Closed Shop

0 November 13, 2009  Federal Construction, Uncategorized

In Closed Shop, Kevin Mooney writes in the American Spectator about President Obama’s Executive Order 13502 and the impact the recent elections in Virginia and New Jersey may have on the fate of government-mandated project labor agreements (PLAs) which are commonly known as costly and corrupt paybacks to Big Labor:

Non-union construction workers could be locked out of new federal projects thanks to an executive order President Obama signed back in February on the sly as part of a payback to organized labor.

The election of Republican governors in Virginia, and especially New Jersey, who are both opposed to union-only favoritism in contracting, could complicate the administration’s efforts, at least on the state level. The loss of New Jersey must be viewed as a particularly acute setback, given how active labor bosses and White House operatives were in their failed effort to secure re-election for a long-time ally.

Industry leaders have responded vociferously to Obama’s order in detailed press releases that fault the administration for advancing discriminatory procurement practices in violation of competitive bidding laws. The directive received scarce media attention for months, even after the Office of Management and Budget (OMB) issued a memorandum to federal agencies in July encouraging them to implement the new rule.

What is the cost of Executive Order 13502 to taxpayers?

Read more after the jump.
A new studyestimates the cost of PLAs on taxpayers:

A new study from the Beacon Hill Institute shows that PLAs would increase construction costs anywhere between 12 and 18 percent in comparison to projects that are not subjected to union rules.

“Our examination of the record produces no evidence of any systematic connection between the absence of a PLA, on the one hand, and cost overruns or delays caused by labor disputes, on the other,” said David G. Tuerck, one of the authors of the study and Executive Director of the Beacon Hill Institute. Therefore, the justifications offered by the Obama Administration for reinstating PLAs are not supported by the evidence.”

In fact, the study estimated the effect Obama’s executive order would have had on projects, had it been initiated in 2008. According to the results, if President Obama’s Executive Order 13502 were in effect in 2008, construction costs would have increased an additional $1.6 billion to $2.6 billion. reported on this tidbit before, but it is worth highlighting again:

Back in New Jersey, Gov.-elect Chris Christie was very explicit in opposing perks for organized labor that would further inflate costs for the already beleaguered state taxpayers. On his campaign website, Christie pledges to end the use of PLAs in New Jersey. Item No. 50 of 88 ways to fix New Jersey reads as follows:

I will eliminate special interest labor union giveaways that increase spending and taxes by ending the use of project labor agreements, which drive up the cost of public construction projects and fail to deliver a public benefit at a time when the economy is shedding jobs and taxpayers are struggling to make ends meet.

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