First Federal Project Labor Agreement Under Obama Administration Riles Senator Gregg

0 September 18, 2009  Federal Construction, Uncategorized

The first government mandated project labor agreement (PLA) on a federal construction project during the Obama Presidency has been attached to a $10+ million U.S. Department of Labor (DOL) Jobs Corp Center in Manchester, NH. A statement released by Senator Judd Gregg (R-NH) highlights the problems with a government mandated PLA in New Hampshire, where just 8.7 percent of the construction workforce is unionized (“Gregg: Needless Labor Requirement Will Delay NH Job Corps Center,” 9/17).

With such a small union workforce available, it makes it virtually impossible for a New Hampshire contracting firm to have unionized employees to fill this requirement.  Furthermore, the Department of Labor requests that contractors exhibit three previous successful PLA projects, a request no New Hampshire contractors can meet.  And while the Department of Labor has designated this as a small business project, which would normally increase competitiveness for New Hampshire contractors, having the PLA requirement essentially prevents New Hampshire contractors from being able to successfully bid for this $35 million in-state construction project.

Senator Gregg stated, “The Administration’s decision to discriminate against successful and independent construction firms simply because New Hampshire employees choose to work in a union-free workplace and not bow down to the demands of big labor is extremely unfair to our state.  The request for bids issued by the Department of Labor requires that contractors employ a Project Labor Agreement (PLA) and requests they provide proof of completion of three prior PLA projects.  However, under these conditions there is not a single firm in our State that would be eligible to bid on this multimillion dollar construction project.  In a time of economic hardship, it is simply absurd to discriminate against local contractors and construction workers for the benefit of national labor unions.

“Further, this unfair practice could result in a lawsuit, which would only delay the beginning of construction for this critical project.  The Administration’s actions on this issue are completely backward.  Instead of expediting the construction of a Job Corps Center that will train and equip New Hampshire residents, while potentially creating New Hampshire construction jobs in the interim, the Administration has knowingly placed a roadblock on job training and increased economic activity in the Granite State. I urge the Administration to quickly reconsider this serious lack of judgment so we can get started on this essential project.”

The agrees with Senator Gregg’s sound evaluation of this discriminatory and costly PLA.

However, according to an article in the Manchester Union Leader, union officials disagree with Senator Gregg’s assessment of the PLA (“Gregg: Union rule threatens job center,” 9/18). The comments of Mark MacKenzie, president of the New Hampshire AFL-CIO, demonstrate an unrealistic and myopic point of view that represents narrow union special interests over those of qualified local non-union contractors and workers that deserve a fair shot at competing for work in their own state paid for by their own tax dollars.

“It may be an out-of-state contractor that bids the work, but it’s going to be New Hampshire people who work on the project,” MacKenzie said.

Unfortunately, MacKenzie ignores an inconvenient truth about PLAs: local union workers have preference over non-union local workers who are equally as qualified. In addition, typical PLAs give preference to non-local union members over quality local non-union workers.  These workers are called “travelers” and unless a PLA specifies that no travelers can be used, union workers from Boston will build this project instead of qualified New Hampshire contractors and their local workforce.

In other areas of the country, unions are quick to criticize the concept of out of state contractors winning local jobs, but in instances such as this, they conveniently amend their principles to suit their self-serving interests.

According to the article, PLA apologists such as Pat Long, former vice present of the New Hampshire Building Trades Council and a Democratic state representative, unwittingly makes an argument against PLAs:

“Under a PLA, a contractor would have to pay $37 an hour for ironworkers.

About $21 would go toward wages and the remainder toward retirement, health insurance and other benefits, he said. A non-union worker would get paid between $25 and $30 an hour, but get no benefits, Long said.”

Long is refering to a Basic Truth About PLAs that is offensive to non-union employees and their employers. If a non-union contractor signs a typical PLA, all employer contributions to an employee’s health, welfare and other benefit funds must be paid to union managed funds as stipulated in a PLA and applicable union collective bargaining agreements. 

Non-union employees will never benefit from employer contributions into union benefit funds unless they join a union and/or become vested in the benefit plans. Benefit plan vesting schedules are much longer than a typical construction project. In short, this scheme is a windfall for union plans because they don’t have to account for future liabilities and costs for the contributing non-union employee.  What’s worse is that PLAs prevent non-union employees from having benefits for the life of a project, unless their non-union employer continues to pay existing non-union benefit plans. This “double payment” of benefit costs is one of the reasons why taxpayers lose with PLAs -non-union contractors can’t give their best possible bid for a quality construction project.

PLA proponents often claim that without a PLA, non-union employees would not get health and reitrement benefits. That statement is absurd and is a misleading scare tactic. Non-union contractors offer attractive health and benefit packages. How else would they maintain a skilled and competent workforce to build the majority of public and private construction projects? And if non-union contractors didn’t offer competitive wages and benefits, wouldn’t more than  just 8.7 percent of New Hampshire’s construction workforce join a union?

In addition, because this is a federal construction job subject to Davis-Bacon wage rates, all contractors, regardless of their union affiliation, have to pay all construction workers in their specific trade (such as an ironworker) a set wage and benefit amount.

If you visit, you can look up the wage rates for a “Building” Construction Type in Hillsborough County, New Hampshire and see that the last federal Davis-Bacon Wage determination for ironworkers in that county was made on 3/15/08 and it requires that ironworkers be paid $21.15 in wages and $16.75 in benefits. The total package is $37.90 per hour. All workers have to be paid that amount in cash if a contractor does not offer a benefit program, otherwise, a worker is paid $21.15 per hour in cash and $16.75 per hour in benefits goes into a contractor’s existing health, retirement and benefit programs.  If employers pay ironworkers less than a total wage and benefit package of $37.90 per hour, they are breaking the law. (An ironworker’s salary and benefit totals about $79K per year ($37.90 * 40 hours per week * 52 weeks per year) if there is full year-round employment on a federal construction project in this county.)

Arguments such as, “non-union workers don’t get paid a fair wage [even though there is a federal law that addresses this issue], therefore, PLAs are necessary” are fallacies that need to be challenged.

The bottom line is that a PLA on this project is a barrier to much needed jobs for qualified New Hampshire construction employees. Employees should not have to pay forced union dues, obey restrictive and inefficient union work rules and forfeit employer benefit contributions to union benefit and pension plans unless they join a union in order to work on a PLA construction project paid for by their own tax dollars.  A PLA will actually prevent a non-union employee from receiving benefits for the life of a construction project.

Senator Gregg is correct. A PLA has no business on this project.

Update: View the U.S. DOL’s “sources sought” notice for this project (Solicitation Number: DOL009RI20791) here.  You can view the presolicitation notice (Solicitation Number: DOL099RB20811) here. The soliciation is scheduled to be published on 10/1.

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