On March 24, 2015, Arkansas Gov. Asa Hutchinson (R) signed into law S.B. 426, the Fair and Open Competition in Governmental Construction Act. This bill codifies an Executive Order issued by then-Gov. Mike Huckabee (R) in 2005 that banned Project Labor Agreement (PLA) mandates as part of any bid for or contract concerning construction projects receiving state financial support.
PLAs are pre-hire collective bargaining agreements with one or more labor organizations that establish the terms and conditions of all employment for a specific construction project — and typically require that all hiring be through unionized firms. Although PLAs can be features of public or private construction contracts, PLA mandates are especially common as part of the bid requirements for government-funded construction projects. At the same time, many groups oppose the use of PLAs, arguing that the agreements discriminate against non-union contractors and neither improve efficiency nor reduce costs of construction projects.
The Arkansas bill, passed unanimously by the state’s General Assembly, bans PLA mandates as part of government-sponsored construction projects. The bill states that its legislative intent is to:
- Provide for the efficient procurement of goods and services by governmental units;
- Promote the economical, nondiscriminatory, and efficient administration and completion of state and state-funded or state-assisted construction projects;
- Provide for fair and open competition for construction contracts, grants, tax abatements, and tax credits awarded by governmental units;
- Prohibit requirements for certain terms in construction contracts awarded by governmental units or supported through grants and tax subsidies and abatements by governmental units;
- Prohibit expenditure of public funds under certain conditions;
- Prohibit certain terms in procurement documents for certain expenditures by governmental units involving public facilities; and
- Provide powers and duties for certain public officers, employees, and contractors.
Other states have expressed similar interest in restricting PLAs. In addition to Arkansas, the West Virginia legislature recently passed similar legislation with bipartisan support — which is awaiting further action by Gov. Earl Ray Tomblin (D). And 20 other states have already passed executive orders or legislation banning PLA mandates in government-funded construction contracts: Alabama, Arizona, Georgia, Idaho, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, and Virginia. States with executive orders — or that have enacted legislation — authorizing or encouraging the use of PLAs on public projects include California, Connecticut, Hawaii, Illinois, Maryland, New Jersey, New York, and Washington.
The federal government, by contrast, issued an Executive Order in 2009 encouraging (but not requiring) PLAs in all federal construction projects. The Executive Order urges federal agencies to consider on a case-by-case basis mandating the use of PLAs on federal construction projects costing $25 million or more. This Order revoked a pair of Executive Orders issued by President George W. Bush in 2001 prohibiting government-mandated PLAs on federal and federally funded construction projects. Many of the recent state-level efforts to restrict PLA mandates are in direct response to the Obama Administration’s Executive Order.