On December 15, 2010, Allentown’s City Council passed a bill that requires contractors to sign project labor agreements (PLAs), as a condition to receiving contracts for work on construction projects sponsored by the City of Allentown. This move makes Allentown the latest in a series of government entities seeking to utilize PLAs on publicly-funded construction projects in Pennsylvania.
The bill will apply to any construction project that is funded in whole or in part by federal or state money and where construction costs will exceed $250,000, not including engineering and architectural costs. Under the bill, contractors must sign a PLA that includes a requirement that they hire employees from local union halls.
What are PLAs?
A PLA is a pre-project agreement between a government entity, like the City of Allentown, and a local building trades council that establishes labor requirements, such as wage rates, common work jurisdictional dispute resolution procedures and uniform work hours, for a specific project.
PLAs are thought to be mechanisms to ensure the timely completion, quality construction of public projects, control the expenditure of taxpayer dollars, protect workers and stimulate the economy.
Critics believe PLAs are driving up construction costs and may give a competitive advantage to union contractors.
Allentown’s PLA Bill
The controversial bill, which passed by a vote of 5-2, was met with much debate between non-union and union supporters.
Supporters say, “the project labor agreements ensure that work is done by highly skilled and highly trained workers, thus protecting taxpayers’ investment.”
Michael Rohrbach, owner of local Allentown concrete company, F.A. Rohrbach believes this bill will drive up costs. He said his “company has done a lot of jobs for the city over the years, but future work would be in jeopardy unless he turns his back on his current employees and hires union workers.”
Legal Implications
Recently, similar bills relating to the implementation of PLAs on projects located in Pennsylvania have been the subject of court challenges, so the ultimate fate of Allentown’s bill remains in question.
A mandatory PLA associated with the U.S. Department of Veterans Affairs’ (VA) {$50 million Research Office in Pittsburgh was challenged by the Associated Builders & Contractors (ABC) in court. The VA voluntarily removed the PLA requirement from the bid documents.
Another mandatory PLA, this time relating to the Pennsylvania Department of Corrections’ $365 million Graterford Prison expansion, was also challenged by the ABC and others. While the Pennsylvania Commonwealth Court upheld the Department of Corrections’ ability to include a PLA in the bid specifications, the challenging parties appealed the decision to the Pennsylvania Supreme Court. The case is still pending.
Also, recently a PLA requirement was challenged in New Jersey with respect to the Armed Services Reserve Center in Camden County. After the challenge was made, the PLA requirement was removed and many more contractors bid on the project, having the obvious effect of creating competition resulting in more competitive bid proposals.
Competition for construction contracts is higher than ever. The Allentown PLA bill could be seen by some as giving a competitive edge to union contractors and to the disadvantage of local taxpayers. Because of this, it is likely that the bill will face a court challenge by a non-union contractor, who is unwilling or unable to sign a PLA in order to bid on an Allentown public project.
If the Allentown PLA bill is upheld by the courts, it is likely that the construction industry will see an increase of cities and localities mandating the use of PLAs on publicly-funded projects.
For more information about PLAs, please contact Marc Furman.