During the 112th Congress, these groups have sent numerous coalition letters to the House and Senate in support of legislation that will ensure free and open competition on federal and federally assisted construction projects and restrict favoritism, waste and discrimination in federal contracting.

Such legislative solutions, like the Government Neutrality in Contracting Act (H.R. 735/S.119) has broad support from this industry coalition. 

In addition, during the 112th Congress, correspondence to the House on three amendents and House floor votes addressing government mandated PLAs, such as this June 2011 letter to the House, demonstrate their support of amendments to appropriations legislation ending anti-competitive PLA schemes in federal contracting.

Finally, these groups have also provided statements and witnesses to testify at two House Committee hearings against government-mandated PLAs in 2011.

The Following Construction Industry and Employer Groups Support Government Neutrality in Federal Contracting and Oppose Government-Mandated Project Labor Agreements:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Panel II concludes at 16:00 of second video.

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

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

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

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

Further Reading:

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

This hearing is the next step in the legislative process towards House passage of the Government Neutrality in Contracting Act (H.R. 735), introduced by Congressman John Sullivan (R-Okla.), which will prohibit the federal government from mandating anti-competitive and costly PLAs on federal and federally assisted construction projects.

H.R. 735 essentially codifies into law former President George W. Bush’s Executive Orders 13202 and 13208, which ensured that taxpayers received the best construction at the best price on over $147 billion worth of federal construction projects and hundreds of billions of dollars of federally assisted construction projects until it was repealed by President Obama’s pro-PLA Executive Order 13502 in Feb. 2009.

Proponents of fair and open competition for federal construction contracts, including Associated Builders and Contractors (ABC), are working hard to make this bill a key legislative priority during the 112th Congress.

The hearing will be streamed live on the Internet at http://oversight.house.gov/.

TheTruthAboutPLAs.com readers may recall that on March 16, a House Oversight and Government Reform subcommittee chaired by Rep. Jim Jordan (R-Ohio) held a hearing on PLA mandates and other regulations harming the construction industry.

Here are the most recent details on Friday’s hearing from a release issued by the House Oversight and Government Reform committee staff:

Title: “H.R. 735 and Project Labor Agreements: Restoring Competition and Neutrality to Government Construction Projects”

Description: The Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform, chaired by Rep. James Lankford, R-Okla., will hold a legislative hearing on H.R. 735 the Government Neutrality in Contracting Act, introduced by Rep. John Sullivan, R-Okla. H.R. 735 restores neutrality into government contracting by nullifying a Presidential Executive Order designed to encourage the use of union labor in government construction projects. The use of mandated Project Labor Agreements increases costs, reduces competition and shuts out small businesses and non-union tradesmen.  You can read a statement from Rep. Sullivan on his bill here. The Oversight Committee heard from American job creators affected by Project Labor Agreements at a subcommittee hearing in March and through AmericanJobCreators.com.

Where: 2154 Rayburn House Office Building

Date/Time: June 3 at 9:30am

Witnesses :

Panel One

• The Honorable Daniel Gordon, Administrator, Office of Federal Procurement Policy, Office of Management and Budget
• Mr. David Foley, Deputy Commissioner, Public Building Service, General Services Administration

Panel Two

• Mr. Maurice Baskin, Venable LLP
• Mr. David Tuerck, Executive Director, The Beacon Hill Institute
• Mr. Kirby Wu, AIA, LEED AP, President of Wu & Associates, Inc.
• Mr. Mike Kennedy, General Counsel, The Associated General Contractors of America

Please check back for additional updates.

The hearing focused on the impact of anti-competitive and costly government-mandated project labor agreements (PLAs) on the construction industry as well as some regulatory red tape and other issues regarding OSHA.

ABC TELLS CONGRESS: GOVERNMENT-MANDATED PROJECT LABOR AGREEMENTS VIOLATE FEDERAL LAW

Contact: Gail Raiman, (703) 812-2073
Gerry Fritz, (703) 812-2062
For Immediate Release       March 16, 2011

Washington, D.C. – In testimony delivered today on Capitol Hill, Associated Builders and Contractors’ (ABC) General Counsel Maurice Baskin, a partner with Venable, L.L.P., stated that recent administration efforts to make project labor agreements (PLAs) part of the federal procurement process are “threatening to violate the longstanding Congressional mandate of full and open competition in federal procurement—at taxpayers’ expense.”  Baskin’s remarks were given during a hearing on the impact of the administration’s pro-PLA policy on construction job creation and the efficient use of taxpayer dollars held by the House Committee on Oversight and Government Reform’s Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending.

“Neither the president nor the Federal Acquisition Regulatory Council has the authority to override the statutory mandate of full and open competition in all federal procurements,” Baskin said.  “No fact-based justification for the change in policy has ever been shown, leading to the widespread belief that the administration’s policy is simply a political payback to organized labor.” According to Baskin, this is the kind of political favoritism that The Competition in Contracting Act was enacted to prevent.

“Since 2009, ABC members have filed a series of bid protests with the Government Accountability Office to stop unjustified PLA mandates from being imposed by federal agencies.  In each case, the federal agency has withdrawn the PLA mandate rather than risk a finding of a procurement law violation.

“The government’s own market research has shown repeatedly that PLAs will not serve the interests of taxpayers, will discourage competitive bidding and will increase costs. Yet, we continue to see PLA requirements popping up on agency procurements around the country,” Baskin said

“Eighty-seven percent of all construction workers currently choose not to belong to a labor union. Rather than promoting full and open competition and maximizing the available labor pool for government construction projects, which is overwhelmingly merit shop, government-mandated PLAs result in the award of federal construction contracts primarily to the much smaller group of unionized contractors and their union employees,” said Baskin.

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 underfunded and mismanaged union benefit plans; and obey costly, restrictive and inefficient union work rules.

In his testimony, Baskin also urged Congress to support the Government Neutrality in Contracting Act (H.R. 735), which would prohibit the federal government from requiring contractors to execute a PLA as a condition of winning federal or federally funded construction projects.  “This legislation will result in more construction jobs, more infrastructure renewal and a more accountable federal government,” Baskin said.

ABC members John Ennis, Jr., CEO of Ennis Electric Company, Inc., Manassas, Va.; and John F. Biagas, CEO of Bay Electric, Newport News, Va., also testified at the hearing.

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Associated Builders and Contractors (ABC) is a national association with 75 chapters representing more than 23,000 merit shop construction and construction-related firms with nearly two million employees. Visit us at www.abc.org and www.thetruthaboutplas.com.

Update:

Here is a youtube video of the first panel of witnesses.

Access the written testimony of each witness by clicking on their name. The time indicates the start of each witnesses testimony on the youtube video.

John Ennis, Jr. (9:30)
CEO, Ennis Electric Company, Inc.

Linda Figg (14:50)
CEO, FIGG Engineering

Dr. Dale Belman (21:10)
Professor, School of Labor and Industrial Relations
Michigan State University

John Biagas (27:50)
CEO, Bay Electric

Maurice Baskin (34:30)
General Counsel, Associated Builders and Contractors Inc.

Chairman Jim Jordan opening statement (:01) witness questions (40:00)

Oversight and Government Reform Committee Chairman Issa (42:35)

Rep. Frank Guinta (R-NH) remarks (43:00) and witness questions (1:01:54)

Rep. Dennis Kucinich (D-OH) opening statment (4:00) questions (45:30)

Vice-Chair Anne Marie Buerkle (R-NY) questions (50:45)

Rep. Jim Cooper (D-TN) questions (56:45)

Rep. Jackie Speier (D-CA) questions (1:08:30)

Rep. Bruce Braley (D-IA) questions (1:12:50)

Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-MD) questions (1:19:50)

Here is a youtube video of the second panel of witnesses.



Daniel Gordon (1:15)
Administrator, Office of Federal Procurement Policy
Executive Office of the President

Robert Peck (7:02)
Commissioner, Public Buildings Service
U.S. General Services Administration

Hon. David Michaels (11:54)
Assistant Secretary for Occupational Health and Safety
U.S. Department of Labor

Notable Moments

Chairman Jim Jordan questions 2nd panel of witnesses (17:00)

Mr. Peck explains GSA’s PLA preference in the best value procurement process (18:50) and (25:00)

Question to Mr. Peck about failed PLA on the 1800 F Street Building (GSA HQ) (22:45)

Mr. Peck says that a PLA has resulted in increased construction costs on some projects where contracts were awarded to contractors submitting a PLA offer (26:10)

Mr. Peck says PLAs have not limited competition on GSA PLA Pilot Program projects (28:17)

Mr. Peck says the vast majority of contractors in the U.S. are not union shops (29:45)

Mr. Peck says GSA has not conducted a study about the effectiveness of PLAs (32:40)

Mr. Peck clarifies that the GSA hired a contractor to conduct a study in 2009 that looked at various construction markets to evaluate the use of government-mandated PLAs. He says that the study was not complete but it questioned the value of a PLA on projects in the Washington, D.C. market. He said he would share the study with the committee (33:30).

The hearing will focus primarily on the impact of anti-competitive and costly government-mandated project labor agreements (PLAs) on the construction industry, but it will also address some regulatory red tape and other issues regarding OSHA.  We expect lawmakers to take a hard look at President Obama’s Executive Order 13502 and the administration’s effort to promote government-mandated PLAs – costly Big Labor handouts – on federal construction projects.

This hearing is hopefully the first step in more progress towards House oversight on government-mandated PLAs, as the House Oversight and Government Reform Committee has legislative jurisdiction over Congressman John Sullivan’s legislation to prohibit the use of government-mandated PLAs on federal and federally assisted projects, the Government Neutrality in Contracting Act (H.R. 735). Sullivan’s bill would codify former President George W. Bush’s Executive Order 13202, which ensured that taxpayers got the best construction at the best price for the duration of his administration. Proponents of free enterprise, including Associated Builders and Contractors (ABC), are working to make this bill a key priority during this Congress.

Also, Rep. Frank Guinta (R-N.H.) is a member of this subcommittee. Rep. Guinta introduced an amendment to the FY2011 Continuing Resolution (C.R.) passed by the House on February 19 that would have prohibited government-mandated PLAs on projects funded by that C.R. The amendment failed by a 210-210 tie.

Several of the witnesses scheduled to testify have outstanding stories to tell about the wasteful nature of these Big Labor handouts, including ABC General Counsel and TheTruthAboutPLAs.com contributor Maurice Baskin (here is Baskin’s testimony) and two ABC members, John Biagas of Bay Electric of Newport News, Virginia and John Ennis of Ennis Electric of Manassas, VA.  Both have been harmed by the GSA’s PLA preference policy and Mr. Biagas provides an interesting perspective as he is a former union member.

Dr. Dale Belman of Michigan State University (MSU) will also testify as the pro-PLA/union/minority witness.  Dr. Belman has written a number of papers promoting government-mandated PLAs at all levels of government, as well as studies promoting prevailing wage laws. Readers may remember that MSU’s School of Labor and Industrial Relations and the School of Planning, Design and Construction – with the help of Dr. Belman - held a conference promoting PLAs in October 2009.

The hearing’s witness list is available here.

The committee will be accepting comments for the official hearing record for the next two weeks, so please leave a note in the comments section of this post if you would like some help having your voice heard.

The hearing will be available via webcast here.

Here is the subcommittee’s press release on the hearing:

Oversight Subcommittee: Does the Administration’s “Mandate” on Project Labor Agreements Cost Construction Jobs and Taxpayers Money?

WASHINGTON, DC – Tomorrow, the House Committee on Government Reform will continue its examination of the regulatory burdens placed on private sector job creators.

By Executive Order, President Obama created a preference for government contractors willing to enter into pre-hire, collective bargaining agreements known as “Project Labor Agreements” or PLAs. PLAs establish the terms and conditions of employment for a specific construction project with one or more labor organizations. The President’s preference has translated into an award bonus essentially locking non-union competitors out of the market for federal construction work. Industry witnesses are expected to testify that PLAs result in increased costs to job creators and taxpayers because of payouts necessary to secure union cooperation.

“When you force union rules on all private sector construction firms, you are essentially locking over 80% of contractors out of the market for federal construction contracts. Even some labor unions have pointed out that PLAs disrupt government-mandated labor agreements already in place between unions and contractors,” Oversight Subcommittee on Regulatory Affairs Chairman Jim Jordan, R-Ohio, said. “That means big labor wins, but taxpayers and private sector businesses lose.”

Chairman Jordan said he intends to seek answers from the administration witnesses: the head of the President’s office of procurement policy, the top public building official at the General Services Administration, and the Labor Department’s OSHA chief.

 Hearing details are below. The hearing will be webcast at http://oversight.house.gov.

Title: “Regulatory Impediments to Job Creation: The Cost of Doing Business in the Construction Industry.”

Details: Wednesday, March 16, 2011, at 1:30 p.m. in room 2154 Rayburn House Office Building

Witnesses:
• Mr. John Ennis, Jr., CEO, Ennis Electric Company, Inc.
• Ms. Linda Figg, CEO, FIGG Engineering
• Mr. Maurice Baskin, Partner, Labor and Employment Group, Venable, L.L.P., and General Counsel to Associated Builders & Contractors.
• Mr. John F. Biagas, CEO of Bay Electric
• Dr. Dale Belman, Professor at Michigan State University’s School of Industrial and Labor Relations
• Mr. Robert Peck, Commissioner, Public Buildings Service, U.S. General Services Administration
• Mr. Daniel Gordon, Administrator, Office of Federal Procurement Policy, Executive Office of the President
• Dr. David Michaels, Assistant Secretary for Occupational Health and Safety, U.S. Department of Labor 

###

 

The Michigan Senate has also taken up the PLA issue and S.B. 165, which is identical to H.B. 4287, has cleared its committee of referral and is set to be considered by the full Senate.

Here at TheTruthAboutPLAs.com, we call on the House and Senate to take quick action on these measures.  The number one issue for Michiganders is jobs and this bill will ensure that the entire construction industry – and not just the 22 percent that join a labor union – have to opportunity to compete for construction projects funded by their own tax dollars.

Additionally, this bill will ensure that the state, public universities and local communities are no longer in a position to build four buildings, schools or miles of roadway for the price of five.  This will mean more money available for construction and as a result, more construction jobs for a state that is struggling to escape double digit unemployment for the first time since 2008.

Here is a press release on the House Commerce Committee’s vote from Associated Builders and Contractors of Michigan:

House Commerce Committee approves PLA reform

As did the state Senate committee’s action on PLA reform last week, the House Commerce Committee’s approval today of its own bill to end the practice of discriminatory union-only project labor agreements will help open up job opportunities for more Michigan construction workers and bring down the cost of public construction projects.

“Michigan workers shouldn’t be denied the chance to work on taxpayer funded construction projects, simply because they choose not to belong to a union,” Chris Fisher, president of Associated Builders & Contractors of Michigan commented in response to the House Committee action. “In this era of tight budgets and economic challenges, Michigan cannot afford costly project labor agreements that divert projects to a select group of workers and contractors, leaving 80 percent of qualified workers who are non-union shut out of the projects.

The committee approved HB 4287 on a 12 to 7 vote, with an amendment that clarified the bill’s impact on prevailing wage, which would not be changed if the PLA reform bill is passed.

The bill, sponsored by Rep. Joe Haveman (R-Holland) and dozens of co-sponsors, would essentially eliminate union-only PLAs, a practice that forces non-union workers and firms to comply with collective bargaining agreements and thus discourages non-union firms from bidding.

“Most women and minorities are not in unions, so PLAs exclude them,” testified Renee Sanborn of Sanborn Construction, a woman-owned company that does excavating work. “ Since there are no unionized excavating companies in this area, when there is a union-only PLA, firms have to be brought in from outside the region.” Sanborn confirmed that under a PLA her firm would be required to pay twice for benefits such as health care, pensions and 401Ks.

An attorney who specializes in the construction industry testified that union-only PLAs “are an extreme example of union protection policies, that assist the unions at the public’s expense.”

“The primary reason contractors won’t sign PLAs is the forced unionization,” David Masud, of the Masud Labor Law Group, stressed, adding that a secondary concern is the frequent requirement to use laborers from the union hall rather than a company’s own employees.

“Like other reform-oriented states, Michigan must pass legislation to create a level playing for everybody,” explained Chris Fisher, ABC of Michigan president. “Such a law will ensure that the state does not discriminate against any business or worker on the basis of union affiliation. Michigan taxpayers will also benefit from having public construction that is completed by the lowest, most responsible and qualified bidder to ensure greater accountability of public funds.”

The bill pertains to state and local government construction projects and will affect all public education institutions – local schools, colleges and universities – as well as township, city and county construction.

ABC of Michigan, a statewide trade association representing the commercial construction industry, is dedicated to open competition, equal opportunity and accountability in publicly funded construction projects.

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The Lansing State Journal covered the hearing around mid-day today.

The hearing is scheduled to resume at 3pm ET and can be viewed through the MI Senate website.

UPDATE: The Michigan Senate Reforms, Restructuring and Reinventing Committee approved S.B. 165 by a 4-2 vote.

UPDATE 2: ABC of Michigan has issued the following press release:

PLA reform is step toward equality, fiscal responsibility, says ABC

Michigan took a step toward cutting costs of publicly funded construction today when the state Senate’s Committee on Reforms, Restructuring and Reinventing approved a bill that would prohibit union-only project labor agreements (PLAs).

Senate Bill 165, introduced by Sen. John Moolenaar, R-Midland, now goes before the entire Senate for consideration. The committee’s 4 to 2 vote in favor of the bill came after Associated Builders and Contractors of Michigan members testified in hearings that the proposal will bring about greater competition and protect a huge majority of Michigan workers from being denied work opportunities based on their labor affiliation.

“I support this bill because it would change the current unfair and anticompetitive contracting process that some governmental bodies employ to a process where all contractors are able to compete freely and therefore increase competition and save tax dollars,” testified Michael Marks, vice president of construction for E.T. MacKenzie Company, based in Grand Ledge. “Because the majority of the contractors in our state are merit shop and cannot compete for contracts requiring a PLA, projects that do require a PLA have a lower number of bidding companies. PLAs decrease competition and increase costs.”

Senate Bill 165 would eliminate union-only PLAs, which force nonunion workers and firms to comply with collective bargaining agreements and thus discourage nonunion firms from bidding.

“Like other reform-oriented states, Michigan must pass legislation to create a level playing field for everybody,” explained Chris Fisher, ABC of Michigan president. “Such a law will ensure that the state does not discriminate against any business or worker on the basis of union affiliation. Michigan taxpayers will also benefit from having public construction that is completed by the lowest, most responsible and qualified bidder to ensure greater accountability of public funds.”

Fisher stressed that important construction industry issues such as training, safety and quality of work are not affected by the legislation, which is clear and limited in scope.

“The bill simply states that all Michigan construction workers and firms will be protected from being discriminated against and denied work opportunities based on whether or not they adhere to a collective bargaining agreement,” Fisher noted.

The bill pertains to state and local government construction projects and will affect all public education institutions – local schools, colleges and universities – as well as township, city, and county construction.

“Allowing the use of project labor agreements on projects funded, either in part or entirely, by state tax dollars is unfair to the vast majority of the construction companies and the taxpayers of the state of Michigan,” Marks stressed.

A companion bill in the state House, House Bill 4287, introduced by Rep. Joe Haveman, R-Holland, also aims to ban PLAs on publicly funded construction projects. Hearings on that bill were held earlier in March.

ABC of Michigan, a statewide trade association representing the commercial construction industry, is dedicated to open competition, equal opportunity and accountability in publicly funded construction projects.

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Testimony (pdf) of Anthony W. Robinson, president of the Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) pointed to union-favoring government-mandated project labor agreements (PLAs) as a barrier to job creation for minorities in the construction industry and one of numerous problems faced by minority contractors:

It is clear that the construction trade labor unions have been, and remain, a serious obstacle to the participation of minority contractors and workers in the construction industry. They intimidate minority-owned construction firms to discourage utilization of minority construction workers, discourage workforce development in higher-paying skilled trades, send less qualified workers to minority-owned construction firms, and discriminate against minority-group workers in apprenticeship programs. The execution of project labor agreement was also cited as disadvantageous to minority owned construction companies and their desire to employ minority workers.

The testimony cites examples of discrimination Mr. Robinson collected during field interviews across eight U.S. cities on issues impacting minority contractors and stakeholders.

This is not the first time U.S. Congress has heard testimony stating that government-mandated PLAs are harming minority contractors and discouraging job creation for minorities.

On August 6, 1998, the U.S. House of Representatives Small Business Committee held a hearing on project labor agreements and their negative impact on women and minority owned businesses.  Access testimony from The Administration’s Policy of Discrimination: Project Labor Agreement’s Negative Impact on Women- and Minority-Owned Small Businesses here.

Harry Alford, president of the National Black Chamber of Commerce (NBCC),  has also shared with Congress this critique of PLAs in various letters and statements:

“It is the policy of the National Black Chamber of Commerce, Inc. to oppose Project Labor Agreements. This opposition is based on the fact that African American workers are significantly underrepresented in all crafts of construction union shops. This problem has been persistent during the past decades and there appears to be no type of improvement coming within the next ten years.

There have been rouses of diversity pre-apprenticeship training programs during the past twenty years but no increase in diversity at the apprenticeship to journeymen levels. The higher incidence of union labor in the construction industry, the lower African American employment will be realized. This is constant throughout the nation.

Also, and equally important, the higher use of union shops brings a correlated decrease in the amount of Black owned businesses being involved on a worksite.”

- NBCC Policy Statement on Project Labor Agreements

Check out Mr. Alford’s opinions on PLAs here and learn what other groups are saying about the discriminatory impact of PLAs here.

With the construction industry facing 17.2 percent unemployment and unemployment rates within the black and hispanic population greater than white unemployment, one wonders why the federal government (and many state and local governments) are encouraging government-mandated PLAs.

For instance, on Feb. 6, 2009, President Obama’s signed Executive Order 13502. It encourages federal agencies to require PLAs on federal projects exceeding $25 million in total cost. In April of this year, this discriminatory and illegal order was implented into federal procurement regulations. While not a mandate, the order and regulations will result in more discriminatory PLAs on federal construction projects, which is likely to harm minority contractors and fail at creating jobs for minority job seekers.

It’s another example of special interest politics trumping sound public policy.

Voters can help restore accountability in government contracting and create federal contracting opportunities for minority businesses and jobs for minority employees by asking their elected officials to support The Government Neutrality in Contracting Act (S.90/H.R. 983), which prohibits the federal government from requiring PLAs on federal and federally assisted construction projects.

We need your help to end anti-competitive and costly PLA schemes.

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.

This bill would require the use of wasteful and discriminatory project labor agreements (PLAs) on all projects costing more than $200,000 that receive some form of support from the District. Coupled with President Obama’s pro-PLA Executive Order 13502, which encourages federal agencies to funnel federal construction contracts exceeding $25 million to Big Labor, the D.C. bill, if passed, will ensure that union contractors and union members will have a monopoly on almost all public construction in the District of Columbia.

Video of the hearing is available here.

One of the most important moments of this nearly nine hour marathon hearing came at just before the two hour mark, when Councilmember Mary Cheh’s (D-Ward 3) questions prompted PLA proponent and Big Labor attorney Gerald Waites to admit that workers have to be members of a union or join a union in order to work on a PLA project.

Minutes later, Cheh’s questioning forces Waites to admit that once an employee joins a union, they are prohibited from working for nonunion contractors unless they give up their union card and forfeit pension contributions earned on the life of a PLA project that are sent to the union-managed pension plans.

Testimony like this exposes the true purpose of wasteful and anti-competitive government-mandated PLA schemes: Big Labor needs the government to create a false choice for local and qualified nonunion employees. They are forced to choose between being forced to join and pay dues to a construction trade union or not work at all.  With just 12 percent of the District of Columbia’s private construction workforce belonging to a labor union, it is easy to see how this false choice would harm the employment opportunities for DC residents.  

This supports the conclusion of a March 31 report on government-mandated PLAs, “The Problem with PLAs in the District of Columbia,” which finds that, “In the context of the current construction economy, government PLA mandates appear likely to have a destabilizing impact on an already depressed industry in the District of Columbia, leading to reduced employment of local residents and considerable harm to small and disadvantaged businesses.”

"The Problem with PLAs in the District of Columbia," Anirban Basu (April, 2010)

Obviously, TheTruthAboutPLAs.com will continue to watch this anti-competitive and harmful measure with close interest.  We hope that D.C. Council members heard enough yesterday to know that this bill is just an attempt to bolster Big Labor’s pocketbook at the expense of D.C. taxpayers and residents seeking good paying jobs.

Also, check out the following media stories for more information:

• Washington Post: Unions, Construction Lobby Wage War over D.C. Council Bill
• Washington Business Journal: Labor Agreements could make Construction more Expensive in D.C.