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

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construction projects and hundreds of billions of dollars of federally assisted construction projects until it was repealed by President Obama’s pro-PLA Executive Order 13502 in Feb. 2009.

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

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

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

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

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

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

Where: 2154 Rayburn House Office Building

Date/Time: June 3 at 9:30am

Witnesses :

Panel One

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

Panel Two

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

Please check back for additional updates.

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

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

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

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

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

The hearing’s witness list is available here.

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

The hearing will be available via webcast here.

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

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

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

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

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

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

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

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

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

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

###

 

Today, the Office of the Federal Register’s Public Inspection Desk published a notice online that the Federal Acquisition Regulation (FAR) Council’s final rule implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations will be published in The Federal Register tomorrow.

Here is an advanced copy of the final rule, which will take effect May 12.

It’s a controversial White House gift to Big Labor that is likely to increase federal construction costs, reduce competition from quality nonunion contractors and their skilled employees, and deny taxpayers the accountability they deserve from government.

Nine months ago (July 14, 2009), the FAR Council issued a proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects) that will implement the content of President Obama’s Executive Order 13502 into federal procurement regulations.

The contentious proposed rule was subject to two 30-day public comment periods.  The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23.

TheTruthAboutPLAs.com readers, associations, taxpayers, contractors and hard hat employees answered our call to action in opposition to the proposed rule and submitted almost 1,000 comments to the FAR Council.  ABC National’s comments can be viewed here (www.abc.org/plastudies), and every comment submitted to the FAR Council is available for public review here.

Despite a July 10, 2009 memo from Office of Management and Budget (OMB) Director Peter R. Orszag encouraging the use of government-mandated PLAs, federal agencies and procurement officials have not successfully implemented government-mandated PLAs – partially because they have been waiting for the final rule, and partially because PLAs are bad public policy.  These special interest giveaways increase the cost of construction, discriminate against nonunion contractors and employees and are a form of government corruption.  They are not in the public’s best interest.

In fact, a 2009 independent study conducted on behalf of the U.S. Department of Veterans Affairs (VA) confirms that government-mandated PLAs will increase construction costs in numerous construction markets across the country where the VA is planning to build new facilities.

One exception to this government-wide hesitation to implement PLAs was a PLA mandated by the U.S. Department of Labor (DOL) on a Job Corps Center in Manchester, N.H. However, after ABC member North Branch Construction of Concord, N.H., with ABC support and representation, filed a protest against the PLA with the Government Accountability Office (GAO), the U.S. DOL cancelled its solicitation to construct the project.

Here is an explanation from the DOL:

The solicitation was cancelled because DOL believes that it is in the public interest for the Department to further evaluate the issues involved in the PLA requirement. The PLA requirement is a new issue to DOL.

The development was 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 could have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

The U.S. General Services Administration (GSA) is also evaluating the use of PLAs on about $1.25 billion worth of American Recovery and Reinvestment Act-funded construction projects in seven states and Washington, D.C. To date, none of these contracts have been awarded with a PLA, although this Procurement Instructional Bulletin (PIB) 09-02 from the GSA’s Public Building Service (PBS) demonstrates that many of these projects will require contractors to submit two price proposals: one that is subject to a PLA requirement and one that is not.  The GSA attempted a similar requirement on the Washington, D.C. Lafayette Building project, but the GSA cancelled the solicitation because the GSA faced a GAO bid protest by contractors.

The GSA has hired a firm to conduct research about the feasibility of PLAs in the various markets identified in the GSA Bulletin. It is unclear if the study results will influence whether a PLA on the identified project(s) is justified.

Finally, the final rule is silent on Section 7 of Executive Order 13502, which could expand PLAs onto federally assisted construction projects. Here is more on Section 7 of Executive Order 13502:

The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6; 180 days sets deadline at Aug. 5, but an order hasn't been issued]

We posted more information about Section 7 here.

Check back with TheTruthAboutPLAs.com this week for additional analysis and resources on the final rule.

In addition to providing commentary and links to media reports about private, local and state PLAs, TheTruthAboutPLAs.com will continue to educate the public about the status of Executive Order 13502 and special interest handouts in federal contracting via government-mandated PLAs.

Today a notice was published online stating that a rule by the Federal Acquisition Regulation (FAR) Council that will implement President Obama’s Feb. 6, 2009 pro-PLA Executive Order 13502 into federal procurement regulations was sent over to the Office of Management and Budget (OMB) on March 16, 2010 for final review.

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

Under Executive Order 12866 regulatory review, OMB has up to 90 days to review the rule. When it has been approved, OMB will move it from “under review” to “review completed” here and it will become an interim final rule or a final rule: http://www.reginfo.gov/public/do/eoPackageMain.

Update: On March 23, the Federal Register issued a request for public comments on the paperwork burden the interim final rule or final rule will have on contractors where the government has required a PLA. The document is notable because it provides a sneak peak of a provision in the interim final rule or final rule. On March 26, the OMB completed review of the rule and sent it back to the FAR Council where it will either be revised or published soon in the Federal Register.

Eight months ago (July 14, 2009) the FAR Council issued a proposed rule (FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects) that will implement the content of President Obama’s Executive Order 13502 into federal procurement regulations.

The contentious proposed rule was subject to two 30-day comment periods during which the public could submit comments related to the proposed rule. The first comment period closed Aug. 14, 2009; it was reopened on Aug. 24 and closed again on Sept. 23.

TheTruthAboutPLAs.com readers, associations, taxpayers, contractors and hard hat employees answered our call to action in opposition to the proposed rule and submitted almost 1,000 comments to the FAR Council.  ABC National’s comments can be viewed here (www.abc.org/plastudies), and every comment submitted to the FAR Council is available for public review here.

Despite a July 10, 2009 memo from OMB Director Peter R. Orszag encouraging the use of government-mandated PLAs, federal agencies and procurement officials have not successfully implemented government-mandated PLAs, partially because they have been waiting for the final rule, and partially because PLAs are bad public policy.  These special interest giveaways increase the cost of construction, discriminate against nonunion contractors and employees and are a form of government corruption.  They are not in the public interest.  

In fact, a 2009 independent study conducted on behalf of the U.S. Department of Veterans Affairs (VA) confirms that government-mandated PLAs will increase construction costs in numerous construction markets across the country where the VA is planning to build new facilities.

One exception to this government-wide hesitation in implementing PLAs was a PLA mandated by the U.S. Department of Labor (DOL) on a Job Corps Center in Manchester, N.H.  However, after a protest was filed against the PLA with the Government Accountability Office (GAO) by ABC member North Branch Construction of Concord, N.H., with ABC support and representation, the U.S. DOL cancelled its solicitation to construct the project.

Here is an explanation from the DOL:

The solicitation was cancelled because DOL believes that it is in the public interest for the Department to further evaluate the issues involved in the PLA requirement. The PLA requirement is a new issue to DOL.

The development was 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 could have addressed the legality of federal government-mandated PLAs and Executive Order 13502.

The U.S. General Services Administration (GSA) is also evaluating the use of PLAs on about $1.25 billion worth of American Recovery and Reinvestment Act-funded construction projects in seven states and Washington, D.C. To date, none of these projects has been awarded with a PLA, although this Procurement Instructional Bulletin (PIB) 09-02 from the GSA’s Public Building Service (PBS) demonstrates that many of these projects will require contractors to submit two price proposals — one that is subject to a PLA requirement and one that is not.  The GSA attempted such a requirement on the Washington, D.C. Lafayette Building project, but the solicitation was cancelled as the GSA faced another bid protest by contractors before the GAO.

The GSA has hired a firm to conduct research about the feasibility of PLAs in the various markets identified in the GSA Bulletin and the results likely will be revealed in early 2010. It is unclear if those results will influence whether or not a PLA on the identified project(s) is justified.

Finally, there has been no movement on Section 7 of Executive Order 13502. Here is more on Section 7:

The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6; 180 days sets deadline at Aug. 5, but an order hasn't been issued]

We posted more information about Section 7 here.

In addition to providing commentary and links to media reports about private, local and state PLAs, TheTruthAboutPLAs.com will continue to educate the public about the status of Executive Order 13502 and special interest handouts in federal contracting via government-mandated PLAs.

In addition, the order prohibited PLAs on hundreds of billions of dollars worth of federally-assisted construction projects across the country. Federally-assisted projects are local, state or private construction projects that receive a federal grant, loan, tax-break or other form of financial assistance.

Unfortunately, the practice of guaranteeing free and open competition on federal and federally-assisted construction projects ended when President Obama signed Executive Order 13502, which repealed Executive Order 13202 and encourages federal agencies to require PLAs on projects valued at more than $25 million.

While the construction industry waits for a final rule from the FAR Council implementing Executive Order 13502 into federal procurement standards, it is important to remember that the Obama Administration is evaluating ways to expand the executive order and government-mandated PLAs, which will open the door to waste and government corruption in federal contracting, as directed by Section 7 of Executive Order 13502.

Section 7. The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6, 180 days sets the deadline at Aug. 5 but an order hasn't been issued]

It is clear that Secretary of Labor Hilda Solis is a proponent of PLAs. At the Sept. 14, 2009 AFL-CIO Convention in Pittsburgh, PA, she reaffirmed her support of these special interest giveaways that will kill jobs and exclusively benefit Big Labor while harming American taxpayers, workers and businesses.

“Not only do the President and I support Employee Free Choice Act, we are strong supporters of Project Labor Agreements.

We know that they are a win-win: good for workers and for contractors Project Labor Agreements improve the economy and efficiency of construction projects.

President Obama issued an executive order encouraging the use of PLA’s for large federally funded projects, and we have been working very hard at DOL with Vice President Biden and the Middle Class Task Force to ensure that Project Labor Agreements are really encouraged and used.

Project Labor Agreements help make Good Jobs!”

Office of Management and Budget (OMB) Director Peter Orszag is a fan of PLAs too. July 10 he signed an OMB memo encouraging federal agencies to require PLAs despite the fact that the FAR Council had only issued a proposed rule implementing Executive Order 13502:

“Accordingly, in light of the benefits that PLAs may offer to Federal agencies in construction projects, agencies are encouraged, during this interim period prior to the FAR Council’s issuance of its final rule, to consider the value of PLAs on a project-by-project basis, and to require the use of PLAs in appropriate circumstances and to the extent permitted by law.”

Despite their clear support for government-mandated PLAs, in May, senior Obama Administration officials graciously invited ABC National to a White House meeting to hear ABC’s contrasting perspective on the expansion of government-mandated PLAs and Executive Order 13502 via Section 7.   ABC National representatives made a strong case that expansion of Executive Order 13502 was not in the best interest of good government, taxpayers, construction procurement officials, or 84.6 percent of the U.S. construction workforce (citizens who do not belong to a construction union) and their employers.

States and local communities should take interest in the expansion of Executive Order 13502 via Section 7. Accepting federal assistance for construction projects with attached strings that favor Big Labor could bust strained budgets. Will states and local communities swallow the 18 percent PLA premium? Can they afford to build four schools, hospitals, bridges and courthouses for the price of five? 

A PLA mandate on federally-assisted projects will also cost jobs. The impact of higher labor costs on finite budgets translates into fewer construction projects. Less building means less jobs in an industry that has shed close to one million jobs in the last 12 months and has a national unemployment rate flirting with 20 percent.

In addition, will local and state government understand that PLAs give preference to out-of-state union members ahead of local and qualified nonunion employees? PLA projects in areas with low union density and market share often fall victim to this boneheaded fiscal policy, as local nonunion employees will continue to rely on state services and not pay into the local tax base while out-of-state union members raid jobs through local union hiring halls.

Finally, it is discriminatory and shortsighted public policy for states and communities to tell skilled nonunion labor they can’t work on these projects unless they agree to pay union dues and lose employer contributions to union benefit and pension plans for the life of a PLA project – typical real world consequences of PLAs on nonunion labor and key reasons why nonunion contractors rarely bid on PLA projects.

The public, elected officials, media and construction workforce must realize there is a lot at stake with the expansion of Executive Order 13502 via Section 7.

Here’s an excerpt:

North Branch Construction, a nonunion contractor in Concord, New Hampshire, filed a bid protest Monday with the Government Accountability Office that accuses the Department of Labor of violating federal law by requiring that a project labor agreement be used in the construction of a federal Job Corps center in Manchester, New Hampshire.

Under project labor agreements (PLAs), contractors are required to enter into a collective bargain agreement with a labor union that establishes the terms and conditions of employment for specific construction projects.

President George W. Bush had barred agencies from requiring PLAs on federal contracts, but President Obama—in his third week on the job—repealed Bush’s executive order. Obama issued a new order, encouraging agencies to use PLAs on large construction projects. Obama did it in the name of efficiency, contending that working out these labor issues up front would ensure the timely completion of projects.

Nonunion contractors saw it differently—as political payback from Obama to the unions who helped elect him president.

“PLAs are special-interest handouts that deny taxpayers the accountability they deserve from federal contracts,” said Ken Holmes, president of North Branch Construction.

His company’s bid protest alleges the Department of Labor’s PLA requirement “unduly restricts competition” and violates several federal laws and regulations, including the Small Business Act. It also will increase the cost of the project, Holmes said.

More than 90 percent of New Hampshire’s construction workforce is not unionized, meaning these workers wouldn’t benefit from the jobs created by the Job Corps project, Holmes said.

This blog post hits on many of the main arguments against wasteful and discriminatory PLAs and is definitely worth reading.

Read “Live Union or Die” in its entirety after the jump.

Oct 06 2009 2:50pm EDT
Live Union or Die

A construction project in New Hampshire has become the latest battleground in the power struggle between business and labor.

North Branch Construction, a nonunion contractor in Concord, New Hampshire, filed a bid protest Monday with the Government Accountability Office that accuses the Department of Labor of violating federal law by requiring that a project labor agreement be used in the construction of a federal Job Corps center in Manchester, New Hampshire.

Under project labor agreements (PLAs), contractors are required to enter into a collective bargain agreement with a labor union that establishes the terms and conditions of employment for specific construction projects.

President George W. Bush had barred agencies from requiring PLAs on federal contracts, but President Obama—in his third week on the job—repealed Bush’s executive order. Obama issued a new order, encouraging agencies to use PLAs on large construction projects. Obama did it in the name of efficiency, contending that working out these labor issues up front would ensure the timely completion of projects.

Nonunion contractors saw it differently—as political payback from Obama to the unions who helped elect him president.

“PLAs are special-interest handouts that deny taxpayers the accountability they deserve from federal contracts,” said Ken Holmes, president of North Branch Construction.

His company’s bid protest alleges the Department of Labor’s PLA requirement “unduly restricts competition” and violates several federal laws and regulations, including the Small Business Act. It also will increase the cost of the project, Holmes said.

More than 90 percent of New Hampshire’s construction workforce is not unionized, meaning these workers wouldn’t benefit from the jobs created by the Job Corps project, Holmes said.

Holmes is a member of Associated Builders and Contractors, a trade association that is lending its support to his bid protest.

ABC believes this contract is the government’s first mandated PLA since Obama issued his executive order. The Federal Acquisition Regulatory Council in July issued a proposed regulation that would codify the order, but it’s still reviewing comments on the proposal. It has not issued a final rule.

The battle over PLAs may directly affect only construction companies, but it’s just one front in the war between business and labor. The biggest battle is yet to come—a vote in Congress on the Employee Free Choice Act, which would make it easier for unions to organize workplaces. Meanwhile, there are plenty of ways the Obama administration can—and will—use its executive power to make life easier for unions.

Kent Hoover is the Washington bureau chief for bizjournals.

Here is the “This Week” news brief text:

Project labor pacts boost costs, study finds

A new Obama administration policy encouraging use of union agreements for large federal projects will significantly increase construction costs, a new industry study finds.

Had Obama’s order been in effect in 2008, covering about $60 billion in construction projects awarded that were worth $25 million or more, the additional cost to taxpayers would have been between $1.6 billion and $2.6 billion, according to the study by the conservative Beacon Hill Institute.

Moreover, the institute refuted the administration’s claims that so-called project labor agreements (PLAs) would save money because it would prevent construction firms from going on strike or otherwise slowing down construction projects with lengthy labor disputes. The Office of Management and Budget was unable to provide any examples that federal projects undertaken during the Bush administration, when most PLAs were outlawed, suffered significant delays or cost overruns due to labor issues.

The Federal Acquisition Regulation Council is crafting changes to federal procurement rules to enact Obama’s February executive order, which encourages agencies to require construction firms for large federal projects to enter into PLAs.

This is the second time Federal Times has covered President Obama’s Executive Order 13502.  In a September 7 article titled, “Administration Policy on Labor Agreements Draws Fire,” Federal Times did a great job uncovering the problems PLAs pose for federal procurement.

Here is an excerpt:

The Associated Builders and Contractors, an advocacy group whose members employ 2 million construction tradesmen, says PLAs cut out nonunion companies from federal business because of the additional costs they impose.  All workers must pay union dues whether they belong to a union or not, and the companies must contribute to union pension and benefit funds on behalf of their employees, who won’t receive the benefits unless they join the union.

The agreements also require companies to adhere to union work rules that limit employees from performing multiple tasks, so companies must hire additionally employees to handle individual tasks that could be handled by fewer employees with skills that cut across trades.

Ben Brubeck, director of labor and state government affairs for the organization cites various studies that indicate PLAs increase the cost of construction between 10 percent and 20 percent.  However, other studies show there can be significant cost savings by consolidating multiple collective bargaining agreements into a single PLA.

Brubeck said requiring agencies to use PLAs is a blatant attempt by unions to generate additional members.  Less than 16 percent of the nation’s private construction workforce belongs to a union, according to the Bureau of Labor Statistics.

“PLAs are used to discriminate against nonunion contractors,” Brubeck said.

Be sure to visit TheTruthAboutPLAs.com’s earlier posts on Executive Order 13502 for more information on how these special interest handouts deny taxpayers to accountability they deserve from federal government contracts.

Here’s an excerpt:

…the solution to underemployment lies in removing obstacles to greater job creation. National Black Chamber of Commerce President Harry Alford went straight to the heart of the matter.  “The solution to underemployment and unemployment are free enterprise and entrepreneurship.” At the local level of Washington, DC, he identified project labor agreements as a major regulatory stumbling block to local residents, including minority residents, gaining access to better jobs. And the problem is likely to get worse, due to President Obama’s rescinding of an Executive Order prohibiting project labor agreements (PLAs) on federal construction projects, a decision Alford said he was “disturbed” by.

Project labor agreements handicap nonunion contractors who wish to bid on federal projects by imposing burdensome requirements on them. Under a PLA, an open shop contractor could be required to employ workers from union hiring halls, acquire apprentices from union apprentice programs, and require employees to pay union dues. As an example, he cited Nationals Park, which, was built under a PLA. Although it is in Southeast DC, “very few people in southeast Washington ”worked on it. As Alford noted, most minority contractors are nonunion.

Mr. Alford is right.  An October 2007 report by the District Economic Empowerment Coalition found that despite a government-mandated PLA requirement that at least 50 percent of journeyman hours on the $611 million Nationals Park project must be performed by DC residents (many of whom are minorities), non-DC residents worked over 70 percent of the journeyman hours!  Additionally, the report found that contractors subject to the Nationals Park PLA failed to hire DC residents at the level required by the PLA and failed to provide the training and apprenticeship opportunities they promised the District.

As we’ve said before, PLAs hurt local residents and serve as an artificial barrier to jobs for minority contractors and their workforces.

Here are the highlights:

The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.

And in this Right to Work state, it is contrary to what our citizens firmly believe.

Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.

Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.

Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.

The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.

And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs.  Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.

So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc.) will cost us up to 20% more than they should.  Our taxes are once again wasted.

PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example.  In addition, union workers are permitted to strike, which can add additional costs to a construction projects. Non-union firms don’t strike.

Mr. Thompson’s Virginia-centric perspective is especially important, as Virginia is one of 22 Right to Work states, in which the payment of union dues cannot be a condition of employment.  All of these states have low union densities, especially in the construction industry.  In some Right to Work states, like Arkansas and North Carolina, only 1-2 percent of the construction industry workforce is unionized.  As a result, 98 percent of workers in these states could be excluded from federal construction work if PLAs are required.  In Right to Work states, PLAs guarantees increased construction costs due to very limited competition and very few local residents will have the opportunity to work on project in their own communities.

Read Mr. Thompson’s full piece after the jump.

http://baconsrebellion.com/2009/09/16/forced-union-payments-on-tax-paid-projects/

Forced Union Payments on Tax Paid Projects

In an Executive Order few have heard about, President Obama is trying to eliminate union competition for federal construction projects.

This egregious order encourages Project Labor Agreements (PLAs) on federal construction projects costing $25 million or more. PLAs are collective bargaining agreements between contractors, their subcontractors and labor unions. Under a PLA, contractors must either use union workers or non-union workers who are forced to make contributions to union pension funds and other union programs – from which they will never benefit. These are blatantly discriminatory rules against non-union shops.

The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.

And in this Right to Work state, it is contrary to what our citizens firmly believe.

Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.

Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.

Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.

The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.

And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs.  Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.

So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc) will cost us up to 20% more than they should.  Our taxes are once again wasted.

PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example.  In addition, union workers are permitted to strike, which can add additional costs to a construction projects Non-union firms don’t strike.

The reason the unions need this PLA rule is to boost their membership. President Obama seems committed to helping unions increase their membership from the current low levels. He still hopes to take away the secret ballot from workers when voting on whether to unionize. That battle is yet to come, right after health care is decided.

The PLA Executive Order may soon become a reality.  The comment period on the order has been extended to September 23 by the Federal Acquisition Regulatory Council.  It will be interesting to see how this turns out.  Tens of thousands of men and women could be adversely impacted when this Executive Order goes into effect.  Here in Virginia it is clear that this new rule will hurt our economy.

Public policy simply should not favor unions in a way that discriminates against non-union workers.  A level playing field is always best for the country and for our state.