In a press release and letter to the White House issued Monday, Sen. Ayotte asked President Obama to repeal his pro-union Executive Order 13502 and remove the anti-competitive and costly union project labor agreement (PLA) mandated by the U.S. Department of Labor (DOL) on a $20 million to $50 million DOL Job Corps Center in Manchester, N.H.

The DOL’s Jan. 30 solicitation (DOL121RB20457) for the Manchester Job Corps Center mandates a union-favoring PLA.

Bidding is only open to certified small business contractors willing to agree to the terms and conditions of the union-friendly PLA drafted and mandated by the DOL. 

Qualified federal contractors played no part in creating this government-mandated PLA, which requires contractors to obey numerous union collective bargaining agreements, pay into union pension and benefit plans, follow inefficient union work rules, hire most of their employees through union hiring halls for the life of the project and force unwanted union representation on nonunion employees.The PLA is a direct assault on New Hampshire’s ”Live Free or Die” state motto.

In New Hampshire, 85.5 percent of the construction workforce does not belong to a labor union, according to new government data. The state does not have a history of using government-mandated PLAs and few federal small business contractors are unionized, leading many in the industry to believe out-of-state union contractors and union workers from Boston will steal jobs away from the New Hampshire construction industry, which is already suffering from a grim construction economy.

According to a press release issued by ABC New Hampshire/Vermont President Mark Holden:

The government-mandated PLA has the potential to again delay this project, increase costs, reduce competition from qualified New Hampshire businesses and deny badly needed jobs to skilled New Hampshire construction workers who have freely chosen not to belong to a union.

The Union Leader ran an article about this controversy (“Sen. Ayotte slams bidding for Manchester Job Corps Center,” 2/7/12):

Sen. Kelly Ayotte is calling on the Obama administration to scrap all union-friendly project labor agreements, saying they are the reason the planned Job Corps Center in Manchester has yet to be built.

In a letter to Obama released Monday, Ayotte asked the President to reverse his executive order requiring federal projects over $25 million to consider using project labor agreements, or PLAs. In his State of the Union address, Obama said he wanted to cut government red tape. These agreements would be a good place to start, the Republican senator said.

“Federal government-mandated PLAs needlessly increase construction costs and limit the ability of non-union companies to successfully compete for government construction contracts,” wrote Ayotte. “This Washington mandate also significantly slows down the procurement of construction projects, forcing workers to wait on the sidelines until the PLA winds its way through the federal bureaucracy.”

A Foster’s Daily Democrat editorial also blasts the DOL’s anti-competitive and costly union-friendly PLA mandate on the Job Corps Center (“The union souffle is falling fast,” 2/9/12):

While there is some debate on the actual impact of PLAs on construction costs, PLAs should play no role in a free an open marketplace.

Unions argue that even though union labor — or union labor rates — may increase the cost of constructions projects, their workers bring to the table better skills and quality assurance. These, in the long run, supposedly make the extra costs worthwhile.

If that is true unions should be willing to compete on the merit of their argument. Bidding on such projects as the Job Corps Center should not be delayed by the prerequisite of a PLA. The impact of union labor on a projected should be part of the bid offered by contractors who may of their own free will choose to use union labor — no pre-mandate.

Such dictatorial practices go a long way in alienating the general public. They fuel Right to Work efforts in states such as New Hampshire. And they leave such a sour taste in he mouths of Mr. and Mrs. John Q. Public that union ranks nationally have fallen faster than a souffle after the oven door is slammed shut while baking.

PLA Controversy Delayed Project
TheTruthAboutPLAs.com readers may recall previous media coverage of the Job Corps Center project, which most recently included a Dec. 23  holiday-themed op-ed in the New Hampshire Union Leader  by Holden. It summarizes the long-running controversy surrounding the DOL’s PLA mandate on the Job Corps Center and the absurdity of this gift to Big Labor at the expense of New Hampshire businesses and workers. It was penned in response to the DOL’s Dec. 22, 2011 pre-solicitation indicating the project would be subject to a PLA mandate.

By Mark Holden

It may be beginning to look a lot like Christmas, but many New Hampshire construction workers and businesses are expecting a lump of coal in their stockings from the federal government.

In this case, the Grinch is the U.S. Department of Labor (DOL), which is planning to build a $35 million Job Corps Center in Manchester with federal tax dollars.  Unfortunately, the DOL is poised to ensure the project is built by out-of-state union labor and union contractors, despite the fact that more than 91 percent of New Hampshire’s construction workforce chooses not to belong to a construction labor union.

The DOL is mandating a union-favoring project labor agreement (PLA) on the Job Corps Center.  Created by unions as a way to circumvent the free market and regain lost market share, a PLA typically requires contractors to replace most or all of their existing workforce with unfamiliar union labor, follow archaic and inefficient union work rules, and pay into underfunded union pension and benefit plans if they want to win contracts.

New Hampshire’s skilled nonunion workers are forced to accept unwanted union representation and pay union dues, yet they will forfeit benefits paid into union pension and benefit plans during the life of the project unless they join a union and become vested in these plans. 

Such humbuggery has the effect of discouraging competition from New Hampshire’s qualified contractors and their local employees.

Reduced competition coupled with costly union red tape needlessly increases construction costs.  Studies by the Beacon Hill Institute in Boston indicate projects subject to prevailing wage laws built with government mandated PLAs are 12 percent and 18 percent more expensive compared to similar non-PLA projects subject to government-determined wage and benefit rates. The research comes as no surprise to anyone familiar with Boston’s Big Dig boondoggle, which was built with a PLA mandate.

In short, government-mandated PLAs are a gift to Big Labor at the expense of taxpayers and New Hampshire construction businesses and tradespeople.

If this controversy has the disappointing familiarity of a re-gifted fruitcake, it is because the DOL tried to mandate a PLA on the Job Corps Center in 2009.  In the face of such blatant discrimination, a brave contractor, North Branch Construction of Concord, filed a bid protest against the DOL’s anti-competitive PLA. Instead of proceeding with PLA-free construction subject to fair and open competition – which would result in badly needed local job creation – the DOL canceled the project.

Not to be deterred, the DOL retained the services of a consultant, Hill International, to prepare a report justifying and defending a PLA requirement. The report cost taxpayers $130,000. It was the second PLA report Hill International prepared for the DOL. The first report, which trumpeted the alleged benefits of PLAs on federal construction projects, cost taxpayers $300,000. The latest report is so shoddy and full of pro-PLA bias, taxpayers will wish it came with a gift receipt.

The DOL and the federal government’s discriminatory policy is the product of an executive order signed by President Obama just a few days after moving into the White House in 2009. The measure encourages federal agencies to mandate PLAs on a case-by-case basis on large federal construction projects exceeding $25 million in total cost.

It is no coincidence it steers federal contracts to one of the White House’s and Democrat party’s biggest political patrons: Big Labor.

So while the Grinch has come to town, stealing Christmas hopes and dreams away from The Granite State’s workers and their families, will any of the GOP presidential candidates take a stand against deceptive payback to Big Labor prior to New Hampshire’s Jan. 10 primary?  

All nonunion contractors and their employees want this holiday season is the ability to fairly compete.  Some members of Congress, such as New Hampshire Sen. Ayotte, Rep. Frank Guinta and Rep. Charlie Bass, have stood up for free enterprise and New Hampshire families in support of legislation (S. 119 and H.R. 735) to “preserve open competition and federal government neutrality toward the labor relations of federal government contractors on federal and federally funded construction projects.”

That’s exactly what should happen. The federal government should preserve the right of everyone to fairly compete for jobs, not just a select few.

Congress should pass this legislation or a new president should undo President Obama’s destructive policy catering to well-connected special interests. It’s the only surefire way to keep the federal Grinch at bay.

##

Mark Holden is the president of the New Hampshire/Vermont Chapter of the Associated Builders and Contractors. To learn more about anti-competitive PLAs, visit www.TheTruthAboutPLAs.com.

Obama Administration’s First Federal PLA Mandate
The DOL mandated a PLA on this project in 2009. It was the first PLA mandated by a federal agency on a federal construction project following President Obama’s Feb. 6, 2009 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 cost. The DOL’s 2009 PLA mandate was especially unusual because it was issued prior to the Federal Acquisition Regulatory (FAR) Council final rule (pdf), issued April 13, 2010, and effective May 13, 2010, implementing Executive Order 13502 into federal procurement regulations (learn more here).

Similar attempts by federal agencies to mandate PLAs before and after the effective date of the FAR final rule were foiled by ABC contractor-led bid protests (learn more here).

Last summer, the project and PLA controversy received attention from the New Hampshire Union Leader (“Jobs Corps Center project going forward,” 8/20/11) and a related press release from Sen. Ayotte (“Senator Ayotte Expresses Concerns about Labor Requirement for Manchester Job Corps Project,” 8/19/11) in response to the DOL’s August announcement they will proceed with construction and mandate a PLA despite previous controversy.

Executive Order 13502 and the related FAR rule remain controversial White House gifts to Big Labor likely to increase federal construction costs, reduce economy and efficiency in federal contracting, reduce competition from quality nonunion contractors and their skilled employees, and deny taxpayers the accountability they deserve from the government.

TheTruthAboutPLAs.com will be following the DOL Job Corps Center project closely in the coming weeks.

While the Giants and the Patriots prepared for their Super Bowl match-up, Indiana’s state government took steps to guarantee Hoosiers the opportunity to work without having to pay dues to a labor union. On Wednesday, Gov. Mitch Daniels signed legislation to make Indiana the 23rd right-to-work state.

The enactment of Indiana’s right-to-work law may be the most significant general labor law reform adopted since the 2010 election. This law gives workers an opportunity to decide whether to join a labor organization, even if their workplace is organized, without having that decision made for them by union bosses.

Courtesy of the National Right to Work Foundation

From our perspective at TheTruthAboutPLAs, this is a very positive development. It will position Indiana to attract investment and this will help create much needed jobs. This is particularly true in the manufacturing and service sectors of Indiana’s economy. There is no doubt it will lead to additional construction jobs, too.

Unfortunately, the right-to-work law does not eliminate the threat of government-mandated project labor agreements (PLAs) in the Hoosier state. As we have explained before, PLA mandates can still occur in right-to-work states, although the PLA cannot require workers to pay full union dues. The PLA can still require contractors to recognize a labor union as the sole representative of all workers on the job, hire some or all of their workers from a union hiring hall, pay into union pension and benefit programs, and follow inefficient union work rules. The right-to-work law removes an important component of PLAs, which is to force workers to join a union as and/or pay union dues as a condition of employment, but the other provisions are burdensome enough that contractors utilizing union labor from local unions participating in PLAs are at a significant competitive advantage over their merit shop counterparts.

Indiana is no stranger to PLA activity. Super Bowl attendees will enjoy the game from Lucas Oil Stadium, a facility constructed under a wasteful and discriminatory PLA mandate. As a result, it was virtually impossible for nonunion construction workers to build this project. This kept 70 percent of Indiana’s construction workforce – those who chose not to join a labor union – from building this project, which was funded in part by their own tax dollars. Out of state license plates from construction union members flooded the area, demonstrating how a PLA does not guarantee local hire.

Additionally, the stadium project was $75 million over budget, despite burning through a $50 million contingency fund.

Lucas Oil Stadium Mid-Construction, Courtesy of Wikipedia

This is just another example of how PLA mandates not only hurt the construction workers and their families, who are deprived of the opportunity to compete for projects, but also average taxpayers.

In an interesting bit of irony, rumors are swirling around Indianapolis that some union members and ‘Occupy’ protesters are planning to protest the right-to-work law at the Super Bowl on Sunday. If protests do happen, we are sure the protesters will say they are standing up for the middle class. Someone should ask them how excluding 72 percent of Indiana’s construction workforce from building the stadium grows the middle class.

(Mr. Lefebvre’s testimony starts at the 2:09 mark)

In his testimony, Lefebvre tells committee members a story we followed here on TheTruthAboutPLAs, regarding a PLA mandate the cost New York State taxpayers nearly $5 million.

The New York Department of Transportation refused to consider a bid from Lancaster Construction to perform work on a highway project in Orange County, NY because their bid did not conform to the department’s PLA mandate, even though Lancaster’s bid saved taxpayers $4.5 million and was scheduled to utilize more minority/disadvantaged businesses as subcontractors than the firm that won the project.

Lancaster Construction and its employees were passed over because they refused to agree to build this project under Big Labor’s terms.

PLA mandates deprive taxpayers of the opportunity to get the best construction at the best price.  On public construction, they also limit the ability of the vast majority of the construction workforce to compete for projects funded by their own tax dollars.  In New York, that means more than 70 percent of the state’s construction workers are left out in the cold.

We urge New York lawmakers to carefully consider S.4121/A.7855, the Public Construction Savings Act.  This legislation would ensure that contractors – not government bureaucrats – decide when a PLA is most appropriate.

According to BLS data, the construction industry recorded the lowest number of union members in 2010, when just 801,000 private construction workers belonged to a union.

From 2010 to 2011, union membership grew from 13.1 percent to 14 percent of the U.S. private construction workforce, with construction unions adding 73,000 new members.

The recession has hit the construction industry hard.  The average construction industry unemployment rate in 2011 is 16.4 percent. According to government data, the current industry unemployment rate is at 16 percent, but it was as high as 22.5 percent in Jan. 2011 .

The construction industry has shown few signs of improvement. From 2010 to 2011, the construction industry added 141,000 jobs and grew from 6,103,000 workers to 6,244,000 workers. However, this few workers have not been employed in the construction industry since 1998, when 5,946,500 workers were employed and 17.8 percent of the workforce was unionized, according to the Union Membership and Coverage Database, available at www.unionstats.com. In addition, government data indicates construction spending has been flat.

Government-Mandated PLAs Create Jobs for Union Members
So how will the decline in overall construction union membership change the public policy debate surrounding government-mandated project labor agreements (PLAs) and President Obama’s pro-PLA Executive Order 13502?

In short, there will be added pressure on politicians to pander to Big Labor’s special interests and help keep their political base afloat. As they did in 2009 and 2010, the White House, members of Congress and federal officials beholden to Big Labor’s costly special interest agenda will try to steer federal construction contracts to unionized employers and create jobs exclusively for union members through federal government-mandated PLAs. On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations.

While the final rule does not mandate PLAs on all federal construction projects — and it offers agencies some flexibility when deciding whether to mandate a PLA on a specific large-scale construction project — the regulation is nothing but a handout to special interests.

The decision to agree to a PLA should be left up to individual contractors and not forced onto qualified contractors by government agencies as a condition of winning a federal construction contract. PLAs mandates reduce competition, increase costs and steer contracts to unionized firms.

This election year, special interests and their political allies will turn up the heat on federal bureaucrats to ensure more PLAs are attached to federal construction projects and other taxpayer-funded construction projects.

After all, numerous elected officials have a politically motivated self-interest in creating jobs for construction union members.  Fewer union jobs spells disaster for union institutions, union retirement plans and the politicians that depend on union contributions to get elected and pass public policy favoring Big Labor.

Politicians understand that a lack of union jobs in the construction industry means fewer union dues and “voluntary” political contributions deducted from union members’ paychecks that are funneled into various union slush funds coordinated through Labor Management Cooperation Committees (LMCCs), 527 groups and Political Action Committees (PACs) that support Big Labor’s friends in politics.

This symbiotic relationship between Big Labor and its political chums cannot continue without healthy union institutions and political contributions from labor unions that fuel the Democrats’ political machine.  

So the latest union membership numbers—coupled with high unemployment in the construction industry and the complex relationship of entities dependent on union revenue—point to a greater push for local, state and federal governments to mandate PLAs at the expense of taxpayers and the merit shop contracting community.

There are valid economic and ethical reasons why promoting the special interests of Big Labor, which composes just 14 percent of the U.S. private construction workforce, ahead of the needs of the rest of the construction industry through PLAs is bad public policy.

For example, on prevailing wage projects, PLAs on average increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA mandated projects. With the added cost premium of anti-competitive PLAs, there is less construction money available. And less construction money means fewer total construction projects and construction jobs. So union-favoring PLAs could make unemployment in the construction industry even worse.

In addition, there is no compelling reason (other than political self-interest) to create jobs for union members ahead of nonunion employees via government-mandated PLAs. Qualified nonunion employees deserve just as fair a shot to feed their families as union members. Unions should use the ultra-competitive market and tough economy as an opportunity to retool their product and make it more lean and efficient to compete in today’s marketplace instead of relying on government handouts to stay relevant.

The U.S. economy and the construction industry would benefit from free and open competition, without corrupt government-mandated PLAs, where taxpayers can get the best possible construction product at the best possible price.

“Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

“During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

“In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

“There’s never been a better time to build, especially since the construction industry was one of the hardest hit when the housing bubble burst. Of course, construction workers weren’t the only ones who were hurt…”

On behalf of the merit shop contracting community, ABC 2012 National Chairman Eric Regelin, president of Granix, LLC, Ellicott City, Md., today reacted to President Obama’s remarks:

“In his speech, the president said ‘we can restore an economy where everyone gets a fair shot, and everyone does their fair share,’” said Regelin. “Yet, one of his first official acts when he took office was to sign an executive order on project labor agreements that discriminates against the 87 percent of the nation’s construction workforce that chooses not to belong to a labor union.

“It is not clear at this point what President Obama meant when he spoke of removing red tape from construction projects, but any sincere effort to do so must involve the elimination of government-mandated project labor agreements and Davis-Bacon wage requirements on taxpayer-funded construction projects,” Regelin said.

“The president’s insistence on a so-called ‘millionaire’s tax’ to fund his various priorities will expose the 80 percent of construction firms that are taxed at the individual rate to a significant tax increase,” said Regelin. “This does not represent a ‘fair share’ that will help the economy and create jobs, but rather the president’s continued use of the nation’s job creators as his personal piggy bank.

“The nation’s construction industry continues to struggle with an unemployment rate of 16 percent – nearly twice the national average,” Regelin said. “However, the president’s only solution to fix the economy is to hand out favors to special interests and punish those who work hard and take risks.”

To view this statement, click here.

So will President Obama’s new executive order cutting red tape slowing down construction projects be helpful, or, will it be another gift to special interests?

Cartoon courtesy of the Boston Globe

It is quite possible President Obama’s new executive order is just repackaging a policy the White House announced in October 2011 to speed along the approval of 14 high priority infrastructure projects. If so, this won’t likely be controversial. It could be something else equally noncontroversial

However, there is concern President Obama will make some changes this election year to federal policy concerning government-mandated PLAs on federal and federally assisted projects. See Section 7 of Executive Order 13502, issued Feb. 6, 2009:

Section 7. The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6, 2009, 180 days sets the deadline at Aug. 5, 2009, but a recommendation has not been publicly issued.] 

An expansion of Section 7 could decrease the current $25 million threshold when federal agencies are currently required to evaluate if a PLA mandate is appropriate on a federal construction project. More PLA mandates on smaller projects would help Big Labor at the expense of everyone else. 

Section 7 could also force pro-PLA policies on federally assisted projects built by private owners and state and local governments. An expansion could increase costs for local and state projects already suffering from difficult budget realities. It could also lead to out-of-area union workers taking jobs away from qualified nonunion construction workers in the local economy.

TheTruthAboutPLAs.com explained the concerns with Section 7 expansion here.

Let's hope Section 7 of Executive Order 13502 is not.

TheTruthAboutPLAs.com will be following White House policies impacting the construction industry closely.

Of interest to TheTruthAboutPLAs.com readers, the estimated 13,000 Keystone XL pipeline construction jobs would be created exclusively for labor union members, as TransCanada required a union-favoring project labor agreement (PLA) on this privately financed project, which forces contractors to use union labor and follow inefficient union work rules.

UPDATE: A TransCanada representative contacted TheTruthAboutPLAs.com and stated the Southern portion of Phase 3, about 120 miles worth of pipeline, was not subject to the PLA and was awarded to a contractfrom firm in Eunice, LA. He said some of the pumping stations are not subject to the PLA as well. We asked for proof of this claim and an executed copy of the PLA but have not received any supporting evidence.

Did Politics or Policy Kill the Project?
Controversy surrounding the project created a schism in the Democrat party’s political base. Environmentalists oppose the project, characterizing it as gift to Big Oil that would destroy farmlands, aquifers and sensitive ecosystems in the pipeline’s path; increase reliance on dirty fossil fuels; and contribute to global warming. 

Meanwhile, construction trade unions support the pipeline expansion because the PLA would create new construction jobs exclusively for union members as the construction industry suffers from a 16 percent national unemployment rate.

Congress and some in the business community point to this stalled project as an example of how President Obama and onerous government regulations stand in the way of job creation and decreasing our reliance on foreign energy supplies.

For more than three years, the State Department conducted a “transparent, thorough and rigorous review” of the privately financed project. After increased pressure by all parties to make a decision, the State Department announced on Nov. 10, 2011, that it needed more time to explore alternative pipeline routes prior to approving TransCanada’s permit application. In response, Congress inserted a provision in the temporary payroll tax cut bill passed in December giving the administration until Feb. 21 to decide the fate of the pipeline.

On Jan. 18, the State Department recommended that President Obama deny the permit, but left the door open for future project approval, stating “it could complete the necessary review to make a decision by the first quarter of 2013.” The White House issued a statement and submitted a report to Congress following the denial of the permit, providing some insight into the reasoning behind the decision.

Political pundits characterize this decision as a political calculation by the Obama administration to shore up environmentalist support prior to the election, but keep the side window open for union job creation pending the results of the 2012 presidential election and additional studies.

Keystone XL Pipeline Creates Union-Only Construction Jobs
In September 2010, TransCanada announced it was requiring contractors interested in working on Phase 3 and Phase 4 of the Keystone XL pipeline to sign a PLA with various construction trade unions.

Typical PLAs force contractors to hire construction workers from local trade union halls in each craft, follow pro-featherbedding union work rules, and pay into union pension and benefit programs.  Nonunion contractors are discouraged from competing for contracts to build taxpayer-funded projects when a PLA is mandated by a government entity, such as a local, county, state or federal government in charge of a project, because the terms of the PLA discriminates against their existing nonunion workforce and makes them less competitive against unionized firms.

The anti-competitive and discriminatory nature of government-mandated PLAs is why the merit shop contracting community was outraged when President Obama signed Executive Order 13502. The order, signed just a few weeks into President Obama’s term on Feb. 6, 2009, encourages federal agencies to mandate PLAs on a case-by-case basis on projects exceeding $25 million in total cost.

On privately financed projects like the Keystone XL pipeline, a PLA can prohibit nonunion firms from bidding or prevent all nonunion workers from being hired, even if they have the necessary qualifications and experience. In some instances, a PLA allows a limited number of nonunion workers, but forces them to pay union dues and fees and/or join a union as a condition of employment. In short, private sector PLAs can take discrimination to a whole new level compared to PLAs mandated by the government in the public sector of the construction market.

The project’s owner, TransCanada, voluntarily mandated a PLA on this private project. There is no evidence to suggest the Obama administration or federal officials forced TransCanada to mandate a PLA on this private project, nor is there evidence suggesting labor unions extorted TransCanada into requiring a PLA through typical tactics attacking construction owners to win more work for union members.

It is unfortunate that TransCanada elected to needlessly discourage competition from qualified merit shop contractors and discriminate against nonunion employees. It is a shame TransCanada’s PLA is telling 87 percent of the U.S. construction workforce they are not welcome to build the pipeline because they don’t have a union card, even if they have the necessary skills and experience.

The possible reasons why TransCanada mandated a PLA are numerous. Perhaps TransCanada needed Big Labor as an ally to shore up Democrat support at the local, state and federal levels of government. It wouldn’t be the first time a corporation hoped to exploit Big Labor’s cozy relationship with the president and his party, knowing that Big Labor donated hundreds of millions of dollars to Democrats during prior election cycles.  Or perhaps TransCanada felt a PLA gave its project the best chance at all-around success. 

Whatever the reason, it is clear construction trade unions are irate at President Obama for his job-destroying decision. Mark Ayers, president of the Building and Construction Trades Department, issued a statement critical of President Obama, as did Laborers’ Union President Terry O’Sullivan.

Despite Big Labor repeatedly attacking Republicans in the 112^th Congress, House Speaker John Boehner says the fight for jobs is not over, and even mentioned they have been working with labor unions to get this project back on track:

Click here to view the video on YouTube.

What Next?
BNA Bloomberg’s Construction Labor Report says (“President Obama Rejects Keystone Pipeline But TransCanada Plans to File New Request,” 1/19/12):

TransCanada President Russ Girling said he is “disappointed,” although the decision was not unexpected.

“TransCanada remains fully committed to the construction of Keystone XL,” Girling said. The company has spent, or is committed to spend, about $1.9 billion so far on the project.

Girling said the company will reapply for a presidential permit, and he hopes that a new application will be processed “on an expedited basis” that would allow an in-service date by late 2014.

However, State Department Assistant Secretary Kerri-Ann Jones said in a media briefing that a new application would require a new review process. She would not speculate on how long such a review might take and whether existing analysis could shorten the environmental review process.

The original TransCanada permit application was filed in September 2008 and has been under review by the State Department for the past three years.

News reports also indicate Canada may build a new pipeline from Alberta to the West coast of Canada and sell this oil to China and the world.

While it is interesting to see the odd political bedfellows created by this controversy, it is important to remember that the Keystone XL pipeline would not offer any direct benefit to the merit shop contracting community due to the discriminatory PLA voluntarily mandated by TransCanada.

TheTruthAboutPLAs.com will be following this project closely.

UPDATE: The Laborers’ International Union Jan. 20 announced it will leave the Blue Green Alliance, a coalition of labor unions and environmental groups that advocates for environmentally friendly green jobs, over disagreements with other coalition members on the proposed Keystone XL pipeline.

Here are the highlights:

Project Labor Agreements Build Nothing but Unions

OPED By ERIC CHRISTEN

January 16, 2012

Los Angeles is ground zero in a war raging over exclusionary and monopolistic project labor agreements, commonly called PLAs. Since these “agreements” started popping up 15 years ago, Los Angeles has had more implemented than any other city in America. The almost canine affection elected officials in this region have for doing the bidding of those who put them into power (Big Labor special interests) is quite striking and unmatched anywhere we have been fighting PLAs.

<snip>

Project labor agreements are associated with fiscal irresponsibility and mismanagement, internal corruption and lack of accountability to the people who pay taxes for the government to provide services. Citizens in Los Angeles have abdicated their responsibility to oversee their local governments. As a result, unions fill the resulting political vacuum and attract ambitious people who see unions as a vehicle to attain personal power and position.

Arguments based on reason and common sense have no power in this kind of environment, where only scandals earn public attention. The problem with Los Angeles is that fidelity to Big Labor is so pervasive that the resulting corruption is hard to keep up with. From the hundreds of millions of dollars wasted under the Los Angeles Unified School District and Los Angeles International Airport PLAs to the broken promises of the Port of Los Angeles and the city of Long Beach PLAs, where does one even begin?

Let’s just pick two.

The city of San Fernando was the first municipality in California to require a PLA for all public works projects. On Sept. 19, 2005, the San Fernando City Council voted 5-0 to require all construction contractors to sign a PLA Agreement with unions for prime contracts worth $150,000 or more, and specialty contracts worth $25,000 or more. These project cost thresholds are unusually low, indicating that representatives of the city made little effort to engage in credible negotiations with union leaders to develop the project labor agreement.

Voting for the PLA in 2005 were council members Julie Ruelas, Nury Martinez, Steven Veres, José Hernández, and Maribel De La Torre. So what happened to them?

San Fernando voters recalled Hernández and Ruelas on Jan. 13, 2009.

Martinez was elected in 2009 to the board of the LAUSD, with endorsements from the Los Angeles/Orange Counties Building & Construction Trades Council and the Los Angeles County Federation of Labor.

Veres was elected in 2011 to the board of the Los Angeles Community College District, with endorsements from the construction trades council and the county labor federation.

Only De La Torre remains on the San Fernando City Council. At its Nov. 21 meeting, she was entangled in a spectacle that is bizarre, even by California standards, involving her relationship with the mayor.

Meanwhile, the city continues to require its contractors to sign a PLA to work on taxpayer-funded city construction. Business as usual.

Then we have the Los Angeles Community College District, subject of a multipart series in the Los Angeles Times highlighting the waste, fraud and poor quality of work that took place under the district’s multibillion-dollar PLA.

The latest scandal involves an inquiry that targets two contractors who worked extensively under that PLA. “The D.A.’s probe centers on Los Angeles Community College District allegations that the firms submitted fraudulent billings for Mission College work, part of a $5.7 billion construction program,” reported the Times.

Coincidence? Hardly. These instances are all quite predictable for any entity that purses something as immoral as a PLA. Sadly, it is the taxpayers, school children and the average citizen who continue to pay the price for the status quo in this region that places the interests of union bosses over that of everyone else.

In the end, the voters have no one left to blame but themselves for placing such morally illiterate people into office.

A number of projects in the L.A. area have been constructed with PLA mandates.  Their track record is well documented in the 2011 edition of Government-Mandated PLAs: A Public Record of Poor Performance.  Here are some examples with their page number for citation purposes:

Cost Overruns:

• The Eastside Reservoir project east of Los Angeles, built under a government-mandated PLA, was the nation’s largest earth moving project in the late 1990s. In October 1998, the project reported a $220 million (11 percent) cost overrun. The increase was attributed to payment of overtime wages under circumstances mandated by the PLA. (p. 9)

Project Delays:

• In 2006, four Los Angeles Unified School District campuses built under a PLA were forced to open their schools one month late because contractors could not find enough skilled labor to complete the project on time. (p. 23)

Discrimination Against Women and Minorities in the Construction Industry:

• In 2010, a private audit found violations by 55 contractors working on a $150 million high school under a PLA mandated by the Los Angeles Unified School District. The violations included inadequate supervision of workers and performing work under expired or suspended licenses. (p. 30)
• The biggest contractor on the union-only San Francisco International Airport PLA project was sued by a Los Angeles transit agency alleging that it used bogus minority subcontractors to get millions in unionized subway work.127 Similar allegations were investigated by the FBI in connection with the San Francisco Airport project. The Los Angeles lawsuit and San Francisco investigation both alleged that white-owned unionized firms set up companies that “either were not qualified or in whom the union companies owned an undisclosed interest.” The lawsuit also alleged that the union joint venture joined with its sham minority subcontractors to present false claims on subway work to obtain millions of dollars in additional payments. (p. 31) 

This is a sample, not a comprehensive list, of the various problems associated with PLA mandates on projects in the L.A. area.

In addition to the examples of problems above, government-mandated PLAs discriminate against the 84 percent of the L.A. area construction workforce that chooses not to join a union and are essentially locked out of construction funded by their own tax dollars.

Mandating PLAs on taxpayer funded work is clearly bad public policy.

The latest to do so is Anne Arundel County, MD, where local leaders adopted a ban on government-mandated PLAs on January 17.

Courtesy of Wikipedia

Maryland joins California, Texas and Pennsylvania as states in which local government entities have approved bans on these Big Labor handouts.  An increasing number of local leaders are starting to understand how Big Labor promises of PLA success usually lead to only cost overruns and discrimination against the vast majority of the construction workforce that chooses not to join a labor organization.

This ban on PLA mandates was enacted just one county away from the upcoming Cheltenham Youth Facility project in Prince George’s County, where Maryland leaders are attempting to become the first state or local government entity to procure a construction project with the Obama administration’s U.S. General Services Administration (GSA) PLA preference policy adopted in April 2010.

Here at TheTruthAboutPLAs.com, we thank Anne Arundel’s leaders for standing up for taxpayers and the local construction workforce.

The PLA mandate harms Washington’s experienced and skilled nonunion construction workforce and will discourage competition from qualified contractors that have successfully built federal projects in Washington and across the country without PLA mandates.  It will also needlessly increase costs.

According to an article in the Kitsap Sun, NAVFAC Northwest mandated a PLA after Sens. Maria Cantwell and Patty Murray, and Reps. Norm Dicks and Jay Inslee (all Democrats from Washington) wrote to the Navy in support of a PLA at the request of construction trades unions (“Navy to hire local workers for second explosives handling wharf,” 1/1/12):

The trades council contacted the area’s federal delegation — Sens. Patty Murray and Maria Cantwell and Reps. Norm Dicks and Jay Inslee — who wrote to the Navy supporting a PLA, Whetham said. Four trade council officials and seven from the Navy met in November to explore the benefits and arrived at cost savings and skilled labor.

According to information obtained from opensecrets.com, construction trades unions have donated the following political contributions totaling $814,375 to the four Washington Democrats who signed the letter:

Rep. Inslee:       $340,000   from 2000 – 2012
Rep. Dicks:       $183,125   from 1998 – 2012
Sen. Murray:     $279,250   from 1998 – 2012
Sen. Cantwell:   $ 12,000    from 2002 – 2012
Total:               $814,375

Is this PLA mandate the product of a crony contracting scheme by federal officials? 

Prior to mandating the PLA, NAVFAC Northwest did not consult with the merit shop contracting community about the negative impact of PLA mandates on qualified federal prime contractors, subcontractors and their skilled local employees.

First Navy PLA Mandate Under Obama Administration
This is the first PLA mandate on a Navy project since President Obama issued Executive Order 13502 on Feb. 6, 2009, just a few weeks after his inauguration. The order strongly encourages federal agencies to mandate PLAs on a case-by-case basis on federal construction projects exceeding $25 million in total costs.

As a result of Obama’s encouragement of federal PLA mandates, NAVFAC has issued several PLA surveys to the contracting community to determine if a PLA mandate will advance the economy and efficiency in federal procurement of numerous large-scale construction projects across the country.  ABC National and ABC members have responded to these PLA surveys.

NAVFAC Northwest did not issue a survey to evaluate if a PLA would be appropriate for this project.

In contrast, NAVFAC directly contacted ABC National and the merit shop contracting community for feedback on possible PLA mandates on other federal projects.

For example, after soliciting comments from ABC National and the contracting community in October 2010 concerning NAVFAC’s potential use of PLAs on billions of dollars worth of construction for Guam base realignment, NAVFAC elected not to mandate a PLA.

NAVFAC’s PLA Mandate Creates Inefficiencies
NAVFAC Northwest’s solicitation instructs qualified contractors invited by NAVFAC to bid on Phase 2 of the solicitation (the short-listed contractors) to negotiate a PLA with specific trade unions and submit an executed PLA within 10 days of the contract award.

NAVFAC supplied short-listed contractors with a pre-drafted PLA containing the terms and conditions NAVFAC already developed with specified construction trade unions and councils.

NAVFAC asked contractors to submit feedback on the pre-drafted PLA by Dec. 28. 

ABC advised short-listed contractors about the numerous problems with NAVFAC’s mandatory PLA language and cumbersome and inefficient procurement approach. Some of these concerns were submitted by short-listed contractors to NAVFAC.

NAVFAC is expected to review and share these comments with unions and provide contractors with a final PLA at a later date that they must use as the starting point in PLA negotiations.

Proposals from short-listed contractors are due Feb. 13. It is unclear when NAVFAC will award the contract, although it should be in early 2012.

Under this inefficient procurement process, it is possible for contractors to not know the terms and conditions of the executed PLA – which impacts labor costs and final bid costs – before submitting a final price proposal to NAVFAC.  If PLA negotiations are stalled by unions or NAVFAC does not supply the final terms of the pre-drafted PLA in time, contractors cannot submit an accurate price proposal.

In addition, the project could be delayed pending the outcome of the post-award PLA negotiations.  The project may have to be re-bid if the final agreement cannot be executed.

In 2010, a General Services Administration (GSA) project, the GSA Headquarters at 1800 F Street in Washington, D.C., suffered delays as a result of labor unions refusing to agree to the terms of a PLA the contractor presented and signed with other labor unions. Congressional testimony from GSA deputy administrator Susan Brita described this scenario, which also required the contractor to present an executed PLA within 10 days post-award.

Even regulatory comments  filed by Frank Dean, NAVFAC’s labor advisor, on the FAR Council’s proposed rule implementing Executive Order 13502 identify concerns with this inefficient post-award PLA procurement approach.

PLA Will Harm Local Nonunion Workforce and Small Businesses
From 2001 to 2009, when President George W. Bush’s Executive Orders 13202 and 13208 prohibited PLA mandates on federal and federally assisted construction projects, Washington’s skilled nonunion tradespeople constructed large-scale projects for the Navy, Army and other federal agencies absent a PLA mandate with no reported problems.

This union-favoring PLA is sure to serve as a barrier to new jobs for 84 percent of Washington’s private construction workforce and 86.9 percent of the U.S. construction workforce that has chosen not to join a construction labor union.

The Washington State Building and Construction Trades Council, AFL-CIO announced “construction labor on this project will be provided by Olympic Peninsula Building Trades and the Northwest Regional Council of the National Construction Alliance II (NWNCA),” and it is unlikely this project’s PLA will allow nonunion contractors to use few, if any, of the existing skilled nonunion employees they have invested training and resources in while employed at the company.

As this letter to the editor in the Kitsap Sun points out, if the PLA even allows nonunion construction workers to build this project, they will have to join a union and/or pay union dues and pay into union pension plans that they will never benefit from unless they join a union and meet vesting requirements.  The PLA results in a huge financial windfall for Big Labors coffers.

Favoritism for unionized construction workers is especially despicable because the construction industry is plagued by high unemployment in Washington and across the country. The number of construction workers employed in Washington in July 2011 was as sparse as the number of workers employed in Washington in August of 1997. Meanwhile, the U.S. construction industry is suffering from an unemployment rate of 16 percent as of December 2011. 

Don’t nonunion construction workers deserve a fair shot at new federal construction jobs?

Provisions in a PLA that force contractors to swap their existing workforce out for unfamiliar union labor is problematic for short-listed contractors that self-perform specific trade work, as well as subcontractors performing specialty trades.

This PLA mandate will make it difficult for short-listed contractors to meet NAVFAC’s small and disadvantaged business subcontracting targets because small businesses are traditionally not unionized:

Because building trades union membership is traditionally not diverse, a PLA mandate also may make it difficult for short-listed contractors to meet minority and women hiring goals set by the FAR’s Equal Opportunity and the Affirmative Action Compliance Requirements for Construction regulations required in federal construction contracts.

The PLA mandate’s inefficient procurement approach and pro-union language will discourage competition and increase costs to remaining competitors. Studies indicate PLA projects subject to prevailing wage laws increase construction costs between 12 percent and 18 percent compared to similar projects subject to prevailing wage laws not subject to government-mandated PLAs.

ABC Committed to Fair and Open Competition
ABC is opposed to government-mandated PLAs because these agreements typically restrict competition, increase costs, create delays, discriminate against nonunion employees and place merit shop contractors at a significant competitive disadvantage. Typical government-mandated PLAs are nothing more than anti-competitive schemes that end open and fair bidding on taxpayer-funded projects.

ABC has led industry opposition against federal PLA mandates, utilizing a variety of educational, public relations, grassroots, political and legal strategies to ensure fair and open competition on taxpayer-funded construction projects.

ABC has helped ABC member contractors file bid protests against federal PLA mandates during the Obama administration, which resulted in the removal of PLA mandates on a Veterans Affairs medical center in Pittsburgh, an Army Corps of Engineers project in Camden, N.J., a General Services Administration project in Washington, D.C., and a Department of Labor Job Corps Center in Manchester, N.H.     

ABC National also has responded to and helped ABC members participate in more than 50 PLA surveys issued by federal agencies to determine the feasibility of a PLA on a federal project.

ABC supports the Government Neutrality in Contracting Act (H.R. 735/S.119), cosponsored by 31 Senators and 172 Representatives and supported by a diverse industry coalition. The measure would eliminate waste and favoritism in federal contracting by prohibiting federal agencies and recipients of federal assistance from mandating PLAs, yet it would allow contractors to voluntarily enter into PLAs. This bill is good for taxpayers and the principles of free enterprise.

In 2011, House committees held two hearings in Washington and three field hearings on the negative consequences of federal PLA mandates and the benefits of H.R. 735.

Additional hearings and votes are expected in 2012.

Stay current on government-mandated PLAs and “Like” us on Facebook at www.facebook.com/TheTruthAboutPLAs and visit TheTruthAboutPLAs.com often.

To help fight this PLA and other federal PLA mandates, please contact Ben Brubeck or TheTruthAboutPLAs.com here.

One such example occurred in California, where union efforts helped get Robert Calone appointed to the Governing Board for the Contra Costa Community College District.  Mr. Calone’s day job is Recording Secretary for the Plumbers and Steamfitters Local 159.

While it’s possible that civic duty motivated Mr. Calone to apply for this office, it is also pretty clear that the construction unions have a revenue stream to develop.  And thanks in part to Mr. Calone, Big Labor will have a virtual monopoly on community college construction for the next five years.

But in all of the excitement over securing nearly all of the community college’s construction work in the next five years for Big Labor, it appears that Mr. Calone may have forgotten to take care of a small detail – properly completing his ethics disclosures.

Here is the press release from the Golden Gate Chapter of Associated Builders and Contractors issued on January 10:

FPPC Complaint filed against Contra Costa Community College District Trustee for Failure to File Form 700 Timely and Report Income

The Fair Political Practices Commission has confirmed receipt of a complaint filed for possible violations relating to Robert Calone, who holds the office of Governing Board member for the Contra Costa Community College District.

California Government Code §87202(a) states that “Every person who is elected to an office specified in Section 87200 shall, within 30 days after assuming the office, file a statement disclosing his or her investments and his or her interests in real property held on the date of assuming office, and income received during the 12 months before assuming office.”

Robert Calone failed to file a statement within 30 days (he did it 200 days after assuming office, after the public requested his Form 700 from the college district). When he filed his statement, he failed to report income.

Finally, by filing his Form 700 late and then omitting a source of income on the late Form 700, Robert Calone concealed his financial interest in a controversial contract that was approved on December 14, 2011 by the Governing Board of the Contra Costa Community College District. Only the intervention of the public in exposing Robert Calone’s failure to submit a Form 700 and his failure to report his employment income prevented him from voting on a contract for which his loyalties and allegiance were divided and influenced by his paid employment as an instructor for an organization that was signatory to the contract.

“Mr. Calone, the Recording Secretary for the Plumbers and Steamfitters Local 159, was appointed to the Board for the sole purpose of enacting a union-only Project Labor Agreement for District construction projects, thereby creating a monopoly on District work that will result in reduced competition and increased costs for public contracts funded by taxpayer dollars” stated Matt Heavey, a local citizen who filed the complaint.

A copy of the complaint can be viewed here.

Here at TheTruthAboutPLAs.com, we believe sunshine and transparency are the best medicine for public corruption.

Regardless of whether Mr. Calone violated the letter of the law, this one doesn’t pass the smell test.