The Truth About Project Labor Agreements

Who is Hill International and why does it consistently support and promote anti-competitive and costly government-mandated project labor agreements (PLAs)?

In short, Hill International is a corporate PLA pimp. Read on to learn why this isn’t hyperbole.

It Ain’t Easy for Corporate PLA Pimps Like Hill International

Many local, state and federal entities in charge of taxpayer-funded construction contracts are required by law or directed by lawmakers to hire consultants to help them determine if a PLA mandate is appropriate for construction projects.

Hill International, headquartered in Marlton, N.J., is a publicly traded construction management and consulting firm. A division within Hill International called the Project Management Group generates profit by providing reports to government clients whose goal is to obtain justification for a proposed government-mandated PLA.

The reports almost always justify an anti-competitive and costly government-mandated PLA on a project by using false logic to calculate alleged cost savings resulting from concessions made by construction trade unions to inefficient terms in normal collective bargaining agreements (learn more here).  The reports rarely present the legitimate concerns of the merit shop contracting community about the impact of PLAs on their business and workforce, nor do the reports truthfully evaluate the cost of a PLA project when compared to a project bid with fair competition open to the employers of 86 percent of the U.S. construction workforce (those who choose not to join a union).

Firms like Hill International sell their services to taxpayers as an objective consultant to evaluate and implement confusing and often controversial PLA mandates. Yet, their own website makes it clear that it approaches the task of evaluating a PLA with a distinct bias in favor of PLAs:

“Hill helps both public and private organizations who have large, complex construction projects save time and money through a type of collective bargaining agreement called a Project Labor Agreement (PLA). PLAs create efficiencies through standardization of project participant contracts. They help avoid conflict issues between contractors who are working a large project and help protect against strike conditions. Hill will work with all parties on the project, including owners, contractors and unions to unify their contractual relationship. The end result is a tremendous savings in both time and money through standardization efficiency.”

You Get What You Pay For

PLA proponents know that spending taxpayer dollars on a Hill International report will guarantee a government-mandated PLA on a taxpayer-funded project.

For example, Gerald Murphy, former vice president and chief operating officer of the New Jersey Schools Development Authority, made clear Hill’s pro-PLA bias in testimony before the New Jersey Office of Inspector General about his experience with Hill when he was Philadelphia’s deputy mayor for labor:

“We used Hill International for a project labor study over there that Mayor Rendell at the time had an Executive Order that he utilized and [sic] project labor agreements. So to do project labor agreements you usually need some authority to come – you know, a company that comes in that specializes in them that basically can set up the justification for it. So we used Hill.”

– New Jersey Office of Inspector General report, starting on page 11, available here.

Unfortunately, Hill International and similar consultants recommend PLAs not because they are in the public interest, but because they can make a buck off producing these studies and drafting and defending PLA mandates as a high-priced consultant.

For example, on Sept. 30, 2009, the U.S. Department of Labor (DOL) awarded Hill International and Interactive Elements a $300,000 contract to produce a report touting the benefits of government-mandated PLAs on federal construction projects as a result of President Obama’s Feb. 6, 2009, Executive Order 13502 and related FAR Regulations encouraging federal agencies to mandate PLAs on a case-by-case basis for federal construction projects exceeding $25 million in total costs.

The DOL again hired Hill International to produce an Oct. 28, 2010, report justifying a PLA mandate on a DOL Job Corps Center in Manchester, N.H., that cost taxpayers $128,000.  The  report says the firm was retained by the DOL “as an expert witness in anticipation of litigation and to evaluate the viability,” of the PLA, and “to provide assistance to the DOL in defense of its position in the event of litigation…based upon its extensive experience in all aspects of the PLA process in over 40 projects.”

The DOL was forced to drop its PLA mandate after merit shop contractors filed a bid protest with the Government Accountability Office (GAO) against the anti-competitive and illegal scheme. The DOL relied on Hill International’s study justifying the PLA, but was dismayed when GAO officials found flaws in Hill International’s research and recommendations for a PLA, and notified the DOL the PLA mandate would violate federal law if not removed from the solicitation.

Hill International Also Produces Expensive Pro-PLA Reports for State and Local Governments

Hill International doesn’t just make money by producing pro-PLA studies for the federal government; it makes money recommending and managing PLAs with private developers and state and local governments, too.

For example, in 2010 a joint venture between Hill International and LiRo won a $15 million contract to provide services and produce a report for the New York City School Construction Authority (NYCSCA) justifying a PLA mandate on billions of dollars worth of city construction projects. The PLA mandate was subject to a recent unsuccessful legal challenge by union contractors and associations because some union tradespeople and contractors were locked out from participating on school projects subjected to the PLA mandate because they were not part of the PLA drafted by Hill International, the NYSCA and favored construction trade unions controlling the labor supply to these projects. Hill International also produced a pro-PLA report for the NYSCA for an unknown sum in 2005.

In 2007, The Daily Freeman reported that Hill International’s relationship with Ulster County, N.Y., was scrutinized by a special investigating committee after it received $1.64 million in taxpayer money for services like a pro-PLA study, “administering a PLA,” and “compiling a jail project study that consisted of copies of job logs…” for the Ulster County Law Enforcement Center (“Jail probe committee scrutinizes consultant,” 8/29/07)

Hill International also produced costly pro-PLA reports for notable projects like the Tappan Zee Bridge in New York (1996); Washington National’s Stadium in Washington, D.C., (2006); and Pittsburgh’s Baldwin High School (2005), Bristol Borough School District (2007) and Scranton School District (2008), all in Pennsylvania.

And the accuracy of Hill International’s expensive analysis has been questioned by independent stakeholders.

According to a June 2011 report from the Regional Plan Association, Hill International’s March 2009 report, Cost Benefit Analysis of BCTC Economic Downturn Project Labor Agreement, overstated the savings NYC private developers would achieve if they entered into PLAs with construction trade unions on private projects:

When announcing the PLA, its negotiators claimed potential labor savings of up to 20 percent, based on a Hill International consultant study. Based on actual experience, however, most employers interviewed for this study identified realized savings as between 2 and 4 percent. The highest savings cited was 7 percent, calculated by an executive of a large contracting firm. Several developers and contractors denied that the PLAs yielded any savings at all, saying that in practice union workers refused to comply even with such basic principles as a full work day.

Management has been almost universally disappointed with the actual savings achieved—2 to 4 percent rather than the promised 20 percent.

Where Is the Incentive to Provide Objective Analysis?

If Hill International were to recommend against a PLA mandate, other governments would be unlikely to hire the firm to produce a report justifying a PLA mandate. In essence, the gravy train would run dry.

In addition, Hill International could not make additional money drafting a PLA, managing the PLA and serving as an expert witness in legal proceedings. And if Hill were to oppose a PLA, it could damage lucrative construction management relationships with pro-union governments and unionized contractors.

So there is no incentive to tell the truth about government-mandated PLAs.

Hill International and other corporations and consultants engaged in pimping PLAs to governments at the expense of taxpayers and free enterprise need to be exposed and held accountable.

Here is some further reading on Hill International’s flawed methodology and monetary motivation behind its pro-PLA reports:

• Affidavit of Prof. David G. Tuerck, PhD, professor and chairman of economics and executive director of the Beacon Hill Institute at Suffolk University in Boston, before the Government Accountability Office refuting the need for a PLA mandate and the pro-PLA Hill International report. Tuerck debunks Hill International’s methodology starting on page 5, section 9.
• Report by Hill International recommending a PLA mandate on the Manchester, N.H., DOL Job Corps Center project (submitted Oct. 28, 2010).
• Evidence documenting cost to taxpayers for Hill International’s pro-PLA mandate report on the Manchester, N.H., DOL Job Corps Center ($128,000, solicitation number DOLJ109630678 paid in two installments).
• Evidence documenting cost to taxpayers for Feb. 25, 2011, Hill International report promoting PLA mandates for all federal agencies ($300,000, solicitation number DOLF09F422062, subcontracted to Hill International by Interactive Elements).
• Blog post about a compelling article by Tuerck critical of government-PLAs,”Why Project Labor Agreements Are Not in the Public Interest,” from the Cato Journal (Volume 30 Number 1, Winter 2010, “Are Unions Good for America?”).