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Maryland Upholds Mandatory Project Labor Agreements for State Construction Projects

In Balfour Beatty v. Department of General Services, the Maryland Court of Appeals upheld the validity of the inclusion of a Project Labor Agreement (“PLA”) as part of a technical proposal for the construction of the Cheltenham juvenile justice facility. 

A PLA is a negotiated pre-hire agreement between a construction manager and a designated collective-bargaining representative for all employees on a particular project. To perform work on a project covered by a PLA, a contractor must sign the plan documents and agree that no labor strikes or disputes will cause a disruption to the construction project. 

In 2011, the State of Maryland Department of General Services (“State”) issued an RFP for a CM at risk to manage the construction process at Cheltenham. The technical proposal requirements provided that any firm submitting an RFP provide at least two examples of projects where they have managed a PLA, and affirm its intent to establish and use a PLA. After a pre-proposal conference in which the PLA process was discussed, protesters filed a joint pre-award bid protest challenging the use of a PLA as an evaluation factor as it unduly restricted competition and had the effect of creating a new procurement policy. The State denied the protests and ultimately awarded the project to Turner Construction. The protestors appealed to the Board of Contract Appeals, which denied the protests.

After a brief stop in the Circuit Court, the case went to Maryland’s highest court. There, the court first concluded that the State had not circumvented its rule making process in requiring a PLA for this project. The court reasoned that the inclusion of the PLA requirement was a “test case” for future construction projects. However, the court did state that “should the BPW determine to adopt a PLA policy with widespread application and future effect, or a de facto policy change is evidenced by the ubiquitous inclusion of PLAs in RFPs, then promulgation through rulemaking may be appropriate.” 

The court also rejected the contention that PLA’s unduly restricted completion. That being said, the protesters had relied upon an expert opinion from Abirban Basu, a Baltimore based economist who is now part of Governor Elect Larry Hogan’s (R) transition team. Mr. Basu offered multiple criticisms of PLAs, claiming that they burden non-union contractors and MBE contractors, result in unsafe work practices and generate large inefficiencies and increased costs. Given Basu’s role as economic advisor to the incoming Governor, it is likely that these criticisms will become State policy as Hogan takes office and that the Cheltenham project will be the one and only PLA project in Maryland in the foreseeable future.

For further information, contact Matt Hjortsberg or Michael Siri at 410-583-2400 or Hjortsberg@bowie-jensen.com or siri@bowie-jensen.com

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