Pennsylvania Court Strikes Down PLA Mandate

0 January 22, 2019  Featured, Open Competition Works, State & Local Construction, Transportation & Infrastructure

ABC members Allan Myers and J.D. Eckman Inc. recently won a court case challenging the Pennsylvania Department of Transportation’s project labor agreement mandate for the Markley Street reconstruction project in Montgomery County. Tried in the Commonwealth Court of Pennsylvania, the court ruled on Jan. 11 that PennDOT’s PLA mandate violated the state’s competitive bidding laws and discriminated against nonunion contractors.

“The court correctly recognized that government-mandated PLAs effectively exclude merit shop contractors and their skilled employees from building projects in their own communities paid for by their own tax dollars,” said Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs. “This ruling will help ensure this project is procured via fair and open competition and will benefit local construction workers, contractors and taxpayers.”

PennDOT’s bid solicitation for the Markley Street project required contractors to execute a PLA agreement with the Building and Construction Council of Philadelphia and Vicinity or the United Steel Workers, which would have precluded nonunion contractors from using their own workers to staff the project. As a result, merit shop contractors like Allan Myers and J.D. Eckman Inc. were unable to effectively bid on the contract, restricting competition.

“By requiring the winning bidder to hire all craft labor personnel through the local unions, the PLA introduced ‘uncertainty in bidding the job’ for prequalified nonunion contractors,” President Judge Mary Hannah Leavitt said in the ruling. “Notwithstanding (its) lip service to the principle of competitive bidding, the PLA does not place nonunion contractors on ‘an equal footing’ with union contractors.”

Leavitt also recognized J.D. Eckman Inc. for its work on phase one of the Markley Street project, which was successfully completed a year ahead of schedule and on budget without a PLA. In August 2017, PennDOT issued a solicitation that contained a PLA requirement for the second phase of the same project. Following public opposition from ABC against PennDOT Secretary Leslie Richards’ decision to impose a PLA mandate and a bid protest filed by plaintiff contractors, PennDOT withdrew the solicitation and issued a new one in December 2017 mandating a revised PLA.

“We were very pleased to learn of the Commonwealth Court’s ruling,” said G. David Sload, president and CEO of ABC Keystone Chapter. “PLAs are discriminatory toward merit shop contractors, which make up an overwhelming majority of Pennsylvania’s construction industry. This is an important step toward instituting a free-enterprise approach to public works contracting.”

Joe Perpiglia, president and CEO of ABC Eastern Pennsylvania echoed Sload’s comments, adding, “Whether they are called PLAs, responsible contractor ordinances or so-called public safety legislation, ABC stands ready to fight these discriminatory bidding practices and ensure a level playing field for merit shop contractors in Pennsylvania.”

The court’s ruling will save federal and state taxpayers an estimated $4.7 million on the Markley Street project, representing nearly a 20% savings. The three lowest bidders on the job were all effectively precluded from bidding under the original bid solicitation containing a PLA. After the lowest PLA bidder withdrew, plaintiff Allan Myers was the low bidder and was awarded the work for $23.9 million.

PLA mandates discriminate against the 86 percent of private-sector construction workers nationwide who choose not to join a union. In Pennsylvania, just 21.7 percent of the construction workforce is unionized. Research has also found PLA mandates can increase construction costs by 12% to 18%, resulting in fewer infrastructure projects and reduced construction industry job creation.

Since President Obama issued Executive Order 13502 in 2009 to promote project labor mandates on government-funded construction projects, 24 states have adopted legislation or executive orders ensuring fair and open competition on state and local taxpayer-funded projects. These states have adopted measures to create the conditions for the vast majority of skilled local labor and qualified contractors to compete to deliver to taxpayers the best possible product at the best possible price.

Update: Following the Commonwealth Court of Pennsylvania’s Jan. 11 decision to strike down PennDOT’s project labor agreement mandate for the Markley Street reconstruction project, PennDOT withdrew their appeal of the decision on March 7.

The project received funding from the U.S. Department of Transportation Federal Highway administration, which approved PLAs mandated by state and local lawmakers on 513 state and local construction projects estimated at a total of $12.88 billion according to a FHWA January 2021 report.

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