The Truth About Project Labor Agreements

Taxpayers will save more than $6 million on the U.S. Department of Labor’s (DOL) Manchester, New Hampshire, Job Corps Center project thanks to the benefits of fair and open competition free from anti-competitive and costly government-mandated project labor agreements (PLAs).

This important example of a federal project bid with and without a PLA requirement undermines baseless claims made by PLA advocates and President Obama’s Executive Order 13502, which encourages federal agencies to mandate PLAs on a case-by-case basis on federal construction projects exceeding $25 million in total costs to “promote the economy and efficiency in federal procurement.”

Actual results proved the opposite is true: The DOL’s PLA mandate reduced competition, increased costs, harmed local businesses and created needless litigation and delays on this federal project.

Government-mandated PLAs remain anti-competitive schemes to steer federal construction contracts and jobs to well-connected unionized contractors and union members. They harm taxpayers, qualified merit shop contractors, skilled nonunion construction workers and result in less building and hinder the creation of construction jobs as the industry faces a 14.7 percent unemployment rate.

Here is a link to an apple-to-apples comparison of bid results of this federal project bid with and without a PLA.

Below is a press release from ABC National about this imortant win for taxpayers and critical case study on the benefits of fair and open competition free from discriminatory PLA mandates.

News Release

Contact: Gerry Fritz, (703) 812-2062, [email protected]

April 24, 2013

TAXPAYERS SAVE MORE THAN $6 MILLION ON DOL’s NEW HAMPSHIRE JOB CORPS CENTER

ABC Contractor Awarded Contract without Project Labor Agreement Mandate

Washington, D.C. – Associated Builders and Contractors (ABC) today celebrated a victory after the U.S. Department of Labor (DOL) awarded Eckman Construction Company a $31.6 million contract to build a DOL Job Corps Center in Manchester, N.H., after removing a controversial government-mandated project labor agreement (PLA) from the federal project’s solicitation for construction services. Eckman Construction Company, Bedford N.H., submitted a bid that was more than $6 million below the lowest offer when the project was subjected to a PLA.

“The award of this contract to a local contractor demonstrates the benefits of fair and open competition in federal contracting and undermines specious claims made by PLA advocates,” said ABC Director of Labor and Federal Procurement Ben Brubeck. “The apples-to-apples comparison of the Job Corps Center bidding with and without a PLA mandate proves these special interest schemes reduce competition, increase costs and harm local contractors.”

The solicitation for construction services to build the Job Corps Center project was first issued in 2009, but the project was delayed for nearly three years as a result of bid protests filed with the Government Accountability Office (GAO) against repeated efforts by DOL to mandate a PLA.

The first attempted PLA mandate for the project was issued in September 2009 as a result of President Obama’s Executive Order 13502, which encourages federal agencies “to consider requiring the use of project labor agreements in connection with large-scale construction projects in order to promote economy and efficiency in federal procurement.”

In response, a federal contractor, with the help of ABC, filed a bid protest with the GAO, prompting the DOL to cancel the Job Corps Center solicitation in November 2009.

“Rather than remove the controversial PLA mandate and proceed with the procurement process using fair and open competition, the DOL waited more than two years to issue a new solicitation, and it still contained a PLA mandate,” said Brubeck. “Public record requests revealed that the DOL spent $428,000 in taxpayer funds to hire a consultant, Hill International, to complete two studies to evaluate the use of PLAs on federal contracts and erroneously justify the DOL’s use of a PLA on the Job Corps Center.”

In March 2012, federal contractors filed another GAO protest against the DOL’s second PLA mandate, again with the assistance of ABC. That summer, the GAO advised the DOL to take corrective action and rebid the project without a PLA. The DOL canceled the solicitation—but after it had already received and publicly unsealed bids that were subject to the PLA mandate.

Finally, in October 2012, the DOL issued a solicitation free from a PLA mandate. Those bids were opened in February. The low bidder, Eckman Construction Company, came in 16 percent less than the low bidder from the first round of bidding subject to a PLA, saving taxpayers $6.2 million. In addition, Eckman is a local firm from New Hampshire, and the first-round low bidder was an out-of-state company.

“When the PLA mandate was removed, the number of qualified contractors bidding on the project increased threefold,” said Brubeck. “Even contractors that submitted proposals during both rounds of bidding lowered their price by an average of 10 percent when bidding on the solicitation without a PLA mandate. Experts familiar with the anti-competitive and costly effect of government-mandated PLAs are not surprised by these results, but taxpayers should be concerned.

“It is time for the Obama administration to stop trying to steer lucrative federal construction contracts to well-connected unionized firms and union members—some of the president’s largest political supporters—through unlawful government-mandated PLAs,” Brubeck said. “The American people deserve the best possible construction project at the best possible price. We can’t afford the increased costs, reduced competition and delays created by these special interest handouts. ABC will continue to fight for fair and open competition, and will challenge federal agencies attempting to impose unjustified PLAs on federal projects.”

Numerous studies show PLAs discourage merit shop contractors and subcontractors from competing for federal contracts, thereby increasing costs to taxpayers and discriminating against the 86.8 percent of the construction workforce that does not belong to a labor union. PLAs typically force contractors to hire most or all of their craft employees from union hiring halls; follow inefficient union work rules; hire apprentices exclusively from union apprenticeship programs; and pay into union benefit plans on behalf of employees, even if they have their own qualified benefit programs. PLAs force employees to pay union dues, accept unwanted union representation, and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefit plans.

View this news release and full bidding results on ABC’s educational blog, TheTruthAboutPLAs.com.

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Associated Builders and Contractors (ABC) is a national trade association representing 22,000 members from more than 19,000 construction and industry-related firms. Founded on the merit shop philosophy, ABC and its 72 chapters help members win work and deliver that work safely, ethically and profitably for the betterment of the communities in which they work. Visit us at www.abc.org.

Update: Additional Resources

• Link to Oct. 2012 Solicitation and award notice (No PLA mandate – 9 bids opened).
• Link to DOL’s Jan. 2012 Solicitation, Canceled (PLA mandate – 3 bids opened).
• Link to DOL’s Sept. 2009 Solicitation, Canceled (PLA mandate – no bids submitted due to bid protest).
• Here is the Job Corps Center’s proposed PLA and here are the numerous union collective bargaining agreements (CBAs) contractors must agree to for the life of the project concerning issues not specifically addressed by the PLA.
• 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 Offce refuting the need for a PLA mandate and the pro-PLA Hill International report.
• Report by Hill International recommending a PLA mandate on the Manchester, NH, 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, NH, 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 for promoting PLA mandates for all federal agencies  ($300,000, solicitation number DOLF09F422062, subcontracted to Hill International by Interactive Elements).
• Read a sample government-mandated PLA and learn how it harms nonunion contractors and workers here.