New York State Chapter, Inc. v. New York State Thruway Authority

Decision Date28 March 1996
Docket NumberAFL-CIO
Citation88 N.Y.2d 56,666 N.E.2d 185,643 N.Y.S.2d 480
Parties, 666 N.E.2d 185, 151 L.R.R.M. (BNA) 2891, 64 USLW 2638 In the Matter of NEW YORK STATE CHAPTER, INC., Associated General Contractors of America, et al., Appellants, v. NEW YORK STATE THRUWAY AUTHORITY et al., Respondents. Local 40, International Association of Bridge, Structural and Ornamental Iron Workers,, et al., Intervenors-Respondents. In the Matter of GENERAL BUILDING CONTRACTORS OF NEW YORK STATE, INC., et al., Appellants, v. DORMITORY AUTHORITY OF THE STATE OF NEW YORK et al., Respondents.
CourtNew York Court of Appeals Court of Appeals
OPINION OF THE COURT

KAYE, Chief Judge.

Can public authorities governed by New York's competitive bidding laws lawfully adopt prebid specifications known as Project Labor Agreements (PLAs) for construction projects? We conclude that PLAs are neither absolutely prohibited nor absolutely permitted in public construction contracts. A PLA will be sustained for a particular project where the record supporting the determination to enter into such an agreement establishes that the PLA was justified by the interests underlying the competitive bidding laws. Here, that burden was satisfied by the Thruway Authority but not the Dormitory Authority (DASNY).

Project Labor Agreements

By way of background, a PLA is a prebid contract between a construction project owner and a labor union (or unions) establishing the union as the collective bargaining representative for all persons who will perform work on the project. The PLA provides that only contractors and subcontractors who sign a prenegotiated agreement with the union can perform project work. A PLA thus generally requires all bidders on the project to hire workers through the union hiring halls; follow specified dispute resolution procedures; comply with union wage, benefit, seniority, apprenticeship and other rules; and contribute to the union benefit funds. In return for a project owner's promise to insist in its specifications that all successful bidders agree to be covered by a PLA, the union promises labor peace through the life of the contract (see, Associated Bldrs. & Contrs. v. Massachusetts Water Resources Auth., 935 F.2d 345, 360 [Breyer, Ch. J., dissenting], revd. sub. nom. Building & Constr. Trades Council v. Associated Bldrs. & Contrs. of Mass./R.I., 507 U.S. 218, 113 S.Ct. 1190, 122 L.Ed.2d 565 [the Boston Harbor case].

By comprehensively requiring all bidders to conform to a variety of union practices and limiting their autonomy to negotiate employment terms with a labor pool that includes nonunion workers--attributes that, by their scope, set these agreements apart from more common specifications, like construction materials or design criteria--PLAs have an anticompetitive impact on the bidding process (see, 207 A.D.2d 26, 30, 620 N.Y.S.2d 855; Harms Constr. Co. v. New Jersey Turnpike Auth., 137 N.J. 8, 44, 644 A.2d 76). Because in particular instances there are, however, also efficiencies to be gained, PLAs have been utilized in major construction projects such as the Boston Harbor (Boston Harbor, 507 U.S. 218, 113 S.Ct. 1190, 122 L.Ed.2d 565, supra ), the Cleveland sports complex (Northern Ohio Ch. of Associated Bldrs. & Contrs. v. Gateway Economic Dev. Corp., 1992 WL 119375 [USDistCt, ND Ohio] and the Massachusetts Central Artery/Third Harbor Tunnel (Utility Contrs. Assn. v. Department of Pub. Works, 29 Mass.App.Ct. 726, 565 N.E.2d 459 [1991].

The backdrop for the present appeals is the United States Supreme Court decision in Boston Harbor. Recognizing the uniqueness of the construction industry, Congress in 1959 amended the National Labor Relations Act (NLRA) to permit prehire agreements in private construction contracts (29 USC § 158[f]. At issue in Boston Harbor was whether the NLRA permitted a public authority to require as a prerequisite to the award of a public contract that the winning bidder and its subcontractors abide by a PLA previously negotiated between a labor consultant and the Boston Metropolitan District Building and Construction Trades Council. The Court concluded:

"It is evident from the face of the statute that in enacting exemptions authorizing certain kinds of project labor agreements in the construction industry, Congress intended to accommodate conditions specific to that industry. Such conditions include, among others, the short-term nature of employment which makes posthire collective bargaining difficult, the contractor's need for predictable costs and a steady supply of skilled labor, and a longstanding custom of prehire bargaining in the industry. * * *

"There is no reason to expect these defining features of the construction industry to depend upon the public or private nature of the entity purchasing contracting services. To the extent that a private purchaser may choose a contractor based upon that contractor's willingness to enter into a prehire agreement, a public entity as purchaser should be permitted to do the same." (Boston Harbor, 507 U.S. at 231, 113 S.Ct. at 1198 [citations omitted].)

While Boston Harbor stimulated local and State interest in PLAs, that decision held only that Federal labor law does not prohibit a public entity from using the same NLRA exception as is available to private purchasers of construction services. The decision did not go further to resolve the question before us: whether in light of competitive bidding mandates a public entity can enter into a PLA.

Recently, the New Jersey Supreme Court--the first State high court to decide the question--concluded that PLAs were prohibited by that State's public bidding statutes, which foster "unfettered competition" in public contracts (Harms, 137 N.J. at 44, 644 A.2d at 95, supra; but see, State ex rel. Associated Bldrs. & Contrs., Cent. Ohio Ch. v. Jefferson County Bd. of Commrs., 106 Ohio App.3d 176, 665 N.E.2d 723 [Ohio CtApp1995], appeal dismissed 74 Ohio St.3d 1499, 659 N.E.2d 314 [1996] [PLA did not violate Ohio competitive bidding statute]. Because we have never construed New York's competitive bidding statutes to be so absolute, we answer the question differently.

Statutory Framework

New York has a multitude of procurement statutes applicable to public entities, but the underlying purpose is uniform: to assure prudent use of public moneys and to facilitate the acquisition of high quality goods and services at the lowest possible cost (see, e.g., General Municipal Law § 100-a). This Court has several times revisited New York's requirement for competitive bidding in the disposition of public contracts.

In Gerzof v. Sweeney, 16 N.Y.2d 206, 264 N.Y.S.2d 376, 211 N.E.2d 826, for example, we reviewed a bid specification of the Board of Trustees of the Village of Freeport on a municipal contract that required experience constructing three generators of a specific type. The requirement had the effect of severely limiting competitive bidding for all but one manufacturer. This Court held that the specification violated General Municipal Law § 103, which provided that all contracts for public works were to be awarded to the lowest responsible bidder:

"We do not mean to suggest that specifications for public projects are illegal merely because they tend to favor one manufacturer over another. More must appear in order to render the specifications and the contract based thereon illegal * * * However, an objectionable and invalidating element is introduced when specifications are drawn to the advantage of one manufacturer not for any reason in the public interest but, rather, to insure the award of the contract to that particular manufacturer. * * * Such a scheme or plan is illegal in the absence of a clear showing that it is essential to the public interest." (Id. at 211-212, 264 N.Y.S.2d 376, ...

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