The Truth About Project Labor Agreements

In 2009, President Obama signed Executive Order 13502, which encourages federal agencies to mandate project labor agreements (PLAs) on large-scale federal construction projects exceeding $25 million in total cost on a case-by-case basis. Many merit shop advocates of fair and open competition predicted the order would steer billions of dollars’ worth of federal construction contracts to unionized contractors and their all-union workforces—without true competition from qualified merit shop contractors and their nonunion employees, who compose 86.8 percent of the U.S. construction workforce.

Industry experts feared the executive order would result in taxpayers needlessly paying nearly 20 percent more per federal contract procured with a PLA requirement. Faced with finite building budgets, it would generate less building and create fewer jobs for the experienced men and women employed by merit shop contractors who deliver projects safely, on time and on budget every day to the federal government.

Stakeholders turned to Associated Builders and Contractors (ABC) to defend fair and open competition in federal contracting. ABC and the merit shop contracting community mobilized an aggressive campaign of effective public relations, political, legal and legislative strategies to restrict the devastating impact of anti-competitive and costly government-mandated PLAs on federal, state and local public works projects.

ABC’s campaign continues to produce impressive results. Efforts helped prevent PLA mandates and preferences on nearly 99 percent of federal contracts exceeding $25 million from FY2009-FY2015, freeing up 1,109 contracts worth a total of $60 billion from PLA requirements so all qualified firms could fairly compete to win these contracts.

ABC contractors have taken advantage of a level playing field. From FY2009-FY2015, ABC member prime contractors won 55.8 percent of large-scale federal contracts subject to President Obama’s pro-PLA Executive Order 13502. That’s 626 contracts valued at a total of $40 billion won by ABC members. This data does not include work awarded and performed by subcontractors.

Defense Tactics

Legal tactics proved effective at stopping federal PLA mandates. Federal contractors, with the support of ABC, filed five Government Accountability Office (GAO) bid protests against PLAs mandated by four different federal agencies on large-scale federal construction projects. In each instance, federal agencies abandoned the PLA requirements after GAO officials suggested they violate federal contracting laws in specific circumstances.

The latest legal victory against a PLA mandate on a U.S. Department of Labor (DOL) Job Corps Center in Manchester, N.H., was the DOL’s second failed attempt to require a PLA on the project. It was also the first apples-to-apples comparison of a federal project bid with and without a PLA requirement. Advocates of fair and open competition were not surprised when the PLA-free project experienced three times as many bidders and bid prices that were 16 percent lower than when the project was bid with a PLA mandate, saving taxpayers more than $6.2 million.

Helping merit shop contractors respond to more than 300 surveys issued by federal agencies to determine if a PLA is appropriate for a federal project has been another effective strategy in the fight against PLAs. A robust response from the merit shop contracting community resulted in no PLA requirements on any surveyed projects.

More importantly, ABC’s campaign prevented the expansion of Executive Order 13502 onto federal projects costing less than $25 million, as well as thwarted an additional push for costly PLA mandates on private, state and local projects receiving federal assistance.

Since President Obama issued Executive Order 13502, 20 states have responded to the threat of discriminatory PLA mandates and preferences by adopting legislation or executive orders banning government-mandated PLAs on state, local and publicly funded projects, bringing the total number of states to enact such measures to 22.

ABC’s efforts to enact state Government Neutrality in Contracting Act (GNICA) laws prevented government-mandated PLAs on $155.86 billion of state construction work through 2013, and an estimated $170 billion through May of 2016.

Nevada, West Virginia and Arkansas enacted laws in 2015 prohibiting state government entities from requiring contractors to sign a PLA or other agreements with labor unions as a condition of performing work on public construction projects, while Maine’s law sunset in October 2015. In 2016, efforts in Florida and Ohio came up short, but more states are poised to pass GNICA legislation in 2017.

Dozens of communities across the country also have enacted similar GNICA laws for public works contracting.

These efforts ensure a level playing field, increase competition, reduce costs and eliminate cronyism in public works contracting at the local and state level.

However, some states controlled by union-friendly Democrats have enacted legislation or executive orders pushing the use of PLAs on state and state-assisted projects. In addition, federal agencies have encouraged state and local governments to require PLAs on billions of dollars worth of state and local projects receiving federal money and other forms of federal assistance. For example, a calendar year 2009 to December 2015 U.S. Department of Transportation (DOT) Federal Highway Administration (FHWA) report indicated FHWA funding recipients mandated PLAs on 323 contracts in six states worth an estimated $8.126 billion and 51 contracts in President Obama’s hometown of Chicago worth $769 million.

While ABC’s campaign is making remarkable progress, lawmakers requiring and encouraging the use of PLA mandates cost taxpayers a fortune and harm qualified merit shop contractors and their skilled trades employees.

Continuing the Fight

Faced with the last six months of President Obama’s discriminatory pro-PLA policies, ABC will continue to make defending fair and open competition in public contracting a top priority. In the 114th Congress, ABC is promoting the Government Neutrality in Contracting Act (H.R. 1671/S. 71) and similar language in appropriations bills with a diverse coalition of organizations, which would restore a level playing field in federal contracting by preventing entities procuring federal and federally assisted projects from requiring PLAs as a condition of winning a taxpayer-funded contract.

For the first time in the history of Congress, in January the House Oversight and Government Reform Committee marked up the H.R. 1671 and voted it favorably out of committee. It awaits a vote on the House floor as a stand-alone bill. Unfortunately, in contrast, a May 19, amendment to the House Military Construction and Veterans Affairs FY 2017 Appropriations bill (H.R. 4974) offered by Rep. Scott Perry (R-Pa.) (H.Amdt. 1076) similar to GNICA that would restrict government-mandated PLAs on projects funded by the bill was defeated 209-216 (Roll Call No. 225), with 33 Republicans voting with all Democrats against the amendment.

ABC will continue to implement effective legislative, legal and regulatory strategies with a communications and grassroots campaign to educate federal agency procurement officials, lawmakers, industry stakeholders, the media and taxpayers about the harmful effects of special interest PLA schemes.

The merit shop contracting community can overcome these discriminatory PLA schemes as long as industry leaders remain diligent and continue to educate lawmakers and stakeholders about this campaign until a political or legislative solution is achievable.

What Will the New President Do With PLA Policy?

Presidential policies addressing the use of government-mandated PLAs on federal and federally assisted construction projects have been subject to a game of political ping pong since the early 1990s, depending on which party controls the White House.

A Hillary Clinton presidency would almost certainly continue, if not expand, President Obama’s pro-PLA policy. Earlier this year at the North American Building Trades Union legislative conference, Clinton promised to gut Right to Work laws, protect the archaic 1935 Davis-Bacon Act, create jobs exclusively for union apprentices and support government-mandated PLAs:

In contrast, Donald Trump has not indicated his support or opposition to government-mandated PLAs. He has refused to build with PLAs on Trump development projects in open shop markets, but he has entered into PLAs with unions on some projects in labor-friendly markets such as New Jersey, Manhattan and Chicago with mixed results.

In June of 2006, the company developing the $850-million Trump International Hotel and Tower in downtown Chicago sued three labor organizations for breaching the terms of a PLA after union members walked off the project during a strike (401 North Wabash Venture LLC v. Chicago and Cook County Building and Construction Trades Council, N.D. Ill., No. 06-CV-3077, 6/5/06).

The development company eventually settled the suit against the Chicago and Cook County Building and Construction Trades Council, the Construction and General Laborers’ District Council of Chicago, and Vicinity and Laborers’ International Union Local 6.

Joseph Gagliardo, managing partner of the firm Laner, Muchin, Dombrow, Becker, Levin and Tominberg Ltd., represented 401 North Wabash in the action and told the media that the unfortunate lesson emerging from this strike and suit has to do with the real value of project agreements with Chicago unions.

“The whole purpose of the project labor agreement is to prevent interruption and prevent delay and have labor peace,” he said. “So the question this strike raises is–and I don’t know the answer to it–what impact will this strike have on the willingness of other building owners to engage in a project labor agreement?”

Trump’s personal experience of broken promises on a PLA project is not unique. TheTruthAboutPLAs.com has documented numerous problems on contracts subjected to government-mandated PLAs, including failures on federal contracts that resulted in increased costs, delays and poor local hiring outcomes.

Taxpayers and the merit shop contracting community deserve relief from anti-competitive and costly policies promoting government-mandated PLAs. Fair and open competition is the only way to give taxpayers the best possible product at the best possible price.

Learn more about government-mandated PLAs with this video: