The Truth About Project Labor Agreements

On May 12, 2010 TheTruthAboutPLAs.com reported about language encouraging government-mandated project labor agreements (PLAs) on federal and federally assisted construction projects in section 4103(g) of the discussion draft of Kerry/Lieberman American Power Act (APA), commonly known as the Senate version of Cap and Trade legislation.

Yesteday, 13 construction and small business groups sent this letter to the U.S. Senate, requesting that the anti-competitive and wasteful provision be removed from the legislation.

First, let’s backtrack and explain the controversy behind this provision.

Federal government PLA mandates are not good for private and public clean energy construction investments because they reduce competition from nonunion contractors and their skilled workforce.  In addition, PLAs have a public record of poor performance and increased construction costs between 12 and 20 percent compared to non-PLA projects. 

State and local budgets already facing record deficits that receive federal assistance or build projects subject to this program containing pro-PLA language will not be able to afford added costs as a result of PLAs. This translates into less energy construction, which is bad for the economy, construction industry, taxpayers and solutions for our nation’s energy crisis.

Section 4103 is the Clean Energy Construction Careers Demonstration Project program. Section 4103 (g) on Page 842 ensures projects funded under this program will be a sweetheart deal for Big Labor as it contains the following language encouraging anti-competitive and costly government-mandated PLAs on federal and federally-assisted projects:

SEC 4103 (g): FACILITATING COMPLIANCE.—The Secretary may require Federal contracting agencies, recipients of Federal assistance, and any other entity established in accordance with this Act to require contractors to enter into an agreement in a manner comparable with the standards set forth in sections 3 and 4 of Executive Order 13502 in order to achieve the purposes of this section, including any requirements established by subsection (c).

Similar language encouraging PLAs was included in Title IV, Subtitle B, Part I, Section 424a (h) (pg. 1139) of the Waxman-Markey House Cap and Trade bill, commonly called the American Clean Energy and Security Act of 2009 ACES.

TheTruthAboutPLAs.com readers are familiar with President Obama’s Feb. 6, 2009 pro-PLA Executive Order 13502 that went into effect May 13. It was a gift to Big Labor and was widely criticized by the media and an April 14 Wall Street Journal editorial blasted the final rule and government-mandated PLAs (“Crony Contracts. Want federal business? Better be a union shop”). 

Here are key excerpts from the letter:

Our organizations are committed to free and open competition in all public construction markets and believe that publicly financed contracts should be awarded without regard to the labor relations policy of the government contractor. We believe that neither a public owner nor its representative should mandate the use of a PLA that would compel any firm to change its labor policy or practice in order to compete for or perform work on a publicly financed project. We further believe that government-mandated PLAs can restrain competition, drive up costs, cause delays, lead to jobsite disputes and disrupt local collective bargaining. If a PLA would benefit a particular project, construction contractors working on the project would be the first to recognize that need and negotiate or adopt a PLA on a voluntary basis.

PLAs don’t help, they hurt:

There is no proof that government-mandated PLAs help agencies manage workforce challenges that arise in connection with large-scale construction contracts. In fact, a government-mandated PLA can be the source of new frictions, disputes and confusion by forcing a new labor framework onto previously nonunion employees, by forcing union contractors to assign work to the members of different trades than they required under their regular collective bargaining agreements, and by otherwise altering the previously agreed-upon status quo.

[snip]

The potential for a government-mandated PLA to raise project costs, create inefficiencies, restrain competition and bring about legal challenge should not be underestimated. Accordingly, we strongly believe Section 4103(g) should be stricken from the bill.

The letter was signed by the following groups:

Associated Builders and Contractors
Associated General Contractors  
Construction Industry Round Table  
Independent Electrical Contractors, Inc.
National Association of Government Contractors
National Association of Minority Contractors – Philadelphia Chapter  
National Association of Women in Construction
National Black Chamber of Commerce
National Federation of Independent Business
National Ready-Mixed Concrete Association
National Utility Contractors Association
Small Business & Entrepreneurship Council
Women Construction Owners and Executives, USA

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