Told You So: Project Labor Agreement on Connecticut High School Increased Costs and Reduced Competition

0 April 2, 2013  School Construction, State & Local Construction

In 2012, the merit shop contracting community and city employees predicted Meriden, Conn., would face increased costs and reduced competition if the city council mandated a union-favoring project labor agreement (PLA) on $220 million worth of contracts to renovate two local high schools. (TheTruthAboutPLAs.com covered the controversy here and here).

Despite the warnings, testy public hearings, and Connecticut’s state and federal pro-PLA lawmakers interrupting proceedings with election season pandering to Big Labor, a May 2012 vote cast by Meriden Mayor Michael Rohde broke a rare 6-6 city council deadlock and approved a resolution to mandate a PLA on both school renovation contracts.

Bid Results Proved Pro-PLA Claims Untrue

PLA proponents claimed a PLA would not increase costs or reduce competition.

They also said it would solve the “problem” of out-of-state contractors and workers stealing jobs from local residents by ensuring 30 percent of construction jobs would be performed by local residents dispatched to the jobsite via union hiring halls, as required by the PLA.

Of course, these were deceptive pro-PLA talking points designed to hoodwink taxpayers and lawmakers into accepting anti-competitive and costly public policy that only serves special interests.

Under the guise of a PLA mandate, lawmakers are free to steer taxpayer-funded construction contracts to well-connected unionized contractors with little competition and create jobs exclusively for union members, despite the fact that almost eight out of 10 members of Connecticut’s construction workforce do not belong to a union. In return, lawmakers typically receive support from construction unions to help maintain or advance their political ambitions.

This month, Meriden City Council’s PLA chickens came home to roost, and they laid a big stinky egg on Meriden taxpayers.

Meriden PLA Chickens Home to Roost

The Record-Journal, which should be commended for diligent reporting in 2012 and 2013 on this issue, reported Maloney High School renovation project bids are at least 13 percent higher than the project’s estimated $75 million construction and abatement budget.

The bid results, documented in this spreadsheet, indicate bids were $9.7 million (13 percent) higher than budgeted estimates and contracts received sparse competition from primarily out-of-area union contractors. The PLA mandate ensured qualified and local merit shop contractors, who successfully built other Meriden projects, did not submit bids because they could not compete on a level playing field with unionized contractors favored by the PLA.

These results come as no surprise to those familiar with a September 2004 study conducted by the Beacon Hill Institute at Suffolk University in Boston. It found the use of PLAs on school construction projects in Connecticut increased the cost of the projects by almost 18 percent. The report concludes that the presence of a PLA increased projects’ final base construction costs by $30 per square foot relative to non-PLA projects.

PLA proponents’ claims of out-of-area contractors and workers stealing construction jobs from locals on PLA-free projects proved to be meritless, too. A subsequent investigation into local hire on Meriden construction projects revealed 47 percent of the workforce building another, albeit smaller, PLA-free Meriden school project were local, exceeding the 30 percent local hire goal set in the Maloney High School PLA.

If these results don’t blow a hole in stale arguments used by PLA mandate advocates, what will?

When will taxpayers hold elected officials accountable for these anti-competitive and wasteful special interest schemes?

Why should children suffer from shoddier schools resulting from lawmakers’ attempts to stay within budget by trimming construction plans to offset increased costs from the PLA?

Meriden City Council Democrat and architect Steve Iovanna said it best on Twitter following his vote against the PLA, “Anti-PLA does not equal anti-union. It equals PRO-competition!”

When will other lawmakers follow Iovanna’s lead and put taxpayers and families ahead of party politics?

Solutions

Meriden City lawmakers can correct this debacle and rebid the Maloney High School without a PLA and ditch the PLA on the upcoming $111.8 million Platt High School project. Meriden will receive more competition and it will save money. If lawmakers act quickly, they can stay on schedule, too.

There is local precedent for rebidding problematic PLA projects, according to the Record-Journal (“Meriden seeks ways to cut Maloney project cost,” 3/30/13):

Middletown is no stranger to project delays and cost overruns. The newly constructed Middletown High School went out to bid in the mid-2000s under a PLA. The bids came in close to $17 million over budget and the construction manager was eventually fired, amid scandal.

A new committee was formed for the construction of the school and Gilbane was hired. The project was put back out to bid without a PLA and came in several million dollars under budget, according to the committee’s former chairman, W. Lee Osborne, an architect by profession.

“It’s almost always going to cost more,” Osborne said about using a PLA. “That doesn’t mean that you should always not do a PLA. You should look at the composition of the community and if the community is largely union based, then maybe you should acknowledge that and consider a PLA.”

Similarly, in 1996, Middletown experienced increased competition and saved taxpayers $1.31 million when it rebid the Wilbur Snow Elementary School renovations without a PLA after the first round of PLA bidding experienced insufficient competition and busted budgets (learn more here).

Lawmakers should let fair and open competition provide Meriden taxpayers with the best possible product at the best possible price.

Record-Journal columnist Eric Cotton’s latest piece puts this debacle into perspective, (“Forget the Taxpayers,” 3/27/13):

The staff at Meriden City Hall said last week they were still trying to figure out exactly why bids for the Maloney High School renovation project came in about $10 million higher than expected.

But I suspect they already have a pretty good idea. And it’s really not their fault.

City Manager Lawrence Kendzior and Purchasing Officer Wilma Petro strongly advised city councilors last spring not to sign a collective bargaining agreement giving trade unions the ability to refer workers and negotiate terms and conditions for the Platt and Maloney high school projects. They said a project labor agreement or PLA, as it’s known, would likely make for a less competitive bid process and drive up costs because non-union companies would be discouraged from bidding. You’d be narrowing the field down to unionized contractors, which only represent about 20 percent of the industry, at a time when most construction companies – union and non-union alike – are still hungry for work.

Unfortunately, six city councilors and the mayor chose to ignore that advice.

So now, a year later, we find that the first two rounds of bidding for Maloney weren’t very competitive, with union shops submitting bids much higher than estimates. Only two companies bid on painting, for example. Drywall also attracted just two bids, as did glass and glazing. No single item attracted more than five bids. The low bid for masonry came in at $11.2 million – almost double what the construction manager expected.

Estimates are rarely so far off.

But it shouldn’t come as any surprise. On the night of the City Council vote, Kendzior warned councilors in no uncertain terms what support for a PLA would mean.

“The data shows school construction projects done with a PLA have a higher cost,” he said. “From a staff position,” he said, doing the project without a PLA “is the most effective and least likely to be legally challenged. We can set hiring goals within the bid packages and shape them so smaller companies in Meriden are able to compete.”

There was simply no need for a PLA from the perspective of the city’s professional staff. But councilors like Democratic Majority Leader Brian P. Daniels, the biggest proponent of the PLA, and Mayor Michael S. Rohde, who broke the 6-6 tie in favor of the agreement, seemed to place the trade unions’ interests above the interests of the average Meriden taxpayer.

Daniels went so far as to criticize fellow Democrat Steve Iovanna’s decision to oppose the PLA.

“If you go back and look at the statements by Councilor Iovanna on the floor, there’s not one legitimate concern that showed he should have voted against it,” Daniels said at the time.

But Iovanna, an architect with Meriden-based BL companies, has said that in his experience PLAs drive up costs. Democrat Matt Dominello, longtime chairman of the School Building Committee, agreed with Iovanna and took issue with Daniels’ statement that councilors had a responsibility to side with party principles when a vote gets close. Dominello said other concerns, such as the effect on taxpayers, can outweigh party allegiance.

“Just because you’re in politics for the party doesn’t mean you have to vote that way all the time,” Dominello said at the time.

“What kind of system is that? That’s saying forget the people, forget the taxpayer.”

As you can see from the Maloney bids, that’s exactly what some Meriden politicians did.

Reach Eric Cotton at ecotton@record-journal.com or (203) 317-2344. Follow him on Twitter @ecotton3

Amen. TheTruthAboutPLAs.com will be following this story closely, but in the interim, you can help.

Take Action

Ask the Meriden City Council to ditch the PLA on the Platt High School and rebid the Maloney High School renovation without a discriminatory and costly PLA mandate.

Urge the following lawmakers to change their position to No PLA:

Encourage new city council members Castro and Graham to oppose PLA mandates and be sure to thank members Iovanna, Dominello, Brunet, Scarpati, Williams and Shamock for voting with taxpayers and Meriden families ahead of special interests.

Get informed, learn more:

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