ABC Texas Testimony on Federal Overreach and PLAs.
TESTIMONY OF
Geoffrey Tahuahua
President, Associated Builders and Contractors of Texas
before the
SENATE COMMITTEE ON NATURAL RESOURCES AND ECONOMIC DEVELOPMENT
June 13, 2024
Thank you, Chairman Birdwell, Vice-Chairwoman Zaffirni, and distinguished members of the Committee. My name is Geoffrey Tahuahua, and I am here on behalf of Associated Builders and Contractors of Texas to speak on a specific issue in Overcoming Federal Incompetence: project labor agreements, or PLAs.
As a brief introduction, ABC Texas is comprised of over 1,600 member companies across the state and represents all specialties within the Texas construction industry, including the industrial and commercial sectors. Members of ABC Texas construct high-rise buildings, schools, offices, highways and industrial facilities for both public and private entities.
Project labor agreements are pre-hire collective bargaining agreements with one or more labor organizations that establish the terms and conditions of employment for specific construction projects. While PLAs are often promoted as tools to ensure labor peace and quality standards, they carry significant anti-competitive and inflationary implications that could adversely affect taxpayers, economic development and workforce in Texas.
Multiple studies show that PLAs, when mandated by government, needlessly raise the cost of construction projects by 12% to 20%. While Texas essentially banned the use of PLAs on all state-funded projects through HB 985 in the 86th Legislative Session, since President Joe Biden’s 2022 Executive Order 14063, we have begun to see these anti-competitive schemes pop up on federal and federally funded projects here in Texas.
This includes federally funded projects such as the Port of Brownsville and Gulf Coast Hydrogen Hub. President Biden’s federal agencies are circumventing Congressional intent by enacting policy via executive fiat that coerces government and private developers competing for federal agency grants and tax incentives to require contractors on critical infrastructure projects to adopt PLAs as a condition of winning construction contracts and delivering this work.
In addition, a federal rule effective Jan. 22, 2024, implementing President Biden’s Executive Order 14063 requires PLAs on direct federal contracts of $35 million or more for construction services on federal military bases, government buildings and U.S. Army Corps of Engineers water and hurricane readiness projects, for example.
This is a direct overreach, forcing contractors to comply with PLA mandates that require unionized labor and favor union-signatory contractors even though nearly 90% of the U.S. construction workforce does not affiliate with a union. That number increases to nearly 98% of construction workers in Texas.
Implementing government PLA mandates and preferences will stifle competition, increase project costs and discriminate against the overwhelming majority of Texas construction workers who are employed by the best merit shop contractors. These workers and contractors have consistently delivered high-quality infrastructure safely, on time and on budget, without the need for PLAs and government-mandated union agreements. Such PLAs force contractors to adhere to inefficient union rules, pay into union benefit plans and hire most or all workers through union halls, effectively sidelining a company’s existing nonunion workforce and driving up costs for taxpayers.
Moreover, PLAs are counterproductive to economic development. They create unnecessary barriers for small and minority-owned businesses that traditionally do not affiliate with unions. This not only limits their ability to compete for projects but also denies them the opportunity to contribute to rebuilding our communities.
ABC Texas urges the committee to consider the negative impacts of federal government PLA mandates and preferences on our state’s economy and workforce and support bills like SB 986 from last session. We also recommend the committee further examine the federal overreach into federally assisted projects as well as direct federal contracts where the state is shouldering a percentage of the project’s cost.
It is crucial to advocate for policies that level the playing field, promote fair and open competition and ensure that all qualified Texas contractors, regardless of union affiliation, have the opportunity to bid on publicly funded projects. This approach will maximize the efficient use of taxpayer dollars, foster economic growth and ensure the timely completion of high-quality construction projects.
Thank you for your attention to this critical issue. We look forward to working with the committee to ensure that Texas continues promoting a free and competitive construction market that benefits all Texans.