WASHINGTON – The Obama Administration’s recent issuance of rules on Project Labor Agreements (PLAs) could result in higher spending of taxpayer dollars and limit competition of small businesses and start-up companies, said Senator Susan Collins.

This week the final rules were published in the Federal Register, amending the Federal Acquisition Regulation (FAR) to include an Executive Order entitled, “Use of Project Labor Agreements for Federal Construction Projects.”

The Executive Order encourages the use of PLAs for large-scale federal construction projects, which are those with a price tag of more than $25 million. With this final rule, Federal procurement policy has changed from ‘neutral’ to ‘pro-labor union’ in Federal construction projects. Specifically, the final rule “encourages” federal agencies to “consider requiring” the use of PLAs in connection with construction projects costing $25 million or more. A project labor agreement is a pre-hire collective bargaining agreement with labor organizations that establishes the terms and conditions of employment for prime and subcontractors for a specific construction project

The new Executive Order repeals one that was in place during the Bush Administration and that required neutrality regarding Federal government contractors working on federal and federally funded construction projects.

“When it comes to spending taxpayer money, the decisions should always be based on the best value possible,” said Senator Collins. “Such decisions should not be driven by partisanship, politics or other agendas. With this change in Project Labor Agreements for Federal Construction Projects, the Administration has eliminated the practice of awarding contracts based on an objective assessment that puts the taxpayers’ interests first.

“This is one more example where the Administration is taking a position that creates barriers for small businesses and blocks the participation of entrepreneurial, start-up companies. I also am concerned about the cost escalation of our large-scale, federal construction projects due to increased labor costs and shifting management priorities.”

Various business groups are opposed to the new Executive Order, including the U.S. Chamber of Commerce, the Associated General Contractors of America (AGC), and the Coalition for Government Procurement (CGP).