District of Columbia Mayor Vincent C. Gray is holding a 2 p.m. press conference at Nationals Stadium today with DC United executives and local construction labor union bosses to announce the signing of a project labor agreement (PLA) that will govern the $300 million DC United soccer stadium at the Buzzard Point area in Southwest Washington, D.C.
Anti-competitive government-mandated PLAs are special interest kickback schemes that end open, fair and competitive bidding on construction projects and steer contracts and jobs to well-connected unionized contractors and unionized construction workers.
PLAs typically force contractors to hire most or all of their craft professionals 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.
In short, PLAs discourage or eliminate merit shop contractors from competing for and winning contracts on construction projects because they are almost always awarded exclusively to unionized contractors and their all-union workforces. Research has found less competition and archaic and inefficient union rules increase the cost of construction projects subject to PLAs between 12 percent and 18 percent, on average.
District’s Government-Mandated PLAs Have a Record of Failure
Washington, D.C., has had its share of bad PLA experiences resulting in needless delays, poor local hiring outcomes and increased costs on three federal projects procured by the U.S. General Services Administration (GSA): the 1800 F Street Building, the Lafayette Building and a contract at the St. Elizabeth’s jobsite (learn more here).
Even prior to February 2009, when President Obama issued Executive Order 13502 encouraging federal agencies to require PLAs on a case-by-case basis on federal projects exceeding $25 million, the district experienced PLA-related problems on the Wilson Bridge and DC Convention Center.
According to the most recent data from the U.S. Department of Labor’s Bureau of Labor Statistics, only 13.2 percent of the 2012 U.S. private construction workforce belongs to a union. Just 2.5 percent of D.C.’s construction workforce belongs to a union. In Virginia and Maryland, the construction unionization rate is 5.4 percent and 10.8 percent, respectively.
In short, PLAs are a windfall for union interests at the expense of the vast majority of everyone else in the region.
Flawed Rationale for PLA
According to a mayor’s office press release about today’s event:
“The PLA being signed tomorrow is a powerful tool to ensure ‘first priority’ employment and federal Davis-Bacon wage rates for District workers.”
Of course, existing law (called the Davis-Bacon Act) governing federal, federally funded and D.C.-funded projects already requires above-market government-determined union scale wages and benefits to be paid to craft labor with or without a PLA.
In addition, all city and city-assisted contracts over $100,000 are subject to D.C.’s First Source requirements, which requires an employer to “hire 51% District of Columbia residents for all new jobs created by the project, and 35% of all apprnticeship hours to be worked by DC residents employed by the employer in connection with the project shall be District residents regestered in programs approved byt he District of Columbia Apprenticeship Council.”
In short, the PLA is not a tool to ensure local hire and fair wages. Existing law already requires that. These talking points are a smokescreen to obscure the fact the PLA is a gift to unions.
The press release also compares the DC United PLA to the controversial Nationals Stadium PLA mandated by the D.C. City Council.
This dubious comparison ought to force the city and taxpayers to call a time out before executing a PLA scheme on the DC United stadium.
According to the DC Progress report, The True Cost of the Washington Nationals Ballpark Project Labor Agreement:
“The Nationals Park PLA created a huge barrier for the District’s non-union workforce: 85 percent of construction workers and 95 percent of minority-owned contractors were left out of the work.”
In addition, the study found reduced competition in bidding and other problems needlessly increased construction costs:
“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 Nationals Baseball Stadium PLA established three main goals to track and measure the PLA’s success in local job creation. However, the PLA only met one goal. For example, the PLA was supposed to ensure D.C. workers performed 50 percent of journeyperson hours, but the report found that goal was not met:
“For the journeyman goad of the stadium PLA to have been met, the project needed to increase the number of DC journeymen hours by 93 percent. A whopping 74 percent of the higher paid journeymen hours went to non-residents.”
Data used in the DC Progress report is from a September 2008 report from the Clark/Hunt/Smoot JV to the DC Sports and Entertainment Commission, which indicates contractors missed multiple hiring goals set by the PLA. (So do these articles from various Washington papers).
Another study, Broken Promises, Big Losses: The Story of DC Workers Watching from the Dugout as the $611 Million Washington Nationals Ballpark is Built, found a PLA couldn’t deliver on local hiring promises either:
“…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, this study found that half of the contractors involved in the project hired no new apprentices; 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. (Check out this related document mailed to district residents.).
In June 2010, the D.C. City Council held a hearing to consider the District Resident Employment and Trade Stimulus Amendment Act of 2010 (Bill 18-650), which would require the use of wasteful and discriminatory PLAs on all projects costing more than $200,000 that receive some form of support from the district. The bill rightfully died in committee but video from the hearing exposed some ugly truths about PLAs and the union hiring hall process that should be revisited in light of today’s announcement.
PLA proponents usually sell PLA schemes to lawmakers and the public by claiming they will prevent costly labor unrest caused by unions in exchange for a union monopoly on the project via the PLA.
Of course, once a PLA sounded more like blackmail than a value proposition to stakeholders, union lobbyists refined their PLA sales pitch by claiming PLAs deliver improved local hiring outcomes and better quality union craftsmanship. Both claims are bunk but harder to refute than outright blackmail.
If proof is needed that PLA-free construction gets the job done right the first time, on time and on budget, both the Orioles Park at Camden Yards and the Washington Redskin’s FedEx field were built without a PLA and without incident.
While the mayor’s office hasn’t released an actual copy of the PLA to the public, it is likely this special interest scheme will harm district taxpayers, hardhats and businesses, and will do nothing to address the underlying problems stemming from typical PLAs.
According to a 7/25 Mayor’s office press release about the project:
“The term sheet calls for the District to act as a horizontal developer and assume the cost of land acquisition and infrastructure (approximately $150 million), while DC United would construct the stadium (approximately $150 million).”
That’s a lot of money and construction jobs at risk for district stakeholders.
Check back for more updates and a call to action.
UPDATE, 12:31 p.m., 9/10/13: A press release from the mayor’s office this afternoon sheds more details on the PLA, although the actual agreement still is not available to the public. This paragraph from the release is interesting, although the devil is in the details of the PLA:
“The soccer stadium PLA ensures that the project will use union labor for subcontracts valued above $6 million. Any trade packages below that threshold are automatically provided a waiver to the PLA, thereby allowing smaller, often non-union firms, to bid on and perform work. All non-union firms can bid on any phase of construction and are free to take advantage of union training programs.”
Doesn’t this $6 million threshold exemption admit PLAs harm/discriminate against nonunion firms and workers and D.C. businesses? Why should firms winning contracts above this threshold be forced to hire union labor and follow the PLA?
According to sources familiar with the stadium deal, the project will move forward if a complicated land swap is properly executed and the project is approved by D.C. City Council.
UPDATE #2, 4:00 p.m., 9/10/13: Here is the PLA on the DC United Soccer stadium.
Article II, Sections 3, 4 and 5 of the PLA make it clear Local Small and Disadvantaged Business Enterprises (LSDBEs) are exempt from signing the PLA if a contract is below $6 million and a LSDBE “maintains an apprenticeship program that has been approved and registered by the District consistent with applicable District and federal law.”
This exemption was $10 million on the Nationals Ballpark Stadium PLA, so this PLA is actually reducing opportunities for LSDBEs.
The mayor’s press release makes it sound like all nonunion firms can participate in the $6 million exemption, but this is misleading. Only LSDBE firms are exempt.
Here are press documents passed out at the press conference by pro-PLA groups DC Jobs With Justice and the AFL-CIO Building and Construction Trades Department (BCTD).