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.

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)

ABC WINS ANOTHER CHALLENGE AGAINST GOVERNMENT-MANDATED PROJECT LABOR AGREEMENTS ON FEDERAL CONSTRUCTION PROJECTS

For Immediate Release
January 6, 2011

 Contact: Gail Raiman, (703) 812-2073
Gerry Fritz, (703) 812-2062 

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) today announced another victory in its fight against government-mandated project labor agreements (PLAs) on federal construction projects. As a result of a bid protest filed Oct. 18 with the Government Accountability Office (GAO), a PLA mandate has been removed from the bidding process for the construction of a $50 million U.S. Department of Veterans Affairs’ (VA) Research Office Building in Pittsburgh.

“PLAs are special interest schemes that force all bidders for construction projects to sign a labor agreement with construction unions as a condition of performing work,” said ABC President and CEO Kirk Pickerel. “This is the fourth successful bid protest that ABC has supported on behalf of one of its members against unlawful PLA schemes on federal construction projects. In similar protests filed on projects in New Hampshire, Washington, D.C., and New Jersey, federal agencies have withdrawn the PLA mandates. This case gives us the clearest indication yet that PLAs violate federal competitive bidding laws.”

ABC member company Bridges Construction of Pittsburgh, supported and assisted by ABC, filed a bid protest with the GAO. The protest challenged the VA’s PLA mandate that appeared in a September 10 bid solicitation (pdf) for the Research Office Building. The PLA requirement discriminated against qualified open shop contractors and their employees by imposing union dues requirements and inefficient and costly union work rules as a condition of performing work on the project.

During the course of the GAO protest, the VA revealed that its own PLA impact study found imposing a PLA on the project would increase costs by millions of dollars, would reduce the number of bidders and subcontractors, and would decrease the pool of skilled labor. In spite of this evidence, the VA claimed a PLA was supported by President Obama’s Executive Order 13502, which “encourages” federal agencies to impose PLAs on large construction projects if “consistent with law.”

After reviewing the facts of the case, the GAO strongly indicated it would sustain the protest of ABC’s member contractor under the federal Competition in Contracting Act (CICA), absent corrective action by the VA. In direct response to GAO’s action, on Dec. 21, 2010, the VA announced its withdrawal of the PLA mandate from the Pittsburgh solicitation. On January 5, 2011, the VA confirmed that adoption of a PLA would be completely “optional” for submitting offerors. According to the VA, “No additional points or weight will be assigned to proposals submitted with a PLA.”

“This result confirms ABC’s position that the open competition requirements of the federal CICA law take priority over President Obama’s pro-PLA Executive Order 13502,” said ABC President Pickerel. “The GAO agrees that no PLAs can be imposed on federal contracts in the absence of a compelling showing of need and evidence that PLAs will deliver increased economy and efficiency in federal contracting.”

“It’s time for the Obama administration to stop steering lucrative federal construction contracts to Big Labor – one of their largest political supporters – through unlawful government-mandated PLAs,” Pickerel said. “The American people deserve the best possible construction project at the best possible price. We can’t afford the increased costs, reduced competition and delays created by these special interest handouts. ABC will continue to fight for fair and open competition, and will challenge federal agencies attempting to impose unjustified PLAs on federal projects.”

Numerous studies show that PLAs discourage open shop contractors and subcontractors from competing for federal contracts, thereby increasing costs to taxpayers and discriminating against the majority of the construction industry workforce; or the 85 percent of the construction workforce that are not members of a labor union.

##

Here are some interesting facts about this case:

TheTruthAboutPLAs.com readers may recall that in 2009, the VA hired a consulting firm to produce a study about the impact of PLAs in specific construction markets where the VA was looking to renovate and build new facilities (“Independent Study Finds PLAs Increase Construction Costs,” 11/2/09). While that study did not address the Pittsburgh market specifically, a similar study (referenced above), was completed in 2010 for the VA on the Pittsburgh market. Like the 2009 study, it found a PLA would increase costs by millions of dollars, reduce the number of bidders and subcontractors, and decrease the pool of skilled available labor.

According to www.unionstats.com, just 20.3 percent of Pennsylvania’s private construction workforce belongs to a construction labor union and just 11.2 percent of ALL private workers (in all industries) in Pittsburgh’s Metropolitan Statistical Area (MSA) belong to a labor union.

The VA failed to produce evidence to suggest that a PLA would create economy and efficiency in federal contracting.  It is no surprise because a PLA is a solution in search of a problem.

If PLA advocates claim that PLAs are needed to prevent labor disputes, the public record from 2001 through early 2009 (when PLAs were prohibited on fedearl and federally assisted construction projects by President Bush’s Executive Order 13202 and 13208) clearly demonstrates that a lack of a PLA did not result in strikes and labor disputes on VA projects, as evidenced by this 2009 Freedom of Information Act request filed by ABC.  Aferall, Big Labor is the cause of labor unrest and worksite friction. Why reward such extortionary tactics with a PLA monopoly?

In addition, comments by PLA proponents claiming that a PLA ensures fair wages and benefits on this project are also bogus. All federal projects, regardless of a PLA, are subject to federal prevailing wage laws set by the Davis-Bacon Act. Davis-Bacon “prevailing wage” rates are typically articifially inflated union wage and benefit rates set by the government that must be paid to all workers, regardless of whether or not there is a PLA or they belong to a union. Wage rates can be found at www.wdol.gov. For example, the rate for an electrician engaged in “Building” construction in Allegheney County is $34.26 in wages plus $17.88  in benefits, for a total compensation package of $52.14 per hour. Assuming full employment through the year, that is a wage and benefit package of $108,451. That is without a PLA, folks.

Again, a PLA is a solution in search of a problem. We think the real problem might be that Big Labor needs a handout from politicians in return for Big Labor’s political investment through campaign contributions and endorsements.

We suspect that officials at the VA were pressured into mandating this PLA by politicians, Big Labor bosses, political appointees and possibly White House staff  interested in paying back Big Labor for their political support.

TheTruthAboutPLAs.com believes that fair and open competition, free from government-mandated PLAs, will help the VA deliver to taxpayers the best possible product at the best possible price.

Update: The Washington Examiner’s Mark Hemingway covered this story today (“White House Loses Battle Over Union Paybacks,” 1/6/10):

Bridges Construction of Pittsburgh recently filed a bid protest with the Government Accountability Office after the federal government tried to impose a Project Labor Agreement (PLA) as part of the federal contract in the construction of a $50 mllion Veterans Affairs building. PLAs are construction contracts negotiated in advance that basically mandate union labor — a study from the Beacon Hill institute found that PLAs make construction projects 12 percent to 18 percent more expensive on average.

Last month, I wrote about how the Obama White House signed an executive effectively imposing on all big Federal construction projects as way to pay back unions for their political support. After my column ran, a number of Republican Congressmen wrote a letter to the White House questioning the White House’s PLA policy.

According to today’s press release from Associated Builders and Contractors, Associated Builders and Contractors and Bridges Construction successfully thwarted the PLA on the VA building in Pittsburgh:

[snip].

During the course of the GAO protest, the VA revealed that its own PLA impact study found imposing a PLA on the project would increase costs by millions of dollars, would reduce the number of bidders and subcontractors, and would decrease the pool of skilled labor. In spite of this evidence, the VA claimed a PLA was supported by President Obama’s Executive Order 13502, which “encourages” federal agencies to impose PLAs on large construction projects if “consistent with law.”

[snip]

Emphasis mine. The government’s own study found the PLA was a waste of tax dollars, and yet they still tried to impose one anyway. Remember unions are Democrats biggest campaign donor. PLAs are not about efficient use of your hard earned tax dollars — they’re political payback.

Hemingway hit the nail on the head. Government-mandated PLAs are all about payback.

Update 1/12/11: An editorial in The Pittsburgh Tribune-Review praised the removal of government-mandated project labor agreement (PLA) on the construction of a $50 million U.S. Department of Veterans Affairs’ (VA) Research Office Building in Pittsburgh and heavily criticized politicians and special interests participating in these anti-competitive and costly schemes (“The VA & PLAs: A welcome reversal,” 1/13/11):

Dropping inclusion of union-coddling project labor agreements (PLAs) from bidding requirements for a $50 million Veterans Affairs research office building in Pittsburgh is a step in the right direction — a direction in which all public construction projects must go for taxpayers’ sake.

The VA dropped the requirement — and said it won’t give preference to bids that include PLAs — after North Side contractor Bridges filed an October protest with the Government Accountability Office. Bridges had help from Associated Builders & Contractors, the local trade group that has sued over PLA requirements for Community College of Allegheny County and Penn Hills School District projects.

PLAs should not be part of public construction projects — period. Politicians use PLAs to reward unionized supporters, putting taxpayers on the hook for the higher costs that studies show PLAs impose. Project labor agreements also discriminate against nonunion workers’ — taxpayers who outnumber unionized workers — job opportunities.

The VA decision on the Oakland project must stick, becoming standard procedure for that agency. And the rest of government, at all levels, must follow suit. Taxpayers’ interests must come before those of extorting unions and the politicians who pander to them.

We agree.

BNA’s Construction Labor Report also covered this story with notable interviews from VA and GAO officials (“Contractor Protest Causes VA to Delete PLA Mandate from Research Building Bid Notice,” 1/12/11) [Note: Subscription Required]:

The Department of Veterans Affairs has made the use of a project labor agreement optional for all offers to construct a research building in Pittsburgh for the department after it withdrew a PLA mandate from the project’s bid solicitation, a department official told BNA Jan. 10.

 A Veterans Affairs spokesman told BNA that proposals submitted with PLAs on the project to construct the VA Research Office Building in Pittsburgh estimated to cost between $50 million to $100 million, will not be awarded any “additional points or weight” during the bid evaluation process. The spokesman said the decision applies only to this specific project. [snip]

A GAO attorney explains the bid protest and PLA withdrawal, indicating that the GAO would have ruled against the VA’s PLA mandate:

According to Ralph White, managing general counsel of GAO’s procurement law division, the protest was dismissed Dec. 9, 2010, because the VA decided to delete the PLA mandate from the bidding requirements. The Veterans Affairs chose to amend the bid solicitation after concluding that the protest filed by Bridges Construction might be sustained by the GAO, however GAO did not reach a final decision because the VA “decided to take corrective action,” White told BNA.

To learn more about the bid protest and victory for taxpayers and members of the construction community, please visit here.

UPDATE: The VA hired the same consulting firm to update their PLA study from September 2010. The new study, dated May 17, 2011, again recommended against a government-mandated PLA on the Pittsburgh project:

For a Pittsburgh, Pennsylvania project at the present time, we see a potential cost risk premium of 3% to 5% if a PLA is mandated. For a $40 mil. project, this would equate to $1.2 to $2.0 mil.

We see that a mandated PLA will reduce sub-contractors and lower the labor pool to the detriment of the project, and potentially add cost; therefore we believe that a PLA would likely not “advance the federal Government’s interest in achieving economy and efficiency in federal procurement.”

Here are the highlights:

Building a case against PLAs

The New Jersey Department of Labor and Workforce Development just released its FY 2008 findings on project labor agreements (PLAs).

PLAs are anti-competitive. They end open, fair and competitive bidding on public works projects. PLAs drive up the cost of construction by reducing competition and effectively excluding merit shop contractors and their skilled employees from building projects paid for by their own tax dollars.

The 2008 study further emphasizes the wasteful and discriminatory practices of PLAs in New Jersey.

Finding No. 2 of the study clearly points out: “School projects that used a PLA tended to have higher building costs, as measured on a per square footage and per student basis, than those that do not use a PLA.” In fact, they are 30.5 percent higher than for all non-PLA projects.

Finding No. 3 of the study proves: “PLA projects tended to have a longer duration than non-PLA projects.” For FY 2008, the average duration of PLA projects (12 of them) was 100 weeks compared with 78 weeks for non-PLA projects (60 of them).

In these tough economic times, we urge the Legislature and the Christie administration to end the anti-competitive practice of PLAs on construction projects in New Jersey.

Patrick Stewart,

Trenton

The writer is president of the New Jersey Associated Builders and Contractors.

Just as the state teachers unions refused to give up their outsized compensation and benefit packages to adjust to staggering state budget deficits, the construction union bosses continue to demand that state and local projects be awarded only to contractors willing to recognize unions as the sole representative of their nonunion workers on a project, hire from union hiring halls and pay into often underfunded benefit programs from which their nonunion workers will likely never see any benefit.

The end result is decreased competition from contractors unwilling to give in to Big Labor’s demands and increased costs to taxpayers.  In a state that continues to face staggering budget deficits, unnecessarily paying an additional 30 percent for state construction isn’t exactly what the doctor ordered.

UPDATE: This is not the first report from the New Jersey Department of Labor and Workforce Development that highlights problems with PLAs. Check out these reports, which came to similar conclusions:

• FY2007 Report (Released June 2009)
• FY2006 Report (Released January 2008)
• FY 2005 Report (Released September 2006)

The United States Army Corps of Engineers (USACE) removed a PLA from the bid solicitation for the construction of a $25 million to $100 million Army Reserve Center in Los Alamitos, Calif.

In July, the USACE issued a market survey requesting information from the contracting community about the feasibility of using a PLA on the Army Reserve Center in Los Alamitos, a small city in Orange County.

After receiving a strong anti-PLA response from the construction community, USACE procurement officials issued an amendment Aug. 31 that removed the PLA mandate.

TheTruthAboutPLAs.com readers may recall that in August, the USACE also removed government-mandated PLAs from bid solicitations for construction projects at the Patrick Air Force Base in Brevard County, Fla. and the Armed Forces Reserve Center in Camden, N.J.  Both PLAs were eliminated because of a robust grassroots response from the construction community in opposition to the PLA.  

Now that the PLA was wisely removed by the USACE, taxpayers and the USACE will be better served by increased competition from qualified contractors and their skilled employees who simply want a fair opportunity to deliver the best possible construction product at the best possible price. Nonunion craft professionals and their families will have a real chance to benefit from jobs created by this investment of federal tax dollars in this important project.

With the construction industry suffering from 17 percent unemployment (as of Aug. 2010) it is critical for federal agencies to put an end to favoritism towards union members and union signatory contractors via PLAs. Nonunion craft professionals should not have to join a union, pay union dues and forfeit fringe benefit contributions to union plans in order to have a job and feed their families.

Update: September 30, the USACE awarded a contract for $23.395 million to a contractor without a government-mandated PLA.

USACE Honolulu District Solicits Comments on PLAs

The USACE Honolulu District is soliciting comments from the construction community addressing the potential use of PLAs for large scale construction projects exceeding $25 million in the state of Hawaii.

It is critical for ABC members and the construction community to respond to this seven question survey. Tell the USACE that a government-mandated PLA on Hawaii USACE projects will injure competition, increase costs and will not advance economy and efficiency in government contracting.

All comments must be submitted by Oct. 18.

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

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

ABC National’s Main Comments to the FAR Council’s Proposed Rule 

ABC Member Survey/Comment Supplement to Main Comments

ABC National Comments Specifically Addressing the Regulatory Flexibility Act

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

Here is a blog post about this document.

This is yet another blow to the Obama administration’s effort to implement Executive Order 13502, which encourages the use of PLAs on federal construction costing more than $25 million.

In this most recent victory for taxpayers, ABC was successful in having a mandatory PLA removed from the bidding process for the construction of an Armed Forces Reserve center in Camden, N. J.

Here is ABC’s August 25 press release:

ABC Wins Challenge Against Mandatory Project Labor Agreement on Federal Construction Project in New Jersey

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) today announced it was successful in having a mandatory project labor agreement removed from the bidding process for the construction of an Armed Forces Reserve center in Camden, N. J.

In response to a bid protest filed with the Government Accountability Office by ABC member Wu & Associates, Inc. of Cherry Hill, N. J., with ABC support and representation, the U.S. Army Corps of Engineers eliminated a solicitation requirement that would have limited the pool of qualified bidders to contractors willing to sign onto a federal construction project covered by a controversial government-mandated project labor agreement.

“Our company and other quality New Jersey businesses deserve a fair opportunity to provide the public with the best construction product at the best price,” said Wu and Associates President Kirby Wu, AIA. “The wasteful and discriminatory project labor agreement would have cut competition from qualified merit shop contractors and their skilled employees. The U.S. Army Corps of Engineers’ decision is a real win for all taxpayers, as well as for the people of New Jersey.”

“We hope that other federal agencies will heed this example and recognize that discriminatory project labor agreements only result in increased costs, delayed construction and harm to taxpayers,” said ABC President and CEO Kirk Pickerel. “ABC will continue to fight any attempt to impose project labor agreements on federal construction projects in violation of competitive bidding laws.”

A project labor agreement is a special interest scheme 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 nonunion employees will never benefit unless they join a union.

###

Associated Builders and Contractors (ABC) is a national association with 77 chapters representing 25,000 merit shop construction and construction-related firms with two million employees. Visit us at www.abc.org.

On Feb. 6, 2009, President Obama signed Executive Order 13502, which repealed a 2001-2008 prohibition on federal PLAs. The Obama order also encourages federal agencies to require PLAs on federal construction projects whose total costs exceed $25 million. This April, the Federal Acquisition Regulatory (FAR) Council issued a controversial final rule, effective May 13, that implements Executive Order 13502 into federal regulations.

Newspaper editorial boards across the country and the construction community widely viewed the pro-PLA Executive Order 13502 as payback to the construction industry’s Big Labor bosses for their past and continued political support of President Obama and congressional Democrats, as PLAs steer lucrative federal construction contracts to unionized contractors and their union employees.

Big Labor bosses deduct union dues from rank-and-file union members to fund PAC contributions and soft money donations to political campaigns of candidates who support PLAs and other pro-Big Labor policies.

This cycle of corruption costs taxpayers dearly, as studies demonstrate PLAs increase the cost of construction between 12 percent and 18 percent while delivering no additional benefits to construction owners or taxpayers.

The PLA racket also stifles job creation for nonunion contractors and their employees. This is particularly offensive because 85 percent of the U.S. construction workforce does not belong to a union and the industry is suffering from 17 percent unemployment as of July 2010.

ABC and TheTruthAboutPLAs.com have led the fight against similar crony contracting mandates by federal agencies (See U.S. DOL Job Corps Center in Manchester, N.H., the U.S. General Services Administration’s (GSA) Lafayette Building in Washington, D.C. and the U.S. Army Corp of Engineers technical applications center at Patrick Air Force Base in Brevard County, FL).

This is a huge win for taxpayers and the 85 percent of the private construction workforce that chooses not to join a labor union.  Here at TheTruthAboutPLAs.com, we thank the U.S. Army Corp of Engineers for doing the right thing and removing this PLA from the bidding process.

While it appears that there may have also been issues with the initial price projections, it is clear that the PLA mandate played a significant role in potentially denying taxpayers the value they deserve on this project.

Here is an excerpt from the CourierPostOnline.com’s coverage (“Council Ponders Next Move on Project,” 5/18) of the town hall debacle:

Last week, council rejected all 10 construction bids for town hall, library and police complex on Second Avenue after the lowest bid came in 35 percent higher — $15.7 million – than the initial construction estimate of $11.6 million.

“The quality of cost estimates relative to design were way off. Kitchen [Kitchen and Associates is the architect on this project], we are disappointed with what you sold us compared to what we got,” Mayor Daniel Roccato said at a meeting in the existing library building, which council intended to replace as part of a two-building town hall project.

He told an audience of residents, including non-unionized general contractors, that council will have to evaluate if the two professional firms are the “right team” and that the entire project may have to be “recast.”

[snip]

Contractors Crag Alper and Kirby Wu disagreed with Kerin’s [Ronald C. Kerins Jr, of project management consultant Greyhawk] contention that the labor agreement for union contractors was not a major factor in the higher prices bid and that construction bids are going up.

Alper, chairman of the Association of Builders and Contractors, said a state Department of Labor study of school construction concluded the labor agreement contracts are 32 percent higher than bids submitted by non-unionized contractors. They still have to pay the prevailing wage for tradesmen and can opt to hire union labor

The council has since decided to keep the current architectural and consulting team, but abandon the PLA requirement.  Here is an excerpt from the Moorestown Sun’s (“Council Keeping Project Pros,” 6/30) coverage of the issue:

Should Council decide to re-bid the contract after hearing the professional team’s new plan in August, professionals said the project could be ready to go out to bid again in October with a notice to proceed to the selected bidder going out in November. The project would then take about 20 months to complete, with an anticipated end date of summer 2012.

It has already been established that, if re-bid, the project will not include a project labor agreement, as the original bids requirements had.

Clearly, the council recognizes that PLAs have a significant impact on cost.  With local budgets stretched to the limit all over the country, now is the worst possible time to reward special interests at the expense of local taxpayers.  This is a positive development for the people of Moorestown. Hopefully fair and open competition without a PLA will help taxpayers get the best possible product at the best possible price.

The report referenced by Mr. Alper in the article above is from research conducted and released in June 2009 during New Jersey Gov. John Corzine’s (D) administration by the New Jersey Department of Labor and Workforce Development (LWD) titled, “2007 Annual Report to the Governor and Legislature: Project Labor Agreement (PLA) Act, P.L. 2002, Chapter 44 (C.52:38-et seq.).” [Here are reports from 2005 and 2006].

In order to determine the impact of PLA on construction costs, LWD conducted a review that, “consists of 64 new schools, of which half (32) were built using PLAs, and includes school construction projects that were started and completed between July 2002 and June 2007.  All non-school construction projects were excluded from the analysis because of the small number of non-school PLA projects and because of major differences in the types of buildings constructed.  Due to the limited availability of data, all projects that were not considered new construction were excluded. “

The results are not surprising:

The average indexed cost per square foot and the average indexed cost per student were both higher for all categories of PLA schools than for non-PLA schools.  The indexed cost per square foot for all PLA projects was $246.28, or 34.2 percent higher than for all non-PLA projects, which averaged $183.50 per square foot.

LWD even produced a chart, which is included on page 10 of the report:

New Jersey LWD researchers were also able to isolate some of the variables that influence cost in order to take them into account.  Here is one more excerpt from the report:

The regression analysis was able to explain approximately 35 percent of the cost difference between PLA and non-PLA projects. The effects of geographic location, size of school and type of school were all found to be statistically significant factors in explaining cost differences. School projects built in the northern region of the state on average were found to cost more, as did middle and high schools. There were economies of scale on larger projects which reduced average costs. After controlling for the effects of these factors, the average cost of PLA projects remained higher than that of non-PLA projects, and the difference was significant at a 99-percent confidence level. These results are in contrast to a previous report which found the cost differences to be statistically insignificant.

The 65 percent of the cost difference remaining after LWD’s regression analysis of the cost difference between schools build with PLAs verse non-PLAs represents a 19.9 percent cost increase for schools built with PLAs.

This is the level of cost increase that numerous studies show that we should expect when government entities mandate PLAs.  For example, several studies conducted by the Beacon Hill Institute at Suffolk University between 2003-2006 found that PLAs increase both bid costs and final construction costs on school construction projects in New York, Massachusetts and Connecticut by as much as 20 percent.  This matches the nearly 20 percent cost differential that the New Jersey LWD found between schools built with and without PLAs after isolating school location, size and type.

This is just one example of the failed policies that led to the $11 billion budget deficit that the Christie administration was forced to confront upon taking office.

Please visit our earlier posts for more information on PLAs in New Jersey.

Item #17 caught our attention:

17. End the use of project labor agreements, which drive up the cost of public construction projects.

Here at TheTruthAboutPLAs, all we can say is us too!

One area of government waste that Governor Christie should take up immediately is the use of project labor agreements (PLAs) on state construction projects.  In 2002, former Governor Jim McGreevey (D) issued Executive Order 1, which provided (emphasis added):

“that on a project-by-project basis, a state department, authority, or instrumentality shall include a PLA in a public works project where it has been determined that the agreement advances the state’s interests of cost efficiency, quality, safety, timeliness, skilled labor force, labor stability, and the state’s policy to advance minority and women-owned businesses.”

This is just one example of the love affairs between Big Labor and New Jersey governors.

The New Jersey Legislature attempted to codify Governor McGreevey’s executive order when it enacted A. 1926 in July 2002.  This bill stated that:

A public entity may include a project labor agreement in a public works project on a project-by-project basis, if the public entity determines, taking into consideration the size, complexity and cost of the public works project, that, with respect to that project the project labor agreement will meet the requirements of section 5 of this act, including promoting labor stability and advancing the interests of the public entity in cost, efficiency, skilled labor force, quality, safety and timeliness. If the public entity determines that a project labor agreement will meet those requirements with respect to a particular public works project, the public entity shall either: directly negotiate in good faith a project labor agreement with one or more labor organizations; or condition the award of a contract to a construction manager upon a requirement that the construction manager negotiate in good faith a project labor agreement with one or more labor organizations.

This wordy paragraph ultimately says that state agencies are essentially required to mandate PLAs on state projects as long as the PLAs do certain things or require certain conditions as outlined in section 5 of the act.

Here is an excerpt from section 5 of this act (emphasis added again):

Each project labor agreement executed pursuant to the provisions of this act shall:
a.Advance the interests of the public entity, including the interests in cost, efficiency,
quality, timeliness, skilled labor force, and safety;

Governor Christie recognizes that PLAs do not advance the interests of state government or taxpayers.  PLAs increase construction costs by as much as 18 percent and limit the ability of 77 percent of New Jersey’s construction workforce from working on projects in their own state.

On the Christie Campaign website, christiefornj.com, item number fifty on 88 Ways Chris Christie Will Fix New Jersey highlights Governor Christie’s pledge to eliminate discriminatory and costly PLAs in New Jersey.

Fifty:

I will eliminate special interest labor union giveaways that increase spending and taxes by ending the use of project labor agreements, which drive up the cost of public construction projects and fail to deliver a public benefit at a time when the economy is shedding jobs and taxpayers are struggling to make ends meet.

Here at TheTruthAboutPLAs.com, we want to wish Governor Christie luck.  New Jersey is facing some important challenges, like finding ways to lower their sky-high property taxes, and needs his sensible leadership now more than ever.

Additionally, we call on Governor Christie to fulfill this campaign pledge and issue an executive order to declare that PLAs are not in the public interest and end their use on state and state funded construction.

The paper published an Op-Ed defending PLAs by Phillip E. Cooney, vice president of the New Jersey Carpenter Contractor Trust, a labor and union contractor organization that directly benefits from government-mandated PLAs (“Project Labor Agreements Preserve State Jobs,” 11/29).

An Op-Ed published 12/3 by Angelo Gaudelli, president of an HVAC contracting company in Millville, discredits Cooney’s pro-PLA arguments and calls Cooney’s commentary “propaganda,” “filled with half-truths,” and “misleading” (“Project Labor Agreements Benefit Unions, Not Taxpayers,” 12/3). TheTruthAboutPLAs.com agrees. 

Gaudelli provides a real world illustration of how PLAs increase the cost of construction by reducing bidders to those willing to obey the anti-competitive terms and conditions of a PLA.

Cooney asserts that “The most recent study conducted by three major universities, “Project Labor Agreements’ by Belman, Bodah and Phillips concluded that PLAs neither increase nor decrease costs.”

While I am not in a position to dispute the arguments of college scholars, I am quite capable of comparing apples to apples.

On April 21, the Blackhorse Regional School District in Camden County accepted bids for a heating and air conditioning replacement project at Triton Regional High School. The specifications required a Project Labor Agreement. The lowest bid submitted was $711,592. All bids were rejected.

On Sept. 9, the project was re-bid without the PLA clause. Every other aspect of the original project’s drawings and specifications remained unchanged. The same union contractor submitted the lowest bid of $514,930. A contract was awarded the following day.

The only difference between the two bids was the PLA. It increased the cost by 40 percent.

In this instance, a union contractor in a fair, open, competitive bid was successful in bidding the project and the taxpayers of Camden County saved $196,662 by eliminating the PLA. As Knute Rockne once said, “Win or lose, do it fairly.”

Let me conclude by reiterating that all employees, union and nonunion alike, are paid the same wages on publicly funded projects. All employers, union and nonunion alike, are required to provide liability insurance and workers compensation coverage, to withhold and remit federal and state taxes, to comply with OSHA requirements and the list goes on.

All vendors are paid the same price for their equipment, supplies and services. So who is really protected by a PLA?

It is certainly not the taxpayer, the awarding governmental agency or the employees.

The city of Fall River, MA had a similar experience in 2006 with projects bid with a PLA and then re-bid without a PLA.  It is one of many real world examples that demonstrate how PLAs increase construction costs and reduce competition.  No biased academic treatise or Big Labor spin doctors can disprove the results of actual bidding in the real world. 

With concrete evidence from Fall River and Camden County demonstrating that PLAs increase construction costs, PLA proponents like Cooney must rely on weak pro-PLA arguments like “PLAs preserve state jobs,” and PLAs are the only way to ensure local hire and keep tax dollars in the local economy.

The pro-PLA local jobsargument is misleading. PLAs discourage competition from local and qualified nonunion contractors and employees that are just as local as Big Labor.  They pay taxes too.  Shouldn’t nonunion contractors and employees deserve a fair opportunity to provide the public the best possible project at the best possible price? Don’t public officials have an obligation to taxpayers to ensure fairness and provide all local businesses and residents an equal opportunity to compete for public projects?

In addition, Big Labor is notorious for bringing in out-of-state workers (known as boomers or travelers in the industry) through local hiring halls and putting them to work ahead of qualified local nonunion craft professionals who are excluded because of PLAs.  For example, if PLAs are required by the federal government under Executive Order 13502 on federal construction projects in low union density markets, out of area union members will be imported through union hiring halls to fill jobs that the local union membership can’t fill. When travelers are used, union bosses would rather collect union dues than ensure that construction dollars stay in the local economy.

Finally, PLAs are not a fair or sensible approach to ensure local hire. If local hire is a policy objective of public construction owners, they don’t need a PLA to set and achieve local hiring goals. Public officials can establish these policies through provisions in bid documents and construction contracts or new local hire preference programs and laws. Unlike PLAs, these local hire solutions do not increase the cost of construction or stack the deck in favor of Big Labor. 

While it is true PLAs can include language for local hire, (after all, PLAs are contracts and can say anything) such a provision is nothing more than lipstick on the PLA pig.