[House Report 114-471]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-471
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GOVERNMENT NEUTRALITY IN CONTRACTING ACT
_______
March 23, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Chaffetz, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1671]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 1671) to preserve open competition
and Federal Government neutrality towards the labor relations
of Federal Government contractors on Federal and federally
funded construction projects, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
CONTENTS
Page
Committee Statement and Views.................................... 2
Section-by-Section............................................... 4
Explanation of Amendments........................................ 5
Committee Consideration.......................................... 5
Roll Call Votes.................................................. 5
Application of Law to the Legislative Branch..................... 5
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 5
Statement of General Performance Goals and Objectives............ 6
Duplication of Federal Programs.................................. 6
Disclosure of Directed Rule Makings.............................. 6
Federal Advisory Committee Act................................... 6
Unfunded Mandate Statement....................................... 6
Earmark Identification........................................... 6
Committee Estimate............................................... 6
Budget Authority and Congressional Budget Office Cost Estimate... 7
Minority Views................................................... 8
Committee Statement and Views
PURPOSE AND SUMMARY
H.R. 1671, the Government Neutrality in Contracting Act,
will ensure that federal agencies neither prohibit nor promote
project labor agreements (PLAs) in federally-funded or federal
government construction contracts.\1\ In 2009, Executive Order
13502 established a preference for PLAs in federal or
federally-assisted construction contracts. H.R. 1671 would
prevent agencies from referencing PLAs when evaluating
construction contract bids by ensuring that no preference is
given either in favor or against PLAs. The purpose of this bill
is to promote efficient and nondiscriminatory administration
and completion of construction projects. The bill will also
help to ensure that the federal government, and therefore
American taxpayers, receive the best possible value in
construction contracts. H.R. 1671 accomplishes this by ensuring
robust competition through equal treatment of union and non-
union contractors.
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\1\Project Labor agreements are comprehensive pre-hire collective
bargaining agreements that establish terms and conditions of employment
for a specific construction project. U.S. Dept. of Transportation,
Construction Program Guide, https://www.fhwa.dot.gov/construction/cqit/
pla.cfm.
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BACKGROUND AND NEED FOR LEGISLATION
In 2009, President Barack Obama signed Executive Order
(E.O.) 13502 on the use of project labor agreements. E.O. 13502
strongly encourages the use of PLAs in federal or federally-
assisted construction projects. Although the E.O. does not
explicitly mandate the use of PLAs in federal or federally-
assisted contracts, agencies have used it to openly encourage
funding recipients to mandate PLAs. For example, federal
agencies have issued guidance stating that contractors who
participate in PLAs may receive preference during the
evaluation process or allow projects to mandate PLAs in
contracts.\2\
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\2\See Letter from Stephen E. Sandherr, Chief Executive Officer,
Associated General Contractors of America to Marta Anerton, Contract
Specialist, U.S. Army Corps of Engineers (July 30, 2014) (discussing
the Army Corps intent to require the use of PLAs on a construction
project); Federal Highway Administration, Interim Guidance on the use
of Project Labor Agreements (May 7, 2010), http://www.fhwa.dot.gov/
construction/contracts/100507.cfm; Memorandum from Department of the
Army on Procurement Instruction Letter (PIL) 2011-01-R1, USACE Policy
Relating to the Use of Project Labor Agreements (PLAs) for Federal
onstruction Projects (Dec. 16, 2011), http://www.acq.osd.mil/dpap/cpic/
cp/docs/PIL_2011-01-R1_Project_Labor_Agreements_Policy.pdf.
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Mandated PLAs are particularly concerning given that PLAs
can drive up the cost of federal or federally-assisted
construction projects by as much as 18 percent.\3\ For example,
a study of 551 California school construction projects, 65 of
which were built using PLAs, showed that PLA contracts
increased the construction costs by $29 to $32 per square
foot.\4\ This same study concluded that PLAs are not a
``costless policy tool'', but instead a cost increasing policy
initiative.\5\
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\3\Letter from American Council of Engineering Companies, et. al.
to Rep. Jason Chaffetz, Chairman, Comm. on Oversight and Gov't Reform,
and, Elijah Cummings, Ranking Member, Comm. on Oversight and Gov't
Reform (Jan. 11, 2016) on file with Comm.
\4\Vince Vasquez, et. Al., Measuring the Cost of Project Labor
Agreements on School Construction in California, National University
System Institute for Public Research (2011).
\5\Id.
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The Government Neutrality in Contracting Act will promote
efficient administration and completion of federal and
federally-assisted construction projects. A review of federal
construction projects during from 2001-2009, during which
President George W. Bush's E.O. prohibiting mandated PLAs was
in place, found no delays caused by significant labor
disputes.\6\ In comparison, a review of state construction
projects with mandated PLAs found numerous instances of delay
as a result of labor disputes. Further, evidence of delays
caused by PLAs are also evident at the state level. For
example, a review by the New Jersey Department of Labor found
that PLA projects experienced an average duration of 100 weeks
compared to non-PLA projects duration of 78 weeks.\7\ By
eliminating the potential for delays that result from mandated
PLAs, this bill will ensure that the federal government, and by
extension the taxpayer, receives the best value in construction
contracts.
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\6\Maury Baskin, Government-Mandated Project Labor Agreements: The
Public Record of Poor Performance (2011).
\7\Id.
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Under the Competition in Contracting Act, P.L. 98-494,
agencies are required to ``obtain full and open competition
through the use of competitive procedures'' in all
procurements.\8\ PLAs, however, can effectively reduce
competition by excluding certain contractors and their
employees from competing for construction projects--because not
all contractors participate in PLAs. Currently, more than 80
percent of the private construction workforce in the United
States is non-union.\9\ In addition, because PLAs increase the
cost of the project, fewer individuals will bid on the
construction projects, thereby reducing competition.\10\ A poll
conducted by the Associated Builders and Contractors, Inc. of
its members found that 98 percent of all respondents would be
less likely to bid on a contract where a PLA was mandated.\11\
The requirement of a PLA, or even providing preference to such
agreements, would therefore effectively hamper the ability of
that 80 percent of contractors to effectively compete for
construction contracts.
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\8\41 U.S.C. 3301(a)(1).
\9\National Right to Work Legal Defense Foundation, http://
www.nrtw.org/neutrality/na_6.htm.
\10\Paul Carr, Investigation of Bid Price Competition Measured
through Prebid Project Estimates, Actual Bid Prices, and Number of
Bidders, J. of Construction, Engineering and Management (Nov. 2005).
\11\Letter from Ben Brubeck, Director of Labor and Federal
Procurement, Associated Builders and Contractors, Inc. to Tom Dickert,
USACE (Mar. 22, 2011) (additional surveys cited in the letter show
between 70-86 percent of nonunionized contractors surveyed would be
unlikely to bid on projects requiring PLAs).
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Additionally, the idea that PLAs in federal and federally-
assisted construction contracts does not impact small business
because of the large size of these contracts is a
misconception. The Small Business Administration notes that the
construction industry in particular is made up of a large
number of small businesses; with a more than an 86 percent of
construction firms considered small businesses.\12\ However,
these small businesses are mostly non-union and are
disadvantaged when PLAs are involved. As a result, the use of
PLAs can negatively impact the small business set-asides put in
place by Congress to promote small businesses.\13\ The
Government Neutrality in Contracting Act will help ensure that
policies designed to promote and support small business in
government contracting are unencumbered by the use of PLA
preferences.
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\12\Office of Advocacy, The Small Business Economy: A Report To The
President, U.S. Small Business Administration, (2009).
\13\Ben Brubeck, Government Project Labor Agreement Mandates Harm
Small Businesses, The Truth About PLAs (June 2, 2010), http://
thetruthaboutplas.com/2010/06/02/government-project-labor-agreement-
mandates-harm-small-businesses/.
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The Committee notes that 23 states currently bar the use of
government-mandated PLAs,\14\ with 20 of these states having
imposed the prohibition in the wake of the 2009 E.O.\15\
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\14\Kevin Dayton, Community College Board in California Will Be
Accountable to Voters, UnionWatch.org (Oct. 17, 2015), http://
unionwatch.org/community-college-board-in-california-will-be-
accountable-to-voters/.
\15\Carl Horowitz, New Bill Would Ban Mandatory Project Labor
Agreements, National Legal and Policy Center (April 30, 2015), http://
nlpc.org/stories/2015/04/30/new-bill-would-ban-mandatory-project-labor-
agreements. (Although the article states only 19 states enacted bans
following the 2009 executive order, the article was printed before
Nevada had passed its ban). See Joanna Masterson, Nevada Bans PLA
Mandates, Construction Executive (July 28, 2015), http://
www.constructionexec.com/Articles/tabid/3837/entryid/4140/nevada-bans-
pla-mandates.aspx.
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LEGISLATIVE HISTORY
H.R. 1671, the Government Neutrality in Contracting Act,
was introduced by Congressman Mick Mulvaney (R-SC) on March 26,
2015 and referred to the House Committee on Oversight and
Government Reform. At a January 12, 2016 business meeting, the
Committee ordered H.R. 1671 favorably reported by voice vote.
Currently, H.R. 1671 has 103 cosponsors.
The Senate companion, S. 71, was introduced by Senator
David Vitter (R-LA) and referred to the Committee on Homeland
Security and Governmental Affairs on January 7, 2015. That bill
currently has 11 cosponsors.
Section-by-Section
Section 1. Short title
Designates the short title of the bill as the ``Government
Neutrality in Contracting Act''.
Section 2. Purposes
Establishes that the purpose of the bill is to promote
economical, efficient, and nondiscriminatory administration and
completion of federal construction projects. The bill
accomplishes this by ensuring open competition on federal
construction projects and those using federal funds and
reducing construction costs for the government. The bill also
ensures that the federal government remains neutral toward
labor relations of contractors. Finally the bill expands job
opportunities, particularly among small and disadvantaged
businesses and prevents discrimination against contractors and
employees based on labor affiliation status.
Section 3. Preservation of open competition and Federal Government
neutrality
Section 3(a) establishes that after the date of enactment,
the head of each executive agency shall ensure that it does not
require or prohibit a party seeking a construction contract
from participating or entering into agreements with labor
organizations related to the construction project. It also
requires that the agency does not discriminate or give
preference to a party because it signs or adheres to a PLA or
refuses to do so.
Section 3(b) establishes the same general rule in Section
3(a) to neither support nor prohibit signing such labor
agreements with one or more labor organization--for the
purposes of grants, financial assistance, or cooperative
agreements.
Section 3(c) states that if an executive agency, an entity
receiving funds from an agency, a party to, or construction
manager operation on behalf of a cooperative agreement fails to
comply with the general rule, then the head of the agency
``shall take such action, consistent with law, as the head of
the agency determines to be appropriate.''
Section 3(d) establishes exemptions for the general rule,
including a finding of ``special circumstances'' to avert an
imminent threat to public health or safety or to serve the
national security. ``Special circumstances'' does not include
the possibility or existence of a labor dispute. Also exempted
are those situations where such labor agreements were in place
prior to enactment of this bill.
Section 3(e) requires the Federal Acquisition Regulatory
Council, no later than 60 days after enactment, to amend the
Federal Acquisition Regulation to implement the provisions of
this bill.
Section 3(f) provides definitions for: construction
contract; Executive Agency with reference to Title 5; and Labor
organization with reference to section 701(d) of the Civil
Rights Act. Construction contract is defined as ``any contract
for the construction, rehabilitation, alteration, conversion,
extension, or repair of buildings, highways, or other
improvements to real property.''
Explanation of Amendments
No amendments to H.R. 1671 were adopted during Full
Committee consideration of the bill.
Committee Consideration
On January 12, 2016 the Committee met in open session and
ordered reported favorably the bill, H.R. 1671, by roll call
vote, a quorum being present.
Roll Call Votes
No roll call votes were requested or conducted during Full
Committee consideration of H.R. 1671.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill preserves open competition and Federal Government
neutrality towards the labor relations of Federal Government
contractors on Federal and federally funded construction
projects. As such this bill does not relate to employment or
access to public services and accommodations.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goal or objective of this bill is to preserve open competition
and Federal Government neutrality towards the labor relations
of Federal Government contractors on Federal and federally
funded construction projects.
Duplication of Federal Programs
No provision of this bill establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting this bill does direct
the completion of specific rule makings within the meaning of 5
U.S.C. 551 as follows. H.R. 1671 section 3(e) requires the
Federal Acquisition Regulatory Council, no later than 60 days,
to amend the Federal Acquisition Regulation to implement the
provisions of the bill.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement the Committee has
received a letter from the Congressional Budget Office included
herein.
Earmark Identification
This bill does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
this bill. However, clause 3(d)(2)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for this bill from the Director of
Congressional Budget Office:
H.R. 1671--Government Neutrality in Contracting Act
H.R. 1671 would prohibit federal agencies working on
construction projects from either requiring or prohibiting the
use of project labor agreements (PLA) except in specific
circumstances. On February 9, 2009, Executive Order 13502
encouraged all federal agencies to use PLAs on construction
projects exceeding $25 million. A PLA is a collective
bargaining agreement that applies to a specific project and is
effective only for the duration of that project. Under those
agreements, which generally include provisions regarding wages
and fringe benefits and procedures for resolving labor
disputes, workers generally agree not to strike and contractors
agree not to lock out workers. The bill would allow contractors
and unions working on construction projects that involve the
expenditure of federal funds to voluntarily negotiate and
execute a PLA.
Information from the Army Corps of Engineers, General
Services Administration, the Congressional Research Service, as
well as union and non-union contractors, is not sufficient to
allow CBO to determine whether the use of PLAs under current
law results in any significant costs or savings to the federal
government. However, because CBO expects that H.R. 1671 would
not significantly change the contracting process or the use of
PLAs, CBO estimates that implementing the bill would not have a
significant effect on the federal budget.
Because enacting the bill could affect direct spending by
agencies not funded through annual appropriations, pay-as-you-
go procedures apply. CBO estimates, however, that any net
change in spending by those agencies would be negligible.
Enacting H.R. 1671 would not affect revenues.
CBO estimates that enacting H.R. 1671 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
H.R. 1671 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Matthew
Pickford. This estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
MINORITY VIEWS
The sole purpose of H.R. 1671 is to overturn Executive
Order 13502, issued by President Obama on February 6, 2009.
Executive Order 13502 does not require the use of Project
Labor Agreements (PLA) on any federal contract. The Executive
Order states that:
In awarding any contract in connection with a large-
scale construction project, or obligating funds
pursuant to such a contract, an executive agency may,
on a project-by-project basis, require the use of a
project labor agreement where use of such an agreement
will (i) advance the Federal Government's interest in
achieving economy and efficiency in Federal
procurement, producing labor-management stability, and
ensuring compliance with laws and regulations governing
safety and health, equal employment opportunity, labor
and employment standards, and other matters, and (ii)
consistent with law.\1\
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\1\Exec. Order No. 13502, 74 Fed. Reg. 6985, Use of Project Labor
Agreements for Federal Construction Projects (Feb. 6, 2009) (online at
www.whitehouse.gov/the-press-office/executive-order-use-project-labor-
agreements-federal-construction-projects).
H.R. 1671 would create a permanent statutory prohibition
preventing federal agencies from requiring the use of PLAs in
any contract, bid specification, project agreement, or other
controlling document for any construction contract. The
legislation would also prohibit the inclusion of any provisions
requiring the use of PLAs in the contracts associated with any
projects funded by any type of federal assistance, including
grants and cooperative agreements.
According to a report by the-then-General Accounting Office
(GAO) issued in 1998, ``PLAs have been used in all 50 states
and the District of Columbia on federal, state, local
government, or private sector construction projects.'' GAO also
found that PLAs have been used extensively by the private
sector, including on such projects as ``the Trans-Alaska
Pipeline and Disney World.''\2\
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\2\General Accounting Office, Project Labor Agreements: The Extent
of Their Use and Related Information (May 29, 1998) (GAO/GGD-98-82)
(online at www.gao.gov/assets/230/225719.pdf).
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Despite the wide use of PLAs in the private sector, under
H.R. 1671, a federal agency would not be able to require the
use of a PLA even if the agency found that a PLA would be in
taxpayers' best interests and would achieve economy and
efficiency in procurement.
It is a disservice to American taxpayers to prevent federal
agencies from using a project management process that is widely
used by the private sector to hire labor for construction
projects in those circumstances when a PLA would protect the
government's investment or save the government money.
Elijah E. Cummings,
Ranking Member.
[all]