Project Labor Agreement
Encyclopedia
A Project Labor Agreement (PLA), also known as a Community Workforce Agreement, is a controversial pre-hire collective bargaining
agreement with one or more labor organizations
that establishes the terms and conditions of employment for a specific construction project. Before any workers
are hired on the project, construction unions have bargaining rights to determine the wage rates and benefits
of all employees working on the particular project and to agree the provisions of the agreement. The terms of the agreement apply to all contractors and subcontractor
s who successfully bid
on the project, and supersedes any existing collective bargaining agreements. PLAs are used on both public and private projects, and their specific provisions
may be tailored by the signatory parties to meet the needs of a particular project. The agreement may include provisions to prevent any strikes, lockouts
, or other work stoppages for the length of the project. PLAs typically require that employees hired for the project are referred through union hiring hall
s, that nonunion workers pay union dues for the length of the project, and that the contractor follow union rules on pensions, work conditions and dispute resolution.
A PLA is authorized under the National Labor Relations Act
(NLRA), 29 U.S.C. §§ 151-169. 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 agreements have been in use in the United States
since the 1930s, and first became the subject of debate in the 1980s, for their use on publicly funded
projects. In these instances, government entities made signing PLAs a condition of working on taxpayer funded projects. This type of PLA, known as a government-mandated PLA, is distinct from a PLA voluntarily entered into by contractors on public or private work—as is permitted by the NLRA—as well as a PLA mandated by a private entity on a privately funded construction project. Executive orders issued since 1992 have affected the use of government-mandated PLAs for federal construction projects and the most recent order, issued by President Barack Obama
in February 2009, encourages their use by federal agencies. The use of PLAs is opposed by a number of groups, who argue that the agreements discriminate against non-union contractors and do not improve efficiency or reduce costs of construction projects. Studies of PLAs have mixed results, with some studies concluding that PLAs have a favorable impact, while others find that the agreements can increase costs, and may negatively impact non-union contractors and workers.
in Washington, the Shasta Dam
in California
and the Hoover Dam
in Nevada
. Modern PLAs particularly developed from those used in construction carried out during World War II
, a period when skilled labor was in demand, construction unions controlled 87% of the national market and government spending on construction had increased significantly over a short period of time. These early PLAs focused on establishing standard rates of pay and preventing work stoppages. PLA projects that followed included Cape Canaveral
in the 1960s, Disney World
from 1967-71 and the Trans-Alaska Pipeline
from 1973-77. During this period and subsequently, the unionized share of the construction industry precipitously declined as construction users sought more open competition. By the 1980s, nonunion contractors claimed in excess of 80% of the construction work, in a wide variety of trades, with some variation in different parts of the country.
reclamation project that began in the 1980s became the focus of debate over the legality of PLAs. When the Massachusetts Water Resources Authority
elected to use a PLA for the project that mandated union-only labor, the Associated Builders and Contractors of Massachusetts/Rhode Island, Inc. challenged its legality, asserting that the use of a PLA was prohibited by the National Labor Relations Act
. In 1990, the First Circuit federal appeals court
ruled that the Boston Harbor PLA breached federal labor law because of its union-work requirement.
On October 23, 1992, while the Boston Harbor case was still in court, President George H. W. Bush
signed Executive Order 12818 prohibiting federal agencies from exclusively contracting union labor for construction projects. Bush's order prohibited the use of PLAs in federal construction projects. The Clinton administration rescinded this order when President Bill Clinton
issued Executive Order 12836 in February 1993, shortly after he took office. This order allowed federal agencies to fund construction projects where contractors required a PLA. One month later, in the Boston Harbor cleanup case, the United States Supreme Court unanimously upheld the use of the agreements on public projects. The Supreme Court ruled that if the government was in the role of a regulator, it was not able to require PLA use under labor law
preemption principles, however, it could choose to do so as a market participant without being preempted by the National Labor Relations Act. The Court did not address the separate question of whether government-mandated PLAs are lawful under federal or state competitive bidding laws. The decision led to increased use of PLAs in public-sector construction projects throughout the U.S.
In 1997, Clinton proposed an executive order stating that federal agencies must consider use of PLAs for federally funded projects. Republicans staunchly opposed themove, believing it would restrict federal projects to union contractors only. Clinton abandoned the proposed executive order, but issued a memorandum on June 5, 1997, encouraging federal departments to consider the use of PLAs for “large and significant” projects. The memorandum required that government agencies review each project to decide whether a PLA would allow the agency to increase efficiency and reduce costs.
signed Executive Order 13202, “Preservation of Open Competition and Government Neutrality Towards Government Contractors’ Labor Relations on Federal and Federally Funded Construction Projects”, prohibiting the use of PLAs for construction projects with federal funding. This order stated that construction projects receiving federal funding would not be allowed to impose project labor agreements. Specifically, the 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 federally funded construction projects. The order allowed any PLAs that had previously been agreed to continue, and did not affect projects that did not receive federal funding. Bush's order revoked the previous executive order affecting PLAs, Clinton's order 12836, which revoked the executive order issued by President George H.W. Bush in 1992. President George W. Bush issued an amendment in April 2001, allowing certain projects to be exempted from this order, if a contract had already been awarded under an existing PLA at the time of the order.
In August 2001, U.S. District Court ruled Executive Order 13202 invalid in a case examining the use of a PLA by Maryland
for the Woodrow Wilson Bridge replacement project. The court ruled that the order was invalid as it conflicted with the National Labor Relations Act
. The judge issued a permanent injunction to block enforcement of the order on November 7, 2001. In July 2002, the U.S. Court of Appeals for the District of Columbia overturned the District Court's decision and ordered the removal of the injunction. Following this decision, the Department of Defense
, NASA
and the General Services Administration
formally recognized the order in the Federal Register
and implemented it in their construction bidding processes.
Although the Court of Appeals decision in 2002 upheld the executive order prohibiting federal projects from using PLAs, individual states and counties were permitted to use PLAs for some public works where funding was from state and local revenue. These PLAs received opposition by organizations such as the Associated Builders and Contractors, and the Black Contractors Group. A notable example of pro-PLA legislation was passed in New Jersey, which enacted a law in 2002 allowing use of PLAs for some government funded projects.
signed executive order 13502, which urges federal agencies to consider mandating the use of PLAs on federal construction projects costing $25 million or more on a case-by-case basis. This act served to revoke the Bush executive orders 13202 and 13208 from eight years earlier that prohibited government-mandated PLAs on federal and federally funded construction projects. The Obama order states that federal agencies can require a PLA if such an agreement will achieve federal goals in economy and efficiency. According to the terms of the order, non-union contractors may compete for contracts subject to PLAs, but they must agree to the various terms and conditions contained in each PLA in order to win a federal contract and build a project. A key change from the 2001 order is that by repealing the Bush orders, the Obama order permits recipients of federal funding, such as state, local and private construction owners, to mandate PLAs on public works projects of any size. However, the order does not encourage or mandate recipients of federal assistance to use a government-mandated PLA.
With the February 2009 stimulus bill allocating approximately $140 billion for federal, state and local construction projects, battles over government-mandated PLAs on public works projects from 2009 to 2011 have been widespread at the state and local government level. Government officials and legislators have clashed over using PLA mandates on projects in states including Iowa, Oregon, Ohio, California, and others. Individual communities have voted on whether to prohibit mandatory PLA use for government projects, including ballot initiatives in Chula Vista
, Oceanside
, and in San Diego County, California
in 2010, which resulted in officials being prohibited from mandating or prohibiting the use of PLAs for government projects. In 2011, contractors filed bid protests with the Government Accountability Office
against government mandated PLAs for construction projects in New Hampshire, New Jersey, Pennsylvania and Washington, D.C. These protests led to federal PLA mandates being removed from project solicitations in each case. , through legislation or by executive order issued by the state governor, the following states have banned the requirement that PLAs be used for government funded construction projects: Arkansas, Arizona, Idaho, Iowa, Louisiana, Maine, Michigan, Missouri, Montana, Tennessee, and Utah. States with executive orders, or that have enacted legislation authorizing or encouraging the use of PLAs on public projects include Illinois, New Jersey, New York and Washington State.
' Gillette Stadium
, are given as examples of how PLAs help project owners meet tight deadlines, according to supporters. In addition to the stated benefits to project owners, supporters of PLAs also say that PLA use has a positive impact on local communities, through set goals for local hiring and provision of education.
Groups including the Associated General Contractors of America (AGC), Associated Builders and Contractors (ABC), Construction Industry Roundtable (CIRT), National Federation of Independent Business (NFIB), the Black Chamber of Commerce, and the U.S. Chamber of Commerce have actively opposed the use of PLAs, particularly for government projects. These groups have challenged the use of such agreements through litigation, lobbying, public relations campaigns. Opponents of PLAs supported the Bush executive order prohibiting government-mandated PLAs, and have argued that between 2001 and 2008, when the executive order was in place, no federal projects suffered significant labor problems, delays or cost overruns attributable to the absence of PLAs. According to those who oppose PLAs, the agreements place restrictions on the hiring and working practices of contractors, and can lead to increased costs for project owners. One of their objections to PLAs is that the agreements require contractors to pay into union benefit plans and obey union work rules. In addition, they oppose the use of PLAs to restrict hiring on projects to construction workers selected by unions through union hiring halls, stating that this does not increase the quality of worker as all those who are licensed in a craft have at least the same level of education and skill, regardless of whether they belong to a union.
Another point of debate is the proportion of construction workers who are unionized. According to opponents, under PLAs contractors must hire their workers through unions, and unionized workers are the majority of those who work on PLA projects, despite non-union workers making up the majority of the construction workforce. Estimates of the percentage of construction workers who are non-union, cited by opponents of PLAs, are around 85%, based on figures from the U.S. Department of Labor Bureau of Labor Statistics, and more recent data puts this figure at 86.9%. This figure is disputed by supporters of PLAs, who state that the figures given by those in opposition to PLAs are misleading and are based on census data that encompasses too broad a concept of a construction worker. According to a study by Cornell University
in 2010, cited by Mary Vogel, executive director of the Construction Institute, as much as 60% of construction labor is unionized.
A number of politicians do not agree with the use of the agreements for publicly funded construction projects, and have introduced bills or executive orders that prohibit using the agreements for government projects or prevent the use of public funds for projects using PLAs. These include Louisiana Senate Bill 76, introduced by Senator Danny Martiny, to prohibit state governments from requiring a PLA for projects with government funding. This bill was passed in June 2011, making Louisiana the 5th state in 2011 to ban government requirements that contractors use PLAs for publicly funded construction projects.
project, Safeco Field
in Seattle, and the San Francisco International Airport
. Three studies carried out on PLA use in school construction by the Beacon Hill Institute
in 2003, 2004 and 2006, found that costs were increased by up to 20% in projects in Massachusetts
, Connecticut
and New York
where PLAs were used. A 2009 study of PLAs use, carried out by Rider Levett Bucknall to determine whether PLAs should be used in the U.S. Department of Veterans Affairs' construction projects, found that costs would increase if PLAs are used for construction projects in locations where union membership is low. According to their analysis, in areas including Denver, Colorado
, New Orleans,
Louisiana
, and Orlando, Florida
, where unions do not have a great presence, use of PLAs for projects would lead to cost increases from 5% to 9%. In two cities, San Francisco and New York City
, where unions have a great presence, the study predicted mixed results regarding potential cost savings ranging from small project cost increases to small cost savings.
PLAs often require all companies to obtain their workers from union hiring halls, though the union controlling this employee referral system may not discriminate on the basis of a worker's union or non-union status. It is often the case, however, that the hired employees must join a union, usually for the duration of the project. PLA opponents argue that the union control of hiring prevents a non-union contractor for using its own employees. The increased cost to contractors and the impact on their workers of joining a union, is said by opponents of PLAs to discourage non-union contractors from bidding on projects with a PLA. For instance, a project in Ohio in 2010, to build dormitories for two schools saw an increased number of bids when a PLA was no longer required, and the bid prices were 22% lower than they had been when a PLA was in place.
and the Washington Nationals Ballpark, for both of which community focused agreements were in place but the goals of local hiring and resources to be provided to the community were not met. According to a report for the DC Sports & Entertainment Commission, the PLA for the Nationals Ballpark failed to meet its three main goals of local workers performing 50% of journeyman hours, apprenticeships provided to city residents only, and apprentices to carry out 25% of the work hours on the project. According to groups such as ABC, since the PLAs require that workers are hired through the unions and there are much fewer union workers, this can mean that meeting local hiring goals is impossible.
In addition to academic research, reports have been produced by government agencies and individuals on behalf of state or federal government. In 1998 the Government Accountability Office
produced a report on PLAs that noted an overall lack of data but reported that both “proponents and opponents of the use of PLAs said it would be difficult to compare contractor performance on federal projects with and without PLAs because it is highly unlikely that two such projects could be found that were sufficiently similar in cost, size, scope, and timing.” The GAO report concluded that it would be difficult to draw "any definitive conclusions" on the impact of PLAs on performance. More recent reports include a favorable study of PLAs from the Cornell University School of Industrial and Labor Relations
, in 2009, reports produced by the Beacon Hill Institute since 2003, which conclude that PLAs increase costs of projects, and an analysis published by the National University System Institute for Policy Research, which found that PLAs increased the cost of school construction in California.
In addition to studies examining the use of PLAs and their impact, reports are available detailing the history of PLA use and the arguments for and against their use. Reports examining the history of PLA use, include a 2001 California State Library
report, compiled for California State Senate
, which recounts the history of PLAs in California and uses case studies to examine the features of public and private PLAs. In a 2001 University of Pennsylvania Journal of Law article, the author outlines the arguments on either side of PLAs and evaluates the state of the law since the 1993 Boston Harbor case decision. The article finds that while there are benefits to PLA use, they can present risks and should only be allowed on projects where they will further the goals of competitive bidding statutes, namely timely, efficient, high quality, and inexpensive construction.
found that there is no evidence that PLAs discriminate against employers and workers, limit the pool of bidders, and raise construction costs. In a 2009 report by Dale Belman, of Michigan State University; Matthew M. Bodah of the University of Rhode Island and Peter Philips of the University of Utah, the authors stated that rather than increase cost, the agreements provide benefits to the community. According to their report, project cost is directly related to the complexity of a project, not the existence of an agreement. They found that PLAs are not suited to all projects, but some projects are good candidates for their use, such as highly complex construction projects. Studies have also considered how PLAs may benefit communities through hiring locals. In a paper focused on whether PLAs for projects developed by the Los Angeles Community College District (LACCD), the Los Angeles Unified School District (LAUSD), and the City of Los Angeles met local hiring goals, the author found that the goal of 30% local hires set by the PLAs was met.
Reports and studies addressing the cost impact of PLAs on construction projects have found that they may not lead to greater costs, such as a 2002 paper by the Harvard University Joint Center for Housing Studies, which states that the increased costs cited by opponents of PLAs is based on bids rather than end costs. According to the paper, a project's end costs would usually be higher than bid costs due to expenses that arise during construction. In addition, a 2004 report by the Director of General Services for Contra Costa County, California reported that bids for five of eight projects subject to a PLA were lower than the architect/engineer cost estimate. In 2004 a report written on the use of PLAs in Iowa
states that PLA use increases efficiency and cost effectiveness of construction projects. "Public-sector PLAs on complex projects or projects where timely project completion is important have been shown to provide the performance desired by contractors and project managers, who repeatedly use them." A 2009 paper concluded that there was difficulty in identifying the effect of PLAs on cost in construction of schools, due to the differences between schools built with PLAs and those built without them. The report stated that there was not any statistically significant evidence for an increase in costs for school construction.
Reports on the legal considerations affecting PLAs make the case that PLAs are an effective tool for labor relations. In a report in 1999, on the legality of PLAs, the authors stated that PLAs "serve as a productive and stabilizing force in the construction industry.” This is supported by a UCLA study that challenged findings of the Beacon Hill Institute on PLAs, which found that in the private sector, the usage of PLAs "creates continuity and stability of the work force at the job site".
(BHI) at Suffolk University in Boston, Massachusetts have concluded that PLAs increase construction costs. Studies in 2003, 2004 and 2006 examining the impact of PLAs on school construction in Massachusetts, Connecticut and New York, respectively, found that where PLAs were in use construction costs were increased, even when controlling for the size of project and type of school. The September 2003 study by the institute found that use of PLAs created a cost increase of almost 14% increase compared to a non-PLA project. The following year their study of PLAs in Connecticut found that PLAs increased costs by nearly 18 %. A May 2006 study by BHI found that the use of PLAs on school construction projects in New York between 1996 and 2004 increased construction costs by 20%. This study controlled for the size of the project and type of school. A report on PLAs by BHI, published in 2009, examined whether claims made in Obama's executive order that PLAs have a positive economic impact are correct. The report considered the findings of the institute's studies, further case studies of PLA and non-PLA projects and addressed
criticisms of their previous studies and concluded that the justifications for PLA use in the executive order were not proven. In particular the report concluded that there was no economic benefit to taxpayers in using PLAs.
An independently-reviewed 2011 study by The National University System Institute for Policy Research analyzed the cost impact of PLAs on school construction in California from 1996 to 2008. The study analyzed 551 school construction projects and is reportedly the largest study of PLAs to have been undertaken to date. It found that the use of PLAs added between 13% and 15% to construction costs, which would represent a cost increase of between $28.90 and $32.49 per square foot when adjusted for inflation. In 2010, the New Jersey Department of Labor studied the impact of government-mandated PLAs on the cost of school construction in New Jersey during 2008, and also found that school construction projects where a PLA was used had higher costs, per square foot and per student, than those without a PLA.
Earlier studies also found increased costs when PLAs were used, including a study in 2000 of a Nevada Water Authority project PLA, which found that the project cost an additional $200,000 because the true low bidder refused to sign the PLA. The project then went to a union contractor whose bid was $200,000 higher. Also in 2000, a study commissioned by the Jefferson County, New York
Board of Legislators examining the potential use of a PLA for the Jefferson County Courthouse Complex concluded that a PLA could result in additional costs of more than $955,000. The total estimated increase of costs for the projects, should a PLA be used, would have represented 7% of the total cost of the project.
In addition to increased costs of projects, studies have found that PLAs can lead to greater costs for nonunion contractors and can lower their employees' take home pay. A study was produced in 2009 by John R. McGowan of Saint Louis University, which found that nonunion workers on government projects with a PLA in place have reduced wages, compared with what they would receive for work on a non-PLA government project. In addition, nonunion employers would have to pay for additional benefits that their employees would be ineligible for and might be liable for pension fund withdrawal liability costs if the terms of the PLA mean they have to contribute to a union pension fund for the duration of the project.
PLAs also may impact competition by discouraging nonunion bids, according to studies including a September 2001 study by Ernst & Young, commissioned by Erie County, New York
. This study analyzed the impact of PLAs on public construction projects and concluded that the number of bidders was reduced for projects with a PLA, as "the use of PLAs strongly inhibits participation in public bidding by non-union contractors." The Worcester Municipal Research Bureau produced a report in 2001, based on a number of studies of PLA use. The report stated that PLAs reduced the number of bidders on construction projects, and led to lower savings than would be possible where contractors are able to work under their usual arrangements for employees. In March 1995, an ABC study of the taxpayer costs for Roswell Park Cancer Institute in Buffalo, New York, assessed bids for the same project both before and after a PLA was temporarily imposed in 1995. It revealed that there were 30% fewer bidders to perform the work and that costs increased by more than 26%.
In terms of wider economic impact, a November 2000 Price Waterhouse Coopers study requested by the Los Angeles Unified School District was not able to confirm whether the project stabilization/labor agreement for the district's Proposition BB construction had produced either a positive or negative economic impact. In March 2006, the Public Interest Institute released a study that concludes that the PLA agreed for the construction of the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
agreement with one or more labor organizations
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
that establishes the terms and conditions of employment for a specific construction project. Before any workers
Laborer
A Laborer or labourer - see variation in english spelling - is one of the construction trades, traditionally considered unskilled manual labor, as opposed to skilled labor. In the division of labor, laborers have all blasting, hand tools, power tools, air tools, and small heavy equipment, and act...
are hired on the project, construction unions have bargaining rights to determine the wage rates and benefits
Employee benefit
Employee benefits and benefits in kind are various non-wage compensations provided to employees in addition to their normal wages or salaries...
of all employees working on the particular project and to agree the provisions of the agreement. The terms of the agreement apply to all contractors and subcontractor
Subcontractor
A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
s who successfully bid
Construction bidding
Construction bidding is the process of submitting a proposal to undertake, or manage the undertaking of a construction project. The process starts with a construction estimate from blueprints and take offs....
on the project, and supersedes any existing collective bargaining agreements. PLAs are used on both public and private projects, and their specific provisions
Contractual term
A contractual term is "Any provision forming part of a contract" Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the...
may be tailored by the signatory parties to meet the needs of a particular project. The agreement may include provisions to prevent any strikes, lockouts
Lockout (industry)
A lockout is a work stoppage in which an employer prevents employees from working. This is different from a strike, in which employees refuse to work.- Causes :...
, or other work stoppages for the length of the project. PLAs typically require that employees hired for the project are referred through union hiring hall
Hiring hall
In organized labor, a hiring hall is an organization, usually under the auspices of a labor union, which has the responsibility of furnishing new recruits for employers who have a collective bargaining agreement with the union....
s, that nonunion workers pay union dues for the length of the project, and that the contractor follow union rules on pensions, work conditions and dispute resolution.
A PLA is authorized under the National Labor Relations Act
National Labor Relations Act
The National Labor Relations Act or Wagner Act , is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions , engage in collective bargaining, and take part in strikes and other forms of concerted activity in...
(NLRA), 29 U.S.C. §§ 151-169. 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 agreements have been in use in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
since the 1930s, and first became the subject of debate in the 1980s, for their use on publicly funded
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...
projects. In these instances, government entities made signing PLAs a condition of working on taxpayer funded projects. This type of PLA, known as a government-mandated PLA, is distinct from a PLA voluntarily entered into by contractors on public or private work—as is permitted by the NLRA—as well as a PLA mandated by a private entity on a privately funded construction project. Executive orders issued since 1992 have affected the use of government-mandated PLAs for federal construction projects and the most recent order, issued by President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
in February 2009, encourages their use by federal agencies. The use of PLAs is opposed by a number of groups, who argue that the agreements discriminate against non-union contractors and do not improve efficiency or reduce costs of construction projects. Studies of PLAs have mixed results, with some studies concluding that PLAs have a favorable impact, while others find that the agreements can increase costs, and may negatively impact non-union contractors and workers.
Early use
The earliest uses of Project Labor Agreements in the U.S. date back to several dam projects in the 1930s, including the Grand Coulee DamGrand Coulee Dam
Grand Coulee Dam is a gravity dam on the Columbia River in the U.S. state of Washington built to produce hydroelectric power and provide irrigation. It was constructed between 1933 and 1942, originally with two power plants. A third power station was completed in 1974 to increase its energy...
in Washington, the Shasta Dam
Shasta Dam
Shasta Dam is an arch dam across the Sacramento River in the northern part of the U.S. state of California, at the north end of the Sacramento Valley. The dam mainly serves long-term water storage and flood control in its reservoir, Shasta Lake, and also generates hydroelectric power...
in California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
and the Hoover Dam
Hoover Dam
Hoover Dam, once known as Boulder Dam, is a concrete arch-gravity dam in the Black Canyon of the Colorado River, on the border between the US states of Arizona and Nevada. It was constructed between 1931 and 1936 during the Great Depression and was dedicated on September 30, 1935, by President...
in Nevada
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...
. Modern PLAs particularly developed from those used in construction carried out during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, a period when skilled labor was in demand, construction unions controlled 87% of the national market and government spending on construction had increased significantly over a short period of time. These early PLAs focused on establishing standard rates of pay and preventing work stoppages. PLA projects that followed included Cape Canaveral
Cape Canaveral
Cape Canaveral, from the Spanish Cabo Cañaveral, is a headland in Brevard County, Florida, United States, near the center of the state's Atlantic coast. Known as Cape Kennedy from 1963 to 1973, it lies east of Merritt Island, separated from it by the Banana River.It is part of a region known as the...
in the 1960s, Disney World
Walt Disney World Resort
Walt Disney World Resort , is the world's most-visited entertaimental resort. Located in Lake Buena Vista, Florida ; approximately southwest of Orlando, Florida, United States, the resort covers an area of and includes four theme parks, two water parks, 23 on-site themed resort hotels Walt...
from 1967-71 and the Trans-Alaska Pipeline
Trans-Alaska Pipeline System
The Trans Alaska Pipeline System , includes the Trans Alaska Pipeline, 11 pump stations, several hundred miles of feeder pipelines, and the Valdez Marine Terminal. TAPS is one of the world's largest pipeline systems...
from 1973-77. During this period and subsequently, the unionized share of the construction industry precipitously declined as construction users sought more open competition. By the 1980s, nonunion contractors claimed in excess of 80% of the construction work, in a wide variety of trades, with some variation in different parts of the country.
Boston Harbor and executive orders
The Boston HarborBoston Harbor
Boston Harbor is a natural harbor and estuary of Massachusetts Bay, and is located adjacent to the city of Boston, Massachusetts. It is home to the Port of Boston, a major shipping facility in the northeast.-History:...
reclamation project that began in the 1980s became the focus of debate over the legality of PLAs. When the Massachusetts Water Resources Authority
Massachusetts Water Resources Authority
The Massachusetts Water Resources Authority is a public authority in the Commonwealth of Massachusetts that provides wholesale drinking water and sewage services to certain municipalities and industrial users in the state, primarily in the Boston area.The authority receives water from the Quabbin...
elected to use a PLA for the project that mandated union-only labor, the Associated Builders and Contractors of Massachusetts/Rhode Island, Inc. challenged its legality, asserting that the use of a PLA was prohibited by the National Labor Relations Act
National Labor Relations Act
The National Labor Relations Act or Wagner Act , is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions , engage in collective bargaining, and take part in strikes and other forms of concerted activity in...
. In 1990, the First Circuit federal appeals court
United States courts of appeals
The United States courts of appeals are the intermediate appellate courts of the United States federal court system...
ruled that the Boston Harbor PLA breached federal labor law because of its union-work requirement.
On October 23, 1992, while the Boston Harbor case was still in court, President George H. W. Bush
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
signed Executive Order 12818 prohibiting federal agencies from exclusively contracting union labor for construction projects. Bush's order prohibited the use of PLAs in federal construction projects. The Clinton administration rescinded this order when President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
issued Executive Order 12836 in February 1993, shortly after he took office. This order allowed federal agencies to fund construction projects where contractors required a PLA. One month later, in the Boston Harbor cleanup case, the United States Supreme Court unanimously upheld the use of the agreements on public projects. The Supreme Court ruled that if the government was in the role of a regulator, it was not able to require PLA use under labor law
United States labor law
United States labor law is a heterogeneous collection of state and federal laws. Federal law not only sets the standards that govern workers' rights to organize in the private sector, but also overrides most state and local laws that attempt to regulate this area. Federal law also provides more...
preemption principles, however, it could choose to do so as a market participant without being preempted by the National Labor Relations Act. The Court did not address the separate question of whether government-mandated PLAs are lawful under federal or state competitive bidding laws. The decision led to increased use of PLAs in public-sector construction projects throughout the U.S.
In 1997, Clinton proposed an executive order stating that federal agencies must consider use of PLAs for federally funded projects. Republicans staunchly opposed themove, believing it would restrict federal projects to union contractors only. Clinton abandoned the proposed executive order, but issued a memorandum on June 5, 1997, encouraging federal departments to consider the use of PLAs for “large and significant” projects. The memorandum required that government agencies review each project to decide whether a PLA would allow the agency to increase efficiency and reduce costs.
Prohibition for federal projects
On February 17, 2001, President George W. BushGeorge W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
signed Executive Order 13202, “Preservation of Open Competition and Government Neutrality Towards Government Contractors’ Labor Relations on Federal and Federally Funded Construction Projects”, prohibiting the use of PLAs for construction projects with federal funding. This order stated that construction projects receiving federal funding would not be allowed to impose project labor agreements. Specifically, the 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 federally funded construction projects. The order allowed any PLAs that had previously been agreed to continue, and did not affect projects that did not receive federal funding. Bush's order revoked the previous executive order affecting PLAs, Clinton's order 12836, which revoked the executive order issued by President George H.W. Bush in 1992. President George W. Bush issued an amendment in April 2001, allowing certain projects to be exempted from this order, if a contract had already been awarded under an existing PLA at the time of the order.
In August 2001, U.S. District Court ruled Executive Order 13202 invalid in a case examining the use of a PLA by Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
for the Woodrow Wilson Bridge replacement project. The court ruled that the order was invalid as it conflicted with the National Labor Relations Act
National Labor Relations Act
The National Labor Relations Act or Wagner Act , is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions , engage in collective bargaining, and take part in strikes and other forms of concerted activity in...
. The judge issued a permanent injunction to block enforcement of the order on November 7, 2001. In July 2002, the U.S. Court of Appeals for the District of Columbia overturned the District Court's decision and ordered the removal of the injunction. Following this decision, the Department of Defense
United States Department of Defense
The United States Department of Defense is the U.S...
, NASA
NASA
The National Aeronautics and Space Administration is the agency of the United States government that is responsible for the nation's civilian space program and for aeronautics and aerospace research...
and the General Services Administration
General Services Administration
The General Services Administration is an independent agency of the United States government, established in 1949 to help manage and support the basic functioning of federal agencies. The GSA supplies products and communications for U.S...
formally recognized the order in the Federal Register
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...
and implemented it in their construction bidding processes.
Although the Court of Appeals decision in 2002 upheld the executive order prohibiting federal projects from using PLAs, individual states and counties were permitted to use PLAs for some public works where funding was from state and local revenue. These PLAs received opposition by organizations such as the Associated Builders and Contractors, and the Black Contractors Group. A notable example of pro-PLA legislation was passed in New Jersey, which enacted a law in 2002 allowing use of PLAs for some government funded projects.
PLA use since 2009
On February 6, 2009, President Barack ObamaBarack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
signed executive order 13502, which urges federal agencies to consider mandating the use of PLAs on federal construction projects costing $25 million or more on a case-by-case basis. This act served to revoke the Bush executive orders 13202 and 13208 from eight years earlier that prohibited government-mandated PLAs on federal and federally funded construction projects. The Obama order states that federal agencies can require a PLA if such an agreement will achieve federal goals in economy and efficiency. According to the terms of the order, non-union contractors may compete for contracts subject to PLAs, but they must agree to the various terms and conditions contained in each PLA in order to win a federal contract and build a project. A key change from the 2001 order is that by repealing the Bush orders, the Obama order permits recipients of federal funding, such as state, local and private construction owners, to mandate PLAs on public works projects of any size. However, the order does not encourage or mandate recipients of federal assistance to use a government-mandated PLA.
With the February 2009 stimulus bill allocating approximately $140 billion for federal, state and local construction projects, battles over government-mandated PLAs on public works projects from 2009 to 2011 have been widespread at the state and local government level. Government officials and legislators have clashed over using PLA mandates on projects in states including Iowa, Oregon, Ohio, California, and others. Individual communities have voted on whether to prohibit mandatory PLA use for government projects, including ballot initiatives in Chula Vista
Chula Vista, California
Chula Vista is the second largest city in the San Diego metropolitan area, the seventh largest city in Southern California, the fourteenth largest city in the State of California, and the seventy seventh largest city in the U.S....
, Oceanside
Oceanside, California
-2010:The 2010 United States Census reported that Oceanside had a population of 167,086. The population density was 3,961.8 people per square mile...
, and in San Diego County, California
San Diego County, California
San Diego County is a large county located in the southwestern corner of the US state of California. Hence, San Diego County is also located in the southwestern corner of the 48 contiguous United States. Its county seat and largest city is San Diego. Its population was about 2,813,835 in the 2000...
in 2010, which resulted in officials being prohibited from mandating or prohibiting the use of PLAs for government projects. In 2011, contractors filed bid protests with the Government Accountability Office
Government Accountability Office
The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...
against government mandated PLAs for construction projects in New Hampshire, New Jersey, Pennsylvania and Washington, D.C. These protests led to federal PLA mandates being removed from project solicitations in each case. , through legislation or by executive order issued by the state governor, the following states have banned the requirement that PLAs be used for government funded construction projects: Arkansas, Arizona, Idaho, Iowa, Louisiana, Maine, Michigan, Missouri, Montana, Tennessee, and Utah. States with executive orders, or that have enacted legislation authorizing or encouraging the use of PLAs on public projects include Illinois, New Jersey, New York and Washington State.
Debate over use
There has been much debate over the government-mandated PLAs, particularly for publicly funded projects. The use of project labor agreements is supported by the construction unions, and some political figures, who state that PLAs are needed to ensure that large, complex projects are completed on time and on schedule. According to those who support the use of such agreements, PLAs enable project owners to control costs and ensure that there are no disruptions to the construction schedule, for example from strikes. In particular, proponents of PLAs point to the inclusion of clauses in the agreement that agree to establish labor management problem solving committees that deal with scheduling, quality control, health and safety, and productivity problems during the project. They also state that PLAs ensure that the workforce hired has received training and is of high quality. The use of PLAs in large private construction projects such as the building of the New England PatriotsNew England Patriots
The New England Patriots, commonly called the "Pats", are a professional football team based in the Greater Boston area, playing their home games in the town of Foxborough, Massachusetts at Gillette Stadium. The team is part of the East Division of the American Football Conference in the National...
' Gillette Stadium
Gillette Stadium
Gillette Stadium is a multi-purpose stadium located in Foxborough, Massachusetts, 21 miles southwest of downtown Boston and from downtown Providence, Rhode Island. It serves as the home stadium and administrative offices for the New England Patriots football team and the New England Revolution...
, are given as examples of how PLAs help project owners meet tight deadlines, according to supporters. In addition to the stated benefits to project owners, supporters of PLAs also say that PLA use has a positive impact on local communities, through set goals for local hiring and provision of education.
Groups including the Associated General Contractors of America (AGC), Associated Builders and Contractors (ABC), Construction Industry Roundtable (CIRT), National Federation of Independent Business (NFIB), the Black Chamber of Commerce, and the U.S. Chamber of Commerce have actively opposed the use of PLAs, particularly for government projects. These groups have challenged the use of such agreements through litigation, lobbying, public relations campaigns. Opponents of PLAs supported the Bush executive order prohibiting government-mandated PLAs, and have argued that between 2001 and 2008, when the executive order was in place, no federal projects suffered significant labor problems, delays or cost overruns attributable to the absence of PLAs. According to those who oppose PLAs, the agreements place restrictions on the hiring and working practices of contractors, and can lead to increased costs for project owners. One of their objections to PLAs is that the agreements require contractors to pay into union benefit plans and obey union work rules. In addition, they oppose the use of PLAs to restrict hiring on projects to construction workers selected by unions through union hiring halls, stating that this does not increase the quality of worker as all those who are licensed in a craft have at least the same level of education and skill, regardless of whether they belong to a union.
Another point of debate is the proportion of construction workers who are unionized. According to opponents, under PLAs contractors must hire their workers through unions, and unionized workers are the majority of those who work on PLA projects, despite non-union workers making up the majority of the construction workforce. Estimates of the percentage of construction workers who are non-union, cited by opponents of PLAs, are around 85%, based on figures from the U.S. Department of Labor Bureau of Labor Statistics, and more recent data puts this figure at 86.9%. This figure is disputed by supporters of PLAs, who state that the figures given by those in opposition to PLAs are misleading and are based on census data that encompasses too broad a concept of a construction worker. According to a study by Cornell University
Cornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
in 2010, cited by Mary Vogel, executive director of the Construction Institute, as much as 60% of construction labor is unionized.
A number of politicians do not agree with the use of the agreements for publicly funded construction projects, and have introduced bills or executive orders that prohibit using the agreements for government projects or prevent the use of public funds for projects using PLAs. These include Louisiana Senate Bill 76, introduced by Senator Danny Martiny, to prohibit state governments from requiring a PLA for projects with government funding. This bill was passed in June 2011, making Louisiana the 5th state in 2011 to ban government requirements that contractors use PLAs for publicly funded construction projects.
Impact on cost
A main argument has been the impact of PLAs on project cost. Those who oppose PLAs state that the agreements impact competition for project bids, reducing the number of potential bidders as non-union contractors are less likely to bid due to the potential restrictions a PLA would pose. According to opponents of the agreements, the reduced competition leads to higher bids and a higher cost for the project owner. In addition, opponents argue that the cost may also be increased due to contractors having greater expenses under a PLA. For example, according to Max Lyons of the Employee Policy Foundation, the cost of a project under a PLA is increased up to 7%, since contractors are required to pay their employees the union wage, rather than the government-determined prevailing wage. Opponents have also argued that there is evidence to show that PLA mandates add costs by forcing non-union contractors to pay into union benefit plans and their existing benefit plans. Supporters of PLA use argue that the end cost of projects is not increased if a PLA is in place, compared to projects without such an agreement, since the agreements prevent cost overruns. In response, opponents of the agreements cite examples of projects a PLA was in place and costs overran including Boston's Big DigBig Dig
The Central Artery/Tunnel Project , known unofficially as the Big Dig and as the Big Dug since completion, was a megaproject in Boston that rerouted the Central Artery , the chief highway through the heart of the city, into a 3.5-mile tunnel...
project, Safeco Field
Safeco Field
Safeco Field is a retractable roof baseball stadium located in Seattle, Washington. The stadium, owned and operated by the Washington-King County Stadium Authority, is the home stadium of the Seattle Mariners of Major League Baseball and has a seating capacity of 47,878 for baseball...
in Seattle, and the San Francisco International Airport
San Francisco International Airport
San Francisco International Airport is a major international airport located south of downtown San Francisco, California, United States, near the cities of Millbrae and San Bruno in unincorporated San Mateo County. It is often referred to as SFO...
. Three studies carried out on PLA use in school construction by the Beacon Hill Institute
Beacon Hill Institute
The Beacon Hill Institute is the research arm of the Department of Economics at Suffolk University in Boston. It was founded in 1991 by businessman and Republican politician Ray Shamie. The institute, considered to be fiscally conservative, draws on faculty and student resources to analyze issues...
in 2003, 2004 and 2006, found that costs were increased by up to 20% in projects in Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
, Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
and New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
where PLAs were used. A 2009 study of PLAs use, carried out by Rider Levett Bucknall to determine whether PLAs should be used in the U.S. Department of Veterans Affairs' construction projects, found that costs would increase if PLAs are used for construction projects in locations where union membership is low. According to their analysis, in areas including Denver, Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
, New Orleans,
Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
, and Orlando, Florida
Orlando, Florida
Orlando is a city in the central region of the U.S. state of Florida. It is the county seat of Orange County, and the center of the Greater Orlando metropolitan area. According to the 2010 US Census, the city had a population of 238,300, making Orlando the 79th largest city in the United States...
, where unions do not have a great presence, use of PLAs for projects would lead to cost increases from 5% to 9%. In two cities, San Francisco and New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, where unions have a great presence, the study predicted mixed results regarding potential cost savings ranging from small project cost increases to small cost savings.
Impact on competition
Opponents of PLAs state that the agreements impact competition for project bids, which can lead to higher costs. It is argued by those who oppose PLAs, such as former ABC president Henry Kelly, that PLAs discourage if not prevent non-unionized contractors from competing for construction projects, particularly federal projects. Competitive bidding statutes discourage public sector PLAs from discrimination between non-union and union contractors, as discrimination between bidders would typically represent a violation of such statutes. Non-union contractors have been awarded contracts on public sector PLA projects, for example the Boston Harbor project. In the United States Supreme Court ruling on the use of a PLA for the Boston Harbor project, it was stated that project owners are within their rights to choose a contractor who is willing to enter into a pre-hire agreement, and that contractors have a choice whether or not they wish to enter such an agreement. However, in a subsequent case the Supreme Court observed the following limitation on the Boston Harbor holding, "In finding that the state agency had acted as a market participant, we stressed that the challenged action "was specifically tailored to one particular job.""PLAs often require all companies to obtain their workers from union hiring halls, though the union controlling this employee referral system may not discriminate on the basis of a worker's union or non-union status. It is often the case, however, that the hired employees must join a union, usually for the duration of the project. PLA opponents argue that the union control of hiring prevents a non-union contractor for using its own employees. The increased cost to contractors and the impact on their workers of joining a union, is said by opponents of PLAs to discourage non-union contractors from bidding on projects with a PLA. For instance, a project in Ohio in 2010, to build dormitories for two schools saw an increased number of bids when a PLA was no longer required, and the bid prices were 22% lower than they had been when a PLA was in place.
Local impact
According to supporters, PLAs can be used by public project owners like school boards or city councils to set goals for creating local jobs and achieving social welfare goals through the construction projects they apply to. PLAs may include provisions for targeted hiring and apprenticeship ratio provisions. According to proponents, by including requirements for a certain proportion of local workers to enter union apprenticeship programs working on the construction program, PLAs can be used to help local workers gain skills. The term "Community Workforce Agreement" (CWA) may be used to describe PLAs with community-focused provisions. Proponents state that Community Workforce Agreements re-inject the tax dollars paying for these infrastructure projects back to the communities. Those who oppose PLAs have pointed to examples such as the construction of the Yankee StadiumYankee Stadium
Yankee Stadium was a stadium located in The Bronx in New York City, New York. It was the home ballpark of the New York Yankees from 1923 to 1973 and from 1976 to 2008. The stadium hosted 6,581 Yankees regular season home games during its 85-year history. It was also the former home of the New York...
and the Washington Nationals Ballpark, for both of which community focused agreements were in place but the goals of local hiring and resources to be provided to the community were not met. According to a report for the DC Sports & Entertainment Commission, the PLA for the Nationals Ballpark failed to meet its three main goals of local workers performing 50% of journeyman hours, apprenticeships provided to city residents only, and apprentices to carry out 25% of the work hours on the project. According to groups such as ABC, since the PLAs require that workers are hired through the unions and there are much fewer union workers, this can mean that meeting local hiring goals is impossible.
Impact on minority contractors
A number of women and minority contractor groups oppose project labor agreements, arguing that PLAs disproportionately impact small businesses, particularly those owned by women and minorities. These groups argue that PLAs are anti-free-market and discriminatory. In particular, groups including the National Association of Women Business Owners, have voiced their opposition to PLAs, and in 1998, there was a House hearing dedicated to the issue of minority groups' opposition to government-mandated PLAs. The National Black Chamber of Commerce opposes the use of PLAs due to the low numbers of black union members in the construction industry. According to the NBCC, implementing PLAs leads to discrimination against black workers who are generally non-union workers and also prevents contractors from using casual laborers. According to the United States Pan-Asian American Chamber of Commerce, the majority of their membership comprises small businesses that are unfairly impacted by PLAs, particularly due to increased costs and lowered employee benefits.Research and reports
A number of studies and reports have been published, aiming at identifying the impact of PLAs.In addition to academic research, reports have been produced by government agencies and individuals on behalf of state or federal government. In 1998 the Government Accountability Office
Government Accountability Office
The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...
produced a report on PLAs that noted an overall lack of data but reported that both “proponents and opponents of the use of PLAs said it would be difficult to compare contractor performance on federal projects with and without PLAs because it is highly unlikely that two such projects could be found that were sufficiently similar in cost, size, scope, and timing.” The GAO report concluded that it would be difficult to draw "any definitive conclusions" on the impact of PLAs on performance. More recent reports include a favorable study of PLAs from the Cornell University School of Industrial and Labor Relations
Cornell University School of Industrial and Labor Relations
The New York State School of Industrial and Labor Relations is an industrial relations school at Cornell University, an Ivy League university located in Ithaca, New York, USA...
, in 2009, reports produced by the Beacon Hill Institute since 2003, which conclude that PLAs increase costs of projects, and an analysis published by the National University System Institute for Policy Research, which found that PLAs increased the cost of school construction in California.
In addition to studies examining the use of PLAs and their impact, reports are available detailing the history of PLA use and the arguments for and against their use. Reports examining the history of PLA use, include a 2001 California State Library
California State Library
The California State Library collects, preserves, generates and disseminates a wide array of information. It was founded in 1850 by the California State Legislature. Today, it is the central reference and research library for state government and the Legislature. The California State Library...
report, compiled for California State Senate
California State Senate
The California State Senate is the upper house of the California State Legislature. There are 40 state senators. The state legislature meets in the California State Capitol in Sacramento. The Lieutenant Governor is the ex officio President of the Senate and may break a tied vote...
, which recounts the history of PLAs in California and uses case studies to examine the features of public and private PLAs. In a 2001 University of Pennsylvania Journal of Law article, the author outlines the arguments on either side of PLAs and evaluates the state of the law since the 1993 Boston Harbor case decision. The article finds that while there are benefits to PLA use, they can present risks and should only be allowed on projects where they will further the goals of competitive bidding statutes, namely timely, efficient, high quality, and inexpensive construction.
Reports supporting PLAs
Studies have found that PLAs offer benefits to project owners and local communities, and do not disadvantage nonunion contractors and employees. A 2009 study by Fred B. Kotler, J.D., Associate Director of the Cornell University School of Industrial and Labor RelationsCornell University School of Industrial and Labor Relations
The New York State School of Industrial and Labor Relations is an industrial relations school at Cornell University, an Ivy League university located in Ithaca, New York, USA...
found that there is no evidence that PLAs discriminate against employers and workers, limit the pool of bidders, and raise construction costs. In a 2009 report by Dale Belman, of Michigan State University; Matthew M. Bodah of the University of Rhode Island and Peter Philips of the University of Utah, the authors stated that rather than increase cost, the agreements provide benefits to the community. According to their report, project cost is directly related to the complexity of a project, not the existence of an agreement. They found that PLAs are not suited to all projects, but some projects are good candidates for their use, such as highly complex construction projects. Studies have also considered how PLAs may benefit communities through hiring locals. In a paper focused on whether PLAs for projects developed by the Los Angeles Community College District (LACCD), the Los Angeles Unified School District (LAUSD), and the City of Los Angeles met local hiring goals, the author found that the goal of 30% local hires set by the PLAs was met.
Reports and studies addressing the cost impact of PLAs on construction projects have found that they may not lead to greater costs, such as a 2002 paper by the Harvard University Joint Center for Housing Studies, which states that the increased costs cited by opponents of PLAs is based on bids rather than end costs. According to the paper, a project's end costs would usually be higher than bid costs due to expenses that arise during construction. In addition, a 2004 report by the Director of General Services for Contra Costa County, California reported that bids for five of eight projects subject to a PLA were lower than the architect/engineer cost estimate. In 2004 a report written on the use of PLAs in Iowa
Iowa
Iowa is a state located in the Midwestern United States, an area often referred to as the "American Heartland". It derives its name from the Ioway people, one of the many American Indian tribes that occupied the state at the time of European exploration. Iowa was a part of the French colony of New...
states that PLA use increases efficiency and cost effectiveness of construction projects. "Public-sector PLAs on complex projects or projects where timely project completion is important have been shown to provide the performance desired by contractors and project managers, who repeatedly use them." A 2009 paper concluded that there was difficulty in identifying the effect of PLAs on cost in construction of schools, due to the differences between schools built with PLAs and those built without them. The report stated that there was not any statistically significant evidence for an increase in costs for school construction.
Reports on the legal considerations affecting PLAs make the case that PLAs are an effective tool for labor relations. In a report in 1999, on the legality of PLAs, the authors stated that PLAs "serve as a productive and stabilizing force in the construction industry.” This is supported by a UCLA study that challenged findings of the Beacon Hill Institute on PLAs, which found that in the private sector, the usage of PLAs "creates continuity and stability of the work force at the job site".
Reports opposing PLAs
Several studies by the Beacon Hill InstituteBeacon Hill Institute
The Beacon Hill Institute is the research arm of the Department of Economics at Suffolk University in Boston. It was founded in 1991 by businessman and Republican politician Ray Shamie. The institute, considered to be fiscally conservative, draws on faculty and student resources to analyze issues...
(BHI) at Suffolk University in Boston, Massachusetts have concluded that PLAs increase construction costs. Studies in 2003, 2004 and 2006 examining the impact of PLAs on school construction in Massachusetts, Connecticut and New York, respectively, found that where PLAs were in use construction costs were increased, even when controlling for the size of project and type of school. The September 2003 study by the institute found that use of PLAs created a cost increase of almost 14% increase compared to a non-PLA project. The following year their study of PLAs in Connecticut found that PLAs increased costs by nearly 18 %. A May 2006 study by BHI found that the use of PLAs on school construction projects in New York between 1996 and 2004 increased construction costs by 20%. This study controlled for the size of the project and type of school. A report on PLAs by BHI, published in 2009, examined whether claims made in Obama's executive order that PLAs have a positive economic impact are correct. The report considered the findings of the institute's studies, further case studies of PLA and non-PLA projects and addressed
criticisms of their previous studies and concluded that the justifications for PLA use in the executive order were not proven. In particular the report concluded that there was no economic benefit to taxpayers in using PLAs.
An independently-reviewed 2011 study by The National University System Institute for Policy Research analyzed the cost impact of PLAs on school construction in California from 1996 to 2008. The study analyzed 551 school construction projects and is reportedly the largest study of PLAs to have been undertaken to date. It found that the use of PLAs added between 13% and 15% to construction costs, which would represent a cost increase of between $28.90 and $32.49 per square foot when adjusted for inflation. In 2010, the New Jersey Department of Labor studied the impact of government-mandated PLAs on the cost of school construction in New Jersey during 2008, and also found that school construction projects where a PLA was used had higher costs, per square foot and per student, than those without a PLA.
Earlier studies also found increased costs when PLAs were used, including a study in 2000 of a Nevada Water Authority project PLA, which found that the project cost an additional $200,000 because the true low bidder refused to sign the PLA. The project then went to a union contractor whose bid was $200,000 higher. Also in 2000, a study commissioned by the Jefferson County, New York
Jefferson County, New York
Jefferson County is a county located in the U.S. state of New York. As of the 2010 census, the population was 116,229. It is named after Thomas Jefferson, third President of the United States of America, and president at the time the county was created in 1805...
Board of Legislators examining the potential use of a PLA for the Jefferson County Courthouse Complex concluded that a PLA could result in additional costs of more than $955,000. The total estimated increase of costs for the projects, should a PLA be used, would have represented 7% of the total cost of the project.
In addition to increased costs of projects, studies have found that PLAs can lead to greater costs for nonunion contractors and can lower their employees' take home pay. A study was produced in 2009 by John R. McGowan of Saint Louis University, which found that nonunion workers on government projects with a PLA in place have reduced wages, compared with what they would receive for work on a non-PLA government project. In addition, nonunion employers would have to pay for additional benefits that their employees would be ineligible for and might be liable for pension fund withdrawal liability costs if the terms of the PLA mean they have to contribute to a union pension fund for the duration of the project.
PLAs also may impact competition by discouraging nonunion bids, according to studies including a September 2001 study by Ernst & Young, commissioned by Erie County, New York
Erie County, New York
Erie County is a county located in the U.S. state of New York. As of the 2010 census, the population was 919,040. The county seat is Buffalo. The county's name comes from Lake Erie, which in turn comes from the Erie tribe of American Indians who lived south and east of the lake before 1654.Erie...
. This study analyzed the impact of PLAs on public construction projects and concluded that the number of bidders was reduced for projects with a PLA, as "the use of PLAs strongly inhibits participation in public bidding by non-union contractors." The Worcester Municipal Research Bureau produced a report in 2001, based on a number of studies of PLA use. The report stated that PLAs reduced the number of bidders on construction projects, and led to lower savings than would be possible where contractors are able to work under their usual arrangements for employees. In March 1995, an ABC study of the taxpayer costs for Roswell Park Cancer Institute in Buffalo, New York, assessed bids for the same project both before and after a PLA was temporarily imposed in 1995. It revealed that there were 30% fewer bidders to perform the work and that costs increased by more than 26%.
In terms of wider economic impact, a November 2000 Price Waterhouse Coopers study requested by the Los Angeles Unified School District was not able to confirm whether the project stabilization/labor agreement for the district's Proposition BB construction had produced either a positive or negative economic impact. In March 2006, the Public Interest Institute released a study that concludes that the PLA agreed for the construction of the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.