiring fewer people to build fewer projects.”