Two Blows Dealt to Project Labor Agreements

Opponents of project labor agreements are no doubt cheering two recent developments concerning wasteful PLA’s.

In New York, a state court has ordered the NYDOT to cancel an interchange project because NYDOT violated New York competitive bidding laws by requiring a PLA on the project.  According to ENR, at issue was a $72.4 million Orange County interchange project.  NYDOT awarded the project to A.Servidone/B. Anthony Construction Corp., a joint venture.  The JV’s bid complied with the PLA but was higher than the low bid, which did not comply.

However, NYDOT originally advertised the bid without the PLA.  However, after receiving a “proposal” from a “union group,” NYDOT changed its mind and 11 days prior to the date, revised the bid specification to include the PLA.

The objecting low bidder, Lancaster Development, bid the project without the PLA.  Although its bid was lowest, NYDOT rejected the bid because it did not comply with the bid specification requiring compliance with the PLA.

However, the Court overturned NYDOT rejection of Lancaster’s bid and ordered NYDOT to rebid the job.  No word on whether the rebid job will include a PLA from the outset.

In Washington, ENR reports that Metropolitan Washington Airports Authority has canceled a PLA for the extension to the Metrorail system to Dulles airport.  The article states that the design build team that will be selected for Phase II of the project can “voluntarily” sign the PLA, which will now only apply to the prime contractor.  The article does not elaborate to what impact the elimination of the PLA to all but the prime contractor will have on the overall participation of merit shop contractors on the project.  If the design-build team anticipates entering into a single contractor with the prime contractor for all of the work, presumably the PLA would have the same effect overall.

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Investing in Unready Projects

In an earlier post, I outlined what a common seanse infrastructure bill should look like.  As the Wall Street Journal reported yesterday, President Obama is apparently not an avid reader of Supplemental Conditions because he is getting ready to market a new “investment” in infrastructure spending program that misses the mark entirely.  I understand that many underemployed construction firms see a new infrastructure spending program as a silver lining to the dark cloud that hangs over the industry right now.  Indeed, the AGC is all but begging to for this bill to be passed.  But, as the Journal alludes to, any new infrastructure spending program is likely to have little impact on the economic realities the industry faces.  First, many of the so called shovel ready projects are at least 3 years from the first shovel being put into the ground.  Additionally, President Obama’s plan will undoubtedly require the use of project labor agreements thereby funneling the spending to union only construction firms and leaving an overwhelming majority of construction firms out in the cold. 

What we need is not targeted spending, but pro-growth policies that will benefit the entire market place.  Public spending directed at 11% (the percentage of the construction industry that is unionized) is simply not going to do it.  Yes, infrastructure spending is nice – and necessary – but it is also useless without vibrant private sector projects.  Unfortunately, no amount of President Obama’s “investment” can get those projects going.

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Wall Street Journal Takes On PLA’s

Hurrah to the Wall Street Journal Opinion page today for taking on Project Labor Agreements.  The Journal’s opinion piece is by far the highest profile criticism of wasteful project labor agreements.  As the editors note, the tide of public opinion is turning squarely against project labor agreements even in those areas that are sympathetic to organized labor.

“As Andy Conlin of Associated Business and Contractors notes, wherever PLAs are subject to popular referendum, they’re rejected.”

The Journal calls project labor agreements

“a form of political bid-rigging that robs taxpayers even in good economic times.”

and calls for them to be outlawed.

What the article implies, but does not state, is that project labor agreements run contrary to the fundamental America values of free enterprises  and reward which is based on merit, not class, rank, or, in the case of PLA’s, political connections.  It is these values that explain why voters of all political persuasion find project labor agreements so distasteful.

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Unions Challenge Iowa PLA Ban

According to the Des Moines register, two union trade organizations have sued Iowa Governor  Terry Branstad and 10 other elected officials over Governor Branstad’s executive order banning Project Labor Agreements on Iowa Public Projects.  A copy of the Executive Order can be downloaded here:  Iowa PLA Executive Order

The Complaint challenges the removal of PLA’s from the bid specification on two state projects pursuant to the Governor’s Executive Order.  A copy of the complaint is available here:  Central Iowa Building and Construction Trades, et. al. v. Terry E. Branstad, et. al Interestingly, the Unions allege that the National Labor Relations Act preempts the Governor’s Executive Order.  This argument is typically one that is used by opponents of PLA’s seeking to invalidate them.  It is also an argument which Federal Court’s have routinely denied.  Indeed, recently, the Supreme Court declined to review a 9th Circuit Opinion which refused to strike a PLA as preemepted under the NLRA.

Perhaps the best argument the unions make is that PLA’s are binding contracts requiring them to be utilized once the public entity executes it.  The complaint does not attach a copy of the PLA in question.

As PLA’s face increased scrutiny from cash strapped state and local governments, it will be interesting to see how this case plays out.    Stay tuned.

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