Please note that all links have been added by TheTruthAboutPLAs.com.

Dear Mr. Brubeck,

I would like to bring to your attention a matter of considerable importance to the question of mandatory Project Labor Agreements (PLAs). As you know I testified against mandatory PLAs at a hearing conducted June 3 before the Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform of the Committee on Oversight and Government Reform of the U.S. House of Representatives.

In my testimony, I reported the results of studies in which the Beacon Hill Institute showed that PLAs increased construction costs for samples of schools built in Massachusetts, Connecticut and New York.

Note: Tuerck’s tesitmony starts at 22:13 of this video

I argued that our studies provide compelling evidence that mandatory PLAs generally increase construction costs and are, on that basis, not in the public interest.

You will also recall that, before I could testify, Representative Elijah E. Cummings read a statement from Professor Peter Philips of the University of Utah in which Philips claimed that our work was nothing but “simple minded statistics” that, in his judgment, do “not pass muster.” Unaware, as I was at the time, that this statement had been submitted to the Subcommittee and given the circumstances in which it was read to me and everyone else at the hearing, I could not respond adequately to Philips’ accusations at that time. Following the hearing, however, and with a written copy of Philips’ statement in hand, I wrote my response, attached here, and sent it to Congressman Cummings.

As you can see, I find Philips’ criticisms to be based on an entirely fabricated characterization of the methodology that we followed in our studies. I need to be emphatic. It is not as if Philips just disagreed with our interpretation of our statistical results, as economists often do in examining each other’s work. This was not a complaint, say, that our results suffered from some problem connected with sample selection or that they failed some standard test for robustness. This was a false characterization of what we did in obtaining our results. It would be as if one chemist tried to debunk another chemist’s findings by falsely describing the laboratory procedures followed in getting those findings.

It has now been a month since I wrote to Congressman Cummings. I have received no reply from him about the questions I raise. If, as it appears, neither Congressman Cummings nor anyone on his staff has asked Philips to clarify his remarks, then anyone who read the record of that hearing would be permitted to believe that there was substance to those remarks, when in fact there was none. Anyone could infer that our findings about PLA costs were spurious and could be ignored when in fact there was nothing presented at that hearing (or anywhere else, by my reckoning) that would support any such conclusion.

I am therefore compelled to take my case to a broader public. To that end, I hoped that you might be able to bring my letter to the attention of readers who follow ABC and its efforts to inform the public about government-mandated PLAs. Your help in this regard would be much appreciated.

Sincerely,

David G. Tuerck
Executive Director, The Beacon Hill Institute
Professor and Chairman, Department of Economics
Suffolk University

##

Here is more on the controversy from a post by BHI on the Red Mass Group blog, (BHI Weekly Dispatch: Taking on the D.C. union proxies on Project Labor Agreements,” 7/21/11).

Here is a key passage from Dr. Tuerck’s letter to Rep. Cummings in response to Dr. Phillips’ attacks:

In Phillips’ mindset, however, a project would never be more costly because it was conducted under a PLA.  The explanation would always lie elsewhere.  The project had a more complex roof.  Or it included an auditorium.  Or it had some other feature that increased the cost. Never mind if there were only a few bidders. Or if the contractor had to follow burdensome work rules.  Or if the contractor had to hire union workers instead of his own workers.  It just couldn’t be the PLA that was at fault.

Phillips’ approach to the PLA question reflects a compulsion, unhappily all too common among social scientists (and even some physical scientists), to hold stubbornly to one’s assumptions no matter what the data show.  That, in and of itself, is a bad enough fault to exhibit in criticizing someone else’s work.  In this instance, however, Phillips went beyond merely attempting to defend his assumptions against the data.  He made up an entirely fictitious story to discredit the work of someone whose data challenge those assumptions.

Be sure to give the full letter a read.

(See previous blog posts from TheTruthAboutPLAs.com on this project and MWAA’s resolution here).

A letter from MWAA President and Chief Executive Officer Lynn Hampton also provides some interesting economic data, shared publicly for perhaps the first time, pertaining to construction contracts awarded to regional businesses for Phase 1 of the Silver Line.

In response to a Washington Post editorial that urged MWAA to abandon the Phase 2 PLA mandate in order to trim “skyrocketing price projections” that threaten to derail the project (“Containing Costs on the Silver Line,” 6/23), MWAA chairman Charles D. Snelling wrote (“A labor pact that would help Dulles Metro construction,” 7/2):

The editorial misrepresented our planned PLA by expressing concern that such an agreement could increase the project’s costs partly because it would impose “cumbersome union rules.” For the record, a PLA will most likely set wages based on rates established by the Labor Department under the Davis-Bacon law. But construction will be done at Davis-Bacon prevailing wage rates regardless of whether there is a PLA, because federal law requires such rates for construction projects that receive federal assistance.

Snelling argues a Phase 2 PLA will have no impact on labor or construction costs because the payment of Davis-Bacon prevailing wage and benefit rates to construction workers is already required on the project, regardless of whether a PLA is mandated on the project.

Clearly, Snelling is either confused or misrepresenting the facts to Washington Post readers.

While Snelling is correct that Phase 2 bid documents can require payment of Davis-Bacon wage and benefit rates to craft professionals with or without a PLA (assuming MWAA voluntarily includes this rule or the project receives federal dollars), the inclusion of such government-determined rates is not why a Phase 2 PLA mandate will increase costs.

PLA opponents have never argued that the applicability of Davis-Bacon rates is the source of anticipated cost increases resulting from the Silver Line’s Phase 2 PLA mandate.

Rather, the “cumbersome union rules” contained in PLAs – such as requirements that contractors hire most or all employees from a union hiring hall, follow archaic and inefficient union work rules, pay into union-controlled slush funds, and pay benefits to union trust funds their employees will never benefit from unless they join a union and become vested in these plans – are the key reasons why PLAs increase costs and discourage competition from qualified nonunion contractors and their skilled local workforce.

The ABC Virginia Chapter sent an April 21 letter (pdf) to Snelling and MWAA highlighting specific provisions in the Phase 2 PLA Heavy Highway Agreement/PLA circulated to the public by MWAA staff that will reduce competition, increase costs, harm Virginia’s construction industry and result in out-of-state union members receiving what amounts to a discriminatory monopoly supplying labor to build the Phase 2 project. The letter never listed Davis-Bacon wage and benefit rates as an area of concern.

Finally, the Beacon Hill Institute studies, often cited as the basis of the estimate that a Phase 2 PLA mandate will increase construction costs between 12 percent and 18 percent ($300 million to $450 million of $2.5 billion in Phase 2 construction costs), sampled construction projects built with government-mandated PLAs and without PLAs in three states subject to state prevailing wage laws (Mass., Conn. and NY). This demonstrates that the added costs resulting from a government-mandated PLA occur on projects subject to prevailing wage laws.

In short, Davis-Bacon rates are a non-issue, so why is Snelling suddenly raising this argument?

Is it because Snelling is intentionally deflecting legitimate criticism of the Phase 2 PLA mandate by fusing these two issues because the special interest contracting scheme cannot be defended?

Or, do Snelling and the MWAA board members need additional education about how a PLA will increase costs and discourage competition from the experienced employers of 94 percent of Virginia’s construction workforce (those who choose not to belong to a construction union)?

MWAA needs to either shoot straight with the public or learn the facts about PLAs before executing another poor and costly decision that has the potential to derail the Silver Line and harm Virginia taxpayers, job creators and stakeholders.

In a June 8 letter responding to objections to the Phase 2 Silver Line PLA mandate from Congressman Andrew Harris (R-Md.), Hampton issued a similar defense of the Phase 2 PLA as Snelling:

Your concern that a PLA will cause a substantial increase in Phase 2 costs appears to be based on the view that wages paid by Phase 2 contractors operating under a PLA will be significantly higher than the wages contractors would pay absent a PLA, and that these higher wages will cause a significant increase in Phase 2 labor costs. I want to respond to these concerns.

A PLA on Phase 2 will likely provide for wages to be based upon either the prevailing wage rates established by the U.S. Department of Labor pursuant to Public Law 107-217 Davis-Bacon) or, like the Phase 1 PLA, comparable wage rates established pursuant to local Collective Bargaining Agreements (CBA). However, Davis-Bacon prevailing wage rates will be applied to Phase 2 even without a PLA. As you know, federal law requires that construction projects receiving federal financial assistance must apply Davis-Bacon wage rates. Along with our funding partners, the Airports Authority has been actively pursuing federal assistance for Phase 2. In particular, we are working to obtain federal credit assistance under the Transportation Infrastructure Finance and Innovation Act (TIFIA). The receipt of a TIFIA loan, or any other federal assistance on Phase 2, would require utilization of Davis-Bacon wage rates. It is the Airports Authority’s intent to require the use of such rates by Phase 2 contractors, irrespective of a PLA.

As a result, the use of a PLA in Phase 2 is not expected to have any significant impact on wage rates, labor costs or overall Phase 2 costs.  It is possible that a Phase 2 PLA, were it to utilize local CBA rates, (as does the Phase 1 PLA), might add a slight premium to comparable Davis-Bacon wage rates. If so, that premium would not cause an appreciable increase in overall Phase 2 costs. Morever, the benefits associated with a PLA i.e., by ensuring the ability to attract and retain a skilled workforce, access to well-established training programs, and providing a mechanism for resolving all workplace disputes and eliminating workplace disruptions and work stoppages that may occur — are, viewed as outweighing any such marginal increase in labor costs.

Once again, an MWAA official ineptly defends the Phase 2 PLA, as Rep. Harris never identified Davis-Bacon rates as the source of increased costs resulting from a Phase 2 PLA mandate. Hampton doesn’t understand that there is a competitive advantage to using nonunion contractors independent of whether a project requires prevailing wage and benefit rates and a PLA mandate typically discourages participation from qualified nonunion contractors.

In addition, Hampton fails to understand that you don’t need an anti-competitive and costly PLA to achieve the benefits MWAA is hoping to achieve.

Hampton rattles off some interesting economic data about first-tier contracts awarded to nonunion contractors under the voluntary Phase 1 PLA Dulles Transit Partners signed, but completely ignores the fact that nonunion/merit shop subcontractors did not have to sign the Phase 1 PLA. (See paragraph 8 of Dulles Corridor Metrorail Project Labor Agreement Final Addendum, Heavy and Highway Construction Project Agreement, Construction of Phase 1 – Fairfax County, Virginia. “Subcontracting:…It is further understood that in the event any covered work is awarded to a merit shop contractor the contractor shall not be required to sign this agreement or sign any other agreement as a condition of performing work on this project.”):

Second, the Project’s experience to date in Phase 1 with the Dulles Transit Partners, LLC, (DTP), the firm under contract with the Airports Authority to design and construct Phase 1, has demonstrated that, notwithstanding the existence of a PLA, non-union local contractors have achieved a high level of participation in Phase 1 contracts.  For example, of the first-tier contracts executed to date by DTP – contracts with a value of $460 million – 58 percent of the contract’s value, or $266 million, has been awarded to non-union contractors, while 42 percent of the value, or $194 million, has been awarded to union contractors.

Further, of the first-tier contractors executed to date by DTP with contractors and suppliers of equipment and materials, including contracts in the area of utility relocations – contracts with a value of $880 million – 60 percent of the contracts’ value, or $528 million, has been awarded to contractors and businesses based in the Commonwealth of Virginia, the District of Columbia, and the State of Maryland (VA/DC/MD), with the remaining 40 percent of the contracts’ value, or $352 million, awarded to contractors and businesses based outside of VA/DC/MD.  This Phase 1 experience shows that the Phase 1 PLA has not had any significant negative effect on the ability of non-union local contractors to successfully bid on and obtain Phase 1 work.

However, the data supplied by Hampton confirms that nonunion contractors played an integral role in building Phase 1 of the Silver Line. Yet Hampton does not promise an exemption for nonunion subcontractors in the Phase 2 PLA, nor acknowledge the truth that nonunion/merit shop contractors did not have to sign the Phase 1 PLA.

While the terms and conditions of the Phase 2 PLA have not been finalized, evidence suggests that MWAA board members oppose a provision similar to the language in Phase 1 exempting nonunion subcontractors from signing the Phase 2 PLA.

For example, the Washington Examiner quoted Laborers union (LiUNA) senior official and MWAA board member Dennis Martire insulting the workforce of PLA opponents and nonunion contractors (“Airport agency’s pro-union pact angers Va. Officials,” 4/14):

“All this does is establish worker rules and where you get your workers from,” said Martire, vice president of Laborers’ International Union of North America. “They’d rather get a guy off of a bar stool and give him a tool and a lower wage. I don’t know how productive that is.”

MWAA’s April 6 resolution mandating a Phase 2 PLA directs the Dulles Corridor and Business Administration committees, to approve and implement the final Phase 2 PLA with the assistance of MWAA staff. Michael Curto, who introduced the resolution, and Martire sit on these committees. The employers of Martire and Curto have a strong and existing financial relationship and both would directly and/or indirectly financially benefit from a Phase 2 PLA mandated by MWAA.

Curto’s employer, Patton Boggs, has received between $1.25 milion and $1.44 million per year since 2005 from Martire’s employer, LiUNA, according to union financial disclorure reports filed with the U.S. Department of Labor.

Snelling’s Washington Post letter to the editor said this:

The benefits associated with a PLA include the ability to attract and retain skilled workers, access to training programs and a mechanism for resolving workplace disputes to avoid disruptive work stoppages.

Both quotes from Martire and Snelling insinuate that it is difficult to have a plentiful supply of skilled workers building projects without a PLA. This is offensive to nonunion tradespeople in Virginia and the greater metropolitan area, and undermines the long and rich history of local, state, federal and private construction projects built without special interest government-mandated PLAs.

These statements are just as illogical as they are factually inaccurate, as subcontractors that performed hundreds of millions of dollars worth of construction work on Phase 1 of the Silver Line did not have to sign the PLA. The arguments used by MWAA officials to defend a Phase 2 PLA have no merit.

The PLA mandated by MWAA on Phase 2 must be removed and MWAA members should devise a plan to encourage full and open competition that will help all qualified contractors deliver to taxpayers the best possible construction project at the best possible price.

Update: This Aug. 22, 2011 correspondence between MWAA and the Purcellville Business and Professional Association again indicates that nonunion contractors built a significant potion of Phase 1. It also indicates that MWAA incorrectly argues (again) that PLA opponents have attributed the predicted additional costs resulting from the Phase 2 PLA to the application of federal prevailing wage and benefit rates (determined by the U.S. Department of Labor under the Davis-Bacon Act) on Phase 2. Of course, these rates would be used regardless of whether a PLA is used. In reality, PLA opponents oppose the Phase 2 PLA because it will increase costs due to reduced competition, archaic and inefficient union work rules, and fees imposed on nonunion firms and employees they must swallow to work on a PLA project.

The subcommittee, chaired by Rep. James Lankford (R-Okla.), heard testimony about the negative impact of President Obama’s controversial Executive Order 13502 and related regulations, which encourage federal agencies to evaluate whether to require project labor agreements (PLAs) on federal construction projects exceeding $25 million in total cost on a case-by-case basis.

UPDATE 12/9/11: Here is a transcript of the hearing.

Because federal and federally assisted construction projects subject to government-mandated PLAs and preferences discourage competition from qualified contractors and their skilled employees that are capable of performing these taxpayer-funded projects, witnesses and Republican subcommittee members explained how the Obama order has resulted in a dysfunctional federal procurement system rife with favoritism and waste.

“Does requiring a small business with no union affiliation to sign a labor agreement as a condition of doing business with the government increase opportunities for small businesses?” chairman Lankford asked in his opening statement. “Requiring a PLA as a condition to compete serves only to restrict, not increase, competition. The current policy discourages or even excludes nonunion firms, including the vast majority of small businesses, from competing for government projects.”

“Project labor agreements mandated by federal agencies result in increased costs for contractors and taxpayers, unnecessary procurement delays and inject uncertainty and favoritism in the federal procurement process, ” said Associated Builders and Contractors (ABC) member Kirby Wu, 2011 chair of the ABC New Jersey Chapter and president of Wu & Associates, Cherry Hill, N.J.

“Our company and other quality small businesses, general contractors, subcontractors and their skilled employees deserve a fair opportunity to provide the public with the best construction product at the best price.”

Witnesses Say PLA Mandates Are Bad Public Policy
Similar to the testimony at a March 16 House Oversight and Government Reform subcommittee hearing chaired by Rep. Jim Jordan (R-Ohio) on PLA mandates and other regulations harming the construction industry, witnesses described how government-mandated PLAs harm their businesses, employees and taxpayers.

Wu testified about how government-mandated PLAs harm merit shop employees and discourage competition:

“Government-mandated PLAs have the practical effect of creating jobs exclusively for unionized construction tradespeople by forcing union representation or compulsory union membership, inefficient and archaic union work rules, payment of union dues, forced contributions to union pension and benefit plans, and a host of other problems on merit shop employees – like my firm’s employees – that have freely decided not to join a union.

Injecting PLA mandates into the federal procurement process discourages competition from qualified contractors – like my company – who employ 87 percent of the U.S. construction workforce.

It is needless discrimination based on labor affiliation and it hurts merit shop employees as much as it hurts their general contractor and subcontractor employers.”

Wu described his unfortunate experience with a PLA mandated by the U.S. Army Corps of Engineers (USACE) on a 2010 federal project in Camden, N.J., that was eventually the subject of a bid protest filed by Wu with the Government Accountability Office (GAO). In the face of the bid protest, the USACE dropped the PLA mandate and replaced it with an illegal and discriminatory PLA preference that awarded additional credit/points in the best value procurement process to contractors that voluntarily submit a bid containing a promise to utilize a PLA:

“We did not pursue the contract further because we felt it was not worth the investment of additional company resources to prepare the bid and compete against contractors submitting PLA offers in this distorted playing field.

This entire exercise resulted in lost time and money for our small business that we could have invested back into our workforce and company.  It also resulted in needless procurement delays exceeding two months, as the Corp’s bid submission deadline was extended a number of times to accommodate the PLA controversy.

Remarkably, the contract was eventually awarded to a merit shop general contractor at a bid price nearly 15 percent below the $16.5 million estimate without a PLA offer. And today the project is reportedly on time and on budget.  The winning contractor would have been discouraged or eliminated from competing, if not for our efforts to fight the PLA mandate.”

Broad Support for the Government Neutrality in Contracting Act (H.R.735)
Witnesses also advocated for Congressional passage of the Government Neutrality in Contracting Act (H.R. 735), introduced by Congressman John Sullivan (R-Okla.), which prohibits the federal government from mandating anti-competitive and costly PLAs on federal and federally assisted construction projects.

H.R. 735 essentially codifies into law President George W. Bush’s Executive Orders 13202 and 13208, which ensured that taxpayers received the best construction at the best price on more than $147 billion worth of federal construction projects and hundreds of billions of dollars of federally assisted construction projects by prohibiting government-mandated PLAs on federal and federally assisted construction projects. The orders, which maintained fairness and neutrality in government contracting, were repealed by President Obama’s pro-PLA Executive Order 13502 in February 2009, just a few weeks after he assumed the presidency.

“It is clear to us that only Congress can bring a timely halt to the political favoritism in contract awards that is being promoted by the administration in the guise of Executive Order 13502,” ABC General Counsel Maurice Baskin told the subcommittee.  “The bill will prohibit federal agencies once and for all from awarding construction projects based on the willingness or unwillingness of contractors to enter into labor agreements. As the bill states, agencies shall neither require nor prohibit contractors from adopting PLAs as a condition of being awarded federal construction work, nor discriminate on that basis.”

“AGC opposes federal mandates for project labor agreements and supports H.R. 735,” testified Associated General Contractors General Counsel Mike Kennedy.

A diverse coalition of construction industry and employer groups support H.R. 735:

Associated Builders and Contractors (ABC)
Associated General Contractors (AGC)
Construction Industry Roundtable (CIRT)
Independent Electrical Contractors Association (IEC)
Electronic Security Association (ESA)
Merit Elevator Contractors Association of America (MECAA)
National Association of Minority Contractors (NAMC) – Philadelphia Chapter
National Association of Government Contractors (NAGC)
National Association of Women in Construction (NAWIC)
National Black Chamber of Commerce (NBCC)
National Federation of Independent Business (NFIB)
National Ready Mixed Concrete Association (NRMA)
National Stone, Sand & Gravel Association (NSSGA)
National Utility Contractors Association (NUCA)
Small Business and Entrepreneurship Council (SBEC)
U.S. Chamber of Commerce
Women Construction Owners and Executives, USA (WCOE)

Congressman Sullivan Testifies in Support of H.R. 735
Rep. Sullivan testified before the subcommittee in support of H.R. 735 and cited examples of federal and federally assisted construction projects that resulted in favoritism and increased costs as a result of a government-mandated PLA:

“Government-mandated PLAs are not only discriminatory, but they are also hurtful to a struggling industry that is already facing unemployment above 17 percent. For example, yesterday The Wall Street Journal reported on a $70 million highway construction contract in New York – funded at least 80 percent by the Federal Highway Administration – that has been scrutinized for the decision to subject it to a PLA. While 27 percent of New York’s private construction workforce is unionized, that means  the employers of 73 percent of New York’s construction workforces, who having been facing steep job losses over the past few years, are discouraged from bidding for this project. Unfortunately, limiting competition comes at taxpayer expense. The article (pdf) mentions that the PLA cost taxpayers an additional $4.5 million because the lowest responsible bidder, a merit shop contractor, was thrown off the project in favor of a union contractor, because the merit shop contractor would not sign a PLA.”

Rep. Sullivan highlighted the added costs to the federal Lafayette Building project in Washington, D.C., a project TheTruthAboutPLAs.com has written about numerous times:

“A U.S. General Services Administration (GSA) renovation project for the Lafayette Federal Building in Washington, D.C. was awarded to a federal contractor without a PLA at $52.3 million.  However, after this contractor agreed to a PLA pushed by the GSA for the project, the contractor added $3.3 million to the cost of the project.  The added $3.3 million isn’t the result of increased material costs, revised blueprints or a more aggressive completion deadline. The contract was awarded to the same contractor with the same proposal, and the only difference was the PLA.

These are just two examples, but there is no doubt that there are many more stories reflecting the true colors of government-mandated PLAs.”

Rep. Sullivan’s office issued this media statement on the hearing:

“In granting my bill, HR 735, the Government Neutrality in Contracting Act, a hearing today, the subcommittee has taken an important step in reestablishing fair and open competition in federal construction contracting. By overturning President Obama’s executive order, which was designed to funnel contracts to unions, this bill will save and create jobs in the struggling construction industry and potentially save taxpayers billions of dollars in inefficiencies.”

“It is simply unacceptable to allow the federal government to discriminate against 87 percent of the U.S. private construction workforce – and the 98 percent in Oklahoma – who seek federal contracts. American tax payers deserve to know that federal contracts are being awarded based on sound, credible criteria such as quality of work, experience and most importantly cost. Government mandated PLAs can drive up the cost of construction projects as much as 18 percent, which is the last thing our economy can afford right now. We owe it to businesses in Oklahoma and across the country whose livelihood depends on their ability to bid on construction projects in a fair and open process.”

(Note: Read a Feb. 16 statement from Rep. Sullivan on H.R. 735 here.)

Are PLA Mandates a Solution in Search of a Problem?
Professor David Tuerck of the Beacon Hill Institute (BHI) at Suffolk University in Boston summarized BHI’s extensive research on government-mandated PLAs, which found that on average, government PLA mandates add an additional 12 percent to 18 percent in construction costs when compared to similar construction projects without a PLA.

Tuerck discussed 2009 research by BHI on federal contracting from 2001 until early 2009, when President Bush’s Executive Orders 13202 and 13208 prohibited government-mandated PLAs on federal and federally assisted construction contracts.

If President Obama and PLA proponents’ claims that PLAs are needed to advance the economy and efficiency in federal contracting are true, “President Bush’s ban on mandatory PLAs should have produced many instances of the delays, strikes and cost overruns against which PLA advocates frequently warn,” said Tuerck.

Tuerck testified that BHI’s research found no federal agencies “could substantiate the occurrence of any delays or cost overruns on Bush-era projects costing $25 million or more that were attributable to the absence of a PLA.”

GSA Witness Admonished for Agency PLA Preference Policy, Questioned About GSA’s Study Critical of PLA Mandates
Susan Brita, deputy administrator for the GSA, provided testimony (pdf ) about the GSA’s experiences with PLA mandates and PLA preferences since President Obama signed Executive Order 13502.

Brita described the GSA’s pilot program, launched in August of 2009 according to this GSA memo, which is in the process of evaluating the performance of PLAs on seven of 10 large-scale federal construction projects managed by the GSA:

“During the implementation of our Recovery Act Spend Plan, GSA conducted a pilot program with Recovery Act projects to consider the use of a PLA. For this pilot program, GSA selected projects with budgets of more than $100 million. Ten projects met this criterion and were selected for the pilot. Of these ten projects, seven have PLAs and three do not.”

Rep. Tim Walberg (R-Mich.) questioned Brita about the GSA’s negative experiences with PLAs on two of the GSA’s PLA pilot projects in Washington, D.C.: the GSA HQ at 1800 F Street (40:55) and the Lafayette Building previously mentioned by Rep. Sullivan (44:13), which experienced added costs and procurement delays.

Brita also explained the GSA’s PLA preference policy, launched April 30, 2010, according to this GSA memo, which applies to all GSA projects exceeding $25 million in total cost.  The GSA’s anti-competitive and discriminatory PLA preference policy awards 10 points in the best value procurement process only to contractors that voluntarily submit a bid containing a PLA agreement.

Drawing from his experience bidding on projects in the private sector prior to becoming a Congressman, Rep. Mike Kelly (R.-Pa.) argued that the GSA’s PLA preference discourages some contractors from competing for federal contracts by tilting the RFP process in favor of contractors submitting PLA offers.

“A 10 percent bonus doesn’t level the playing field, that totally tilts it,” said Kelly. “You set those type of parameters [in GSA RFPs], you are setting them to get one type of a bidder to get the award.”

“I see it as exclusionary,” said Kelly. “I don’t see it as increasing the field of bidders, I see it as narrowing it down.”

Chairman Lankford and Kelly questioned Brita about the findings of a consultant’s report funded by the GSA that was critical of government-mandated PLAs on construction projects in the GSA’s PLA pilot program in various construction markets across the country.

Brita’s testimony indicated the consultant’sJan. 27, 2010, report was “suspended” and only remains in draft form. Brita said it was shelved to “let the marketplace determine the applicability of PLAs rather than rely on the report.”

Chairman Lankford and Kelly suggested the report was suspended because its initial findings contradicted the GSA’s existing PLA pilot program, which had already been well underway since its launch in August 2009.

“It seems to me that the information they [the GSA] got back is not consistent with what they were looking to find,” said Kelly.

In addition, subcommittee members and witnesses raised objections to the GSA’s April 2010 implementation of the anti-competitive and discriminatory PLA preference policy that awards additional credit to PLA offerors since the GSA’s report was critical of PLAs in various markets across the country.

Note: This exchange between Kelly and Brita pretty much sums up the problems with the GSA’s PLA preference policy.

Brita and Office of Management and Budget’s Office of Federal Procurement Policy administrator Dan Gordon defended the GSA’s PLA pilot program and PLA preference policy.

Gordon explained that in the GSA’s pilot program, there were instances where bidders submitting a PLA offer won the project and there were instances where a bidder submitting a non-PLA offer won. He maintained that the GSA was not “tilting it one way or another” but did not provide any data or meaningful analysis to support this claim.

TheTruthAboutPLAs.com has long argued that the GSA’s PLA preference policy reduces competition and is a de facto PLA mandate when a PLA offeror submits a PLA bid.

Brita explained there would be a future report issued on the results of the GSA’s 10 PLA pilot projects, but that the initial findings indicated there was no evidence of reduced competition or increased costs resulting from PLAs on these projects.  However, Brita did not provide the subcommittee with any evidence to support this claim.

Of course, it would be fallacious reasoning to jump to broad conclusions about the impact of federal PLA mandates on competition and cost from the GSA’s bidding results when the GSA is skewing the participation of qualified and available bidders by awarding additional credit to voluntary PLA offerors through their PLA preference policy.  It is also unlikely that this flawed experiment will perform any meaningful analysis about the added costs resulting from reduced competition from the pool of qualified and experienced federal subcontractors.

In any case, because the hearing exposed the GSA’s track record of suppressing data that conflicts with their existing politically-motivated policies, the GSA should present the results and raw data of their bidding experiment to an independent evaluator and make the raw data available to the public in a transparent manner.

Susan Brita (22:14)
Deputy Administrator
General Services Administration

Panel II concludes at 16:00 of second video.

Panel III
Maurice Baskin, Venable LLP (17:00)
General Counsel
Associated Builders and Contractors

David Tuerck (22:13)
Executive Director
The Beacon Hill Institute

Kirby Wu, AIA, LEED AP (28:40)
Wu & Associates, Inc.

Mike Kennedy (34:50)
General Counsel
The Associated General Contractors of America

Further Reading:

• GSA’s Policy of Big Labor Favoritism Draws Congressional Inquiry (12/18/10).
• ABC News Release: ABC Testifies on Problems with Project Labor Agreements before House Committee (06/03/2011) (pdf)

Unfortunately, the board did approve a PLA requirement for a $63 million high school project.  This means that over 60 percent of the community’s upcoming school construction projects will go only to contractors willing to play ball with Big Labor.

The sad truth is that Waterbury has a long history of wasteful taxpayer dollars on wasteful PLAs.  This history was noted in the Waterbury Republican American’s (“Waterbury School Board Splits on Project Labor Agreements,” 10/5/10) coverage of the Board of Education’s decision.

Here are the highlights:

After years of insisting school construction projects be restricted to union workers and tradespeople, the Board of Education voted Monday to open two new multimillion projects to bids from all.

The board still agreed to a “project labor agreement” on the most expensive of three future projects — a $63.8 million high school.

As in the past, that vote fell purely along party lines, with six board Democrats supporting a PLA over the objections of two Republicans and two Independent Party members.

Democratic leaders were willing to open two additional projects — a $6.7 million renovation of Wilby High School’s science labs and a new $34.7 million school in Bunker Hill — to bids from unionized and nonunionized companies.

<snip>

Several non-union company owners urged open bids as fair, and potentially cost saving. In a few cases, owners with companies in Waterbury said they feel its unfair they can’t bid on city work when they pay city taxes.

<snip>

A few Democrats, however, agreed the time had come to open a couple projects to non-union workers. All 10 members of the board opposed a PLA for a project to replace Carrington Elementary School. Only two Democrats — Coleen Flaherty Merritt and Jose Morales — voted for a PLA on the Wilby job.

The Republican American’s (“A Case for Open Bidding,” 10/2/10) editorial board also weighed in on this matter in advance of Monday’s vote.  They site the successful construction of the new Waterbury town hall as local evidence of successful construction without discriminatory, union-only requirements.

Here is an excerpt:

Here they go again. With $105 million to spend on school-construction projects, the Waterbury Board of Education has a choice: open bidding, which allows nonunion contractors to participate; or project-labor agreements, which effectively restrict bidding to unionized firms.

Open bidding enlarges the pool of contractors seeking work, thereby bringing in more expertise and more competitive pricing. Removing the union mandate does not diminish the quality of workmanship because contract language spells out qualifications in detail.

As has been widely reported, the on-time, under-budget City Hall project was non-PLA. In a letter to the editor published Thursday, school board member Ann Sweeney pointed out 17 of the 21 contractors on this project are union; the project manifestly is not in the hands of hacks, crooks and incompetents. And it went so well, city officials were moved to engage in the fiscally dubious practice of adding flourishes, such as engraved bronze elevators doors and a sculpture garden, to an otherwise well-executed project.

Time will tell, but the City Hall renovation is shaping up as the best construction project Waterbury has undertaken in many years. The contractors did no worse than the school district’s PLA contractors in meeting hiring targets for women, minorities and city residents. What message can the school board take from those two facts?

On Monday, the board will decide how it will approach the $105 million in major construction and renovation projects. In the audience will be dozens of union officials and laborers, clamoring for continued exclusion of nonunion contractors. A few of the latter will show up as well, but they’ll be outnumbered.

None of that should matter. Past pleas by forward-thinking, fiscally responsible city officials to use open bidding on one of the three K-8 schools have been ignored, but there’s City Hall, on time, under budget and non-PLA. And there are the union leaders and their members, talking about quality and safety, but guided solely by self-interest, just as the independent contractors are.

But the board’s duty here is quite evident. It should do right by students and taxpayers. And that means disregarding the unionists’ demands and adopting the strategy that worked so well in the City Hall renovation.

The RA’s editorial board is right about the discriminatory impact of PLAs.  These requirements force contractors to unnecessarily recognize unions as the sole representative of their workers, trade in their skilled workers for ones dispatched from Big Labor’s hiring halls and pay into union pension programs instead of (or in addition to) their employees’ retirement plans.  The effect is to make it essentially impossible for nonunion firms to compete.

Additionally, studies have shown the inflationary impact of these Big Labor handouts on school construction in Connecticut.  A 2004 study conducted by the Beacon Hill Institute at Suffolk University found that the use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent. The report concludes that the presence of a PLA increased the projects’ final base construction costs by $30 per square foot relative to non-PLA projects.

While allowing fair and open competition for two of these projects is a positive step, the people of Waterbury deserve better.  The Waterbury City Hall is a shinning example of why PLAs are unnecessary.  We strongly encourage the Board of Education to reconsider its decision to require a PLA on the $63 million high school project.

Here are the highlights:

Despite some claims to the contrary, these requirements are nothing more than handouts to one politically-connected special interest group — Big Labor. PLAs and the unnecessarily burdensome apprenticeship requirements are designed to ensure that only union labor has the opportunity to work on construction projects.

When public officials place these requirements on projects, they essentially preclude the 75 percent of local construction workers that choose not to join a labor organization from competing for projects funded by their own tax dollars.

Unfortunately, for local taxpayers, the discrimination inherent in these types of agreements is not the end of the story. Numerous third-party studies show that PLAs have a record of increasing construction costs by approximately 18 percent when required on public construction projects.

A 2006 study conducted by the Beacon Hill Institute at Suffolk University found that PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20 percent increase in costs over the average non-PLA project.

At a time when local families, and also state and local government, are grappling with significant budget deficits and crippling unemployment, now is the worst possible time to reward special interest groups at the expense of hardworking taxpayers.

By opening the door to all contractors, they can help keep the competition up and the project costs down by insisting that every worthy company has a fair shot.

We agree.

By the way, the Beacon Hill Institute study referenced in the article is available here.  Of the 117 schools examined by the researchers, 19 municipalities entered into PLAs for school projects. The researchers took into account differences in both the type of schools (elementary, junior and high schools) and the size (controlling for square footage). The majority of school districts that chose not to enter into such agreements saved between $2.7 million for a 100,000-square-foot building and $8.1 million for a 300,000-square-foot structure.

With local budgets stretched to their limits nationwide, now is the worst possible time for local officials to waste taxpayer dollars on Big Labor handouts.  We urge Rochester officials to say no to PLAs.

Here is the coverage from the July 2 edition of the Middletown Times Herald-Record (“School Board Vote Rejects Project Labor Agreement,” 7/2/10):

School board vote rejects project labor agreement

By Heather Yakin

MIDDLETOWN — The Middletown School Board cast a vote Thursday night that effectively killed the idea of a project labor agreement for construction of a new elementary school.

The district had gotten three responses to its request for bids to do a preliminary study to determine if such an agreement, which sets terms of wages, scheduling, apprenticeships and other issues between labor and a developer, would save money on the project. The bids ranged from $16,500 to $33,000; the district was considering the highest bid, based on the companies’ track records.

But on Thursday, citing a need to be ready to bid the construction immediately if and when the state Education Department issues its okay, the board voted 6-2 to reject all of the bids and move forward on the project without a PLA.

Voting to reject the bids were board President Will Geiger, Vice President Linda Knapp and members Ed Estrada, John Perrino, Rose Tobiassen and Andrew Warren. Members Nicholas Mauro and Evelyn Isseks voted no.

“For us not to approve the feasibility study is a slap in the face to the union workers in our area,” Mauro said.

Score one for local taxpayers!

A 2006 study conducted by the Beacon Hill Institute at Suffolk University titled, “Project Labor Agreements and Public Construction Costs in New York State,” concluded that the presence of a PLA increased school construction projects’ base construction bids by $27 per square foot relative to non-PLA projects, representing an almost 20% increase in costs over the average non-PLA project.

By rejecting this PLA, the Middletown School Board ensured that taxpayers get the best construction at the best price.

A recent Columbus Dispatch points to evidence that PLAs in Ohio increase the cost of construction (“Value of Labor Agreements Open to Debate,” 6/26):

The state Legislative Service Commission seemed to vindicate the Republicans when, in 2002, it determined that state taxpayers saved $487.9 million – or almost 11 percent – because there was no prevailing wage on state-funded school projects. Although that study did not directly address the effect of PLAs, all PLA projects pay the prevailing union wage.

Here is a link to that study.

After a commission meeting Thursday, Murray declined to answer any questions about how PLAs affect prices. Murray is under investigation by the Ohio inspector general’s office over accusations that he pressured some school districts to sign PLAs.

Even the previous OSFC director, Mike Shoemaker - who was ousted from his OSFC position after Strickland’s Big Labor cronies complained that he wasn’t promoting PLAs and steering enough contracts to Big Labor – says that PLAs increase the cost of construction:

Mike Shoemaker, who was Gov. Ted Strickland’s first director of the facilities commission, said his rule of thumb was that prevailing wage adds about 5 percent to 7 percent to the cost of a job. A PLA, because of benefits payments and union dues, adds roughly an additional 5 percent to 7 percent, he said.

You never know what a project is going to cost until it’s done, said Shoemaker, who was forced out of his job last fall. Change orders, the tool that contractors use to demand more than they bid, were equally common among union and nonunion firms, Shoemaker said.

TheTruthAboutPLAs.com readers know that pro-PLA claims by Fred Kotler, who until last year was an associate director at Cornell University’s AFL-CIO-affiliated Union Leadership Institute, are bogus.

Kotler said there is no evidence to support claims that project labor agreements either limit the pool of bidders or drive up final construction costs, particularly on jobs already paying the prevailing union wage.

Owners enter into PLAs “for the promise of sustained work, which is a powerful incentive,” said Kotler, who now lectures at the Cornell program, which trains high-level union officials.

Plenty of anecdotal evidence and peer reviewed research contradicting Kotler’s obvious pro-Big Labor bias is available at www.abc.org/plastudies. 

For example, the three Beacon Hill Institute (BHI) studies evaluating the cost impact of PLAs on school construction in prevailing wage states of Massachusetts, Connecticut and New York all demonstrate a robust correlation between PLAs and increased costs.

However, Big Labor’s allies, like Kotler, have done everything possible to discredit BHI’s research.

BHI Professor David Tuerck responded to attacks on BHI studies in a September 2009 BHI study “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem” which we blogged about here. (See page 24-29, where BHI refutes Kotler’s study, as well as other critics such as Belman, Bodah and Phillps).

BHI’s article in the Cato Journal, “Why Project Labor Agreements Are Not in the Public Interest,” dismantles some of the methodology and false logic often employed in studies (such as Kotler’s) promoting PLAs as a mechanism to reduce construction costs. (See pages 53-62 of the report).

Academic squabbles aside, here is the key point in the OSFC corruption probe that taxpayers need to remember in order to hold appointed officials and the Strickland administration accountable:

“Our state potentially faces an $8 billion budget shortfall next year,” state Rep. Kris Jordan, a nonvoting member of the commission, wrote Murray in a letter last week. “Why is the commission not going with the lowest and best bidders for every project?”

Meanwhile, according to the Sidney Daily News, the OSFC decided to reverse its decision to deny a local nonunion contractor a waiver request regarding the Hardin-Houston School District’s K-12 building project (“State approves school project,” 6/26). Denying the waiver request would have ensured a union contractor would get the work but would have added costs.

The nonunion contractor was a victim of Murray’s zealous modus operandi to do everything possible to “find something wrong with nonunion contracts,” according to Shoemaker, and steer contracts to union contractors.

Read the Columbus Dispatch article to get the full details on the OSFC shenanigans.  According to the Sidney Daily News article, the corruption probe appears to have loosened Murray’s grip on the OSFC. 

Ohio school children and taxpayers are already better served.

The editorials point out that Patrick’s recent promotion of PLAs (at forums sponsored by Big Labor) in exchange for Mass. Big Labor Bosses’ support during November’s gubernatorial election makes little fiscal sense for Massachusetts taxpayers and stinks of political favoritism – especially considering the $22 billion Big Dig’s well-documented record of missed deadlines, cost-overruns, construction defects (including a motorist fatility due to a collapsed tunnel ceiling panel), and reports of union workers visting methadone clinics, sleeping and drinking heavily on the job.

Funded by federal and Massachusetts taxpayers, the Big Dig is the most expensive and infamous government-mandated PLA job of all time.

For readers not familiar with the Big Dig, its Wikipedia page says it all:

The Big Dig was the most expensive highway project in the U.S.[2]. Although the project was estimated in 1985 at $2.8 billion (in 1982 dollars, US$6.0 billion adjusted for inflation as of 2006^[update]),[3] over $14.6 billion ($8.08 billion in 1982 dollars)[3] had been spent in federal and state tax dollars as of 2006^[update].[4]

A July 17, 2008 article in The Boston Globe stated, “In all, the project will cost an additional $7 billion in interest, bringing the total to a staggering $22 billion, according to a Globe review of hundreds of pages of state documents. It will not be paid off until 2038.”[5] At the beginning of the project, Congressman Barney Frank joked, “Wouldn’t it be cheaper to raise the city than depress the artery?”[6] The project has incurred criminal arrests,[7][8] escalating costs, death, leaks, and charges of poor execution and use of substandard materials.

Of course the PLA isn’t responsible for all of the Bid Dig snafus, but it certainly didn’t prevent these mistakes either.  Because PLAs are marketed to lawmakers and project owners as a tool to avoid these types of incidents, it’s critical that lawmakers do their homework and fairly evaluate if PLAs actually live up to proponents’ promises of a PLA delivering a quality, on-time and on-budget project.

It’s clear Gov. Patrick hasn’t done his homework on PLA projects like the Big Dig. And apparently neither have other public officials.

The evidence against PLAs hasn’t stopped Bay State lawmakers like Gov. Patrick and Umass officials from attempting to mandate Big Labor-favoring PLAs on public works projects in exchange for construction union campaign cash and votes.

These officials should expect taxpayers, contractors and ABC chapters to hold them accountable for these special interest deals.

For example, in a 2005 effort to educate local and state lawmakers pushing PLAs on Massachusetts schools, the ABC Masachussets Chapter erected this billboard along the Southeast Expressway in Dorchester for drivers exiting the Big Dig’s I-93 tunnel.

The billboard’s connection between Massachusetts school PLAs and the Big Dig PLA received considerable media attention.  As a result of the bad publicity, public officials were reluctant to mandate PLAs.

Additionally, in 2006 the City of Fall River, Mass., bid the Kuss school construction  project under a PLA. After attracting few bidders — with those providing bids coming in well above the projected budget – the city canceled the PLA and reopened the bidding process. Reports stated that Fall River saved $5.8 million on total construction bids by removing the PLA and bidding the project using free and open competition. 

It was a real-world experiment measuring the cost of PLAs – right in the backyard of the Big Dig – and its results clearly demonstrate that PLAs cut competition and increase costs. 

A December 2006 report by the Beacon Hill Institute (BHI) at Suffolk University, “Project Labor Agreements and Financing Public School Construction in Massachusetts,” reviews this case study, which supports BHI’s previous research on the effect of PLAs on Massachusetts school construction costs.

BHI’s peer-reviewed academic paper  “Do Project Labor Agreements Raise Construction Costs?”  published by Bentley’s business school journal, is worth a read, too.

When Gov. Patrick and other Massachusetts lawmakers talk about the benefits of government-mandated PLAs, ask them what happened with the PLA on the Big Dig. Or the PLA experiment in Fall River. Or BHI research that found that PLA school projects are more expensive than non-PLA schools.

If lawmakers give you the wrong answer, they haven’t learned their lesson from the Big Dig and need to hit the books.

Required Reading on the Big Dig

The Boston Herald: Dozing on the Dig: Idle hands raise ire
Channel 7 News WHDH: Hank Investigates: The Big Swig (pdf)
The Boston Globe: Fore! Score a Bogey for the Big Dig (pdf)
City Journal: Lessons of Boston’s Big Dig
Boston Magazine: Confessions of a Big Dig worker
Wall Street Journal opinion piece by Stephen Moore: You Can’t Big Dig Yourself Out of a Hole (pdf)
Washington Post: Minding the Cost of Boston’s Bid Dig

This editorial is one for the ages. Let’s hope federal agencies and their procurement officials put politics aside and acknowledge that PLAs are a “rotten deal for taxpayers” when deciding whether a PLA is appropriate for federal construction projects.

There’s almost a direct correlation these days between the Obama Administration’s complaints about “special interests” and its own fealty to such interests. Consider its latest decree that federal contractors must be union shops.

The federal rule, which went live yesterday, implements an executive order President Obama signed within weeks of taking office. It encourages federal agencies to require “project labor agreements” for all construction projects larger than $25 million. This means that only contractors that agree to union representation are eligible for work financed by the U.S. taxpayer.

Only 15% of the nation’s construction workers are unionized, so from now on the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment. “This is nothing but a sop to the White House’s big donors,” says Brett McMahon, vice president at Miller & Long Concrete Construction, a nonunion contractor. “We’ve seen this so many times now, and how many times does it have the union label? Every time.”

It’s also a rotten deal for taxpayers. White House economist Jared Bernstein blogged that these agreements “significantly enhance the economy and efficiency of Federal Construction projects.” In fact, the carve-outs put an end to open, competitive federal bidding, which means higher project costs. They also mean taxpayers must finance the benefits and work rules of union members.

Mr. Bernstein could check all this with the Department of Veterans Affairs, which last year commissioned an independent study showing the Obama project labor agreements would likely raise the VA’s construction costs for hospitals by as much as 9% in three of five markets—Denver, New Orleans and Orlando. In two others, New York and San Francisco, the study predicted a mixture of small cost increases and small cost savings.

The study reported “strong evidence to suggest that the result of a PLA [project labor agreement] that dictates work rules, double benefits, team structure and activities on non-union type contractors will be that production costs will increase—given these union-related requirements.” It also rebutted a favorite liberal argument that such agreements lead to less labor strife, noting that there are “many examples for projects where there have been strikes but also no strikes—unrelated to whether or not a PLA is in place.”

The Veterans study mirrors academic work showing that project labor agreements raise the costs of construction by 10% to 20%. The Beacon Hill Institute at Boston’s Suffolk University in 2006 investigated the costs of building 126 Boston-area schools. It found project labor agreements raised winning bids for school construction projects by 12% and actual construction costs by 14%.

Boston’s Big Dig, Seattle’s Safeco field, Los Angeles’s Eastside Reservoir project, the San Francisco airport, Detroit’s Comerica Park—all were built under PLAs marked by embarrassing cost overruns. We’d list more, but newsprint is expensive.

The White House went out of its way to note that the Supreme Court has upheld such agreements in the past, suggesting it has a guilty conscience. In fact, the High Court has never ruled on the legality of these agreements under federal competitive bidding laws. Industry groups are now threatening legal action to defend the rights of workers who will be denied employment for the crime of not sporting Obama-Biden bumper stickers. It’s a fight worth having.

Links to the Veterans Affairs and the Beacon Hill Institute studies on PLAs can be found at www.abc.org/plastudies.

Many of the examples cited in the WSJ editorial are also referenced in ABC General Counsel Maury Baskin’s 2005 report, Union-Only Project Labor Agreements: The Public Record of Poor Performance.

A new survey conducted by the Suffolk University Political Research Center for the Beacon Hill Institute shows that 69% of Massachusetts voters oppose a requirement under which private contractors who perform public projects must hire workers through union hiring halls. The finding is important because the requirement is a key feature of Project Labor Agreements (PLAs), which are strongly favored by construction unions for conducting public projects.

Last year, President Obama issued an executive order encouraging the use of PLAs on federal construction projects. The order is controversial in part because PLAs require contractors to use labor provided by the unions, whether or not their own workers are union members.

Proponents argue that PLAs guarantee the availability of a skilled workforce and labor “peace.” Opponents argue that nonunion workers are just as a skilled as union workers and that the requirement puts nonunion contractors at a competitive disadvantage, penalizes the vast majority of construction workers, who do not belong to unions, and increases construction costs. Worries about labor peace, say opponents, are an empty threat.

Opposition to the idea of requiring construction contractors to hire through union hiring halls runs counter to voters’ otherwise sympathetic attitudes to unions. The same survey showed that a majority (52%) of Massachusetts voters have a favorable opinion of unions. It also found that only 19% of voters believe that public sector union workers are overpaid.

The requirement that construction contractors hire their workers through union hiring halls is opposed by almost every segment of the electorate. Eighty‐eight percent (88%) of Republicans, 76% of Independents and 52% of Democrats oppose the requirement. Even among households with union members, 59% are opposed. Opposition is consistent across voters segmented according to age, gender, race and attitudes toward candidates for governor and the U.S. Senate. Only the 15% of voters who have a “very favorable” view of unions support the requirement.

The survey suggests that public opinion of project labor agreements may be sensitive to perceptions about the degree to which construction workers are unionized. Seventy‐three percent (73%) of the respondents estimated that the fraction belonging to unions is 40% or more. In fact, only about 20% of private construction workers in Massachusetts belong to unions. Respondents were given this fact before they were asked about hiring through union hiring halls.

David G. Tuerck, Executive Director of the Institute said that “elected officials who must decide whether to enter into PLAs on public construction projects should be interested in the results of the survey. Apparently, when voters are informed of the facts concerning union membership, they do not support a key feature of PLAs.”

The statewide survey of 500 Massachusetts registered voters was conducted Feb. 21‐24, 2010.

The margin of error is +/‐ 4.4 percent at a 95 percent level of confidence. Cross-tabs.

See The Boston Herald for additional coverage, (“Poll: Don’t Mandate Unions on Projects,” 3/4/10).

While some PLAs permit a nonunion contractor to use a limited number of their core workforce (usually the lesser of 8 employees or 12 percent of the trade’s total workforce), most PLAs require an all-union workforce.

For those few nonunion employees that work on a PLA project, PLAs require that they are hired through the union hiring hall where they are often subject to union intimidation to join a union. While on the jobsite, PLAs force nonunion employees to follow unfamiliar union work rules and pay union fees for the life of a PLA project. 

Employer contributions to employee benefits must be paid into labor-management (union) run plans rather than existing plans offered by their nonunion employer. Employees will forfeit these contributions earned for hours worked on a PLA jobsite to the union plans unless they join a union and become vested. 

A 2009 study by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements” found that nonunion employees of nonunion contractors that are forced to perform under government-mandated PLAs suffer a reduction in their take home pay that is conservatively estimated at 20 percent because of the “pension” provision in typical PLAs.  Hundreds of millions of dollars of their income would be distributed to union pension funds, from which the nonunion workers will receive no benefits. It’s no wonder why nonunion contractors and their employees oppose PLAs.

The study found that had President Obama’s pro-PLA Executive Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements would likely have ranged from $230 to $767 million per year. In total, the move to PLAs could cost nonunion workers and their employers $414 million to more than $1.38 billion annually.

In short, nonunion employees experience a Big Labor shakedown on PLA projects.

Big Labor will be quick to refute this poll with arguments that PLAs don’t require an all-union workforce and nonunion contractors can bid on PLA projects. While both claims may be technically true, the reality is that PLA proponents must rely on distorted facts instead of superior value and performance to secure work for their members and regain lost market share.