Proponents of anti-competitive and costly PLAs claim these schemes deliver economy and efficiency in federal contracting. However, the negotiation and execution of the 1800 F Street PLA became so problematic, the GSA allowed the contractor to ditch the PLA and proceed with construction without a PLA.

GSA Rendering of Phase 1 Modernization of GSA Headquarters at 1800 F Street

GSA Issues a Discriminatory De Facto PLA Mandate
In April 2010, the GSA issued a solicitation to potential bidders utilizing a two-step selection process. In Step 1, the GSA issued a Request for Qualifications (RFQ) that the GSA used to narrow the list of qualified bidders to invite to respond to its Request for Proposal (RFP). Step 2 participants received the project plans and contract specifications and were invited to respond to the RFP and submit a firm-fixed price.

Pursuant to a new controversial pilot program promoting the use of PLAs outlined in the GSA Public Buildings Service’s Aug. 11, 2009, Procurement Instructional Bulletin (PIB) 09-02, contractors invited to participate in Step 2 of the 1800 F Street project bidding were allowed to submit a proposal with or without a PLA (or submit two proposals: one with a PLA and without a PLA).

However, the winning bidder was selected using a best value process evaluating firms based on a mix of price and non-price factors. The best value process, outlined in Section V.A. Evaluation of Offers of Section C201 of the RFP (see page 23), included a anti-competitive and discriminatory provision giving firms submitting a proposal containing a promise to utilize a PLA 100 points, or 10 percent, out of the 1,000 total possible points the GSA used to evaluate non-price factors.

While Step 2 firms were not technically forced to use a PLA, the GSA’s new policy discriminated against contractors unwilling to enter into a PLA and put them at a significant competitive disadvantage. This 10 percent “bonus” to PLA contractors is a de facto PLA mandate because it would be virtually impossible for contractors that do not want to build the project with a PLA to have a non-price score competitive with firms willing to use a PLA. There is no rationale justifying the preferential treatment towards PLA offers other than special interest favoritism.

In short, the 10 percent bonus is the GSA’s way of rigging the competitive bidding process to produce a result that would guarantee the contractor building 1800 F Street does so with a PLA that would funnel jobs to well-connected union-friendly contractors and ensure job creation for unionized workers, despite the fact that fewer than one out of 10 construction workers in the District of Columbia and surrounding states belong to a union.

1800 F Street Contract Awarded to PLA Offeror
On Sept. 16, 2010, the GSA awarded contract GS-11P-10-MKC-0025 to a Whiting-Turner Walsh Joint Venture (JV) for $124,349,000 funded by the American Recovery and Reinvestment Act (ARRA) of 2009, commonly known as the stimulus act.

As expected, the JV submitted a PLA offer. A non-PLA offer would have been a waste of time because of the GSA’s rigged bidding process, so there is no direct comparison of the JV’s winning PLA bid versus its non-PLA bid.

Section C101 of the RFP (see Section III.A.16 Project Labor Agreement on page 20), explains the minimum mandatory terms of a PLA acceptable to the GSA and requires the winning contractor to “bargain in good faith with all Labor Organizations having jurisdiction over work included in the Contract and to enter into a PLA that will govern the performance of all construction work by the Contractor and its subcontractors under this Contract.” It also requires the executed PLA to be furnished to the contracting officer within 45 days following award (Oct. 31, 2010).

However, FOIA documents demonstrate this project suffered increased costs and was delayed by at least 107 days due to the prime contractor’s inability to successfully execute a PLA with labor organizations.

PLA Negotiation Caused Delays
The GSA issued Whiting-Turner Walsh JV a Limited Notice to Proceed Nov. 1 because it had not submitted an executed PLA by the Oct. 31 deadline. 

The JV was granted a 10-day extension to submit a final PLA by Nov. 10.

Correspondence on Nov. 30 from the GSA indicated the JV must continue PLA negotiations with “all Labor Organizations having jurisdiction over work” despite the fact the JV could only successfully execute a PLA with the carpenters union and were unable to execute a PLA with other unions represented by the DC Building Construction Trades Council (here is the executed Carpenters PLA).

On Feb. 10, 2011 (107 Days after Nov. 1), the GSA communicated to the JV would receive a Full Notice to Proceed and must issue a refund to the GSA for costs associated with the PLA in its bid because the JV could not execute a PLA with all labor organizations:

 “…[the]GSA would be issuing a modification to your contract that would not only remove the PLA requirement but also establish a credit value for the removal of that requirement. Therefore, given that your initial bid proposal did not include Non-PLA pricing, I request that you provide Non-PLA pricing to the attached list of items that were awarded on 16 September 2010 under your PLA cost proposed.”

The delays associated with the PLA conflict directly with June 3, 2011, testimony given by GSA Deputy Administrator Susan Brita before the House Oversight and Government Reform Committee’s Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommittee. At 40:50 of this hearing video, Brita claims the PLA only delayed the 1800 F Street project by 45 days. The truth is the PLA delayed the project by 107 days.

Click here to view the video on YouTube.

PLA Increased Costs
It is unclear how much the de facto PLA mandate increased costs for the GSA and taxpayers, but the bottom line is it did increase costs.

A July 25, 2011, contract modification document puts the amount the JV credited to the GSA due to the PLA at $1,631,600.

However, this amount appears to factor in other non-PLA-related costs at issue between the JV and the GSA. In addition, the figure does not account for the amount of time lost and expense incurred by the JV negotiating a PLA with various labor groups prior to the GSA issuing a Full Notice to Proceed 107 days after the JV could have proceeded with construction had there not been a PLA requirement.

Finally, the figure fails to address the additional cost savings the GSA could have experienced had the RFP been bid without a discriminatory de facto PLA mandate policy.

Studies indicate PLA mandates on projects subject to prevailing wage laws like the 1800 F Street project increase costs between 12 percent and 18 percent.  In fact, a Jan. 27, 2010, consultant’s report funded by the GSA recommended against a PLA on the 1800 F Street project, expressing concerns it would raise costs by 4.9 percent (see page 93 of the PDF):

“Based on the Rider Levett Bucknall analysis contained within this report and given the current poor economic climate in the US – for a well compiled PLA on 1800 F St, Washington DC, the GSA may be disadvantaged by a PLA and that a PLA is likely to not “advance the federal Government’s interest in achieving economy and efficiency in federal procurement…”

The only entity that knows the cost of the PLA is the Whiting Turner Walsh JV and perhaps the GSA. The GSA’s Office of Inspector General should investigate the waste, fraud and abuse associated with the PLA and the GSA’s discriminatory pro-PLA policy.

However, an investigation wouldn’t reveal the true amount of money wasted because it would fail to account for the cost-saving benefits of free and open competition without a PLA mandate or preference.

In short, the excessive delays and the act of the GSA requesting the JV to refund money associated with increased costs related to the PLA undermines the key claim in President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 that a PLA increases economy and efficiency in federal contracting. A PLA is supposed to establish jobsite harmony and rules all unions and contractors must obey, yet the PLA proved to be more of a problem than a helpful tool. Phase 1 of the 1800 F Street building ended up being constructed without a PLA without any strikes, delays or any other problems.

GSA Continues Costly Policy of PLA Favoritism
As a fitting coda to this story, the GSA announced it has halted plans to construct Phase 2 of the 1800 F Street modernization due to a lack of funding.

The increased costs and delays associated with the 1800 F Street project PLA, in addition to $3.3 million worth of increased costs associated with a de facto PLA mandate on another GSA building in Washington, D.C, – the Lafayette Building – have not dampened the GSA’s enthusiasm for PLA preferences and PLA mandates.

While procuring this project, the GSA revised its pro-PLA policy April 30, 2010, and Sept. 24, 2010, to clarify some sticking points in its PLA pilot program, including forcing contractors to sign PLAs with all labor organizations (and not just one labor organization, as was a problem with the 1800 F Street project).

In addition, despite negative media attention, a congressional hearing and inquiry from House GOP members, the GSA has expanded its policy of PLA favoritism to all GSA projects exceeding $25 million. However, the impact of this change has been limited because the GSA’s budget for new construction has been slashed dramatically during the past few years due to fiscal concerns, a glut of federal properties and the scandal that rocked the agency in April 2012.

It’s time for the GSA to shelve its anti-competitive and costly pro-PLA policy once and for all, and restore economy and efficiency in federal contracting.

The post Delays and Increased Costs: The Truth about the Failed PLA on the GSA’s Headquarters at 1800 F Street appeared first on The Truth About PLAs.

The IG report, documenting the GSA’s excessive, wasteful, and in some cases impermissible spending, forced the resignation of GSA Administrator, Martha N. Johnson, and the firing of Public Buildings Service (PBS) Chief Robert A. Peck and another Johnson deputy. Four regional commissioners who planned the October 2010 conference are on administrative leave.

Linda Chero, previous Mid-Atlantic regional commissioner with the GSA’s Federal Acquisition Service, has replaced Peck. PBS oversaw billions of dollars worth of federal construction projects funded by the federal budget and the American Recovery and Reinvestment Act.

The scandal has grabbed newspaper headlines, sparked outrage from political commentators and drawn White House ire.

Inexplicably, there was little reaction from the media and no investigation from the GSA’s IG office when the GSA’s PBS wasted nearly four times as much money on a blatant handout to Big Labor in 2010.

GSA Policy Funnels Construction Contracts to Obama’s Political Patrons
The GSA approved a change order of an additional $3.3 million on a $52.3 million construction contract to ensure stimulus-funded renovations to the Lafayette Federal Building in Washington, D.C., were built with union labor through a union-favoring project labor agreement (PLA).

As a result of President Obama’s Executive Order 13502, issued Feb. 6, 2009, federal agencies like the GSA are strongly encouraged, on a case-by-case basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost.

The order, which effectively steers federal contracts to unionized contractors and union workers, is a gift to well-connected special interests that have spent hundreds of millions of dollars in support of President Obama and his Democrat colleagues in Congress.

Executive Order 13502: Obama’s Gift to Big Labor. Image courtesy of The Boston Globe, “Obama kowtows to labor unions,” 10/07/09.

What is a Government-Mandated PLA?
Anti-competitive government-mandated PLAs are special interest schemes that require contractors to promise that most or all of their workforce building a PLA project will be hired through a union hiring hall or built by card-carrying (and unfamiliar) union members. The terms of PLAs vary from project to project because these pacts are one-time contracts between contractors and labor unions for a specific construction jobsite. However, when required by local, state and federal agencies, contractors can’t win taxpayer-funded contracts unless they agree to the government-mandated PLA.

In some PLAs, merit shop contractors are permitted to use a limited number of existing nonunion employees, but they are forced to join a union and/or pay union dues and fees in order to work on a project funded by their tax dollars.

It is a raw deal for an industry workforce already facing a 17.2 percent unemployment rate, according to government data. It is especially discriminatory to the 86 percent of the U.S. construction workforce that choose not to belong to labor union.

In addition, PLAs saddle contractors with archaic and inefficient union work rules that needlessly increase construction costs.

Finally, PLAs typically force merit employers to pay employee benefits into union-managed multi-employer pension funds, but employees do not see the benefits of the employer contributions unless they join a union and become vested in these plans.

Qualified Nonunion Employees and Experienced Contractors Victimized by PLAs
An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements,” found that nonunion employees of merit contractors forced to work under government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.

Merit contractors that offer their own benefits, including quality health and retirement plans, often continue to contribute to both existing programs and union programs under a PLA.  The McGowan report found that nonunion contractors are forced to pay in excess of 25 percent in benefits costs above and beyond existing prevailing wage laws as a result of this “double payment” attached to PLAs.

These requirements make it difficult for nonunion contractors to compete and results in increased construction costs. It is also unfair to employees who have earned this money for a secure retirement.

PLA Mandates Increase Costs and Reduce Competition
The costly and discriminatory terms and provisions in typical PLAs discourage competition from nonunion contractors and increase the cost of construction. Numerous studies have found that government-mandated PLAs typically increase the cost of construction between 12 percent and 18 percent. That translates into less building and fewer construction industry jobs.

PLA Mandates Are Politically Motivated Solutions in Search of a Problem
The Obama administration justifies the use of government-mandated PLAs because they allegedly produce “economy and efficiency” in government contracting. However, no credible evidence supports this claim. In reality, PLA mandates are an earmark for Big Labor bosses and contractors justified as a solution to a problem that doesn’t exist in federal contracting.

GSA’s PLA Policy Investigated by Congress, but Remains Unchanged
The GSA has taken an aggressive and indiscriminate approach to promoting the use of union-favoring PLA mandates.

GSA policy permits firms to submit a PLA offer or, a nonPLA offer (or both) on all GSA projects exceeding $25 million in total cost. However, PLA offers submitted by bidders receive extra credit in the technical evaluation category of the best value procurement process. The special treatment makes it difficult, if not impossible, for non-PLA offers to win contracts when competing against PLA offerors (see the 9/24/10 PBS Procurement Instructional Bulletin (PIB) 10-04-Revision 1 for more details on this policy).

The GSA’s discriminatory PLA preference policy has led to delays, reduced competition and increased costs. Requests for congressional investigation forced the GSA to testify at two 2011 House Oversight and Government Reform Committee hearings to justify its wasteful favoritism.

See GSA deputy administrator Susan Brita’s attempt to justify the waste on the Lafayette Building at 44:16 of this hearing video and check out more highlights from the hearing after the jump.

Despite the congressional investigation, the GSA’s wasteful and discriminatory PLA preference policy remains unchanged. They refused to answer tough questions regarding their PLA policy and have provided the public with no evidence that it is beneficial to the public.

Union contractors and union construction workers continue to receive a considerable advantage when competing for contracts to build taxpayer-funded GSA construction projects. Numerous projects have been awarded to contractors submitting PLA bids at the expense of qualified firms opposed to PLA mandates. Full and open competition has been curtailed in violation of the federal Competition in Contracting Act. Taxpayer dollars have been wasted. Skilled nonunion craftspeople and their qualified employers have been denied jobs and opportunity as a result of this needless policy.

The waste and favoritism of the GSA’s PLA policy is comparable to the waste documented in the recent IG’s report.  If unchallenged, federal agencies will continue their unfortunate track record of waste, fraud and taxpayer abuse.

Congress and the media should renew their interest in the GSA’s anti-competitive procurement practices and call for reform. The GSA needs to be held accountable for any instance of waste, whether it be procuring conferences or construction services.

The post GSA Wasted Millions on Union Handout: Where’s the Outrage? appeared first on The Truth About PLAs.

The subcommittee, chaired by Rep. James Lankford (R-Okla.), heard testimony about the negative impact of President Obama’s controversial Executive Order 13502 and related regulations, which encourage federal agencies to evaluate whether to require project labor agreements (PLAs) on federal construction projects exceeding $25 million in total cost on a case-by-case basis.

UPDATE 12/9/11: Here is a transcript of the hearing.

Because federal and federally assisted construction projects subject to government-mandated PLAs and preferences discourage competition from qualified contractors and their skilled employees that are capable of performing these taxpayer-funded projects, witnesses and Republican subcommittee members explained how the Obama order has resulted in a dysfunctional federal procurement system rife with favoritism and waste.

“Does requiring a small business with no union affiliation to sign a labor agreement as a condition of doing business with the government increase opportunities for small businesses?” chairman Lankford asked in his opening statement. “Requiring a PLA as a condition to compete serves only to restrict, not increase, competition. The current policy discourages or even excludes nonunion firms, including the vast majority of small businesses, from competing for government projects.”

“Project labor agreements mandated by federal agencies result in increased costs for contractors and taxpayers, unnecessary procurement delays and inject uncertainty and favoritism in the federal procurement process, ” said Associated Builders and Contractors (ABC) member Kirby Wu, 2011 chair of the ABC New Jersey Chapter and president of Wu & Associates, Cherry Hill, N.J.

“Our company and other quality small businesses, general contractors, subcontractors and their skilled employees deserve a fair opportunity to provide the public with the best construction product at the best price.”

Witnesses Say PLA Mandates Are Bad Public Policy
Similar to the testimony at a March 16 House Oversight and Government Reform subcommittee hearing chaired by Rep. Jim Jordan (R-Ohio) on PLA mandates and other regulations harming the construction industry, witnesses described how government-mandated PLAs harm their businesses, employees and taxpayers.

Wu testified about how government-mandated PLAs harm merit shop employees and discourage competition:

“Government-mandated PLAs have the practical effect of creating jobs exclusively for unionized construction tradespeople by forcing union representation or compulsory union membership, inefficient and archaic union work rules, payment of union dues, forced contributions to union pension and benefit plans, and a host of other problems on merit shop employees – like my firm’s employees – that have freely decided not to join a union.

Injecting PLA mandates into the federal procurement process discourages competition from qualified contractors – like my company – who employ 87 percent of the U.S. construction workforce.

It is needless discrimination based on labor affiliation and it hurts merit shop employees as much as it hurts their general contractor and subcontractor employers.”

Wu described his unfortunate experience with a PLA mandated by the U.S. Army Corps of Engineers (USACE) on a 2010 federal project in Camden, N.J., that was eventually the subject of a bid protest filed by Wu with the Government Accountability Office (GAO). In the face of the bid protest, the USACE dropped the PLA mandate and replaced it with an illegal and discriminatory PLA preference that awarded additional credit/points in the best value procurement process to contractors that voluntarily submit a bid containing a promise to utilize a PLA:

“We did not pursue the contract further because we felt it was not worth the investment of additional company resources to prepare the bid and compete against contractors submitting PLA offers in this distorted playing field.

This entire exercise resulted in lost time and money for our small business that we could have invested back into our workforce and company.  It also resulted in needless procurement delays exceeding two months, as the Corp’s bid submission deadline was extended a number of times to accommodate the PLA controversy.

Remarkably, the contract was eventually awarded to a merit shop general contractor at a bid price nearly 15 percent below the $16.5 million estimate without a PLA offer. And today the project is reportedly on time and on budget.  The winning contractor would have been discouraged or eliminated from competing, if not for our efforts to fight the PLA mandate.”

Broad Support for the Government Neutrality in Contracting Act (H.R.735)
Witnesses also advocated for Congressional passage of the Government Neutrality in Contracting Act (H.R. 735), introduced by Congressman John Sullivan (R-Okla.), which prohibits the federal government from mandating anti-competitive and costly PLAs on federal and federally assisted construction projects.

H.R. 735 essentially codifies into law President George W. Bush’s Executive Orders 13202 and 13208, which ensured that taxpayers received the best construction at the best price on more than $147 billion worth of federal construction projects and hundreds of billions of dollars of federally assisted construction projects by prohibiting government-mandated PLAs on federal and federally assisted construction projects. The orders, which maintained fairness and neutrality in government contracting, were repealed by President Obama’s pro-PLA Executive Order 13502 in February 2009, just a few weeks after he assumed the presidency.

“It is clear to us that only Congress can bring a timely halt to the political favoritism in contract awards that is being promoted by the administration in the guise of Executive Order 13502,” ABC General Counsel Maurice Baskin told the subcommittee.  “The bill will prohibit federal agencies once and for all from awarding construction projects based on the willingness or unwillingness of contractors to enter into labor agreements. As the bill states, agencies shall neither require nor prohibit contractors from adopting PLAs as a condition of being awarded federal construction work, nor discriminate on that basis.”

“AGC opposes federal mandates for project labor agreements and supports H.R. 735,” testified Associated General Contractors General Counsel Mike Kennedy.

A diverse coalition of construction industry and employer groups support H.R. 735:

Associated Builders and Contractors (ABC)
Associated General Contractors (AGC)
Construction Industry Roundtable (CIRT)
Independent Electrical Contractors Association (IEC)
Electronic Security Association (ESA)
Merit Elevator Contractors Association of America (MECAA)
National Association of Minority Contractors (NAMC) – Philadelphia Chapter
National Association of Government Contractors (NAGC)
National Association of Women in Construction (NAWIC)
National Black Chamber of Commerce (NBCC)
National Federation of Independent Business (NFIB)
National Ready Mixed Concrete Association (NRMA)
National Stone, Sand & Gravel Association (NSSGA)
National Utility Contractors Association (NUCA)
Small Business and Entrepreneurship Council (SBEC)
U.S. Chamber of Commerce
Women Construction Owners and Executives, USA (WCOE)

Congressman Sullivan Testifies in Support of H.R. 735
Rep. Sullivan testified before the subcommittee in support of H.R. 735 and cited examples of federal and federally assisted construction projects that resulted in favoritism and increased costs as a result of a government-mandated PLA:

“Government-mandated PLAs are not only discriminatory, but they are also hurtful to a struggling industry that is already facing unemployment above 17 percent. For example, yesterday The Wall Street Journal reported on a $70 million highway construction contract in New York – funded at least 80 percent by the Federal Highway Administration – that has been scrutinized for the decision to subject it to a PLA. While 27 percent of New York’s private construction workforce is unionized, that means  the employers of 73 percent of New York’s construction workforces, who having been facing steep job losses over the past few years, are discouraged from bidding for this project. Unfortunately, limiting competition comes at taxpayer expense. The article (pdf) mentions that the PLA cost taxpayers an additional $4.5 million because the lowest responsible bidder, a merit shop contractor, was thrown off the project in favor of a union contractor, because the merit shop contractor would not sign a PLA.”

Rep. Sullivan highlighted the added costs to the federal Lafayette Building project in Washington, D.C., a project TheTruthAboutPLAs.com has written about numerous times:

“A U.S. General Services Administration (GSA) renovation project for the Lafayette Federal Building in Washington, D.C. was awarded to a federal contractor without a PLA at $52.3 million.  However, after this contractor agreed to a PLA pushed by the GSA for the project, the contractor added $3.3 million to the cost of the project.  The added $3.3 million isn’t the result of increased material costs, revised blueprints or a more aggressive completion deadline. The contract was awarded to the same contractor with the same proposal, and the only difference was the PLA.

These are just two examples, but there is no doubt that there are many more stories reflecting the true colors of government-mandated PLAs.”

Rep. Sullivan’s office issued this media statement on the hearing:

“In granting my bill, HR 735, the Government Neutrality in Contracting Act, a hearing today, the subcommittee has taken an important step in reestablishing fair and open competition in federal construction contracting. By overturning President Obama’s executive order, which was designed to funnel contracts to unions, this bill will save and create jobs in the struggling construction industry and potentially save taxpayers billions of dollars in inefficiencies.”

“It is simply unacceptable to allow the federal government to discriminate against 87 percent of the U.S. private construction workforce – and the 98 percent in Oklahoma – who seek federal contracts. American tax payers deserve to know that federal contracts are being awarded based on sound, credible criteria such as quality of work, experience and most importantly cost. Government mandated PLAs can drive up the cost of construction projects as much as 18 percent, which is the last thing our economy can afford right now. We owe it to businesses in Oklahoma and across the country whose livelihood depends on their ability to bid on construction projects in a fair and open process.”

(Note: Read a Feb. 16 statement from Rep. Sullivan on H.R. 735 here.)

Are PLA Mandates a Solution in Search of a Problem?
Professor David Tuerck of the Beacon Hill Institute (BHI) at Suffolk University in Boston summarized BHI’s extensive research on government-mandated PLAs, which found that on average, government PLA mandates add an additional 12 percent to 18 percent in construction costs when compared to similar construction projects without a PLA.

Tuerck discussed 2009 research by BHI on federal contracting from 2001 until early 2009, when President Bush’s Executive Orders 13202 and 13208 prohibited government-mandated PLAs on federal and federally assisted construction contracts.

If President Obama and PLA proponents’ claims that PLAs are needed to advance the economy and efficiency in federal contracting are true, “President Bush’s ban on mandatory PLAs should have produced many instances of the delays, strikes and cost overruns against which PLA advocates frequently warn,” said Tuerck.

Tuerck testified that BHI’s research found no federal agencies “could substantiate the occurrence of any delays or cost overruns on Bush-era projects costing $25 million or more that were attributable to the absence of a PLA.”

GSA Witness Admonished for Agency PLA Preference Policy, Questioned About GSA’s Study Critical of PLA Mandates
Susan Brita, deputy administrator for the GSA, provided testimony (pdf ) about the GSA’s experiences with PLA mandates and PLA preferences since President Obama signed Executive Order 13502.

Brita described the GSA’s pilot program, launched in August of 2009 according to this GSA memo, which is in the process of evaluating the performance of PLAs on seven of 10 large-scale federal construction projects managed by the GSA:

“During the implementation of our Recovery Act Spend Plan, GSA conducted a pilot program with Recovery Act projects to consider the use of a PLA. For this pilot program, GSA selected projects with budgets of more than $100 million. Ten projects met this criterion and were selected for the pilot. Of these ten projects, seven have PLAs and three do not.”

Rep. Tim Walberg (R-Mich.) questioned Brita about the GSA’s negative experiences with PLAs on two of the GSA’s PLA pilot projects in Washington, D.C.: the GSA HQ at 1800 F Street (40:55) and the Lafayette Building previously mentioned by Rep. Sullivan (44:13), which experienced added costs and procurement delays.

Brita also explained the GSA’s PLA preference policy, launched April 30, 2010, according to this GSA memo, which applies to all GSA projects exceeding $25 million in total cost.  The GSA’s anti-competitive and discriminatory PLA preference policy awards 10 points in the best value procurement process only to contractors that voluntarily submit a bid containing a PLA agreement.

Drawing from his experience bidding on projects in the private sector prior to becoming a Congressman, Rep. Mike Kelly (R.-Pa.) argued that the GSA’s PLA preference discourages some contractors from competing for federal contracts by tilting the RFP process in favor of contractors submitting PLA offers.

“A 10 percent bonus doesn’t level the playing field, that totally tilts it,” said Kelly. “You set those type of parameters [in GSA RFPs], you are setting them to get one type of a bidder to get the award.”

“I see it as exclusionary,” said Kelly. “I don’t see it as increasing the field of bidders, I see it as narrowing it down.”

Chairman Lankford and Kelly questioned Brita about the findings of a consultant’s report funded by the GSA that was critical of government-mandated PLAs on construction projects in the GSA’s PLA pilot program in various construction markets across the country.

Brita’s testimony indicated the consultant’sJan. 27, 2010, report was “suspended” and only remains in draft form. Brita said it was shelved to “let the marketplace determine the applicability of PLAs rather than rely on the report.”

Chairman Lankford and Kelly suggested the report was suspended because its initial findings contradicted the GSA’s existing PLA pilot program, which had already been well underway since its launch in August 2009.

“It seems to me that the information they [the GSA] got back is not consistent with what they were looking to find,” said Kelly.

In addition, subcommittee members and witnesses raised objections to the GSA’s April 2010 implementation of the anti-competitive and discriminatory PLA preference policy that awards additional credit to PLA offerors since the GSA’s report was critical of PLAs in various markets across the country.

Note: This exchange between Kelly and Brita pretty much sums up the problems with the GSA’s PLA preference policy.

Brita and Office of Management and Budget’s Office of Federal Procurement Policy administrator Dan Gordon defended the GSA’s PLA pilot program and PLA preference policy.

Gordon explained that in the GSA’s pilot program, there were instances where bidders submitting a PLA offer won the project and there were instances where a bidder submitting a non-PLA offer won. He maintained that the GSA was not “tilting it one way or another” but did not provide any data or meaningful analysis to support this claim.

TheTruthAboutPLAs.com has long argued that the GSA’s PLA preference policy reduces competition and is a de facto PLA mandate when a PLA offeror submits a PLA bid.

Brita explained there would be a future report issued on the results of the GSA’s 10 PLA pilot projects, but that the initial findings indicated there was no evidence of reduced competition or increased costs resulting from PLAs on these projects.  However, Brita did not provide the subcommittee with any evidence to support this claim.

Of course, it would be fallacious reasoning to jump to broad conclusions about the impact of federal PLA mandates on competition and cost from the GSA’s bidding results when the GSA is skewing the participation of qualified and available bidders by awarding additional credit to voluntary PLA offerors through their PLA preference policy.  It is also unlikely that this flawed experiment will perform any meaningful analysis about the added costs resulting from reduced competition from the pool of qualified and experienced federal subcontractors.

In any case, because the hearing exposed the GSA’s track record of suppressing data that conflicts with their existing politically-motivated policies, the GSA should present the results and raw data of their bidding experiment to an independent evaluator and make the raw data available to the public in a transparent manner.

Susan Brita (22:14)
Deputy Administrator
General Services Administration

Note: Panel II concludes at 16:00 of second video:

Click here to view the video on YouTube.

David Tuerck (22:13)
Executive Director
The Beacon Hill Institute

Kirby Wu, AIA, LEED AP (28:40)
Wu & Associates, Inc.

Mike Kennedy (34:50)
General Counsel
The Associated General Contractors of America

Further Reading:

• GSA’s Policy of Big Labor Favoritism Draws Congressional Inquiry (12/18/10).
• ABC News Release: ABC Testifies on Problems with Project Labor Agreements before House Committee (06/03/2011) (pdf)

The post ABC Members Testify in Support of Legislation Restoring Fairness in Federal Contracting appeared first on The Truth About PLAs.