All ABC members, employees and construction community stakeholders are encouraged to respond to the requests for information and tell the USACE that government-mandated PLAs injure competition, increase costs, and will not advance economy and efficiency in government contracting.

Stakeholders that participate on projects in Georgia, South Carolina, North Carolina, Virginia, Florida, Tennessee and Alabama may want to respond to the Savannah request for information by the Oct. 29 deadline.  Contractors in Kentucky, Illinois, Indiana, Ohio, Tennessee and Michigan may want to respond to the Fort Campbell survey, which is due Nov. 1 by 1:00 p.m. (EST), and contractors in Connecticut, New York, Massachusetts and Rhode Island may want to respond to the Newtown/Bridgeport Armed Forces Reserve Center survey, which is due Nov. 4 by 1:00 p.m. (EST).

The USACE recently removed government-mandated PLAs from the Army Reserve Center in Los Alamitos, Calif. and the Patrick Air Force Base in Brevard County, Fla. after a strong grassroots response and survey participation from the contracting community. The USACE removed a PLA mandate on the Armed Forces Reserve Center in Camden, N.J. following a legal challenge and robust grassroots response from the construction stakeholders.

In response to the USACE Honolulu District’s Sept. 24 request for information about PLAs on large scale construction projects (exceeding $25 million) within the State of Hawaii (Sources Sought Notice W9128A-PLA-INFO), ABC National sent an Oct. 18 letter in opposition to government-mandated PLAs on USACE projects in Hawaii.

The USACE and other federal agencies have issued PLA surveys as a result of President Obama’s pro-PLA Executive Order 13502 and federal regulations implementing the discriminatory and illegal order. The order and regulations encourage federal agencies to mandate anti-competitive and costly PLAs on a case-by-case basis on federal construction projects exceeding $25 million. The survey results are an important source of information used to determine whether a PLA is appropriate for a federal project.

Construction stakeholders interested in responding to these surveys should review the Oct. 18 letter to the USACE Honolulu District office as well as additional resources linked after the jump.

UPDATE: Here are ABC National’s responses to the USACE’s RFI on PLAs in various markets:

• Letter to USACE Louisville concerning Danbury, CT project (11/4/10)
• Letter to USACE Louisville concerning Ft. Campbell, KY area projects (11/1/10)
• Letter to USACE Savannah District (10/28/10)

For contractors, taxpayers and construction professionals unfamiliar with the problems with federal PLAs and regulations implementing President Obama’s pro-PLA Executive Order 13502, below are links to ABC National comments, which may be helpful information for contractors to review before responding to the USACE PLA survey.

The blog post, “PLA Final Rule Takes Effect Today: Let the Waste, Cronyism and Discrimination Begin,” provides a helpful overview about the current state of federal PLAs and the Obama order.

• ABC National’s Main Comments to the FAR Council’s Proposed Rule
• ABC Member Survey/Comment Supplement to Main Comments
• ABC National Comments Specifically Addressing the Regulatory Flexibility Act

On April 21, 2010, ABC National released, “The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged” by ABC general council Maurice Baskin, Esp., Venable LLP.  This document argues that the Obama Administration’s actions and the FAR Council’s final rule violate federal procurement laws; discriminate against 85 percent of the construction industry workforce and many small businesses; and hurt taxpayers.

Here is a blog post about this document.

Thanks for taking the time to respond to these surveys. Your responses will help maintain an open and competitive environment that will allow all qualified contractors to fairly compete for contracts to build the best possible construction projects at the best possible price.

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 is an excerpt from Ms. Alford’s letter (“Writer Won’t be Intimidated by Pro-Union Threat,” 7/27/10), with our emphasis added:

The presentations [for and against PLAs} given by the trade unions and the Connecticut chapter of Associated Builders and Contractors were informative and well done except for one thing. The trade union presentation never actually explained what a PLA is. We saw pictures of and heard about successful PLA projects and we heard a lot about what unions do but never got the details about PLAs. Thankfully, Lelah Campo from the Connecticut chapter of Associated Builders and Contractors supplied that pertinent information.

At the end of the day, both committees voted overwhelmingly against approving a PLA.

My congratulations to these hardworking volunteers for voting to keep the projects as open as a prevailing-wage project can be and making it possible for both union and merit tradesmen and women to have a chance to work in Bristol for Bristol; for being committed to getting the best possible price when spending the taxpayers’ money; and for saying to everyone that they believe in fairness to all.

But I must relay a not-so-nice incident from last night. As I was walking out of the Forestville School Committee meeting after the vote, and making my way through the crowd of union workers and union leaders near the door, someone — I don’t know who because he made sure I couldn’t turn my head to see him — whispered these words to me: “Just think about how hard the unions are going to work against you in your next campaign.”

To put that comment in perspective so that it makes some sense, some may remember that I ran for mayor last year and, at last night’s meeting, spoke against the PLA before the West Side School Committee.

So, was it a union member? A union leader? Does it matter? I don’t know, but comments like that — some might even say threats — are intended to intimidate, frighten and otherwise make someone think twice about disagreeing with the unions out loud. Whoever it was demonstrated the reputation of unions as a bunch of bullies and thugs, only interested in themselves — and you had better not cross them, by God, or else.

Whether or not I ever choose to run for office again is not the point, and not important. What is important is that somebody is comfortable with using threats and intimidation to silence any and all opposition or as a payback tactic for those who do oppose them.

Funny how much this kind of thing resembles the practices of the bosses of the past who unions are so proud to tell you they fought until workplaces were safe and wages were “fair.”

Not so funny is the fact that this kind of thing reflects back on the entire rank and file, making them “guilty by association.” Call me naïve, but I do not believe, nor will you ever convince me, that the majority of hard-working union members approve of such tactics. They don’t.

To the man who decided it was okay to attempt to intimidate me, politically or otherwise, nice try, buddy. But I don’t scare that easily and I am completely unimpressed by cowards.

Mary Alford

Bristol

Ms. Alford makes two very important points in her letter.  The first is obvious.  Threatening behavior with the intent to intimidate others is unacceptable.  If Ms. Alford’s account is true, and there is no reason to believe it is not, then this is a clear case of union cronies threatening a concerned citizen and past candidate for public office.  There is no place for this type of behavior in public debates.

The other important point is that in this case – as with many others – Big Labor is short on details when it comes to the actual provisions of PLAs.  Labor bosses show up at public meetings like this, say that PLAs will do everything short of guarantee world peace and then expect public officials to accept these claims as fact.

The true intent of these agreements starts to become clear when public officials take the time to examine a typical PLA.  Please visit our earlier post, “Project Labor Agreement Basics: What is a PLA,” to see what we mean.

CONSTRUCTION CONTRAST: Item: The $20.5 million Rotella Interdistrict Magnet School was finished late and came in 10 percent over budget. Today, it’s leaky, the climate-control system is faulty, the courtyard isn’t level, and brown stuff oozes from the tile floors in some places. Item: The $34.7 million Duggan School reconstruction is at least 20 percent over budget, and the school will open a year later than expected. In both cases, the Board of Education insisted on union-only project labor agreements (PLAs), effectively excluding the many nonunion contractors from bidding. Item: The $35.9 million City Hall renovation, about which we had serious misgivings from the start because of long years of neglect and recent, potentially catastrophic water damage, likely will be turned over to the city Nov. 30, a month early, and apparently under budget. The City Hall project was not a union-only PLA. What conclusions might one draw from these facts?

In 2007, Waterbury Board of Education officials mandated PLAs on $90 million worth of public school construction like the Duggan School and the Rotella Interdistrict Magnet School. The Republican-American wrote this scathing editorial opposed to the decision by Waterbury Board of Education officials to mandate PLAs on future construction (“The Return of Paronage,” 1/29/07).

It didn’t take long for Waterbury’s political establishment to make taxpayers start missing the state oversight board, which disbanded last week. The oversight board’s prime directive was to stand up for taxpayers. Those who hoped that approach to spending might spread through government like a vaccine saw their hopes dashed Jan. 22 by the Board of Education.

Presented with an opportunity to save city and state taxpayers money on school construction, the board said no to the savings and yes to a special-interest group: labor unions.

Poised to spend $90 million in school construction and renovation, the board could have opened the bidding to independent contractors that may or may not use union labor; or to union contractors only.

Obviously, the former approach would have saved money. Lelah Campo of Associated Builders and Contractors of Connecticut told the board 80 percent of the contracting firms in the state are not unionized, so there would have been keener competition for the contracts.

Just as obviously, choosing the lower-cost alternative presented no implications for quality. Only qualified bidders would win contracts. The Interstate 84 storm-sewer fiasco, meanwhile, was a union production. So was the troubled Rotella Magnet School project. Boston’s Big Dig, notorious for cost overruns, delays and lethal incompetence? Union only.

The board voted 7-3 to require a project-labor agreement, meaning only union contractors need apply. There was an undercurrent of selfish irresponsibility; board members understood the state will pay 80 percent of the project cost. The state’s money; the state’s tough luck, if the board’s decision inflates the price tag.

Most distressing, however, were the indications the board simply didn’t grasp its duty to taxpayers. With four dozen union members in the audience and only a few people representing the independent contractors, the board may have felt intimidated. But it didn’t take long for members to play to the crowd. “The key component of this whole thing is for Waterbury people to get a good wage,” board President Patrick J. Hayes Jr. said. “It’s about rebuilding the community.”

No, it’s about getting the schools built properly, on or under budget, and on time. It’s about public education. If Mr. Hayes and other members of the majority want to help adults in Waterbury get better wages, government agencies and private organizations engaged in that mission would benefit from their enthusiasm. But the school board’s job is to provide the best possible education for the children for a price the community can afford. Knowingly inflating the cost of a $90 million project poorly serves that objective.

Here’s an excerpt:

[Alan] Felder said that the Project Labor Agreement (PLA) signed by all unions working on city school construction allows contractors to avoid hiring blacks. “For us it’s a Preference Labor Agreement,” he said.

Read the full article here.

• In Trumbull, CT subcontractors for the Trumbull High School renovation/reconstruction project have been selected.  The local construction unions’ are upset because they lobbied hard to make sure this was a PLA project.   Supporters of free enterprise fought hard to ensure this project would be bid based on open competition and not union favoritism.  Now the project is set to put hundreds of people to work, regardless of their labor affiliation.
• The Third District Court of Appeals in Sacramento, CA stepped in to stop union greenmail abuse against the proposed $600 million Sutter Midtown Medical Center, midtown campus.  The Sacramento Business Journal reports that “the midtown development plan includes a women’s and children’s center, renovation of Sutter General Hospital and the Sutter Cancer Center across the street. The project also includes housing, stores and a new theater complex for the Children’s Theatre of California.”  This project is sure to create hundreds of jobs and some important additions to the community.  This court decision is a big win for the people of Sacramento as it sends a clear message that union greenmail will not be tolerated. Unfortunately, Sutter signed a PLA early in the construction process to avoid project delays and increased costs as a result of greenmail threats from construction unions. The SEIU had their own labor-related agenda so they picked up where the building trades unions left off and engaged in greenmail.  Businesses and government entities need to stand up to Big Labor or else this extortion will continue. 
• Staying in California, construction trade unions continue their attempts to establish a foothold in San Diego.  This time, they are preemptively targeting potential developers for the proposed San Diego civic center to negotiate a PLA.  Although we expect this type of behavior from the San Diego construction unions, it takes a special kind of nerve for a developer to being negotiating a PLA before they have been awarded a project.  Just a note to the future developer of the San Diego civic center project and their potential union friends, I would expect a serious fight if you insist on a PLA.
• Finally, bowing to union demands has put the San Diego Unified School District (SDUSD)’s School Board in a bad situation – again.  Despite a significant budget shortfall, the School Board opted to utilize a PLA on school construction funded by Proposition S, a $2.1 billion bond.  Not surprisingly, the SDUSD School Board also takes orders from the teacher’s union.  Despite a significant surplus of teachers and unlike every other district in California, the SDUSD refused to lay off any teachers to address the district’s cash crisis.  Out of money, the SDUSD School Board is now proposing a $30 million tax increase on local residents and businesses to cover their shortfall.  Needless to say, this is not going well.

That’s all for this week.  Be sure to check back with www.thetruthaboutplas.com for the most updated news and information on wasteful and discriminatory PLAs.

The editorial also cites the “simple and impeccable” methodology of a 2006 study by the Beacon Hill Institute at Suffolk University in Boston that compared costs of 117 New York state school construction projects with PLAs and without PLAs.  Devoid of pseudo-intellectual economic jargon and obscure reasoning, this study remains the best indicator of how PLAs cut competition and raise costs of public works for taxpayers.

Editor’s note: You can read the other two Beacon HIll Institute school construction PLA studies from MA and CT, as well as other studies and white papers about costly and discriminatory PLAs here and here.

You can also read opposition to PLAs in America’s newspaper editorials here.

YOUR VIEW: LELAH CAMPO

Open Government Projects to Nonunion Labor

Hartford Courant, May 5, 2009

With Gov. M. Jodi Rell and state legislators struggling to address a big budget deficit for this year and huge projected deficits for the next two years, we are surprised that an item that offers huge cost saving potential is not on the table.

The fiscal debate has included suggestions of tax hikes and compensation concessions by state employees, but one opportunity to close budget gaps should not be overlooked: the elimination of union-only construction.

In many of Connecticut’s cities, project labor agreements are signed between unions and politicians. The sweetheart deals make it all but impossible for nonunion contractors to bid on public construction projects.
Because project labor agreements require that all contractors and subcontractors agree to union representation of all workers, use union hiring halls and conform to restrictive union work rules and job categories, these agreements are expensive. A 2004 study of Connecticut school construction by the Beacon Hill Institute at Suffolk University, which we underwrote, showed that such agreements raised costs by 17.9 percent.

Why are locally signed project labor agreements a problem for state taxpayers? The state funds a large share of municipal construction in Connecticut. Thus, all state taxpayers pay the premium for such deals.

Hartford, for example, announced in January a decade-long, school-construction project with an estimated price tag of $966 million. Under the city’s existing project labor agreement, that figure is nearly 18 percent too high, based on the Beacon Hill study. Given an expected state reimbursement rate of between 75 and 80 percent, Hartford’s building program will sock Connecticut’s taxpayers with a self-inflicted cost overrun as much as a $138 million. (If the elimination of union-only construction in one city would save so much, just imagine the savings that would result from banning project labor agreements throughout the state.)

What do taxpayers get for the added expense of project labor agreements? It’s not superior performance. Plenty of such restricted projects have failed to be completed on time and on budget. The long-troubled renovation of Hartford Public High School is under a project labor agreement.

As for quality, jobs done with or without project labor agreements are governed by the same codes and specifications, with engineers and inspectors providing oversight.

Unions claim that project labor agreements ensure that only local workers are employed. But more than 80 percent of construction employment in Connecticut is nonunion. By restricting competition, project labor agreements exclude eight out of every 10 local workers, which can cause contractors to seek employees from other states.

Construction union bosses say project labor agreements ensure workers fair compensation for their work. Unfortunately, proponents prefer rhetoric to reality. On Connecticut public projects – all companies union and merit-shop alike – must pay the “prevailing wage,” (union scale wages) as well as benefits.

In some ways, nonunion contractors do even better for their workers. For example, paid holidays and paid vacations, which are usually not included in union contracts, are commonplace in Connecticut’s merit shops. Also, nonunion workers aren’t required to pay union dues, much of which is used not to represent members’ interest, but to support lobbying and election-related projects.

A recent poll found that nearly two-thirds of residents prefer spending reductions as the means to balance the state’s books. Couple that desire for fiscal prudence with a serious drop in Connecticut’s construction employment – down 16,400 jobs since its October 2007 peak – and it’s clear that expensive agreements that lock the majority of state pre-qualified contractors out of the bidding process for public building projects can no longer be justified.

Even in a strong economic environment, cozy and costly arrangements between politicians and construction unions aren’t sound public policy. In a period of economic and fiscal woes, project labor agreements make even less sense.

•Lelah Campo is president of the Associated Builders and Contractors of Connecticut located in Rocky Hill.

Merit shop contractors and subcontractors are building the Q Bridge foundations with a mixture of union and non-union workers.  Local unions are pushing hard for a PLA on larger Q Bridge contracts that will be bid later this season. 

The current bridge foundation project was broken into smaller contracts to make the main contract more manageable because the Q bridge received no bidders when it was first advertised in 2006. 

The second round of bids was scheduled to be opened May 27, but that date has been pushed back to June 3 at the request of potential bidders.

A spokesman for the Connecticut Department of Transportation advocates that free and open competition, without PLAs, is the best way to attract a greater number of bidders and bring a project on time and on budget: 

Kevin Nursick, spokesman for the state Department of Transportation, said it wouldn’t be in the state’s best interest to require union labor on the big highway and bridge projects.

“Our (bidding) process is intended to produce the best product at the lowest possible price for taxpayers,” he said. “Thus, we believe that (requests for proposal) should be unencumbered by any provisions which could limit the pool of prospective respondents.”

Hopefully that sentiment will be true for all current and future Connecticut construction projects.

Kudos to the CT DOT for serving the interests of all taxpayers (not just the special interests of organized labor) by bidding this project using free and open competition.

TheTruthAboutPLAs.com will be following this project closely.

Fact: PLAs eliminate merit shop contractors and their employees from working on PLA construction projects.

So how does this fact impact construction owners and taxpayers?

Academic studies overwhelmingly show that union-only PLAs increase construction costs between 10 percent and 20 percent when compared to similar non-PLA projects.

A May 2006 study by the Beacon Hill Institute (BHI) at Suffolk University in Boston, Massachusetts, found that the use of PLAs on school construction projects in New York increases construction costs.

Project Labor Agreements and Public Construction Costs in New York State concluded the following key findings:

Based on data on construction costs and related variables for school projects in New York since 1996, we find the following:

1. PLA projects have higher bid costs; again, we are more than 97% confident of this finding, based on the available data.
2. The finding that PLA projects have higher construction costs is robust, in that:
   1. The effect persists even when the data are subdivided, so that the effect is evident separately for large projects, mid-size projects, small projects and elementary schools.
   2. A regression that weights observations by project size also shows the effect.
3. PLA projects add an estimated $27 per square foot to the actual cost of construction (in 2004 prices), representing an almost 18% increase in costs over the average non-PLA project.

In sum, the evidence that PLAs have increased the cost of school construction in New York since 1996 is strong.  The effect is also substantial; our estimates find that PLAs increase project bid costs by 20%

These findings support a fundamental premise of economics that is at the heart of the PLA debate: fewer firms competing for a contract results in higher costs.  This is especially true when 84.4 percent of the construction workforce - and their employers – are eliminated or discouraged from projects subject to a PLA. 

In addition, inefficient and costly union work rules add to labor costs, although academic research has been somewhat limited in this field and unable to generate a reliable figure that can be applied to construction projects. 

If the New York study is not enough evidence to support the conclusion that PLAs increase the cost of construction, BHI completed a similar study of Connecticut schools (2004) that found that PLAs raise the cost of building schools by an average of almost 18 percent. A September 2003 BHI study of Massachusetts school construction concluded that bid prices on projects with a government-mandated PLA were on average 14 percent higher than bid prices on non-PLA projects. In addition, the average actual cost of construction was 12 percent higher for projects executed with a PLA.

Fact: PLAs increase the cost of construction when compared to non-PLA projects

So let’s answer the original question. How do PLAs impact construction owners and taxpayers? 

PLAs increase the cost of construction between 10 percent and 20 percent. That means a construction owner has to either cut 10 percent to 20 percent of a project’s budget to build the exact same product (absent a PLA) or find additional money to cover the increase in costs. 

If you are a taxpayer in a school district that is spending taxpayer dollars on schools subject to PLAs, that means you are getting roughly four schools for the price of five. 

As a taxpayer, that may mean cuts in critical education spending, scaled back construction and/or increased taxes.

If you are a taxpayer in a community utilizing PLAs, Sometimes The Truth About PLAs hurts.