Here is additional background on the controversy from Michigan Capitol Confidential (Big Labor Fights Against Lansing Entrepreneurs … and Virg Bernero?, 11/15/10):

The developer, Pat Gillespie of East Lansing, purchased the property for $1.6 million from the city. He did this knowing that he would need to spend at least $1 million – and perhaps much more – clearing up an as yet unknown amount of environmental contamination. In the sale agreement with Gillespie, the city agreed to use reasonable efforts to help him acquire brownfield tax credits and other assistance to help pay for the clean-up of the contamination. The property sits on the bank of the Grand River, five blocks from the state Capitol Building.

To fulfill the city’s part of the agreement, the council took up the issue of extending the brownfield help during two council meetings in October. But at these meetings there emerged a sentiment by four of the eight council members who believe that Gillespie should also be required to agree to a PLA covering 100 percent of the jobs used to build his apartment complex. It is estimated that at least 84 workers will be hired for the work.

Ultimately, the council deadlocked 4-4 on votes to extend the brownfield assistance, thus effectively refusing to approve the help. Gillespie sued, and on Oct. 25 Ingham Circuit Court Judge Rosmarie Aquilina ruled that he had held up his end of the land purchase contract and awarded the brownfield package to him.

On Nov. 8, following the court order, council met again and had another acrimonious debate about whether or not they should vote to discuss an appeal of Aquilina’s decision. Mayor Bernero joined this debate and steadfastly supported Gillespie.

Councilmember Kathie Dunbar is allied with the mayor on this issue. At the Nov. 8 hearing she also fired several warnings toward the four council members who wished to continue down the path of blocking Gillespie’s plans.

“We breached a contract,” said Dunbar of the council’s vote against Gillespie. “When you do that, you negate your insurance policy that covers your claims.”

Losing a drawn-out legal appeal with no insurance protection, Dunbar noted, could force the city to pay up from its general fund for all of the damages and all of the attorney fees associated with its decision to breach the contract. She warned that it would be the taxpayers of Lansing who would pay for the council’s costly mistake if the politicians decided to continue their PLA demands on Gillespie in the courts.

In a contentious appearance before the council, Bernero accused the block of four of playing “roulette” with the city’s development future, and putting “petty politics before progress.” He also estimated that fighting and losing a “dangerously shortsighted” appeal could cost the city as much as $6 million and compromise the city’s ability to fund police and firefighters.

Big Labor’s shrewd political maneuvering is often how they obtain government-mandated union-only PLAs on pubic works projects. Instead of delivering the best possible project at the best possible price to taxpayers through fair and open competition, Big Labor has to develop a scheme to increase union market share that cuts competition and forces employees to join a union and/or pay union dues in order to work on a construction project paid for by their own tax dollars.

Of significant note is a statement 45 seconds into this story made by Steve Padilla, an appointed member of the Board of Port Commissioners for the Unified Port of San Diego. Padilla declared “If there were a similar proposition in the City of San Diego a few years ago, Petco Park may never have been built.”

With this allegation, Mr. Padilla hit squarely upon the primary inspiration for the enacted and proposed ordinances in San Diego County to prohibit local governments from requiring contractors to sign project labor agreements. Let’s focus on the reprehensible abuses of just one specific construction union based in San Diego: the International Brotherhood of Electrical Workers (IBEW) Local 569.

In the summer of 1999, the law firm of Adams Broadwell Joseph & Cardozo based in South San Francisco submitted objections on behalf of the IBEW Local 569 to the draft Environmental Impact Report (EIR) required under the California Environmental Quality Act (CEQA) for the San Diego Padres ballpark (now known as Petco Park).

On January 14, 2000, union officials, Padres executives, and various local politicians held a press conference to announce the signing of a project labor agreement for ballpark construction. An article in the January 15, 2000 San Diego Union-Tribune reported the following:

The agreement puts to rest any doubts that one union, the International Brotherhood of Electrical Workers, was not fully on board the ballpark bandwagon. In July 1999, that union briefly became the sharpest critic of the project, raising written objections that carried the implicit threat of a lawsuit.

At the time, [Padres Executive Vice President Jack] McGrory, then chief executive of Price Enterprises, a San Diego-based real estate investment trust, said the move was “leverage” designed to force a project-labor agreement.

Yesterday, McCrory said the union dropped its objections because its environmental concerns were answered by city officials and because it saw the Padres were serious about reaching a project-labor agreement.

It was a classic case of environmental permit extortion, or greenmail: the union exploitation of environmental laws to block construction of a proposed project until the applicant agrees to labor agreements unrelated to the environment. In the case of the Padres ballpark, the developer surrendered to the union extortion and signed the PLA.

The IBEW Local 569 in San Diego has no moral qualms about greenmail. In the union’s May 1999 newsletter, the business manager bragged about how construction union officials and their lawyers coerced merchant power plant developers to sign PLAs against their will:

On Friday, April 30 I got the word that the High Desert Power Plant Project has agreed to ALL of our agreements. If you read in the past Transmitters, I told you that Constellation Energy (the developer) vowed that they would NEVER sign our agreements and would fight us all the way. We accepted their challenge and after being held back for almost 2 years, they’ve decided that it is much better to work with CURE.

CURE stands for California Unions for Reliable Energy, a construction union-backed entity represented by the law firm of Adams Broadwell Joseph & Cardozo that intervenes in the California Energy Commission licensing process and uses various tactics to delay state approval when an applicant for an energy project is unwilling to sign a PLA.

I saw the tactics of the IBEW Local 569 firsthand on August 12, 2004, when the San Diego Planning Commission was considering a union appeal of a development agency’s decision to approve a 33-story building in downtown San Diego. An attorney for Adams Broadwell Joseph & Cardozo made a presentation alleging numerous environmental problems that required further investigation. In response, various association representatives and I spoke on how this appeal was really union greenmail designed to extort the developer into a PLA.

An IBEW organizer then claimed that its appeal was “very much an environmental issue” and explained how much union members care about the environment. One commissioner noted how this was the first project she had seen in which the IBEW had challenged the approval. “What is the threshold that makes this project different than the others?” she asked. The organizer wouldn’t answer, of course, and the lawyer claimed they had just discovered how projects were being approved in San Diego without adequate environmental review. As reported in the August 12 San Diego Daily Transcript (“Union’s Appeal of CCDC Project Rejected, 4/12/04”), the appeal was rejected 7-0.

When the IBEW Local 569 and other construction unions attempted the same stunt in 2007 against a proposed hotel and convention center in Chula Vista, the developer Gaylord Entertainment refused to succumb to the extortion. Instead, it revealed to the public that it was the victim of extortion and ultimately released a letter explaining that it was withdrawing from the project because of union threats to block the project with environmental objections until their demands were met.

No wonder the organizer and political director for the IBEW Local 569 has declared that the accomplishment she is proud of was kicking Gaylord Entertainment out of Chula Vista. “I believe we sent a strong message about the power and commitment of San Diego’s electrical workforce with the Gaylord campaign” she says. Note that union power supersedes concerns such as economic growth, job creation, and the rebirth of polluted bayfront property.

How could any voter that knows about these four incidents NOT vote for a proposition that undermines this cynical manipulation of the state’s environmental laws? At the most basic level Proposition G in the City of Chula Vista is about protecting taxpayers, project investors, and the public from being victimized by union abuse of power.

The New School is planning to build a $215 million classroom and dormitory building on the corner of 14th Street and Fifth Avenue, but the Painters Union DC 9 is blocking the construction manager’s effort to apply for a market recovery program unique to NYC labor unions that would allow the developer to implement an anti-competitive and costly project labor agreement (PLA).  In NYC, Big Labor has convinced private developers and public officials that PLAs will result in union concessions that will save money.

The cost savings resulting from PLAs have been disputed and questioned, but the real reason PLAs are being promoted by Big Labor is to cut competition from nonunion contractors encroaching on union marketshare in Manhattan and the surrounding burroughs.

For example, here is a quote from a union source on the NYC market recovery program in ”NYC Firms and Unions Will Cut Costs To Boost Work,” (McGraw Hill Construction August 2009).

“We have two problems in New York: the financial crisis and creeping nonunionism. This will help both,” said John A. Cavanagh, a former building contractor executive and chairman emeritus of the Contractors’ Association of Greater New York, a BTEA member group.

Also, Building and Construction Trades Council of New York President Edward Malloy (“PLAs are Essential to Growth Opportunities for Union Sector,” Subcontracting News, March 2008) wrote the following:

“To create growth opportunities in the union sector, PLAs are the most valuable tool we have…

…These PLAs, which typically involve modest adjustments on issues other than wages and supplements, can reap huge rewards for the union sector of the industry by assuring that all work from start to finish — including tenant build-outs — will be done union.

We must address our shrinking share of the residential market, particularly in the affordable and low-rise segments, but quite frankly, in the market rate and high-rise segments as well…

In the affordable and low-rise segments, however, we must acknowledge that there are very few projects where union labor, contractors and subcontractors are competitive.  We can, and therefore must, adopt a more aggressive package of wages and supplements to address this sector of work…”

While noteworthy, a Big Labor Boss’ admission that unions are not competitive without the help of special interest schemes that discourage nonunion competitors is not why this story is so salacious.

The painters union has a beef with the construction manager for the New School project, Tishman Construction Corp., because they are using nonunion painters on an Upper East Side condominium project called Manhattan House.  Here is more from the WSJ:

Unionized painters aren’t being used on that project, according to Mr. Coletti and an official with the painters union. A spokeswoman for Manhattan House, which is being developed by New York-based O’Connor Capital Partners, declined to comment.

“Painters Union DC 9 will not sign the project labor agreement until the issue at the Manhattan House is resolved,” Mr. Coletti says.

Tishman is planning to use union painters on the New School project if a project labor agreement is reached, a Tishman spokesman said. But for the Manhattan House project, Mr. Coletti notes that Tishman is the owner’s representative and doesn’t have the power to award construction contracts.

A Tishman spokesman said the company only hires subcontractors who employ union members when it is in charge, but declined to discuss specifics of the Manhattan House project.

Jack Kittle, a spokesman for the painters’ union, said business manager Joseph Ramaglia wasn’t available on Friday. “We do have an issue with Tishman,” Mr. Kittle said, but he added that it was “very possible” that the choice of subcontractors at the Manhattan House was outside of Tishman’s control…

[snip]

…Construction on the new building may still be able to proceed without a project labor agreement in place—but, potentially, at a higher cost.

Big Labor’s latest underhanded tactic to regain market share in NYC is shocking. The painters union is threatening not to sign a PLA – which would ensure that the New School is built 100 percent union and create a labor monopoly for Big Labor – if the project manager removes nonunion painters from a totally unrelated project.

This reminds me of a classic scene from Blazing Saddles, where the townspeople draw their weapons on the new sheriff.  Sheriff Bart escapes the hostile and gullible townspeople by holding himself hostage and threatening to shoot himself.

The DC Painters 9 are either too greedy or  too stupid to even attempt to leverage a 100 percent labor monopoly (via a PLA) to eliminate competition and regain lost market share on another project. This nonsensical “I Want It All” behavior has given the labor movement a black eye and crippled local governments with waste and increased costs.

Let’s hope that the NYC public sees Big Labor’s pressure tactics in the same unfavorable light that the rest of the country views wasteful, discriminatory and costly PLA schemes.

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

Looking for someone to blame?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONSTRUCTION CONTRAST: Item: The $20.5 million Rotella Interdistrict Magnet School was finished late and came in 10 percent over budget. Today, it’s leaky, the climate-control system is faulty, the courtyard isn’t level, and brown stuff oozes from the tile floors in some places. Item: The $34.7 million Duggan School reconstruction is at least 20 percent over budget, and the school will open a year later than expected. In both cases, the Board of Education insisted on union-only project labor agreements (PLAs), effectively excluding the many nonunion contractors from bidding. Item: The $35.9 million City Hall renovation, about which we had serious misgivings from the start because of long years of neglect and recent, potentially catastrophic water damage, likely will be turned over to the city Nov. 30, a month early, and apparently under budget. The City Hall project was not a union-only PLA. What conclusions might one draw from these facts?

In 2007, Waterbury Board of Education officials mandated PLAs on $90 million worth of public school construction like the Duggan School and the Rotella Interdistrict Magnet School. The Republican-American wrote this scathing editorial opposed to the decision by Waterbury Board of Education officials to mandate PLAs on future construction (“The Return of Paronage,” 1/29/07).

It didn’t take long for Waterbury’s political establishment to make taxpayers start missing the state oversight board, which disbanded last week. The oversight board’s prime directive was to stand up for taxpayers. Those who hoped that approach to spending might spread through government like a vaccine saw their hopes dashed Jan. 22 by the Board of Education.

Presented with an opportunity to save city and state taxpayers money on school construction, the board said no to the savings and yes to a special-interest group: labor unions.

Poised to spend $90 million in school construction and renovation, the board could have opened the bidding to independent contractors that may or may not use union labor; or to union contractors only.

Obviously, the former approach would have saved money. Lelah Campo of Associated Builders and Contractors of Connecticut told the board 80 percent of the contracting firms in the state are not unionized, so there would have been keener competition for the contracts.

Just as obviously, choosing the lower-cost alternative presented no implications for quality. Only qualified bidders would win contracts. The Interstate 84 storm-sewer fiasco, meanwhile, was a union production. So was the troubled Rotella Magnet School project. Boston’s Big Dig, notorious for cost overruns, delays and lethal incompetence? Union only.

The board voted 7-3 to require a project-labor agreement, meaning only union contractors need apply. There was an undercurrent of selfish irresponsibility; board members understood the state will pay 80 percent of the project cost. The state’s money; the state’s tough luck, if the board’s decision inflates the price tag.

Most distressing, however, were the indications the board simply didn’t grasp its duty to taxpayers. With four dozen union members in the audience and only a few people representing the independent contractors, the board may have felt intimidated. But it didn’t take long for members to play to the crowd. “The key component of this whole thing is for Waterbury people to get a good wage,” board President Patrick J. Hayes Jr. said. “It’s about rebuilding the community.”

No, it’s about getting the schools built properly, on or under budget, and on time. It’s about public education. If Mr. Hayes and other members of the majority want to help adults in Waterbury get better wages, government agencies and private organizations engaged in that mission would benefit from their enthusiasm. But the school board’s job is to provide the best possible education for the children for a price the community can afford. Knowingly inflating the cost of a $90 million project poorly serves that objective.

The latest PLA-related story titled, “An Ailing Process,” comes courtesy of the January 24 Indianapolis Star.

Here are the highlights:

At the heart of the issue is the decades-old use of project labor agreements that require contractors on most major projects to negotiate with union officials, recognize union benefits and generally abide by collective-bargaining agreements.

Gaylor has been opposing PLAs for years as president of Associated Builders and Contractors, an Indiana trade group representing nonunion firms.

He is raising his voice a little louder this year as officials prepare to award contracts for the $754 million Wishard Memorial Hospital complex in Indianapolis under such an agreement.
Gaylor and other nonunion contractors argue that the agreements limit competition and drive up construction costs.

As evidence, Gaylor points to the fact that earlier this month only five contractors bid for the contract on the $30 million parking garage planned for Wishard.

For Gaylor, the fact that only a handful of contractors bid during a recession that is starving the construction industry for work shows a bid process gone awry.

“By limiting competition, you don’t get the competitive bids,” Gaylor contends.

Ten or 12 bidders could drive down the price, Gaylor argues, but the bid process thwarts competition and, he claims, costs taxpayers millions of dollars on expensive projects.

The story goes on to mention that some “experts” say that no data exists to support J.R. Gaylor’s contention that PLAs increase construction costs.

Really?

If someone asked for data to prove the inflationary impact of PLAs, I would first direct them to a June 2009 study conducted by consulting firm Rider Levett Bucknall for the U.S. Department of Veterans Affairs (VA) Office of Construction and Facilities Management found that PLAs would likely increase construction costs by as much as 9 percent in construction markets in which the VA is planning to build hospitals.

Additionally, the Beacon Hill Institute at Suffolk University researched the impact of PLAs on school construction in Massachusetts, Connecticut and New York from 2003-2006 and found that PLAs increased construction costs by as much as 18 percent.  In Connecticut, this costs taxpayers an extra $30 per square foot in final construction expenses.  In other words, PLAs on school construction in Connecticut costs taxpayers an extra textbook worth of waste for every square foot of construction.

There are numerous other studies that show the inflationary impact of PLAs available at www.abc.org/plastudies.

Don’t believe the numbers?  Here is some anecdotal data.

Indianapolis has some recent history with PLAs.  Construction of Lucas Oil Stadium, home of the Super Bowl-bound Indianapolis Colts, blew out its budget by over $75 million and the Indianapolis Public Library construction project exceeded its budget by $50 million.  The library project was also plagued by problems and took two extra years to build.

The data is out there.  PLAs are nothing more than special interest handouts that deny taxpayers they results they deserve.  Hoosiers deserve better than construction defects and cost overruns.

In the meantime, we hope Marion County Health and Hospital Corporation – owners of the Wishard hospital – seriously reconsider becoming associated with the next PLA failure in Indiana.

In a December 22 editorial, the Riverside, CA Press-Enterprise expressed its frustration with the Riverside Community College District Board’s recent handout to Big Labor in the form of a project labor agreement (PLA) requirement on all college projects over $1 million that use funds from the 2004 voter-approved $350 million Measure C.

The editorial does an outstanding job of highlighting the questionable tactics used by some members of the Riverside Community College District Board to get this PLA requirement approved.

Here is the editorial:

The Riverside Community College District board’s new motto is apparently: Vote quickly, not carefully. The board pushed ahead with a sweeping new labor agreement last week, without giving the public — or even board members — a chance to understand the issue before the vote.

That nonsense needs to end. The district needs to provide thorough answers to the questions surrounding this pact before taking any further action. District officials need to explain the reason for the agreement, how the district and taxpayers might benefit from it and what effect the pact would have on the cost of college projects built with local bond money.

Seldom has a board decision raised more warning flags than last week’s vote on a draft project labor agreement with the Riverside and San Bernardino Building and Construction Trades Council. The board voted 3-2 to approve the draft pact and have Chancellor Greg Gray negotiate a final deal. The agreement would set workplace and contracting rules for all district projects of more than $1 million that use money from Measure C, the $350 million bond measure district voters approved in 2004.

But the circumstances surrounding the vote last week defy any conception of proper public procedure. The board received the document only minutes before the meeting began, so neither the trustees nor the public had any time to digest the draft pact before the board voted. Voting blindly is just reckless policy, particularly on an issue as far-reaching as the proposed labor pact.

The board could not hold any informed discussion on the document under those circumstances. But providing information was not high on the agenda: The district offered no analysis of how the agreement would affect college projects.

That omission is astounding. Such agreements almost universally favor expensive union workers over cheaper nonunion labor. So the pact could inflate the costs of college projects, thus reducing what the bond money will buy for students and the community. And district taxpayers will certainly want to know why a majority of the board is intent on rushing ahead without studying the financial consequences of the pact.

But when Trustees Virginia Blumenthal and Janet Green asked for more time to study the issue — and actually read the draft agreement — the rest of the board rebuffed the request. Just why is this deal so urgent to Mary Figueroa, Jose Medina and Mark Takano that they cannot spare time to answer questions about the consequences for the district?

The final agreement is slated to return to the board for approval in coming months. The chancellor and board will need to provide a clear rationale for the agreement, along with a detailed analysis of the pact’s provisions. And the board should allow a full public airing of those issues before it takes any vote.

Complete transparency is the only acceptable course. The reasons for this proposal remain unclear. But acting in haste, without public input, invites the suspicion that district taxpayers’ interests are not the trustees’ primary concern.

We couldn’t have said it better ourselves.

Here’s an excerpt:

And since the Labor Department’s request for bids requires proof of three prior PLAs, Sen. Gregg says, “not a single firm in our state would be eligible to bid on this multi-million-dollar construction project.” Mark MacKenzie, president of the New Hampshire AFL-CIO, acknowledged that only out-of-state contractors will be able to bid on the work. (read Senator Gregg’s press release about the Manchester Job Corps project PLA here)

The op-ed also notes the finding of the recently released Beacon Hill Institute study, “Project Labor Agreemens on Federal Construction Projects: A Costly Solution in Search of a Problem:”

A recent study on PLAs in three states by the Beacon Hill Institute found that PLAs increased the price of construction projects anywhere from 12 to 18 percent without reducing cost overruns, construction delays, or labor disputes – the chief benefits cited by their proponents. Executive director David G. Tuerck, one of the study’s authors, concluded that PLAs are “an effort to solve a problem that doesn’t exist.”

Even the president of the New Hampshire AFL-CIO admits that E.O. 13502 and the Manchester Job Corps project PLA will keep New Hampshire contractors – and their local employees – from competing for this project. 

This is bad for both in-state contractors and the 91 percent of the Granite State’s private construction workforce that decided not to join a labor union. 

Congratulations New Hampshire, you are about to become the first victim of President Obama’s Executive Order 13502.

With such a small union workforce available, it makes it virtually impossible for a New Hampshire contracting firm to have unionized employees to fill this requirement.  Furthermore, the Department of Labor requests that contractors exhibit three previous successful PLA projects, a request no New Hampshire contractors can meet.  And while the Department of Labor has designated this as a small business project, which would normally increase competitiveness for New Hampshire contractors, having the PLA requirement essentially prevents New Hampshire contractors from being able to successfully bid for this $35 million in-state construction project.

Senator Gregg stated, “The Administration’s decision to discriminate against successful and independent construction firms simply because New Hampshire employees choose to work in a union-free workplace and not bow down to the demands of big labor is extremely unfair to our state.  The request for bids issued by the Department of Labor requires that contractors employ a Project Labor Agreement (PLA) and requests they provide proof of completion of three prior PLA projects.  However, under these conditions there is not a single firm in our State that would be eligible to bid on this multimillion dollar construction project.  In a time of economic hardship, it is simply absurd to discriminate against local contractors and construction workers for the benefit of national labor unions.

“Further, this unfair practice could result in a lawsuit, which would only delay the beginning of construction for this critical project.  The Administration’s actions on this issue are completely backward.  Instead of expediting the construction of a Job Corps Center that will train and equip New Hampshire residents, while potentially creating New Hampshire construction jobs in the interim, the Administration has knowingly placed a roadblock on job training and increased economic activity in the Granite State. I urge the Administration to quickly reconsider this serious lack of judgment so we can get started on this essential project.”

The TruthAboutPLAs.com agrees with Senator Gregg’s sound evaluation of this discriminatory and costly PLA.

However, according to an article in the Manchester Union Leader, union officials disagree with Senator Gregg’s assessment of the PLA (“Gregg: Union rule threatens job center,” 9/18). The comments of Mark MacKenzie, president of the New Hampshire AFL-CIO, demonstrate an unrealistic and myopic point of view that represents narrow union special interests over those of qualified local non-union contractors and workers that deserve a fair shot at competing for work in their own state paid for by their own tax dollars.

“It may be an out-of-state contractor that bids the work, but it’s going to be New Hampshire people who work on the project,” MacKenzie said.

Unfortunately, MacKenzie ignores an inconvenient truth about PLAs: local union workers have preference over non-union local workers who are equally as qualified. In addition, typical PLAs give preference to non-local union members over quality local non-union workers.  These workers are called “travelers” and unless a PLA specifies that no travelers can be used, union workers from Boston will build this project instead of qualified New Hampshire contractors and their local workforce.

In other areas of the country, unions are quick to criticize the concept of out of state contractors winning local jobs, but in instances such as this, they conveniently amend their principles to suit their self-serving interests.

According to the article, PLA apologists such as Pat Long, former vice present of the New Hampshire Building Trades Council and a Democratic state representative, unwittingly makes an argument against PLAs:

“Under a PLA, a contractor would have to pay $37 an hour for ironworkers.

About $21 would go toward wages and the remainder toward retirement, health insurance and other benefits, he said. A non-union worker would get paid between $25 and $30 an hour, but get no benefits, Long said.”

Long is refering to a Basic Truth About PLAs that is offensive to non-union employees and their employers. If a non-union contractor signs a typical PLA, all employer contributions to an employee’s health, welfare and other benefit funds must be paid to union managed funds as stipulated in a PLA and applicable union collective bargaining agreements. 

Non-union employees will never benefit from employer contributions into union benefit funds unless they join a union and/or become vested in the benefit plans. Benefit plan vesting schedules are much longer than a typical construction project. In short, this scheme is a windfall for union plans because they don’t have to account for future liabilities and costs for the contributing non-union employee.  What’s worse is that PLAs prevent non-union employees from having benefits for the life of a project, unless their non-union employer continues to pay existing non-union benefit plans. This “double payment” of benefit costs is one of the reasons why taxpayers lose with PLAs -non-union contractors can’t give their best possible bid for a quality construction project.

PLA proponents often claim that without a PLA, non-union employees would not get health and reitrement benefits. That statement is absurd and is a misleading scare tactic. Non-union contractors offer attractive health and benefit packages. How else would they maintain a skilled and competent workforce to build the majority of public and private construction projects? And if non-union contractors didn’t offer competitive wages and benefits, wouldn’t more than  just 8.7 percent of New Hampshire’s construction workforce join a union?

In addition, because this is a federal construction job subject to Davis-Bacon wage rates, all contractors, regardless of their union affiliation, have to pay all construction workers in their specific trade (such as an ironworker) a set wage and benefit amount.

If you visit www.wdol.gov, you can look up the wage rates for a ”Building” Construction Type in Hillsborough County, New Hampshire and see that the last federal Davis-Bacon Wage determination for ironworkers in that county was made on 3/15/08 and it requires that ironworkers be paid $21.15 in wages and $16.75 in benefits. The total package is $37.90 per hour. All workers have to be paid that amount in cash if a contractor does not offer a benefit program, otherwise, a worker is paid $21.15 per hour in cash and $16.75 per hour in benefits goes into a contractor’s existing health, retirement and benefit programs.  If employers pay ironworkers less than a total wage and benefit package of $37.90 per hour, they are breaking the law. (An ironworker’s salary and benefit totals about $79K per year ($37.90 * 40 hours per week * 52 weeks per year) if there is full year-round employment on a federal construction project in this county.)

Arguments such as, “non-union workers don’t get paid a fair wage [even though there is a federal law that addresses this issue], therefore, PLAs are necessary” are fallacies that need to be challenged.

The bottom line is that a PLA on this project is a barrier to much needed jobs for qualified New Hampshire construction employees. Employees should not have to pay forced union dues, obey restrictive and inefficient union work rules and forfeit employer benefit contributions to union benefit and pension plans unless they join a union in order to work on a PLA construction project paid for by their own tax dollars.  A PLA will actually prevent a non-union employee from receiving benefits for the life of a construction project.

Senator Gregg is correct. A PLA has no business on this project.

Update: View the U.S. DOL’s “sources sought” notice for this project (Solicitation Number: DOL009RI20791) here.  You can view the presolicitation notice (Solicitation Number: DOL099RB20811) here. The soliciation is scheduled to be published on 10/1.

City staff recognized that these agreements limit the number of bidders and increase construction costs.  Here is an excerpt from the Monroe News:

Because the project was so specialized, city staff had recommended in February that the Labor Harmony policy be waived for the water main project, fearing the requirement would limit the number of bidders and result in higher costs.

Staff asked that contractors only be required to pay prevailing wages rather than form a project labor agreement with local unions. But the city council voted 5-2 against the recommendation. Councilmen Beneteau and Edward Paisley supported waiving the Labor Harmony Agreement for the project.

Despite the fact that the project’s only bid was nearly 13 percent higher than the engineer’s estimate, the county’s Director of Water and Wastewater Utilities had the audacity to tell the Monroe News the following:

However, city officials say they actually will come out ahead of their budget projections for the entire project because of American Recovery & Reinvestment [ARRA - the stimulus bill] money, as well as the State Drinking Water Revolving Fund.

Barry LaRoy, Director of Water and Wastewater Utilities, said the federal and state money will take off $2 million — or about 40 percent — of the $5.1 million project cost. “It’s a good savings for the community as far as keeping costs down,” he said.

Essentially, Mr. LaRoy is saying that despite $200,000 in waste, the city and its residents came out ahead because the federal and state governments are picking up 40 percent of the project’s tab.  This is a ridiculous statement.  Mr. LaRoy doesn’t understand that Monroe residents, as federal and state taxpayers, are also funding 40 percent of the project via the American Recovery & Reinvestment Act money and Michigan’s State Drinking Water Revolving Fund. 

Despite what Monroe city officials are telling the media, most are not acting as good stewards of taxpayer money just because the city is spending less money.  Monroe officials must spend federal and state grants responsibly as well and $200,000 in waste on a special interest giveaway is not responsible. 

Kudos to Councilman Brian Beneteau for recognizing the problem with wasting taxpayer dollars on giveaways to Big Labor and warning how it will harm local residents:

“Not only are City of Monroe residents going to incur higher water rates, but also anyone who uses our city water from Monroe Township to Dundee.”

It is also worth noting that this project labor agreement is made possible by President Obama’s Executive Order 13502.  In addition to encouraging PLAs on federal construction over $25 million, Obama’s order repealed Executive Order 13202′s prohibition of PLAs on projects receiving federal funds.  This project is a great example of waste that Executive Order 13202 was issued to prevent and limit. 

If local officials and voters don’t think that President Obama’s payoff to special interests in Executive Order 13502 will impact their local and state budgets, they need to change their understanding of this issue and encourage the OMB Director and Secretary of Labor to refrain from expanding Executive Order 13502  to state and local construction projects receiving federal assistance (i.e., grants, tax breaks, loans) via Section 7 of the order.