Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

By: Joseph A. Hackenbracht

On April 2, 2010, the Government Accountability Office responded to a request from the House Subcommittee on Energy and Water Development to evaluate “whether the President’s recent budget requests for the Corps are presented so that agency priorities are clear and proposed use of funds transparent.” In its analysis, the GAO reviewed the Corps’ internal review guidance for fiscal year 2011 and interviewed Corps’ officials at the Headquarters office and all Division offices. The GAO concluded that the Corps’ budget presentation continues to lack transparency and should provide key information that would be useful for Congress’ review of the budget. GAO believes that the Corps should provide two types of project-level information: first, information on projects previously funded that may still have resource needs; and second, information on the amount of unobligated appropriations remaining on previously funded projects. GAO suggests that this detailed information would help Congress make better informed appropriations and oversight decisions. Both Senate and House members have indicated that this type of information would be useful, and the Corps has agreed to provide this type of project-level information in future budget requests. While some of the information has been provided for the 2011 budget, the Corps has indicated that it can supplement the budget request during Congressional consideration of the appropriations.

The GAO noted that the fiscal year 2011 budget request included 95 construction projects and 65 investigation projects. The budget request that President Obama presented to Congress on February 1, 2010, totaled 3.834 trillion dollars. The budget proposal includes 4.881 billion dollars to support the U.S. Army Corps of Engineers’ Civil Works Program. Highlights of the Corps’ proposed budget are:

• $164 million to construct commercial navigation improvements on America’s inland waterways. 
• $789 million for efforts to reduce the risk of flood and storm damage. 
• $506 million to restore aquatic ecosystems. 
• The budget gives construction priority to dam safety work, projects that reduce significant risks  to human safety, and projects that will complete construction during 2011.
• $58 million for the Corps share of the CALFED Bay-Delta Program designed to improve California’s water supply and the ecological health of the San Francisco Bay/Sacramento-San Joaquin River Delta.
• $180 million to advance Corps studies and key construction projects to restore the South Florida ecosystem, including the Everglades, an extraordinary but threatened ecosystem.
• $36 million for efforts to restore and protect the ecosystem along the Louisiana Coast, still recovering from Hurricanes Katrina and Rita.

The Corps’ 2011 proposed amount, however, represents a substantial decrease from the 2010 budget amount of 5.446 billion dollars. The budget proposal for the Corps also reflects a dramatic drop in fiscal outlays from the American Recovery and Reinvestment Act funding for the Civil Works Program.

The Water Resources Coalition, an organization established to promote the development, implementation and funding of a comprehensive national water resources policy, has expressed its concern that the budget cuts will have wide negative impacts “including reducing necessary flood control protection along coastlines, stifling inland waterway shipments, and the lost opportunity for job creation.” Among its members, the Water Resources Coalition includes the Associated General Contractors of America and the American Society of Civil Engineers.

Brian T. Pallasch, Co-Chairman of the Water Resources Coalition, stated that “the Administration’s budget ignores the public safety and environmental benefits these programs offer our nation. The residual risk to life and property behind such structures cannot be ignored.” The Water Resources Coalition has encouraged Congress to reverse these budget cuts and increase the funding for the Corps’ Civil Works Program. The project-level information that the Corps has indicated it would provide for the 2011 budget process may assist Congress in justifying increases in the funding for the Corps. 
 

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By: Joseph A. Hackenbracht

On April 13, 2010, the FAR Council published in the Federal Register a Final Rule that adds a new section to the Federal Acquisition Regulation – Subpart 22.5 – Use of Project Labor Agreements for Federal Construction Projects. The Final Rule implements Executive Order 13502, which President Obama signed on February 6, 2009, encouraging Federal agencies to consider the use of a project labor agreement (“PLA”), on large construction projects. Use of project labor agreements by Federal agencies had been curtailed by an Executive Order issued by President Bush in 2001. (See earlier blog article dated February 10, 2009 for more information).

As of May 13, 2010, Contracting Officers can include in solicitations for construction projects clauses FAR 52.222-33 and FAR 52.222-34 that will require an offeror to negotiate a PLA and that will “bind the offeror and all subcontractors engaged in construction on the project to comply with the PLA.” Use of the FAR provisions concerning PLAs, however, is limited to projects where the total cost to the Federal Government is $25 million or more. The Alternate clauses are to be used if the Contracting Officer determines to only require the “apparent successful offeror” or the awardee of the contract to negotiate the PLA.

In deciding whether or not to require a PLA, agencies must conclude that use of a PLA will “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.” Agencies can also consider other factors in determining whether a PLA is appropriate, such as: (1) the project involves multiple contractor or subcontractors employing multiple crafts; (2) a shortage of skilled labor exists in the project area; (3) the project has a relatively long performance time; (4) PLAs have been used on comparable projects, public and private, in the project area; and (5) a PLA promotes the agency’s long term program interests.

Jared Bernstein, Chief Economic Advisor to Vice President Biden, reports that “Project Labor Agreements have also been used by the private sector for a variety of construction projects that are similar in nature to those undertaken in the public sector, including for manufacturing plants, power plants, parking structures, and stadiums. The executive order and the final rule now enable Agencies to consider whether their projects might gain some of the benefits found in the private, state and local construction sectors as well.” Mr. Bernstein quoted the Secretary of Labor, Hilda Solis, as saying, “Project labor agreements are a win-win; they benefit businesses, workers and taxpayers.” Simon Brody, with the National Association of Government Contractors, however raises the question whether the Federal government’s PLA initiative is pro-labor and anti-small business. Mr. Brody suggests that the use of PLAs will “put more Federal contracts out of reach for the mid-sized and small contractors who are best able to infuse the crippled job market with immediate opportunities.” He reported that Representative John Kline, member of the House Education and Labor Committee, observed that “PLAs are an antiquated approach to federal contracting designed to favor large, unionized contractors at the expense of smaller employers,” and that “PLAs reduce competition, increase costs for taxpayers, and add layers of bureaucracy and red tape to federal construction projects. Creating a formal federal process for imposing these Depression-era mandates on construction projects may be a win for special interests, but it’s a loss for workers, taxpayers, and small businesses hoping to compete for federal jobs.”

The use of PLAs has always been controversial, and has been the subject of contentious litigation. It can be expected that challenges to their implementation will continue, particularly in light of Mr. Bernstein’s comment that “[m]any agency contracting offices have little knowledge of or experience with PLAs.” However, he did note that an Inter-Agency PLA Working Group had been convened to provide technical assistance to agencies. With the soon-to-go into effect FAR provisions, we will need to wait and see what types of, and how many, solicitations Contracting Officers decide are appropriate for a Project Labor Agreement.
 

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