Thursday, by a bipartisan vote of 211 to 209, the House passed an amendment offered by Rep. Roscoe Bartlett (R-Md.) and cosponsored by Rep. Jeff Flake (R-Ariz.) to the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (H.R. 4310) that prohibits federal agencies from mandating anti-competitive and costly project labor agreements (PLAs) and using PLA preferences on federal construction contracts authorized by the NDAA.

“This is a victory for the nation’s merit shop construction contractors and the 86 percent of the construction workforce that chooses not to join a labor union,” said Associated Builders and Contractors (ABC) Vice President of Federal Affairs Geoff Burr. “With a construction industry unemployment rate of 14.5 percent, everyone deserves a level playing field to compete for this work, regardless of labor affiliation.

“The amendment passed today will ensure fair and open competition on government-funded construction contracts, as well as give taxpayers and the government the best possible construction product at the best possible price – completed safely and on time,” Burr said. “We thank the members of Congress who voted in favor of this amendment.”

Historic Win
This was the first time the U.S. House passed legislation ensuring fair and open competition in federal contracting. During the first session of the 112th Congress, the House voted three times on similar measures. Each effort failed by a razor thin margin (210-210 , 207-213 and 204-203).

On Friday, construction labor unions benefitting from PLA favoritism in federal contracting cut back-room deals and lobbied furiously for a re-vote on the Bartlett amendment. However, House members supportive of discrimination in federal contracting and their special interest lobbyists were unable to muster enough supporters to ensure a successful re-vote, so they withdrew their effort.

It was another victory for taxpayers, free enterprise and the merit shop contracting community.

The NDAA passed the House 299-120 on Friday afternoon.

House Appropriations Committee Supports Fair and Open Competition
On Wednesday, the House Appropriations Committee passed via voice vote a similar amendment offered by Rep. Jeff Flake (R-Ariz.) prohibiting government-mandated PLAs on federal and federally assisted construction projects funded in the MilCon/VA FY 2013 appropriations bill.

PLA proponents are expected to attempt to push an amendment to strike this language from the MilCon/VA FY 2013 appropriations bill when it is considered on the House floor later this month.

Efforts Restore Government Neutrality in Contracting
Both measures restore open competition and government neutrality toward government contractors’ labor relations on Department of Defense construction projects authorized and funded by these two pieces of legislation.

Provisions in both bills closely mirror language contained in President George W. Bush’s Executive Order No. 13202 and Executive Order No. 13208, which was upheld by the U.S. Court of Appeals for the District of Columbia Circuit decision in the Allbaugh case. The Bush executive orders declared that neither the federal government, nor any agency acting with federal assistance, shall require or prohibit construction contractors to sign union agreements as a condition of performing work on government construction projects.

Allbaugh remains the controlling case on government-mandated PLA law and affirms that governments can mandate a position of neutrality when it comes to a contractor’s use of a PLA, as is the intent of both of these measures.

From 2001 until it was repealed by President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502, President Bush’s executive orders ensured there were no government-mandated PLAs on $147 billion worth of federal construction projects and hundreds of billions of dollars of federally assisted construction projects.

Under the Bush orders, firms were free to enter into PLAs on a voluntary basis. Research found that the government’s position of neutrality toward PLAs fostered fair and open competition and contributed to the completion of safe, on-time and on-budget projects. In short, PLA mandates were unnecessary.

Additional research suggests government-mandated PLAs can needlessly increase costs and typically force nonunion construction workers to pay union dues, join a union and receive reduced take-home pay and no benefits during the life of a PLA project unless they join a union and become vested in union benefits programs.

The Government Neutrality in Contracting Act (H.R. 735), introduced by Congressman John Sullivan (R-Okla.) and cosponsored by 176 other House members, essentially codifies into law President Bush’s executive orders ensuring fair and open competition on federal and federally assisted construction projects.  It remains in the House Oversight and Government Reform Committee and was the subject of a subcommittee hearing last year.

Coalition Supports Efforts
A coalition of construction and business groups sent a letter to the full House in support of the Bartlett amendment to the NDAA highlighting concerns with the Obama administration’s anti-competitive and costly pro-PLA policy:

President Obama’s Feb. 6, 2009, Executive Order 13502 encourages federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost on a case-by-case basis in order to “advance the economy and efficiency in federal contracting.”

However, studies of construction projects subject to prevailing wage laws found PLA mandates increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA projects. Recent government-mandated PLAs on federal projects have resulted in increased costs, delays and discrimination.

In addition, the executive order and related FAR regulations have exposed agency procurement officials to intense political pressure from special interest groups and politicians to mandate PLAs on federal projects even when they are not appropriate.

The Bartlett amendment counteracts potential special interest favoritism by prohibiting federal agencies building projects authorized by this bill from mandating PLAs and implementing PLA preferences. However, it also permits federal agencies to award contracts to businesses that voluntarily enter into PLAs in accordance with the National Labor Relations Act.

During the Obama administration, a number of Department of Defense construction projects have been subjected to PLA mandates, or have attempted PLA mandates (here and here), discriminatory PLA preferences and onerous PLA surveys.

The diverse coalition opposed to government-mandated PLAs includes the following groups representing both union and nonunion employers and employees:

American Council of Engineering Companies (ACEC)
Associated Builders and Contractors (ABC)
Associated General Contractors (AGC)
Business Coalition for Fair Competition (BCFC)
Construction Industry Round Table (CIRT)
Independent Electrical Contractors (IEC)
Merit Elevator Contractors Association of America (MECAA)
National Association of Women in Construction (NAWIC)
National Black Chamber of Commerce (NBCC)
National Federation of Independent Business (NFIB)
Small Business & Entrepreneurship Council (SBEC)
U.S. Chamber of Commerce
Women Construction Owners & Executives, USA (WCOE, USA)

AGC’s letter supporting the Bartlett amendment highlights why union and nonunion contractors are opposed to government-mandated PLAs (emphasis added):

“Government-mandated PLAs – whether mandated in contract specifications or mandated by government rules, regulation or by Executive Order – effectively compel both union and open shop contractors to alter their hiring practices, work rules, job assignments, and benefits in order to compete for, or to perform work on, publicly funded projects. PLAs typically restrict the majority of employment to those workers whom unions are willing to refer to the project. For these reasons, PLA mandates – even when competition is facially neutral and open to all contractors – effectively discriminate against open-shop companies, small companies, and disadvantaged businesses, limiting the number of competitors on a project, increasing costs to the government and, ultimately, the taxpayers. They can also negatively impact union contractors because the PLA supersedes the hard-fought terms and conditions a union has negotiated to achieve in its collective bargaining agreement.

Project owners have many ways to ensure that their construction contractors complete their projects in a timely manner, and there is no reliable evidence that PLAs improve the performance an owner can expect in the absence of such an agreement. In addition, PLAs can give rise to jurisdictional disputes that would not otherwise occur.

The choice of whether to enter into a collective bargaining agreement should be left to the employers and employees who will be subject to the agreement; the choice should not be imposed as a condition to, or advantage in, competing for publicly funded work. In cases where the use of a PLA would benefit a particular project, the construction contractors otherwise qualified to perform the work would be the first to recognize that fact and would adopt a PLA without the mandate.”

The Bartlett amendment is supported by the National Taxpayers Union:

“PLAs diminish the benefits of competitive contracting and, by effectively encouraging unionization, undercut an individual’s right to choose whether or not to be represented by a union.  PLAs are often the source of cost overruns and higher construction expenses, both of which are passed on to the taxpayer.”

The National Right to Work Committee’s letter to Congress in support of the Bartlett amendment explains the negative impact of government-mandated PLAs on nonunion workers and contractors:

“The fact is, union-only PLAs between public entities and contractors discriminate against independent-minded workers and contractors.

Unfortunately, state Right to Work laws don’t fully protect workers from forced-unionism abuse under PLAs. While Right to Work laws protect workers from forced dues and fees, under a PLA, workers are forced under terms and conditions exclusively negotiated by union bosses.

Worse, PLAs often force contractors and their employees to “contribute” to mismanaged union pension and benefit plans even if their workers already have their own plan. And, unless those employees are willing to give up their independence altogether by joining the union, they’ll likely never see the supposed “benefits” they’ve been forced to pay for.

By requiring union-only PLAs on taxpayer-funded projects, the federal government is essentially telling open or merit shop contractors they either turn their employees over to union boss control or forget about applying for the work. In these tough economic times especially, that’s the last thing Congress should allow!

Forbidding non-union contractors and workers from projects their tax dollars help fund amounts to state-sanctioned discrimination, plain and simple. Congress should never allow federal agencies to actively shut out or discriminate against well-qualified workers and contractors solely on the basis of union affiliation.

The fact is, union-only “Project Labor Agreements” are nothing more than an attempt by union officials to take even more power at the expense of workers and taxpayers.

Adoption of the Bartlett Amendment is critical, not just for non-union workers but for taxpayers as well. Contracts for any publicly-funded project should be awarded on merit, not on the basis of union affiliation.”

Learn about government-mandated PLAs and Right to Work here.

Continued:

“…In fact, studies of other union-only PLAs confirm they increase taxpayer expenses by at least 20%.

It is simple. Under PLAs, higher costs are exacted from taxpayers while individual workers are forced under monopoly union control at best and forced to pay dues or lose their jobs at worst.

By adopting the Bartlett Amendment, you would not only be protecting the rights of American workers and contractors but also defending the pocketbooks of the American taxpayers. Only Big Labor gains from union-only PLAs — not the majority of workers and taxpayers, not the majority of businesses, and not our nation’s economy.

The overwhelming majority of American workers, those who are not union members, should certainly not be denied access to the projects paid for by their taxes simply because they choose not to surrender their bargaining rights to a union boss…”

Review studies on the increased costs and reduced competition resulting from government-mandated PLAs here.

TheTruthAboutPLAs.com applauds the House for passing the Bartlett amendment.  It is an important step in restoring fair and open competition in government contracting.

Check back for updates and media coverage.

Further Reading
Language of Bartlett Amendment No. 182
Floor Debate on Bartlett Amendment
Roll Call Vote on Bartlett Amendment
Coalition Letter of Support
ABC Letter of Support
AGC Letter of Support
NRTW Letter of Support
National Taxpayers Union Endorsement
Rep. Bartlett Press Release
Dear Colleague Letter of Support from Rep. Guinta (R-NH)
Building Trades Unions Materials Opposing Bartlett Amendment
Rebutting Misleading and Untrue Statements Union Lobbyists Make about Project Labor Agreements (PLAs)
The Legality of Legislation Restricting Government-Mandated PLAs
Packet Supporting Bartlett Amendment

Eric Christen, executive director of the Coalition for Fair Employment in Construction (CFEC) recently debated former San Diego City Council Member Donna Frye on the merits of Proposition A, which would ban government-mandated project labor agreements on city funded projects.

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

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.

However, data continues to show that construction union multiemployer pension plans (MEPPs) are in serious financial trouble, which calls into question the wisdom of elected officials pushing MEPPs onto qualified contractors and craft professionals through PLA mandates.

A new report shining light on the dreadful health of MEPPs for U.S. union workers and retirees estimates such plans are only 52 percent funded, with a $369 billion shortfall (Dan McCrum & Ajay Makan, “US Union Pensions Hole Deepens To $369 Billion,” Financial Times, 4/8/12 and “The Multiheaded Pension Monster,” WSJ, 4/23/12 ).

The March 26, 2012, Credit Suisse report paints a grim financial picture for firms, workers and retirees participating in MEPPs, concluding the deficit in these plans could more than triple if participating companies calculate their funding levels using fair market values.

Construction Industry MEPPs Are Troubled
While the report does not measure the specific exposure of construction industry MEPPs to underfunding, data from the Pension Benefit Guaranty Corporation (PBGC)—the federal agency created in 1974 to monitor and insure pension benefits in private sector defined benefit plans—indicates the construction industry is a key contributor to the drastic overall underfunding of MEPPs.

Fifty-five percent of the 1,488 MEPPs insured by the PBGC are in the construction industry, according to the most recent PBGC report using 2009 data (see table M-8: PBGC-Insured Plans and Participants by Industry (2009) Multiemployer Program).

The largest number of employees from any industry, about 3.885 million or 37.4 percent of all PBGC-insured MEPP participants (workers and retirees), are from the construction industry.

Construction MEPPs are responsible for about $167 billion (or 47 percent) worth of PBGC-insured MEPP underfunding (see Table M-14: Funding of PBGC-Insured Plans by Industry (2009, estimated) Multiemployer Program).

In 2009, the PBGC reported the construction industry was responsible for about $87.8 billion (or 45 percent) worth of PBGC-insured MEPP underfunding (see Table M-14: Funding of PBGC-Insured Plans by Industry (2007) Multiemployer Program).

The construction industry MEPP underfunding doubled in a few years, and it is likely to get worse. Yet, the public won’t know the real-time financial implications because there is a two-year lag in the public reporting of the health of MEPPs. The public does not yet know the health of MEPPs for the 2010 and 2011.

Will the MEPP Crisis Result in a Taxpayer Bailout?
The PBGC has publicly raised concerns about the simmering funding crisis because its balance sheet is impacted by the health of MEPPs. MEPP insolvency triggers the PBGC’s guarantee and loans are provided to the MEPP (those loans are rarely repaid by the MEPP) to help it pay guaranteed benefits (up to $12,870 per year per individual beneficiary), according to the Credit Suisse report. PBGC financing comes from insurance premiums paid by companies insured by the PBGC, as well as other sources such as investment income, plan assets and other recoveries. Taxes do not fund the PBGC plans…yet.

Engineering News-Record reported that PBGC’s fiscal 2011 report estimates the number of insolvent MEPPs would more than double in five years. (“Pension Agency Sees Rise in Aid to Ailing Multiemployer Plans,” 12/5/11):

PBGC estimates its “reasonably possible” obligations to multiemployer plan participants were $23 billion at the end of fiscal 2011, up from $20 billion a year earlier and $326 million in 2009. PBGC says the main reason for the increase in potential obligations to multiemployer plans is that two large plans were added to the “reasonably possible” inventory.

[snip]

PBGC reports it provided $115 million in aid to 49 multiemployer plans in 2011, up from $97 million in aid to 50 plans in 2010. Because added plans failed, PBGC says its multiemployer plan insurance program’s deficit jumped to $2.8 billion in 2011 from a $1.4-billion shortfall in 2010.

That’s right. The PBGC’s MEPP insurance program deficit doubled in one year. If this deficit continues to climb, expect calls from Big Labor and its beltway pals to orchestrate a backroom-deal PBGC bailout. Caps on annual monetary contributions from the PBGC to insolvent MEPPs and participants could be raised significantly because taxpayers would foot the bill instead of private revenue generated by the PBGC.

Sen. Robert Casey (D-Pa.) tried to execute a similar bailout in 2010, described in this Aug. 15, 2010, Wall Street Journal editorial. So did Reps. Patrick Tiberi (R-Ohio) and Earl Pomeroy (D-N.D.), according to this RealClearMarkets column by Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor.

If re-elected, President Obama and Democrats in Congress may consider a bailout of the union MEPPs through the PBGC. The current maximum of $12,870 per year MEPP beneficiaries are guaranteed through the PBGC is possible only if the PBGC has the money. If Democrats use the PBGC to bail out the union MEPPs, they first have to bail out the PBGC.

MEPPs in the Construction Industry
All MEPPs are defined by the Taft-Hartley Act of 1947. They cover workers from more than one employer. Employer contributions, determined by collective bargaining with a labor union, fund the plan. These plans exist to provide benefits to unionized workers in businesses characterized by frequent job and employer switching, such as union craftspeople in the construction industry. They do so by considering service with multiple employers under the same plan as if the worker had worked for the same employer during the life of their career.

Unionized contractors receive craft labor from union hiring halls composed of tradespeople who specialize in a specific craft (e.g., IBEW dispatches electricians and LiUNA dispatches laborers).  During their career, union workers may be dispatched by union halls to dozens of union-signatory contractor employers. Designated union bosses and union contractors administer pension plans that multiple union-signatory employers must pay into on behalf of employed trade union members in accordance with their respective collective bargaining agreement(s) with a construction union.

In contrast, quality merit shop contractors typically hire, train and invest resources in tradespeople who work exclusively for the company in a traditional employee/employer relationship. These contractors provide common benefits packages including a portable 401(k), paid time off, training and profit sharing to attract and retain skilled, experienced employees.

MEPPs Opposed by Merit Shop for Decades
As TheTruthAboutPLAs.com has stated many times, one of the reasons nonunion contractors are discouraged from competing for contracts on construction projects subject to government-mandated PLAs is because of typical provisions in a PLA that require employers to pay employee benefits into Big Labor’s MEPPs for the life of a PLA project.

In rare instances when nonunion employees (and union employees who do not belong to unions that are favored in PLAs) and their employers participate in PLA projects, employers must make benefit contributions to Big Labor’s MEPPs on behalf of their employees. These benefit contributions are forfeited to the MEPP unless employees join a union and meet vesting schedules defined by each plan.

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 employees of nonunion contractors forced to perform work under government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.

Besides stealing benefits rightfully earned by construction employees working on a PLA project, PLA pension provisions are a windfall for Big Labor’s MEPPs because the MEPPs don’t have to pay future benefits to those employees. Though small in comparison to overall funding shortfalls, these contributions prop up insolvent MEPPs and hide the flawed structure and Ponzi-scheme economics of MEPPs.

For decades, merit shop firms have offered alternative retirement plans for their workforce in lieu of MEPPs because they know union MEPPs cannot be financially sustained in the long term. Construction industry stakeholders have only recently publicly addressed MEPP underfunding, partially because of scrutiny from the financial industry.

For example, data from Moody’s Global Corporate Finance’s Sept. 10, 2009, report, “Growing Multiemployer Pension Funding Shortfall is an Increasing Credit Concern,” measured the crisis faced by construction industry MEPPs. Using 2007 numbers as a starting point, Moody’s estimates that 2008 underfundings for construction MEPPs ballooned to $72.484 billion, or a 54 percent funded level. In other words, for every dollar that these construction MEPPs owe, they hold only 54 cents of invested assets.

With unemployment in the construction industry at 17 percent as of March 2012, it is no surprise that contractors (specifically union contractors) that participate in these MEPPs are going out of business. And when MEPP participants go belly up, the burden on employers remaining in the MEPPs becomes greater. Bankrupt contractors that can’t pay their fair share to MEPPs create additional liability for a MEPP’s remaining employer participants, which produces all sorts of disastrous consequences like forcing more employers out of business, weakening already struggling MEPPs and forcing the PBGC to step in.

The Blame Game
The recession, decline in construction industry union membership, high industry unemployment rate, and a looming construction industry workforce shortage point to future insolvency for many MEPPs.

In response, Big Labor has tried to exploit its political clout to fix its pension woes by pushing lawmakers and unelected bureaucrats at the National Labor Relations Board to pass rules that will make it easier for unions to organize and add new members to the basement of their MEPP scheme (see the Employee Free Choice Act/Card Check, Executive Order 13502, Ambush Elections, Micro Unions and Invasion of Privacy).

In addition, unions have ratcheted up rhetoric blaming their pension troubles on Wall Street and the recession.  Instead of pushing reasonable solutions like adjusting benefits, increasing contributions, preventing fraud and waste, executing sound investment and management strategies, and diverting hundreds of millions of dollars of discretionary union political spending to pension plans, unions are playing the blame game and posturing for a bailout from Uncle Sam. The union MEPP crisis is a key reason why unions are hijacking the Occupy Wall Street movement and asking this loaded question: If Wall Street can get a bailout, why shouldn’t union pension plans?

However, the shaky financial condition of some MEPPs was obvious pre-recession and occurred under the watch of union pension trustees, such as this example from a TheTruthAboutPLAs post:

The Sheet Metal Workers National Pension fund discloses the plan’s annual funding levels for plan participants here.  The SMWIA union’s own pension fund documents indicate that on 1/1/2008, the fund was just 52.2 percent funded.

So just three months after the Dow closed at an all-time high of 14,164 on 10/9/07, the pension fund took such a big loss in the stock market that the plan ended the year at 52.2 percent funded? Something doesn’t smell right.

This July 26, 2009, WSJ article points to similar anecdotes of pre-recession MEPP underfunding in other industries and inequality between the pension plans of rank-and-file members and Big Labor Bosses:

Poor management probably deserves a lot of the blame for the union decline, but the exact causes are a mystery. An even bigger mystery is that the unions do a far better job with funds created for their officers and employees than for mere workers. The SEIU Affiliates, Officers and Employees Pension Plan—which covers the staff and bosses at its locals—was funded as of 2007 at 102.2%. The plan for the folks at SEIU international headquarters was funded at 84.8%.

A September 2009 report on union pension plans by the Hudson Institute, “Comparing Union-Sponsored and Private Pension Plans: How Safe Are Workers’ Retirements?” found similar results and highlighted the disparities between union officer pension plans and union member plans. So does this piece.

Get to Know Your MEPP
The U.S. Department of Labor provides a list of all MEPPs in the critical and endangered status here. We’ve sorted through the growing list and identified construction industry MEPPs in this easy-to-search spreadsheet. Check to see if the MEPP you are participating in (or your competitors pay into) is in trouble.

For too long construction industry employees, contractors and lawmakers have been fooled into thinking union MEPPs deserve special treatment, are without fault and are a safe retirement strategy. The truth is that many plans are not in good shape and haven’t been healthy even in the best of economic times. Construction industry MEPPs have offered little transparency, accountability or meaningful solutions.  Workers, contractors and taxpayers should expect more of the same without proper education, oversight and corrective action.

Share your thoughts, concerns and anecdotes on this issue in the comments section.

Required Reading

• Multiemployer Pension Plans Face Uncertain Future (pdf)
• A Hitchhiker’s Guide to Taft-Hartley (pdf)
• Outstanding WSJ analysis in this editorial (8/15/10): “The Next Pension Bailout” (pdf)
• Construction Unions Push PLAs to Save Underfunded Union Pension Plans
• Construction Union Pension Plans and Project Labor Agreements
• New Report Finds PLA Pension Requirements Steal From Employee Paychecks, Harm Employers and Taxpayers
• Construction Unions Posture for Pension Bailout?

Readers can keyword search “pensions” to review the numerous posts TheTruthAboutPLAs.com has written about the link between government-mandated project labor agreements (PLAs) and MEPPs.

UPDATE 5/15/12: The WSJ wrote about this piece, “The Union Pension Bomb: Multi-employer plans look to be in big trouble,” 5/14/12. Take a look.

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 Friday, March 23, Meriden Record-Journal op-ed writer Eric Cotton authored a strong piece urging the city not to require a wasteful and discriminatory PLA on two future school construction projects.  Here are the highlights from his op-ed “Skip the PLA“:

The local building trades unions are looking for an exclusive deal that would guarantee they receive the lion’s share of $220 million in renovation work, overriding the normal bidding process. In return, the city would get access to qualified union contractors, a guarantee of no work stoppages and assurances that 30 percent of the work would go to local residents, if possible.

But there’s already an abundance of qualified contractors available. With jobs in the construction industry so scarce, it won’t be difficult to find good people — union or non-union — to work on the high schools. Strikes and other work stoppages are also unlikely. And city officials are already looking into other ways of setting goals for hiring local workers.

There’s little need, at least from the city’s perspective, for a project labor agreement, or PLA.

<Snip>

The city has to protect the interests of taxpayers. Residents can hardly afford to shoulder additional costs from the high school projects as they struggle to make ends meet. Controlling costs is a big part of making sure the renovations go smoothly and it starts with the competitive bidding process. But PLAs, by their very nature, eliminate competition.

“When you eliminate competition, prices go up,” Petro said.

The unions argue that non-union companies are welcome to bid on PLA projects, which is true. But those companies would need to abide by the terms of the agreement, which means they have to rely on the unions to provide most of the workers, all but a few essential supervisors. That makes submitting an accurate bid nearly impossible since the non-union companies will be using workers they’re unfamiliar with. Fringe benefits are also handled differently in union and non-union situations, putting non-union shops at a disadvantage when bidding on PLA projects. This effectively eliminates them from the equation.

Since Meriden happens to have a lot of non-union contractors, that could make it more difficult to meet local hiring goals.

<Snip>

At any rate, in this climate, the city will be better off handling the school projects through the normal bidding process and with union and non-union contractors ultimately working side by side at Platt and Maloney.

Mr. Cotton is exactly right.  PLAs have a long history of reducing competition, which leads to increased construction costs, and not guaranteeing a local workforce.

PLA mandates also discriminate against the 80 percent of Connecticut’s construction workforce that chooses not to join an union and won’t have the opportunity to fairly compete for projects funded by their own tax dollars.

We urge the Meriden City Council to stand firm against Big Labor’s pressure and say no to PLA requirements on future school construction.

It would have been the first government-mandated project labor agreement within the Central Coast counties of Ventura, Santa Barbara, and San Luis Obispo counties.

Before the vote, county supervisors heard a lengthy presentation from county public works staff and county counsel about hundreds of hours of work on negotiations with various stakeholder groups – in particular the Tri-County Building and Construction Trades Council and the Southwest Regional Council of Carpenters – to come to an agreement on provisions concerning core workforce limitations, jurisdictional dispute resolution, and mandatory union initiation fees and dues paid by all workers under the PLA. The county was not able to resolve differences between the Building Trades and the Carpenters concerning jurisdictional dispute resolution.

Supervisor Peter Foy pointed out that the county had spent more than $1 million trying to develop a PLA and made a motion to move forward in bidding the hospital without a PLA, which he regarded as unnecessary and wasteful. He even dared to refer to “the free market” and “the taxpayers” in his statement. That motion failed to get a second.

Supervisor Linda Parks complained that she was being forced to vote on a 33-page contract she hadn’t been able to read because it was provided by staff after 6:00 p.m. on Monday, March 12. Parks asked if anyone on the board had read it, and Supervisors Kathy Long, John Zaragoza, and Steve Bennett said they had read it. Supervisor Steve Bennett said there were no compelling new things in the PLA and it was time to move forward.

Supervisor Kathy Long then made a motion for the board to vote on the staff recommendation to adopt a PLA with a “safe harbor” provision on core workforce and jurisdictional dispute resolution for the Carpenters union, provided all parties sign the PLA by Friday, March 16. Board chairman John Zaragoza instead moved for adoption of the version of the PLA supported by the Tri-Counties Building and Construction Trades Council. That motion failed 2-2-1.

There are three prequalified design-build entities for bidding on the project: Hensel-Phelps Construction, McCarthy Construction, and Clark Construction.

Staff reported that Clark did not object to a PLA because union contractors would perform all of its major trade work and at least 90% of the total work. Staff also reported that Hensel-Phelps noted that it employs its own workers under the jurisdiction of the Carpenters trade (which a Carpenters union official claimed to comprise 30% of the work).

McCarthy was planning to use a large Merit Shop electrical contractor that has Ventura County employees. A McCarthy representative declared that if the county approved a PLA as proposed, it would drop its plan to bid unless the county provided time to prequalify unionized electrical subcontractors. According to Public Works staff, prequalifying more electrical contractors would delay the project for up to 4-6 months at a cost of $400,000 per month. Showing a low priority for open competition and fiscal responsibility, the board chairman John Zaragoza declared that the county would still have two bidders if McCarthy dropped out.

See material provided by staff to the board here.

News Reports:

Board can’t pass labor agreement for county hospital – Ventura County Star – March 14, 2012

…and lastly, (uh) to direct staff to evaluate and consider options for a Project Labor Agreement and Community Benefit Agreement and discuss those options with the (uh) Entertainment Sports Complex development and operation partners for potential inclusion in the subsequent definitive agreements.

Associated Builders and Contractors of California suspects a violation of the state’s Ralph M. Brown Act (a 60-year old law making California governments accountable to the people when they do the public’s business) when the Sacramento City Council inserted this unannounced directive concerning a Project Labor Agreement (and for a Community Benefit Agreement) into the motion to approve the new Kings arena. (The full motion was approved 7-2, with the debate and votes primarily revolving around funding sources for the arena.)

Nothing about a Project Labor Agreement or a Community Benefit Agreement was included in the agenda or staff report. (See Item 16-Entertainment & Sports Complex (PDF-2279 KB) [Updated 3-1-12 @ 6:30 pm]). Interested members of the public were NOT informed through public notice that the subject matter would include a direction to staff to evaluate requiring contractors to sign a Project Labor Agreement with unions to build the arena, or to require all parties to sign a Community Benefit Agreement.

The city manager and the assistant city manager did not mention a Project Labor Agreement or a Community Benefit Agreement in their opening presentations. They did not indicate having any meetings with labor unions during their public outreach.

While the Project Labor Agreement directive had long been expected, the Community Benefit Agreement was an interesting addition, opening numerous opportunities for mischief from local activist organizations. The Sacramento Central Labor Council, AFL-CIO would presumably want a Community Benefit Agreement to include a “displaced workers” provision requiring the arena developers to retain the employees (such as concession and parking employees) from the current arena. The agreement would likely include “union neutrality agreements” that allow unions to campaign to organize arena employees without allowing the employers to argue against it. It could also include all sorts of costly provisions not even publicly discussed to date. Examples could include (1) a requirement to use steel manufactured in the United States; (2) a requirement not to use contractors that engage in certain business activities or do business with certain corporations or countries; (3) bird-friendly non-reflective windows; (4) large one-time payments to specific community organizations and/or programs; (5) restrictions on building materials; (6) solar panels, waterless urinals, and other energy and water requirements.

Oblique remarks from a few city council members during their statements betrayed their knowledge that this provision was going to be added.

What special interest group provided this provision to add to the final motion? Well, since the State Building and Construction Trades Council of California is now bragging that the Sacramento City Council approved a PLA for the new Kings Arena (see SBCTC – City Council Endorses PLA for Sacramento Arena Project) and provides the exact wording of the motion in its victory announcement, one can guess that the Sacramento-Sierra Building and Construction Trades Council was behind it, probably in coordination with the Sacramento Central Labor Council, AFL-CIO.

In its notice about the motion, the State Building and Construction Trades Council mocks Associated Builders and Contractors for failing to qualify a ballot measure in the City of Sacramento that would have prohibited a Project Labor Agreement requirement on city contracts, including the new Kings arena. The notice describes the vote as “a stinging defeat for ABC, which tried to avert this outcome…”

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.