Understanding Government-Mandated Project Labor Agreements and the Law

0 July 7, 2012  Federal Construction, State & Local Construction

Lawmakers, the media, taxpayers and members of the construction industry frequently inquire about government-mandated project labor agreements (PLAs) and the law. They question how such blatant favoritism and cronyism is legal. 

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.[1]

The Supreme Court of the United States

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 Boston Harbor court was not asked to decide whether government-mandated PLAs violate competitive bidding laws at either the federal or state level.

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.

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 Executive 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 the government and taxpayers benefited from full and open competition from all qualified contractors and their employees by ensuring contractors could voluntarily decide whether to use a PLA.

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. The 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, which upheld President Bush’s Executive Orders 13202 and 13208.

Under the Bush executive orders, the federal government awarded $147.1 billion worth of federal construction contracts without government-mandated PLAs. During the eight years of the Bush administration, 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.[2]

The Bush order was repealed by President Obama Feb. 6, 2009 and replaced with a pro-PLA Executive Order 13502, which encourages federal agencies to mandate PLAs on federal projects exceeding $25 million in total costs. (Learn more about the history of White House policy on PLAs here.)

Federal legislation like the Government Neutrality in Contracting Act (H.R. 735/S.119), cosponsored by 31 Senators and 172 Representatives in the 112th Congress and supported by a diverse industry coalition, closely mirrors the neutral language used in the Bush executive orders and is consistent with legal precedents. The measure would eliminate waste and favoritism in federal contracting by prohibiting federal agencies and recipients of federal assistance from mandating PLAs, yet it would allow contractors to voluntarily enter into PLAs. This bill is good for taxpayers and the principles of free enterprise as it will increase competition, reduce costs and create more construction jobs.

Amendments to federal appropriations bills as well as state and local legislation and executive orders mirroring the Bush executive orders and following the spirit of the Boston Harbor and Allbaugh cases have been offered and enacted across the country.

The Allbaugh case remains the controlling case on government-mandated PLA law unless it is overturned by the U.S. Supreme Court.

Here are three key points about PLAs and the law:

  • Via law or executive order, governments can enact a position of neutrality regarding the use of PLAs by contractors on taxpayer funded construction projects as long as the government is acting as a market participant.
  • Governments can mandate PLAs on contractors under certain circumstances, as long as the government is acting as a market participant.
  • Contractors always have the right to voluntarily enter into PLAs.

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