Federal Times “This Week” News Brief: Project Labor Pacts Boost Costs, Study Finds

0 September 30, 2009  Federal Construction

Federal Times, the premier news source for federal government managers, covered the September 23 release of the Beacon Hill Institute’s (BHI) study, “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” in their September 28 “This Week” news briefs.  The BHI study found that PLAs significantly increase construction costs on federal projects.  Additionally, the BHI review of federal construction projects from 2001-2008, the years under which government-mandated PLAs were prohibited, revealed that there were no instances in which labor disruptions occurred that resulted in significant project delays or increased costs.  The study concludes, “The justifications for PLAs provided by Executive Order 13502 are unproven.”

Here is the “This Week” news brief text:

Project labor pacts boost costs, study finds

A new Obama administration policy encouraging use of union agreements for large federal projects will significantly increase construction costs, a new industry study finds.

Had Obama’s order been in effect in 2008, covering about $60 billion in construction projects awarded that were worth $25 million or more, the additional cost to taxpayers would have been between $1.6 billion and $2.6 billion, according to the study by the conservative Beacon Hill Institute.

Moreover, the institute refuted the administration’s claims that so-called project labor agreements (PLAs) would save money because it would prevent construction firms from going on strike or otherwise slowing down construction projects with lengthy labor disputes. The Office of Management and Budget was unable to provide any examples that federal projects undertaken during the Bush administration, when most PLAs were outlawed, suffered significant delays or cost overruns due to labor issues.

The Federal Acquisition Regulation Council is crafting changes to federal procurement rules to enact Obama’s February executive order, which encourages agencies to require construction firms for large federal projects to enter into PLAs.

This is the second time Federal Times has covered President Obama’s Executive Order 13502.  In a September 7 article titled, “Administration Policy on Labor Agreements Draws Fire,” Federal Times did a great job uncovering the problems PLAs pose for federal procurement.

Here is an excerpt:

The Associated Builders and Contractors, an advocacy group whose members employ 2 million construction tradesmen, says PLAs cut out nonunion companies from federal business because of the additional costs they impose.  All workers must pay union dues whether they belong to a union or not, and the companies must contribute to union pension and benefit funds on behalf of their employees, who won’t receive the benefits unless they join the union.

The agreements also require companies to adhere to union work rules that limit employees from performing multiple tasks, so companies must hire additionally employees to handle individual tasks that could be handled by fewer employees with skills that cut across trades.

Ben Brubeck, director of labor and state government affairs for the organization cites various studies that indicate PLAs increase the cost of construction between 10 percent and 20 percent.  However, other studies show there can be significant cost savings by consolidating multiple collective bargaining agreements into a single PLA.

Brubeck said requiring agencies to use PLAs is a blatant attempt by unions to generate additional members.  Less than 16 percent of the nation’s private construction workforce belongs to a union, according to the Bureau of Labor Statistics.

“PLAs are used to discriminate against nonunion contractors,” Brubeck said.

Be sure to visit TheTruthAboutPLAs.com’s earlier posts on Executive Order 13502 for more information on how these special interest handouts deny taxpayers to accountability they deserve from federal government contracts.

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