After sailing through the California legislature via a deceptive gut and amend legislative vehicle originally about tuberculosis screening, Governor Jerry Brown (D) signed SB 922 on Sunday to “prohibit” measures passed by local governments that ban government-mandated PLAs.

Local governments in California like the City of Fresno, Orange County, City of Chula Vista, City of Oceanside, Placer County, Palmdale Water District, San Diego County and Stanislaus County have passed measures prohibiting government-mandated PLAs on construction projects partially or completely funded by their government’s funds.  The measures permit contractors to voluntarily execute PLAs on local projects, as is permitted by the National Labor Relations Act and are intended to increase competition and deliver taxpayers the best possible construction project at the best possible price.

Popular ballot initiatives like San Diego County’s Proposition A, which voters overwhelmingly passed in November 2010 by a 75-24 margin, demonstrate that local taxpayers have had enough with these costly crony contracting PLA schemes. Faced with a threat that the people would put an end to union-favoring government-mandated PLAs, Big Labor called in a favor with Gov. Brown and Sacramento Democrats to pass SB 922.

Today the Wall Street Journal editorial board blasts Gov. Brown and Sacramento Democrats for trampeling the political will of local voters and supporting schemes that steer taxpayer-funded construction projects to prominent donors of the Democrat party (“Shovelling for Labor: California tries to raise the cost of construction projects,” 10/5/11):

We keep hearing that the U.S. needs better roads, bridges and other public works. But then why do politicians keep making it so much more expensive to build them? In the latest example, Governor Jerry Brown signed a bill on Sunday that attempts to prevent California cities from banning government-mandated project labor agreements, or PLAs.

PLAs are pre-hire agreements that contractors negotiate with labor unions. Construction firms must generally agree to play by union work rules, pay workers union wages, and contribute to union health and retirement funds—whether or not the employees they hire belong to a union. Non-union workers usually then have to join the union and pay union dues. According to some studies, PLAs raise costs by 12% to 18%, which explains why cash-strapped governments and tapped-out taxpayers are moving against them.

Arizona, Louisiana, Maine, Michigan and Tennessee have enacted laws in the last year prohibiting local governments and agencies, which often play into the hands of unions, from mandating PLAs. Voters in San Diego County and the San Diego suburbs of Chula Vista and Oceanside approved bans on government-mandated PLAs last November. The cities of San Diego and Sacramento are planning similar ballot measures next year.

Unions hate this trend, so they, er, encouraged Democrats who run the state legislature in Sacramento to pass the bill that Mr. Brown so obligingly signed. Democrats know that the National Labor Relations Act, a federal law, already prevents local governments from banning PLAs altogether. But what states and cities have been trying to do is prevent governments from requiring PLAs. Democrats hope the new law will deter cities from passing laws that keep the doors open to non-union contractors. Cities that ban government-mandated PLAs could face legal challenges and harassment from unions. The state could also refuse to fund their projects.

The California law is the first of its kind, and non-union construction firms fear that other labor-friendly state legislatures will follow Sacramento’s lead. If that happens, taxpayers will lose the limited ability they have to constrain costs and expedite construction. The result? Public projects that cost more and create fewer jobs, though they’ll be the kind of jobs that Democrats prefer—unionized, and thus with dues payable into campaign funds to elect more Democrats.

As usual, the Wall Street Journal editorial board’s analysis is correct.

It is unclear how SB 922 will impact current government-mandated PLA bans enacted by charter cities as well as the progress of ballot initiatives in the City of San Diego and City of Sacramento already underway.

What’s clear is that Big Labor’s chums in Sacramento have no qualms about choking free enterprise, soaking taxpayers with added construciton costs and smothering the will of the people in order to feed their campaign coffers with Big Labor’s campaign contributions.

Expect some legal wrangling, requests for legal opinions and lots of press in the coming weeks.

Update: Fox News covered Jerry Brown’s signing of this disastrous legislation on the October 7 edition of Fox and Friends:

This is also a good opportunity to review the numerous times that California media availed itself of the opportunity to can the entire package.

For those not following this issue, California State Senate Pro Tem Darrell Steinberg and Assembly Speaker John Perez changed two bills unrelated to construction or labor issues and through a “Gut and Amend” process, transformed them into vehicles to overturn the will of both local elected officials and taxpayers in a number of communities throughout the state.

The legislative leadership took a bill about tuberculosis screening (Senate Bill 922) on the Friday before Labor Day and turned it into a bill that nullifies current and future bans on PLA mandates by local governments and cuts off state funds for charter cities that ban government-mandated PLAs.

Two other bills were amended at the last minute and without much public scrutiny to meet Big Labor’s demands.  The first, A.B. 436, requires certain local governments to pay fees to the state for labor compliance, unless these governments require their construction contractors to sign a PLA, in which case they don’t have to pay the fees to the state.

Another, S.B. 790, includes an unrelated tack-on provision that allows utilities to pass through to ratepayers the costs of mandatory payments in PLAs to Labor-Management Cooperative Committees, mysterious and unaccountable slush funds authorized by an obscure federal law from 1978.

These bills are designed to undercut the eight California communities to ban PLA mandates on taxpayer funded projects.  Several of these communities adopted these bans through ballot initiatives that were overwhelmingly approved.

Here at TheTruthAboutPLAs.com, we urge Gov. Brown to veto these bills.  That is pretty obvious.  But we aren’t the only ones.  State and local media has covered these, and other bad bills on their way to the governor’s desk, extensively.  It turns out that other people are concerned about some of the garbage coming from the California Legislature also.

(Cartoon Credit: Bakersfield Californian)

Here is a round-up of media coverage on this issue:

News Media Coverage of Senate Bill 922 Since Passage in the California Legislature:

1.      Raft of labor-backed bills are a challenge for Jerry Brown– Sacramento Bee – September 12, 2011; in Fresno Bee – September 13, 2011

2.      Bills that Need to be Vetoed – Modesto Bee (editorial) – September 12, 2011

3.      EDITORIAL: Meet the boss – North County Times (editorial) – September 13, 2011

4.      Not every bill warrants that signature – Merced Sun-Star (editorial) – September 13, 2011

5.      Four bills need Gov. Brown’s veto– Oakland Tribune, Contra Costa Times, other San Francisco Bay Area local newspapers (editorial) – September 13, 2011

6.      Brown Ought to Use His Veto Pen Without Mercy – Sacramento Bee (editorial) – September 13, 2011

7.      Follow the Yellow Brick Road – www.CalWatchdog.com – September 14, 2011

8.      FORUM: Legislature cares little about local control – North County Times (powerful opinion piece by Oceanside City Councilman Jerry Kern about his personal experience at the state capitol opposing Senate Bill 922) – September 15, 2011

9.      Late amends leave advocates punched in the gut – Capitol Weekly – September 15, 2011

10.   Proposed legislation could cost cities millions – North County Times – September 11, 2011

11.    California Legislators: Gut and Amend is Gutless and Abusive – California Political Review – September 14, 2011

12.     Brown would be wise to veto many of the bills before him – Fresno Bee (editorial) – September 15, 201

13.     600 bills on Jerry’s desk – Sacramento Bee – September 17, 2011

14.     Senseless Bills – Riverside Press-Enterprise (editorial) – September 17, 2011

15.    Four Bills the Governor Should Veto – Woodland Daily Democrat – September 16, 2011

16.    Four for Brown’s veto pen – Vallejo Times-Herald – September 18, 2011

17.   New Initiative Sets Stage for Latest Labor, Business Battle – www.voiceofSanDiego.org – September 21, 2001

Despite the gutting and amending of this bill immediately before Labor Day weekend, numerous construction trade associations, business groups, taxpayer organizations, local government associations, and local government officials went on record in opposition to the bill, starting with a hastily-scheduled Assembly Business and Professions Committee hearing on Tuesday, September 6.

State Senator Michael Rubio (D-Bakersfield), who plans to run for Congress, appeared before the committee to cheerlead for this sloppy last-minute creation of the State Building and Construction Trades Council and its affiliate construction unions. Senate Bill 922 passed this committee and then passed the Assembly Appropriations Committee on September 7 on party-line votes. (All Democrats supported the bill; all Republicans opposed it).

Meanwhile, faxes began pouring into legislators’ offices from contractors, business owners, and ordinary California taxpayers objecting to Senate Bill 922 and its union-backed partners, Assembly Bill 436 (gutted and amended on Wednesday, August 30) and Senate Bill 790.

Assembly Bill 436 requires certain local governments to pay fees to the state for labor compliance, unless these governments require their construction contractors to sign Project Labor Agreements, in which case they don’t have to pay the fees to the state. The state leaves those contractors (and the unions) to do whatever they do when no one with official authority is watching. It passed on the Senate floor on a party-line vote (Democrats in support, Republicans opposed) on September 7.

Senate Bill 790 includes an unrelated tack-on provision that allows utilities to pass through to ratepayers the costs of mandatory payments in Project Labor Agreements to Labor-Management Cooperative Committees, mysterious and unaccountable slush funds authorized by an obscure federal law from 1978. The bill (about community choice aggregation programs for electric consumers) was uncontroversial and headed toward unanimous approval until this provision (inserted at the request of union lobbyists) tainted the bill. It passed the Assembly floor on September 8, after the presiding chairman of the Assembly denied the request of Assemblywoman Shannon Grove (R-Bakersfield) to show physical evidence of such payments and then cut off her oral statement. See the video here: Assemblywoman Grove tries to discuss a controversial provision of SB 790 and is shut down by opposing leadership before being able to speak.

Then the news media became aware of these bills. Here are articles and editorials about at least one of these bills (and in some cases, all three bills):

1. Editorial: Gut-and-amend bill needs to be stopped – Sacramento Bee – September 7, 2011

2. Legislature moves to overturn bans on local labor friendly agreements – San Diego Union-Tribune – September 7, 2011

3. Kevin Dayton: Construction Unions Set Up State Legislature to Crush Fair and Open Competition Policies at Local Governments – www.FlashReport.org (op-ed) – September 7, 2011

4. Union Bias – Riverside Press-Enterprise (editorial) – September 8, 2011

5. Legislature’s Rhetoric on Jobs is Empty – San Diego Union-Tribune (editorial) – September 8, 2011

6. Labor bills introduced as session nears end – Orange County Register (editorial) – September 8, 2011

7. Banning Project Labor Agreement Bans in California – www.PublicSectorInc.com – September 7, 2011

8. Opinion: SB 922 Undermines Basis of State/Local Government Relationship – www.PublicCEO.com – September 8, 2011

9. Unions attempt to push through Senate Bills by going to puppet legislators – San Diego Daily Transcript (op-ed) – September 6, 2011

10. Dan Walters: Fun, games mark California Legislature’s final week – Sacramento Bee (columnist, run in numerous state newspapers) – September 8, 2011

11. Legislation Boosts Union Trust Fund – www.CalWatchdog.com – September 8, 2011

12. Dan Walters: New legislative bills grow in the dark – Sacramento Bee (columnist, run in numerous state newspapers) – September 9, 2011

13. Union ‘Gut and Amend’ Bills Slice Open California – www.FoxandHoundsDaily.com – September 9, 2011

14. A Bad Bill Sneaks through Legislature – Modesto Bee (editorial) – September 8, 2011

15. Bill OK’d that could expedite stadium (also reports on SB 922 moving through legislature) – San Diego Union-Tribune – September 10, 2011

 16. Senate approve bill boosting NFL stadium in L.A. (also reports on SB 922 moving through legislature)  – Orange County Register – September 10, 2011

UPDATE: All three bills passed the California legislature and wait for Gov. Brown’s approval.

Fax Gov. Brown TODAY and urge him to VETO all three bills.

The Wall Street Journal recently tallied up the growing number of state and local governments that are rejecting demands for project labor agreements on public construction projects.

No surprise, Massachusetts wasn’t on the list.

TheTruthAboutPLAs.com readers can learn more here about recently enacted state legislation, such as Michigan’s S.B. 165, which curtails anti-competitive and costly government-mandated PLAs on state-funded projects in Michigan.  The red states in this map have enacted legislation or similar executive orders curtailing government-mandated PLAs.

More from the Boston Herald editorial:

Project labor agreements steer public construction work to union shops in exchange for a guarantee of labor “harmony.” Union leaders argue that they guarantee skilled workers and safe working conditions on taxpayer-funded projects.

But in practical terms, they box out non-union companies (whose tradespeople are of course licensed by the state and must comply with all workplace safety rules), drive up public construction project costs and allow union-friendly politicians to curry favor with organized labor.

Perhaps the most offensive example in Massachusetts of late is the decision to require a PLA on a 10-year, $750 million capital plan at the University of Massachusetts at Boston, a decision backed by the Patrick administration. No non-union shops need apply for any of that work over the next decade.

As the Journal noted, Louisiana has passed a law prohibiting state entities from mandating PLAs. Tennessee, Arizona and Idaho have passed similar legislation. Maine Gov. Paul LePage this month signed a bill guaranteeing open competition on state building projects through 2015, while Utah, Montana, Missouri and Arkansas already have similar laws.

These measures don’t prohibit the use of union labor, and isn’t necessary to prohibit PLAs altogether.

But by preventing local and state government agencies from making these agreements mandatory, they can level the playing field. We can dream, can’t we?

With PLA-friendly Democrats entrenched in Beacon Hill, the Herald’s editorial board might have to wait until after the results of the 2014 gubernatorial election is announced before they can start whistling Hall & Oates:

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The editorial is correct, such a measure would benefit Mass. taxpayers, qualifed contractors and their experienced nonunion employees who compose 84.4 percent of the Bay State’s 2010 private construction workforce. It will encourage full and open competition from both union and nonunion firms and permit contractors to use PLAs on a voluntary basis.

Anti-government-mandated PLA legislation will ensure fairness and neutrality in government contracting and helps taxpayers get the best possible product at the best possible price.

The editorial board at The Wall Street Journal has again come out against wasteful and discriminatory government-mandated PLAs.  Here are the highlights from the editorial (“Project Labor Revolt: The states ban union political bid-rigging. Obama demurs,” 7/19/11):

One benefit of the squeeze on state and local budgets is that politicians are finally having to confront their sweetheart deals with labor unions. The latest reform movement is moving against project labor agreements, or PLAs, that limit bids on construction projects to contractors that agree to union representation.

Only about 13% of construction workers belong to unions, and PLAs are a union invention to use their political muscle to organize more companies. Proponents argue that PLAs ensure the speed and quality of construction plans. But PLAs are one of the reasons that Boston’s Big Dig was estimated at $2.8 billion but eventually cost $22 billion. Studies show that projects under PLA contracts on average cost 12% to 18% more than projects awarded by open, competitive bidding. Taxpayers pick up much of this tab.

[snip]

In response to this evidence, states have been pulling away from PLAs. Louisiana passed a law this month that prohibits state entities from mandating the use of PLAs. Tennessee, Arizona and Idaho passed similar legislation earlier this year, and Iowa’s Governor Terry Branstad, in one of his first acts after inauguration, signed an executive order ending a state PLA requirement. Legislatures in Maine and Michigan recently passed bills along these lines that governors are expected to sign. These states are joining Utah, Montana, Missouri and Arkansas, which enacted bans in recent years.

The new wave of Republican state officials is leading this reform, but the public seems to support the effort even in Democratic-leaning areas. Seven localities in California have passed ballot initiatives to end mandated PLAs in the last decade, including five since 2009. This includes places like Chula Vista, where President Obama received 61% of the vote. As Andy Conlin of Associated Business and Contractors notes, wherever PLAs are subject to popular referendum, they’re rejected.

You may not be surprised to learn that the Obama Administration is not part of this reform trend. In February 2009 Mr. Obama issued Executive Order 13502, which lifted President Bush’s ban on PLAs and explicitly “encourages” them in federal construction projects worth more than $25 million. As the 2012 election nears, the Administration will be tempted to extend the order to include projects that receive any federal funds.

That would raise construction costs across the country, and at all levels of government, because so many public works projects are jointly funded by states and the feds. It would also mean fewer construction jobs overall, though higher pay for those unionized workers lucky enough to get one.

PLAs are a form of political bid-rigging that robs taxpayers even in good economic times. Amid today’s limited fiscal resources, PLAs steal money from the likes of education and law enforcement to reward politically-connected companies and their unions. They deserve to be outlawed.

Here at TheTruthAboutPLAs.com, we couldn’t agree more.

This editorial touches on a couple of key points. In addition to detailing how PLAs increase construction costs and discriminate against the 87 percent of the construction workforce that chooses not to join a labor organization, it outlines what has become a national trend in the last 12 months. In state after state and community after community, Americans are standing up to demand the best construction at the best price for their hard-earned tax dollars. These demands are showing up at the ballot box in places like Chula Vista and San Diego County in California, where voters overwhelmingly approved ballot initiatives banning government-mandated PLAs on local projects. In places like Iowa, Maine and soon Michigan, taxpayers’ desire for fair and open competition is being expressed through their governors and state legislators. Regardless of the method, sensible taxpayers are taking important steps to guarantee value on public construction projects.

The Wall Street Journal also reminds us that the threat of Section 7 of Executive Order 13502 looms large as the 2012 presidential election approaches. Regular readers remember that Section 7 of the order requires: “The Director of OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of project labor agreements, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance.”

While we have clearly passed the 180-day deadline set by the order, there is still reason to believe that the Obama administration could take action on Section 7 in the next 18 months. It is clear that bid protests, other legal impediments and public pressure have kept the Obama administration from implementing as many government-mandated PLAs as they expected and section 7 of Executive Order 13502 allows the administration to provide a tasty handout just in time for Big Labor to support President Obama’s re-election campaign. We saw this same cycle occur at the state level where embattled incumbent governors in Iowa, Illinois and Massachusetts either issued executive orders encouraging state agencies to require PLAs or used other methods to encourage the use of government-mandated PLAs on high profile construction projects with the obvious intent of currying favor with the construction union bosses.

Corruption: This is how Big Labor Leverages Government-Mandated Project Labor Agreements

Back to the editorial, this is an outstanding read and really breaks down how government-mandated PLAs are bad for taxpayers and the construction industry workforce still struggling to come back from more than 15 percent unemployment.

(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.

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

Originally estimated to cost $2.5 billion, Phase 2’s price tag has ballooned to more than $3.5 billion and the project has not even broken ground yet. Financial support from Virginia stakeholders (Loudoun County, Fairfax County, the Commonwealth of Virginia and Dulles Toll Road users) footing the bill for this project is unraveling because MWAA has not done enough to control escalating project costs.

The controversy has grabbed headlines and forced local, state and federal officials to develop cost-cutting solutions and investigate the questionable decision-making and planning of MWAA.

On Saturday, a Washington Post editorial suggested MWAA should abandon the Phase 2 PLA mandate as a solution to trim “skyrocketing price projections” that threaten to derail this project (“Containing Costs on the Silver Line,” 6/23):

One focus should be the airport board’s insistence that any general contractor bidding on the project be bound by a pro-union labor agreement. Already, Ken Cuccinelli II, Virginia’s attorney general, has threatened to sue if the deal turns out to violate the state’s labor laws.

The airports board was pushed to adopt the “project labor agreement” by board member Dennis Martire, who, in his day job, is a senior official in the Laborers’ International Union of North America, which represents hundreds of thousands of construction workers. Mr. Martire had an obvious conflict of interest, as his union would be a direct and major beneficiary from a labor deal. He should have had the common sense to recuse himself from the decision, even if his vote did not technically violate the board’s narrowly drawn ethics policy.

There is serious debate about whether a labor pact would drive up expenses. The airports authority says a similar pact for the project’s first phase, under construction from Falls Church to Reston, has helped contain costs and enhance efficiency by ensuring a steady supply of workers and avoiding labor trouble. But that agreement was adopted voluntarily by the contractor. There are concerns that a mandatory labor agreement for the second phase could dampen competition and drive up costs by discouraging bids from some large contractors, and by imposing cumbersome union rules. In an era of belt-tightening, the airports authority must go the extra mile to ensure that the Silver Line’s construction is managed as frugally as possible.

Attorney General Ken Cuccinelli’s expressed opposition to the Phase 2 PLA during this June 3 radio interview on WMAL 630 (listen to discussion of the Phase 2 Silver Line PLA at 2:49 of the clip) when he said the Phase 2 PLA mandate may be subject to a legal challenge if it violates Virginia’s Right to Work law.

The Washington Examiner reported that Virginia delegates Tim Hugo, Barbara Comstock and Thomas Greason sent a letter requesting that Cuccinelli investigate the Phase 2 PLA mandate and the possible ethics violation of the MWAA board member and Laborers International Union of North America (LIUNA) official Dennis Martire because he advocated for the Phase 2 PLA mandate that financially benefits his employer (“Virginia lawmaker calls for probe of Dulles Rail labor pact,” 5/28).

Martire’s possible MWAA ethics violations have drawn interest from other sources, including the Chantilly and Oakton Patch and the Bacon’s Rebellion Blog. (Check out the nice piece at Bacon’s Rebellion on the Silver Line PLA controversy (pdf).

The Washington Post reported that Secretary of Transportation Ray LaHood has been called in to mediate the dispute between Virginia’s key financial stakeholders and MWAA (“Transportation Secretary LaHood to try to mend rift over Dulles Metro station,” 5/31) where he has already delivered some reality checks to MWAA board members, according to this WaPo editorial (“Reality check for Dulles rail,” 6/1):

FOR THE PAST couple of months, the handful of unelected officials in charge of building Metro’s $6 billion Silver Line extension to Dulles International Airport and beyond have pushed the idea that federal loans — not serious cost-cutting — will make the project’s numbers work. On Wednesday they got a harsh reality check.

It came in a meeting called by Transportation Secretary Ray LaHood, who convened project stakeholders, including members of the Metropolitan Washington Airports Authority, which is in charge of building the 23-mile extension. In response to suggestions from the airports board that the feds could shore up the Silver Line’s shaky finances with a huge loan, Mr. LaHood delivered an unusually blunt message, according to several people who attended the meeting. The federal government “is not a cash cow,” he said; it’s not going to ride to the project’s rescue.

The Fairfax Times reported that the U.S. Department of Transportation announced it will audit MWAA (“Inspector General will audit MWAA,” 6/24):

U.S. Inspector General of the U.S. Department of Transportation Calvin L. Scovel III announced Tuesday that his office will audit the Metropolitan Washington Airports Authority.

The audit, according to a letter to MWAA from Scovel, will determine if the authority’s policies and procedures comply with the law and whether its board of directors has been transparent and accountable in its decisions related to the now controversial Dulles Rail Project.

U.S. Reps. Frank Wolf (R-Dist. 10) and Tom Latham (R-Iowa) asked for the investigation earlier this year.

MWAA was the subject of a 2002 report from the Government Accountability Office (GAO) that investigated MWAA’s controversial contracting policies.

Virginia Delegates Tim Hugo, Barbara Comstock and Jim Lemunyon sent a letter June 11 to MWAA Chairman Charles Snelling objecting to the $330 million in additional costs resulting from MWAA’s decision to build an above ground metro stop at Dulles Airport. The letter also strongly opposed the Phase 2 PLA:

We also find it fiscally reckless for MWAA to adopt the unnecessary resolution directing MWAA staff to include a PLA in the procurement documents for Phase 2 of the project. As you know, we raised the issue of PLAs in a hearing of the House Transportation Committee, held by Chairman May, in March.  We never received satisfactory answers about the added costs from PLAs.  Instead, this decision was made hastily with little discussion.  If MWAA mandates a PLA in the specifications of Phase 2 bidding documents, it will harm local and Commonwealth taxpayers, increase costs for Dulles Toll Road users, and discourage competition from Virginia’s qualified construction firms.  It will also put the funding path for this project on an unsustainable path that our constituents simply will not accept.

Further, the logic MWAA board members used to mandate a PLA on Phase 2 is based on misinformation provided by special interests serving on the MWAA board. MWAA member Dennis Martire is the Vice-President of The Laborers International Union of North America (LiUNA). A Phase 2 PLA mandate will result in LiUNA, the labor organization employing Mr. Martire, receiving a financial windfall worth tens of millions of dollars resulting from an estimated 10 million man hours of labor supplied by LiUNA members. What are the potential conflicts of interest here?  The public needs to know more about this situation.  MWAA board members and staff cannot ignore such an appearance of conflict.

What’s worse, is the potential economic consequences for Commonwealth taxpayers. Studies estimate PLA mandates increase the cost of construction by 12 percent and 18 percent compared to similar non-PLA projects, and these could very well be low estimates.  MWAA’s financial stakeholders can’t afford the $300 million to $450 million in crony contracting costs added to the $2.5 billion construction budget.

In addition, this is unfair to Virginia workers.  Virginia can’t afford the job losses resulting from this PLA, as 96 percent of Virginia’s private construction workforce does not belong to a union, and they deserve a fair shot at these high paying jobs. Pro-PLA Board Members claimed that a PLA provides a steady workforce, implying that there was some type of worker shortages in today’s economy. This has no basis in fact. A PLA mandate will ensure that the majority of construction jobs created by Phase 2 will go to out-of-state businesses and union members, yet Virginia stakeholders are picking up the tab.  Of course it is no small irony that the majority of those voting for this option that puts the tab on Virginia taxpayers don’t live in the area that will be impacted. Such an outcome simply will not stand.

Perhaps MWAA board members have been misled into believing a PLA mandate is needed for Phase 2, as the Phase 1 PLA is credited for positive Phase 1 construction performance. But the fact remains that the PLA on Phase 1 was a voluntary PLA entered into by Dulles Transit Partners after they were awarded the Phase 1 contract, and it specifically exempted merit shop (nonunion) subcontractors. In short, it is fallacious reasoning to assume that the Phase 1 agreement and a PLA mandated on Phase 2 will produce the same results.

On June 23, a coalition of 13 of Northern Virginia’s leading business groups and associations held a press conference highlighting a letter they sent to MWAA that offers solutions to reduce costs and get the Phase 2 project back on track.

The five areas where Northern Virginia business leaders are seeking cost reductions are:

1. Eliminate the requirement that the primary contractor implement a mandatory Project Labor Agreement (PLA) on Phase II.
2. Approve the aboveground station at Washington Dulles International Airport, cutting more than $300 million, with minimal inconvenience to airport passengers.
3. Reduce the scope of the Dulles Airport rail yard and seek ways to finance it separately or in conjunction with WMATA, saving $50 million to $100 million.
4. Ask Fairfax and Loudoun Counties to assume responsibility for funding and construction of the parking structures, similar to the public-private partnership at the Wiehle Avenue station.
5. Seek additional financial help from Virginia and the Federal Government, neither of which has any meaningful financial participation in Phase II.

TheTruthAboutPLAs.com reported May 20 that the following Northern Virginia groups and elected officials publicly opposed the government-mandated PLA on Phase 2 of the Silver Line:

Herndon Mayor Steve DeBenedittis
Loudon County Board of Supervisors
Fairfax County Board of Supervisors
Fairfax Chamber of Commerce
Dulles Regional Chamber of Commerce
Women Construction Owners and Executives, USA (WCOE)
Washington Examiner

Finally, the Washington Examiner reported that former Postmaster General John E. “Jack” Potter has been named CEO of MWAA (“Former postal chief to oversee airports,” 6/22).

Expect more headlines and controversy this summer.

As ABC Virginia wrote to MWAA in April, TheTruthAboutPLAs agrees that MWAA should abandon the PLA mandated by MWAA for construction of Phase 2 of  the Silver Line. Virginia taxpayers, businesses, employees and metro riders would benefit from fair and open competition.

Check TheTruthAboutPLAs.com for updates and feel free to contact us if you would like additional information.

Rep. Wolf called the press conference to object to the Metropolitan Washington Airport Authority’s (MWAA) April 6 decision to build an underground metro station at Dulles Airport that will cost Dulles Toll Road users, as well as Virginia, Fairfax County and Loudoun County taxpayers, an additional $330 million.

Along with Rep. Wolf, Loudoun County Chairman Scott York, Ryan Dunn of the Virginia Chamber of Commerce and Pat Dean of Associated Builders and Contractors (ABC) Virginia Chapter spoke outagainst MWAA’s resolution mandating a union-favoring project labor agreement (PLA). MWAA’s pro-PLA resolution will give construction labor unions (like the out-of-state protestors bused in) a virtual monopoly over supplying labor to build Phase 2 of the project, which will begin at Wiehle Avenue (where Phase 1 ended) and terminate at Ashburn in eastern Loudoun.

ABC Virginia President Pat Dean’s stated MWAA’s PLA mandate will soak Virginia taxpayers with an estimated 12 percent to 18 percent in additional construction costs, discourage competition from Virginia construction firms and discriminate against 96 percent of the Virginia construction workforce that chooses not to belong to a union.

In short, the anti-competitive special-interest PLA will bust budgets and lead to out-of-state workers (such as the LIUNA local 657 “members” bused in to protest) stealing jobs from qualified Virginia construction workers and taxpayers–despite the fact Virginians are footing the bill for this project.

In a letter sent to MWAA officials, Rep. Wolf criticized MWAA’s recent fiscally-irresponsible decisions that could jeopardize the financing of Phase 2 construction under current funding models and agreements with local financial stakeholders; (i.e., MWAA, the Commonwealth of Virginia, Fairfax County, Loudoun County and Dulles Toll Road users).

Phase 2 Cost Increases Will Bust Financing Models. Is This Virginia’s Big Dig?
Rep. Wolf and local financial stakeholders have good reason to be concerned about the financing for Phase 2, as project costs are escalating quickly. Originally projected to cost $2.5 billion, Phase 2 has ballooned to more than $3.5 billion (and growing), and the project has not even broken ground yet. In addition, MWAA officials have not adequately calculated the added cost increases resulting from the PLA, nor realized potential cost savings from opening the project to a voluntary or PLA-mandate free competitive bidding process.

The financial agreement for the Silver Line says that MWAA, Loudon County and Fairfax County will fund a percentage of total Silver Line cost of 4.1 percent, 4.8 percent and 16.1 percent, respectively. This means their costs grow and shrink depending on the overall Silver Line project costs.  The Commonwealth of Virginia is contributing a fixed total of $275 million. Dulles Toll Road revenue and bond proceeds (controlled by MWAA) will cover the remaining costs (about 55+ percent of the total costs). (This presentation compares the cost impact of having an above ground or a below ground metro station at Dulles Airport).

In order to raise enough money to service the construction and debt needed to complete the Silver Line, MWAA hired consultants to help project a schedule of toll rates, assuming a Phase 2 budget of $2.5 billion. The July 2009 WilburSmith Associates report projected a toll rate schedule with Dulles Toll Road users paying $11.25 each way in 2047 (see table ES-2). An alternate toll schedule  projects motorists to pay $16.75 each way in 2047 (see table 6-3 on p. 124). The study makes some crystal ball assumptions for traffic in the later years of the schedule, which makes these projections somewhat unreliable.

Even with annual inflation, these tolls are a steep commuting cost for the average Virginia motorist in the Dulles corridor.

The critical issue is that it is unclear if the financial models and agreements account for the additional $1 billion in Phase 2 construction cost (and growing) in addition to the initial $2.5 billion Phase 2 cost estimate, which has to be paid by somebody and will result in higher taxes, toll increases, cuts in other infrastructure spending or a combination of all three.  Will higher tolls drive motorists off the Toll Road and deprive the Silver Line revenue it needs to pay its bills? Is this financing a recipe for future financial shortfalls and chaos?

An article in Leesburg Today points out key issues raised in the letter about the Phase 2 PLA (“Union Protestors Crash Wolf Press Conference On Dulles Rail Station,” 4/18):

While contract terms for the Phase 1 project had similar language, Wolf pointed out in a letter to MWAA board chairman Charles Snelling, “it was entered into voluntarily by Dulles Transit Partners and Bechtel after the contract was signed, and expressly exempted merit shop contractors from agreeing to the PLA.

“Requiring firms to agree to the use of a PLA before contracts are awarded would be a significant departure from the Phase 1 agreement,” the letter reads.

Calling on the MWAA board to abandon its plans for a PLA for Phase 2, Wolf’s letter points out that “several large construction firms” have already stated they will not submit a bid for the project if they are required to agree to a PLA.

“Fewer bids will decrease competition and drive up costs,” the letter states. “In addition the firms that may decline to bid on a PLA contract are merit-based companies. Discouraging their bids will make Phase 2 subject to more costly union hiring, work and pension regulations.”

Dulles Transit Partners Built Phase 1 with a Voluntary PLA
As mentioned in Rep. Wolf’s letter to MWAA, Dulles Transit Partners (DTP) (Bechtel and URS) completed Phase 1 of the Metrorail Project under a voluntary PLA entered into by DTP after it already had been awarded the Phase 1 contract.[7] In addition, merit shop contractors were exempted from being subject to the agreement.[8]

This is a significant detail, as the resolution indicates the Phase 2 PLA is going to be mandated by MWAA on prime contractors prior to contract award. Prime contractors and subcontractors interested in competing for these contracts likely will be forced to agree to a PLA (it is unclear if the PLA will have already been negotiated by MWAA) in MWAA’s request for proposal (RFP), which is how contractors get the information needed to submit bids to win Phase 2 contracts. If they do not sign the PLA prime contractors and their subcontractors can’t win the project.

What Is a Project Labor Agreement?
Typical PLAs are pre-hire contracts that require projects to be awarded only to contractors and subcontractors that agree to:

• recognize unions as the representatives of their employees on that job;
• use the union hiring hall to obtain workers;
• obtain apprentices exclusively from union apprenticeship programs;
• pay into union benefit plans (such as underfunded and mismanaged pension plans); and
• obey costly, restrictive and inefficient union work rules.

When mandated by government agencies, these agreements are very controversial in the construction industry because they are special interest schemes that end open, fair and competitive bidding on public works projects.

Anti-competitive PLA mandates drive up the cost of construction by discouraging competition from merit shop contractors (commonly known as nonunion contractors because they are not signatory to union agreements, they typically hire union and nonunion employees, and they work alongside/hire union subcontractors based on merit) and their skilled employees from building projects paid for by their own tax dollars.

Merit shop contractors are not prevented from bidding on PLA projects, but they must agree to follow the terms and conditions of a PLA in order to win a contract. While some provisions of a PLA are standard practice in the construction industry, typical PLA provisions put merit shop contractors at a competitive disadvantage by forcing them to adopt inefficient union work rules and hire unfamiliar union workers, subjecting firms to needless costs and uncertainties during the bidding process. The added costs and inefficiencies make it difficult for merit shop contractors to win PLA contracts against union/pro-PLA contractors.

How Will a PLA Impact Costs, Competition and Jobs for Virginians on Phase 2?
Government-mandated PLAs discourage (if not eliminate) competition from qualified merit shop contractors that can offer the best possible construction project at the best possible priceto MWAA and taxpayers.[3]

A government-mandated PLA on this project is especially problematic in Virginia because only 3.9 percent of the state’s private construction workforce belongs to a union.[4] (Only 13.1 percent of the U.S. private construction workforce belongs to a union.[5])

While it is unclear how much the PLA will add to the Dulles Phase 2 project at this time (because the final agreement has not been drafted, and because costs vary from project to project and market to market), studies in states with prevailing wage laws (where wage and benefit rates are a controlled variable) have found that PLAs typically increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA projects.[6]

PLA advocates maintain a PLA mandate is the only way to ensure union-scale wages and benefits. But the truth is, a PLA is not needed to implement prevailing wage and benefit rates. This project already was going to be subject to federal Davis-Bacon Act prevailing wage and benefit rates for Fairfax County, despite the fact that Phase 2 has no federal money. (Phase 1 was subject to federal prevailing wage rates because it received federal money and MWAA’s Phase 2 construction estimates assumed federal prevailing wage rates.) Qualified merit shop contractors have no problem complying with prevailing wage laws, but they are discouraged from competing for contracts subject to PLAs.

About six prime contractors are interested in competing for Phase 2 contracts. Three of the six prime contractors and their preferred subcontractors are opposed to government-mandated PLAs and might be discouraged by the PLA mandate, depending on the details of the agreement and how it is utilized in the procurement process.  A PLA will give three of the interested prime contractors, including Phase 1 winner DTP, a significant advantage in the competitive bidding process, as the PLA may effectively cut competition from experienced and qualified contractors and subcontractors opposed to PLAs.

If contractors believe PLAs are beneficial, they should voluntarily enter into them after they have been awarded the project, as was the case in Phase 1. MWAA should not mandate these agreements if they contain anti-competitive/pro-union provisions.

It is unclear if the Phase 2 PLA will exempt merit shop subcontractors like the voluntary Phase 1 PLA. However, upon request, MWAA staff released a Heavy & Highway Construction Project Agreement by the National Heavy & Highway Coalition that may be the type of agreement MWAA committees will implement on Phase 2. It is very similar to the Phase 1 PLA.

Considerable evidence suggests the agreement will not be modified to exempt merit shop subcontractors, as union special interests serving on the MWAA board will benefit from a PLA extending to all merit shop subcontractors, assuming any are part of winning teams that submit Phase 2 bids.

MWAA Member Dennis Martire Is Engaged in Self-Dealing
MWAA member Dennis Martire is chairman of MWAA’s Planning and Construction Committee. He also is employed as the vice president and Mid-Atlantic regional manager of the Laborers’ International Union of North America LiUNA with an annual salary of $266,000, plus a generous benefit and pension package.[9] Martire’s employer, LiUNA, and its local affiliates, (such as LiUNA Local 657, which bused in the protestors), and their various benefit funds, will receive a financial windfall from the Phase 2 PLA that could easily exceed tens of millions of dollars.[10]

For example, Phase 2’s sample PLA forces contractors to pay to a Construction Industry Labor-Management (CILM) Trust Fund $375 for every $1 million of the project’s award amount, with a contribution cap of $50,000 per contractor per project (see Section 2.2). If Phase 2′s construction costs are at $2.5 billion ($3.5 billion is the estimated total cost), that adds up to a maximum financial windfall of $937,500 for the life of the project that will go into the trust/union slush fund.

According to the sample PLA:

“Contributions to the Trust are payable withing ninety (90) days once the Notice to Proceed is received, and shall be made payable to the Construction Industry Labor-Management Trust and forwarded to 905 16th Street, N.W., 4th floor, Washington, D.C., 2006.”

The national headquarters of Martire’s employer, LiUNA, is located at that address and LIUNA and its membership benefit financially from CILM activities.

These trust funds are not required to disclose their spending and are used for a variety of purposes, including attacking merit shop contractors, funding PR campaigns promoting union contractors and political spending. These trust funds are largely unregulated and unaccountable. For example, a California trust fund extorted $90,000 from a developer and then sent a portion of that money to attack a ballot initiative that local construction unions opposed.

The potential $937,500 financial windfall to the CILM trust fund doesn’t even count the other required employer and employee contributions to various union benefit funds as part of the PLA and related collective bargaining agreement.

The wage and benefit schedule contained in the current LiUNA collective bargaining agreement for LIUNA Local 657 and Local 11 (the LiUNA locals with jurisdiction over this project) highlight the wage and benefit rates contractors must pay to their union laborers if they are party to this agreement. Appendix A (page 20) lists the following hourly contributions contractors are required to pay to union funds by contractors (after contractors collect the hourly deductions from each Laborer’s paycheck):

Pension: $1.99
Health and Welfare: $3.01
Training: $0.25
LECET: $0.10
CCC Industry Fund: $0.08
Total:  $5.43 per hour

Here is the section from the CBA on union dues:

“…the Employer agrees to deduct union dues in the amount of 5% of gross wages as well as other authorized deductions from net pay after taxes and remit same to the appropriate Local Union.”

This excel worksheet estimates the financial windfall LiUNA and various LiUNA funds will receive from a Phase 2 PLA mandate. Here are the total amounts based on current information:

Pension: $21.544 million
Health and Welfare: $32.587  million
Training: $2.706 million
LECET: $1.082 million
CCC Industry Fund: $833,113.22
Dues: $8.081 million
Contractors pay to CILM: $937,500 max.

This does not include other fees, or voluntary contributions to political or other union-managed funds not included in the union collective bargaining agreement that union members might have to opt-into or opt-out of during the life of the Phase 2 project.

Clearly, a PLA will benefit LiUNA and the various LiUNA funds with millions of dollars of new revenue.

Other construction unions have similar arrangements that force contributions from tradesmen and contractors, resulting in a large financial windfall to union institutions, their members and their various funds.

Unions typically support Democrats, which is a key reason why MWAA members appointed by Democrats or affiliated with the party supported this PLA resolution. The public officials that appointed them will eventually benefit from union political contributions funded by this PLA.

Martire has been an advocate for a government-mandated PLA on Phase 2. He authored this paper, [11] voted for the PLA resolution, spoke at MWAA Dulles Corridor committee meetings in support of the PLA and helped MWAA member Michael Curto introduce the PLA resolution.

Martire’s MWAAA bio lists him as “a former Trustee to the National Heavy and Highway Alliance” (the very same group that drafted the proposed Phase 2 PLA and the Phase 1 PLA voluntarily signed by DTP) and Martire is also the Chairman of the Mid-Atlantic Laborers’ Employers Cooperation and Education Trust (LECET), which is a union fund contractors/employees are forced to pay into under the current LiUNA collective bargaining agreement. Here is more on LECET from their website:

“The Laborers-Employers Cooperation and Education Trust (LECET) brings the Laborers’ International Union of North America (LIUNA) and its signatory contractors together to address issues of importance to both. Laborers and their employers share a lot of common ground. Working as a team, they secure projects and jobs, increase union-sector market share, advertise their services, develop a workforce, and advance shared market-related interests.”

As the evidence demonstrates, at the very least, Martire should have excused himself from engaging in this decision, as this self-dealing undermines the public trust given to MWAA; is a common-sense disregard for integrity; and is a direct violation of the code of ethical responsibilities MWAA board members must follow.[12]

Wilson Bridge Redux?
Stakeholders concerned about the anti-competitive and costly impact of the government-mandated PLA on Phase 2 of the Dulles Corridor Metrorail project should look at the results and controversy surrounding other government-mandated PLAs in the Washington, D.C., area, including the Wilson Bridge.  The $2.4 billion project to replace the Wilson Bridge between suburban Maryland and Virginia was temporarily subjected to a union-favoring PLA requirement by former Maryland Gov. Parris Glendening in 2000. After the PLA was imposed, only one bidder responded to the RFP for Phase 1 of the project, at a bid price more than $370 million above the state’s engineering estimates—a 78 percent cost overrun.^[13]

After President Bush issued Executive Order 13202 prohibiting PLAs on federally assisted projects like this one,[14] the mega-contract for the Wilson Bridge project was rebid into smaller contracts without a government-mandated PLA. This time, multiple bids were received and the winning bids came in significantly below the engineering estimates.[15] The mega-project has been completed on time and on budget by union and merit shop contractors, with no government-mandated PLAs.[16]

What’s Next?
MWAA should rescind the resolution mandating a PLA on Phase 2 of the project. Doing so will encourage full and fair competition from Virginia’s qualified prime contractors and subcontractors, as well as reduce construction costs.

Abandoning this special interest PLA scheme will give local construction professionals who will be harmed by the PLA – specifically, the 96 percent of Virginia’s construction workforce that does not belong to a union – a fair shot at working on projects funded by local and state taxes and tolls. Such fairness would be a welcome act of good government as the construction industry faces a 20 percent unemployment rate.[17]

Everyone wins by introducing maximum competition for Phase 2 construction contracts by eliminating a PLA mandate. Fair and open competition will create more jobs for Virginia construction workers, reduce costs to Phase 2 financial stakeholders and keep future toll rates down. The current and future economy of the Dulles Corridor depends on cost-efficient rail and road infrastructure.

Removing the Phase 2 mandate will help MWAA deliver the best possible construction product at the best possible price to Virginia taxpayers and Dulls Toll Road users.

If you would like more information about the PLA on Phase 2 of the project, please send us a note here.

Here is Media Coverage from this week
Washington Examiner Editorial
Leesburg Today
Washington Times
Fairfax Times
Loudoun Times
NBC 4 News
Channel 9 News
Channel 7 News
WTOP
Labor Union Report
Washington Examiner (04/14)

Footnotes after the jump.

[1] See attached “Resolution No.11-8” obtained via request from MWAA staff. The PLA discussion was first publicly announced on an agenda contained in this media advisory, sent on Monday, 4/6/11. The vote was at 8AM on Wednesday. There was little time for comment prior to the meeting and no opportunity to ask questions or present concerns to MWAA members at the actual meeting.  The resolution passed 11-2.

[2] MWAA staff said minutes from the meeting will not be released until they are approved after the next MWAA meeting on May 5, 2011, but it was reported that MWAA board members Davis and Cobey voted against the PLA resolution.

[3] You can learn more about government-mandated PLAs at www.thetruthaboutplas.com

[4] www.unionstats.com , just 6.7 percent of Maryland’s private construction workforce belongs to a union. There is not data on union membership in Washington, D.C.’s private construction workforce.

[5]U.S. Department of Labor Bureau of Labor Statistics http://www.bls.gov/news.release/union2.nr0.htm

[6] Studies are available at www.abc.org/plastudies

[7] The PLA was executed 12/15/05. Attached is the proposed Heavy and Highway Construction Project Agreement from the National Heavy and Highway Coalition that applied to Phase 1. Here is the proposed Phase 2  Highway and Highway Construction Project Agreement.

[8] 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.”  

[9] See Form LM-2 from 2010 filed with the U.S. Department of Labor Employment Standards Administration, Office of Labor Management Standards. Martire made approximately $266,000 from LiUNA in 2010.

[10] It is difficult to calculate the financial benefit of the Phase 2 PLA to LiUNA, LiUNA locals, LiUNA members and their related pension, benefit and union slush funds until the PLA is finalized and estimates for the project construction costs and projected man-hours are more refined.

[11] Project Labor Agreements: Advantages for Capital Construction Projects, Dennis L. Martire, Laborers’ International Union of North America, Dec. 2008

[12] See MWAA Code of Ethics on Direct and Indirect Financial Interests: http://www.metwashairports.com/file/CodeofEthicsDirectors.pdf

[13] Lone Wilson Bridge Bid Comes in 70 percent Above Estimate, Engineering News Record, Dec. 24, 2001; see also Baltimore Sun, March 2, 2002.

[14] Executive Order 13202 (Feb. 17, 2001), as amended, Executive Order 13208 (April 6, 2001). President Bush’s executive order was upheld against claims of labor law preemption in Building & Const. Trades Dept., AFL-CIO v. Allbaugh, 295 F. 3d 28 (D.C. Cir. 2002).

[15] Unexpectedly Low Bid Keeps Wilson Bridge Under Budget, Washington Post, March 2, 2002.

[16] Wilson Bridge Bike Path Gets Rolling, Washington Post, June 7, 2009; See also Wilson Bridge Span Open Early, Washington Post, June 12, 2006; Woodrow Wilson Bridge Beats Obstacles as It Becomes Beltway Savior, ENR, January 31, 2005.

[17] http://www.bls.gov/iag/tgs/iag23.htm

Virginia is a proud right-to-work state, so the resolution passed last week by the Metropolitan Washington Airports Authority requiring a project labor agreement for construction of Phase 2 of the Dulles Rail project was a slap in the face of all working Virginians.

Adding insult to injury, the MWAA board did not provide adequate public notice prior to the 11-2 vote. The precise terms of the PLA resolution remain undisclosed, but a draft indicates that contractors and subcontractors will be required to submit to union rules and working conditions as a precondition for bidding on Phase 2 – unlike Phase 1, in which Dulles Transit Partners agreed to a voluntary PLA after the bidding process was completed.

Since only about 4 percent of Virginia construction workers are unionized, about half of all qualified Virginia construction firms will be discouraged from bidding on Phase 2, Ben Brubeck, director of labor and federal procurement for the Arlington-based Associated Builders and Contractors, told The Examiner. This means that most of the workers hired to build the Metrorail extension will be union members from other states. That’s not the only problem. Brubeck estimates that the PLA will raise the cost of the project between 10 and 20 percent, adding an estimated $350 million to $750 million because of higher labor costs and reduced competition. This is in addition to the $330 million MWAA has already elected to spend on an underground station at Washington Dulles International Airport, raising the total cost of the financially questionable project by more than $1 billion.

In addition to freezing out Virginia workers, MWAA’s cavalier disregard of Virginia taxpayers is yet another slap in the face. Worse, MWAA board member Dennis Martire, vice president of the Laborers’ International Union of North America, violated MWAA’s own code of ethics by failing to recuse himself from a vote that will likely produce a financial windfall for his employer.

A handful of local public officials, including longtime Dulles Rail supporter Rep. Frank Wolf, R-Va., are finally blasting MWAA for ratcheting up the costs of Phase 2 while simultaneously trying to freeze out nonunionized Virginia workers. Wolf’s Monday press conference attacking the PLA was a perfect illustration of MWAA’s insulting attitude toward Virginians: It was invaded by hundreds of protesting union members who were all bussed into the commonwealth from somewhere else.

This editorial lays out the facts concerning this special interest scheme. Check back for more updates as we follow this story closely and review all TheTruthAboutPLAs.com blog posts about the Phase 2 Dulles Metro Rail PLA here.

At a time when people want a return to civility and pleasant political discourse, “preemptive strike,” a military term, may not be the appropriate one to describe the county commissioners’ move this week on Project Labor Agreements. But that’s exactly what it was.

The commissioners voted 2-1 on Wednesday to outlaw PLAs, onerous agreements that require contractors whether they are unionized or not to subject themselves and their employees to unionization in order to work on government-funded construction projects.

Commissioners Scott Martin and Dennis Stuckey, who make up the Republican majority, voted as they did, even though they can’t recall county government ever participating is such mandatory unionism.

Still, Martin, the commissioners’ chairman, said PLAs are making inroads in other areas of the state, and it’s only a matter of time before they reach us.

So, what do Martin and Stuckey have against PLAs?

They say PLAs discourage participation by non-union construction companies, which employ the vast majority of construction workers in Pennsylvania.

The projects, themselves, end up costing more, and that means more money is taken out of taxpayers’ wallets, the officials contend.

“I believe it is important that this action (ordinance) be taken to preserve fair and competitive costs for taxpayers and to offer a process that doesn’t exclude 85 percent of the work force from competing for government projects,” says Martin.

The new law not only covers county projects, but municipal projects that receive county grants.

Labor unions defend PLAs as a way to ensure a skilled labor force that does high-quality work, but the point is debatable. The fact is, the PLAs are more about protecting union jobs and those of high-paid union bosses.

Commissioner Craig Lehman, a Democrat, sided with those union bosses, calling the new law political pandering.

“We have plenty of important issues here in Lancaster County that we need to work on. This (majority commissioners’ action) is a public relations maneuver to create press on how to deal with PLAs at the state and federal level, and I just find it inappropriate,” says Lehman.

Lehman may be on to something: PLAs were embraced by the previous administration (Democratic) in Harrisburg. Now that we have a Republican governor and Republican-controlled House and Senate, PLAs’ days may be numbered.

The union bosses apparently won’t take the county’s action lying down. They talking about a possible court challenge, believing the new law “discriminates” against contractors that employ union workers.

That’s nonsense.

It is unions and their legislative toadies who seek to discriminate by forbidding non-union workers from government jobs.

The new county ordinance does just the opposite. It assures that construction contracts remain open to all companies.

That’s something all companies non-union and union can embrace. That’s something Lancaster County taxpayers should support.

However you wish to describe it; “pre-emptive strike” or, in Martin’s words, “proactive action,” the new law is on target.

We agree and applaud Lancaster County residents for electing officials who stand up to costly special interests and put taxpayers and fair competition first.

In 2011, taxpayers and the construction industry can expect and should encourage leaders across the country to stand up for what is right and advance similar legislation and initiatives.