The Truth About Project Labor Agreements

Oregon’s Daily Journal of Commerce story about the U.S. General Services Administration’s (GSA) Edith Green-Wendell Wyatt Federal Building in Portland  mentions how the GSA is evaluating project labor agreements (PLAs) on federal construction projects funded by federal stimulus money (“Green Wyatt Goes to Howard S. Wright,” 12/18).

The project, paid for with federal stimulus money, has attracted attention for its size and the fact that it could become the first federal project built using a project labor agreement since President Barack Obama reversed a Bush administration rule banning the agreements.

A statement by Robert Peck, Commissioner of the U.S. GSA Public Buildings Service (PBS) before the U.S. House Committee on Transportation and Infrastructure’s Economic Development, Public Buildings and Emergency Management Subcommittee on 10/27/09 describes the program used by the GSA to evaluate a PLA.

…we have identified 10 large Recovery Act projects, representing $1.25 billion in Recovery Act spending, located in seven states and the District of Columbia, where Project Labor Agreements (PLAs) may be used, as appropriate. For example, we are currently researching the market in San Francisco, CA, Honolulu, HI, and Portland, OR to determine the feasibility of PLAs for Recovery Act projects in those cities….

…This is consistent with the President’s new executive order encouraging executive agencies to consider the use of PLAs in connection with large-scale federal construction projects.

Despite the fact that the final Federal Acquisition Regulatory (FAR) Council regulations implementing Executive 13502 into procurement code have not been issued, the GSA’s PBS issued a Procurement Instructional Bulletin 09-02.  It indicates these projects will require contractors to submit two price proposals – one that is subject to a PLA requirement and one proposal that is not (see Section 7 part (b), page 3 for Construction, Design Build Solicitations and part (d) for CMc Solicitations in lieu of Alternative Offerors). 

b. Alternative Offers for PLA (Construction, Design Build Solicitations)

(a) Offerors shall submit two price proposals: One proposal that is subject to the PLA requirement set forth in the Agreement and one that is not. Each price proposal shall clearly denote whether the proposial is or is not subject to the PLA requirement.

(b) If the Government accepts an offer that is not subject to the PLA requirement, the requirements regarding PLAs set forth in the Agreement shall not be binding on the successful Offeror.

The GSA would evaluate those dual price proposals, and possibly other factors like a firm’s experience and technical qualifications, when awarding the contract to a prime contractor.

If you think this dual bidding requirement will provide the GSA with an opportunity to evaluate the true cost of a PLA, and stimulate an environment encouraging free and open competition between union and nonunion contractors, think again.

There are fundamental problems with the way the GSA is procuring contracts for these projects that will discourage competition from nonunion contractors.  The devil is in the details, or in this case, the GSA solicitations.

One problem is that a PLA has not been negotiated in advance by the GSA and labor unions, although the GSA has suggested minimum language that must be included in the PLA.  This means that contractors must estimate labor costs based on a contract that has not been finalized and they must negotiate and ratify a PLA with labor unions in order to be considered a responsive bidder. 

If the GSA awards the contract to a nonunion bidder who has submitted a PLA price proposal, forced PLA negotiations with the local labor unions is an area of concern for nonunion contractors who have little experience negotiationg these agreements. Such negotiations may be costly.  Unions may not want to negotiate PLAs in good-faith with nonunion contractors. No finalized PLA means no GSA contract for a contractor.   

In addition, it takes time and money to estimate costs and submit dual bids on projects. Many nonunion contractors don’t want to operate their business under a PLA, so such nonunion contractors are not likely to submit PLA price proposals in the event that the GSA utilizes a PLA price proposal.

TheTruthAboutPLAs.com will be monitoring  the GSA projects closely.