Under protest

March 4, 2019

Pennsylvania bid protest case signals potential change in judicial attitude toward labor unions

I rarely write on labor union issues.

However, I happened upon a bid protest case in a traditionally strong union state, Pennsylvania, and wondered whether the court’s decision, which struck down a mandatory Project Labor Union Agreement (PLA), might signal a change in judicial attitudes toward organized labor in the Commonwealth. Perhaps not, but the case of Allan Myers, L.P. v. Department of Transportation, 2019 WL 165632 (Pa. Commonwealth Jan. 11, 2019) is nevertheless interesting.

On Dec. 20, 2017, the Pennsylvania Department of Transportation (PennDOT) issued a bid solicitation, which also required contractors to sign a PLA with the Building and Construction Council. The PLA obligated contractors to hire through local unions in accordance with the terms of their respective collective bargaining agreements, and included a provision stating that if the successful bidder already has a collective bargaining agreement with United Steelworkers, that bidder was not subject to the hiring requirements under the PLA and is permitted to use its current United workforce.

A non-union contractor filed a bid protest with PennDOT, which was dismissed after deciding the contractor’s arguments were without merit. The contractors appealed, arguing that the PLA was discriminatory because it effectively precludes non-union contractors from bidding and unduly favors contractors affiliated with United. On the first point, the contractor contended that a nonunion contractor wishing to bid is foreclosed from using its own workers because the contractor cannot force its workers to join a union. Furthermore, there was no assurance that the various unions would even allow the contractor’s employees to join, and even if they did, there is no assurance the union would assign the employees back to the contractor at the conclusion of the project. The contractor thus argued that it could not prepare a meaningful bid due to “an unknown workforce.”

On the second point, the contractor pointed out that contractors affiliated with United were unfairly favored because such contractors could use their existing workforces and did not have to hire workers from the local unions. Moreover, whereas the PLA prohibited strikes and lockouts, there was no such prohibition in the United labor agreement. Accordingly, these contractors are essentially operating under a different set of rules than other bidders–union and non-union. The Commonwealth Court of Pennsylvania agreed and ordered PennDOT to cancel the solicitation.

In doing so, it distinguished three prior cases PennDOT cited in which courts had rejected challenges by contractors to the use of mandated PLAs by various public entities within the Commonwealth. In the first case involving the construction of a convention center, the court cited as a “key factor” the public entity’s stated need to complete the facility in the shortest time possible due to the potential loss of both an anchor tenant and state funding. In that case, the contractor challenging the PLA also failed to show any specific discrimination towards non-union contractors. The second and third cases, which involved school and prison construction projects, respectively, also were being built fast-track, and the contractors there failed to prove any specific impact on non-union bidders. Despite standard “time is of the essence” language in PennDOT’s PLA, the court rejected PennDOT’s claim that the project being bid was under critical time constraints and held that no evidence had been produced in this regard.

The court agreed that under the terms of the PLA, United affiliate contractors could fully utilize their current workforces whereas other union and non-union contractors could not. It similarly agreed that the PLA introduced uncertainty in bidding because there existed no guarantee the contractor’s workers could join the local unions, and the contractor possessed no power to make its employees join in any event. The court thus concluded that the PLA requirement in the bid solicitation violates competitive bidding laws.

The court’s decision regarding the mandated PLA hinged on PennDOT’s inability to show extraordinary circumstances surrounding the project that would warrant a PLA and the contractor’s ability to prove specific inequities resulting from the PLA requirement that placed bidders on an unlevel playing field.

I have seen no record that an appeal has been filed, and thus it appears that future challenges to mandatory PLAs will be judged on these two factors.

About The Author: Caudle is a principal in Kraftson Caudle LLC, a law firm in McLean, Va., specializing in heavy-highway and transportation construction. Caudle can be contacted via e-mail at [email protected].

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