BILL ANALYSIS �
AB 1804
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Date of Hearing: April 11, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1804 (Valadao) - As Introduced: February 21, 2012
SUBJECT : Public contracts: public entities: project labor
agreements.
SUMMARY : Repeals existing provisions authorizing local public
entity use of project labor agreements (PLAs) in construction
contracts. Specifically, this bill :
1)Repeals provisions authorizing a public entity to use a
project labor agreement for a construction project, subject to
five specified taxpayer protection provisions.
2)Repeals provisions authorizing a public entity to enter into a
project labor agreement and allocate funding thereto by
majority vote of its governing board, which may not be
superseded by any charter, provision, or initiative except
where the public entity is a charter city.
3)Repeals provisions prohibiting the use of state funding or
financial assistance in cases where a charter provision,
initiative, or ordinance of a charter city prohibits the
governing board of the public entity from considering or
entering into a project labor agreement.
4)Declares the statute to be an urgency measure that would take
effect immediately.
EXISTING LAW:
1)Sets forth the requirements for the solicitation and
evaluation of bids and the awarding of contracts by public
entities.
2)Authorizes a public entity to use, enter into, or require
contractors to enter into, a project labor agreement for a
construction project, if the agreement includes specified
taxpayer protection provisions.
3)Provides that if a charter provision, initiative, or ordinance
of a charter city prohibits the governing board's
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consideration of a project labor agreement for a project to be
awarded by the city, or prohibits the governing board from
considering whether to allocate funds to a city-funded project
covered by such an agreement, then state funding or financial
assistance may not be used to support that project, as
specified.
FISCAL EFFECT : Unknown. This bill is keyed fiscal.
COMMENTS :
1)This bill aims to repeal the entirety of SB 922 (Steinberg),
Chapter 431, Statutes of 2011, which was enacted to protect a
local public agency's access to the use of PLAs under
specified conditions. The bill is author-sponsored.
2)According to the author, "AB 1804 would repeal the provisions
of Chapter 2.8 of Part 1, Division 2 of the Public Contract
Code, which currently punishes those charter cities and
taxpayers who have voted not to use a Project Labor Agreement
(PLA) on their public works projects, by categorically denying
any state funding for those projects. This policy undermines
taxpayers by placing collectively bargained terms and
conditions ahead of an open public bidding process and
sacrifices the idea of the best price being a specification
for winning a contract. Local control should be restored by
repealing the provisions that hinder the will of the people
and discourage open bidding and financial soundness of public
works contracts."
3)A project labor agreement is defined as a "prehire collective
bargaining agreement that established terms and conditions of
employment for a specific construction project or projects"
and falls within certain parameters specified in federal law.
The terms of a PLA are available to all of the contractors and
subcontractors who successfully bid on the project. PLAs are
agreements negotiated in advance between a construction
project's managers and workers, and establish the wage rates
and benefits of all employees working on the project. They are
also used to prevent strikes, lockouts, or other work
stoppages during the life of the project. The terms of a PLA
apply to all contractors and subcontractors, whether union or
non-union, who successfully bid on the project, and supersede
any existing collective bargaining agreements.
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Before any workers are hired on a project with a PLA,
construction unions and contractors bargain to determine the
wage rates and benefits of all employees working on the
particular project and agree to prevent any strikes, lockouts,
or other work stoppages for the length of the project. The
terms of the agreement apply to all contractors and
subcontractors who successfully bid on the project, and
supersede any existing collective bargaining agreements.
PLAs are used on both public and private projects, and their
specific provisions are tailored by the contracting parties to
meet the needs of a particular project. PLAs typically
require that nonunion workers pay dues for the length of the
project and that the contractor follow union rules on
pensions, work conditions and dispute resolution. Many PLAs
also require that employees hired for the project be referred
by the union hiring halls, though most of these allow for
alternate hiring mechanisms, including retention of a
contractor's key employees.
On February 6, 2009, U.S. President Barack Obama issued
Executive Order 13502 encouraging the use of PLAs on federal
projects of $25 million or more.
4)Backers of PLAs contend that the agreements are tools for
creating local jobs, encouraging open and efficient
competition, and ensuring the efficient use of public funds.
PLAs establish common work rules, schedules, and dispute
resolution processes for every worker on a project before
construction starts, and bar strikes, lockouts, and other
disruptions.
Some critics of PLAs want to ban their use for public
construction projects, arguing that PLA requirements are
inconsistent with the principle of awarding public contracts
to the lowest bidder. Voter-approved initiatives have banned
PLAs in San Diego County and in the Cities of Chula Vista and
Oceanside. The City Council of Fresno and the Boards of
Supervisors in Orange County, Placer County and Stanislaus
County have all banned PLAs by ordinance.
5)The law targeted for deletion by this bill, SB 922
(Steinberg), authorized a public entity to use, enter into, or
require contractors to enter into, a PLA for a construction
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project, if the agreement includes specified taxpayer
protection provisions (a ban on certain forms of
discrimination, open bidding regardless of collective
bargaining status, agreement on drug testing protocols, a
guarantee against strikes and other disruptions, and binding
arbitration). That bill also guaranteed access to the use of
PLAs by majority vote of the governing board of a local public
agency, other local provisions notwithstanding.
Charter cities were exempted from that guarantee, but charter
cities that prohibit consideration of PLAs will be prohibited
from using state funds or financial assistance
in such projects, starting January 1, 2015. SB 922 was passed
by the Assembly on
September 9, 2011, by a 52-27 vote. It was signed by Governor
Brown and chaptered
on October 2, 2011.
The Associated General Contractors support this bill's
deletion of the SB 922 provisions, stating that the measure
"infringed on the right to direct democracy?AGC feels it is
not appropriate for the �L]egislature to punish the citizens
of a local government for passing an initiative and enacting
an ordinance �to prohibit the use of PLA's] that the
legislature does not support."
The California Professional Firefighters oppose the bill,
stating "�t]his bill would repeal specified parameters
relating to project labor agreements (PLAs) that are entered
into by charter cities for publicly-funded construction
projects. PLAs are valuable tools for creating local jobs,
encouraging open and fair competition, and ensuring the
efficient use of public funds. Ultimately, the taxpayer's
interests are best served when PLAs contain fundamental
protections. Because AB 1804 would repeal those protections,
we urge you to oppose this bill."
6)This bill contains an urgency clause, and therefore requires a
two-thirds vote on the Assembly Floor for passage.
7)Support arguments : The California Chamber of Commerce argues
that "SB 922?drives up costs and stalls job-creating
projects?This law �also] effectively attempts to force charter
cities to reject local initiatives and ordinances restricting
project labor agreements. However, such attempts conflict
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with Article XI of the California Constitution?"
Opposition arguments : The California Professional
Firefighters contend that "PLAs are valuable tools for
creating local jobs, encouraging open and fair competition,
and ensuring the efficient use of public funds. Ultimately,
the taxpayers' interests are best served when PLA's contain
fundamental protections."
8)This bill is double-referred to the Committee on Business,
Professions and Consumer Protection.
REGISTERED SUPPORT / OPPOSITION :
Support
American Council of Engineering Companies
Associated General Contractors (AGC)
California Chamber of Commerce
Opposition
California Labor Federation
California Professional Firefighters
State Building and Construction Trades Council
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958