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By: Kendall Jones on September 29th, 2016

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The Debate Over Project Labor Agreements Rages On

Construction Bidding | Industry News

The use of Project Labor Agreements (PLAs) on public projects, which date back to 1933 with the construction of the Grand Coulee Dam, continues to be a hot-button issue in the construction industry. PLAs are collective bargaining agreements used to establish conditions and terms of employment for a specific construction project through one or more labor organizations or unions and project owners. PLAs are negotiated prior to any bidding or hiring labor on a project.

PLAs determine wage rates, benefits and working conditions for all labor on a project, for both union and nonunion workers. Terms of a PLA apply to all contractors and subcontractors who successfully bid on a project and typically include provisions on the use of local labor, diversity requirements for MBEs, SBE’s WBEs, and normalizing shift work. They generally include provisions to prevent work stoppages due to strikes and lockouts. PLAs typically require all workers on the project be hired through referrals from union halls. Nonunion workers often have pay union dues, regardless of whether they decide to join the union or not, during the length of the project with a PLA.

Opponents of PLAs argue that their use increases construction costs and are anti-competitive. Since PLAs typically requires all contracting companies involved in the project to rely on a union or unions to act as representatives for their employees. They state that the use of union representation discourages competition since nonunion contractors aren’t as likely to bid on projects that require a PLA. Contractors are not involved in negotiating PLAs like they are in traditional collective bargaining agreements.

Opponents also argue that since union halls are typically used for hiring workers that contractors are required to pay union wages that would result in increased costs. Over a dozen organizations and groups have come out in support of the Government Neutrality in Contracting Act including the Associated Builders and Contractors, Associated General Contractors, National Association of Women in Construction and the Independent Electrical Contractors.

Proponents for the use of PLAs argue that workers, both union and nonunion, benefit from PLAs because they are protected with pre-established wages and benefits. This is also supposed to create a level field of play for contractors bidding the project since no one can try and underbid a project by offering lower wages to their employees.

Supporters also argue that construction delays are avoided by being able to quickly resolve labor disputes and also avoid labor shortages by guaranteeing access to skilled labor and a trained workforce which will also result in on-time delivery of the project. Labor costs can also be reduced by utilizing registered apprentices on the construction project. Some of the groups that have come out in favor of the use of PLAs or in opposition of the Government Neutrality in Contracting Act include the AFL-CIO and the Sheet Metal and Air Conditioning Contractors’ National Association.

Supporters and opponents of PLAs are usually split based whether you are pro-union or anti-union and along political party lines between Democrats and Republicans. States with limited union representation or with right-to-work laws typically have laws prohibiting the use of PLAs on public projects.

Over the past few years, Congress has introduced legislation that would prevent government agencies from being able to mandate the use of PLAs on Federal and federally funded construction projects. The Government Neutrality in Contracting Act (H.R. 1671/S. 71) was introduced by the 114th Congress last year. The House version saw some movement this year when it was reported by the Committee on Oversight and Government Reform and then placed on the Union Calendar back in March. No action has been taken on the version in the Senate since it was introduced in January 2015.

Similar bills have been introduced going back to the 107th Congress. Each subsequent session of Congress has introduced a Government Neutrality in Contracting Act, yet none have made it through the legislative process to become law. GovTrack.us, which tracks federal legislation, gives the House bill an 11% chance of being enacted. The Senate version only has a 2% chance of being enacted.

If passed the bill would basically nullify President Obama’s Executive Order 13502 which encourages federal agencies to require PLAs on federal construction projects that are projected to cost $25 million or more. The debate over the use of PLAs for federal projects is nothing new. In 1992, President George H.W. Bush issued an Executive Order that banned the use of PLAs on federally funded projects. A year later, President Bill Clinton released an Executive Order allowing the use of PLAs. In 2001 President George W. Bush issued two Executive Orders that reinstated the ban on PLAs.

Legislation regarding PLAs isn’t solely a concern of the federal government. Currently, 23 states have passed legislation prohibiting government entities from mandating the use of PLAs in order for contractors to work on public construction projects. In 2015, Arkansas, Nevada and West Virginia became the latest states to ban PLAs, joining Alabama, Arizona, Georgia, Idaho, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah and Virginia. States with legislation that authorizes and/or encourages the use of PLAs such as New Jersey, New York, Washington and Illinois.

It is important to note that while the Government Neutrality in Contracting Act would bar government agencies from requiring the use of PLAs, it would not prevent contractors from voluntarily participating in a PLA for federally funded construction projects.