Project Labor Agreements criticized for boosting costs, blocking competition

Legislation that would preclude state government officials from mandating Project Labor Agreements (PLAs) on construction projects is scheduled for a vote today (Monday) in the House.

Although union officials remain sharply critical, Sen. Danny Martiny (R-Metaire) is encouraged by the feedback and support from lawmakers in both parties. Earlier this month, the House and Industrial Relations Committee passed SB 76 with a 6-3 vote. Reps. Herbert Dixon (D-Alexandria), Patrick Williams (D-Shreveport), and Patricia Haynes Smith (D-Baton Rouge) voted no. However, the bill passed the Senate in May with the support of  eight Democrats.

“If a union and a public entity decide to enter into a Project Labor Agreement on their own, they can still do this,” Martiny said in an interview. “This is about maintaining competitive bidding practices and giving everyone a fair shot. All this says is that public entities cannot require PLAs as a pre-requisite for being able to bid.”

Officials with the the Associated Builders and Contractors (ABC) have argued that PLAs, which are exclusive to the construction industry, lock out non-union construction shops. PLAs call for construction contractors, including those non-unionized, to require their employees to be represented by a union on government-funded construction projects.

Even if the bill were to pass, Louisiana would still have to follow federally mandated PLAs. So SB 76 only applies to state agencies.

An executive order from President Obama encourages federal agencies to use PLAs on construction projects costing over $25 million. This reverses an earlier executive order from President Bush that banned PLAs. The concern on the part of ABC is that organized labor can now angle itself into areas of the country that are largely non-unionized at the expense of taxpayers.

Research from the Beacon Hill Institute suggests that PLAs raise construction costs by about 18 percent. Another study from Maurice Baskin, a law partner with Venable LLP in Washington D.C. who represents construction employees, concludes that PLAs both reduce competition and delay project completion.

Renee Baker, the Louisiana director for the National Federation of Independent Business (NFIB) views Martiny’s bill as an effective, much needed piece of legislation.

“If PLAs are mandated that’s an extreme hardship for my small business people,” she said. “That makes it impossible for them to bid, and it takes them out of the game.

But Robert “Tiger” Hammond, president of the Greater New Orleans (AFL-CIO), spoke out against the legislation during the House committee hearing. In response to question from Rep. Dixon, Hammond agreed that Martiny’s bill translated into “union busting” and was too restrictive.

After the Katrina hurricane, the national AFL-CIO came into New Orleans and committed millions of dollars, of its own money, to rebuilding efforts, he recalled.

“The way I interpret the bill, the city could not partner on projects [with unions] even if the city is not putting up the money,” Hammond said.

Although PLAs are yet to take root in Louisiana, a few failed attempts have been made at acquiring Responsible Contractor Ordinances (RCOs) and Responsible Employer Ordinances REOs, which contain language typical to PLAs, according to ABC.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at Follow him on Twitter.