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114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-471

======================================================================



 
                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]