Government Neutrality in Contracting Act Seeks to Ban Use of Project Labor Agreements

The Government Neutrality in Contracting Act (HB 436/SB 109) introduced at the beginning of the year seeks to stop government agencies from being able to mandate the use of Project Labor Agreements (PLAs) on Federal and federally funded construction projects. PLAs are collective bargaining agreements used to establish conditions and terms of employment for a specific construction project through one or more labor organizations or unions. Terms for the PLA apply to all contractors and subcontractors who successfully bid on the project and typically include provisions on the use of local labor, diversity requirements for MBEs, SBE’s WBEs, etc., preset wage requirements, uniform work rules, dispute resolution and normalizing shift work. The Government Neutrality in Contracting Act was also introduced during the 112th Congress as HB 735 and SB 119 never made its way never made its way out of committee. A similar bill was also introduced with the same title during the 107th Congress with it being reintroduced in each subsequent session of Congress.

According to the text from HB 436 the purpose of the Government Neutrality in Contract Act is to:

(1) promote and ensure open competition on Federal and federally funded or assisted construction projects;

(2) maintain Federal Government neutrality towards the labor relations of Federal Government contractors on Federal and federally funded or assisted construction projects;

(3) reduce construction costs to the Federal Government and to the taxpayers;

(4) expand job opportunities, especially for small and disadvantaged businesses; and

(5) prevent discrimination against Federal Government contractors or their employees based upon labor affiliation or the lack thereof, thereby promoting the economical, nondiscriminatory, and efficient administration and completion of Federal and federally funded or assisted construction projects.

If passed the bill would basically nullify President Obama’s Executive Order 13502 which encourages federal agencies to require PLAs on federal construction projects that are projected to cost $25 million or more. The debate over the use of PLAs for federal projects is nothing new. In 1992 then President George H.W. Bush issued an Executive Order that banned the use of PLAs on federally funded projects. A year later, President Bill Clinton released an Executive Order allowing the use of PLAs. In 2001 President George W. Bush issued two Executive Orders that reinstated the ban on PLAs. The apparent trend here is that Democratic presidents are pro-PLAs while their Republican counterparts are anti-PLAs.

Legislation regarding PLAs isn’t solely a concern of the federal government. Currently, 18 states have passed legislation prohibiting government entities from mandating the use of PLAs in order for contractors to work on public construction projects. Within the past three months the governors of both North Carolina and South Carolina signed bills into law that prohibit government entities in their respective states from requiring PLAs on public construction projects. They join Arkansas, Arizona, Georgia, Idaho, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Oklahoma, North Dakota, Tennessee, and Utah which already have laws prohibiting the use of PLAs. Other states have legislation that authorizes and/or encourages the use of PLAs such as New Jersey, New York, Washington and Illinois.

Opponents of PLAs argue that their use increases construction costs and are anti-competitive. Since PLAs typically requires all contracting companies involved on the project to rely on a union or unions to act as representatives for their employees it would require nonunion workers to either pay union dues during the course of the project or join the union to work on the project and receive union benefits. They state that the use of union representation discourages competition since nonunion contractors aren’t as likely to bid on projects that require a PLA. Opponents also argue that since union halls are typically used for hiring workers that contractors are required to pay union wages that would result in increased costs. Over a dozen of organizations and groups have come out in support of the Government Neutrality in Contracting Act including the Associated Builders and Contractors, Associated General Contractors, National Association of Women in Construction and the Independent Electrical Contractors.

Proponents for the use of PLAs argue that workers, both union and nonunion, benefit from PLAs because they are protected with pre-established wages and benefits. This is also supposed to create a level field of play for contractors bidding the project since no one can try and underbid a project by offering lower wagers to their employees. Supporters also will argue that construction delays are avoided by being able to quickly resolve labor disputes and also avoid labor shortages by guaranteeing access to skilled labor and a trained workforce which will also result in on-time delivery of the project. Labor costs can also be reduced by utilizing registered apprentices on the construction project. Some of the groups that have come out in favor of the use of PLAs or in opposition of the Government Neutrality in Contracting Act include the AFL-CIO and the Sheet Metal and Air Conditioning Contractors’ National Association.

It is important to note that while the Government Neutrality in Contracting Act would bar government agencies from requiring the use of PLAs, it would not prevent contractors from voluntarily participating in a PLA for federally funded construction projects.

One Response to “Government Neutrality in Contracting Act Seeks to Ban Use of Project Labor Agreements”

  1. The Truth About PLAs August 20, 2013 at 11:09 PM #

    “: Government Neutrality in Contracting Act Seeks to Ban Use of Project Labor Agreements” Accurate analysis.

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