The DOL’s Job Corps Center PLA was believed to be the first government-mandated PLA on a federal construction project since President Obama’s Executive Order 13502 was issued Feb. 6, 2009. 

An Associated Press (AP) story appeared in The New York Times, Boston Globe, WBZ38-TV (DE), The News Journal (DE), CBS 4 Denver, Yahoo! News, Seattle Post-Intelligencer, The Miami Herald, The Sacramento Bee, ABC News and other media outlets (“US Labor Dept Reviews NH Job Corps Building Terms, 11/12).

The piece mentions a statement by Republican Senator Judd Gregg, a vocal critic of the discriminatory and costly PLA on this project:

…Thursday, Republican Sen. Judd Gregg, who had lobbied for the Job Corps center, called the Labor Department’s recent decision ”just another unnecessary bureaucratic delay to the progress of this critically important project.”

”This setback clearly illustrates that the administration’s decision to discriminate against successful, independent construction firms because Granite State employees choose to work in a union-free environment simply does not hold water in New Hampshire,” he said.

In September, Gregg had urged the department to reconsider its decision, saying that only 8.7 percent of the construction workers in New Hampshire were unionized…

Additional coverage from the Concord Monitor, Job Corps Site Sits in Silence (11/12), explains why this project is so important to qualified New Hampshire contractors who oppose the discriminatory and costly PLA:

Kenneth Holmes, president of North Branch Construction, which filed the protest that lead to the bid delay, said he hoped his firm could qualify for the project. He said that he had laid off about 18 workers in the past couple of years because of the economy but that a big project such as the Job Corps center might require him to call some of them back.

“I’ve got 40 workers, and I’d like to put them to work,” Holmes said.

Additional coverage, besides the stories linked here and here, include:

• (BNA) Construction Labor Report: Labor Department Cancels Bid Solicitation Under Challenge in New Hampshire for PLA,” 11/12 (password required)
• The Nashua Telegraph: Labor Dept Examining Requirement for NH Jobs Corps, 11/12
• OpenMarket.org: Obama Administration Hits Brakes on Project Labor Agreement, 11/12

Let’s hope that the increased media attention will shed some light on Executive Order 13502 and PLAs, which are special interest giveaways to Big Labor and have no place in fair and effective public policy.

On 10/2, a discriminatory and costly PLA was officially included in the contract solicitation for the construction of a U.S. Department of Labor Job Corps Center in Manchester, New Hampshire.  The PLA is now the subject of a bid protest filed by a New Hampshire contractor with the Government Accountability Office (GAO). Below is a press release from ABC National.

ABC MEMBER FILES PROTEST AGAINST U.S. DEPARTMENT OF LABOR PROJECT LABOR AGREEMENT

CONTRACT DISCRIMINATES AGAINST MAJORITY OF NEW HAMPSHIRE’S CONSTRUCTION WORKFORCE

Contact: Gail Raiman, (703) 812-2073

Gerry Fritz, (703) 812-2062

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) member company North Branch Construction, a Concord, N.H.-based general contractor, Oct. 5 filed a bid protest with the Government Accountability Office (GAO) against the U.S. Department of Labor (DOL). The complaint accuses the DOL of violating federal law by mandating the use of a project labor agreement (PLA) – a controversial contract that strongly favors union-signatory contractors, increases the cost of construction up to 18 percent, and restricts competition from nonunion contractors and their qualified workforce – in its bid specifications for the construction of a federal DOL Job Corps center in Manchester, N.H.

The complaint states that the DOL’s inclusion of the PLA, “unduly restricts competition, is wholly unsupported and violates the Competition in Contracting Act, Executive Order 13502, the Small Business Act, and numerous procurement regulations,” and requests that the GAO order the DOL to remove any PLA requirement from the solicitation.

“PLAs are special interest handouts that deny taxpayers the accountability they deserve from government contracts,” said Ken Holmes, president of North Branch Construction. “This DOL PLA discriminates against New Hampshire’s qualified and experienced nonunion employees and businesses, such as North Branch Construction, who all deserve a fair opportunity to provide the public with the best construction product at the best price.”

A PLA is a contract that discourages competition from nonunion contractors and their nonunion employees by requiring a construction project to be awarded only to contractors and subcontractors that agree to recognize unions as the representatives of their employees on that job; use the union hall to obtain workers; obey the union’s restrictive apprenticeship and work rules; and contribute to union pension plans and other funds in which their employees will never benefit unless they join a union.

“More than 91 percent of New Hampshire’s construction workforce does not belong to a labor union, and since August 2008, New Hampshire’s construction workforce has suffered an 18.6 percent increase in unemployment,” said Holmes. “A PLA on this project is bad economic policy, especially because a PLA will unnecessarily increase the cost of construction of this taxpayer-funded project, and it will prevent nonunion workers from competing – possibly increasing unemployment in our state.”

The legal challenge is expected to heighten tensions over the federal government’s recent shift in federal procurement policy concerning the use of discriminatory and costly PLAs. On Feb. 6, President Obama signed Executive Order 13502, which repealed a 2001-2008 prohibition on federal PLAs and encourages agencies to require PLAs on federal construction projects whose total costs exceed $25 million. The Federal Acquisition Regulatory (FAR) Council is in the process of reviewing public comments on its controversial July 14 proposed rule that would implement Executive Order 13502 into federal procurement code. The DOL PLA is believed to be the first government-mandated PLA on a federal construction project since Executive Order 13502 was issued, despite the fact that a final rule has not been implemented by the FAR Council.

North Branch Construction’s bid protest is supported by ABC’s Construction Legal Rights Foundation and the ABC New Hampshire/Vermont Chapter.

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Associated Builders and Contractors (ABC) is a national association with 79 chapters representing 25,000 merit shop construction and construction-related firms with two million employees. Visit us at www.abc.org.

For more PLA-related information or to view the complaint, visit www.TheTruthAboutPLAs.com or www.abc.org/pla

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.