Construction Groups Decry Obama's Executive Order on Rules for Federal Building Projects
Thursday, February 12, 2009
Two of the biggest construction industry trade groups are denouncing a move by President Obama that they say could limit the number of workers hired on new federal jobs to build roads, bridges and buildings, at a time when construction employment is plummeting.
Obama issued an executive order Friday requiring federal agencies to consider putting in place agreements that set wages, work rules and other benefits when awarding major construction contracts.
Tommy Vietor, a White House spokesman, said the order does not require the use of union labor but encourages following rules that are set up before a project starts.
"We think it will make procurement dollars more efficient so taxpayer dollars aren't wasted," he said. "It creates a more smooth and efficient process that protects workers and employers before the project begins."
Construction unions strongly back such agreements, known as project labor agreements. "It means a level playing field for union labor and union contractors," said Vance Ayres, executive secretary-treasurer of the Washington D.C. Building and Construction Trades Council, which represents 25,000 union workers.
But the construction trade groups say the agreements, which typically follow union rules and guidelines, raise costs. They say that goes against the goal of creating jobs with the estimated $150 billion that was set aside for construction projects in the House-passed stimulus package.
The executive order "has the unfortunate potential to limit contractors' ability to compete for projects" at a time when 1 million construction workers have been laid off, Stephen Sandherr, chief executive of the Associated General Contractors of America, said in a statement.
Based on the House version of the stimulus package, Moody's has estimated that 803,000 construction jobs could be created by the end of 2012.
Sandherr and contractors said the government does not have the experience to negotiate such complex deals as project labor agreements. Some said higher costs could discourage firms from bidding on federal jobs.
"If the purpose of these projects is to get Americans back to work, why would we pick an approach that would allow only a small percentage of the construction workforce to participate?" asked Jerry Gorski, national chairman of the Associated Builders and Contractors. The industry group says 84 percent of the country's construction workers are not in labor unions.
Obama's executive order marks a major departure from the approach of the Bush administration, which prohibited the use of project labor agreements.
Brian Turmail, a spokesman for the Associated General Contractors, said the order "takes the contractor out of the process of negotiating with their employees and puts the government in that role."
In the Washington region, where the majority of the construction work is done by nonunion companies, some executives said they might not bid on federal projects, although their private-sector work has slowed or stopped.
"It is truly hard to argue that it is not just a monopoly set aside," said Brett McMahon, a vice president at Miller & Long, a construction firm with 2,400 employees. He said higher expenses would mean fewer workers.