Review of District of Columbia Project Labor Agreements

1 April 6, 2010  Federal Construction, Uncategorized

As members of the D.C. Council review the misleadingly named District Resident Employment and Trade Stimulus Act of 2010 (Bill 18-650), which would require project labor agreements (PLAs) on D.C. construction projects that cost more than $200,000 and receive government assistance, it is important to review the limited, yet poor, history Washington, D.C., has had with PLAs.

Research in “The Problem with PLAs in the District of Columbia” uncovered just two D.C.-funded projects — the Washington Nationals Stadium and the D.C. Convention Center — that have been subject to federal, state or local government-mandated PLAs.

Washington Nationals Stadium
DC Progess released a report criticizing the performance of the government-mandated PLA on the Washington Nationals Stadium (“The True Cost of the Washington Nationals Ballpark Project Labor Agreement“).

“This report exposes the problems that PLAs present for DC taxpayers, as well as unemployed, and underemployed residents. Specifically, it focuses on the broken promises of the D.C. Ballpark PLA, in order for policymakers, stakeholders in the local economy, and citizens to understand the burdens that PLAs impose on state and city governments. The Nationals Park PLA created a huge barrier for the District’s non-union workforce: 85 percent of construction workers and 95 percent2 of minority-owned contractors were left out of the work.

The agreement was supposed to bring new jobs and on-the-job training for District of Columbia residents, particularly local small and minority businesses. Unfortunately the PLA, by its very nature, is set up to fail on the very goals it sets out. Many jobs went to out-of-town workers, and many minority-owned businesses were shut out from the beginning.

The PLA established three main goals to track and measure the PLAs success in job creation. However, only one goal was met during the Stadium’s construction.”

According to the report, the PLA did little to control ballpark construction costs.

“…the cost of construction was also increased substantially as a result of the reduced competition which resulted from the union-only PLA. The cost of the ballpark may reach $800 million, more than double the initial cost estimate of $395 million. The union-only PLA increased costs by reducing the pool of potential bidders. Future PLAs will do the same.”

The DC Progress report’s criticism of the Nationals Stadium PLA is similar to concerns raised in an Oct. 2, 2007, study by the District Economic Empowerment Coalition (DEEC), “Broken Promises, Big Losses: The Story of DC Workers Watching from the Dugout as the $611 Million Washington Nationals Ballpark is Built.”

The DEEC study found that non-D.C. residents worked 506,926 journeyperson hours (71.1 percent of total journeyperson hours), while D.C. resident worked just 206,444 journeyperson hours (28.9 percent), far below the PLA requirement that D.C. residents work 50 percent of total journeyperson hours.

Additionally, the study found that half of the contractors involved in the project have hired no new apprentices, and of the companies that hired new trainees, only 17 of 56 met the PLA requirement that 100 percent of new apprenticeships go to D.C. residents.

Finally, a September 2006 Beacon Hill Institute study, “Washington Nationals’ Ballpark: Cost and Timeliness Implications of Using a Project Labor Agreement,” questioned the wisdom of using a PLA on the stadium, finding, that the Nationals Stadium construction would:

“…benefit from lower costs, without sacrificing quality or timeliness, by not using a PLA and introducing more competition into the process.”

D.C. Convention Center
Before the Washington Convention Center construction project entered into a PLA, estimated costs stood at $650 million.  After the PLA, actual construction costs reached $850 million.

Qualified and local nonunion contractors and their employees did not bid on the project due to the PLA. Instead, the construction manager imported numerous out-of-town union contractors to perform various trade work. The project produced fewer economic benefits and generated fewer job opportunities for local workers than would have been the case without a PLA.

In April 2001, midway through PLA construction, part of the convention center roof collapsed. Engineers probing the collapse ultimately determined that improper installation of a 180-foot steel truss by unionized ironworkers employed by an out-of-town contractor contributed to the collapse. The supplier of the steel, Havens Steel of Kansas City, later declared bankruptcy.

See packet of supporting information here.

Wilson Bridge
The report did not cover the $2.4 billion Woodrow Wilson Bridge, a federally assisted project replacing the bridge spanning the Potomac River between Maryland and Virginia and updating four major bridge-related interchanges. The project’s bridge superstructure contract was temporarily subjected to a union-favoring PLA requirement by former Maryland Governor Parris Glendening (D). Originally estimated to cost $450 million to $500 million, in Dec. 2001 the Wilson Bridge’s superstructure contract received just one bid at a price of $860 million – more than $370 million more than engineering estimates, a 78 percent cost overrun.

The PLA was subjected to a legal challenge and related controversy involving the White House and elected officials in Maryland and Virginia. Eventually, the Wilson Bridge superstructure project was rebid without the government-mandated PLA into three smaller bid packages. In Oct. 2002, multiple bids were received on each of the smaller contracts by union and nonunion firms, and the winning bids came in significantly below the engineering estimates. While the bridge was delayed more than a year for re-bidding, it was eventually completed below the original budget and completed on-time.

The Wilson Bridge controversy demonstrates how government-mandated PLAs can reduce competition and increase costs on major infrastructure projects in the Washington, D.C., metropolitan area. Learn more about the Wilson Bridge here.

PLAs on Future Federal Projects
The failure of PLAs in the D.C. market is pertinent to future decisions concerning government-mandated PLAs on three federal projects identified in the U.S. General Services Administration (GSA) Procurement Instructional Bulletin (PIB) 09-02 memo.

The projects listed in the GSA’s PIB 09-02 memo are:

  • 1800 F Street (GSA headquarters) – Approx. award amount of $159.29 million
  • Lafayette Building on 811 Vermont, Ave, NW – Approx. award amount of $106.27 million
  • Department of Homeland Security (DHS) Headquarters Campus at the former St. Elizabeth’s Hospital facility – Approx. award amount of $93.45 million readers may remember that on Feb. 4, 2010 the GSA cancelled the Lafayette Building solicitation in response to a bid protest contractors submitted with the Government Accountability Office (GAO) against the GSA’s dual bidding/PLA requirement. Similar to the outcome of the bid protest issued against the U.S. Department of Labor Job Corps Center in Manchester, N.H., the GSA opted to cancel the solicitation instead of proceeding (and create construction jobs) without a PLA.

The GSA issued a new solicitation March 24, 2010 that permits contractors to submit bids with a PLA, without a PLA, or both — increasing competition among all firms, regardless of whether they will sign a PLA:

“Offerors will be invited to submit a proposal subject to PLA requirements (a PLA offer), a proposal not subject to PLA requirements, or both. If a PLA proposal is accepted by GSA, the awardee shall be required to execute a Project labor Agreement (PLA) with one or more appropriate labor organizations for the term of the resulting contract.”

With just 12 percent of the D.C. construction workforce belonging to a labor union, multiple city or federal government-mandated PLAs in the D.C. market likely will exhaust the unionized labor pool in D.C.  Because PLAs give preference to  out-of-town labor ahead of local and qualified nonunion construction workers, D.C. residents stand to lose the most from these special interest schemes.

PLAs make little economic sense for the D.C. workforce and economy. Since Feb. 2009, 25 percent of the D.C. construction workforce suffered job losses.  PLAs will not create jobs for unemployed nonunion construction workers, and taxpayers will shoulder additional construction costs due to anti-competitive PLAs.

Update, March 11, 2013: Evidence suggests PLAs on federal projects in DC have failed at hiring DC residents, despite promises by PLA advocates.

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