Courts Rule in Favor of #NoPLA Laws Promoting Fair and Open Competition

0 January 10, 2017  Featured, Federal Construction, State & Local Construction

Proponents of government-mandated project labor agreements (PLAs) have unsuccessfully challenged federal and state laws and executive orders that prevent lawmakers and agencies from imposing anti-competitive and costly union-favoring PLA requirements on taxpayer-funded construction projects.

When mandated by government entities, PLAs have a dismal track record of increasing costs, reducing competition, and discriminating against experienced construction companies and qualified local employees because they are not affiliated with a union.

Federal PLA Policy Litigated

In the 1993 landmark Boston Harbor case, the Supreme Court of the United States held that government-mandated PLAs are not prohibited by the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151-169.

As discussed in the case, sections 8(e) and (f) of the NLRA, 29 U.S.C. §§ 158(e) and (f) make special exceptions from other requirements of the NLRA in order to permit employers and unions in the construction industry to enter into PLAs.

The court was not asked to decide whether government-mandated PLAs violate competitive bidding laws at either the federal or state level, which other PLA-related court cases have focused on to varying degrees and outcomes.

As a result, nothing in the Boston Harbor decision requires or prohibits government entities from imposing PLAs on government construction contracts, as long as the government entity is acting as a market participant for services it is procuring.

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.

Since the 1990s, GOP presidents have issued executive orders opposing government-mandated PLAs, while Democratic presidents have enacted policies advocating the use of government-mandated PLAs.

On Feb. 17, 2001, President George W. Bush signed Executive Order No. 13202, “Preservation of Open Competition and Government Neutrality Towards Government Contractors’ Labor Relations on Federal and Federally Funded Construction Projects.” This order declared that neither the federal government, nor any agency acting with federal assistance, shall require or prohibit construction contractors to sign union agreements as a condition of performing work on federal and federally-assisted construction projects.

Essentially, the federal government took a position of neutrality towards the use of PLAs and decided that government and taxpayers benefited from full and open competition from all qualified contractors.

The Bush order was challenged by PLA proponents in a lengthy legal case, Building and Construction Trades Department, AFL-CIO et al., v. Joe M. Allbaugh, Director, Federal Emergency Management Agency, et al. Construction unions contended the Bush executive orders conflicted with the NLRA.  In January 2003, the U.S. Supreme Court denied certiorari in the case, upholding the U.S. Court of Appeals for the District of Columbia Circuit decision upholding President Bush’s Executive Orders 13202 and clarifying Executive Order 13208.

The Allbaugh case remains the controlling case in similar litigation.

Under the Bush executive orders, the federal government awarded $147.1 billion worth of federal construction contracts without government-mandated PLAs, and tens of billions’ of dollars worth of federally assisted construction projects were built without PLA mandates. During the eight years of the Bush administration, research found there were no significant labor-related problems on federal construction projects (such as work delays, cost overruns or similar problems) even though there were no government-mandated PLAs.

The Bush order was repealed by President Obama Feb. 6, 2009, and replaced with the pro-PLA Executive Order 13502, which encourages federal agencies to mandate PLAs on federal projects exceeding $25 million in total costs on a case-by-case basis. It also allows (but does not formally encourage) federally assisted projects procured by state and local governments to require PLAs under certain circumstances, which has been strongly encouraged by some federal agencies, lawmakers and bureaucrats.

ABC has vigorously attacked President Obama’s pro-PLA order and has achieved great success defeating federal PLA mandates without filing a direct legal challenge against the Obama order by spearheading contractor bid protests with the Government Accountability Office. This forced federal agencies to rescind PLA mandates in all five cases where ABC employed this strategy and chilled the use of PLA mandates and preferences across federal agencies.

However, state and local governments heavily influenced by organized labor in states like Hawaii, California, Washington, Illinois and New York have a track record of mandating PLAs on massive infrastructure projects receiving federal assistance. These projects have often delivered poor outcomes, despite the alleged benefits of a PLA mandate.

For example, the media has called the Highway 99 tunnel mega-project underneath Seattle’s downtown waterfront the West Coast’s “Big Dig,” named after Boston’s notoriously delayed and budget-busting series of tunnels that were also procured with a government-mandated PLA. It has been plagued by delays, cost overruns, union strikes, featherbedding and labor disputes, a poor safety record, employees working on the jobsite while drunk, sexual harassment allegations and violations of state and federal minority contracting rules.

According to the U.S. Department of Transportation’s (DOT) Federal Highway Administration (FHWA) November 2016 records, lawmakers during the Obama era mandated PLAs on more than 400 similar state and local construction projects (totaling $8.712 billion) that received federal assistance from the FHWA.

A Hillary Clinton presidency would have continued, if not expanded, President Obama’s pro-PLA policy. In early 2016, at the North American Building Trades Union legislative conference, Clinton promised to gut Right to Work laws, protect the archaic 1930s era Davis-Bacon Act, create jobs exclusively for union apprentices and support government-mandated PLAs:

In 2017, a coalition of construction and industry stakeholders and ABC asked President-elect Trump to rescind President Obama’s pro-PLA policy and replace it with the court-tested and proven Executive Orders 13202 and 13208.

States Push Back On Obama Administration’s Pro-PLA Policy

Today, 22 states have enacted pro-taxpayer laws restricting government-mandated PLAs, including 20 states that enacted legislation or executive orders banning PLA mandates since President Barack Obama’s 2009 pro-PLA Executive Order 13502.

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All legal challenges by PLA advocates to such state measures have ultimately failed.

In September 2011, the U.S. District Court for the Southern District of Iowa upheld an executive order signed by Iowa Gov. Terry Branstad (R) in 2011 that restricted government-mandated PLAs.

In September 2013, the U.S. Circuit Court of Appeals for the 6th Circuit overturned a lower court ruling and upheld Michigan’s right to ban government-mandated PLAs on taxpayer-funded construction projects.

In May 2015, a federal court in the Eastern District of Louisiana ruled that Louisiana’s 2011 law banning government-mandated PLAs was neither unconstitutional nor preempted by the National Labor Relations Act.

In September 2015, the U.S. Court of Appeals for the 9th Circuit ruled in favor of Idaho’s law restricting state agencies or political subdivisions from requiring contractors to enter into PLAs as a condition of performing public work stands.

ABC filed supporting legal briefs in all of these pivotal cases concerning state laws reforming government-mandated PLA policy and will continue to defend any challenges to existing or new state or federal laws and executive orders. In addition, ABC will continue to attack laws requiring or encouraging the use of PLA mandates, such as a discriminatory Jersey City law that forced developers to enter into a PLA with construction trade unions as a condition of receiving tax abatements on certain projects.

Numerous studies show government-mandated PLAs discourage merit shop contractors and subcontractors from competing for public construction contracts, thereby increasing costs to taxpayers between 12 percent and 18 percent and discriminating against the 86.8 percent of the U.S. construction workforce that chooses not to belong to a labor union.

PLAs typically force contractors to hire most or all of their craft employees from union hiring halls, follow inefficient union work rules, hire apprentices exclusively from union apprenticeship programs, and pay into union benefit plans on behalf of employees, even if they have their own qualified benefits programs. PLAs force employees to pay union dues, accept unwanted union representation and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefit plans.

Lawmakers pursuing policies restricting anti-competitve and costly government-mandated PLAs should be confident knowing the law supports efforts to ensure taxpayers get the best possible construction product at the best possible price. Such laws create a level playing field in the procurement of government construction contracts, increase competition, help small businesses grow, curb construction costs and spread the job-creating benefits of federally funded contracts throughout the entire construction industry.

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