Preservation of Open Competition and Government Neutrality Towards Government Contractors'Labor Relations on Federal and Federally Funded Construction Projects

Background

Before its revocation, Executive Order 13202 had a marked impact on the legal and regulatory framework governing federal and federally funded construction projects. Issued with the intent of promoting open competition, the order restricted the ability of executive agencies to require or prohibit contractors from entering into agreements with labor organizations, a stipulation primarily aimed at project labor agreements (PLAs) which are typically collective bargaining agreements with labor unions that establish the terms and conditions of employment for a particular construction project. By prohibiting mandates or discrimination based on labor agreements, the order significantly altered the landscape by reducing the overt influence of unions on such projects, which were traditionally more favorable towards unionized labor forces. This was regarded as a deregulatory action that tilted favor toward non-union companies, providing what some argued was a more level playing field.

Operational adjustments were evident as federal agencies and federally assisted construction projects were required to modify their bidding and contracting processes. The Federal Acquisition Regulatory Council had to amend its regulations accordingly, mandating compliance with the order's provisions. Without the mandate for PLAs, many contractors could submit bids without considering union stipulations, potentially lowering costs and streamlining processes. This refocusing meant that federal construction projects could be awarded more frequently based on merit and cost-effectiveness, rather than union affiliation, aligning with the broader push for government efficiency advocated during the Bush administration.

However, social policy outcomes were mixed. While the order sought to prevent discrimination against non-union contractors, unions argued that it weakened labor standards and diminished the bargaining power of workers. The potential for reduced wages and benefits became a concern, especially for projects that might subcontract to the lowest bidder. Critically, it also stirred tension in the relationship between government projects and organized labor, an arena historically fraught with push-and-pull dynamics. The result was a construction environment that strategically sidelined the historical influence of unionized labor for nearly a decade, prompting debates over cost savings versus worker protections.

Reason for Revocation

The revocation of Executive Order 13202 by President Barack Obama in 2009 was grounded in a broader ideological shift towards strengthening the role of organized labor and emphasizing worker rights in federally funded projects. President Obama was elected on a platform that was generally more supportive of organized labor and its contributions to fair work environments. His administration viewed the use of PLAs as a tool to ensure that federal construction projects were completed on time, within budget, and with a well-trained, highly skilled workforce—outcomes perceived as jeopardized by the absence of PLAs under the previous executive order.

The revocation was part of a wider strategy to rebalance labor-management relations, which had experienced a tilt toward employers and non-unionized contractors under the Bush administration. By issuing a new executive order that encouraged federal agencies to consider PLAs when they were beneficial, the Obama administration signaled its intention to foster an environment where labor organizations could play a vital role in major construction initiatives. This shift was not just about supporting labor unions but also about ensuring high standards of quality, safety, and compliance on large-scale projects.

This ideological shift aimed at correcting what was perceived as the deregulation excesses of the previous administration. The stance taken was that PLAs would foster not only higher quality workmanship but also assure community benefits, such as local job creation and skills development, especially in economically disadvantaged areas. The administration argued that partnering with organized labor through PLAs improved efficiency by reducing the likelihood of work stoppages and disputes, facilitating project targets.

Winners

The most immediate beneficiaries of the revocation were labor unions, which regained leverage in negotiating terms for workers on federally funded construction projects. This restoration of influence enabled unions to better advocate for higher wages, improved benefits, and superior working conditions for their members. As federal projects once again became open to or conditioned upon the use of PLAs, unions found themselves in a strengthened position to ensure labor standards and conditions that aligned with their objectives for fair and equitable treatment of workers.

Additionally, the construction industry sectors closely aligned with union operations, such as large national entities with established agreements with organized labor, stood to benefit. Companies like Bechtel and Turner Construction, which frequently engage in large public works projects and often employ unionized labor, could enhance their competitiveness on federal project bids by leveraging their existing relationships and union alliances. By creating an environment supportive of union-led projects, these companies could rely on the stability provided through such agreements, reducing the likelihood of labor disputes or work stoppages.

Beyond corporations and unions, skilled workers—particularly those in organized trades like electricians, carpenters, and plumbers—were poised to see gains with the return of PLAs. These agreements often included commitments to job training and apprenticeship programs, fostering skills upgrades among workers and promoting continued education within the trades. This focus on workforce development was seen as a societal good, improving employability and wage prospects for workers willing to undergo such training.

Losers

On the other side, non-union contractors were likely disadvantaged by the revocation. Smaller companies, which might have relied on the absence of PLAs to remain price competitive, found themselves at a disadvantage when PLAs became more common or required. These firms typically had lower overhead but could face difficulties absorbing the additional costs associated with adhering to union-scale wages and benefits, potentially forcing them out of federal contract contention.

The policy reversal also posed challenges for more cost-conscious public sector stakeholders who prioritized budget considerations over labor association. Critics argued that requiring or encouraging PLAs could lead to increased project costs due to higher labor expenses, which would ultimately be passed down to taxpayers. These concerns were especially salient during periods of fiscal restraint or when budget deficits demanded taxpayer-funded projects to seek every available efficiency.

Furthermore, communities in regions with low union density might not have ability to capitalize on the benefits of union-negotiated agreements as effectively. In these areas, where union influence is weaker or less organized, project delays or increased costs could have led to reduced funds available for critical infrastructure projects. The impact could mean fewer projects overall, counteracting efforts to expand job opportunities in economically challenged locales. This could potentially deepen existing divides between regions with strong union presence and those without.