A Project Labor Agreement (PLA) is a contract under which an owner agrees with trade unions that the trade unions will be the sole source of labor for a project in return for assurances from those unions of stable wage rates and labor harmony. A PLA negotiated by a public owner is implemented by notification in the bid documents to all bidders that acceptance of the PLA is a condition of contract award both to general contractors and all subcontractors on the project. A contractor or subcontractor selected for award who refuses to sign the PLA will be denied a contract. The contract or subcontract would go to the lowest responsible bidder willing to sign the PLA. While PLAs differ from project to project, most include the following requirements:
(1) Each contractor/subcontractor must recognize the various trade unions as the sole exclusive representatives of all craft employees working on the project;
(2) Each contractor/subcontractor may employ only workers referred through union hiring halls;
(3) Each contractor/subcontractor must contribute to established union employee benefit funds; and
(4) Each contractor/subcontractor must comply with uniform work schedules, holidays, work assignments and overtime provisions set out in the PLA.
While PLAs do not exclude open shop contractors from bidding, the restriction on labor source and the requirement for paying benefits to union trust funds may discourage their participation in PLA projects. Projects which are subject to PLAs raise many interesting policy questions. A basic purpose of the Massachusetts competitive bidding statutes is to encourage open competition and obtain as many competent bidders so as to assure the lowest price for the public. Public bidding projects subject to PLAs may attract fewer bidders. The question is does the use of a PLA on a project conflict with the purposes of the competitive bidding statutes?
The Supreme Judicial Court dealt with these issues in a decision last year involving a project in Malden for the construction of multiple replacement school buildings. The Court approved the use of a PLA for the project. The Court concluded the size and complexity of the project, and the necessity of precision timing in closing some schools and opening others, made labor harmony crucial to achieve timely completion of all phases. In essence, the Court approved use of PLAs only in extraordinarily complex projects where labor strikes would be disastrous. In that same decision, the Court stated that the ordinary project, such as a construction of a single school, would not justify use of a PLA. In its decision, the Court was willing to accept some restriction on competition as an acceptable trade-off to avoid the threat of strikes where a strike could cause substantial harm for the public.
The Supreme Judicial Court has now ruled that PLAs are legal on Massachusetts public building projects. The question that remains unanswered is how large or complex must a project be to justify its use.
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