California Court of Appeals Holds that Water District Could Include “Project Labor Agreement” in Solicitation Because it Was Not Subject to State Competitive Bidding Statute

Associated Builders & Contractors, Golden Gate Chapter, Inc. v. Contra Costa Water District,
43 Cal. Rptr. 2d 600, 1995 Cal. App. LEXIS 734 (Cal. Ct. App. Aug. 2, 1995)

California county water district performing construction financed under the provisions of state bond law was not subject to state statutes requiring competitive bidding and, therefore, its solicitation for bids which included a “project labor agreement” requiring the work to be performed with union labor was not improper.

A California county water district solicited bids for the construction of a $450 million water system reservoir and pipeline project. The solicitation for bids required all bidders to accept a “project labor agreement” which was included in the contract documents and negotiated between the water district and a local union. The local chapter of the Associated Builders & Contractors (“ABC”) brought this action seeking a declaration that the project labor agreement violates California law which requires the water district to solicit bids in an open and competitive bidding process and to accept the bid from the lowest bidder. The ABC contended that the project labor agreement violates the law in that it would permit the water district to reject the lowest bidder and award the project to a higher bidder if the low bidder was unwilling to be a party to the union contract.

In a narrowly tailored decision, the California Appellate Court held that the defendant, the Contra Costa Water District, was not required by any California statute to award contracts to the lowest bidder where the contract is one for construction of a project financed under the provisions of the California Revenue Bond Law of 1941. The authority of the Revenue Bond Law of 1941, and entrusted to county water districts, are subject to a lowest bidder requirement in the circumstances of this case. Unless that legislative action is taken, we are precluded from imposing such a requirement in this case in light of our Supreme Court’s observation that minimum bidding laws must be strictly construed, and may not be extended beyond the specific provisions enacted by the Legislature.

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