ConstructionPro Week, Volume: 4 - Issue: 3 - 01/23/2015

Do Project Labor Agreements Restrict Competition?

By Bruce Jervis

 

Project Labor Agreements (PLAs) are controversial. These are pre-hire agreements between a general contractor or a construction manager and a designated collective bargaining representative for all labor on the project. Every constructor on the project must sign the PLA and agree to hire workers exclusively through the designated representative, but participation on the project is not limited to union contractors. Labor is not restricted to union members, although non-union labor must be hired through union halls and paid the negotiated rates.

 

A Maryland appellate court recently upheld the imposition of a PLA on a public project even though PLAs are not expressly authorized by state procurement statute or regulation. The court concluded there was conflicting evidence on the effect of PLAs on non-union contractors. It could not be said with certainty that PLAs restrict competition. And, PLAs provide a public benefit by ensuring a supply of skilled labor, providing more predictable labor costs, and allowing greater control over the schedule on large, complex construction projects.

 

What do you think? Is it not disingenuous to say that project labor agreements have no negative effect on non-union contractors? And, isn’t any negative impact restrictive of competition? Or, is the impact minor and offset by the benefits a Project Labor Agreement can bring to a large public project? I welcome your comments.

 

COMMENTS

It has been our experience that PLA's are very difficult to work with as not all labor trades are properly represented thru the unions. I believe that in our case , a PLA required the contractor to hire thru the union , thus all the labor had to join the union and pay union dues. This restricted the use of MEP subs to union only, which in our market was workable, but did exclude a few capable non-union subs. However, non of the finish trades and non of the foundation and structure trades except foundation and one concrete sub were union. This provided all sorts of challenges and did add significant cost and negatively affected the schedule. PLA's should not be allowed on public works projects. IF the state wishes to ensure only qualified subs be allowed to bid on specific mega projects, then there should be a qualification round starting 6 months before a project to announce the upcoming project and announce the criteria for qualifications and solicit submissions to pre-qualify and then require only pre-qualified subs be listed on the bidders bid form similar to the DBE submissions now required on bid day.
Posted by: Richard Dupont - Friday, January 23, 2015 10:19 AM


This point is moot regarding public projects that have any federal funding, as Davis-Bacon stipulations must be adhered to for projects costing $2,000 or more. Davis-Bacon wage determinations are predicated upon Union wages.

There may be some public projects without any federal funding, but PLAs, in those situations, will level the playing field, which is why Davis-Bacon exists, right? So, contractors employing disenfranchised segments of the population cannot swoop into the area and capture bids with rates that local labor cannot match, due to cost of living, etc.

Generally speaking, which probably isn't a good idea, however - generally speaking, one expects to pay more for Davis-Bacon/PLA projects but, at least theoretically, this ensures the local economic base, thereby supporting the entire community from top to bottom.

PLAs exist for the same reason Davis-Bacon exists, correct? They level the playing field and support local economy. They ensure a decent wage, which may result in an independent workforce, which is to say a workforce able to support families without public assistance - Again, theoretically, given cost of living increases. PLAs may also help to eliminate a disenfranchised populace, if all must pay the same wages for the same job in the same area.
Posted by: Helen A. Dinsmore - Friday, January 23, 2015 11:25 AM


To answer your question in simple terms if you have Davis-Bacon the PLA should not be required. I was a non-union sub in CA for many years, paid same wages as the union for all Davis Bacon work. Being a specialized Sub Contractor,pile driving,drilling, marine or land we had an advantage due to the union manning requirements. Union required 7 man crew, we used 5 person crew with safety and in many cases better production rates. Through the lobbying efforts of unions they required that a union General Contractor could only use signatory sub-contractors. 5-7 general contractors bid work, 4-5 were signatory so end of story. Ultimate goal for unions was to eliminate non-union subs. We ultimately signed a union contract with stipulations for how many personnel were needed to drive a pile. Please don't be mislead by PLA's. The labor cost of any operation is how many hours and how many people to do same job. Non-union personnel properly trained can save money on lots of projects.
Posted by: Mike Brenner - Friday, January 23, 2015 12:08 PM


We're a public works prime and typically don't get involved in PLA's. The administrative component, labor redundancy and the inability to use my loyal workforce makes us non-competitive. Most PLA's have different language but one we're involved with now states we pay the $14 benefit package to our employee, again to the union. The union $14 benefit is then returned to us via change order. Indirectly a payoff to the union with public funds. You read that right.

I'm very unclear how PLA's favor anyone but unions. My employees, the very people that are providing the taxes for the projects are restricted from working on said projects. Our lowest paid full time labor makes around $85k a year. He pays a lot of taxes for a kick in the teeth by a Maryland court.

PLA's do not level any playing field period. ANY public works job over $25k is required to pay prevailing wage. PLA's exist solely for the benefit of unions. Whether thru unearned benefit packages, salting of work forces or restricting access to public works projects. The project specs you bid have work rules in them and are riddled threats of fines and disbarment if you attempt to evade proper wage payment.


Posted by: Christopher Johnson - Friday, January 23, 2015 1:20 PM


I believe that PLAs should not be used in any situation. They restrict competition and violate the rights of non-union workers and contractors.

Under a PLA the worker’s rights are violated because in most cases they will never see a dime of the fringe benefit money that is sent to the union trust funds in their behalf. The unions simply keep the money because the workers never become vested.

The non-union contractor’s rights are violated because they are forced to compete on a project with a workforce that they are not familiar with. At a minimum this puts them at a competitive disadvantage. At worst it will cause them pass up on work they are otherwise willing and able to perform. This sounds like a win win for the unions and union contractors. Not for the public and govenment budgets.

Union officials give self serving sales pitches to government officials that a union only project, i.e. PLA, can shorten the duration of a project and reduce costs. If that is true, then a union firm will use these advantages to be the low bidder, with or without a PLA. However, when a well qualified non-union firm that could perform just as well, if not better, chooses not to bid on the project because a PLA is in place it is the public that loses and our free enterprise system gets beaten down even further.
Posted by: Ray Bertelsen - Friday, January 23, 2015 8:36 PM


Davis Bacon Wage rate, open shop contractor are more competitive than Union Rates

Union Contractor are in minority in the marketplace, so if there are 4 Union Drywall companies there are 40 Open Shop Companies that perform prevailing wage project

The rate is approximately the same, but the hours to perform the work are substantially less thereby creating cost saving to either the Federal Goverment or State Goverment
Posted by: Jim Lawson - Saturday, January 24, 2015 9:24 AM


A PLA is organized theft. Nothing more, nothing less.
Posted by: Matthew Hermanson - Saturday, January 24, 2015 10:48 PM


Government-mandated PLAs absolutely discourage competition from qualified merit shop contractors (and some unionized contractors) and their skilled employees. You can learn all about how government-mandated PLAs reduce competition, increase costs, create delays and bring a number of problems to projects (despite promises by pro-PLA lobbyists) at www.thetruthaboutplas.com/get-the-truth/
Posted by: TheTruthABoutPLAs.com - Tuesday, January 27, 2015 11:53 AM


 









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