High Court Strikes Down PLAS
In what can only be described as a victory for workers and taxpayers alike the US Circuit Court of Appeals ruled that the state of Michigan has the right to ban government-mandated Project Labor Agreements (PLA’s), overturning a lower court ruling from 2012.
After the 2010 election, new governor Rick Snyder and a Republican legislature introduced and passed into law Public Law Act which banned PLA’s but was soon challenged by the Michigan Building and Construction Trades Council, AFL-CIO, and the Genesee, Lapeer and Shiawassee Building and Construction Trade Council, AFL-CIO. These groups had a vested interest in preserving these expensive, anti-competitive, taxpayer funded contracts that were sweetheart deals between government and unions.
Numerous research journals have highlighted the problems of PLA’s. Here are just a few:
• California school construction projects built using government-mandated PLAs experienced increased costs of 13 percent to 15 percent, or $28.90 to $32.49 per square foot, compared to projects that did not use a PLA. (National University System Institute for Policy Research (NUSIPR))
• PLAs significantly increase construction costs on federal projects. Had President Obama's pro-PLA Executive Order 13502 been in effect in 2008, and all 2008 federal construction projects worth $25 million or more had been performed under PLAs, it would have increased the cost to federal taxpayers by $1.6 billion to $2.6 billion. In addition, the BHI review of federal construction projects from 2001-2008 (Beacon Hill Institute)
• Bidder participation was diminished because the county chose to utilize a PLA. Further, the use of PLAs adversely affects competition for publicly bid projects to the likely detriment of cost-effective construction. Our research revealed that the use of PLAs strongly inhibits participation in public bidding by non-union contractors and may result in those projects having artificially inflated costs (Ernst and Young)
Chris Fisher, President of the Associated Builders and Contractors (ABC) of Michigan said of the decision:
“This landmark decision ends union-based discrimination in the Michigan construction industry and ensures taxpayers get the fiscal accountability they deserve…This decision has national implications and makes crystal clear that Michigan and other states can pursue equal opportunity in public contracting regardless of labor affiliation.”
Governor Rick Snyder, who inherited tsunami of problems from predecessor Jennifer Granholm is slowly trying to put the Great Lakes state back together. With this assist from the courts, Michigan can continue to build on the reforms that will help move the state back towards growth and prosperity.