With the Obama administration flush with borrowed cash and eager to spend it, the fight for billions of dollars in federal construction contracts is heating up. Old battle lines have been redrawn pitting organized labor against private business. Organized labor, more often than not, is the beneficiary of generous federal contracts because of the billions of dollars they throw at Democrat’s campaigns and an arcane contract loophole, theDavis-Bacon Act. It gets worse for private business; President Obama signed Executive Order 13502 (E.O. 13502) which urges the Federal Acquisitions Regulation to mandate that all federal construction projects with price tags higher than $25 million (nearly all do) contain project labor agreements (PLA).
Additionally, Section 7 of the Executive Order calls for Secretary Solis and the Office of Management and Budget to make recommendations about an expansion of E.O. 13502, most likely to recipients of federal money (state and local construction projects). Obama is using federal loans as leverage to bully local governments into encouraging or requiring PLAs on their construction projects. Translation: Obama wants to deal exclusively with labor when contracting construction projects.
The proposed handout to labor would distort the construction market and raise the cost of governmental projects. By guaranteeing labor all federal contracts Obama isolates labor unions from outside competition. This would inflate the price of construction jobs and is the equivalent of signing a monopoly into law. Monopolies are bad. They are even worse when taxpayers get stuck funding unnecessarily expensive projects. This is not cynical; labor has been price gouging the federal government for years through manipulation of the Davis-Bacon Act.
Obama’s proposed PLA mandate has the additional effect of pressuring employers to unionize so they can receive governmental contracts. With unionization rates plummeting, currently at 7.6% in the private sector, labor has turned to Democrats to help bolster membership. Obama’s executive order and the misnamed Employee Free Choice Act are evidence of Democratic initiatives to increase union membership.
There is hope though, the Federal Acquisition Regulation Council, the board Obama submitted Executive Order 13502 to, is considering extending the comment period that expired August 13. Currently, the debate is being dominated by labor’s well organized effort to ratify Executive Order 13502.
Alliance for Worker Freedom urges interested parties to submit comments here and will continue to follow this story.