On April 21, 2010, ABC National released, “The Final Rule Implementing the PLA Executive Order: Why it Should Be Challenged,” by ABC general counsel Maurice Baskin, Esp., Venable LLP.  This document lays out ABC’s argument for how the Obama Administration’s actions violate federal procurement laws; discriminate against 85 percent of the construction industry workforce and many small businesses; and harm taxpayers.   Read the document.

Read TheTruthAboutPLAs.com blog post about Baskin’s finale rule analysis
Read the Final Rule, effective May 13, 2009 
Read TheTruthAboutPLAs.com blog post summarizing final rule and regulatory process

ABC National’s Comments on Proposed Rule Encouraging Federal Agencies to Mandate PLAs (FAR Case 2009-005 and Executive Order 13502)
 
On August 13, 2009, ABC filed comments with Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in response to a proposed rule to implement Executive Order 13502, which encourages federal agencies to require PLAs on federal construction projects via the Federal Aquisition Regulation (FAR) Council “FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects.”

Hundreds of contractors and groups filed comments opposed to the proposed rule. All comments can be viewed here.

ABC’s comments express serious concerns with the proposed regulation, particularly with its impact statement, the absence of any meaningful criteria for agencies to use in deciding whether to impose PLAs and the absence of any empirical justification for using PLAs on federal projects.

ABC’s comments highlight numerous problems with government mandated PLAs and reference a variety of arguments and studies that document how this bad public policy will harm taxpayers, contractors and their employees.

ABC National’s Comments
ABC Member Survey Supplement to Main ABC Comments (Learn why contractors oppose government-mandated PLAs)
ABC National Comments Specifically Addressing the Impact of FAR Rule on Small Businesses and Violation of the Regulatory Flexibility Act
ABC News Release on Comments
ABC Survey Finds PLAs on Public Construction Projects Will Injure Competition (June 2009) 
ABC Survey Finds PLAs on Public Construction Projects Injure Competition (Jan. 2011) 

Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition)

The 2011 edition of ABC General Counsel Maury Baskin’s report on government-mandated PLAs documents a record of PLA construction projects experiencing an unfortunate pattern of cost overruns, reduced competition, delays in construction, construction defects, safety problems and diversity issues. It is a key resource to find failed government-mandated PLA projects in your community, illustrating why anti-competitive and costly government-mandated PLAs are nothing more than a bad solution in search of a problem.

Read Maury Baskin’s Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition)

Project Labor Agreements on California School Construction Raise Costs up to 15 Percent, Study Says

According to a July 2011 study released by the National University System Institute for Policy Research (NUSIPR), California school construction projects built using government-mandated PLAs experienced increased costs of 13 percent to 15 percent, or $28.90 to $32.49 per square foot, compared to projects that did not use a PLA.

Read the report

Report Opposes PLAs in the District of Columbia Construction Market (April 2010)

An April 2010 report by ABC Chief Economist Anirban Basu, “The Problem with PLAs in the District of Columbia,” provides an assessment of the economic implications of government-mandated project labor agreements on construction projects in the District of Columbia.  Specifically, the study finds that government-mandated PLAs are not economically sensible in the context of the current environment for construction services in the District of Columbia market.

Read the Report

Cato Journal on Why PLAs are Not in the Public Interest (Winter 2010)

A compelling piece critical of government-mandated project labor agreements by David G. Tuerck, executive director of the Beacon Hill Institute for Public Policy Research at Suffolk University, appears in the current issue of the Cato Journal (Volume 30 Number 1, Winter 2010, “Are Unions Good for America?”). “Why Project Labor Agreements Are Not in the Public Interest,” surveys the historical decline of construction union membership and poor performance of government-mandated PLAs while countering common union arguments for PLAs. The piece attacks the faulty logic and methodology often employed in studies promoting PLAs as a mechanism to reduce construction costs (p. 53-61).

Read the Article

Report Calls Washington, D.C. Nationals Ballpark PLA a Failure (November 2009)

A November 2009 report by DC Progress, “The True Cost of the Washington Nationals Ballpark Project Labor Agreement,” exposes the problems that PLAs present for DC taxpayers, as well as unemployed, and underemployed residents. The report focuses on the, “broken promises of the D.C. Ballpark PLA, in order for policymakers, stakeholders in the local economy, and citizens to understand the burdens that PLAs impose on state and city governments.  The Nationals Park PLA created a huge barrier for the District’s nonunion workforce: 85 percent of construction workers and 95 percent of minority-owned contractors were left out of work.”

Read the Report

Study Finds that PLAs and President Barack Obama’s Executive Order 13502 Will Hurt Nonunion Workers (October 2009)

An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements” finds that employees of nonunion contractors that are employed under government-mandated PLAs suffer a reduction in their take home pay that is conservatively estimated at 20 percent. The report estimates that as a result of President Obama’s pro-PLA Executive Order 13502, hundreds of millions of dollars of nonunion employees’ income on federal construction projects will be distributed to union pension funds, from which nonunion employees will likely receive no benefits.

In addition, the report found that PLAs on federal projects substantially increase costs (approximately 25 percent) for nonunion employers.  Nonunion contractors will also face increased and unnecessary exposure to pension fund liability if they perform work under PLAs, including possible withdrawal liability when the PLA project is completed.

The study found that had President Obama’s pro-PLA Executive Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements would likely have ranged from $230 to $767 million per year. Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million, depending on the assumptions made for companies executing contracts via PLAs. In total, the move to PLAs could cost nonunion workers and their employers $414 million to more than $1.38 billion annually.

Related Information on Topic
TheTruthAboutPLAs.com Blog Entry on McGowan PLA Pension Study

Beacon Hill Institute Study Says Federal PLAs and Executive Order 13502 Will Harm Taxpayers (September 2009)

A study released Sept. 23, 2009, by the Beacon Hill Institute (BHI), “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” found that PLAs significantly increase construction costs on federal projects.

Had President Obama’s pro-PLA Executive Order 13502 been in effect in 2008, and all 2008 federal construction projects worth $25 million or more had been performed under PLAs, it would have increased the cost to federal taxpayers by $1.6 billion to $2.6 billion.

In addition, the BHI review of federal construction projects from 2001-2008, the years under which government-mandated PLAs were prohibited, also revealed that there were no instances in which labor disruptions occurred that resulted in significant project delays or increased costs. The study concludes that “the justifications for PLAs provided by Executive Order 13502 are unproven.”

Read the Study
ABC Newsline Story on Study 
TheTruthAboutPLAs.com Blog Entry on Study

Beacon Hill Institute Report Examines Case Study Supporting Previous PLA Research on the Effect of PLAs on School Construction Costs (December 2006)

A December 2006 report by the Beacon Hill Institute at Suffolk University, “Project Labor Agreements and Financing Public School Construction in Massachusetts,” reviews a real-world case study supporting BHI’s previous research on the effect of PLAs on school construction costs. In 2006, the City of Fall River, MA bid three school construction projects under a PLA. Then, after attracting few bidders, with those providing bids coming in well above the projected budget, the city canceled the PLA and reopened the bidding process. The report found that the city of Fall River saved $5.8 million on total construction bids by removing the PLA and bidding the project using free and open competition.

Read the Report
Read a related academic paper published by Bentley University, ”Do Project Labor Agreements Raise Construction Costs?”
Read update on Fall River case study in July 2007 Boston Globe Op-Ed
Read a letter encouraging open competition from Fall River, MA City Councilor Camera

Beacon Hill Institute Recommends Against Project Labor Agreement on the Nationals’ Stadium (September 2006)

The Beacon Hill Institute’s paper, Washington National’s Ballpark: Cost and Timeliness Implications of Using a Project Labor Agreement, found that “the D.C. Sports and Entertainment Commission would benefit from lower costs, without sacrificing quality or timeliness, by not using a PLA and introducing more competition into the process.”

The paper concluded, “we find that claims of cost savings from the use of PLAs to be erroneous and misleading. Using a PLA reduces competition and, keeping with standard economic theory, drives up bids and final construction costs. Extrapolating from our prior work, we estimate construction costs to be inflated $34 million to $49 million due to the inclusion of a PLA.”

Read the Paper

Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in New York (April 2006)

This study conducted by the Beacon Hill Institute at Suffolk University found that PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20% increase in costs over the average non-PLA project.

Read the Study
Read the ABC Newsline Story

Iowa Events Center PLA Study (March 2006)

The Public Interest Institute, a nonpartisan, nonprofit research and educational institute in Mt. Pleasant, Iowa, has released a new study that concludes the PLA on the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.

Read the Study (pdf)
Read the ABC Newsline Story

Union-Only Project Labor Agreements: The Public Record of Poor Performance (2005 Edition)

The 2005 edition of ABC General Counsel Maury Baskin’s report on union-only PLAs documents a record of union-only construction projects experiencing a consistent pattern of cost overruns, adverse impacts on competition, delays in construction, construction defects, safety problems and diversity issues.

Read the Study

Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in Connecticut (September 2004)

This study conducted by the Beacon Hill Institute at Suffolk University found that the use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent.  The report concludes that the presence of a PLA increased the projects’ final base construction costs by $30 per square foot relative to non-PLA projects.   “This study provides further evidence that PLAs drive up the cost of construction projects, while discriminating against the four out of five construction workers who choose not to join a labor union,” said Kirk Pickerel, ABC president and CEO.

Read the Study (pdf)
Link to Study on BHI Website

Beacon Hill Institute Study Finds PLAs Increase Cost of School Projects in Massachusetts (September 2003)

A study completed by the Beacon Hill Institute entitled, “Project Labor Agreements and the Cost of School Construction in Massachusetts,” finds that “PLA projects add an estimated $18.83 per square foot to the bid cost of construction (in 2001 prices), representing an almost 14 percent increase in costs over the average non-PLA project. The low estimates find that actual project costs are raised by 8.4 percent; the high estimates find that bid costs are raised by 14.9 percent.

Read the Study

Erie County (NY) Courthouse Construction Projects: Project Labor Agreement Study (September 2001)

This report, completed by the firm of Ernst & Young, was commissioned by Erie County in New York to analyze a PLA on a public construction project. Ernst & Young concluded that “bidder participation was diminished because the county chose to utilize a PLA. Further, the use of PLAs adversely affects competition for publicly bid projects to the likely detriment of cost-effective construction… the use of PLAs strongly inhibits participation in public bidding by non-union contractors and may result in those projects having artificially inflated costs.”

Read the Study

PLAs on Public Construction Projects: The Case For And Against (May 2001)

The Worcester Municipal Research Bureau May 21, 2001 released a study titled “Project Labor Agreements on Public Construction Projects: The Case For and Against.”. The study concluded that “PLAs tend to constrict the number of bidders on a project compared to those without PLAs, and are likely to reduce the savings to the public that would accrue if nonunion contractors who are employed were allowed to follow their customary methods.”

Read the Study Summary
Read the Study

Project Labor Agreements Research Study: Focus on Southern Nevada Water Authority (November 2000)

This study, completed by Neil Opfer and Jaeho Son of the University of Nevada, Las Vegas, and John Gambatese of Oregon State University, concluded that a Nevada Water Authority project PLA cost taxpayers an additional $200,000 because the true low bidder refused to sign the PLA. The project went to a union contractor whose bid was $200,000 higher. 

Read the Study

Economic Evaluation of Project Stabilization Agreement For Construction Projects Funded Proposition BB (November 2000)

The project stabilization/labor agreement (PSA/PLA) for the Los Angeles Unified School District’s (LAUSD) Proposition BB construction was required to end after one year unless the LAUSD or unions could prove the PLA was effective. A Price Waterhouse Coopers study requested by the LAUSD was “unable to conclusively determine whether the PSA has had either a net positive or net negative economic impact for the District, [and] there is anecdotal information which suggests that the PSA has to date had neither a significant positive nor a significant negative net impact.” Despite the study’s findings, the school board voted 5-2 to continue with the PLA, supporting the thesis that PLAs are implemented by public officials because of political concerns and not on the basis of sound public policy.

Read the Study

Project Labor Agreement in Minnesota (September 2000)

“Project Labor Agreements in Minnesota” was completed by Zachary C. Kleinsasser of Albion College. The study outlines inefficiencies with construction projects that contain PLAs between the months of June and August in the year 2000.

Read the Study

Analysis of the Impacts on the Jefferson County (NY) Courthouse Complex through Project Labor Considerations (September 2000)

This study, commissioned by the Jefferson County, New York, Board of Legislators, and completed by Professor Paul G. Carr, P.E., concluded that “[t]he additional costs estimated with the use of a PLA could range upwards of $955,000. With the loss of even one general contractor from the bidding [as a result of the PLA], the cost increase could approach $200,000.” On this estimated $14 million project, this would mean a cost increase of more than of 7 percent.

Read the Study

Weber Merritt Survey Finds Washington D.C. Contractors Less Likely to Bid on Projects with PLAs

In a 2000 survey of Washington D.C. area public works contractors regarding PLAs and public projects, over 70 percent said they would be less likely to bid on a project with a government-mandated PLAs.

Read the Survey Results

Task Order No. 99-1: Project Labor Agreement (PLA) Study  (June 2000)

The Clark County School District (CCSD) in Nevada, retained Resolution Management to perform an objective study of the use of union-only PLAs on School District Projects. In an independent and unbiased study, they found “no compelling reason for CCSD to enter into PLAs for school construction at this time.”

Read the Study

Government-Mandated Project Labor Agreements in Construction: A Force to Obtain Union Monopoly on Government-Funded Projects (January 2000)

This study by Dr. Herbert R. Northrup of the University of Pennsylvania’s Wharton School, concludes that “analysis shows that the justifications for imposing government-directed project agreements are flimsy at best. They are neither based upon fact nor do they conform to the realities of the construction industry.”

Read the Study

Fitchburg State College Project Labor Agreement Survey Results (1998)

This 1997-1998 survey conducted by researchers at Fitchburg State College refutes claims by PLA proponents that open shop contractors widely particiapte on government-mandated PLA projects. It found that over 66 percent of prime contractors identified as open shop by project managers on the Boston Harbor Cleanup Project were in fact union contractors.  Additionally, 54 percent of the subcontractors surveyed that the project manager claimed to be open shop were either union contractors or didn’t work on the project at all.

Read the Survey Results

Perception and Influence of Project Labor Agreements on Merit Shop Contractors (1997)

This 1997 study conducted by researchers at the University of Washington found that “when the virtues of using a PLA are evaluated…, it appears PLAs might not be necessary on any construction projects.”

Read the Study

Roswell Park Cancer Institute Letters  (March 1995)

This ABC analysis of the taxpayer costs for Roswell Park Cancer Institute in Buffalo, New York, assessed bids for the same project both before and after a PLA was temporarily imposed in 1995. It revealed that there were 30 percent fewer bidders to perform the work and that costs increased by more than 26 percent when the PLA was in effect.

Read the Study

Federal Government Reports and Hearing Testimony

ABC Members Testify in Support of Legislation Restoring Fairness in Federal Contracting (June 3, 2011)

On June 3, the House Oversight and Government Reform Committee’s Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommittee held a hearing, “H.R. 735 and Project Labor Agreements: Restoring Competition and Neutrality to Government Construction Projects.”  

Watch the hearing
TheTruthAboutPLAs.com Blog Entry with links to hearing video, testimony and analysis

Regulatory Impediments to Job Creation: The Cost of Doing Business in the Construction Industry (March 16, 2011)

On March 16, 2011, the U.S. House Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending held a hearing on the cost of doing business in the construction industry. Click the below link to view testimony and video of the hearing.

TheTruthAboutPLAs.com Blog Entry on the March 2011 Hearing

Congressional Research Service Report for Congress on PLAs (July 1, 2010)

“Project Labor Agreements,” by Gerald Mayer, analyst in labor policy.

Read the CRS Report

Congressional Research Service Report for Congress on PLAs (August 24, 1999)

“Project Labor Agreements in Federal Construction Contracts: An Overview and Analysis of Issues,” by Gail McCallion, Specialist in Labor Economics, Economics Division.

Read the CRS Report

The Administration’s Policy of Discrimination: Project Labor Agreement’s Negative Impact on Women and Minority Owned Small Businesses (August 1998)

Testimony from an August 6, 1998 U.S. House Small Business Committee hearing on project labor agreements and their negative impact on women and minority owned businesses. Click the below links to view testimony before the committee in opposition to PLAs.

Read ABC Member hth Companies Testimony
Read the Associated General Contractors of America’s Testimony
Read Phoenix Construction Services’ Testimony

U.S. Government Accounting Office (GAO) Report: Project Labor Agreements: The Extent of Their Use and Related Information (May 1998)

A U.S. General Accounting Office (GAO) report, issued May 5, 1998, demonstrated that it is nearly impossible to show any cost savings or increased quality derived from the use of union-only project labor agreements, largely because of the difficulty in finding two identical projects, with or without a PLA, to study.

Read Report

Senate Committee on Labor and Human Resources Hearing on the “Proposed Executive Order on Project Labor Agreements” (April 1997)

Testimony from an April 30, 1997 hearing before the U.S. Senate Committee on Labor and Human Resources on President Clinton’s Proposed Executive Order on PLAs that later became a memo on PLAs.  Click the below organizations to view their testimony before the committee in opposition to union-only PLAs.

Learn about the history of White House actions encouraging/prohibiting governement-mandated PLAs on federal and federally assisted construction projects here.

Hearing Testimony
ABC Member Cianbro’s Testimony
Associated General Contractors’ Testimony
U.S. Chamber of Commerce Testimony

U.S. Government Accounting Office (GAO) Report: Labor Management Relations: Construction Agreement at DOE’s Idaho Laboratory Needs Reassessing (May 1991)

A U.S. General Accounting Office (GAO) report, issued May 23, 1991, reviewed the site stabilization agreement between a labor union and organizations within the DOE’S Idaho Laboratory. The report looked at whether nonunion contractors had access to DOE Idaho Operations Office construction contracts.

Read Report

The post Research on Government-Mandated Project Labor Agreements appeared first on The Truth About PLAs.

This video is just one more resource in the fight against wasteful government-mandated PLAs.

Supporting facts for the video are also available here.

Say No to Government-Mandated PLAs

The post Project Labor Agreements: Not What We Need, Not What We Deserve appeared first on The Truth About PLAs.

ABC DECLARES VICTORY AS FEDERAL GOVERNMENT WITHDRAWS PROJECT LABOR AGREEMENT

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 by three contractors March 19 with the Government Accountability Office (GAO) against a PLA mandated by the U.S. Department of Labor (DOL), the DOL has withdrawn a solicitation that would have required contractors to sign a controversial union agreement—a PLA—as a condition of building a $40 million Job Corps Center in Manchester, N.H. After reviewing the facts of the case, the GAO strongly indicated to the parties that it likely would sustain the contractors’ protest under the federal Competition in Contracting Act, absent corrective action by the DOL. In direct response to the GAO’s action, on May 31, 2012, the DOL announced its withdrawal of the Job Corps Center solicitation that included the PLA mandate.

“This is a big win for taxpayers and the principles of fair and open competition in federal contracting,” said ABC Director of Labor and Federal Procurement Ben Brubeck. “Removing the coercive PLA mandate in New Hampshire will level the playing field and ensure increased competition and construction job creation for all skilled construction workers and their qualified employers, instead of just special interests needlessly favored by this administration.”

This is the second time the DOL has unlawfully tried to mandate a PLA on the Job Corps project and been forced to withdraw it after contractors filed protests at the GAO. “It is shameful that the DOL has delayed construction of this much needed New Hampshire Job Corps Center for more than two years for no reason other than to show favoritism toward the administration’s cronies in organized labor,” said Brubeck. “It is past time for the DOL to carry out its mission of helping create jobs by building this project free from unlawful special interest handouts. ABC calls on the DOL to take immediate action to reissue the Job Corps solicitation without any PLA mandate or preference.”

This is the fifth GAO bid protest ABC has supported on behalf of members objecting to illegal PLA requirements on federal projects. On each occasion, the federal agencies that attempted to mandate PLAs have been forced to withdraw their unlawful solicitations. ABC-supported GAO protests resulted in the removal of PLA mandates from a General Services Administration procurement in Washington, D.C.; an Army project in Camden, N.J.; a Veterans Affairs project in Pittsburgh; and now twice on the New Hampshire Job Corps Center.

“Federal law is clear that Obama’s Executive Order 13502 does not allow federal agencies to discriminate in favor of PLAs without a strong showing of need and evidence that PLAs will deliver increased economy and efficiency in federal contracting,” said Maurice Baskin of Venable LLP, ABC’s general counsel who represented the successful protesters in the New Hampshire case. “We were able to show the DOL’s PLA mandate needlessly restricted competition, increased costs to taxpayers and actually hurt local construction workers, all without any factual justification for the PLA. Of particular significance, the DOL failed to justify the PLA even after spending hundreds of thousands of dollars on a market impact study by Hill International. The Hill report failed to show that a government-mandated PLA was needed to serve any legitimate government needs in New Hampshire, as demonstrated by our own expert witness, Professor David Tuerck of the Beacon Hill Institute.”

“It is time for the Obama administration to stop trying to steer lucrative federal construction contracts to Big Labor—one of the president’s largest political supporters—through unlawful government-mandated PLAs,” Brubeck 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 PLAs discourage merit shop contractors and subcontractors from competing for federal contracts, thereby increasing costs to taxpayers and discriminating against the 86 percent of the construction workforce that does not belong to a labor union. PLAs typically force contractors to hire most or all of their craft employees from union hiring halls; follow inefficient union work rules; hire apprentices exclusively from union apprenticeship programs; and pay into union benefit plans on behalf of employees even if they have their own qualified benefit programs. PLAs force employees to pay union dues; accept unwanted union representation; and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefit plans.

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Associated Builders and Contractors (ABC) is a national association with 74 chapters representing 22,000 merit shop construction and construction-related firms. Visit us at www..

Please review the following for more information:

• Union Favor on Federal Construction Project in New Hampshire Draws Criticism (2/9/12)
• U.S. Department of Labor solicitation (DOL121RB20457) for the Manchester Job Corps Center,
• Here is the Job Corps Center PLA and here are the numerous union collective bargaining agreements (CBAs) contractors must agree to for the life of the project concerning issues not specifically addressed by the PLA.
• Affidavit of Prof. David G. Tuerck, PhD., professor and Chairman of Economics and Executive Director of the Beacon Hill Institute at Suffolk University in Boston, before the Government Accountability Offce refuting the need for a PLA mandate and the pro-PLA Hill International report.
• Report by Hill International recommending a PLA mandate on the Manchester, NH, DOL Job Corps Center project (submitted Oct. 28, 2010).
• Evidence documenting cost to taxpayers for Hill International’s pro-PLA mandate report on the Manchester, NH, DOL Job Corps Center ($128,000, solicitation number DOLJ109630678 paid in two installments).
• Evidence documenting cost to taxpayers for Feb. 25, 2011, Hill International report for promoting PLA mandates for all federal agencies  ($300,000, solicitation number DOLF09F422062, subcontracted to Hill International by Interactive Elements).
• 3/28/12 the DOL opened bids for the project subject to the PLA. They only received three bids from out-of-state contractors. The low bidder from Clearwater, FL, submitted a bid for $37.87 million. The other two bidders were from MA and RI.
• Information about President Obama’s pro-PLA Executive Order 13502.
• Read a sample government-mandated PLA and learn how it harms nonunion contractors and workers here.

UPDATE 6/9/12:

• Statement by Sen. Kelly Ayotte (R-NH) and Rep. Frank Guinta (R-NH),
• New Hampshire Union Leader article, “Union-friendly bidding nixed on Jobs Corps Center in city,” 6/4/12.
• Bloomber BNA Construction Labor Report, “DOL Rescinds Bid Solicitation, PLA Mandate for Planned Manchester Job Corps Center,” 6/7/12 (pdf).

New Hampshire Union Leader editorial, “Job Corps delay ended: Another blow to labor/Dem axis,” 6/9/12:

…Ironically, President Obama’s Feb. 6, 2009, executive order commanding that PLAs be considered for all federal construction projects of $25 million or more stated that the purpose of using PLAs was “to promote the efficient administration and completion of federal construction projects.”Obama claimed that he wanted the PLAs because construction projects typically involve multiple work crews, and disputes about pay and other issues can delay project completion. He was simply concerned about speed and efficiency, he wrote.

That was a smoke screen. The PLA order was a political repayment to unions that had helped Obama get elected only three months earlier.

Because of that political payoff, Manchester’s Job Corps Center has been delayed for three years. The center itself is unnecessary and will remove prime city land from the tax rolls. But if it is going to be built, at least now it will be done at a lower cost to the taxpayers, and will involve more local rather than Boston contractors.

UPDATE 7/11/12:

July 10, 2012, the DOL formally cancelled the solicitation mandating a PLA on this project and released this statement:

A GAO protest was filed in connection with this solicitation. The U.S. Department of Labor (DOL) continued to evaluate its options throughout the protest and ultimately determined that it was in the best interest of the Government to cancel this solicitation. DOL plans to move forward with a new solicitation for the construction of the New Hampshire Job Corps Center and will be re-issued at a later date. Please continue to monitor www.fbo.gov for updates.

All original copies of bid packages received in response to this IFB will be retained in our procurement file with the exception of the Bid Bonds. All original Bid Bonds will be returned to the bidders.

However, the DOL cancelled the solicitation after it had already received and publicly opened bids March 28, 2012.

March, 28, 2012, PLA Bid Results:

1. Firm A (the low bidder), Clearwater, Fla. ($37,872,000)
2. Firm B, Salem, Mass. ($38,297,000)
3. Firm C, Providence, R.I. ($40,987,000)

Three bidders, all from out of state, is pretty unusual in today’s construction economy. It appears the PLA reduced competition and locked out New Hampshire’s qualified contractors.

Once again the DOL subjected themselves to costly delays and waste by mandating a PLA. Will they attempt to mandate a PLA again when the solicitation is reissued a third time? TheTruthAboutPLAs.com will be monitoring this project closely.

UPDATE 7/24/12:

July 24, 2012, the DOL issued a sources sought notice to determine if there is interest from qualified small business general contractors to construct the estimated $20 million to $50 million project.  There was no mention of a PLA. Responses to the sources sought notice can be submitted only by certified small business contractors, relative to the primary NAICS code 236220 with a Small Business Size Standard of $33.5 million.

The SBA explains how size standards are determined:

“SBA size standards are usually stated either in number of employees over the past 12 months, or average annual receipts over the past three years – whichever number represents the largest size of your business right now (including subsidiaries and affiliates). This number is what you will be using to remain classified as a small business for SBA and to bid on federal contracting programs. Size standards are available for every private sector industry in the U.S. economy, with the North American Industry Classification System (NAICS) used to identify the industries.”

SBA defines and explains average annual receipts calculation:

Receipts means “total income” (or in the case of a sole proprietorship, “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms. Receipts do not include net capital gains or losses; taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees; proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. For size determination purposes, the only exclusions from receipts are those specifically provided for in this paragraph. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, and employee-based costs such as payroll taxes, may not be excluded from receipts.

SBA explains how much of a contract must be performed by a firm to be awarded a federal small business set-aside or 8(a) contract:

“To be awarded a government small business set-aside or 8(a) contract, the contractor must perform at least a given percentage of the contract. This provision limits the amount of subcontracting a contractor may enter into with other firms when performing these types of contracts. The provisions are as follows:

Construction: For general and heavy construction, at least 15 percent of the cost of the contract, not including the cost of materials, must be performed by the prime contractor with its own employees. For special trade construction, such as plumbing, electrical or tile work, this requirement is 25 percent.”

Update October 2012:

In October 2012, more than three years after they issued the original solicitation containing the PLA, the DOL issued a solicitation for the Manchester, NH Job Corps Center construction services without discriminatory and costly PLA mandate or preference language.

Update February 2013:

In February 2013, the DOL opened PLA-mandate free bids, which provided a direct apples-to-apples comparison between a federal project bid with and without a PLA mandate.

Without the PLA mandate, more than three times as many companies bid on the project (10 bidders). The low bidder, a local firm from New Hampshire, submitted a bid of $31 million, which was about 18 percent ($6.872 million) less than the lowest bid submitted by an out-of-state firm during the first round of bidding in 2012.

These results demonstrate government-mandated PLAs create delays, reduce competition, increase costs, harm local businesses and expose the federal government to litigation.

The post ABC Declares Victory as Federal Government Withdraws Project Labor Agreement appeared first on The Truth About PLAs.

An Albany County Supreme Court ruled March 1 that the government-mandated PLA issued by NYS DOT violated state procurement laws. The court found that the NYS DOT failed to demonstrate that the decision to require a PLA advanced the state’s interests in the procurement of construction services. The court ordered NYS DOT to re-bid the project.

Here are the highlights from the press release issued by the Empire State Chapter of Associated Builders and Contractors (ABC):

“The ruling effectively means the DOT was flawed in its decision to add a project labor agreement to the job, which would cost taxpayers $4.5 million more than necessary,” said Mark Galasso, President of Lancaster Development, Inc. “As a contractor and taxpayer I am pleased by today’s decision.”

The court on Friday ruled the PLA illegal and thus nullified the existing contract. This means the state DOT must rebid the project.

“The ruling shows a failure by New York State Department of Transportation officials to comply with the competitive bidding rules set out by state law,” said Steve Lefebvre, President of ABC. “Thanks to the court’s decision the project will be rebid, to the benefit of the taxpayers. When this project goes out to be rebid, I would caution the DOT not to attempt the inclusion of a PLA, as we have just seen an open and fair bidding process is the best way to maximize cost savings on public work projects.”

Lefebvre further added that the decision rendered by the court confirms what the ABC has said right from the start, that Project Labor Agreements are subjective and subject to questionable insider negotiations.

In this ruling, the judge points out several alarming issues that arose during the court’s examination of NYS DOT’s attempt to implement a PLA mandate.

Throughout the legal process, the courts ordered NYS DOT to hand over correspondence and other documents surrounding the process used to determine that a PLA is appropriate for this project.  In the decision, the judge takes NYS DOT to task for not being able to produce all the documents involved in the decision to require a PLA despite repeated requests by the court.  At best, this is evidence of sloppiness on the part of NYS DOT.  At worst, it could indicate that they have something to hide.  Either way, it is troubling.

The court also criticized the department’s handling of its feasibility study process.  In New York, public entities are required to obtain a feasibility study prior to requiring contractors to sign a PLA as a condition of performing work.  The study must demonstrate that the PLA mandate will promote the public interest through the: “(1) protection of the public finances by obtaining the best work at the lowest possible price; and (2) prevention of favoritism, improvidence, fraud and corruption in the awarding of public contracts.”

The court found the decision to require a PLA was not supported by either the first draft of the feasibility study developed by Arace & Company Consulting, LLC or NYS DOT’s own initial research.  The department relied on the more PLA-friendly second draft of the Arace study to justify the PLA mandate.  This second study was released to the department approximately one month after the first draft and with virtually no new evidence, endorsed the PLA mandate to a degree that the initial draft did not.

Clearly, the department wanted a PLA mandate on this project.  You don’t need to look any further than the fact that they threw out a bid from a qualified contractor for nearly $5 million more than the next lowest bid to determine NYS DOT’s intent.

The project will now be rebid.  We hope fair and open competition will trump Big Labor favoritism this time.

We also hope this incident will prompt lawmakers to take a closer look at The Public Construction Savings Act (S. 4121/A. 7855).  This bill would prohibit government-mandated PLAs on public construction projects.  It would guarantee that PLAs would be used when they make sense and ensure that taxpayers get the best construction at the best price.

The post New York Firm Wins Lawsuit Against NYS DOT’s Government-Mandated PLA appeared first on The Truth About PLAs.

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 post Government-Mandated Project Labor Agreements Harm Union Contractors and Tradespeople appeared first on The Truth About PLAs.

Measuring the Cost of Project Labor Agreements on School Construction in California (Vince Vasquez, Dr. Dale Glaser, and W. Erik Bruvold; 2011) examined the inflation-adjusted square foot construction costs for 551 school projects in California built between 1995 and 2009 – a dataset more than four times larger than any previous similar study, such as the three studies examining the impact of PLAs on school construction costs in Mass., Conn., and NY by the Beacon Hill Institute at Suffolk University in Boston, which also found that there is a statistically robust correlation between PLAs and greater school construction costs when compared to school projects constructed without a PLA.

The findings of the NUSIPR study are particularly important because California voters have approved $64 billion in school construction bonds during the past decade and several school districts have adopted the use of PLAs on these projects.

“This study, the largest and most comprehensive to date, provides new insight into the fiscal impact of PLAs,” said Vince Vasquez, NUSIPR senior policy analyst and co-author of the report. “It is our hope that our findings inform public debate when PLAs are advanced as a costless policy tool. Our research suggests they are not. Should districts choose to adopt them, school construction costs are likely to rise significantly.”

TheTruthAboutPLAs.com has long maintained that anti-competitive government-mandated PLAs are special interest schemes that end open, fair and competitive bidding on public works projects. PLAs drive up the cost of construction by reducing competition and discouraging qualified merit shop contractors and their skilled employees from building projects paid for by their own tax dollars.

Typical PLAs are pre-hire contracts that require projects be awarded only to contractors and subcontractors that agree to:

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

Study Criticized by PLA Proponents
The AFL-CIO Building and Construction Trades Department – staunch advocates and beneficiaries of anti-competitive and costly government-mandated PLA schemes – attacked the study’s findings, citing arguments by a proponent of PLAs, Dr. Dale Belman of Michigan State University’s School of Labor and Industrial Relations (see Belman’s CV and previous coverage). Belman claimed that the study overlooked important factors that affect school construction costs.

In response, the study’s authors noted during a July 22 press conference the NUSPIR study used methods to control for factors that might have increased costs that could not have been attributed to the PLA, such as the numbers of stories, where the school was built and the presence of swimming pools and gymnasiums.  NUSIPR also responded to Belman’s critique in this July 25 news release.

Adding credibility to the study’s methodology and findings, the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California performed an independent review of the study and endorsed the statistical analysis and associated findings:

“Overall, we believe that the conclusion drawn in the report regarding the influence of PLAs on project cost are supported by the data set provided to us and the subsequent statistical analysis of that data,” said Richard G. Little, AICP, Director of The Keston Institute. “The research team appropriately utilized well-accepted statistical methods to arrive at this conclusion and it constitutes an important research finding. However, I would like to reiterate at this time that the results of our review should in no way be construed as the Keston Institute for Public Finance and Infrastructure Policy supporting any position relating to the use of Project Labor Agreements by any public or private entity.”

There is little doubt that academic experts will continue to vigorously debate relevant study methodologies and the overall value and cost implications of government-mandated PLAs on construction projects (for example, take a look at how Dr, David Tuerck from the Beacon Hill Institute at Suffolk University in Boston dissects Congressional testimony provided by PLA advocate and University of Utah Professor Dr. Peter Phillips in a recent Congressional hearing.

Study Renews PLA Debate
The study, covered by the San Diego papers here and here, renewed the debate about government-mandated PLAs on California construction projects funded by taxpayer dollars.

The San Diego Union Tribune reported that PLA proponent Tom Lemmon, business manager for the San Diego local trades council, admitted that PLAs do not save money when asked to comment about the study:

“You could study this thing to death,” said Lemmon, an asbestos worker. “PLAs do not raise the cost of projects. We are not saying they save money either, but they bring the projects in on time and on budget because of a more coordinated workforce.”

An op-ed published in the Sacramento Bee from Eric Hogue, a talk show host on KTKZ (1380 AM) in Sacramento and vice president of advancement at William Jessup University, argues that public officials should evaluate contractors on merit, rather than whether or not they are willing to sign a union-favoring PLA that only benefits Big Labor’s special interests (“Viewpoints: Exposing California’s costly school construction secret,” 6/22/11):

Given this data, if I were in charge of a school district, here is what I would do. If we needed to build a new school or modernize an existing facility, I would encourage all contractors to bid on the project. I would prohibit any discrimination against union contractors or other licensed construction firms. And I’d make sure that every bidder was evaluated on the merits of their proposal, the history of their performance and the benefit to my teachers, students and taxpayers who are paying the bills.

To my conservative friends, I’d say, “I’m hiring union” if their bid was best. And to my liberal friends, I’d say, “sorry, can’t work with you this time” if another contractor was the best choice. That’s the point. Political ideology has no business in anything other than history books. And that’s the biggest benefit of the national study. It’s all about dollars and cents.

The study also inspired The Flash Report’s John Fleishman’s call for fair and open competition on school construction projects  (“Checkmate: University Study Makes the Case Against Project Labor Agreements,” 7/25/11)::

I would encourage every education official to think long and hard about enacting these mandated waste agreements and tell any voter to reject a school bond, UNLESS, there is written language that states there will be no project labor agreement tied to any of the funds.  If the unions earn the work by providing the best bid, then that’s fine.  But forcing taxpayers to spend millions more than necessary at the same time as we’re pink-slipping teachers and talking about shortening the school year is flat wrong.

This report is required reading for anyone who cares about schools or the state’s budget challenges.  It’s full of good data that should serve as the foundation for a statewide campaign to ensure all public dollars spent for school construction are allocated through a competitive bidding process that is open to all licensed and qualified contractors.

The Associated Builders and Contractors California Cooperation Committee — which supported the study with a grant to defray about 20 percent of the study’s extensive research costs according to NUSIPR estimates — plans to educate  public officials about the study’s findings through a direct mail piece to California’s construction stakeholders.

Be sure to review the study and related materials at www.TheCostofPLAs.com.

Check back with www.TheTruthAboutPLAs.com and www.facebook.com/theTruthAboutPLAs for more coverage and analysis as this study gains more attention.

Review TheTruthAboutPLAs.com’s analysis on the latest anti-PLA mandate research here and review all studies opposing government-mandated PLAs here.

May 18, 2012 update: Check out coverage of a public appearance by the study’s author here. It drew protests from Big Labor and PLA mandate proponents.

The post Project Labor Agreements on California School Construction Raise Costs up to 15 Percent, Study Says appeared first on The Truth About PLAs.

Please note that all links have been added by TheTruthAboutPLAs.com.

Dear Mr. Brubeck,

I would like to bring to your attention a matter of considerable importance to the question of mandatory Project Labor Agreements (PLAs). As you know I testified against mandatory PLAs at a hearing conducted June 3 before the Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform of the Committee on Oversight and Government Reform of the U.S. House of Representatives.

In my testimony, I reported the results of studies in which the Beacon Hill Institute showed that PLAs increased construction costs for samples of schools built in Massachusetts, Connecticut and New York.

Note: Tuerck’s tesitmony starts at 22:13 of this video

I argued that our studies provide compelling evidence that mandatory PLAs generally increase construction costs and are, on that basis, not in the public interest.

You will also recall that, before I could testify, Representative Elijah E. Cummings read a statement from Professor Peter Philips of the University of Utah in which Philips claimed that our work was nothing but “simple minded statistics” that, in his judgment, do “not pass muster.” Unaware, as I was at the time, that this statement had been submitted to the Subcommittee and given the circumstances in which it was read to me and everyone else at the hearing, I could not respond adequately to Philips’ accusations at that time. Following the hearing, however, and with a written copy of Philips’ statement in hand, I wrote my response, attached here, and sent it to Congressman Cummings.

As you can see, I find Philips’ criticisms to be based on an entirely fabricated characterization of the methodology that we followed in our studies. I need to be emphatic. It is not as if Philips just disagreed with our interpretation of our statistical results, as economists often do in examining each other’s work. This was not a complaint, say, that our results suffered from some problem connected with sample selection or that they failed some standard test for robustness. This was a false characterization of what we did in obtaining our results. It would be as if one chemist tried to debunk another chemist’s findings by falsely describing the laboratory procedures followed in getting those findings.

It has now been a month since I wrote to Congressman Cummings. I have received no reply from him about the questions I raise. If, as it appears, neither Congressman Cummings nor anyone on his staff has asked Philips to clarify his remarks, then anyone who read the record of that hearing would be permitted to believe that there was substance to those remarks, when in fact there was none. Anyone could infer that our findings about PLA costs were spurious and could be ignored when in fact there was nothing presented at that hearing (or anywhere else, by my reckoning) that would support any such conclusion.

I am therefore compelled to take my case to a broader public. To that end, I hoped that you might be able to bring my letter to the attention of readers who follow ABC and its efforts to inform the public about government-mandated PLAs. Your help in this regard would be much appreciated.

Sincerely,

David G. Tuerck
Executive Director, The Beacon Hill Institute
Professor and Chairman, Department of Economics
Suffolk University

##

Here is more on the controversy from a post by BHI on the Red Mass Group blog, (BHI Weekly Dispatch: Taking on the D.C. union proxies on Project Labor Agreements,” 7/21/11).

Here is a key passage from Dr. Tuerck’s letter to Rep. Cummings in response to Dr. Phillips’ attacks:

In Phillips’ mindset, however, a project would never be more costly because it was conducted under a PLA.  The explanation would always lie elsewhere.  The project had a more complex roof.  Or it included an auditorium.  Or it had some other feature that increased the cost. Never mind if there were only a few bidders. Or if the contractor had to follow burdensome work rules.  Or if the contractor had to hire union workers instead of his own workers.  It just couldn’t be the PLA that was at fault.

Phillips’ approach to the PLA question reflects a compulsion, unhappily all too common among social scientists (and even some physical scientists), to hold stubbornly to one’s assumptions no matter what the data show.  That, in and of itself, is a bad enough fault to exhibit in criticizing someone else’s work.  In this instance, however, Phillips went beyond merely attempting to defend his assumptions against the data.  He made up an entirely fictitious story to discredit the work of someone whose data challenge those assumptions.

Be sure to give the full letter a read.

The post Beacon Hill Institute Responds to Attacks on Project Labor Agreement Research appeared first on The Truth About PLAs.

But few understand the merit shop contractor cost advantage despite anecdotal evidence and compelling research on the topic.

A new report sheds some light on why wasteful union work rules are harming union productivity, losing union marketshare, and costing NYC taxpayers and private owners a fortune.

The Regional Plan Association (RPA) May 2011 report, Construction Labor Costs in New York City: A Moment of Opportunity, found that “arcane union work rules, inefficient practices, and featherbedding impose 20 percent to 30 percent in excess costs, leading to dramatic increase in nonunion work on NYC construction sites.”

The study also mentioned that NYC developers complained that NYC PLAs were a failure and delivered little to no promised cost savings:

“Management has been almost universally disappointed with the actual savings achieved—2 to 4 percent rather than the promised 20 percent.”

For every Local 14 operating engineer running a major piece of equipment, a Local 15 ‘oiler’ tags along—a vestige of the mid-20th century, when equipment required frequent lubrication.35 Nowadays, thanks to the modern equipment deployed, oilers have little to do, and spend their highly paid time “polish[ing] the crane like fire trucks.” For a building of approximately one million square feet (50-60 stories) and an 18-month construction schedule, the fully loaded cost for each unneeded oiler is approximately $190,000.

The RPA report explains why such reforms are needed:

A 10 percent differential between union and nonunion construction is tolerable to union developers and contractors, while the existing 20-30 percent differential is not. If the high differential continues, developers will convert some projects that would have been union in earlier times to merit shop, and will simply not go forward with other projects.

Because the construction industry in NYC is heavily unionized, PLA proponents argue a PLA can alter normal union wage and benefit rates and offer concessions to inefficient union work rules that would otherwise be prevalent on a construction project absent a PLA.