Of interest to TheTruthAboutPLAs.com readers, the estimated 13,000 Keystone XL pipeline construction jobs would be created exclusively for labor union members, as TransCanada required a union-favoring project labor agreement (PLA) on this privately financed project, which forces contractors to use union labor and follow inefficient union work rules.

Did Politics or Policy Kill the Project?
Controversy surrounding the project created a schism in the Democrat party’s political base. Environmentalists oppose the project, characterizing it as gift to Big Oil that would destroy farmlands, aquifers and sensitive ecosystems in the pipeline’s path; increase reliance on dirty fossil fuels; and contribute to global warming. 

Meanwhile, construction trade unions support the pipeline expansion because the PLA would create new construction jobs exclusively for union members as the construction industry suffers from a 16 percent national unemployment rate.

Congress and some in the business community point to this stalled project as an example of how President Obama and onerous government regulations stand in the way of job creation and decreasing our reliance on foreign energy supplies.

For more than three years, the State Department conducted a “transparent, thorough and rigorous review” of the privately financed project. After increased pressure by all parties to make a decision, the State Department announced on Nov. 10, 2011, that it needed more time to explore alternative pipeline routes prior to approving TransCanada’s permit application. In response, Congress inserted a provision in the temporary payroll tax cut bill passed in December giving the administration until Feb. 21 to decide the fate of the pipeline.

On Jan. 18, the State Department recommended that President Obama deny the permit, but left the door open for future project approval, stating “it could complete the necessary review to make a decision by the first quarter of 2013.” The White House issued a statement and submitted a report to Congress following the denial of the permit, providing some insight into the reasoning behind the decision.

Political pundits characterize this decision as a political calculation by the Obama administration to shore up environmentalist support prior to the election, but keep the side window open for union job creation pending the results of the 2012 presidential election and additional studies.

Keystone XL Pipeline Creates Union-Only Construction Jobs
In September 2010, TransCanada announced it was requiring contractors interested in working on Phase 3 and Phase 4 of the Keystone XL pipeline to sign a PLA with various construction trade unions.

Typical PLAs force contractors to hire construction workers from local trade union halls in each craft, follow pro-featherbedding union work rules, and pay into union pension and benefit programs.  Nonunion contractors are discouraged from competing for contracts to build taxpayer-funded projects when a PLA is mandated by a government entity, such as a local, county, state or federal government in charge of a project, because the terms of the PLA discriminates against their existing nonunion workforce and makes them less competitive against unionized firms.

The anti-competitive and discriminatory nature of government-mandated PLAs is why the merit shop contracting community was outraged when President Obama signed Executive Order 13502. The order, signed just a few weeks into President Obama’s term on Feb. 6, 2009, encourages federal agencies to mandate PLAs on a case-by-case basis on projects exceeding $25 million in total cost.

On privately financed projects like the Keystone XL pipeline, a PLA can prohibit nonunion firms from bidding or prevent all nonunion workers from being hired, even if they have the necessary qualifications and experience. In some instances, a PLA allows a limited number of nonunion workers, but forces them to pay union dues and fees and/or join a union as a condition of employment. In short, private sector PLAs can take discrimination to a whole new level compared to PLAs mandated by the government in the public sector of the construction market.

The project’s owner, TransCanada, voluntarily mandated a PLA on this private project. There is no evidence to suggest the Obama administration or federal officials forced TransCanada to mandate a PLA on this private project, nor is there evidence suggesting labor unions extorted TransCanada into requiring a PLA through typical tactics attacking construction owners to win more work for union members.

It is unfortunate that TransCanada elected to needlessly discourage competition from qualified merit shop contractors and discriminate against nonunion employees. It is a shame TransCanada’s PLA is telling 87 percent of the U.S. construction workforce they are not welcome to build the pipeline because they don’t have a union card, even if they have the necessary skills and experience.

The possible reasons why TransCanada mandated a PLA are numerous. Perhaps TransCanada needed Big Labor as an ally to shore up Democrat support at the local, state and federal levels of government. It wouldn’t be the first time a corporation hoped to exploit Big Labor’s cozy relationship with the president and his party, knowing that Big Labor donated hundreds of millions of dollars to Democrats during prior election cycles.  Or perhaps TransCanada felt a PLA gave its project the best chance at all-around success. 

Whatever the reason, it is clear construction trade unions are irate at President Obama for his job-destroying decision. Mark Ayers, president of the Building and Construction Trades Department, issued a statement critical of President Obama, as did Laborers’ Union President Terry O’Sullivan.

Despite Big Labor repeatedly attacking Republicans in the 112^th Congress, House Speaker John Boehner says the fight for jobs is not over, and even mentioned they have been working with labor unions to get this project back on track:

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What Next?
BNA Bloomberg’s Construction Labor Report says (“President Obama Rejects Keystone Pipeline But TransCanada Plans to File New Request,” 1/19/12):

TransCanada President Russ Girling said he is “disappointed,” although the decision was not unexpected.

“TransCanada remains fully committed to the construction of Keystone XL,” Girling said. The company has spent, or is committed to spend, about $1.9 billion so far on the project.

Girling said the company will reapply for a presidential permit, and he hopes that a new application will be processed “on an expedited basis” that would allow an in-service date by late 2014.

However, State Department Assistant Secretary Kerri-Ann Jones said in a media briefing that a new application would require a new review process. She would not speculate on how long such a review might take and whether existing analysis could shorten the environmental review process.

The original TransCanada permit application was filed in September 2008 and has been under review by the State Department for the past three years.

News reports also indicate Canada may build a new pipeline from Alberta to the West coast of Canada and sell this oil to China and the world.

While it is interesting to see the odd political bedfellows created by this controversy, it is important to remember that the Keystone XL pipeline would not offer any direct benefit to the merit shop contracting community due to the discriminatory PLA voluntarily mandated by TransCanada.

TheTruthAboutPLAs.com will be following this project closely.

UPDATE: The Laborers’ International Union Jan. 20 announced it will leave the Blue Green Alliance, a coalition of labor unions and environmental groups that advocates for environmentally friendly green jobs, over disagreements with other coalition members on the proposed Keystone XL pipeline.

The latest to do so is Anne Arundel County, MD, where local leaders adopted a ban on government-mandated PLAs on January 17.

Courtesy of Wikipedia

Maryland joins California, Texas and Pennsylvania as states in which local government entities have approved bans on these Big Labor handouts.  An increasing number of local leaders are starting to understand how Big Labor promises of PLA success usually lead to only cost overruns and discrimination against the vast majority of the construction workforce that chooses not to join a labor organization.

This ban on PLA mandates was enacted just one county away from the upcoming Cheltenham Youth Facility project in Prince George’s County, where Maryland leaders are attempting to become the first state or local government entity to procure a construction project with the Obama administration’s U.S. General Services Administration (GSA) PLA preference policy adopted in April 2010.

Here at TheTruthAboutPLAs.com, we thank Anne Arundel’s leaders for standing up for taxpayers and the local construction workforce.

The PLA mandate harms Washington’s experienced and skilled nonunion construction workforce and will discourage competition from qualified contractors that have successfully built federal projects in Washington and across the country without PLA mandates.  It will also needlessly increase costs.

According to an article in the Kitsap Sun, NAVFAC Northwest mandated a PLA after Sens. Maria Cantwell and Patty Murray, and Reps. Norm Dicks and Jay Inslee (all Democrats from Washington) wrote to the Navy in support of a PLA at the request of construction trades unions (“Navy to hire local workers for second explosives handling wharf,” 1/1/12):

The trades council contacted the area’s federal delegation — Sens. Patty Murray and Maria Cantwell and Reps. Norm Dicks and Jay Inslee — who wrote to the Navy supporting a PLA, Whetham said. Four trade council officials and seven from the Navy met in November to explore the benefits and arrived at cost savings and skilled labor.

According to information obtained from opensecrets.com, construction trades unions have donated the following political contributions totaling $814,375 to the four Washington Democrats who signed the letter:

Rep. Inslee:       $340,000   from 2000 – 2012
Rep. Dicks:       $183,125   from 1998 – 2012
Sen. Murray:     $279,250   from 1998 – 2012
Sen. Cantwell:   $ 12,000    from 2002 – 2012
Total:               $814,375

Is this PLA mandate the product of a crony contracting scheme by federal officials? 

Prior to mandating the PLA, NAVFAC Northwest did not consult with the merit shop contracting community about the negative impact of PLA mandates on qualified federal prime contractors, subcontractors and their skilled local employees.

First Navy PLA Mandate Under Obama Administration
This is the first PLA mandate on a Navy project since President Obama issued Executive Order 13502 on Feb. 6, 2009, just a few weeks after his inauguration. The order strongly encourages federal agencies to mandate PLAs on a case-by-case basis on federal construction projects exceeding $25 million in total costs.

As a result of Obama’s encouragement of federal PLA mandates, NAVFAC has issued several PLA surveys to the contracting community to determine if a PLA mandate will advance the economy and efficiency in federal procurement of numerous large-scale construction projects across the country.  ABC National and ABC members have responded to these PLA surveys.

NAVFAC Northwest did not issue a survey to evaluate if a PLA would be appropriate for this project.

In contrast, NAVFAC directly contacted ABC National and the merit shop contracting community for feedback on possible PLA mandates on other federal projects.

For example, after soliciting comments from ABC National and the contracting community in October 2010 concerning NAVFAC’s potential use of PLAs on billions of dollars worth of construction for Guam base realignment, NAVFAC elected not to mandate a PLA.

NAVFAC’s PLA Mandate Creates Inefficiencies
NAVFAC Northwest’s solicitation instructs qualified contractors invited by NAVFAC to bid on Phase 2 of the solicitation (the short-listed contractors) to negotiate a PLA with specific trade unions and submit an executed PLA within 10 days of the contract award.

NAVFAC supplied short-listed contractors with a pre-drafted PLA containing the terms and conditions NAVFAC already developed with specified construction trade unions and councils.

NAVFAC asked contractors to submit feedback on the pre-drafted PLA by Dec. 28. 

ABC advised short-listed contractors about the numerous problems with NAVFAC’s mandatory PLA language and cumbersome and inefficient procurement approach. Some of these concerns were submitted by short-listed contractors to NAVFAC.

NAVFAC is expected to review and share these comments with unions and provide contractors with a final PLA at a later date that they must use as the starting point in PLA negotiations.

Proposals from short-listed contractors are due Feb. 13. It is unclear when NAVFAC will award the contract, although it should be in early 2012.

Under this inefficient procurement process, it is possible for contractors to not know the terms and conditions of the executed PLA – which impacts labor costs and final bid costs – before submitting a final price proposal to NAVFAC.  If PLA negotiations are stalled by unions or NAVFAC does not supply the final terms of the pre-drafted PLA in time, contractors cannot submit an accurate price proposal.

In addition, the project could be delayed pending the outcome of the post-award PLA negotiations.  The project may have to be re-bid if the final agreement cannot be executed.

In 2010, a General Services Administration (GSA) project, the GSA Headquarters at 1800 F Street in Washington, D.C., suffered delays as a result of labor unions refusing to agree to the terms of a PLA the contractor presented and signed with other labor unions. Congressional testimony from GSA deputy administrator Susan Brita described this scenario, which also required the contractor to present an executed PLA within 10 days post-award.

Even regulatory comments  filed by Frank Dean, NAVFAC’s labor advisor, on the FAR Council’s proposed rule implementing Executive Order 13502 identify concerns with this inefficient post-award PLA procurement approach.

PLA Will Harm Local Nonunion Workforce and Small Businesses
From 2001 to 2009, when President George W. Bush’s Executive Orders 13202 and 13208 prohibited PLA mandates on federal and federally assisted construction projects, Washington’s skilled nonunion tradespeople constructed large-scale projects for the Navy, Army and other federal agencies absent a PLA mandate with no reported problems.

This union-favoring PLA is sure to serve as a barrier to new jobs for 84 percent of Washington’s private construction workforce and 86.9 percent of the U.S. construction workforce that has chosen not to join a construction labor union.

The Washington State Building and Construction Trades Council, AFL-CIO announced “construction labor on this project will be provided by Olympic Peninsula Building Trades and the Northwest Regional Council of the National Construction Alliance II (NWNCA),” and it is unlikely this project’s PLA will allow nonunion contractors to use few, if any, of the existing skilled nonunion employees they have invested training and resources in while employed at the company.

As this letter to the editor in the Kitsap Sun points out, if the PLA even allows nonunion construction workers to build this project, they will have to join a union and/or pay union dues and pay into union pension plans that they will never benefit from unless they join a union and meet vesting requirements.  The PLA results in a huge financial windfall for Big Labors coffers.

Favoritism for unionized construction workers is especially despicable because the construction industry is plagued by high unemployment in Washington and across the country. The number of construction workers employed in Washington in July 2011 was as sparse as the number of workers employed in Washington in August of 1997. Meanwhile, the U.S. construction industry is suffering from an unemployment rate of 16 percent as of December 2011. 

Don’t nonunion construction workers deserve a fair shot at new federal construction jobs?

Provisions in a PLA that force contractors to swap their existing workforce out for unfamiliar union labor is problematic for short-listed contractors that self-perform specific trade work, as well as subcontractors performing specialty trades.

This PLA mandate will make it difficult for short-listed contractors to meet NAVFAC’s small and disadvantaged business subcontracting targets because small businesses are traditionally not unionized:

Because building trades union membership is traditionally not diverse, a PLA mandate also may make it difficult for short-listed contractors to meet minority and women hiring goals set by the FAR’s Equal Opportunity and the Affirmative Action Compliance Requirements for Construction regulations required in federal construction contracts.

The PLA mandate’s inefficient procurement approach and pro-union language will discourage competition and increase costs to remaining competitors. Studies indicate PLA projects subject to prevailing wage laws increase construction costs between 12 percent and 18 percent compared to similar projects subject to prevailing wage laws not subject to government-mandated PLAs.

ABC Committed to Fair and Open Competition
ABC is opposed to government-mandated PLAs because these agreements typically restrict competition, increase costs, create delays, discriminate against nonunion employees and place merit shop contractors at a significant competitive disadvantage. Typical government-mandated PLAs are nothing more than anti-competitive schemes that end open and fair bidding on taxpayer-funded projects.

ABC has led industry opposition against federal PLA mandates, utilizing a variety of educational, public relations, grassroots, political and legal strategies to ensure fair and open competition on taxpayer-funded construction projects.

ABC has helped ABC member contractors file bid protests against federal PLA mandates during the Obama administration, which resulted in the removal of PLA mandates on a Veterans Affairs medical center in Pittsburgh, an Army Corps of Engineers project in Camden, N.J., a General Services Administration project in Washington, D.C., and a Department of Labor Job Corps Center in Manchester, N.H.     

ABC National also has responded to and helped ABC members participate in more than 50 PLA surveys issued by federal agencies to determine the feasibility of a PLA on a federal project.

ABC supports the Government Neutrality in Contracting Act (H.R. 735/S.119), cosponsored by 31 Senators and 172 Representatives and supported by a diverse industry coalition. The measure would eliminate waste and favoritism in federal contracting by prohibiting federal agencies and recipients of federal assistance from mandating PLAs, yet it would allow contractors to voluntarily enter into PLAs. This bill is good for taxpayers and the principles of free enterprise.

In 2011, House committees held two hearings in Washington and three field hearings on the negative consequences of federal PLA mandates and the benefits of H.R. 735.

Additional hearings and votes are expected in 2012.

Stay current on government-mandated PLAs and “Like” us on Facebook at www.facebook.com/TheTruthAboutPLAs and visit TheTruthAboutPLAs.com often.

To help fight this PLA and other federal PLA mandates, please contact Ben Brubeck or TheTruthAboutPLAs.com here.

The hearing was an opportunity for the committee to discuss how certain parties, particularly labor unions, exploit public participation in the CEQA process to achieve objectives unrelated to environmental protection. Assemblywoman Grove cited four specific recent examples of different unions (the Teamsters, the California Nurses Association, the United Food and Commercial Workers, and the Service Employees International Union) filing CEQA lawsuits to delay projects as leverage to extract labor concessions from businesses. She also noted that some businesses use CEQA to try to block potential competition.

Testifying on behalf of the sponsor, ABC of California Government Affairs Director Kevin Dayton discussed how certain construction trade unions abuse CEQA as a weapon to delay projects until the owner agrees to require contractors to sign a Project Labor Agreement with unions. The Western Electrical Contractors Association (WECA) and the Chambers of Commerce Alliance of Ventura & Santa Barbara were the other public supporters of the bill.

Assemblywoman Linda Halderman (R-Fresno) cited a specific example of a union using CEQA to try to force a contractor to sign a Project Labor Agreement to install solar panels at Fresno-Yosemite International Airport. Assemblyman Steve Knight (R-Palmdale) adeptly exposed the Attorney General’s double standard of opposing the additional responsibilities assigned in AB 598 while remaining silent about adopting additional responsibilities through other legislation.

Legitimate environmental organizations such as the Sierra Club and the Planning and Conservation League opposed the bill. The Teamsters and United Food and Commercial Workers (UFCW) union opposed the bill in writing but did not speak at the hearing. Democrats on the committee opposed the bill, but some of them (along with the Attorney General’s office) acknowledged that some parties abuse CEQA. Assemblyman Bill Monning (D-Santa Cruz) said nothing about how the Carpenters union used CEQA in a recent high-profile campaign to delay and ultimately derail the proposed La Bahia Hotel in Santa Cruz.

The committee defeated the bill on a 5-3 party-line vote: Democrats opposed, Republicans in support.

You can thank the following state legislators at these email addresses:

Assemblywoman Shannon Grove: Contact

Assemblywoman Linda Halderman: Contact

Assemblyman Steve Knight: Contact

Background on Assembly Bill 598: text, committee analysis

Some Recent News Media Coverage of CEQA Abuse: Bad Environment for Development? (Los Angeles Business Journal, July 18, 2011, via Central City Association of Los Angeles); Firms Turning to Environmental Law to Combat Rivals (Los Angeles Times, November 14, 2011).

As the release goes onto say, one of the mandates hindering job growth in the construction industry in New York is government-mandated project labor agreements (PLA).  PLA mandates on both state and local projects have been a regular problem for the construction industry in New York – particularly for the 72.5 percent of the workforce that chooses not to join a labor union.

These mandates have also been a problem for New York taxpayers.  A blatant example of how these Big Labor handouts hurt taxpayers occurred in the spring of 2011, where the NYS Department of Transportation tried and was ultimately successful in implementing a PLA mandate on an infrastructure project that disqualified a qualified contractor’s bid and cost taxpayers an addition $5 million in unnecessary construction costs.

As America climbs out of recession, it is vital that government entities use taxpayer funds as wisely as possible.  As far as we are concerned, rewarding union bosses for their political support by giving union contractors a leg up against their nonunion counterparts doesn’t seem like the best use of public money.

Like the ABC Empire State Chapter, we urge Gov. Cuomo to support the Public Construction Savings Act and put an end to government-mandated PLAs in New York.

The ABC Empire State Chapter press release from January 5 is below.

STATEMENT FROM ABC PRESIDENT STEPHEN LEFEBVRE ON GOV. CUOMO’S STATE OF THE STATE ADDRESS

I want to applaud the governor on his first year in office and wish him the best on the start of the 2012 Legislative Session. The plan he laid out today in his annual State of the State provided some bold initiatives to enhance government and improve the economy through investment in many areas that the construction industry is sure to help build. With any discussion of development I encourage the governor to seek out the best value possible for the money paid by New York’s hard-working taxpayers.

I urge Gov. Cuomo to unshackle the full economic potential of any government funded construction work from the unnecessary use of restrictive measures such as mandatory Project Labor Agreements (PLAs) that time and again have driven up the cost of public work projects in the Empire State. The governor should seek construction mandate relief in the form of the Public Construction Savings Act (S.4121/A.7855) which would allow government entities to bid public construction in a way that promotes unfettered competition among contractors seeking public work to the benefit of taxpayers.

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The Empire State Chapter of Associated Builders and Contractors (“ABC”) represents over 550 merit-shop construction contractors and subcontractors employing thousands of workers throughout the State of New York.

Update 1/1/12: Sen. Mark Obenshain introduced companion legislation in the Virginia Senate, SB 242 (pdf). It is cosponsored by all 20 Senate GOP members. The Virginia Senate has 20 GOP and 20 Democrat Senators. Lieutenant Governor Bill Bolling (R) casts deciding votes. 

Click here to write your legislators and encourage them to support HB 33/SB 242.

HB 33/SB 242 ensures Virginia taxpayers get the best construction project at the best price and 96 percent of Virginia’s construction workforce (those who choose not to belong to a labor union) have a real shot at working on taxpayer funded projects.  It will also help stretch scarce tax dollars to meet Virginia’s transportation and infrastructure needs.

In 2011, Michigan, Maine, Tennessee, Arizona,  Louisiana, Iowa and Idaho enacted similar legislation and executive orders ensuring taxpayers get the best possible product at the best possible price. 

In July, 2011, the Wall Street Journal and the Boston Herald editorial boards applauded states for enacting fair and open competition measures that end “sweetheart deals with labor unions,” and “limit bids on construction projects to contractors that agree to union representation.”

State budget deficits and a 2009 President Obama executive order encouraging PLAs on federal projects and allowing their use on federally-assisted projects pushed states to take steps at preventing waste and discrimination in public contracting.

A total of 11 states have enacted legislation or executive orders prohibiting government-mandated PLAs on state and state-assisted projects to some degree.

This year, Democrats controlling Illinois and California state government enacted legislation encouraging the use of government-mandated PLAs. New Jersey and New York have existing laws enacted by Democrat legislatures and administrations encouraging anti-competitive and costly PLA mandates, while Washington has a pro-PLA executive order.  

If enacted, HB 33/SB 242 will prevent special interst handouts like the mandated PLA on Phase 2 of the $2.8 billion Dulles Metrorail Silver Line project Virginia is partially financing. TheTruthAboutPLAs.com covered this controversial project in great detail yesterday. It will increase competition, reduce costs and create job for Virginia’s construction industry.

The measure prevents the state and those procuring projects with state dollars from MANDATING PLAs.  Contractors would be free to voluntarily enter into PLAs, as is permitted by the National Labor Relations Act.

Update 12/15 and 12/19:
The Virginia Chamber of Commerce issued this press release Dec. 14 in support of HB 33.

Del. Comstock and Del. Hugo issued a Dec. 19 press release on HB 33.

Virginia Construction Industry Supports Legislation Ensuring Fair and Open Competition On Public Construction Contracts

Contact:      Angie Gutenson, Vice President, ABC-VA (703) 968-6205                     For Immediate Release
                     Ben Brubeck, PLA Expert, ABC National (703) 812-2042                        December 13, 2011

DULLES, VA – On behalf of its 660 Virginia merit shop employers, Associated Builders and Contractors (ABC-VA) supports the Fair and Open Competition in Government Contracting Act (HB 33) introduced on Monday by Virginia Delegate Barbara Comstock (R-34^th) and GOP Caucus Chairman Virginia Delegate Tim Hugo (R-40^th). HB 33 prohibits Virginia and recipients of state funding or assistance from requiring or prohibiting contractors to enter into union agreements, such as a project labor agreement (PLA), as a condition of winning state and state-assisted construction contracts. 

“This commonsense legislation will reduce costs, increase competition and create jobs for qualified Virginia businesses and their skilled local employees on state and state-funded construction projects,” said ABC-VA President Patrick Dean. “It will ensure Virginia’s infrastructure dollars are spent wisely and support projects subject to fair and open competition, which ultimately will benefit taxpayers by funding more construction projects and creating more jobs for Virginians.

“Unfortunately, unaccountable political appointees controlled by special interests have been steering taxpayer-funded construction contracts to their political supporters by mandating union-favoring PLAs on projects funded by the state,” said Dean. “This special interest favoritism has no place in Virginia.

“If enacted, this measure would prohibit state-assisted construction projects, such as Phase 2 of the multi-billion dollar Dulles Metrorail Silver line project, from mandating unwanted anti-competitive and costly PLAs on contractors,” said Dean. “Why should Virginia’s financial stakeholders pay for the majority of this project when the PLA mandated on the prime contractor by MWAA ensures discrimination against 96 percent of Virginia’s construction workforce – those who have freely decided not to join a union? Local workers will lose jobs to out-of-state union members given hiring priority via the PLA.”   

“HB 33 simply ensures the government remains neutral with respect to a qualified contractor’s relationship with labor unions and gets the government out of the business of picking winners and losers through cronyism,” said Ben Brubeck, ABC National’s Director of Labor and Federal Procurement. “To date, 11 states have enacted similar measures, resulting in reduced costs, increased job creation and a level playing field encouraging robust competition from qualified nonunion and union contractors.

“HB 33 allows contractors to voluntarily enter into union agreements like PLAs,” said Brubeck. “Unlike a government-mandated PLA, it gives contractors a real choice, which can only increase competition and help taxpayers get the best possible product at the best possible price.”

Learn more about anti-competitive and costly PLAs and the Silver Line Metrorail controversy at www.TheTruthAboutPLAs.com.

###

About ABC — Associated Builders and Contractors is a national association with 75 chapters representing more than 23,000 merit shop construction and construction-related firms with nearly two million employees. Founded in 1972, the ABC Virginia Chapter is the only association in Virginia dedicated to representing the interests of merit shop contractors. ABC VA represents all firms in the commercial construction industry equally. Membership represents the full range of contractors, from small family-owned subcontractors to global general contracting firms, as well as, materials suppliers and industry professionals. The ABC Virginia Chapter has offices in Chantilly, Richmond and Hampton Roads. 

What level of protection will Virginia’s right-to-work law offer to the state’s nonunion construction workers?

Virginia taxpayers, public officials, businesses and construction workers deserve answers and public officials haven’t offered much clarity.

TheTruthAboutPLAs.com has monitored this project closely since the Metropolitan Washington Airports Authority (MWAA) passed an April 6, 2011, resolution requiring prime contractors to agree to a PLA similar to the agreement voluntarily entered into by the Phase 1 prime contractor, Dulles Transit Partners.

About the Silver Line
The Silver Line is a $6 billion project involving the construction of 23 miles of new Metro track.  

Phase 1 of the Silver Line is under construction and runs from the Orange Line’s existing West Falls Church station through Tysons Corner to Reston. It is expected to open late next year, but contractors and MWAA officials have said it could be delayed and is as much as $150 million over budget.

Phase 2 of the Silver Line will run from Wiehle Avenue in Reston to just past Dulles International Airport in Loudoun County. 

According to the original funding agreement, Phase 2 is financed by MWAA (4.1 percent), Loudoun County (4.8 percent), Fairfax County (16.1 percent) and the Commonwealth of Virginia ($275 million). Toll revenue generated from the MWAA-owned and operated Dulles Toll Road will fund the remainder of Phase 2.

MWAA says estimated revenue needed to fund Phase 2 construction will be similar to the toll schedule published in the July 2009 Wilbur Smith Associates traffic and toll revenue report commissioned by MWAA, which predicts Dulles Toll Road motorists will pay $16.75 each way in 2047 (see table 6-3 on p. 124). An updated study is expected to be completed in the next few months.

Broad Opposition to the Phase 2 PLA Mandate
Opposition to MWAA’s PLA mandate include the Loudoun County Board of Supervisors; Fairfax County Board of Supervisors; local, state and elected officials; The Washington Post editorial board; The Washington Examiner editorial board; Fairfax Chamber of Commerce; Dulles Regional Chamber of Commerce; Purcellville Business and Professional Association; a coalition of 13 of Northern Virginia’s leading business groups and associations; Women Construction Owners and Executives; and former Virginia Governor and U.S. Senator George Allen, who is running for the U.S. Senate in Virginia (see summary of entities opposing the Phase 2 PLA mandate here and here).

They know a PLA mandate will ensure discrimination against Virginia’s nonunion construction workforce (96 percent of Virginia’s construction workforce does not belong to a union) and reduce competition from qualified prime contractors opposed to PLA mandates.

An April 21 letter from ABC Virginia to MWAA explained how reduced competition and costly pro-union rules and fees within the proposed Phase 2 PLA circulated by MWAA earlier this year will increase Phase 2 bid costs by hundreds of millions of dollars and discriminate against Virginia’s construction workforce.

 
Unanticipated costs are problematic because financial stakeholders balked at Phase 2’s rising expenses, which ballooned to $3.825 billion – an increase of more than $1.8 billion (53 percent) compared to Phase 2’s initial $2.5 billion budget. This summer, U.S. Department of Transportation Secretary Ray LaHood was called in to negotiate an agreement between MWAA and state and local stakeholders to reduce costs and get the project back on track.

Is the Silver Line Back on Track?
On Nov.16, 2011, MWAA signed Resolution No. 11-33 approving a new Memorandum of Agreement (MOA) between the project’s financial stakeholders modifying the Phase 2 scope, financing structure and budget. It trims the Phase 2 costs from $3.825 billion to an estimated $2.8 billion, although these are only rough estimates at this stage in the project.

The MOA says the Commonwealth of Virginia agreed to contribute an additional $150 million, provided the funds are appropriated by the General Assembly and allocated by the Commonwealth Transportation Board in 2012.

The MOA places Loudoun County in charge of financing and building parking garages included in the original Phase 2 project plan. Likewise, Fairfax County must build two garages and a new Route 28 Metro station. These cost shifts from the original Phase 2 plan will be subsidized by federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loans the localities can apply for in the coming months. 

Loudoun County and Fairfax County recently agreed to the MOA, which gives them 90 days to opt out of the project after Phase 2 preliminary engineering, financing and cost estimates are released in early 2012. 

In short, Phase 2 will face many financial hurdles in the coming months, although the project is in better shape now that costs have been trimmed and the local stakeholders have been given a larger role in planning the project.

The Facts About the Phase 2 PLA Mandate
Section 3.9 of the MOA refers to a “separate agreement on the matter of Project Labor Agreements for Phase 2” reached by MWAA and the Commonwealth of Virginia. While the PLA agreement (known as the PLA MOU) clarifies a PLA will not be mandated on Phase 2 subcontractors, it will not discriminate against nonunion contractors, and it will comply with Virginia’s Right to Work and contracting laws, Section 3 clearly states the prime contractor is subject to a PLA mandate: 

“(3) no prime contractor working or seeking to work on Phase 2 shall be required, in order to secure or maintain a phase 2 prime contract, to become a party to any labor agreement other than the Phase 2 PLA; and” [emphasis added] 

However, there remains great confusion about whether Phase 2 prime contractors are subject to a PLA mandate. 

The confusion may be fueled in part because it is unclear if the Commonwealth of Virginia understands the PLA MOU. Thelma Drake, director of the Virginia Department of Rail and Public Transportation, signed the PLA MOU along with Commonwealth Secretary of Transportation Sean Connaughton. She said this about the Phase 2 PLA: 

“The PLA is not mandatory,” Drake says. “You cannot require your prime to sign a PLA.” 

For example, an article in Leesburg Today reported the PLA was optional and the controversy was resolved: 

As part of the MOA, the state government also will be contributing more money, as has been pushed by many local leaders, up to $150 million, now [sic] controversy over MWAA’s plan to require a Project Labor Agreement has been resolved. The project plan, as originally created, had a requirement for labor workers to be used for the entirety of the second phase of the project. In Phase 1, the option is left to the individual contractor, something some leaders pushed for in the second phase. 

In an agreement worked out directly between the state and the MWAA, the use of union contractors will be optional. “Neither will be discriminated against and will allow for all to participate in the bidding on the project,” York said, noting it was similar to the approach used in Phase 1. 

The Loudoun Times reported the MOU “remove[d] the use of mandatory project labor agreements,” and “Virginia Gov. Bob McDonnell also agreed to give $150 million to help finance the rail extension as long as mandatory project labor agreements were eliminated.”

The truth is that it is a PLA mandate. A prime contractor must sign a union PLA in order to win Phase 2 construction contracts as a prime contractor.

A Nov. 16 Washington Times article, “Dulles Metrorail Phase 2 is right to work,” examines the impact of MWAA’s PLA mandate and PLA MOU with respect to Virginia’s right-to-work law:

Still, union-friendly labor agreements are a thorny issue in states such as Virginia that have right-to-work laws, under which workers cannot be required to join a union as a condition of employment. 

“This agreement ensures that Virginia’s right-to-work laws will apply to every aspect of Phase 2,” said Secretary of Transportation Sean Connaughton. “It also will ensure that no one — contractors or subcontractors — will be forced to take on unions. It will also subject [Phase 2] to Virginia law. So we think it’s a major step forward from Phase 1.”

While Virginia believes the MOU offers prime contractors a measure of protection against forced unionism, Virginia has still given the green light for MWAA to mandate a PLA. This is problematic.

The public doesn’t know the final terms and conditions of the PLA now and may not know these terms until Virginia and local financial stakeholders have committed funding to the project. By then it may be too late to ensure Virginia taxpayers, workers and contractors maximize their investment in this project. 

Right to Work and PLAs
The truth is that the PLA MOU and Virginia’s right-to-work law do not eliminate all of the anti-competitive and costly provisions of the draft Phase 2 PLA identified by ABC Virginia’s April 21 letter to MWAA. Virginia’s right-to-work law grants all employees the right to refrain from being a full union member and to pay either no or reduced union dues. Second, if the PLA requires all employees to be hired through an exclusive union hiring hall, the hiring hall may not discriminate between union and nonunion workers. However, typical union hiring hall rules give preferential treatment to out-of-work union members from all over the country ahead of qualified nonunion workers from Virginia seeking jobs on Phase 2. Officials don’t understand how this process works and allows unions to police themselves. It is rife with discrimination. 

In addition, despite a right-to-work law, the PLA may still force contractors to pay into union slush funds used to harm merit shop contractors, force contractors and employees to follow archaic and inefficient union work rules, require contractors to only use union apprentices, and force unwanted union representation on employees for the life of the project.

The biggest concern most contractors have about PLA mandates is how these agreements typically require contractors to pay into underfunded multi-employer pension plans, exposing their businesses to significant financial liability (e.g., the Sheet Metal Workers National Pension fund is in critical status, according to the U.S. Department of Labor) and preventing workers from receiving retirement benefits rightfully earned. Employees will never benefit from fringe benefit contributions employers make to union pension and benefit plans unless the employee joins a union and meets vesting requirements. In order to ensure employees accumulate benefits they can eventually keep, contractors pay into their own existing benefit plans, artificially inflating their labor costs and making their bid uncompetitive against union firms free from double benefit costs. (This 2009 report by Dr. McGowan explains the anti-competitive and costly impact of pension contribution mandates in PLAs.)  

Learn more about PLAs and right-to-work laws at TheTruthAboutPLAs.com blog post, Understanding PLAs in Right to Work States.

In short, Virginia’s right-to-work law does not make this government-mandated PLA any less offensive, nor will it increase competition.
 
Reduced Competition Will Increase Costs
Unfortunately, when faced with a government-mandated PLA, nonunion contractors and their existing workforces are presented with a false choice of agreeing to the union-favoring PLA in order to win a contract and perform work on Phase 2, or not pursuing work at all.

A reduction of two or three bidders because of MWAA’s PLA mandate could increase costs by hundreds of millions of dollars, depending on the final Phase 2 construction costs.

With strong evidence demonstrating that reduced competition increases bid costs, why would MWAA mandate an anti-competitive scheme that undermines the spirit of Virginia’s right-to-work law and has the potential to needlessly increase bid costs?

The answer, of course, is politics. 

Politics and Corruption at MWAA
Unions overwhelmingly give campaign contributions to Democrats, which is a key reason why MWAA members appointed by Democrats or affiliated with the party supported MWAA’s PLA mandate. The public officials who appointed them know they will eventually benefit from union political contributions resulting from union job creation through this PLA. It is not surprising that MWAA board members with union ties orchestrated MWAA’s PLA mandate.

The Washington Examiner reported that Virginia GOP delegates Tim Hugo, Barbara Comstock and Thomas Greason sent a letter requesting that Virginia Attorney General Ken Cuccinelli (R) investigate the Phase 2 PLA mandate and possible ethics violation of MWAA board member Dennis Martire because he advocated for the Phase 2 PLA mandate that financially benefits his employer, the Laborers International Union of North America (LiUNA), (“Virginia lawmaker calls for probe of Dulles Rail labor pact,” 5/28).

Martire, appointed by Virginia Gov. Tim Kaine (D), is chairman of MWAA’s Planning and Construction Committee. He also is employed as the vice president and Mid-Atlantic regional manager of LiUNA with an annual salary of $266,000, plus a generous benefit and pension package totaling $336,270, according to the most recent financial disclosure filings by LiUNA.

According to the Virginia Public Access Project, the Laborers Mid-Atlantic Regional Organizing Coalition has donated $419,050 to candidates and political action committees since 2007 — overwhelmingly to Democratic candidates. Creigh Deeds, unsuccessful candidate for governor, scooped up $250,000. Moving Virginia Forward, Tim Kaine’s PAC, garnered $55,000. LiUNA kicked in another $200,000 to the Democratic Party of Virginia in 2008. Martire was appointed by Gov. Kaine (D), in July 2009.

Martire’s employer, LiUNA, and its local affiliates (such as LiUNA Local 657, which bused in protestors to disrupt the April 18, 2011, press conference held by U.S. Rep. Frank Wolf and other local politicians to address concerns about Phase 2 of the project) will receive a significant financial windfall from the Phase 2 PLA that could easily exceed millions of dollars. 

The PLA mandate will likely require the prime contractor to hire primarily union labor dispatched from LiUNA hiring halls (and union members performing labor in other trades from their respective union hiring halls) and force contractors to contribute into union slush funds and pension and benefit plans.

Martire’s MWAAA bio lists him as “a former Trustee to the National Heavy and Highway Alliance” (the same group that drafted the proposed Phase 2 PLA and the Phase 1 PLA voluntarily signed by DTP). Martire is also chairman of the Mid-Atlantic Laborers’ Employers Cooperation and Education Trust (LECET), which is a union fund contractors/employees are forced to pay into under the current LiUNA collective bargaining agreement that contractors would have to follow under the PLA.

The wage and benefit schedule contained in the current LiUNA collective bargaining agreement for LIUNA Local 657 and Local 11 (the LiUNA locals with jurisdiction over this project) highlight the benefit rates and plans contractors must pay into on behalf of their laborer employees if they are party to this agreement. Appendix A (page 20) lists the following hourly contributions contractors are required to pay to union funds by contractors (after collecting the hourly deductions from each laborer’s paycheck):

Pension: $1.99
Health and Welfare: $3.01
Training: $0.25
LECET: $0.10
CCC Industry Fund: $0.08
Total:  $5.43 per hour

When Martire pushed for the PLA to apply to Phase 2 prime contractors and subcontractors earlier this year, this excel worksheet estimated the following financial windfall LiUNA and various LiUNA-affiliated funds will receive from a Phase 2 PLA mandate:

Pension: $21.544 million
Health and Welfare: $32.587 million
Training: $2.706 million
LECET: $1.082 million
CCC Industry Fund: $833,113.22
Dues: $8.081 million
Contractors Pay to CILM: $937,500 max.

This calculation doesn’t factor in benefits other unions besides LiUNA will receive as a result of the PLA mandate.

The amount of jobs created for union members and money flowing into union funds likely will be less because the recently executed PLA MOU states the PLA does not apply to subcontractors. However, MWAA will require the prime contractor to self-perform a significant amount of Phase 2 work, meaning a large portion of the Phase 2 project would be subject to a PLA. Spokespeople for DTP said they have self-performed 65 percent of Phase 1. 

(Note: Merit shop subcontractors were exempted from signing the Phase 1 PLA agreement and MWAA has reported 60 percent of Phase 1 contracts have been awarded to nonunion shops that did not sign the Phase 2 PLA. This means the strong or poor performance of Phase 1 construction cannot be attributed to the voluntary PLA.) 

In short, the total number of Phase 2 construction jobs created for union members and money paid to union funds is unknown until the project is completed, but they will certainly benefit from this PLA mandate.

While Martire’s conflict of interest is obvious, others have raised questions about a possible conflict of interest by MWAA board member Michael Curto, who was appointed by Maryland Gov. Martin O’Malley (D) in January 2011. MWAA board members recently elected Curto as their 2012 chair. Curto’s employer, Patton Boggs, has received between $1.25 million and $1.44 million per year since 2005 from Martire’s employer, LiUNA, according to recent union financial disclosure reports filed with the U.S. Department of Labor. Curto’s bio says he is a member of the firm’s Management Committee and head of the firm’s ERISA and Employee Benefits practice, representing corporate, nonprofit and government sponsors of pension and welfare benefit plans, including the type of union Taft-Hartley pension plans contractors would be forced to pay into under this PLA.

Curto introduced the PLA resolution, and Martire and Curto advocated for the resolution at the April, 6 2011, MWAA board meeting. Curto and Martire sit on the MWAA committees in charge of implementing the Phase 2 PLA, which is to be authorized by MWAA’s CEO and director. Both Curto and Martire voted for the resolution on April 6, 2011, when it passed 11-2. Both spoke to other MWAA board members and staff in support of this measure outside of MWAA meetings.

Martire authored this paper encouraging the use of government-mandated PLAs.

Despite all of these direct and indirect conflicts of interest, MWAA continues to defend Martire’s advocacy of a government-mandated PLA and denies he violated MWAA’s code of ethical responsibilities.

As the evidence demonstrates, at the very least, Martire should have excused himself from engaging in this decision, as this self-dealing undermines the public trust given to MWAA. MWAA should reveal to the public documents exonerating Martire and Curto from any wrongdoing.

Recent efforts to reform the MWAA board and an ongoing U.S. Department of Transportation Office of Inspector General audit of MWAA may prevent future ethical conflicts, but the damage is already done.

Taxpayers Benefit From Free and Open Competition
Taxpayers win with open competition free from anti-competitive and costly PLA mandates. Just look at taxpayer-funded projects free from government-mandated PLAs like the Wilson Bridge, the post- 9/11 renovations to the Pentagon, the Air Force memorial and many other high-profile projects in Virginia and the Washington, D.C. metro area.

The Commonwealth of Virginia, Loudoun County and Fairfax County would benefit from knowing the final terms and conditions of the Phase 2 PLA and its impact on competition and cost before agreeing to fund this project. Phase 2 of the Silver Line already has the potential to be Virginia’s Big Dig. Why not take the appropriate measures to protect taxpayers, create jobs for Virginians, increase competition, reduce costs and eradicate corruption at MWAA by ditching this dreadful PLA mandate policy?

Is it right for a government to require contractors to make employee fringe benefit payments to union-managed trust funds and obtain their workers from a union hiring hall? What kind of thinking leads a representative of the People to require workers to pay initiation fees and dues to a union as a condition of working on a public project? What kind of community leader wants to build four taxpayer-funded schools for the cost of five, in order to curry favor with a special interest group?

Project Labor Agreements are associated with fiscal irresponsibility and mismanagement, internal corruption, and lack of accountability to the people who pay taxes for the government to provide services. Citizens abdicate their responsibilities to oversee their local governments. As a result, unions fill the resulting political vacuum and attract ambitious people who see unions as a vehicle to attain personal power and position.

Arguments based on reason and common sense have no power in this kind of environment, where only scandals earn public attention.

Today’s Exhibit A is the City of San Fernando, near Los Angeles.

The City of San Fernando was the first municipality in California to require a PLA for all public works projects. On September 19, 2005, the San Fernando City Council voted 5-0 to require all construction contractors to sign a Project Labor Agreement with unions for prime contracts worth $150,000 or more and specialty contracts worth $25,000 or more. These project cost thresholds are unusually low, indicating that representatives of the city made little effort to engage in credible negotiations with union leaders to develop the PLA.

Voting for the PLA in 2005 were council members Julie Ruelas, Nury Martinez, Steven Veres, José Hernández, and Maribel De La Torre. So what happened to them?

San Fernando voters recalled José Hernández and Julie Ruelas on January 13, 2009.

Nury Martinez was elected in 2009 to the board of the Los Angeles Unified School District, with endorsements from the Los Angeles/Orange Counties Building & Construction Trades Council and the Los Angeles County Federation of Labor.

Steven Veres was elected in 2011 to the board of the Los Angeles Community College District, with endorsements from the Los Angeles/Orange Counties Building & Construction Trades Council and the Los Angeles County Federation of Labor.

Only Maribel De La Torre remains on the San Fernando City Council. At the November 21, 2011 city council meeting, she was entangled in a spectacle that is bizarre, even by California standards.

Meanwhile, the city continues to require its contractors to sign a Project Labor Agreement to work on taxpayer-funded city construction. Business as usual.

Postscript: Today’s Exhibit B on Project Labor Agreements and Moral Breakdown…

Inquiry Targets Two Contractors on L.A. Community Colleges Project – Los Angeles Times – December 1, 2011

“The D.A.’s probe centers on Los Angeles Community College District allegations that the firms submitted fraudulent billings for Mission College work, part of a $5.7-billion construction program.”

According to Philly’s press release, the order does not mandate PLAs on all projects, but it creates a PLA evaluation procedure that opens the door to waste and discrimination during procurement of city construction contracts:

“City departments and agencies will refer projects appropriate for a PLA above five million in estimated construction costs to the Mayor’s Office, which will determine the feasibility of a PLA. The executive order establishes the Advisory Committee for Project Labor Agreements, which will monitor and review all PLAs and will make periodic evaluations of the use of PLAs. The members of the Committee are the Mayor’s Chief of Staff, the City Solicitor, Managing Director, Director of Finance, Deputy Mayor for Transportation and Utilities, and Deputy Mayor for Economic Development.”

The press release claims the executive order will lead to government-mandated PLAs that can prevent strikes, save taxpayer dollars and lead to increased minority and Philadelphia resident participation on construction projects funded by local tax dollars.

A press release (pdf) issued yesterday by ABC Eastern Pennsylvania opposed Mayor Nutter’s pro-PLA executive order. And for good reason. TheTruthAboutPLAs.com readers know how government-mandated PLAs do not prevent strikes, reduce costs, increase competition from qualified bidders or, encourage employment of minorities and women tradespeople. Instead, they serve as a barrier to contracts for minority and disadvantaged businesses, and fail to create meaningful local hiring.

More from ABC Eastern PA’s press release:

ABC objects to the use of government-mandated PLAs on any taxpayer-funded construction project.

”Mayor Nutter’s executive order is discriminatory and costly. Government-mandated PLAs effectively preclude a majority of qualified contractors and their local employees from building construction projects funded by their tax dollars,” said Jeff Zeh, president and CEO of ABC Eastern Pennsylvania. “PLAs are only promoted by construction trade unions and their allies in an effort to end open, fair and competitive bidding, thereby providing unions with a workforce monopoly on construction projects.”

“This is nothing more than play to pay politics at its best in Philadelphia,” said Zeh. “The public should hold the Mayor and new Advisory Committee on PLAs accountable for any PLA mandates as these schemes will undoubtedly restrict competition, increase costs and unfairly cater to narrow special interests.”

Why the Reversal in PLA Policy, Mayor Nutter?
Few media outlets have covered this new executive order or questioned the reasoning behind Mayor Nutter’s sudden reversal of his position on government-mandated PLAs.

Journalists need to ask if this is the best solution for taxpayers, minorities and residents. Is this flip flop the result of Philly trade unions becoming more inclusive and less discriminatory, or is this standard Philly pay-to-play politics now that Mayor Nutter was elected for a second term?

Big Labor Causes Discrimination, Waste and Headaches for Philly
For years, Philadelphia was subjected to a pro-PLA bias on city-funded construction projects, starting with Executive Order No. 5-95, signed by Mayor Ed Rendell (D), who served as Pennsylvania’s governor for two terms and pushed government-mandated PLAs on construction projects built and funded by the commonwealth through the Department of General Services.

Taxpayers are also hurt by Big Labor’s presence in Philly’s residential construction market.  To put the negative impact of Philly’s construction unions on city residents into perspective, a 2010 construction industry report suggested modular homes as a solution to Philadelphia’s urban blight and run down neighborhoods because of Philly’s high construction labor costs.

The report said:

“Philadelphia’s construction costs are the fourth highest of any major city in the nation and 18 percent above the national average for all United States communities. The city’s house values—the price for which homes can be sold —are the third lowest of any major city in the nation and are 40 percent below the national average. As a result, construction costs often exceed the prices of new homes. This makes government subsidy a prerequisite for home building in most Philadelphia neighborhoods to fill the gap between building costs and the sales price of a home. High labor costs, 39 percent above the national average, drive the construction industry’s out-of-scale cost structure. These labor costs make up over half the total cost of an average project in Philadelphia.”

Big Labor’s stranglehold on Philly’s government and construction market also has wasted billions of dollars in the commercial and publicly funded construction markets. Embarrassments like the construction trade unions almost running MTV’s Real World out of town for using nonunion labor to build the cast’s trendy home, and unions forcing the Comcast Tower developers to install a second set of plumbing pipes because of a union dispute over the use of environmentally friendly PVC pipes and flushless urinals because they require less labor to install and less maintenance during the building’s lifespan, are too common. And then there is the infamous Dec. 2007 incident in which an African-American union construction worker from the Operating Engineers Local 542 in Fort Washington, Pa., (which has a storied history of choking diversity since at least 1971) complained that another construction worker from the glaziers’ union brandished a noose while working at the city’s Comcast Center.

The noose incident sparked a demonstration by African-American construction workers in City Center and compelled  the Philadelphia City Council to challenge the unions’ pattern of racism in 2007 and 2008. City Council members were outraged by constituent complaints, high city unemployment, and the lack of diversity in Philadelphia’s construction trade unions. Minorities and local residents have been shut out of the trade unions for decades (remember Nixon’s Philadelphia Plan of 1967) and weren’t hired on recent union-controlled projects funded by the city. Despite the fact that almost 80 percent of Pennsylvania’s private construction workforce does not belong to a union, local nonunion contractors and qualified workers complained they’ve been prevented from working on Philadelphia projects because of the city’s pro-PLA policy and other measures designed to steer contracts to union contractors and union labor who have installed pro-union Democrat allies in all levels of government.  At the time, City Council members and Mayor-elect Nutter called it “economic apartheid” for Philly’s constituents.

In early 2008, Tom Ferrick Jr., the Philadelphia Inquirer’s resident investigative journalist, tirelessly researched and bravely brought these facts to light:

“The building-trades unions – despite nearly three decades of effort to the contrary – remain all-male and overwhelmingly white.

Data I have analyzed recently indicate that only one craft is majority black and Latino: the laborers, who are at the bottom rung of the pay scale…

…Under federal regulations, OHCD must keep information on the home addresses, race and sex of workers who work on any government-subsidized project.

The union projects covered by the OHCD data totaled $514 million and involved 10,748 workers.

The nonunion projects – understandably – added up to much less. They totaled $39 million and involved 992 workers.

But the majority of workers in these nonunion projects were minorities: 72 percent, to be exact. And 71 percent lived in the city. Only 2 percent were women.”

This packet of articles, including Ferrick’s columns, document the Philly PLA controversy and tipping point, when Philadelphia City Council members demanded unions put more local and minority residents to work on the then estimated $700 million Convention Center renovation.

The project’s proposed PLA called for 13 percent of the workers to be minorities. The council wanted it at 50 percent. When the unions refused, the city threatened to open the Philadelphia Convention Center renovation project to competition from nonunion contractors by exempting them from having to agree to the union-only PLA as a condition of winning a contract.  The city demanded that trade unions open up their books and reveal the demographics of their membership. Two unions refused, but those that begrudgingly complied (or else they would lose their beloved PLA – their tool to obtain a labor monopoly on the Convention Center project) revealed results supporting Ferrick’s research: Philadelphia construction trade unions are not diverse and their members are not city residents.

The Philadelphia Daily News ran this article Feb. 5, 2008:

A breakdown of building-trades info that ended standoff

Here’s a breakdown of the 11 building-trades unions that provided membership data to City Council:

* Asbestos Workers: 6 percent minorities and women, 19 percent city residents. Among apprentices, 9 percent minorities and women, 35 percent city residents.
* Bricklayers: 20 percent minorities and women, 26 percent city residents. Among apprentices, 25 percent minorities and women, 59 percent city residents.
* Cement Masons: 27 percent minorities and women, 42 percent city residents. Among apprentices, 45 percent minorities and women, 64 percent city residents.
* Elevator Constructors: 5 percent minorities and women, 9 percent city residents. Apprentice data not provided.
* Ironworkers: 19 percent minorities and women, 32 percent city residents. Among apprentices, 24 percent minorities and women, 47 percent city residents.
* Painters: 7 percent minorities and women, 21 percent city residents. Among apprentices, 8 percent minorities and women, 33 percent city residents.
* Plumbers: 5 percent minorities and women, 29 percent city residents. Apprenticeship data not provided.
* Sheet Metal Workers: 14 percent minorities and women, 30 percent city residents. Among apprentices, 23 percent minorities and women, 56 percent city residents.
* Sprinkler Fitters: 6 percent minorities and women, 23 percent city residents. Among apprentices, 11 percent minorities and women, 40 percent city residents.
* Steamfitters: 4 percent minorities and women, 14 percent city residents. Among apprentices, 9 percent minorities and women, 25 percent city residents.
* Laborers: 91 percent minorities and women, 73 percent city residents.

- Dave Davies

Pitiful.  Plus, the data cannot be independently verified and unions failed to accurately report their exact demographics. For example, nobody knows how many individual black AND local members are in the plumbers union. Two major unions, the IBEW local 98 and the carpenters local union, refused to turn over data. But somehow, it was good enough for the City Council.

Politics Stifled Real Reform
Eventually, the city was pressured by Gov. Ed Rendell to cut a deal. The unions were given their anti-competitive PLA and the city received its unenforceable minority and local hiring ”goals” on the Convention Center. Unions were forced to make their best efforts to hire a Convention Center workforce in which 50 percent of workers were Philadelphia residents, 25 percent were African American, 10 percent Hispanic American, 10 percent women and 5 percent Asian. Of course, the Convention Center  exceeded the $700 million estimated cost by more than $86 million when it was completed in late February 2011.  Union abor costs have been blamed for the Convention Center’s difficulty in attracting customers. It is no surprise that reducing competition and mandating archaic union work rules through a PLA produces results like this. And it is unclear if Philly’s trade unions met the controversial hiring goals.

The deal also led to the creation of a new taskforce to address City Council’s concerns. The Mayor’s Advisory Commission on Construction Industry Diversity (MACCID), packed with union members and Big Labor cronies, was formed and tasked with creating a report that would produce solutions to fix the diversity problem festering within Philadelphia’s construction trade unions.

The MACCID produced this report in March 2009, which glossed over the fact that the power and culture of Big Labor is primarily responsible for preventing minority and local residents from obtaining new construction jobs. It offered few real and effective solutions and did not acknowledge Ferrick’s findings, which documented how the nonunion workforce boasted better diversity and local hire numbers. The report did not offer a cost-effective and viable solution: Philly should open competition from nonunion contractors, creating market pressure on unions to diversify faster and enact real reform.

The report and creation of the MACCID was mainly political window dressing offered to constituents less powerful than Big Labor to create the appearance of government addressing their complaints.

Have Philly Unions Suddenly Diversified?
That brings us to Mayor Nutter’s sudden appetite for government-mandated PLAs.

Have Philly’s trade unions produced measurable improvement in terms of putting minorities and local residents back to work?

Did Philly trade unions meet their hiring goals for the Convention Center?

Have unions really allowed the victims of discrimination to become members, despite record levels of construction industry unemployment, which peaked at 27 percent in Feb. of 2010?

Have the disenfranchised actually been hired by contractors, or are they toiling on union hiring hall out-of-work benches.

If there has been positive results, where is the data?

Why are local nonunion contractors and their skilled employees treated like second-class citizens in Philly?

Why did Mayor Nutter suddenly reverse course? How much money did the building trades contribute to his campaign in the last election cycle?

After sailing through the California legislature via a deceptive gut and amend legislative vehicle originally about tuberculosis screening, Governor Jerry Brown (D) signed SB 922 on Sunday to “prohibit” measures passed by local governments that ban government-mandated PLAs.

Local governments in California like the City of Fresno, Orange County, City of Chula Vista, City of Oceanside, Placer County, Palmdale Water District, San Diego County and Stanislaus County have passed measures prohibiting government-mandated PLAs on construction projects partially or completely funded by their government’s funds.  The measures permit contractors to voluntarily execute PLAs on local projects, as is permitted by the National Labor Relations Act and are intended to increase competition and deliver taxpayers the best possible construction project at the best possible price.

Popular ballot initiatives like San Diego County’s Proposition A, which voters overwhelmingly passed in November 2010 by a 75-24 margin, demonstrate that local taxpayers have had enough with these costly crony contracting PLA schemes. Faced with a threat that the people would put an end to union-favoring government-mandated PLAs, Big Labor called in a favor with Gov. Brown and Sacramento Democrats to pass SB 922.

Today the Wall Street Journal editorial board blasts Gov. Brown and Sacramento Democrats for trampeling the political will of local voters and supporting schemes that steer taxpayer-funded construction projects to prominent donors of the Democrat party (“Shovelling for Labor: California tries to raise the cost of construction projects,” 10/5/11):

We keep hearing that the U.S. needs better roads, bridges and other public works. But then why do politicians keep making it so much more expensive to build them? In the latest example, Governor Jerry Brown signed a bill on Sunday that attempts to prevent California cities from banning government-mandated project labor agreements, or PLAs.

PLAs are pre-hire agreements that contractors negotiate with labor unions. Construction firms must generally agree to play by union work rules, pay workers union wages, and contribute to union health and retirement funds—whether or not the employees they hire belong to a union. Non-union workers usually then have to join the union and pay union dues. According to some studies, PLAs raise costs by 12% to 18%, which explains why cash-strapped governments and tapped-out taxpayers are moving against them.

Arizona, Louisiana, Maine, Michigan and Tennessee have enacted laws in the last year prohibiting local governments and agencies, which often play into the hands of unions, from mandating PLAs. Voters in San Diego County and the San Diego suburbs of Chula Vista and Oceanside approved bans on government-mandated PLAs last November. The cities of San Diego and Sacramento are planning similar ballot measures next year.

Unions hate this trend, so they, er, encouraged Democrats who run the state legislature in Sacramento to pass the bill that Mr. Brown so obligingly signed. Democrats know that the National Labor Relations Act, a federal law, already prevents local governments from banning PLAs altogether. But what states and cities have been trying to do is prevent governments from requiring PLAs. Democrats hope the new law will deter cities from passing laws that keep the doors open to non-union contractors. Cities that ban government-mandated PLAs could face legal challenges and harassment from unions. The state could also refuse to fund their projects.

The California law is the first of its kind, and non-union construction firms fear that other labor-friendly state legislatures will follow Sacramento’s lead. If that happens, taxpayers will lose the limited ability they have to constrain costs and expedite construction. The result? Public projects that cost more and create fewer jobs, though they’ll be the kind of jobs that Democrats prefer—unionized, and thus with dues payable into campaign funds to elect more Democrats.

As usual, the Wall Street Journal editorial board’s analysis is correct.

It is unclear how SB 922 will impact current government-mandated PLA bans enacted by charter cities as well as the progress of ballot initiatives in the City of San Diego and City of Sacramento already underway.

What’s clear is that Big Labor’s chums in Sacramento have no qualms about choking free enterprise, soaking taxpayers with added construciton costs and smothering the will of the people in order to feed their campaign coffers with Big Labor’s campaign contributions.

Expect some legal wrangling, requests for legal opinions and lots of press in the coming weeks.

Update: Fox News covered Jerry Brown’s signing of this disastrous legislation on the October 7 edition of Fox and Friends: