This support comes despite union claims that if Proposition A is adopted, the city risks losing future state construction funding due to a new state law signed by Gov. Jerry Brown last week.

Here are the highlights from the Union-Tribune‘s editorial announcing the paper’s support for Proposition A:

We acknowledge that Proposition A puts state construction funding at risk. Former Councilwoman Donna Frye points out that Mayor Jerry Sanders’ administration considered the funding threat significant enough that it was mentioned in a disclosure document for an upcoming bond offering.

But this bullying of local governments and taxpayers should not be accepted as a legitimate tactic, especially when the law used to execute the bullying is so susceptible to a court challenge.

Beyond that, the concern that Proposition A addresses – that union-allied elected city officials could began mandating PLAs – is real. Such a local union power play would be nothing new.

For four years, union-allied City Council members helped stall the implementation of a 2006 voter initiative meant to downsize city government by creating “managed competition” between private companies and government workers to provide city services. Union-allied members of the San Diego school board pushed through a version of a PLA for projects built with the $2.1 billion Proposition S bond approved in 2008 – after never mentioning their intentions during the campaign for the measure.

If we can pre-emptively block such power plays, let’s do so. The U-T San Diego Editorial Board urges a yes vote on Proposition A. Don’t let the bullies win.

Proposition A will help guarantee San Diego taxpayers the best construction at the best price.

To learn more, visit their website www.fairandopencompetition.com or their Facebook page.

Here are the highlights from The LA Times, with my emphasis added:

Gov. Jerry Brown announced on Saturday that the state’s deficit has ballooned to $16 billion, a huge increase over his $9.2-billion estimate in January.

<snip>

“This means we will have to go much further, and make cuts far greater, than I asked for at the beginning of the year,” Brown said in the video.

Lawmakers and others were hoping that a rebounding economy would help the state avoid steep cuts to social services. But revenue in April, the most important month of the year for income taxes, fell far short of expectations, leading to a shortfall of at least $3 billion in the current fiscal year.

The state has also spent $2.1 billion more than expected, according to the controller, further worsening California’s financial health.

Advocates involved in budget discussions say they expect deeper cuts to social services than Brown originally proposed in January. Union officials are also in negotiations with administration officials about ways to reduce state payroll costs, an issue that wasn’t on the table earlier this year.

Brown has said there will be even deeper cuts, mostly to public education, if voters do not improve tax hikes in November. He is seeking a quarter-cent increase in the state sales tax for four years and a seven-year hike on incomes of $250,000 or more that will range from 1 to 3 percentage points. He says the measure would raise $9 billion in the upcoming budget year.

What does this have to do with wasteful and discriminatory project labor agreements (PLAs)?

Regular readers of this blog know that many California leaders at the state and local levels go out of their way to mandate the use of PLAs on public construction.  Recently, Gov. Brown signed bills that attempt to overturn the will of local voters and elected officials in 12 California communities by nullifying PLA mandate bans in general law localities, and attempting to deprive charter cities of state funding for construction.

California has the most dire state budget situation in America, at a time when most states have already turned the corner.  This should not be a surprise to anyone.  Governing has consequences.  If government officials are comfortable spending nearly 20 percent more for public construction projects just to help out construction union bosses, it is obviously that getting value for the taxpayers’ money is not a priority.

And that is how you end up with a $16 billion budget deficit.

While Oklahoma does not have a history of problems with PLA mandates, this statute will ensure taxpayers continue to enjoy the value and accountability resulting from public construction that is awarded based on contractors’ ability to provide the best construction at the best price.

This law also ensures neither the state government nor local government entities will be in a position to pick winners and losers for public construction projects based on a contractor’s affiliation with a labor union.

Oklahoma’s leaders continue to be champions of open competition on public construction projects. If Gov. Fallin’s name sounds familiar to readers of this blog, it is because she spearheaded a proposal in former U.S. House Minority Whip Eric Cantor’s (R-Va.) YouCut program when she was a member of the U.S. House of Representatives. The YouCut website, launched in May 2010, featured a list of five proposals aimed at reducing federal spending. The public was encouraged to vote for the proposal it would most like to see eliminated by Congress. The YouCut program highlighted some of the ridiculous ways the federal government spends taxpayer money.

Gov. Fallin is not the only champion of free enterprise from the Sooner State. Oklahoma is also home to Congressman John Sullivan, who is the lead sponsor on the U.S. House version of The Government Neutrality in Contracting Act (H.R. 735). This bill would prohibit government-mandated PLAs on federal and federally assisted construction, guaranteeing Americans the best construction at the best price.

Here at TheTruthAboutPLAs.com, we are pleased that responsible state leaders continue to stand up for free enterprise despite strong opposition from organized labor and their allies.

From 2000 to 2011, the merit shop construction community helped local leaders and voters across the state understand that government-mandated project labor agreements (PLAs) deprive taxpayers of the opportunity to get the best construction at the best price. Eight local communities enacted bans on PLA mandates, including three that did so through citizen initiatives.

Union bosses could feel the ground shifting under them, but were not going to take an assault on their monopoly lying down. As a major political contributor to most of the Democrats in the legislature’s majorities, Big Labor used its leverage to get state legislators to approve S.B. 922 in the closing days of the 2011 legislative session.

This bill was a clear special interest handout. From a policy standpoint, it nullified PLA mandate bans in localities controlled by the state government and was designed to deprive charter cities (i.e., cities where voters opted for local control by adopting a city charter) of state funding for future construction projects unless city leaders could consider the use of a PLA mandate.

If the policy wasn’t bad enough, this language was amended into an unrelated bill during the twilight of the legislative session, depriving taxpayers of the time to learn what the Democrats were really trying to pull, and then passed on party-line votes.

It turns out that Democrats in the legislature and their Big Labor allies moved the 2011 bill so quickly that the statute was not as air-tight as they wanted. Luckily for them, that is an easy fix for a state in which Big Labor calls the shots. On April 25, Gov. Jerry Brown (D) signed S.B. 829, which is designed to strip charter cities of state construction funds if the city cannot institute a government-mandated PLA.

Here are more details from a press release issued by Associated Builders and Contractors’ (ABC) Golden Gate Chapter:

Gut and Amend Bill interferes with local control for California Charter

Livermore, CA– Today, the Governor signed Senate Bill 829 (Rubio-Fresno), which intends to cut off all state funds from charter cities that ban Project Labor Agreements (PLAs). This is a follow-up bill to the original Union-Backed Senate Bill 922 signed by the Governor in 2011, intended to End Local Project Labor Agreement Bans or Fair and Open Competition ordinances for taxpayers at local governments.

SB 829 is the latest attempt by labor-backed lawmakers in Sacramento to limit state funds paid to any charter city that enacts restrictions on costly PLAs – including initiatives approved by voters. After heavy lobbying by labor unions and with minimal public debate, a maneuver called “gut and amend” was used to pass this bill in the State Senate last Thursday. The bill was passed on a straight party line vote.

“The bill has serious constitutional defects. However, that has not stopped some in the Legislature from backing what should be a non-starter. SB829 is a power grab by Sacramento politicians that will certainly be overturned by the courts,” said Nicole Goehring, Government Affairs Director, Associated Builders and Contractors Golden Gate Chapter.

SB829 is an attempt to undercut Proposition A in San Diego and similar Fair and Open Competition reforms gaining traction across the state. The bill was backed by the State Building & Construction Trades Unions in an attempt to gain state control of local construction money and block savings for local taxpayers.

Proposition A – the Fair and Open Competition Initiative – is on the June ballot in San Diego. It will prevent the City Council from imposing mandatory project labor agreements (PLAs) on city-funded construction projects and requires the Mayor to post construction contracts on-line for public review.

Senator Doug La Malfa and Assemblymembers Bill Berryhill, Connie Conway, Linda Halderman, Shannon Grove and Jim Nielsen among others in the State Legislature are to be applauded for opposing SB 829 and defending the rights of charter cities to exercise local control.

“We owe our duty to the constitution, not the unions,” said Assemblymember Shannon Grove, who spoke against the bill on the floor of the state Assembly. Grove represents part of the Central Valley where fair and open competition in construction is considered the best value for taxpayers.

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The Problem with Project Labor Agreements

All construction work done under a Project Labor Agreement (PLA) must be performed by union-only signatory construction workers. The PLA will force non-union contractors and their workers to pay union dues, pay into union benefit programs, require all employees to be hired through a union-hiring hall to get work, and would allow for union-only apprentices on the project. By unnecessarily limiting bidders and following outdated and inefficient union work rules, union-only PLAs consistently drive up costs to the taxpayers. Several academic studies indicate PLAs increase the cost of construction between 10 percent and 20 percent when compared to similar projects not subject to union-only PLAs.

ABC of California also issued a statement.

Here is some great video of Sens. Anderson and Wyland, both Republicans from the San Diego area, speaking out against this bill:

There is also good video of Assemblywoman Shannon Grove (R) correctly characterizing the bill as unconstitutional.

This is just another example of how California is broken. When you put special interest groups in the driver’s seat, taxpayers get left behind.

Let’s just hope San Diego voters can see through the smokescreen on June 6.

Read more from TheTruthAboutPLAs:

• WSJ Editorial Blasts California SB 922
• California Governor Signs Union-Backed Senate Bill 922, Intended to End Local Project Labor Agreement Bans
• California Governor Jerry Brown Will Decide Fate of Local Voter Rebellions Against Project Labor Agreements
• All California posts

H.B. 33 prohibits the Commonwealth of Virginia and recipients of state assistance from mandating project labor agreements (PLAs) and enacting PLA preferences discriminating against bidders unwilling to execute PLAs.

Seven states passed similar legislation in 2011; Virginia is the first state to do so in 2012. A total of 12 states have enacted measures restricting the use of anti-competitive and costly government-mandated PLAs, and additional states may pass similar laws this year.

Virginia Del. Barbara Comstock, who introduced H.B. 33 with chief co-patrons Del. Tim Hugo and Del. David Ramadan, released a statement supporting the measure’s passage:

“H.B. 33 is commonsense legislation that will guarantee competition and a level playing field for all Virginia workers and businesses. This bill protects the 96 percent of Virginia workers who are nonunion. It commits that Virginia workers won’t be robbed of jobs through crony contracting and makes sure that Virginia’s tax dollars are spent wisely and stretched to respond to our transportation and infrastructure needs.”

The issue of government-mandated PLAs and PLA preferences has been hotly debated in Virginia and the greater Washington, D.C., area as a result of the PLA mandate controversy on Phase 2 construction of the Metropolitan Washington Airport Authority’s (MWAA) $2.8 billion Dulles metro rail project known as the Silver Line.

In April 2011, MWAA mandated a PLA on Phase 2 of the project. In the face of months of PLA mandate opposition by Phase 2 funding partners, stakeholders, lawmakers, taxpayers and Virginia’s construction industry, MWAA abandoned the PLA mandate in February. However, MWAA was heavily criticized by stakeholders for substituting the PLA mandate with a preference policy that amounts to a de facto PLA mandate. (Note: Here is a copy of the draft PLA circulated by MWAA board member and Laborers Union Vice President Dennis Martire. Learn more about MWAA and the PLA mandate and preference controversy here).

“Passage of this legislation should send a wakeup call to the Metropolitan Washington Airports Authority Board (MWAA) that they need to work with all of their funding partners who seek a level playing field for all Virginia workers,” said Comstock. “With passage of this legislation, MWAA can no longer stack the deck for union contractors. Instead of pushing union mandates and union preferences, they should do what is best for Virginia and comply with the law and our right-to-work tradition that treats all employees equally.”

Virginia’s Budget Targets MWAA’s PLA Preference Scheme
Last week Virginia passed a budget containing language from Delegate Hugo that prevents Virginia from giving money to projects implementing a PLA preference, such as Phase 2 of the Silver Line.

While the Republican-controlled House passed a budget three times, Senate Democrats delayed passage of the budget for nearly 40 days. They held out for an additional $300 million of funding for Phase 2 of the Silver Line, but the evenly divided Senate approved the budget without additional funding when Sen. Charles J. Colgan (D-Prince William) voted with Senate Republicans.

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

MWAA Can Do the Right Thing
The passage of H.B. 33 and the Virginia budget containing language prohibiting MWAA’s PLA preference schemes will force MWAA to choose between abandoning their discriminatory PLA preference policy benefiting special interests, or forfeiting Virginia’s planned $150 million contribution to Phase 2 costs.

Virginia Secretary of Transportation Sean Connaughton’s letter to Silver Line stakeholders in Northern Virginia establishes a list of conditions MWAA must meet in order to receive Virginia’s pledged $150 million this year and possible future funding from the Commonwealth.

In addition, Loudoun County has until July 1 to decide if they want to fund their share of the Silver Line. Loudoun County Board of Supervisors have repeatedly told MWAA that they must eliminate a PLA preference and mandate if they want Loudoun to fund the project and have raised additional concerns about maintenance costs.

MWAA said the loss of hundreds of millions of dollars of Loudoun and Virginia contributions to Phase 2 would simply be passed on to Dulles Toll Road motorists via increased tolls.  Stakeholders are concerned that raising tolls in excess of the already expensive toll projections needed to finance Phase 2 will decrease traffic and related revenue, which will disrupt already tenuous Silver Line financing models.

Last week, MWAA announced Phase 1 was expected to finish at least $150 million over budget and it has delayed the release of the Phase 2 RFQ until July, when funding commitments are expected from Loudoun County.

U.S. Department of Transportation Secretary Ray LaHood is meeting with stakeholders on Wednesday to get this project back on track.

Phase 1 was built with a PLA voluntarily entered into by the Phase 1 prime contractor, Dulles Transit Partners (DTP).  However, it did not apply to Phase 1 subcontractors. A DTP report revealed that the majority of construction workers employed by DTP on Phase 1 are union members from Maryland dispatched through union hiring halls under the rules of the PLA, despite the fact the project is in Virginia and 97.4 percent of Virginia’s construction workforce does not belong to a union (see coverage in “Maryland workers outnumber Virginians on Dulles Rail project,” 2/17/12).

Merit Shop Applauds H.B. 33
ABC Virginia applauded the passage of H.B. 33, which it strongly supports:

 “This legislation will enhance competition, protect and expand opportunities for qualified Virginia employers and their skilled workers, and help ensure Virginia obtains the best product and service at the best price.”

Earlier this year, TheTruthAboutPLAs.com urged taxpayers to contact their legislators and encourage them to support H.B. 33 and Sen. Mark Obenshain’s companion legislation in the Virginia Senate, S.B. 242 (pdf). Kudos to everyone who contacted their elected officials and participated in this legislative process.

TheTruthAbouPLAs.com applauds the passage of H.B. 33 and a Virginia budget ensuring fair and open competition on all taxpayer-funded construction projects. We thank Virginia Delegates Comstock, Hugo, Ramadan, Sen. Obenshain, the McDonnell administration and all of the local and state stakeholder groups for their leadership on this important issue.

It is time for MWAA to eliminate the PLA mandate and preference schemes and ensure fair and open competition for Phase 2 construction contracts. Doing so will ensure critical funding from Phase 2 stakeholders, create jobs for Virginia’s construction industry and the community served by the Silver Line, and help deliver to taxpayers the best possible project at the best possible price.

The prior piece of legislation (S.B. 1006 of 2011) Gov. Otter signed on March 3, 2011 to ban these taxpayer-funded handouts was invalidated in December 2011 in a legal ruling favoring the Idaho Building and Construction Trades Council, AFL-CIO. A federal judge in Michigan issued a similar decision on its law to ban government-mandated PLAs in February 2012.

The Idaho and Michigan courts’ decisions directly conflict with settled case law on this issue.

In September 2011, a federal judge in Iowa dismissed a union lawsuit against Gov. Terry Branstad’s Executive Order 69, which prohibits government-mandated PLAs on state and state-funded construction. It is the first court to address whether a state executive order or statute guaranteeing government neutrality with regard to PLAs is preempted by federal law.

More importantly, the Idaho and Michigan decisions conflict with the U.S. Circuit Court of Appeals for the D.C. Circuit’s opinion in Building and Construction Trades Dep’t, AFL-CIO v. Allbaugh, 295 F.3d 28 (D.C. Cir. 2002), in which the court upheld President George W. Bush’s Executive Order 13202, which banned government-mandated PLAs on federal and federally assisted construction. To date, this is the highest court to consider whether the National Labor Relations Act (NLRA) preempts executive orders and statutes guaranteeing government neutrality with regard to PLAs. The judge in the Michigan lawsuit went so far as to say the Allbaugh decision was ruled incorrectly.

Associated Builders and Contractors (ABC) agrees with the Allbaugh decision, in which the court states government entities have the right to make their own procurement decisions with regard to PLAs through their proprietary interest in the construction services marketplace. While the NLRA expressly allows for pre-hire agreements (i.e. PLAs) in the construction industry, it does not authorize government entities to require pre-hire agreements as a condition of performing work on public construction projects.

The executive orders and statutes adopted by 12 states to ban government-mandated PLAs (Montana, Utah, Arizona, Iowa, Missouri, Louisiana, Arkansas, Tennessee, Maine, Michigan, Idaho and now Virginia) simply require government neutrality with regard to PLAs. The orders and statutes say that government entities can neither prohibit nor require a contractor to enter into a PLA as a condition of performing public work. This allows contractors to configure their bids in a way that guarantees taxpayers the best construction at the best price, while still allowing government entities to accept bids that provide the most value for taxpayers regardless of whether they include a PLA.

ABC is pleased the Idaho Legislature re-affirmed its commitment to quality and accountability on public construction projects. ABC believes a positive solution for taxpayers is in the cards for Michigan as well.

Washington, D.C., spin doctors created the term “community workforce agreement” in an attempt to get around the much-deserved negative stigma associated with project labor agreements.

Santa Fe is the first government entity in New Mexico to adopt a policy to require or encourage PLA mandates on taxpayer-funded construction. The city council adopted this policy despite very little public commentary and virtually no input from the merit shop construction community. Many merit shop construction firms have a long history of building Santa Fe projects on time and on budget, without having to agree to Big Labor’s terms and conditions.

Here is a press release on the new mandate issued by Associated Builders and Contractors’ (ABC) New Mexico Chapter:

SANTA FE CITY COUNCIL ADOPTS NEW POLICY THAT WILL INCREASE COSTS AND

DISCRIMINATE AGAINST WORKERS

SANTA FE, N.M. – Associated Builders and Contractors’ (ABC) New Mexico Chapter today calls on the Santa Fe City Council to repeal its newly adopted policy requiring contractors to sign a wasteful and discriminatory community workforce agreement with the construction unions in order to work on Santa Fe city construction projects that cost more than $500,000.

A community workforce agreement is a special interest scheme that discourages competition from nonunion contractors and their workers 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 nonunion employees will never benefit unless they join a union.

“The Santa Fe City Council adopted this policy after very little consideration and with no input from the merit shop construction community,” said ABC New Mexico Chapter President Roxanne Rivera-Wiest. “These mandates have a long public record of costing taxpayers and hurting the vast majority of the construction workforce in communities from coast to coast.”

“Numerous studies show these types of mandates increase construction costs by as much as 20 percent, which means taxpayers can expect four city buildings for the price of five under this policy,” Rivera-Wiest said. “Additionally, this policy will discriminate against the 97 percent of New Mexico’s construction workforce that chooses not to join a labor union. This means thousands of hardworking New Mexicans will be deprived of the opportunity to work on projects in their own backyard unless they give in to Big Labor’s demands.”

The ABC New Mexico Chapter urges the Santa Fe City Council to repeal this policy. In the meantime, ABC will do everything within its power to ensure Santa Fe residents are guaranteed the best construction at the best price.

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While aggressive Big Labor bullying is nothing new in New Mexico, this is the most significant public policy win in the state for union bosses since they successfully lobbied the legislature to abandon prevailing wage surveys and simply make the union wage rate the minimum wage for all state funded construction.

There is great concern in the merit shop construction community that union bosses could use the “success” of this requirement as evidence to support PLA requirements in other cities in New Mexico, or even for state-funded construction projects in the future. Readers of this blog know this requirement can never be truly successful because PLAs/CWAs have a well-established history of increasing construction costs and discriminating against the vast majority of the construction workforce that chooses not to join a labor union – 96.5 percent in New Mexico.

Even more troubling, contractors in Santa Fe report that due to budget issues, there are no projects costing more than $500,000 in the pipeline!

With no projects subject to this CWA requirement expected in the near future—and the agreements’ proven track record of failure at achieving their promised public policy objectives—it is clear that this policy is nothing more than a politically motivated handout to Big Labor. It could potentially guarantee that only union workers have the opportunity to perform Santa Fe construction projects in the future. Additionally, this policy could be a springboard for Big Labor’s attempts to secure CWA/PLA requirements on state construction or in other communities.

Aside from being bad policy, ABC and the merit shop community believe this new requirement could have potential legal problems as well.

New Mexico taxpayers deserve the best construction at the best price. Additionally, the 96.5 percent of the state’s construction workforce that chooses not to join a union deserves the opportunity to compete for projects funded by their own tax dollars. The City of Santa Fe can accomplish neither with a CWA/PLA requirement in place.

We call on the Santa Fe City Council to rethink this discriminatory policy to ensure city residents get the most value for their local construction dollars.

On Wednesday, MWAA passed a resolution adopting a new policy needlessly favoring contractors that submit proposals promising to use a union project labor agreement (PLA) to construct Phase 2 of the $2.8 billion Silver Line metro extension project in Northern Virginia. (Learn more about the project and PLA controversy here.)

Big Labor, Be My Valentine. Love, MWAA

Obtained from MWAA staff, here is a copy of the unofficial language the MWAA board approved unanimously, with the exception of MWAA board members Dennis Martire and Michael Curto. They recused themselves from the vote, presumably because they have come under fire for cronyism related to their active promotion of a PLA mandate on Phase 2 (learn more about this controversy here).

MWAA’s new policy discriminates against contractors unwilling to enter into a PLA on Phase 2 construction work and puts them at a significant competitive disadvantage.  It awards contractors willing to build the project under a PLA a 10 percent bonus in the Phase 2 procurement process.

It is a de facto PLA mandate because it will be virtually impossible for contractors that do not want to build the project with a PLA to make it to the next phase of the procurement process, where technical and price proposals will be evaluated.

Explanation of the Phase 2 Procurement Process
At the end of February, MWAA is expected to release a request for qualifications (RFQ) to all contractors interested in bidding Phase 2. The presentation on Phase 2′s procurement process, given at January’s MWAA meeting, suggests contractors will be evaluated on the following factors contained within the RFQ: Performance History, Management Plan, Qualifications of Key Personnel, Description of Project Challenges, and Safety Plan.

MWAA will evaluate and score each factor in the contractor RFQ response. (The public won’t know whether each factor is given equal weight and if these are the final evaluation categories until MWAA releases the RFQ). Each contractor response to each evaluation category will be assigned a point value out X possible points. A contractor’s aggregate point score will receive a 10 percent bonus if it agrees to build Phase 2 with a PLA.

The five highest scoring firms will be selected to participate in step two of the procurement process, where they will be invited to respond to a request for proposal (RFP) to be issued by MWAA in May. Each of the five firms will receive a $1.5 million stipend because it will cost between $5 million and $6 million for each firm to compete in the procurement process from start to finish. The five finalists, or short-listed contractors, will be evaluated based on their response to the RFP’s technical proposals, due in September 2012, and price proposals, due in December 2012.

For arguments sake, let’s assume each of the five RFQ evaluation categories is worth 20 points for a total of 100 points. If a contractor receives an aggregate score of 85 and agrees to a PLA, it will receive an additional bonus of 8.5 points (10 percent of 85 points), for a final total of 93.5 points. If an equally qualified  contractor receives an aggregate score of 85 and does not agree to a PLA, it will only receive a final total of 85 points.

It will be virtually impossible for non-PLA contractors to overcome the 10 percent disadvantage because only the top five firms will be invited to the second phase of the project, where they will respond to the RFP. The “spread” between the highest and lowest scores of the top five likely will be very small. The 10 percent point bonus is a significant handicap and likely will lead to only PLA contractors being invited to submit a cost offer in step two.

In short, MWAA is rigging the competitive bidding process to produce a result that will guarantee the contractor building Phase 2 will do so with a PLA.

Non-PLA contractors will not waste their time and money chasing this work, which will reduce competition and increase project costs because everyone will be stuck with the same expensive union rules contained in the PLA.  The public will never know how much cost savings MWAA left on the table to satisfy their pro-union de facto PLA mandate policy.

MWAA’s new policy replaces the controversial April 6, 2011, resolution No. 11-08, which permitted MWAA staff to include in Phase 2 construction contract procurement documents a PLA similar to the PLA voluntarily entered into by the Phase 1 prime contractor, Dulles Transit Partners.  However, the Phase 2 PLA was mandatory.

In November 2011, a proposed MOU between MWAA and the Commonwealth of Virginia - although not signed by Virginia – clarified that MWAA intended to require the Phase 2 prime contractor to negotiate and execute a PLA with construction labor unions in order to win Phase 2 construction contracts. The MOU exempted subcontractors from signing the mandatory Phase 2 PLA, just as Phase 1 subcontractors were exempted from signing the voluntary Phase 1 PLA.

Discriminatory Preference Policy Under Fire
Virginia’s construction industry and lawmakers are not happy about MWAA’s PLA preference/de facto PLA mandate policy.

“MWAA has once again demonstrated they are determined to ensure their cronies benefit from some type of anti-competitive and discriminatory contracting scheme on this multi-billion dollar construction project,” said Patrick Dean, president of the Virginia Chapter of Associated Builders and Contractors.  (Take a look at ABC-VA’s press release below).

The Washington Times covered opposition to the PLA preference policy from Virginia lawmakers (“Labor pact for Dulles Metrorail opposed,” 2/21/12):

“I think we’ve had grave concerns,” Mr. Hugo said. “And we’ve expressed it repeatedly that we want a level playing field. I think, point blank, that the actions of the … authority are on the verge of killing this project.”

Mr. Hugo added he supports the project, but “thinks the board’s actions are going to kill it.”

The Fair and Open Competition in Government Contracting Act (HB 33/SB 242), which would prohibit the state from mandating PLAs and giving state assistance to projects mandating or giving preference to PLAs, is close to becoming law in Richmond (TheTruthAboutPLAs.com covered this legislation here). Update: The bills are headed to Gov. McDonnel’s desk.

Is a PLA Mandate or Preference Bad for Virginia’s Construction Workforce?
Lawmakers and representatives of Virginia’s construction industry, where 97.4 percent of the state’s construction workforce do not belong to union, have good reason to be concerned about the impact of a PLA on local job creation and the overall cost of the project.

A report presented at last week’s MWAA meeting by a representative from the Phase 1 prime contractor, Dulles Transit Partners (DTP), revealed that the majority of DTP construction workers employed on Phase 1 are union members from Maryland, despite the fact the project is in Virginia.  (See coverage in “Maryland workers outnumber Virginians on Dulles Rail project,” 2/17/12).

DTP provided a snapshot of its workforce building Phase 1 from December 2011. Data showed that 304 of 602 DTP construction workers came from Maryland, 18 of 602 came from DC, 27 of 602 were from other states and 253 of the 602 were from Virginia.

DTP gets almost all of its craft workers exclusively from union hiring halls, as required in the Phase 1 PLA it voluntarily entered into.

Data in the report only represents DTP employees who were building the project under the terms of the PLA.  The data does not include close to 400 employees of subcontractors, which are not required to operate under DTP’s Phase 1 PLA.

If Phase 2 has mandatory or bid-rigged PLA preference, Virginia public officials should be concerned about similar local job creation results.  Is it fair for other states to benefit from this project considering it is slated to be supported by Fairfax and Loudoun Counties, the state of Virginia and Dulles Toll Road users (likely mostly Virginia drivers)?

Will a PLA Mandate or Preference Increase Costs?
It is unclear how much a PLA mandate or preference will increase Phase 2 construction costs. Studies have demonstrated that PLAs increase the costs of construction between 12 percent and 18 percent because they reduce competition and shackle contractors with expensive union work rules.

However, those studies do not pull from a sample size of large projects such as Phase 2.

The cost increase also may depend on how much work prime contractors would be forced to self-perform under the PLA and if subcontractors are subject to the PLA.

In addition, it is important to know how MWAA intends to implement a PLA mandate or preference in the procurement process, if contractors are bound by the same PLA, and if firms have the chance to review the terms and conditions of the PLA before submitting a final bid with their price.

Finally, the only way to know if a PLA mandate or preference increases the cost of construction on Phase 2 is a direct comparison of bids submitted with and without a PLA mandate or preference.

The only way to ensure that project financers receive the best bang for their buck is for MWAA to abandon its PLA scheme altogether. Why not let contractors decide if a PLA is appropriate without giving contractors a dramatic incentive to use a PLA? Why not take steps that will increase competition and reduce costs?

Speaking of costs, here is a link to a report given at the last MWAA meeting on Phase 1 Costs (note an expected $150 million cost overrun) and here is copy of their consultants’ Toll Rate Study, which lays out the projected toll rates needed to finance Phase 2.

Stay tuned, TheTruthAboutPLAs.com will be following this closely.

ABC Virginia Press release after the jump.

With Minnesotans likely to pick up at least some of the bill for this project, this PLA will keep thousands of hardworking taxpayers from being able to compete effectively for a project funded by their own tax dollars.

Associated Builders and Contractors Minnesota Chapter President Bob Heise expressed his thoughts on this discriminatory PLA in an op-ed published by the Star Tribune on Feb. 14. Here are the highlights:

These PLAs are bad public policy. In Minnesota, three out of four construction workers are employed by contractors not affiliated with any union.

Since PLAs effectively preclude open-shop companies from working on a stadium project, they discriminate against the majority of workers who choose not to join a union but whose hard-earned tax dollars may go toward funding this project.

Organizations like the Associated Builders and Contractors would never advocate a public policy that says “union contractors should be banned from doing public work.” That would be as offensive to us as it is when the unions advocate policies that shut out merit shops.

If the unions really are as efficient as they claim, they wouldn’t need to advocate for public policies that give them an artificial competitive advantage in projects like stadiums.

Several minority and women’s groups have been vocal opponents of union-only agreements

The National Association of Women Business Owners, National Black Chamber of Commerce and the Latin Builders Association are among the groups that have gone on record opposing PLAs. The National Black Chamber of Commerce described PLAs as anti-free-market, noncompetitive and, most of all, discriminatory.

Basically, the PLA deal was sold to the Vikings on the basis that they could reduce costs and ensure “labor peace.” Both propositions are erroneous.

By limiting the bidding pool to union-only contractors, you reduce healthy competition and drive up costs, almost guaranteeing wasteful spending of taxpayer dollars. The unions also agreed not to strike on the Vikings stadium project in exchange for the concession that the PLA be signed.

They contend this saves money by avoiding costly delays and keeping labor peace. The real meaning of labor peace is that, since only union labor will be working on the stadium, unions will not engage in strikes. This guarantees protectionism for a small part of the construction market.

These restraints imposed by the Vikings are political decisions, which have no economic rationale. The real losers are the taxpayers across the state who have chosen not to be affiliated with a union. Their tax dollars will subsidize a stadium that they will not be allowed to build.

It’s going to be difficult to gain legislative support to fund a Vikings stadium when the Vikings can only support some fans some of the time.

Big Labor frequently targets large-scale stadium projects for PLA mandates for several significant reasons. Stadium projects fit union bosses’ narrative that PLAs are required for large, complex projects. Additionally, because stadium projects are large, unions have the opportunity to put large numbers of members to work when they are covered by a PLA. Most importantly, unions target large stadium projects for PLAs because they are often built in cities controlled by politicians supported by Big Labor. Unions attempt to leverage this political muscle to ensure that PLAs are mandated on stadium projects.

Unfortunately for union bosses, PLA mandates have a public record of poor performance on stadium projects. Cost overruns, delays, safety issues and other problems have plagued stadium construction projects covered by PLAs.

Here are the highlights from the 2011 edition of Maury Baskin’s publication, Government-Mandated PLAs: A Public Record of Poor Performance.

Miller Park – Milwaukee, Wis.

• This stadium, built under a government-mandated PLA, was supposed to be completed in time for opening day of the 2000 season. Instead, the new stadium was not completed in time to be used at all during that season due to construction delays, which included a fatal accident involving union workers.
• In August 1999, the PLA-mandated construction came to a halt when a crane collapsed onto the stadium, killing three workers and injuring three others.

Gund Arena – Cleveland

• Original costs were estimated at $118 million. After the governing agency entered into a PLA, the final cost came in at $148 million—$30 million (25 percent) more than estimated.

Cleveland Browns Stadium – Cleveland

• The cost of the Cleveland Browns’ stadium, also constructed pursuant to a government-mandated PLA, was $21 million higher than the estimate in 1998. The union-only bids for the stadium were millions of dollars higher than the estimates.
• The final cost of the stadium was reported to be at least $61 million more than the original estimate, an increase of 25 percent.

Comerica Park – Detroit

• A PLA was signed and, upon completion of construction, costs were reported to be in excess of $320 million. The original cost estimate was $260 million in 1999.
• Four female African-American carpenters sued the Stadium Authority for discrimination and failure to provide promised job opportunities to minorities and women on the ballpark project.

Nationals Park – Washington, D.C.

• Construction of a new Washington Nationals baseball stadium under a government-mandated PLA ran significantly over the budgeted $611 million. By contrast, Baltimore’s nearby Camden Yards and Washington’s own FedEx Field (football) were built without any PLA requirements, with no cost overruns.
• The owner of the Washington Nationals initially refused to pay $3.5 million in rent because the PLA project was not “substantially complete” on the date the city was required to hand over the stadium.
• The PLA called for half of the journeyman construction hours to be performed by city residents, a high percentage of whom are minorities. A subsequent study revealed, however, that city residents only performed 27 percent of the work. Targets to have all new apprentices be city residents and to have their work constitute at least one-fourth of the hours dedicated to construction also fell short.

Lucas Oil Stadium – Indianapolis

• After using a $50 million contingency fund, this project was still $75 million over budget. (Read more about this project)

Citi Field – New York

• The New York Post reported in 2009 that the Mets’ new Citi Field, built under a PLA at a cost of $850 million, was “riddled with construction defects.” The defects included large chunks of concrete and granite and a neon sign falling from the stadium, as well as numerous problems with elevators, electricity and flooding of various stadium sections.

Safeco Field – Seattle

• In Seattle, the PLA construction of Safeco Field for the Seattle Mariners experienced very high cost overruns in 1998. The original estimate for the new stadium was $320 million. The stadium’s final price tag was in excess of $517 million, a 60 percent increase. Safeco Field was completed months later than scheduled as the stadium could not be opened in time for the beginning of the 1999 season, as had been promised, and the Seattle Mariners could not begin play at their new home until July 1999.

There have been other problems with stadiums not in the report.

The New Yankee Stadium – New York

• The NY Daily News reported that the community benefits agreementcontaining a PLA on the new $1.3 billion Yankee Stadium has been a “joke” and a failure:
  

  Then there are all those promises about contracts and construction jobs.

  The team acknowledges that more than 3,900 people have applied for construction work at the stadium. More than 80% didn’t belong to any union. Since you must be a union member to work on the site, the Bronx residents most in need of a job have been shut out of the daily workforce of 1,200.

  As for the union employees, a lot of the craft unions have been “checkerboarding,” according to one source who has worked on the stadium project from the start.

  “They take members who live in the Bronx but work at some other site in Manhattan, then they transfer them to the stadium just to boost the numbers. That doesn’t add any new jobs for Bronx residents.”

Construction is a complex, expensive and dangerous industry. Unfortunately, local hire failure, construction delays, cost overruns and even tragic accidents can happen.

It is also important to note that large stadium projects have been built without PLAs.  For example, on the new Dallas Cowboys Stadium, union and nonunion workers alike worked side-by-side to build the project on time and on budget without a PLA. The same can be said for the Redskins home, FedEx Field (formerly Jack Kent Cook stadium); the Baltimore Ravens stadium; and the Bank of America Stadium in Charlotte where President Obama is scheduled to deliver his DNC speech this summer.

Here at TheTruthAboutPLAs.com, we reject the contention that a PLA mandate will make large-scale projects more efficient, safer or more likely to guarantee job opportunities to women and minorities in the construction industry. PLAs simply guarantee that contractors have to play by Big Labor’s rules in order to work on a project.

For the people of Minnesota, we hope the stadium is finished on time and on budget as soon as the building plans are finally approved. Minneapolis is a great football town and it deserves a first-class stadium; just don’t think it is going to get one just because the union bosses say so.

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).