US infrastructure diversity plan draws fire from contractors, minority groups

Dive Brief:

Two cabinet-level heads are better than one at funneling a higher percentage of lucrative infrastructure jobs to women and minority contractors.
That's the concept behind a memo of understanding between Labor Secretary Marty Walsh and Transportation Secretary Pete Buttigieg to award more of the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) to underrepresented workers.
But the framework drew fire from a powerful construction trade group for emphasizing project labor agreements. And it elicited skepticism from a minority contractors' organization for lacking tracking and enforcement details.

Dive Insight:

The objective of the memo is to create good-paying jobs, with the choice to join a union, for workers in traditionally underserved communities, according to a joint statement from DOL and DOT released this week. But it also said it would favor union partnerships and project labor agreements in grant decisions.

PLAs are similar to collective bargaining agreements but apply to a single project and are agreed upon by all parties: general contractors, subcontractors and labor groups. Last month, President Joe Biden issued an executive order mandating PLAs on federal contracts of $35 million or more.

While PLAs don't specifically cut non-union contractors out of federal projects, they're often perceived by construction employers' groups as doing so. For example, the Associated Builders and Contractors trade group, which has been waging a concerted campaign against PLAs since Biden took office, railed against their inclusion in the joint memo. It claimed PLAs actually promote exclusionary practices for underrepresented workers, since 87.4% of the construction workforce doesn't belong to unions, according to the Bureau of Labor Statistics.

"If the Biden administration is serious about creating opportunities for a diverse and local construction workforce, it should abandon PLA schemes, which disproportionately exclude nonunion local, minority-, veteran- and women-owned businesses and their employees from bidding on and building public works projects,” said Ben Brubeck, vice president of regulatory, labor and state affairs at ABC, in a statement.

Meanwhile, the National Association of Minority Contractors, the oldest minority construction trade group in the country, said the memo lacked teeth, because it didn't include a specific mechanism for measuring minority participation.

"They can use all the wonderful terms and buzzwords they want, but we track compliance," said Wendell Stemley, NAMC emeritus national director. "Our experience tells us that 50% of the time, states don't comply with the federal participation contracting guidelines that they use to get the money from the federal government in the first place."

Stemley was referring to disadvantaged business enterprise (DBE) goals which are used in federal contracting. Those goals call for a minimum of 10% participation by women and minority-owned firms, as well as small businesses, in federal contracts.

But minority contractors assert DBE targets are really just window dressing, since they are only goals, not requirements, and noncompliance rarely has material consequences.

"The states will say they'll shoot for 11% DBE participation if the feds give them $30 million for a freeway," Stemley says. "Once they get the $30 million and they don't achieve the 11% participation, they just write to the government and ask for a waiver. But they keep the $30 million."

For example, according to the United States Code, the 10% goals of DBE participation within the Department of Transportation are "aspirational" and based on good faith efforts. The law says the goal doesn't actually require recipients to set a goal at 10%, or take any special administrative steps if they fail.

The results within the industry are hiring practices that neglect to include underrepresented contractors, and a macho and racist image in the field. Another common outcome is billions of dollars in contracts, with only small percentages going to women and minority firms.

"When you have a $2 billion contract, and only $100,000 goes to African American contractors, that's like being in a rainstorm and you can't get wet," Stemley said. "That means you are systematically excluded, forgot about, or they never really planned on including you in the first place."

Representatives from DOL did not immediately return phone messages seeking comment on contractors' reaction to the joint memo.