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Iowa Law Restricts Government-Mandated Project Labor Agreements, Protects Hawkeye State Construction Industry

0 April 16, 2017  Featured, Federal Construction, State & Local Construction

On April 13, Gov. Terry Branstad (R-Iowa) signed SF 438 into law, which promotes fair and open competition on contracts for construction services funded by Iowa taxpayers. The measure will ensure that the government cannot mandate controversial project labor agreements (PLAs) on state, state-assisted and local construction projects, guaranteeing that the 85 percent of Iowa’s private construction workforce that has chosen not to join a labor union can work on projects funded by their own tax dollars.

Iowa is one of 22 states that have passed laws and executive orders restricting government-mandated PLAs.

22 FOCA GMPLA State Map as of 041417

Here is more from RadioIowa on Thursday’s bill signing:

Project labor agreements have been used on some of the state’s biggest government construction projects, like the Iowa Events Center in downtown Des Moines. But in 2011 when Branstad returned as Iowa’s governor, he issued an executive order that banned project labor agreements on state-financed construction. The bill Branstad signed into law this week ensures the ban applies not only to projects that are financed with state tax dollars, but construction paid for with tax dollars collected by cities, counties and school districts.

“Publicly-funded construction projects create jobs for workers here in Iowa and it’s important to make sure that all qualified workers have the opportunity to bid on these projects,” Branstad said during a bill-signing ceremony in his statehouse office.

Project labor agreements have been used on some of the state’s biggest government construction projects, like the Iowa Events Center in downtown Des Moines. But in 2011 when Branstad returned as Iowa’s governor, he issued an executive order that banned project labor agreements on state-financed construction. The bill Branstad signed into law this week ensures the ban applies not only to projects that are financed with state tax dollars, but construction paid for with tax dollars collected by cities, counties and school districts.

“Project labor agreements infringe on Iowans’ right to work by denying small businesses, contractors, women- and minority-owned companies the opportunity to competitively bid on these important projects,” Branstad said. “PLAs increase the cost of public projects by preventing competitive bidding on projects and leave Iowa taxpayers to foot the bill for these increased expenses.”

In September 2011, the U.S. District Court for the Southern District of Iowa upheld Branstad’s executive order that restricted government-mandated PLAs on state and state-assisted projects. All legal challenges to similar state and federal laws and executive orders have failed since 2011.

In 2011, Branstad’s executive order on PLA mandates grabbed headlines after the state withheld a $15 million state I-JOBS grant for work on the Cedar Rapids Convention Complex flood recovery project until a compromise was reached.

The scope of SF 438 prohibits PLA mandates on local projects (it still applies state and state-assisted projects already covered by the executive order), because of the Cedar Rapids controversy and the negative impact of PLA mandates on Hawkeye State job creation. In 2013, The Des Moines Register reported the $132 million Iowa State Penitentiary project in Fort Madison, Iowa, subject to a 2010 PLA mandated by the former Gov. Chet Culver’s (D) administration created jobs for a large number of out-of-state union workers, despite promises by advocates of PLAs that these union-favoring pacts create jobs primarily for Iowa’s taxpayers and construction workforce (“Many prison project jobs went to non-Iowans,” 10/12/13).

In addition, a 2006 study by The Public Interest Institute found that a PLA on the Iowa Events Center project in Des Moines placed an “unnecessary burden” on local workers, business and taxpayers. Iowa public officials required a PLA and stated that it was necessary to “keep the project on time, keep it on budget, and complete it in a safe manner.” According to the study, the union-only PLA “failed on all three counts.”

Here is ABC’s press release on this important win for free enterprise and Iowa taxpayers.

Iowa Governor Signs Bill to Protect Taxpayers, Boost Jobs for Iowa’s Construction Industry

Contact: Jeff Leieritz (202) 905-2104              
leieritz@abc.org

WASHINGTON, D.C., April 13—Associated Builders and Contractors (ABC) today applauded Gov. Terry Branstad (R-Iowa) for signing legislation into law that will promote fair and open competition on contracts for construction services funded by Iowa taxpayers. The bill, SF 438, will ensure that the government cannot mandate controversial project labor agreements (PLAs) on state, state-assisted and local construction projects, guaranteeing that the 85 percent of Iowa’s private construction workforce that has chosen not to join a labor union can work on projects funded by their own tax dollars. 

Gov. Branstad has long supported government neutrality toward PLAs, issuing Executive Order 69 in January 2011, which prevented state and local governments procuring state and state-assisted construction projects from encouraging or prohibiting PLAs in contract solicitations. Signing SF 438 into law allows all qualified contractors to compete for construction contracts funded by Iowa taxpayers on a level playing field and ensures that future governors cannot mandate discriminatory PLAs on public construction projects through an executive action. 

“Iowa’s law supporting fair and open competition boosts national momentum against government-mandated PLAs and guarantees that Iowans will continue to receive the best quality product at the best possible price for taxpayer-funded schools, hospitals, roads and other public construction projects,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Governor Branstad and the Iowa legislature sent a message that they are serious about generating value for taxpayers and creating jobs and opportunities for all of Iowa’s construction workers and businesses. Associated Builders and Contractors is hopeful that similar policy addressing anti-competitive and costly government-mandated PLAs, which steer construction contracts to unionized firms and discriminate against 86 percent of the U.S. private construction workforce, will be implemented on federal and federally assisted construction projects through executive action by President Trump and legislation recently proposed in Congress.” 

“On behalf of the merit shop contractors we represent, Associated Builders and Contractors of Iowa thanks Governor Terry Branstad for signing this legislation that sets a fair standard and rewards free enterprise,” said ABC of Iowa President and CEO Greg Spenner. “We also appreciate the hard work from legislators who pushed the bill forward. By restricting the use of discriminatory project labor agreements, more local companies are now better positioned to bid on public projects. This will ultimately increase competition and lower costs. The real winners today are Iowa’s taxpayers.” 

When mandated by a government agency on a taxpayer-funded project, PLAs drive up the cost of construction projects between 12 percent and 18 percent, according to a series of academic studies. PLAs typically ensure construction contracts are awarded only to companies that agree to recognize unions as the representatives of their employees on that job; use the union hiring hall to obtain workers at the expense of existing qualified employees; obtain apprentices through union apprenticeship programs; follow inefficient union work rules; pay into union benefit and multi-employer pension plans workers will never benefit from unless they meet vesting requirements; and force workers to pay union dues and/or join a union as a condition of employment. 

In 2009, President Obama signed Executive Order 13502, which strongly encourages, on a case-by-case basis, government-mandated PLAs on federal construction projects and permits state and local governments procuring federally-assisted construction contracts to mandate PLAs. In January 2017, ABC and a coalition of construction and industry stakeholders asked President Trump to issue an executive order similar to President Bush’s Executive Orders 13202 and 13208, which prohibited government-mandated PLAs on $147.1 billion worth of federal construction contracts and hundreds of billions of dollars’ worth of federally assisted projects. 

A total of 22 states (20 since 2011, including Iowa) have adopted similar legislation or executive action ensuring fair and open competition on state and local projects. This year, a number of states may pass similar bills, such as Wisconsin’s SB3, which was sent to Gov. Scott Walker’s desk on March 9. In 2015, West Virginia became the 22nd state to ban government-mandated PLAs when Gov. Earl Ray Tomblin signed the bipartisan Establishing Fair and Open Competition in Governmental Construction Act (SB 409). Gov. Tomblin is the first Democratic governor to sign a bill prohibiting PLA mandates. Also in 2015, Arkansas Gov. Asa Hutchinson signed into law SB 426, a bipartisan bill prohibiting PLA mandates that had previously passed the state Senate and House of Representatives in unanimous votes. All legal challenges to similar state and federal laws executive orders have failed. 

On March 28, a U.S. House of Representatives committee favorably reported the ABC-supported Fair and Open Competition Act (H.R. 1552) out of committee. The bill, sponsored by Rep. Dennis Ross (R-Fla.), would extend the same neutrality towards the use of PLAs adopted in Iowa to federal and federally assisted construction contracts. The bill was also introduced in the U.S. Senate (S. 622) by Sen. Jeff Flake (R-Ariz.). 

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