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ABC strongly opposes government-mandated Project labor agreements on public construction projects
Anti-competitive project labor agreements (PLAs) are special interest schemes that end open, fair and competitive bidding on public works projects. PLAs drive up the cost of construction by reducing competition and effectively excluding merit shop contractors and their skilled employees from building projects paid for by their own tax dollars.
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Project Labor Agreements
Not What We Need, Not What We Deserve
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| Learn more about project labor agreements (PLAs) by clicking on the video or viewing the PLA fact sheet. |
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Posted In: [Public-PLAs: Federal (Regulations & Guidance)]
On February 6, 2009, President Obama signed Executive Order 13502: Use of Project Labor Agreements for Federal Construction Projects.
On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, 2010, implementing President Obama’s Executive Order 13502 into federal procurement regulations.
President Obama's Executive Order 13502 encourages federal agencies, on a project-by-project basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost. The order also permits (it does not require) private, local and state recipients of federal assistance to mandate PLAs —a practice prohibited from 2001 to 2009 by President George W. Bush’s Executive Orders 13202 and 13208.
Section 7 of Executive Order 13502
directs the Secretary of Labor and OMB director to make
"recommendations about whether broader use of PLAs, with respect to both
construction projects undertaken under Federal contracts and
construction projects receiving Federal financial assistance, would help
tp promote the economical, efficient, and timely completion of such
projects" within 180 days of Feb. 6, 2009. To date, there has not been an expansion of Section 7, although officials from federal
agencies have been pushing PLAs on federally assisted construction
projects.
There is concern President Obama will expand this order during his second term to more federal and federally assisted construction projects.
The Obama order fulfilled his campaign
promise to organized labor. In a September 16, 2008, letter
to the International Brotherhood of Electrical Workers (IBEW) union,
Obama wrote, “We need to make sure the government uses project labor
agreements to encourage completion of projects on time and on budget.
One of the first things George Bush did when he got into office was to
ban PLAs. One of the first things I’ll do as President is repeal that
ban."
It is now the policy of the federal government to discourage competition from qualified merit shop contractors and their skilled employees whenever PLAs are mandated by federal agencies.
Some federal agencies have adopted policies determining how they evaluate and mandate PLAs. Most agencies issue PLA surveys on FBO.gov requesting feedback from the contracting community in order to determine if a PLA project is appropriate for a project. ABC responded to and has helped contractors reply to more than 150 federal agency PLA surveys during President Obama's first term.
Agency Policies:
Please visit www.TheTruthAboutPLAs.com for the latest regulatory, legal and legislative updates on Executive Order 13502 and federal government-mandated PLAs.
Popular Tags: executive order
Posted In: [Public-PLAs: Federal (Regulations & Guidance)]
On April 13, 2010, the Federal Acquisition Regulation (FAR) Council released a final rule implementing President Obama’s Executive Order 13502, which encourages federal agencies to use PLAs on federal construction costing more than $25 million.
This final rule represents the culmination of a regulatory process that began in July 2009 with the FAR Council’s release of a proposed rule to implement the content of Executive Order 13502 into federal procurement regulations.
The contentious proposed rule was subject to two 30-day public comment periods. The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23. Nearly 1,000 supporters of fair and open competition on taxpayer-funded construction projects submitted comments to the FAR Council opposing the proposed rule. ABC National’s comments are available at www.abc.org/plastudies, all comments submitted to the FAR Council are available via Regulations.gov.
Initial points of interest on the final rule implementing Executive Order 13502 into federal procurement regulations:
- Applies to federal construction projects costing more than $25 million and does not specifically address smaller-scale federal projects.
- Does not mandate the use of PLAs and allows federal agencies flexibility in developing individual agency PLA policies that that can be applied to federal projects on a case-by-case basis.
- Allows federal agencies several options when they can require contractors to submit a PLA during the acquisition process: (1) when the offers are due; (2) prior to award (by apparent successful offeror); or (3) after award. This is a departure from the proposed rule issued in 2009.
- Allows agencies to specify the minimum terms and conditions of a PLA in the project bid solicitation. As a condition of receiving a contract award, federal agencies can require the successful offeror to become a party to a PLA containing a minimum of agency-drafted terms and conditions. This is a departure from proposed rule.
- Prohibits agencies from mandating PLAs on federal projects already underway retroactively. This is a clarification of the proposed rule.
- Gives agencies discretion in addressing the impact of a PLA on small businesses. This is a very modest attempt to address concerns raised by nonunion contractors who perform work on federal contracts under small business requirements and standards.
- The rule does not address federally-assisted projects specifically (Section 7).
On April 21, 2010, ABC National released, "The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged," by ABC general council Maurice Baskin, Esp., Venable LLP. This document lays out ABC's argument for how the Obama Administration’s actions violate federal procurement laws; discriminate against 85% of the construction industry workforce and many small businesses; and hurt taxpayers.
Read TheTruthAboutPLAs.com's coverage of the release of the final rule here.
Popular Tags: Federal Acquisition Regulation
Posted In: [Public-PLAs: Federal (Regulations & Guidance)]
On August 13, 2009, ABC National filed comments with Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in response to a proposed rule to implement Executive Order 13502, which encourages federal agencies to require PLAs on federal construction projects via the Federal Aquisition Regulation (FAR) Council "FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects".
Hundreds of contractors and groups filed comments opposed to the proposed rule. All comments can be viewed here.
ABC's comments express serious concerns with the proposed regulation, particularly with its impact statement, the absence of any meaningful criteria for agencies to use in deciding whether to impose PLAs and the absence of any empirical justification for using PLAs on federal projects.
ABC's comments highlight numerous problems with government mandated PLAs and reference a variety of arguments and studies that document how this bad public policy will harm taxpayers, contractors and their employees.
Resources:
Popular Tags: Project Labor Agreements (PLAs), executive order
Posted In: [Public-PLAs: Federal (Regulations & Guidance)]
On July 10, 2009, the Office of Management and Budget (OMB) issued a policy memorandum informing all federal department and agency heads that rules prohibiting government-mandated project labor agreements (PLAs) on federal and federally funded construction had been revoked. Additionally, the policy memorandum encouraged federal agencies to consider utilizing PLAs on a project-by-project basis and require PLAs in “appropriate circumstances.”
This memorandum came in advance of the Federal Acquisition Regulation (FAR) Council’s July 14, 2009, proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects) on President Obama’s Executive Order 13502, which encourages the use of PLAs on construction projects costing more than $25 million.
The contentious proposed rule was subject to two 30-day public comment periods. The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23.
Government officials, associations, taxpayers, contractors and hard hat employees answered a call to action in opposition to the proposed rule and submitted almost 1,000 comments to the FAR Council.
ABC’s comments to the proposed rule can be viewed here. (Review ABC member survey supplement to ABC comment here, ABC National’s comments addressing the impact of the rule on small businesses in violation of the Regulatory Flexibility Act here, and a blog post about surveys measuring the anti-competitive effect of PLAs on contractors here). Every comment submitted to the FAR Council, including close to 1,000 comments filed by ABC members, is available for public review here.
ABC has serious concerns with the proposed rule's impact statement, the absence of any meaningful criteria for agencies to use in deciding whether to impose PLAs, and the absence of any empirical justification for PLAs on federal projects.
- ABC National July 15, 2009, Newsline Story Regarding Proposed Rule to Implement E.O. 13502
- FAR Council Proposed Rule to Implement E.O. 13502, Encouraging PLAs on all Federal Construction Costing More than $25 million
- FAR Case 2009-015, Revocation of Executive Order 13202
- ABC National July 10, 2009, Newsline Story Regarding OMB Policy Memo and Proposed Rule to Implement E.O. 13502
- OMB July 10, 2009, Policy Memorandum Encouraging PLAs
- ABC National July 14, 2009, News Release on OMB Memo and FAR Council Proposed
Popular Tags: Federal Acquisition Regulation
Posted In: [Public-PLAs: Federal (Regulations & Guidance)]
On February 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.
The order declares 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 government construction projects.
On April 6, 2001, the Bush Administration amended Executive Order No. 13202 with Executive Order No. 13208, which exempts from Executive Order 13202 any project which has had at least one contract awarded with a PLA.
Between 2001 and 2008, Executive Order 13202 ensured that at least $147.1 billion worth of federal construction projects was bid without discriminatory and wasteful government mandated PLAs. The actual value of construction projects protected by Executive Order 13202 is exponentially larger, as the above figure does not include local construction spending from 2001-2008 that received federal funding or assistance that was protected by Executive Order 13202. It is estimated that free and open competition saved American taxpayers between 12 percent and 18 percent on federal construction spending and provided women, minorities and qualified nonunion craft professionals the opportunity to work in their communities.
Popular Tags: executive order
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Posted In: [Public-PLAs: Federal (Legal)]
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
landmark Boston Harbor case, the Supreme Court held that government-mandated
PLAs are not prohibited by the National
Labor Relations Act
(NLRA), 29 U.S.C. §§ 151-169. [1]
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 government construction projects.
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. commonly referred to as the Allbaugh case. 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 Order 13202 and 13208.
Federal legislation like the Government Neutrality in Contracting Act, related amendments, and state and local anti-PLA mandate legislation closely mirror the
neutral language used in the Bush executive order and is consistent with legal
precedents.
Under
the Bush executive order, the federal government awarded $147 billion worth of
federal construction contracts without any government-mandated PLAs. During the
eight years of the Bush administration, there were no significant labor-related
problems on federal construction projects (such work delays, cost overruns or
similar problems), without any need for government-mandated PLAs. [2]
The Allbaugh
case remains the controlling case on government-mandated PLA law. Governments
can enact a position of neutrality when it comes to the use of PLAs by
contractors.
Here are
five key points about government-mandated 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 on single projects under certain circumstances, as long as
the government is acting as a market participant.
- Governments can prohibit government agencies and recipients of government assistance from mandating PLAs on publicly funded construction projects.
- The NLRA ensures contractors have the
right to voluntarily enter into PLAs, regardless of existing laws requiring, encouraging or restricting government-mandated PLAs.
- Legislative efforts to restrict government-mandated PLAs restore government-neutrality in contracting and do not interfere with a contractors' right to voluntarily execute a PLA.
[1] Review the Boston Harbor case here: http://www.law.cornell.edu/supct/html/91-261.ZO.html
Popular Tags:
Posted In: [Public-PLAs: Federal (Legal)]
Here’s a brief review of legal challenges to federal government-mandated project labor agreements (PLAs) during President Obama’s first term.
On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, 2010, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations. It encourages federal agencies, on a project-by-project basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost. The order also permits (it does not require) private, local and state recipients of federal assistance to mandate PLAs —a practice prohibited from 2001 to 2009 by President George W. Bush’s Executive Orders 13202 and 13208.
During President Obama’s first term, federal contractors (with assistance from ABC) filed five bid protests with the Government Accountability Office (GAO) against PLAs mandated by federal agencies. For the following federal projects, each bid protest resulted in the agency removing the PLA mandate in the face of the protest:
Legal arguments for these GAO bid protests focused on how PLA mandates fail to improve the economy and efficiency in federal contracting and violate federal regulations requiring full and open competition in federal procurement. Additional bid protest arguments mirror concerns raised by ABC in comments submitted to the FAR Council in response to its July 14, 2009, proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects).
ABC’s comments to the proposed rule can be viewed here. (Review ABC member survey supplement to ABC comment here, ABC National’s comments addressing the impact of the rule on small businesses in violation of the Regulatory Flexibility Act here, and a blog post about surveys measuring the anti-competitive effect of PLAs on contractors here). Every comment submitted to the FAR Council, including close to 900 comments filed by ABC members, is available for public review here.
On April 21, 2010, ABC released, “The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged,” by ABC general counsel Maurice Baskin, Esq., Venable LLP. This document lays out ABC’s argument for how the Obama administration’s actions violate federal procurement laws; discriminate against 85 percent of the construction industry workforce and many small businesses; and harm taxpayers. Check out the related blog post here.
Federal agencies will likely experience GAO bid protests and additional legal action if they needlessly mandate PLAs on federal construction projects during President Obama’s second term.
In addition, any expansion of Executive Order 13502 onto federal or federally assisted projects via Section 7 of the order will be met with an aggressive, legal, legislative, political and public relations response.
Popular Tags:
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Posted In: [Public-PLAs: State & Local]
Kansas
Gov. Sam Brownback (R) signed H.B. 2157, which prohibits government-mandated PLAs on all state, local and state-funded construction in the state.
Read more.
Oklahoma
Gov. Mary Fallin (R) signed H.B. 3043, which prohibits government-mandated PLAs on all state, local and state-funded construction in the state.
Read more.
Virginia
Gov. Robert McDonnell (R) signed H.B. 33, which prohibits the Commonwealth of Virginia and recipients of state assistance from mandating PLAs and enacting PLA preferences discriminating against bidders unwilling to execute PLAs.
Read more.
Michigan
Michigan Gov. Rick Snyder (R) signed S.B. 165, which prohibits government-mandated PLAs on all state, local, university and state funded construction in the state.
Read more.
Maine
Maine Gov. Paul LePage (R) signed L.D. 1257, which prohibits government-mandated PLAs on all state projects through October 2015.
Read more.
Louisiana
Louisiana Gov. Bobby Jindal (R) June 27, 2011 signed S.B. 76, which prohibits government-mandated PLAs on all state, local and state funded construction.
Read more.
Tennessee
Tennessee Gov. Bill Haslam (R) May 20, 2011 signed H.B. 1498, which prohibits the use of government-mandated project labor agreements (PLAs) on state and local construction projects, and also prohibits public entities from requiring PLAs as a condition of receiving public financial assistance for construction. HB 1498 also prohibits localities from enacting wage requirements that are higher than the state prevailing wage rates.
Read more.
Arizona
Gov. Jan Brewer signed S.B. 1403 on April 6, 2011, which bans the use of government-mandated PLAs on state and local construction projects. Additionally, this bill prohibits abusing the state's environmental permitting process to pressure project owners into requiring contractors sign a PLA as a condition of performing work. This practice is otherwise known as "greenmail."
Read more.
Idaho
Gov. Butch Otter (R) signed S.B. 1006 on March 3, 2011 to prohibit the state and political subdivisions from requiring the use of government-mandated PLAs on publicly funded construction projects.
Read more.
Missouri
On March 22, 2007, Missouri Governor Matt Blunt (R) signed S.B. 339, “The Fairness in Public Construction Act” which prohibits union-only PLAs for projects receiving more than half of their funding from the state. For all other building projects receiving public funds, governmental entities would first have to analyze the merits of mandating a PLA and hold public hearings before doing so. This legislation took effect on August 28, 2007.
Montana
On April 30, 1999, S.B. 305, “An Act Prohibiting A Requirement for Project Labor Agreements and Other Types of Prehire Agreements on Public Works Contracts” was signed by Montana Governor Marc Racicot (R).
Utah
Utah Code 34-30-14. Enacted by Chapter 72, 1995 General Session.
Popular Tags: government neutrality
Posted In: [Public-PLAs: State & Local]
Iowa
On January 14, 2011, Gov. Terry Branstad (R) issued Executive Order 69 repealing Executive Order 22, issued by his predecessor Gov. Chet Culver (D), that had encouraged state agencies to require PLAs on state projects over $25 million. The Branstad order also prohibits the use of PLAs on any state funded construction. By issuing this order, Gov. Branstad fulfilled his campaign pledge to ensure that Iowa taxpayers get the best construction at the best price.
Nevada
On Jan. 3, 2008 Nevada Governor Jim Gibbons signed an executive order repealing Governor Bob Miller's April 14, 1994 executive order mandating project labor agreements on Nevada public works construction projects. As reported in the Las Vegas Review Journal, Governor Gibbons' new executive order will maintain free and open competition on public works projects in Nevada but does not prohibit the Nevada government from implementing PLAs if needed.
Minnesota
On November 21, 2005, Minnesota Governor Tim Pawlenty (R) signed Executive Order No. 05-17, "Preserving Competition on State Construction Contracts."
MINNESOTA GOVERNOR SIGNS EXECUTIVE ORDER REQUIRING NEUTRALITY ON STATE CONSTRUCTION
Minnesota Gov. Tim Pawlenty (R) Nov. 21 signed an executive order requiring that the state award all public construction contracts without regard to a contractor’s union or non-union status. “Preserving Competition on State Construction Contracts,” Executive Order 05-17, declares that the state of Minnesota and its agencies and representatives will neither require construction contractors to sign, nor prohibit construction contractors from signing a union agreement as a condition of working on state government construction projects.
“Gov. Pawlenty’s leadership on this issue will ensure that taxpayers receive the most value for their tax dollars,” said Kent Durenberger of Mid-States Mechanical Services, Inc., Mankato, Minn., chairman of ABC’s Minnesota chapter.
In July, Arkansas Gov. Mike Huckabee (R) signed a similar order requiring neutrality toward the union status of contractors thereby promoting and preserving fair competition and free enterprise for Arkansas’ state contracts. Both the Arkansas and Minnesota executive orders prohibit the states from requiring contractors to sign a union-only project labor agreement (PLA) when bidding on state work.
“This issue is critical to taxpayers because union-only PLAs drive down competition for contracts, thereby increasing project costs,” said Durenberger. “Union-only PLAs discourage qualified and experienced merit shop contractors from offering economical project bids.”
“The overwhelming majority of the nation’s construction workforce, approximately 85 percent, have chosen not to belong to a union,” said ABC 2005 National Chairman Gary Roden. “Often, firms with these employees offer the most affordable and highest quality project bids, but have been discouraged from bidding because of discriminatory union agreements. When the project is publicly funded, accepting bids from all qualified contractors is in the taxpayers’ best interest. Actions like these executive orders ensure that all bids will now be considered fairly and that these states will benefit from more competition.
“Hopefully, our nation’s policy-makers will continue recognizing the importance of delivering the most economical construction projects to their constituents, who deserve value for their tax dollar,” added Roden.
This executive order expired on March 1, 2011 and was not renewed by Gov. Mark Dayton (D).
Arkansas
On July 21, 2005, Arkansas Governor Mike Huckabee (R) signed Executive Order 05-09, “An Executive Order Concerning State or State-Funded or Assisted Construction Projects.”
Click here for ABC National's related news release.
Popular Tags: executive order, Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: State & Local]
Hawaii
On May 22, 2012, Hawaii Gov. Neil Abercrombie (D) issued an administrative directive that encourages state agencies to require the use of PLA mandates on state construction projects costing more than $25 million. When the governor announced this directive, he also stated that five state projects with an estimated total cost of $520 million would be subject to PLA mandates.
Read more
California
Gov. Jerry Brown announced on October 2, 2011 that he had signed S.B. 922, which nullified local laws banning government-mandated PLAs in general law political subdivisions and was designed to deprive charter cities of state construction funding if the city had a ban on government-mandated PLAs in place.
On April 25, 2012, Gov. Brown signed S.B. 829, which strengthened the state’s ability to deprive charter cities with PLA mandate bans of state construction funding.
Read more
CONNECTICUT
Gov. Dan Malloy (D) signed S.B. 33 on June 6, 2012, which authorizes the use of PLA mandates by local government entities in the state. This act was a direct response to an impending lawsuit that threatened to curtail the ability of local government entities to require PLAs on many local projects that received state funds.
After a 2011 special session of the General Assembly on economic development, Gov. Dan Malloy (D) signed H.B. 6801, which authorizes the use of public-private partnerships under state statute. This bill requires contractors on public-private partnership projects to be subject to the state’s prevailing wage requirements or the wage rates established by the use of a PLA.
Illinois
Illinois Gov. Pat Quinn (D) July 27, 2010 signed H.B. 2987, The Project Labor Agreements Act, which codified two earlier executive orders issued by Gov. Quinn and former Gov. Rod Blagojevich (D), encouraging state entities to require PLAs on a project-by-project basis.
Illinois PLA policy had been established by Executive Order 2010-03, which Gov. Quinn signed on March 31, 2010. The Quinn order reaffirmed Executive Order 2003-13, issued by disgraced former Gov. Blagojevich in 2003.
The Heartland Institute published an article on this topic and E.O. 2003-13’s negative impact on Chicago taxpayers and non-union construction companies at: http://www.heartland.org/Article.cfm?artId=16548.
Read more
New Jersey
On July 18, 2000, the New Jersey Educational Facilities Construction and Financing Act was signed into Law. It resulted in full funding by the state of all school construction and renovations in 30 special needs districts, known as the Abbott School Districts, as well as approximately 25 districts receiving 55% or more in state aid. In addition, it provides grants to fund the state share on projects in districts that receive less than 55% in state funding.
On August 26, 2002 the New Jersey Schools Construction Corporation (NJSCC) was created to oversee the state's school construction program. The NJSCC has decided to implement PLAs on all Abbot School construction and renovation. It is unclear if the NJSCC extended the PLA requirement to all schools in NJ, regardless of their Abbot status. However, this NJSCC document sheds some light on PLAs and Abbot Schools.
On January 18, 2002, New Jersey Governor McGreevey (D) signed Executive Order No. 1. E.O. #1 provides that on a project-by-project basis, a state department, authority, or instrumentality shall include a PLA in a public works project where it has been determined that the agreement advances the state's interests of cost efficiency, quality, safety, timeliness, skilled labor force, labor stability, and the state's policy to advance minority and women-owned businesses.
On July 30, 2002 Governor McGreevey signed A. 1926, authorizing the use of Project Labor Agreements on all major public works projects into New Jersey law. See code here.
New York
On February 12, 1997, New York Governor George Pataki (R) signed Executive Order No. 49, “Establishing Procedures to Consider, in its Proprietary Capacity, the Utilization of One or More Project Labor Agreements.”
Executive Order No. 49 orders each State agency to establish procedures to consider, in its proprietary capacity, the utilization of project labor agreements with respect to individual public construction projects.
In addition, No. 49 sets a policy of when a project labor agreement should be considered by a State agency. The State agency must determine if the use of a project labor agreement is in compliance with standards established by the New York Court of Appeals in the case AGC v. NY State Thruway Authority.
AGC v. NY State Thruway Authority found that the utilization of a project labor agreement is justified if it meets the interests underlying the New York State’s competitive bidding laws. In order to use a project labor agreement, it must be established that a project labor agreement will satisfy the following state competitive bidding criteria:
- obtaining the best work possible at the lowest possible price; and
- preventing favoritism, improvidence, fraud and corruption in the awarding of public contracts.
The Executive Order warms that:
“…agencies should be mindful that, in the past, the courts of the State of New York have struck down any such agreement wherein a contracting entity was unable to show a proper business purpose for entering into such agreement. No project labor agreement shall be approved by an agency unless the decision to enter into a project labor agreement has, both as its purpose and likely effect, the advancement of the interests of the State’s competitive bidding statutes.”
One of the consequences of Executive Order No. 49 is that public agencies considering the use of PLAs prior to large public works projects, authorize costly studies in order to determine the necessity for a PLA. As a result of Executive Order No. 49, a small industry has blossomed of firms that publish these PLAs studies. The studies often justify the need for a PLA and have been criticized by the construction community because they tend to be “cookie cutter” studies that “rubber-stamp” endorse the use of PLAs without any unbiased and true analysis of costs, labor market forecasts, construction density and other factors that may vary from region to region. The arguments by PLA opponents are rarely countered or addressed in these studies. Frequently, firms with an existing and large clientele of organized labor, union contractors and union-only construction owners produce these studies - which adds yet another reason to question their objectivity and importance in determining sound public policy.
New York's Wick's Law Reform Leads to More PLAs
In 2008, New York "reformed" their Wicks Law, which is an archaic and unpopular procurement law that requires individual contracts for construction projects worth more than a defined threshold amount. For years, many municipalities claimed that Wicks Law increased construction costs and needed reform to decrease construction costs and increase competition. During the 2008 legislative session, as part of an 11th hour deal, Wicks Law was altered in a manner that left just about everyone in the business and construction community unhappy with the final outcome except for organized labor.
The new Wicks Law mandates that all contractors on public works projects valued more than $500,000 in upstate New York, $1.5 million in Nassau, Suffolk and Westchester counties, and $3 million in New Yor City are to have a state-registered apprenticeship program, and the program is required to have been in place for three years.
The new threshold amounts, increased from $50,000 - an amount unchanged since 1964 - is still too low and will provide relief to few construction projects. Worse yet are the Wicks Law Reform state-registered apprenticeship program requirements that will exclude non-union contractors from New York from bidding on public works projects.
The new apprenticeship requirement contained within the Wick's Law Reform initiative is particularly devastating to non-union contractors because NYSDOL placed a moratorium on developing new apprenticeship programs in August 2007. This decision ensured that most non-union contractors can't compete for public projects. The New York State Apprenticeship Council (SAC) approves training programs and is stacked with members representing organized labor. The NY SAC has a history of refusing to recognize and register non-union apprenticeship training programs, thereby granting unions a monopoly on training in New York. Wicks Law Reform coupled with the moratorium on new apprenticeship programs essentially gives away all public construction projects in New York to organized labor.
Finally, public works projects that meet the new Wicks Law Reform threshold amounts are exempt from Wicks Law if a contractor agrees to enter into a PLA. The PLA exemption is trading one costly mandate (PLAs) for another (Wicks Law).
Please read "Hijacking Wicks Law" - an excellent May 30, 2008 Op-Ed from the Central New York Business Journal.
Major changes to the Wicks Law
Dollar amounts
Now: Wicks Law requirements govern a public project if it costs more than a certain amount. Legislators set up a three-tiered system of thresholds: $500,000 for upstate projects, $1.5 million for projects in Long Island and Westchester, and $3 million for the New York City area.
Before: The law previously set one minimum amount for the entire state: $50,000. And that had gone unchanged since the early 1960s.
Project labor agreements
Now: A public entity can waive all Wicks Law requirements if it signs an agreement with one general contractor, who will largely determine work on a project.
Before: This option did not exist before.
Apprenticeship programs
Now: All firms working on a public project must have had a state-approved apprenticeship program in place for at least three years.
Before: This requirement did not exist before.
Washington State
Dec. 6, 1996 Governor Mike Lowry signed Executive Order 96-08, which directs “State Offices” and other “State Agencies” to consider project labor agreements (PLAs) for appropriate public works projects which meet the criteria established Executive Order 96-08 on a project-by-project basis.
“The decision to use a project labor agreement shall be made on a project-by-project basis, and only where such an agreement will promote labor stability and advance the State’s interest in cost, efficiency, quality, safety and timeliness.”
Dec. 6, 1996 Governor Mike Lowry signed , which directs “State Offices” and other “State Agencies” to consider project labor agreements (PLAs) for appropriate public works projects which meet the criteria established Executive Order 96-08 on a project-by-project basis.“The decision to use a project labor agreement shall be made on a project-by-project basis, and only where such an agreement will promote labor stability and advance the State’s interest in cost, efficiency, quality, safety and timeliness.”
When making the decision whether to use a PLA, the following factors must be considered by the agency:
- potential labor disruptions which could affect completion of project;
- the number of trades and crafts anticipated to be used on the project;
- the need and urgency of the project and the harm to the public if completion of the project is delayed;
- the size and complexity of the project and the time needed for completion; and
- the benefits of the public from the use of a PLA relative to cost, efficiency, quality, safety and timeliness.
Finally, Executive Order 96-08 defines requirements that must be present in each PLA and directs a “State Office” to support a decision to use a PLA “by written findings which clearly demonstrate how the use of a project labor agreement will benefit the project and the interests of the public and the State from a cost, efficiency, quality, safety and timeliness standpoint.”
Subsequent Washington Governors Gary Locke (D) and Christine Gregoire (D) have not rescinded Executive Order 96-08 and PLAs frequently appear on major state public works projects in Washington.
Popular Tags: Project Labor Agreements (PLAs), executive order
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Read the academic studies and reports below to learn more about the failure of union-only PLAs to control construction costs, increase work opportunities, prevent construction delays or improve safety, productivity or quality on construction projects.
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
On April 21, 2010, ABC National released, "The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged," by ABC general counsel Maurice Baskin, Esp., Venable LLP. This document lays out ABC's argument for how the Obama Administration’s actions violate federal procurement laws; discriminate against 85% of the construction industry workforce and many small businesses; and hurt taxpayers.
Read More
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [PLAs], [Public-PLAs: Studies (Academic and Private Reseach)]
The 2011 edition of ABC General Counsel Maury Baskin's report on government-mandated PLAs documents a record of PLA construction projects experiencing an unfortunate pattern of cost overruns, reduced competition, delays in construction, construction defects, safety problems and diversity issues. It is a key resource to find failed government-mandated PLA projects in your community, illustrating why anti-competitive and costly government-mandated PLAs are nothing more than a bad solution in search of a problem.
Read Maury Baskin's Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition)
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
According to a July 2011 study released by the National University System Institute for Policy Research (NUSIPR), California school construction projects built using project labor agreements (PLAs) experienced increased costs of 13 percent to 15 percent, or $28.90 to $32.49 per square foot, compared to projects that did not use a PLA.
Read the report
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Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
An April 2010 report by ABC Chief Economist Anirban Basu, "The Problem with PLAs in the District of Columbia," provides
an assessment of the economic implications of government-mandated project labor
agreements on construction projects in the District of Columbia. Specifically,
the study finds that government-mandated PLAs are not economically sensible in
the context of the current environment for construction services in the District
of Columbia market.
Read the report
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Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A compelling piece critical of government-mandated project labor agreements by David G. Tuerck, executive director of the Beacon Hill Institute for Public Policy Research at Suffolk University, appears in the current issue of the Cato Journal (Volume 30 Number 1, Winter 2010, “Are Unions Good for America?”). "Why Project Labor Agreements Are Not in the Public Interest,” surveys the historical decline of construction union membership and poor performance of government-mandated PLAs while countering common union arguments for PLAs. The piece attacks the faulty logic and methodology often employed in studies promoting PLAs as a mechanism to reduce construction costs (p. 53-61).
Read the article
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Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A November 2009 report by DC Progress, "The True Cost of the Washington Nationals Ballpark Project Labor Agreement," exposes the problems that PLAs present for DC taxpayers, as well as unemployed, and underemployed residents. The report focuses on the, "broken promises of the D.C. Ballpark PLA, in order for policymakers, stakeholders in the local economy, and citizens to understand the burdens that PLAs impose on state and city governments. The Nationals Park PLA created a huge barrier for the District's nonunion workforce: 85 percent of construction workers and 95 percent of minority-owned contractors were left out of work."
Read the article
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
An October 2009 report by Dr. John R. McGowan, "The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements" finds that employees of nonunion contractors that are employed under government-mandated PLAs suffer a reduction in their take home pay that is conservatively estimated at 20 percent. The report estimates that as a result of President Obama's pro-PLA Executive Order 13502, hundreds of millions of dollars of nonunion employees' income on federal construction projects will be distributed to union pension funds, from which nonunion employees will likely receive no benefits.
In addition, the report found that PLAs on federal projects substantially increase costs (approximately 25 percent) for nonunion employers. Nonunion contractors will also face increased and unnecessary exposure to pension fund liability if they perform work under PLAs, including possible withdrawal liability when the PLA project is completed.
The study found that had President Obama's pro-PLA Executive Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements would likely have ranged from $230 to $767 million per year. Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million, depending on the assumptions made for companies executing contracts via PLAs. In total, the move to PLAs could cost nonunion workers and their employers $414 million to more than $1.38 billion annually.
Related Information on Topic
TheTruthAboutPLAs.com Blog Entry on McGowan PLA Pension Study
Popular Tags: Project Labor Agreements (PLAs), executive order
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A study released Sept. 23 by the Beacon Hill Institute (BHI), “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” found that PLAs significantly increase construction costs on federal projects. Had President Obama's pro-PLA Executive Order 13502 been in effect in 2008, and all 2008 federal construction projects worth $25 million or more had been performed under PLAs, it would have increased the cost to federal taxpayers by $1.6 billion to $2.6 billion.
In addition, the BHI review of federal construction projects from 2001-2008, the years under which government-mandated PLAs were prohibited, also revealed that there were no instances in which labor disruptions occurred that resulted in significant project delays or increased costs. The study concludes that “the justifications for PLAs provided by Executive Order 13502 are unproven.”
PLA EXECUTIVE ORDER WILL HURT TAXPAYERS, STUDY REVEALS
The Beacon Hill Institute (BHI) at Suffolk University in Boston, Mass. Sept. 23 released a new study that finds project labor agreements (PLAs) significantly increase construction costs on federal projects without adding benefits for taxpayers. The study is titled, “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem.”
In February, President Obama issued Executive Order 13502, which encourages agencies to require contractors to use PLAs on federal construction projects costing $25 million or more. In addition, the Federal Acquisition Regulatory Council (FAR) issued proposed regulations in July that will turn the executive order into a formal rule that federal agencies must follow when procuring construction services.
“Our report shows that there is no reason to implement a PLA on a federal construction project, except perhaps for political payback to union leaders,” said David G. Tuerck, one of the authors of the study and executive director of BHI. “PLAs are anti-competitive by nature and add costs to the taxpayers. The federal government should consider this research when making its final decision about implementing the President’s order.”
BHI used the findings of three previous studies that analyzed the effect of PLAs on school construction projects and demonstrated that PLAs add 12-18 percent to construction costs, to estimate the effect Obama’s executive order would have had on projects initiated in 2008. According to the results, if President Obama’s Executive Order 13502 were in effect in 2008, construction costs would have increased an additional $1.6 billion to $2.6 billion.
The study pointed out that although taxpayers would have footed an unnecessarily large bill for these projects because of PLAs, they would not have received any benefits in return. Although the purpose of a PLA is to keep labor “peace” during construction projects, BHI’s examination of federal projects with a price tag of at least $25 million, initiated between 2001 and 2008, did not reveal any evidence that those built without a PLA suffered significant delays or cost overruns due to labor issues.
“The justifications for PLAs provided by Executive Order 13502 are, therefore, unproven,” the study pointed out. “What is proven is that PLAs add to the dollar amount of winning bids and increase construction costs…The Obama Executive Order should be seen as a costly giveaway to the construction unions with no proven benefit to the taxpayers.”
To read the complete BHI study on PLAs, visit http://www.beaconhill.org.
Popular Tags: Project Labor Agreements (PLAs), executive order
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A June 2009 study conducted by property and construction consulting firm Rider Levett Bucknall prepared for the U.S. Department of Veterans Affairs (VA) Office of Construction and Facilities Management found that PLAs would likely increase construction costs by as much as 9 percent on three of the five construction markets (Denver, New Orleans and Orlando) in which the VA is planning to build hospitals.
The VA hired this firm to evaluate the cost impact of PLAs in various markets where the VA plans to build hospitals in light of President Obama's order that encourages federal agencies to mandate PLAs (Executive Order 13502).
Read Project Labor Agreements – Impact Study for the Department of Veterans Affairs
Read analysis of this study here.
Popular Tags: Project Labor Agreements (PLAs), executive order
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A PLA on the District of Columbia's new $611 million baseball stadium has completely failed to ensure that local residents get the majority of work on the project, according to a report released Oct. 2, 2007 by the District Economic Empowerment Coalition.
Read the Study
NEW STUDY QUESTIONS EFFECTIVENESS OF DC BASEBALL STADIUM PLA
A project labor agreement (PLA) signed to ensure local residents the majority of work on the District of Columbia’s new $611-million baseball stadium has failed completely, according to a new report released Oct. 2 by the District Economic Empowerment Coalition (DEEC).
The “Broken Promises, Big Losses” study details how none of the 56 contractors on the project met the four stipulations of the PLA. The agreement, which was signed in March 2006 by former Washington, D.C. mayor Anthony Williams, local construction trade unions, the project’s construction manager and the D.C. Sports and Entertainment Commission, mandates that 50 percent of journeyperson hours be performed by D.C. workers; 100 percent of apprenticeships go to city residents; at least 25 percent of total work hours be performed by apprentices; and 51 percent of all new hires be D.C. residents.
“The construction of this stadium has been a disaster for the District of Columbia,” said Ted Trabue, DEEC executive director. “Not one contractor subject to this PLA has achieved all four goals. This was a tremendous opportunity for D.C. residents, and they have been forced to watch from the dugout as outside workers take desperately needed jobs on a project funded by their own tax dollars.”
According to the report, non-D.C. residents have worked 506,926 journeyperson hours (71.1 percent of total journeyperson hours), while D.C. resident have worked just 206,444 journeyperson hours (28.9 percent), far below the PLA requirement that D.C. residents work 50 percent of total journeyperson hours. Additionally, the study found that half of the contractors involved in the project have hired no new apprentices, and of those companies that have hired new trainees, only 17 (of 56) have met the PLA requirement that 100 percent of new apprenticeships go to D.C. residents.
“This report details how the guarantees of the PLA—and the interests of Washingtonians—have been ignored,” said Trabue. “It is disappointing that the contractors and unions involved on this important project did not devote the necessary time and energy to job recruitment, and the city did not provide the oversight needed to ensure that the residents of D.C. would not be left out in the cold.”
Click here to download a copy of the “Broken Promises, Big Losses” study.
For more information, contact Ted Trabue at DEEC, ted.trabue@dceec.org.
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A December 2006 report by the Beacon Hill Institute at Suffolk University, “Project Labor Agreements and Financing Public School Construction in Massachusetts” reviews a real-world case study supporting BHI’s previous research on the effect of PLAs on school construction costs. In 2006, the City of Fall River, MA bid three school construction projects under a PLA. Then, after attracting few bidders, with those providing bids coming in well above the projected budget, the city canceled the PLA and reopened the bidding process. The report found that the city of Fall River saved $5.8 million on total construction bids by removing the PLA and bidding the project using free and open competition.
Read the Report
Read a related academic paper, "Do Project Labor Agreements Raise Construction Costs?"
Read update on Fall River case study in July 2007 Boston Globe Op-Ed
Read a letter encouraging open competition from Fall River, MA City Councilor Camera
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
The Beacon Hill Institute’s paper, Washington National’s Ballpark: Cost and Timeliness Implications of Using a Project Labor Agreement, found that “the D.C. Sports and Entertainment Commission would benefit from lower costs, without sacrificing quality or timeliness, by not using a PLA and introducing more competition into the process.”
The paper concluded, “we find that claims of cost savings from the use of PLAs to be erroneous and misleading. Using a PLA reduces competition and, keeping with standard economic theory, drives up bids and final construction costs. Extrapolating from our prior work, we estimate construction costs to be inflated $34 million to $49 million due to the inclusion of a PLA.”
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
This April 2006 study conducted by the Beacon Hill Institute at Suffolk University found that PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20% increase in costs over the average non-PLA project.
Read the study
BEACON HILL STUDY FINDS PLAS INCREASE COST OF SCHOOL PROJECTS IN NEW YORK
The Beacon Hill Institute at Suffolk University in Boston May 22 released a new study which found that the use of project labor agreements (PLAs) on school construction projects in New York increased the cost of the projects by 20 percent.
The report, titled “Project Labor Agreements and Public Construction Costs in New York State,“ concluded that the presence of a PLA increased the projects’ base construction bids by $27 per square foot relative to non-PLA projects.
“This study provides further proof that PLAs drive up the cost of construction projects, while discriminating against the four out of five construction workers who choose not to join a labor union,” said Kirk Pickerel, ABC president and CEO.
Of the 117 schools examined by the researchers, 19 municipalities entered into PLAs for school projects. The researchers took into account differences in both the type of schools (elementary, junior and high schools) and the size (controlling for square footage). The majority of school districts that chose not to enter into such agreements saved between $2.7 million for a 100,000-square-foot building and $8.1 million for a 300,000-square-foot structure.
In 2004, the Beacon Hill Institute released a similar study that found that the use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent. The report concluded that the presence of a PLA drove up the projects’ final base construction costs by $30 per square foot compared to non-PLA projects. (Newsline, Vol. 4, No. 36, Sept. 15, 2004)
Click here for more information on the Beacon Hill Institute.
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
The Public Interest Institute, a nonpartisan, nonprofit research and educational institute in Mt. Pleasant, Iowa, has released a new study that concludes the PLA on the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.
Read the study
NEW STUDY CONCLUDES IOWA EVENTS CENTER PLA WAS "UNNECESSARY BURDEN"
The Public Interest Institute, a nonpartisan, nonprofit research and educational institute in Mt. Pleasant, Iowa, has released a new study that concludes the project labor agreement (PLA) agreed to for the construction of the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.
The Iowa Events Center project was conceived by the board of supervisors of Polk County, Iowa, to help revitalize Des Moines’ downtown area. The board decided to renovate the city’s existing Polk County Convention Complex and Veterans Memorial Auditorium, while building a new 17,000-seat sports and entertainment arena and a new exhibit and meeting hall. In 2002, the board signed a PLA with the Central Iowa Building and Construction Trade Council, stating that the agreement was necessary to “keep the project on time, keep it on budget, and complete it in a safe manner.” According to the study, the PLA “failed on all three counts.”
Under the PLA, contractors were forced to recognize “the union as the sole and exclusive bargaining representative of all craft employees,” and “hire employees for covered work through the job referral systems offered by each signatory local union.” The study found that as a result, many local merit shop contractors did not bid on the project, which reduced competition and increased the cost of the project.
“One might think that completing a project on budget, on time and safely would be the goal for each and every construction project, but apparently the Polk County Board of Supervisors felt these goals could not be accomplished on the Iowa Events Center project without a project labor agreement,” the study concludes. “Having been granted the PLA, was the Iowa Events Center completed on budget, on time and safely? No. Instead, workers were frozen out of the opportunity to work, businesses were not allowed to compete, and the taxpayers were forced to pay even more for the Iowa Events Center construction because of the cost overruns of the project. The project labor agreement for the Iowa Events Center project was an unnecessary burden on the workers, businesses and taxpayers of Iowa.”
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
The 2005 edition of ABC General Counsel Maury Baskin's report on union-only PLAs documents a record of union-only construction projects experiencing a consistent pattern of cost overruns, adverse impacts on competition, delays in construction, construction defects, safety problems and diversity issues.
Read the study
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
This September 2004 study conducted by the Beacon Hill Institute at Suffolk University found that the use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent. The report concludes that the presence of a PLA increased the projects’ final base construction costs by $30 per square foot relative to non-PLA projects.
"This study provides further evidence that PLAs drive up the cost of construction projects, while discriminating against the four out of five construction workers who choose not to join a labor union," said Kirk Pickerel, ABC president and CEO.
Read study
Popular Tags: Project Labor Agreements (PLAs)
Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
A September 2003 study completed by the Beacon Hill Institute entitled, "Project Labor Agreements and the Cost of School Construction in Massachusetts," finds that "PLA projects add an estimated $18.83 per square foot to the bid cost of construction (in 2001 prices), representing an almost 14 percent increase in costs over the average non-PLA project. The low estimates find that actual project costs are raised by 8.4 percent; the high estimates find that bid costs are raised by 14.9 percent.
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Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
This September 2001 study, completed by the firm of Ernst & Young, was commissioned by Erie County in New York to analyze a PLA on a public construction project. Ernst & Young concluded that "bidder participation was diminished because the county chose to utilize a PLA. Further, the use of PLAs adversely affects competition for publicly bid projects to the likely detriment of cost-effective construction… the use of PLAs strongly inhibits participation in public bidding by non-union contractors and may result in those projects having artificially inflated costs."
Read the study
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Posted In: [Public-PLAs: Studies (Academic and Private Reseach)]
The Worcester Municipal Research Bureau May 21, 2001 released a study titled "Project Labor Agreements on Public Construction Projects: The Case For and Against.". The study concluded that "PLAs tend to constrict the number of bidders on a project compared to those without PLAs, and are likely to reduce the savings to the public that would accrue if nonunion contractors who are employed were allowed to follow their customary methods."
Read the study summary
Read the study
Popular Tags: Project Labor Agreements (PLAs)
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