Review research opposing government-mandated project labor agreements (PLAs).
ABC’s Statement on Why the FAR Final Rule to Implement Executive Order 13502 Should be Challenged
On April 21, 2010, ABC National released, “The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged,” by ABC general counsel Maurice Baskin, Esp., Venable LLP. This document lays out ABC’s argument for how the Obama Administration’s actions violate federal procurement laws; discriminate against 85 percent of the construction industry workforce and many small businesses; and harm taxpayers. Read the document.
ABC National’s Comments on Proposed Rule Encouraging Federal Agencies to Mandate PLAs (FAR Case 2009-005 and Executive Order 13502)
On August 13, 2009, ABC filed comments with Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in response to a proposed rule to implement Executive Order 13502, which encourages federal agencies to require PLAs on federal construction projects via the Federal Aquisition Regulation (FAR) Council “FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects.”
ABC’s comments express serious concerns with the proposed regulation, particularly with its impact statement, the absence of any meaningful criteria for agencies to use in deciding whether to impose PLAs and the absence of any empirical justification for using PLAs on federal projects.
ABC’s comments highlight numerous problems with government mandated PLAs and reference a variety of arguments and studies that document how this bad public policy will harm taxpayers, contractors and their employees.
ABC National’s Comments
ABC Member Survey Supplement to Main ABC Comments (Learn why contractors oppose government-mandated PLAs)
ABC National Comments Specifically Addressing the Impact of FAR Rule on Small Businesses and Violation of the Regulatory Flexibility Act
ABC News Release on Comments
ABC Survey Finds PLAs on Public Construction Projects Will Injure Competition (June 2009)
ABC Survey Finds PLAs on Public Construction Projects Injure Competition (Jan. 2011)
Survey Finds Government-Mandated Project Labor Agreements Reduce Competition (Oct. 2013)
Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition)
The 2011 edition of ABC General Counsel Maury Baskin’s report on government-mandated PLAs documents a record of PLA construction projects experiencing an unfortunate pattern of cost overruns, reduced competition, delays in construction, construction defects, safety problems and diversity issues. It is a key resource to find failed government-mandated PLA projects in your community, illustrating why anti-competitive and costly government-mandated PLAs are nothing more than a bad solution in search of a problem.
Project Labor Agreements on California School Construction Raise Costs up to 15 Percent, Study Says
According to a July 2011 study released by the National University System Institute for Policy Research (NUSIPR), California school construction projects built using government-mandated PLAs experienced increased costs of 13 percent to 15 percent, or $28.90 to $32.49 per square foot, compared to projects that did not use a PLA.
Report Opposes PLAs in the District of Columbia Construction Market (April 2010)
An April 2010 report by ABC Chief Economist Anirban Basu, “The Problem with PLAs in the District of Columbia,” provides an assessment of the economic implications of government-mandated project labor agreements on construction projects in the District of Columbia. Specifically, the study finds that government-mandated PLAs are not economically sensible in the context of the current environment for construction services in the District of Columbia market.
Cato Journal on Why PLAs are Not in the Public Interest (Winter 2010)
A compelling piece critical of government-mandated project labor agreements by David G. Tuerck, executive director of the Beacon Hill Institute for Public Policy Research at Suffolk University, appears in the current issue of the Cato Journal (Volume 30 Number 1, Winter 2010, “Are Unions Good for America?”). “Why Project Labor Agreements Are Not in the Public Interest,” surveys the historical decline of construction union membership and poor performance of government-mandated PLAs while countering common union arguments for PLAs. The piece attacks the faulty logic and methodology often employed in studies promoting PLAs as a mechanism to reduce construction costs (p. 53-61).
Report Calls Washington, D.C. Nationals Ballpark PLA a Failure (November 2009)
A November 2009 report by DC Progress, “The True Cost of the Washington Nationals Ballpark Project Labor Agreement,” exposes the problems that PLAs present for DC taxpayers, as well as unemployed, and underemployed residents. The report focuses on the, “broken promises of the D.C. Ballpark PLA, in order for policymakers, stakeholders in the local economy, and citizens to understand the burdens that PLAs impose on state and city governments. The Nationals Park PLA created a huge barrier for the District’s nonunion workforce: 85 percent of construction workers and 95 percent of minority-owned contractors were left out of work.”
Study Finds that PLAs and President Barack Obama’s Executive Order 13502 Will Hurt Nonunion Workers (October 2009)
An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements” finds that employees of nonunion contractors that are employed under government-mandated PLAs suffer a reduction in their take home pay that is conservatively estimated at 20 percent. The report estimates that as a result of President Obama’s pro-PLA Executive Order 13502, hundreds of millions of dollars of nonunion employees’ income on federal construction projects will be distributed to union pension funds, from which nonunion employees will likely receive no benefits.
In addition, the report found that PLAs on federal projects substantially increase costs (approximately 25 percent) for nonunion employers. Nonunion contractors will also face increased and unnecessary exposure to pension fund liability if they perform work under PLAs, including possible withdrawal liability when the PLA project is completed.
The study found that had President Obama’s pro-PLA Executive Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements would likely have ranged from $230 to $767 million per year. Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million, depending on the assumptions made for companies executing contracts via PLAs. In total, the move to PLAs could cost nonunion workers and their employers $414 million to more than $1.38 billion annually.
Beacon Hill Institute Study Says Federal PLAs and Executive Order 13502 Will Harm Taxpayers (September 2009)
A study released Sept. 23, 2009, by the Beacon Hill Institute (BHI), “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” found that PLAs significantly increase construction costs on federal projects.
Had President Obama’s pro-PLA Executive Order 13502 been in effect in 2008, and all 2008 federal construction projects worth $25 million or more had been performed under PLAs, it would have increased the cost to federal taxpayers by $1.6 billion to $2.6 billion.
In addition, the BHI review of federal construction projects from 2001-2008, the years under which government-mandated PLAs were prohibited, also revealed that there were no instances in which labor disruptions occurred that resulted in significant project delays or increased costs. The study concludes that “the justifications for PLAs provided by Executive Order 13502 are unproven.”
Government Funded Study Finds PLAs Increase Costs and Offer Limited Value (June 2009)
A June 2009 study conducted by property and construction consulting firm Rider Levett Bucknall prepared for the U.S. Department of Veterans Affairs (VA) Office of Construction and Facilities Management found that PLAs would likely increase construction costs by as much as 9 percent on three of the five construction markets (Denver, New Orleans and Orlando) in which the VA is planning to build hospitals.
The VA hired this firm to evaluate the cost impact of PLAs in various markets where the VA plans to build hospitals in light of President Obama’s order that encourages federal agencies to mandate PLAs (Executive Order 13502).
Read Project Labor Agreements – Impact Study for the Department of Veterans Affairs .
Read analysis of this study here.
Study Questions Effectiveness of DC Baseball Stadium PLA (October 2007)
A PLA on the District of Columbia’s new $611 million baseball stadium has completely failed to ensure that local residents get the majority of work on the project, according to a report released Oct. 2, 2007 by the District Economic Empowerment Coalition.
Beacon Hill Institute Report Examines Case Study Supporting Previous PLA Research on the Effect of PLAs on School Construction Costs (December 2006)
A December 2006 report by the Beacon Hill Institute at Suffolk University, “Project Labor Agreements and Financing Public School Construction in Massachusetts,” reviews a real-world case study supporting BHI’s previous research on the effect of PLAs on school construction costs. In 2006, the City of Fall River, MA bid three school construction projects under a PLA. Then, after attracting few bidders, with those providing bids coming in well above the projected budget, the city canceled the PLA and reopened the bidding process. The report found that the city of Fall River saved $5.8 million on total construction bids by removing the PLA and bidding the project using free and open competition.
Read the Report
Read a related academic paper published by Bentley University, ”Do Project Labor Agreements Raise Construction Costs?”
Read update on Fall River case study in July 2007 Boston Globe Op-Ed
Read a letter encouraging open competition from Fall River, MA City Councilor Camera
Beacon Hill Institute Recommends Against Project Labor Agreement on the Nationals’ Stadium (September 2006)
The Beacon Hill Institute’s paper, Washington National’s Ballpark: Cost and Timeliness Implications of Using a Project Labor Agreement, found that “the D.C. Sports and Entertainment Commission would benefit from lower costs, without sacrificing quality or timeliness, by not using a PLA and introducing more competition into the process.”
The paper concluded, “we find that claims of cost savings from the use of PLAs to be erroneous and misleading. Using a PLA reduces competition and, keeping with standard economic theory, drives up bids and final construction costs. Extrapolating from our prior work, we estimate construction costs to be inflated $34 million to $49 million due to the inclusion of a PLA.”
Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in New York (April 2006)
This study conducted by the Beacon Hill Institute at Suffolk University found that PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20% increase in costs over the average non-PLA project.
Iowa Events Center PLA Study (March 2006)
The Public Interest Institute, a nonpartisan, nonprofit research and educational institute in Mt. Pleasant, Iowa, has released a new study that concludes the PLA on the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.
Union-Only Project Labor Agreements: The Public Record of Poor Performance (2005 Edition)
The 2005 edition of ABC General Counsel Maury Baskin’s report on union-only PLAs documents a record of union-only construction projects experiencing a consistent pattern of cost overruns, adverse impacts on competition, delays in construction, construction defects, safety problems and diversity issues.
Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in Connecticut (September 2004)
This study conducted by the Beacon Hill Institute at Suffolk University found that the use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent. The report concludes that the presence of a PLA increased the projects’ final base construction costs by $30 per square foot relative to non-PLA projects. “This study provides further evidence that PLAs drive up the cost of construction projects, while discriminating against the four out of five construction workers who choose not to join a labor union,” said Kirk Pickerel, ABC president and CEO.
Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in Massachusetts (September 2003)
A study completed by the Beacon Hill Institute entitled, “Project Labor Agreements and the Cost of School Construction in Massachusetts,” finds that “PLA projects add an estimated $18.83 per square foot to the bid cost of construction (in 2001 prices), representing an almost 14 percent increase in costs over the average non-PLA project. The low estimates find that actual project costs are raised by 8.4 percent; the high estimates find that bid costs are raised by 14.9 percent.
Erie County (NY) Courthouse Construction Projects: Project Labor Agreement Study (September 2001)
This report, completed by the firm of Ernst & Young, was commissioned by Erie County in New York to analyze a PLA on a public construction project. Ernst & Young concluded that “bidder participation was diminished because the county chose to utilize a PLA. Further, the use of PLAs adversely affects competition for publicly bid projects to the likely detriment of cost-effective construction… the use of PLAs strongly inhibits participation in public bidding by non-union contractors and may result in those projects having artificially inflated costs.”
PLAs on Public Construction Projects: The Case For And Against (May 2001)
The Worcester Municipal Research Bureau May 21, 2001 released a study titled “Project Labor Agreements on Public Construction Projects: The Case For and Against.”. The study concluded that “PLAs tend to constrict the number of bidders on a project compared to those without PLAs, and are likely to reduce the savings to the public that would accrue if nonunion contractors who are employed were allowed to follow their customary methods.”
Project Labor Agreements Research Study: Focus on Southern Nevada Water Authority (November 2000)
This study, completed by Neil Opfer and Jaeho Son of the University of Nevada, Las Vegas, and John Gambatese of Oregon State University, concluded that a Nevada Water Authority project PLA cost taxpayers an additional $200,000 because the true low bidder refused to sign the PLA. The project went to a union contractor whose bid was $200,000 higher.
Economic Evaluation of Project Stabilization Agreement For Construction Projects Funded Proposition BB (November 2000)
The project stabilization/labor agreement (PSA/PLA) for the Los Angeles Unified School District’s (LAUSD) Proposition BB construction was required to end after one year unless the LAUSD or unions could prove the PLA was effective. A Price Waterhouse Coopers study requested by the LAUSD was “unable to conclusively determine whether the PSA has had either a net positive or net negative economic impact for the District, [and] there is anecdotal information which suggests that the PSA has to date had neither a significant positive nor a significant negative net impact.” Despite the study’s findings, the school board voted 5-2 to continue with the PLA, supporting the thesis that PLAs are implemented by public officials because of political concerns and not on the basis of sound public policy.
Project Labor Agreement in Minnesota (September 2000)
“Project Labor Agreements in Minnesota” was completed by Zachary C. Kleinsasser of Albion College. The study outlines inefficiencies with construction projects that contain PLAs between the months of June and August in the year 2000.
Analysis of the Impacts on the Jefferson County (NY) Courthouse Complex through Project Labor Considerations (September 2000)
This study, commissioned by the Jefferson County, New York, Board of Legislators, and completed by Professor Paul G. Carr, P.E., concluded that “[t]he additional costs estimated with the use of a PLA could range upwards of $955,000. With the loss of even one general contractor from the bidding [as a result of the PLA], the cost increase could approach $200,000.” On this estimated $14 million project, this would mean a cost increase of more than of 7 percent.
Weber Merritt Survey Finds Washington D.C. Contractors Less Likely to Bid on Projects with PLAs
In a 2000 survey of Washington D.C. area public works contractors regarding PLAs and public projects, over 70 percent said they would be less likely to bid on a project with a government-mandated PLAs.
Task Order No. 99-1: Project Labor Agreement (PLA) Study (June 2000)
The Clark County School District (CCSD) in Nevada, retained Resolution Management to perform an objective study of the use of union-only PLAs on School District Projects. In an independent and unbiased study, they found “no compelling reason for CCSD to enter into PLAs for school construction at this time.”
Government-Mandated Project Labor Agreements in Construction: A Force to Obtain Union Monopoly on Government-Funded Projects (January 2000)
This study by Dr. Herbert R. Northrup of the University of Pennsylvania’s Wharton School, concludes that “analysis shows that the justifications for imposing government-directed project agreements are flimsy at best. They are neither based upon fact nor do they conform to the realities of the construction industry.”
Fitchburg State College Project Labor Agreement Survey Results (1998)
This 1997-1998 survey conducted by researchers at Fitchburg State College refutes claims by PLA proponents that open shop contractors widely particiapte on government-mandated PLA projects. It found that over 66 percent of prime contractors identified as open shop by project managers on the Boston Harbor Cleanup Project were in fact union contractors. Additionally, 54 percent of the subcontractors surveyed that the project manager claimed to be open shop were either union contractors or didn’t work on the project at all.
Perception and Influence of Project Labor Agreements on Merit Shop Contractors (1997)
This 1997 study conducted by researchers at the University of Washington found that “when the virtues of using a PLA are evaluated…, it appears PLAs might not be necessary on any construction projects.”
Roswell Park Cancer Institute Letters (March 1995)
This ABC analysis of the taxpayer costs for Roswell Park Cancer Institute in Buffalo, New York, assessed bids for the same project both before and after a PLA was temporarily imposed in 1995. It revealed that there were 30 percent fewer bidders to perform the work and that costs increased by more than 26 percent when the PLA was in effect.
Federal Government Reports and Hearing Testimony
ABC Members Testify in Support of Legislation Restoring Fairness in Federal Contracting (June 3, 2011)
On June 3, 2011, the House Oversight and Government Reform Committee’s Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommittee held a hearing, H.R. 735 and Project Labor Agreements: Restoring Competition and Neutrality to Government Construction Projects.
Regulatory Impediments to Job Creation: The Cost of Doing Business in the Construction Industry (March 16, 2011)
On March 16, 2011, the U.S. House Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending held a hearing on the cost of doing business in the construction industry. Click the below link to view testimony and video of the hearing.
Congressional Research Service Report for Congress on PLAs (July 1, 2010)
“Project Labor Agreements,” by Gerald Mayer, Congressional Research Service labor policy analyst.
Congressional Research Service Report for Congress on PLAs (August 24, 1999)
“Project Labor Agreements in Federal Construction Contracts: An Overview and Analysis of Issues,” by Gail McCallion, Specialist in Labor Economics, Economics Division, CRS.
The Administration’s Policy of Discrimination: Project Labor Agreement’s Negative Impact on Women and Minority Owned Small Businesses (August 1998)
Testimony from an August 6, 1998, U.S. House Small Business Committee hearing on PLAs and their negative impact on women and minority owned businesses.
U.S. Government Accounting Office (GAO) Report: Project Labor Agreements: The Extent of Their Use and Related Information (May 1998)
A U.S. General Accounting Office (GAO) report, issued May 5, 1998, demonstrated that it is nearly impossible to show any cost savings or increased quality derived from the use of union-only project labor agreements, largely because of the difficulty in finding two identical projects, with or without a PLA, to study. The GAO report
Senate Committee on Labor and Human Resources Hearing on the Proposed Executive Order on Project Labor Agreements (April 1997)
Testimony from an April 30, 1997, hearing before the U.S. Senate Committee on Labor and Human Resources on President Clinton’s Proposed Executive Order on PLAs that later became a memo on PLAs. Click the below organizations to view their testimony before the committee in opposition to union-only PLAs.
Learn about the history of White House actions encouraging/prohibiting governement-mandated PLAs on federal and federally assisted construction projects here.
U.S. Government Accounting Office (GAO) Report: Labor Management Relations: Construction Agreement at DOE’s Idaho Laboratory Needs Reassessing (May 1991)
A U.S. General Accounting Office (GAO) report, issued May 23, 1991, reviewed the site stabilization agreement between a labor union and organizations within the DOE’S Idaho Laboratory. The report looked at whether nonunion contractors had access to DOE Idaho Operations Office construction contracts.