Bidding is open only to certified small business contractors willing to agree to the terms and conditions of the DOL’s union-friendly PLA. The DOL issued a sources sought notice Sept. 23, 2011 (DOL111RI20431), to determine if there were enough interested and qualified small business general contractors to designate it a 100 percent small business set-aside.

Controversy concerning the union-favoring PLA mandate will heighten once the project’s solicitation containing the PLA is issued the second week of January.

Update Jan. 30: The DOL solicitation, issued  Jan. 30, 2012, can be read here. Here is the actual PLA and here are the numerous union collective bargaining agreements (CBAs) contractors will have to agree to in addition to the PLA for the life of the project. Bids are due March 21, 2012.

Update Feb. 6: Sen. Kelly Ayotte (R-NH) issued a press release and sent a letter to the White House asking for President Obama to repeal his pro-PLA Executive Order 13502 and remove the DOL’s PLA mandate on this project. The Union Leader has a piece on the controversy here.

Dec. 23, the New Hampshire Union Leader ran a holiday themed op-ed by ABC New Hampshire/Vermont President Mark Holden. It summarizes the long-running controversy surrounding the DOL’s PLA mandate on the Job Corps Center and the absurdity of this gift to Big Labor at the expense of New Hampshire businesses and workers.

Executive Order 13502: Obama's Gift to Big Labor. Image courtesy of The Boston Globe, "Obama kowtows to labor unions," 10/07/09.

By Mark Holden

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

##

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

Well said, Mark.

To date, The Government Neutrality in Contracting Act (H.R. 735/S.119) has 170 cosponsors in the House, nearly 30 cosponsors in the Senate, and broad support from industry groups.

Concerned taxpayers can write Congress here to help keep the federal Grinch at bay this holiday season.

Image Courtesy of the Columbus Dispatch

TheTruthAboutPLAs.com readers may recall previous media coverage of the Job Corps Center project, which most recently includes a New Hampshire Union Leader article (“Jobs Corps Center project going forward,” 8/20/11) and related press release from U.S. Sen. Kelly Ayotte (“Senator Ayotte Expresses Concerns about Labor Requirement for Manchester Job Corps Project,” 8/19/11) in response to the DOL’s August announcement they will proceed with construction and mandate a PLA:

MANCHESTER — A project labor agreement, which delayed construction of New Hampshire’s Job Corps Center for 21 months, will be a project requirement according to the U.S. Department of Labor.

The department announced last week it would move forward with the long-delayed $35 million project off Dunbarton Road. A New Hampshire contractor challenged the requirements two years ago, delaying project construction.

U.S. Sen. Kelly Ayotte said in a press release Friday she is concerned that the PLA favors out-of-state unionized contractors over local firms and could drive up the project’s cost.

“The administration’s plan to keep in place the PLA represents yet another senseless government mandate that could put New Hampshire businesses and workers at a competitive disadvantage. A PLA effectively gives unionized firms an unfair advantage over non-union firms, making it less likely that New Hampshire contractors would be able to bid successfully for the work,” said Ayotte. “This is a New Hampshire project, and local contractors should be able to compete for it on a level playing field.”

Project labor agreements usually require companies working on a construction project to provide health care, retirement benefits and apprenticeship programs. And PLAs usually include work rules, safety provisions, dispute resolution and a no-strike clause.

Contractors balked when the Job Corps agreement called for experience with three or more PLAs. North Branch Construction of Concord filed a protest with the Government Accountability Office and that brought the bidding process to a halt.

Manchester Mayor Ted Gatsas said Friday his concern with the original PLA was the prior PLA experience. That meant no New Hampshire firms could qualify to do the work, because no firm had experience with three PLAs, he said.

“My understanding was that was not going to be in there,” Gatsas said. “It should be New Hampshire people doing this project.”

Gatsas said he has not seen the documentation, but noted “This is a project we need to move forward. It’s 300 construction jobs to the city and 135 permanent jobs.”

In response to a request from Ayotte asking to clarify the PLA issue, the DOL wrote that in keeping with a January 2009 executive order by President Obama, construction projects over $25 million should use PLAs. A PLA is appropriate for the $35 million Job Corps project, the department wrote.

Mark Holden, president of the Associated Builders and Contractors of New Hampshire/Vermont said: “It is important for all New Hampshire taxpayers to understand the impact of this decision. Requiring non-union contractors to execute union agreements for the project, agreeing to replace their employees with union workers, pay into union funds and abide by union work rules and conditions creates unknown costs that are impossible to plan and bid for and are conditions that make it non-competitive for non-union contractors.

“To suggest that a non-union contractor’s ability to compete would not be impacted by this PLA is untrue. A PLA requirement will have a chilling impact on competition from non-union contractors and will dramatically inflate the construction cost of this taxpayer funded project. At a time when a challenging economy is dependent on real solutions for job creation and accountability for every taxpayer dollar, this decision is unbelievable.”

Joe Casey, president of the New Hampshire Building and Construction Trades Council, said Ayotte and Holden are making a lot of assumptions about the PLA and what it will require. “It all depends on what the project labor agreement is and I have yet to see one for this project,” Casey said. “This is a debate we should have once the Department of Labor releases the project (documents).”

He noted the DOL hired an independent group, Hill International, to determine if a PLA is feasible for the project, but he had not seen the study. “We should all take a step back and see the actual contents of the project labor agreement,” Casey said. “The provisions could benefit New Hampshire contractors and New Hampshire workers.”

He noted the last major federal construction project in New Hampshire was the Berlin prison and the contractors and almost all of the workers came from out-of-state. That prison has yet to open because the federal government has not released operation money.

“That is the type of thing the project labor agreement addresses,” Casey said. “If federal money is coming to the state of New Hampshire, why shouldn’t it stay in New Hampshire with the New Hampshire workforce. At the end of the day, that is what we are looking for.”

Dick Anagnost, a Manchester developer who is chairman of the Job Corps Task Force, told the New Hampshire Union Leader last week that the project will take about 18 months.

He said the Labor Department should take a month to prepare bid specifications. Another month will be needed to solicit bids, and a final month will be needed to review them.

A Job Corps Center will help train economically disadvantaged youth to enter high-growth industries. New Hampshire is among the last states to have a Job Corps Center. The state began efforts 10 years ago to land a center of its own.

The DOL’s 2009 PLA mandate was the first PLA mandated by a federal agency following President Obama’s Feb. 6, 2009 Executive Order 13502, which encourages federal agencies to mandate PLAs on a case-by-case basis on federal construction projects exceeding $25 million in total cost. The DOL’s 2009 PLA mandate was especially unusual because it was issued prior to the Federal Acquisition Regulatory (FAR) Council final rule (pdf), issued April 13, 2010, and effective May 13, 2010, implementing Executive Order 13502 into federal procurement regulations (learn more here).

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

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

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

In October 2010, two construction trade groups affiliated with construction trade unions, the Building Industry Electrical Contractors Association (BIECA) and United Electrical Contractors Association (UECA), filed a complaint against the City of New York (NYC) because of their widespread use of government-mandated PLAs in The Building Industry Electrical Contractors Association et al v. City of New York, in the U.S. District Court for the Southern District of New York, No. 10-8002.

The plaintiffs maintained that NYC violated the National Labor Relations Act, Municipal Law and New York Labor Law because of PLAs mandated by NYC government. The complaint argued that instead of acting to secure the best deal for the taxpayers, the city was using PLAs to handpick favored unions and contractors to perform the vast majority of the work. The plaintiffs also argued the alleged cost savings of $300 million over four years PLA advocates claimed the PLA would deliver to the city were “speculative and illusory” and were calculated using flawed methodology based on erroneous assumptions by Hill International and other consultants paid by city agencies to prepare PLA feasibility studies for various NYC public works projects.

Unfortunately, on August 4, 2011, U.S. Southern District Judge Robert Patterson ruled in favor of the city and PLA opponents.

Reuters reports:

Alan Pollack, who represented the plaintiffs, said his clients will appeal. The ruling will hurt city taxpayers by driving up construction costs, he said.

As the case makes its way through the appeals process, the public, media and elected officials should recognize an important fact from this lawsuit: Union contractors and union employees are often harmed by government-mandated PLAs.

In fact, the union contractors and union employees aided by this suit are opposed to government-mandated PLAs for the same reasons nonunion contractors and nonunion employees loathe government-mandated PLAs. In this case, contractors belonging to the plaintiff associations, the BIECA and UECA, were effectively excluded from the competitive bidding process for NYC contracts subject to a government-mandated PLA because of their existing contracts and relationships with other unions that are not favored or part of the NYC PLAs. The case’s fact pattern is similar to common complaints from nonunion contractors that government-mandated PLAs discourage, if not effectively exclude, nonunion contractors from competing for contracts and deny qualified nonunion tradespeople the opportunity to build a taxpayer funded construction project because they are not affiliated with unions that drafted and promoted the PLA.

This is not an isolated incident. Union contractor associations, contractors and union members excluded from PLA negotiations and PLA contracts have opposed government-mandated PLAs for years.

For example, in 2009, New Jersey’s Bayonne Local Redevelopment Authority was sued by the International Steelworkers Union to get on the list of unions eligible to perform work on a PLA covering a Military Ocean Terminal site.

Associated General Contractors (AGC), a national construction trade association that often negotiates union collective bargaining agreements for its union members, explains how government-mandated PLAs negatively impact their union contractor members (and nonunion members too) in this document.

Finally, here is a link to other examples of union contractors and associations opposing PLA schemes.

Anti-Competitive Favoritism Inherent in NYC PLAs
The City of New York enacted a series of PLAs entered into by and between various NYC agencies procuring contracts to build public works projects and The Building Construction Trades Council of Greater New York and Vicinity and its affiliated Local Unions (known as the BCTC).  Pursuant to the BCTC’s negotiations with NYC, only those unions belonging to the BCTC were permitted to become participating signatory unions to each of NYC’s PLAs and benefit from being recognized as the collective bargaining representative for all persons who perform work on PLA projects.

Consisting of 27 contractors, the BIECA is a trade association that has entered into a collective bargaining agreement (CBA) with Local 363, United Electrical Workers of America, IUJAT.  Local 363 is not a member of the BCTC. Pursuant to Local 363’s CBA with the BIECA, the BIECA and its contractors have agreed to recognize Local 363 as the “sole and exclusive bargaining representative of all electrical workers…who are or may hereinafter become employed” by any BIECA contractor. Their CBA requires employees of BIECA contractors to become members of Local 363 and BIECA contractors must contribute to pension, benefit, welfare and education funds designated by and affiliated with Local 363.  The terms of the NYC PLAs conflict directly with BIECA CBAs.

The UECA has been engaged in ongoing collective bargaining negotiations with the International Brotherhood of Electrical Workers (IBEW) Local 3. Pursuant to a December 7, 1995 Settlement Agreement with the National Labor Relations Board, UECA contractors are required to contribute to Building Trades pensions and benefit funds. In contrast, the NYC PLAs require contractors to contribute to BCTC’s benefit funds, which violates the BIECA’s settlement agreement with IBEW Local 3.

The facts of the case demonstrate that the terms and conditions in the PLAs used in NYC effectively excluded union contractor members of the BIECA and UECA from winning contracts subject to the PLA.

For instance, the PLA prevented Local 363 journeymen and apprentices members and any existing journeymen and apprentices of BIECA contractors from working on PLA projects because they are not represented by the unions favored in the BCTC’s PLA.  The existing CBA between Local 363 and BIECA contractors forbids contractors from hiring tradespeople represented by other unions, which prevented the plaintiff from bidding on the contracts subject to the BCTC’s PLA.

In addition, the PLA would have forced BIECA and UECA contractors to pay fringe benefits into the plans affiliated and managed by BCTC unions favored in the NYC PLA. Since existing UECA and BIECA agreements require contractors to make benefit contributions into funds managed and affiliated with local unions not favored by the BCTC, these contractors must pay benefits to both the BCTC benefit funds identified in the PLA and the existing benefit funds designated in their current union agreements.

These double benefit expenses increase labor costs and put UECA and BIECA contractors at a severe disadvantage when submitting a competitive bid.  In addition, the union members employed by the plaintiffs would not receive any benefit contributions made to BCTC benefit plans unless they joined these BCTC unions and became vested in these BCTC favored plans. In short, the NYC PLAs would have resulted in a windfall for BCTC plans at the expense of many union members employed by UECA and BIECA contractors.

The fact that certain union members and signatory contractors are excluded and discriminated against by PLAs undermines the false claim that PLAs are needed to ensure a high quality project built by a safe, well-trained and efficient union workforce. Like their nonunion counterparts, the BIECA and UECA contractors and their employees are qualified and experienced, but they are being harmed by the anti-competitive intent of PLA schemes. The real purpose of these agreements is to create a monopoly for handpicked unions to supply labor to construction jobsites and deny qualified contractors and their skilled an employees the right to compete for these contracts and jobs.

Consultants’ Pro-PLA Studies Flawed, Says Complaint
The plaintiffs argue that the pro-PLA studies are flawed. Cost savings the studies say a PLA will deliver to NYC are illusory. According to the plaintiffs brief in opposition to the defendants’ motions to dismiss:

…each study concludes that by obtaining certain union concessions, including standardizing work hours, overtime hours, work shift rules and holidays for each of the various construction trades along with “no strike” provisions and common grievance procedures, the City would realize substantial cost savings on projects covered by these PLAs…However, as detailed in the accompanying Tuerck Affidavit, the PLA studies are based on the flawed and unsupported methodology that only BCTC contractors historically bid on and perform City work.  The PLA studies further conclude that by obtaining certain concessions from the BCTC unions under the City PLAs, the City saves money.

For example, the original complaint explains that the non-BCTC contractors like the BIECA and UECA already have cost saving labor practices promised by the PLA, so a PLA is not needed and the alleged cost savings are bogus:

By artificially limiting the universe of contractors who perform City work to BCTC contractors, the authors of the feasibility studies give false and unwarranted credit to the PLAs for concessionary cost savings that would have been realized in the absence of a PLA and through the competitive bidding process.

For example, when the Local 363 CBA is compared with the CBA of Local 3, which is a BCTC signatory union, it is evident that certain cost savings the City claims can only be accomplished by concessions negotiated by a PLA, are already built into Local 363’s CBA.

Since the signatory unions mandate a seven hour workday, the feasibility study assumes that by adopting a PLA which mandates an eight hour workday, the City is provided with cost savings benefits by saving an hour of overtime pay per day over the course of the project.  Thus, the PLA would reduce costs by 12.5% (1/8) of the total number of hours worked, multiplied by the difference between overtime and straight time pay.

However, this presumed cost savings ignores the fact that Local 363’s CBA, Article 6, Section A (a), stipulates that a “regular week’s work shall consist of forty (40) hours, divided into any five (5) consecutive days between Monday through Sunday inclusive, of eight (8) hours each, performed between the hours of 6:00 AM and 6:00 PM.”  Had the City considered local 363’s CBA as their baseline, or the work rules and practices of a UECA contractors, it would have already realized a savings that would have obviated the need for any cost savings through the enactment of a PLA.

Nonunion contractors are also not restricted by the BCTC’s inefficient CBA rules that the PLA would allegedly address, resulting in cost savings that the plaintiffs call illusory. The brief continues:

What each of the PLA studies fails to address is whether PLAs offer any real cost savings when compared to projects performed in the absence of a PLA, where the actual qualified bidding pool of contractors – including other union and nonunion contractors – is able to bid for City work through the competitive bidding process.

Unfortunately, this is not the first time Hill International and other consultants have produced a flawed study to justify a government-mandated PLA without considering that there is a skilled and experienced alternative to BCTC labor and contractors signatory to BCTC unions.

A number of the firms selected by government agencies to evaluate the feasibility of PLAs have clear conflicts of interest with Big Labor that prevent them from providing an honest and accurate assessment of the impact of government-mandated PLAs on cost, competition and quality.

For example, the in the summer of 2009 Pennsylvania Department of General Services relied on the questionable findings of the Keystone Research Center (KRC) to justify the use of PLAs on hundreds of millions of dollars worth of prison construction even though the KRC board was heavily dominated by construction union members and a portion of the KRC’s annual revenue came from construction trade unions (learn more about this scandal here).

Can the Appeals Process Deliver Justice?
Regardless of how this case plays out in the courts, it is clear that anti-competitive and costly provisions in NYC’s government-mandated PLAs have harmed the plaintiffs representing union contractors and their union employees just as much as these agreements have harmed nonunion firms and tradespeople in the NYC area.

It is also clear that the process used to justify these PLA schemes is rife with errors, corruption and deception.

Anti-competitive and costly government-mandated PLAs have no place in a fair and open market.

Why not let the best contractors and employees with the best skills and experience compete? NYC taxpayers can only best be served via fair and open competition.

Check back with www.TheTruthAboutPLAs.com for updates on this case.

This case stems from former Pennsylvania Gov. Ed Rendell administration’s effort to force PLA requirements on several large state correctional institution projects in 2009.  We’ve followed this issue at length on this blog.

Here is the truth, from a press release issued by all four chapters of Associated Builders and Contractors in Pennsylvania.

PRESS RELEASE

SUPREME COURT DECISION RESULTS IN MORE QUESTIONS THAN ANSWERS:

ASSURES THAT PLA DISPUTE WILL CONTINUE

A recent ruling by the Pennsylvania Supreme Court has resulted in confusion in the construction industry regarding the legality of Project Labor Agreements in Pennsylvania. On January 18, 2011, the Pennsylvania Supreme Court issued brief Order which affirmed a prior single judge decision issued by Judge Pellegrini of the Commonwealth Court on December 1, 2009 in the case of Hawbaker, et al. v. Commonwealth of Pennsylvania Department of General Services, et al. However, the Supreme Court’s ruling was issued in the extremely narrow context of upholding the denial of a request for a preliminary injunction, and was issued “per curiam” (without an opinion) and thus it has no precedential value, i.e., is not binding on any court.

The original lawsuit was filed in 2009 by numerous contractors, employees of contractors, and various Pennsylvania Chapters of Associated Builders and Contractors, Inc. (“Petitioners”) to challenge the legality of the procurement process being used by DGS for various prison projects in Pennsylvania. Among the arguments raised by Petitioners was that the procurement process for many of the projects was illegal because it imposed a Project Labor Agreement (“PLA”) on the contractors for the projects. Ultimately, after DGS agreed not to impose PLAs on two of the prison projects, DGS attempted to impose a PLA on the project at SCI Graterford. Petitioners sought to preliminarily enjoin the bid process for that project, and also sought a permanent injunction with respect to the use of PLAs generally on public projects in Pennsylvania. Petitioners’ primary argument is that PLAs violate Pennsylvania’s competitive bid laws. In denying Petitioners’ request for a preliminary injunction in December 2009, Judge Pellegrini opined that he could not, as a single judge, rule that all PLAs were illegal or legal, and thus was constrained to deny the injunction. Significantly, one of the primary grounds on which Judge Pelligrini denied the preliminary injunction was due to his belief greater harm would result in the delay of a $400 million prison project which DGS argued was necessary to help address prison overcrowding, than would result if an arguably illegal bid process was permitted to proceed. As an opinion authored by a single judge, the Commonwealth Court decision is likewise not binding on any other courts.

On appeal to the Pennsylvania Supreme Court, Petitioners faced a high burden, as they had to demonstrate that Judge Pellegrini had no reasonable grounds to deny the request for a preliminary injunction. Additionally, DGS contended that the appeal was moot as immediately after the appeal was taken, DGS cancelled the procurement that was at issue in the litigation. By issuing a “per curiam” Order rather than a full Opinion, it is clear that while the Pennsylvania Supreme Court ruled that Commonwealth Court had at least one reasonable ground to deny Petitioners’ request for a Preliminary Injunction, the Supreme Court opted not to specifically rule on the legality of PLAs in Pennsylvania at this stage in the suit. Significantly, in the Supreme Court’s brief Order, two justices, including Chief Justice Castille, noted their disagreement with the Court’s decision to only issue a per curiam order, but rather those justices favored oral argument and a resolution by a full opinion.

The case will now proceed at the Commonwealth Court for a full blown hearing on the merits of Petitioners’ challenge and request for a permanent injunction. ABC and the Petitioners in the Hawbaker suit are committed to the development of a full and complete record on which the Commonwealth Court can decide the issues which form the basis of their request for a permanent injunction, including seeking a ruling that Project Labor Agreements on public projects conflict with public bid laws. ABC and the Petitioners believe that such a ruling will result in an open and competitive bid environment that places everyone on a level playing field, and therefore will result in the lowest costs for the taxpayers of the Commonwealth. For now, until a final decision is rendered in the Hawbaker suit, there is still no caselaw in Pennsylvania to suggest that a public body simply may impose a PLA as a matter of preference, and the decisions to date in the Hawbaker lawsuit do not hold otherwise.

Here are the highlights:

Politics brought union agreement to the school district

As far back as 1999, construction union lobbyists were putting pressure on the San Diego Unified School District to require its contractors to sign a Project Labor Agreement. In November 1998, San Diego voters had approved a $1.51 billion bond measure called Proposition MM, and unions saw an opportunity to require contractors on this huge construction program to obtain all workers from unions and pay all employee benefits into union trust funds. In addition, if the agreement was implemented, contractors would have to obtain apprentices exclusively from union apprenticeship programs (often called Joint Apprenticeship Training Programs, or JATCs).

In part because of the opposition of local business groups, the board of education did not consider a Project Labor Agreement in the end, although the district did adopt an in-house “labor compliance program” that initially invited participation from volunteer investigators affiliated with union-oriented Labor Management Committees. Construction projects funded by Proposition MM were bid under fair and open competition, and contractors were able to provide on-the-job training under state law to apprentices from any eligible program approved by the California Division of Apprenticeship Standards.

After the Proposition MM money was spent, the board of education placed a $2.1 billion bond measure called Proposition S on the November 2008 ballot to fund more school construction. The voter information for Proposition S mentioned nothing about contractors being required to sign a union agreement, and voters approved it. But one other significant change for the school district happened at that election: an incumbent school board member named Mitz Lee was defeated by her challenger, John Lee Evans. This gave construction unions a supportive majority of three votes on the five-member board of education to approve a Project Labor Agreement.

New school board implements union agreement

The new school board wasted no time in advancing the construction union plot to control future school construction at the San Diego Unified School District. At its Jan. 13, 2009 meeting, the board of education voted 3-2 to negotiate a Project Labor Agreement (now called a Project Stabilization Agreement) with construction unions in order to work on projects of $1 million or more. Despite the objections of Associated Builders and Contractors, the Associated General Contractors and numerous other community and business groups, the board of education approved a final Project Labor Agreement with the unions on a 3-2 vote on May 26, 2009. The board voted 3-2 again on July 28, 2009 to fix defects in the original agreement and adopt a new agreement.

In all three votes, board members Richard Barrera, John Lee Evans and Shelia Jackson supported the union agreement, while board members Katherine Nakamura and John de Beck opposed it. Apparently seeing the Project Labor Agreement as part of a fundamental structural change in local and national ideological identity, school board member Evans summed up the vote on May 26 this way: “I think the bigger picture that people are realizing — and this is what scares some people — is that San Diego is changing, the United States is changing … this is a different city … we are looking at a different community.”

Restrictions on apprentices in the Project Labor Agreement

What is the nature of this “different city?” It is a city in which unions have a monopoly on apprenticeship training and as a result have tremendous power over what kinds and how many people enter the construction work force. There is no competition among apprenticeship programs and no choice for young people considering a career in the construction trades.

There is no acknowledgement in Article XIV of the Project Labor Agreement that state-approved unilateral (non-union) apprenticeship programs exist, such as the programs affiliated with ABC. Nor is there acknowledgement that apprentices are enrolled in such programs.

The union agreement directs potential workers into “participation in such Joint Labor Management Apprenticeship programs.” It says that “the unions agree to cooperate with the contractor in furnishing apprentices as requested up to the maximum percentage.” A subcommittee of the Labor Management Committee oversees identification and development of programs and procedures leading to “the full utilization of apprenticeship programs.”

It is unclear what would happen if a contractor working at the San Diego Unified School District and signatory to the Project Labor Agreement actually had the gumption to request and accept an apprentice from a non-union apprenticeship program in order to fulfill the requirements of California law and regulations regarding apprenticeship training. An educated guess can be made based on the experience of a contractor who worked on a job at the Los Angeles Unified School District and signed the Project Labor Agreement in effect there.

The contractor requested apprentices from the applicable International Brotherhood of Electrical Workers (IBEW) union program, but then requested apprentices from the non-union program run by the Los Angeles/Ventura Chapter of Associated Builders and Contractors after the IBEW program failed to dispatch apprentices. The ABC program provided 17 apprentices, who received the appropriate on-the-job training on the project. Subsequently, the IBEW and its related trust funds sued the contractor in federal court, contending that the contractor should have paid journeymen wages and benefits to the apprentices because they were not dispatched from the applicable union apprenticeship program as specified in the Project Labor Agreement.

On Nov. 3, 2009, a district court judge ruled that the Project Labor Agreement required apprentices to come from union programs. The judge awarded the union $272,738.63 in underpaid trust contributions, including interest of $55,940.34, along with liquidated damages of $55,940.34 and additional auditor fees of $7,177.50. The contractor was given a rude lesson about signing a Project Labor Agreement and then bucking the unions.

ABC has responded to this threat and others with a “10 in 2010” program to ensure fair and open competition and freedom of choice in training in the 10 most populous cities in San Diego County.

Here is the status of the campaign as of May 1:

City	Population (2008)	Status
1. San Diego	1,337,000	On Nov. 18 San Diego citizens filed a notice of intent with the city clerk to circulate petitions for a ballot initiative amending the city charter to guarantee fair and open bid competition. Signature gathering is winding down and the initiative will be on the Nov. 2 ballot. For more information, visit reformsandiego.com.
2. Chula Vista	231,000	On Sept. 1, the Chula Vista City Council voted to place a proposed ordinance on the June 2010 ballot guaranteeing fair and open bid competition. The initiative will be on the June 8 ballot. For more information, visit fairnessforchulavista.com.
3. Oceanside	179,000	On Dec. 16, the Oceanside City council voted to place a proposed charter on the June 2010 ballot that includes a section guaranteeing fair and open bid competition. The charter will be on the June 8 ballot. For more information, visit passthecharter.com.
4. Escondido	143,000	Voters in most of these cities and their elected city council members are overwhelmingly supportive of getting the best quality construction at the best price though fair and open bid competition. Visit thetruthaboutPLAs.com for regular updates about policies concerning fair and open bid competition in these seven cities.
5. Carlsbad	104,000
6. El Cajon	98,000
7. Vista	96,000
8. San Marcos	83,000
9. Encinitas	64,000
10.National City	61,000

And as a bonus, don’t forget about the San Diego County Board of Supervisors, who unanimously approved an ordinance guaranteeing fair and open competition for county-funded construction on March 2.

This op-ed not only breaks down the sad history of PLA-related political payback in California, but also dives into how PLAs negatively affect nonunion apprentices.  PLAs are often a blatant attempt to keep these well-trained professionals from competing for public construction work in their own communities.

Additionally, residents of the San Diego County cities of Chula Vista and Oceanside will have the opportunity to say NO to these union handouts at the polls next Tuesday.  We strongly encourage voters in these cities to support Proposition G (Chula Vista) and Measure K (Oceanside).

Read Kevin’s full op-ed after the jump.

http://www.sddt.com/news/article.cfm?SourceCode=20100601crg

NEWS – SAN DIEGO

ABC Fights to Preserve Apprenticeship Training Opportunities for Future Construction Work Force

By KEVIN DAYTON, ABC of California

Tuesday, June 1, 2010

Construction contractors working at the San Diego Unified School District now have to sign a contract with construction unions affiliated with the San Diego County Building and Construction Trades Council. This contract is commonly called a Project Labor Agreement, although supporters of the controversial agreement have dubbed it with the more pleasant-sounding name of “Project Stabilization Agreement.”

As demanded by the unions, the agreement includes provisions that restrict the ability of contractors to train apprentices. It takes away the rights of many apprentices to obtain on-the-job training on San Diego Unified School District construction projects.

How did this agreement come about, and what implications does it have for training the future construction work force of San Diego County?

Politics brought union agreement to the school district

As far back as 1999, construction union lobbyists were putting pressure on the San Diego Unified School District to require its contractors to sign a Project Labor Agreement. In November 1998, San Diego voters had approved a $1.51 billion bond measure called Proposition MM, and unions saw an opportunity to require contractors on this huge construction program to obtain all workers from unions and pay all employee benefits into union trust funds. In addition, if the agreement was implemented, contractors would have to obtain apprentices exclusively from union apprenticeship programs (often called Joint Apprenticeship Training Programs, or JATCs).

In part because of the opposition of local business groups, the board of education did not consider a Project Labor Agreement in the end, although the district did adopt an in-house “labor compliance program” that initially invited participation from volunteer investigators affiliated with union-oriented Labor Management Committees. Construction projects funded by Proposition MM were bid under fair and open competition, and contractors were able to provide on-the-job training under state law to apprentices from any eligible program approved by the California Division of Apprenticeship Standards.

After the Proposition MM money was spent, the board of education placed a $2.1 billion bond measure called Proposition S on the November 2008 ballot to fund more school construction. The voter information for Proposition S mentioned nothing about contractors being required to sign a union agreement, and voters approved it. But one other significant change for the school district happened at that election: an incumbent school board member named Mitz Lee was defeated by her challenger, John Lee Evans. This gave construction unions a supportive majority of three votes on the five-member board of education to approve a Project Labor Agreement.

New school board implements union agreement

The new school board wasted no time in advancing the construction union plot to control future school construction at the San Diego Unified School District. At its Jan. 13, 2009 meeting, the board of education voted 3-2 to negotiate a Project Labor Agreement (now called a Project Stabilization Agreement) with construction unions in order to work on projects of $1 million or more. Despite the objections of Associated Builders and Contractors, the Associated General Contractors and numerous other community and business groups, the board of education approved a final Project Labor Agreement with the unions on a 3-2 vote on May 26, 2009. The board voted 3-2 again on July 28, 2009 to fix defects in the original agreement and adopt a new agreement.

In all three votes, board members Richard Barrera, John Lee Evans and Shelia Jackson supported the union agreement, while board members Katherine Nakamura and John de Beck opposed it. Apparently seeing the Project Labor Agreement as part of a fundamental structural change in local and national ideological identity, school board member Evans summed up the vote on May 26 this way: “I think the bigger picture that people are realizing — and this is what scares some people — is that San Diego is changing, the United States is changing … this is a different city … we are looking at a different community.”

Restrictions on apprentices in the Project Labor Agreement

What is the nature of this “different city?” It is a city in which unions have a monopoly on apprenticeship training and as a result have tremendous power over what kinds and how many people enter the construction work force. There is no competition among apprenticeship programs and no choice for young people considering a career in the construction trades.

There is no acknowledgement in Article XIV of the Project Labor Agreement that state-approved unilateral (non-union) apprenticeship programs exist, such as the programs affiliated with ABC. Nor is there acknowledgement that apprentices are enrolled in such programs.

The union agreement directs potential workers into “participation in such Joint Labor Management Apprenticeship programs.” It says that “the unions agree to cooperate with the contractor in furnishing apprentices as requested up to the maximum percentage.” A subcommittee of the Labor Management Committee oversees identification and development of programs and procedures leading to “the full utilization of apprenticeship programs.”

It is unclear what would happen if a contractor working at the San Diego Unified School District and signatory to the Project Labor Agreement actually had the gumption to request and accept an apprentice from a non-union apprenticeship program in order to fulfill the requirements of California law and regulations regarding apprenticeship training. An educated guess can be made based on the experience of a contractor who worked on a job at the Los Angeles Unified School District and signed the Project Labor Agreement in effect there.

The contractor requested apprentices from the applicable International Brotherhood of Electrical Workers (IBEW) union program, but then requested apprentices from the non-union program run by the Los Angeles/Ventura Chapter of Associated Builders and Contractors after the IBEW program failed to dispatch apprentices. The ABC program provided 17 apprentices, who received the appropriate on-the-job training on the project. Subsequently, the IBEW and its related trust funds sued the contractor in federal court, contending that the contractor should have paid journeymen wages and benefits to the apprentices because they were not dispatched from the applicable union apprenticeship program as specified in the Project Labor Agreement.

On Nov. 3, 2009, a district court judge ruled that the Project Labor Agreement required apprentices to come from union programs. The judge awarded the union $272,738.63 in underpaid trust contributions, including interest of $55,940.34, along with liquidated damages of $55,940.34 and additional auditor fees of $7,177.50. The contractor was given a rude lesson about signing a Project Labor Agreement and then bucking the unions.

What is ABC doing to preserve freedom of choice in training programs at state, local levels?

Project Labor Agreements at local governments are not the only tool used in California to restrict apprenticeship training opportunities in the construction trades. An ongoing political battle continues at the state’s California Apprenticeship Council (CAC) over the approval of new apprenticeship programs and the approval of existing apprenticeship programs to expand into new geographical jurisdictions. Unions routinely manipulate state laws and regulations to block approval or expansion of apprenticeship programs that would compete against their own programs.

The situation is so reprehensible that the U.S. Department of Labor has removed the authority of the state of California to regulate apprenticeship for federal projects because of the discriminatory “needs test” enacted into law as part of Assembly Bill 921, signed by then-Gov. Gray Davis in 1999 (his first year in office). Commonly referred to as “derecognition,” this drastic federal action was initiated in 2002 and finalized in 2007.

In 2005, a federal administrative law judge ruled that the U.S. Department of Labor has the right to “derecognize” California’s authority to regulate apprenticeship on federal projects. The decision noted that the “needs test” in the California Labor Code used by unions to prevent new or expanded apprenticeship programs “does not promote competition among programs, does not consider the needs of individuals seeking apprenticeship training and limits training opportunities for apprentices.” That’s a concise and accurate description of how state law discourages competition and choice for apprenticeship training in the construction trades.

On the local level, construction unions in San Diego County are aggressively trying to monopolize apprenticeship training by encouraging local governments to require contractors to sign Project Labor Agreements that contain language similar to Article XIV of the union agreement for the San Diego Unified School District. For example, on April 28, union representatives asked a committee of the San Diego City Council to require contractors to sign Project Labor Agreements to work on city public works projects. The committee chose not to proceed with a Project Labor Agreement, but the threat remains.

ABC has responded to this threat and others with a “10 in 2010” program to ensure fair and open competition and freedom of choice in training in the 10 most populous cities in San Diego County.

In the meantime, there will be elections for seats on the San Diego Unified School District board of education in November 2010 and November 2012. ABC has conducted or obtained several polls indicating that about 90 percent of San Diego County residents want fair and open bid competition, and 80 percent would consider voting against a candidate if he or she supported policies that required contractors to sign union agreements.

For the apprentices deprived of opportunities to learn a construction trade at the San Diego Unified School District, there is hope because the people are with you — not with the special interests that want to control the training programs for the future construction work force.

Below is  the text of the document with links to relevant www.TheTruthAboutPLAs.com blog posts for your convenience.

THE FINAL RULE IMPLEMENTING THE PLA EXECUTIVE ORDER: WHY IT SHOULD BE CHALLENGED

Maurice Baskin, Esq., Venable LLP

On April 13, 2010, the Federal Acquisition Regulation (FAR) Council issued a “final rule” to implement President Obama’s Executive Order 13502 (issued Feb. 6, 2009). The Executive Order declared that executive agencies awarding contracts on “large scale construction projects” (having a total cost to the federal government of $25 million or more) “may, on a project-by project basis, require the use of a project labor agreement (PLA)” by a contractor (binding all subcontractors). The final rule amends the Federal Acquisition Regulation (FAR) to enforce the Executive Order.

The Administration’s actions violate federal procurement laws; discriminate against 85% of the construction industry workforce and many small businesses; and hurt taxpayers, for each of the following reasons: 

• This is the first time that the federal government has issued a rule with the force of law encouraging PLA requirements on federal construction projects. Serious questions have been raised about the legality of Executive Order 13502. The new rule fails to address those questions in any serious way and is itself unlawful.
   
• The drafters of the new rule acknowledge that they received hundreds of comments in opposition to their proposal. The final rule nevertheless fails to meaningfully address any of the facts or law cited by the rule’s opponents. 
   
• In particular, the final rule offers no support for the claim that government-mandated PLAs are needed to solve any existing labor relations problem on federal construction projects. The FAR Council does not dispute that, during the previous decade in which PLAs were banned on federal and federally assisted construction projects via President Bush’s Executive Order 13202, none of the labor issues identified as potential problems in the new rule and/or the Obama Executive Order promoting PLAs occurred on any federal project. 
   
• The final rule primarily cites as its models for PLAs such outdated construction projects as the Grand Coulee Dam, which were undertaken more than 50 years ago, before Congress passed the Competition in Contracting Act. Since that time, the construction industry has changed from being dominated by union monopolies to being 85% non-union with full and open competition.  The final rule would turn the clock back from healthy competition to a tarnished era of strikes, favoritism and blatant discrimination in the construction industry. 
   
• The final rule fails to acknowledge any of the discriminatory effects of government-mandated PLAs on non-union contractors and their employees. The rulemaking record is filled with proof that PLAs discriminate against such firms, most of whom are small businesses, by greatly increasing their costs and forcing them to pay for union pensions that will never benefit non-union employees. 
   
• The final rule fails to identify any cost savings that will result from PLAs, and ignores testimony in the record that PLAs will increase the costs to taxpayers by as much as 20%. Numerous studies have shown that PLAs increase the cost of government construction, either because of the smaller number of bidders or because of the added costs of dealing with unions and inefficient union work rules. 
   
• The final rule does not cite any evidence that the increased costs have produced any proven increases in construction quality, safety, or timeliness. Instead, many government projects that have been subjected to PLAs have encountered problems with construction defects, delays, and workplace injuries.
   
• Neither the Executive Order nor the final rule identifies any meaningful criteriafor federal agencies to apply in deciding whether to impose PLAs on specific projects. This failure will lead to arbitrary and discriminatory results.
   
• The final rule violates the Regulatory Flexibility Act and the Small Business Act by failing to acknowledge the significant economic impact on small businesses caused by imposing PLAs on federal construction projects. In particular, the final rule wrongly ignores the impact of PLAs on subcontractors, many of whom are small businesses.
   
• Where the government imposes a PLA, all employees working on that project become subject to the union’s authority and typically must pay dues to the union, regardless of what they want. But 85 percent of all construction workers have chosen not to be represented by labor unions; they do not want any union to act as their bargaining agent. Under a PLA the government forces employees to become associated with a labor organization against their will.
   
• Numerous studies have shown that imposing PLAs on government construction projects reduces the number of bidders willing to perform the work. PLAs thus undermine the competitive bidding laws, whose purpose is to maximize competition for the benefit of taxpayers. PLAs instead promote favoritism for the small group of contractors who have signed union agreements.

Associated Builders and Contractors (ABC) 2010 National Chairman Jim Elmer, president of James W. Elmer Construction Co., Spokane, Wash., best summarized the prospects of a legal challenge in his April 12 statement in reaction to the final rule:

“ABC believes this final rule implementing President Obama’s Executive Order 13502, issued February 6th last year, exceeds his statutory authority and violates the Competition in Contracting Act, as well as other procurement laws and regulations. We will exhaust every opportunity to challenge this policy, which is effectively a federal government endorsement of union set-asides.”

TheTruthAboutPLAs.com will provide the public with updates on efforts by ABC and the construction and business community to challenge this costly and anti-competitive final rule.

This summary of a recent case by labor attorney David P. Wolds of the Wolds Law Group of San Diego, CA is yet another example of how a contractor trying their best to comply with the rigged procurement process through typical PLAs can still get burned when attempting to follow Big Labor’s discriminatory and costly PLA rules.

The facts of this case are important because they discredit assertions made by PLA proponents that PLAs allow the use of nonunion apprentices on a PLA project.

In this case, a nonunion contractor signed a PLA that was part of the bid specifications for a project at the Los Angeles Unified School District (LAUSD). The contractor requested apprentices from the applicable International Brotherhood of Electrical Workers (IBEW) union program, as required by the PLA.  The IBEW program failed to dispatch apprentices, so the contractor requested apprentices from a nonunion program – a practice thought to be permissible under this particular PLA. The nonunion program provided 17 apprentices, who had received the appropriate training for the project.

Subsequently, the IBEW and its related trust funds sued the contractor in federal court, contending that the contractor should have paid journeymen wages and benefits to the apprentices because they were not dispatched from the applicable union apprenticeship program as specified in the PLA. 

The lead negotiator for the Los Angeles and Orange Counties Building and Trades Council who participated in drafting the PLA was allowed to testify that the parties intended the term “apprentice” to mean only apprentices in union training programs. Earlier drafts of the PLA, which were entered into evidence, demonstrated that any broader definition of “apprentice” had been repeatedly rejected. The IBEW business manager also testified that a person cannot be an “apprentice” under the labor agreement unless the person signs an apprenticeship agreement with the IBEW.  Therefore, all apprentices must come form union programs, nonunion apprentices are not recognized and are actually journeyman, and the employer should have paid journeyman level benefits into union funds.

On November 3, 2009, a district court judge ruled that the PLA required apprentices to come from union programs. The judge awarded the union $272,738.63 in underpaid trust contributions, including interest of $55,940.34, along with liquidated damages of $55,940.34 and additional auditor fees of $7,177.50.

This contractor was given a rude lesson about signing agreements with construction unions to work for fiscally unaccountable and irresponsible local governments. 

The court avoided ruling directly whether nonunion apprentices were permitted on the PLA project.  Instead they ruled that nonunion apprentices should have been paid journeyman wages and were therefore journeymen.

This case study undermines promises by PLA advocates that PLAs permit the use of nonunion apprentices on a PLA project. The IBEW witness testified that apprentices from nonunion programs were not welcome on this particular PLA project.

This case serves as an strong example of how PLAs discourage competition from nonunion contractors and their nonunion employees and apprentices.

Looking for something to blame?
It’s the PLA, stupid!

Looking for someone to blame?

Blame Big Labor’s lobbyists for pushing costly, job-killing special interest PLAs and blame public officials for allowing these backroom kickback schemes to end open, fair and competitive bidding on public work projects.

TheTruthAboutPLAs.com covered the controversy surrounding government-mandated PLAs on $865 million worth of prison construction commissioned by the Pennsylvania Department of General Services (DGS).

From the Philadelphia Inquirer (“Lawsuit Over Labor Delays Montco Prison Project,” 3/1/10).

At a time when unemployment among construction workers stands at close to 25 percent, a $400 million Pennsylvania prison project that would have employed 1,400 carpenters, electricians, and others in the trades remains mired in bureaucracy and litigation.

Meanwhile, the state prison system is so crowded that it is shipping 2,000 inmates out of state at a daily cost of $62 per inmate.

Construction on the project, a new 4,100-bed prison next to Graterford Prison in Skippack Township, Montgomery County, was supposed to have started in September. …

….The Graterford project has been plagued by three problems – a disagreement over how it should be bid, the question of whether the workforce must be union, and the inability to find a bidder able to build the prison envisioned for the money available.

O’Reilly’s department had put the project out for bid in the spring. None of the bidders met the price.

The department was in negotiations in July with the lowest bidder, Keating Building Corp., a Philadelphia union contractor. Then nearly four dozen nonunion construction workers and contractors, along with trade associations that represent open shops, filed a lawsuit against the state to stop the project.

The plaintiffs made two requests: an injunction to stop the department from awarding the contract, and not to require a project labor agreement as a bid specification.

Project labor agreements typically require contractors to pay union wages and, in some cases, use union workers. The unions guarantee a trained labor supply and promise there will be no work stoppages.

On Dec. 1, Commonwealth Court Judge Dan Pellegrini refused to grant the request for an injunction; his decision has been appealed to the state Supreme Court.

The Pennsylvania Independent explains the complaint behind the lawsuit in greater detail and connects the corrupt dots between the DGS, The Keystone Research Center, Gov. Rendell and Big Labor (“Project Labor Agreements Delay Prison Construction,” 3/2/10).

Remember the lack of competition, increased costs, legal wrangling and project delays experienced by this project the next time public officials and Big Labor lobbyists want to play JEOPARDY! with public works contracts in your community.

UPDATE: Matthew Brouillette, president and CEO of the Commonwealth Foundation, notes in an op-ed (“Some Interests More Special Than Others,” 3/3/10) that when it comes to Gov. Rendell stopping the influence of special interest groups in Pennsylvania, some groups are more special than others.  As we have pointed out before, the governor has a particular love affairs with Big Labor and Mr. Brouillette mentions this in his op-ed:

Other special interests that apparently have the governor’s blessing include teachers’ unions, which lobby for hundreds of millions of dollars more every year, and construction unions, which lobby for such special privileges as “project labor agreements.”

The development is a win for taxpayers and proponents of fair and open competition.  However, the cancelled solicitation rendered the pending bid protest before the GAO moot.  A GAO ruling on the bid protest may have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

The Labor Department has not disclosed why the solicitation was cancelled but is required by FAR regulations to provide cause.

Here is a summary of media coverage since Friday:

• New Hampshire Union Leader: Job Corps Center Plan Hits Wall in Bid Process
• WMUR 9: Feds Cancel Bidding on Manchester Job Corps Center
• Daily Reporter: Proposed PLA Project Canceled
• National Right to Work Blog: Obama Administration Backs Down (For Now) Rather than Defend Discriminatory Project Labor Agreements

The Union Label Blog post, Victory Against Obama’s Unionism in New Hampshire, provides a practical explanation of the relationshop between PLAs and politics. 

A PLA ruling either outright excludes non-union companies…   …or forces them to be hobbled under union rules, but PLAs are nothing less than a government payoff to unions. In essence a PLA is a direct transfer of government money to union coffers and that is precisely why President Obama decreed via Executive Order that henceforth all government construction projects would be forced to proceed under PLAs

While the Obama order does not subject ALL federal construction projects to a PLA, it encourages federal agencies to require PLAs on appropriate federal projects exceeding $25 million. 

Section 7 of the executive order may expand a PLA encouragement or mandate to local and state construction users receiving federal assistance (grants, loans, tax breaks etc.).  Forcing federal special interests onto state and local procurement officials is a recipe for discrimination, corruption and increased costs on local and state budgets already strained by weak revenue due to the sagging economy.  States should not be hoodwinked into paying for four schools, bridges and hospitals for the price of five (the federal government shouldn’t tolerate this waste either, but that’s politics).

In addition, in states with low construction union density and/or a tight labor market, out of state union workers will take the jobs of qualified in-state nonunion workers under PLA mandates.

David Denholm’s blog post, Obama/Labor Bid Rigging Scheme Unravels, provides a sharp analogy of PLAs:

PLAs are bid rigging and protection racket schemes under which the construction owner agrees to use only union labor, thus driving up the cost of the project at the public’s expense, while the unions guarantee “labor peace.”

To put this in perspective, picture a thug at a candy store in Chicago telling the store’s owner that for a weekly payoff his windows won’t be broken and his customers will not be molested. The cost of the weekly payoff is, of course, passed along in higher prices to the purchasers of candy. The thug has the additional economic responsibility to impose the same terms on all other candy stores in the area so that his client won’t be at a disadvantage.

 Stay tuned for more updates and coverage.

Below is a news release from ABC National.

New Release

ABC Defeats Unlawful and Discriminatory New Hampshire Construction Contract

 Move Comes in Response to ABC Member Protest

Washington, D.C. – Associated Builders and Contractors (ABC) today announced that the U.S. Department of Labor (DOL) has cancelled its solicitation for bids to construct a new Job Corps Center in Manchester, N.H. under a government-mandated project labor agreement (PLA). The cancellation came in response to a protest filed with the Government Accountability Office (GAO) by ABC member North Branch Construction of Concord, N.H., with ABC support and representation. North Branch Construction challenged the PLA as unlawful and discriminatory.

“This is a real win for the principle of fair and open competition in government procurement,” said North Branch Construction attorney Maurice Baskin of Venable LLP, ABC’s General Counsel. “It is no coincidence that the Department of Labor cancelled its unlawful PLA mandate the day before the agency was required to file a response to our bid protest. We demonstrated that there was no justification for imposing a PLA on this project and that the PLA mandate violated the Competition in Contracting Act and other longstanding federal procurement requirements.”

“There is no justification for playing favorites in the government procurement process,” said ABC President and CEO Kirk Pickerel. “We hope that other federal agencies will heed this example and recognize that PLAs only result in delayed construction and harm to taxpayers. ABC will continue to protest any attempt to impose PLAs on federal construction projects in violation of competitive bidding laws.”

“The Department of Labor can still move this project forward by abandoning this illegal PLA,” said Ken Holmes, president of North Branch Construction. “Our company and other New Hampshire businesses deserve a fair opportunity to provide the public with the best construction product at the best price and we hope the Labor Department will build this project without a PLA in early 2010.”

A PLA is a contract that discourages competition from nonunion contractors and their nonunion employees by requiring a construction project 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 hall to obtain workers; obey the union’s restrictive apprenticeship and work rules; and contribute to union pension plans and other funds in which their employees will never benefit unless they join a union.

The bid protest challenged the legality of the federal government’s recent shift in federal procurement policy concerning the use of discriminatory and costly PLAs. On Feb. 6, President Obama signed Executive Order 13502, which repealed a 2001-2008 prohibition on federal PLAs and encourages agencies to require PLAs on federal construction projects whose total costs exceed $25 million. The Federal Acquisition Regulatory (FAR) Council is in the process of reviewing public comments on its controversial July 14 proposed rule that would implement Executive Order 13502 into federal procurement code. ABC filed detailed comments challenging the implementation of Executive Order 13502.

The DOL’s Job Corps Center PLA was believed to be the first government-mandated PLA on a federal construction project since Executive Order 13502 was issued.

###

Media Inquiries: Gail Raiman, (703) 812-2073 or Gerry Fritz, (703) 812-2062

TheTruthAboutPLAs.com on this development: Rather than build this project without a discriminatory and costly (and probably illegal) PLA – and generate the related economic benefits this project would create for New Hampshire taxpayers - the DOL has inexplicably cancelled this project. 

This unfortunate decision also stopped the bid protest pending before the Government Accountability Office (GAO) that would have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

Justice delayed, is justice denied.

The focus of the bid protest is a government-mandated project labor agreement (PLA) on the U.S. Department of Labor’s Job Corps Center in Manchester, N.H. 

Delivering on President Obama’s promise to boost the labor movement, the administration has announced a $35 million federal construction project in New Hampshire that requires union representation for the workers and forces nonunion employees to pay dues and contribute to a union pension fund.

Mr. Obama issued an executive order in the first weeks of his presidency that would make the requirement, known as a “project labor agreement” or PLA, the norm for all government contracts on large-scale construction jobs. The order is under review and a final rule is not expected for months, but that did not stop the Labor Department from rushing to use a PLA to build its new Job Corps Center in Manchester, N.H.

The reporter covers points of contention in a typical PLA debate.

Critics say imposing the union-friendly rules on the New Hampshire job – the first federal construction contract with such stipulations since President Clinton was in office – will drive up costs, delay the project and force most of the workers to pay union dues and pension contributions for which they likely will never receive benefits.

Big Labor’s PLA advocates respond with this haggard and bogus argument.

Union officials argue that PLAs, which incorporate collective bargaining agreements into the contract, ensure the construction companies hire highly skilled workers and pay them fair wages.

“Rather than all the money going to the contractor profit, a fair share goes into the worker’s paycheck,” said Greg Denier, communications director for Change to Win, a coalition of unions that includes the Laborers’ International Union of North America.

This argument in favor of PLAs is a poor one, especially because there is already a prevailing wage law, independent of PLAs, that requires employees to be paid a “fair wage” on federal construction projects.  “Prevailing wages” are almost always the union wage and benefit rate and 32 states and D.C. have prevailing wage laws that are similar to the federal prevailing wage law known as the Davis-Bacon Act.

Then Brett McMahon of ABC Member Miller&Long Concrete points out a major objection to PLAs by non-union contractors and non-union employees.

“In order to go to work, you have to pay for it,” Mr. McMahon said. 

On a PLA project, workers have to pay dues to a union in order to work on a project paid for by their own tax dollars (New Hampshire is not a Right-to-Work State, FYI). 

In addition, as TheTruthAboutPLAs.com has covered many times before in this blog (here), in rare instances where non-union workers and their employers participate in PLA projects, all employer contributions to union-managed pension and benefit funds on behalf of non-union employees are forfeited to the union plans unless employees join a union and become vested. It is a windfall for Big Labor because they don’t have to pay benefits to those contributors and non-union workers receive no benefit.

How is requiring a non-union worker to pay dues to a union with no benefits unless they join union for the life of a taxpayer funded construction project sound public policy?