The Truth About Project Labor Agreements

On Monday, Maryland Gov. Martin O’Malley (D) issued an executive order that changes how state government procures taxpayer-funded construction contracts.

According to an O’Malley administration press release, Executive Order 01.01.2013.05 (pdf) issued Sept. 23, 2013, directs entities “under the control of the governor” that procure contracts for construction services to adopt new procurement guidelines: 

“The procurement guidelines direct State agencies to consider on a project-by-project basis whether promoting apprenticeship programs and community hiring is in the best interests of the State, after considering a broad range of factors, including the size and complexity of the project and the impact on project costs, if any. Contractors who agree to participate in apprenticeship programs are authorized to execute either a project labor agreement or an apprenticeship agreement with an operator of a program that is registered with the Maryland Apprenticeship and Training Council [or the U.S. Department of Labor].”

Some of Maryland’s merit shop contractors and employees view this as a favor to the construction union lobby interests. They are concerned Gov. O’Malley’s executive order will lead to fewer construction jobs and contracting opportunities for local residents if state agencies encourage or require the use of apprenticeship programs, and use the order to advance the “voluntary” use of project labor agreements (PLAs), which force contractors to hire most or all of their craft employees through union hiring halls.

Unions have expressed concerns that the executive order does not go far enough. According to a Bloomberg BNA article, they would prefer a directive requiring or encouraging the use of PLAs on state construction projects. In addition, the O’Malley administration has indicated this executive order will be used in lieu of government-mandated PLAs on state projects.

“Baltimore Building and Construction Trades Council President Rod Easter told Bloomberg BNA that the governor’s order is a step in the right direction. “Those that have real bonafide apprentice schools … we’re giving them credits for doing that,” Easter said.

However, Easter said many construction union members and leaders wanted more out of the order in terms of project labor agreements. Easter said several members of the construction labor community hoped to see a PLA requirement, as opposed to giving contractors the option to choose between a PLA or apprenticeship agreement.”

The O’Malley administration has indicated this executive order will be used in lieu of government-mandated PLAs on state projects.

According to the governor’s office, apprenticeship participation can be required, or will be used by procurement officials as criteria to evaluate and score a contractor’s technical qualifications. When encouraged or mandated by procurement officials on a case-by-case basis, this new policy will hinder competition from firms that do not participate in apprenticeship programs.

However, it appears merit shop contractors could satisfy any public procurement’s apprenticeship program mandate or encouragement language by participating in apprenticeship programs registered with the U.S. Department of Labor or the Maryland Apprenticeship and Training Council, such as those offered by ABC chapters in Maryland and other qualified programs across the state.

In addition, the executive order permits firms participating in a registered apprenticeship program to have the choice of executing a PLA or “an agreement with an entity that operates a registered apprenticeship program”  in order to compete and win a construction contract subject to this new policy (see Section D of order). 

The merit shop contracting community, which employs 89.2 percent of Maryland’s construction workforce (i.e., construction industry employees who do not belong to a union), won’t know the full impact of this executive order on their ability to fairly compete for taxpayer-funded construction contracts with the state of Maryland until state agencies and boards procuring construction services put this new policy into practice. 

Meanwhile, on the same day the O’Malley executive order was issued, Democrat gubernatorial candidates “wooed a labor organization on Monday by pledging to pursue labor agreements that steer work on public projects to unionized firms,” according to an Associated Press article published in The Washington Post (“Md. Democratic candidates for governor woo labor group at building trades conference” 9/23/13). 

More from the article:

Lt. Gov. Anthony Brown said project labor agreements would have a chance in every public project under his administration, while he also noted that there are legal requirements that must be met for them to go forward. He said his administration would work to address legal hurdles. 

“And you know what? Sometimes we’ll be successful and sometimes we won’t, but that won’t stop us from trying,” Brown said at the Maryland State and DC Building Trades Conference.

Attorney General Doug Gansler, who is launching a statewide tour on Tuesday seeking the Democratic nomination for governor, also committed to moving ahead with project labor agreements.

“We’re going to have project labor agreements in the future,” Gansler said.

Del. Heather Mizeur, whose district is in Montgomery County, said she pushed to have project labor agreements during the recent legislative session as part of a major Baltimore schools funding measure. But she said Democratic leadership balked at the idea for fear it would jeopardize the proposal.

“So rather than push it for a vote and end up losing badly, we decided to hold off, wait for a Mizeur administration where we get these things done,” she said.

Brown also touted a gas tax increase approved in a tough vote in this year’s legislative session, saying it will enable construction of badly needed transportation projects that will increase construction jobs.

He also noted difficult work on expanding gambling in Maryland, which will generate jobs for construction workers who will be needed to build a new Las Vegas-style casino near the nation’s capital.

Increased PLA Use in Maryland Troubling to Merit Shop
As part of the technical criteria used by Maryland officials to evaluate contractors bidding on the Cheltenham jail project, the state rewarded firms that “voluntarily” used PLAs. Local governments in Maryland, like Prince George’s County, have passed legislation encouraging government-mandated PLAs on local projects when feasible. Coupled with President Obama’s push for PLAs on federal construction projects exceeding $25 million in Maryland and the District of Columbia through Executive Order 13502, it is clear Democrat politicians controlling the procurement of construction services in all levels of government are leaning toward policies favoring the construction industry’s unionized contractors and unionized workers at the expense of Maryland’s nonunion competition. 

Maryland’s merit shop contracting community must stay engaged and fight for fair and open competition in government contracting. While the O’Malley executive order could have been much worse for merit shop interests, the overall trend is concerning to the principles of free enterprise, which has a proven track record of delivering to taxpayers the best possible project at the best possible price. 

Stay tuned for more updates and developments as we watch Maryland’s use of PLAs closely.