The Truth About Project Labor Agreements

At a Feb. 2 House Education and Labor Committee hearing, U.S. Representative Glenn ‘GT’ Thompson (R-PA) questioned U.S. Secretary of Labor Hilda Solis on President Obama’s pro-project labor agreement (PLA) Executive Order 13502 for federal construction contracts and asked why the U.S. Department of Labor (DOL) mandated a PLA on a Job Corps Center in Manchester, N.H. 

After a protest was filed against the PLA with the Government Accountability Office (GAO) by ABC member North Branch Construction of Concord, N.H., with ABC support and representation, the U.S. DOL cancelled its solicitation to construct the project.

Here is more on the hearing from a press release on Rep. Thompson’s website (“U.S. Labor Secretary Dodges Thompson’s Questions on Project Labor Agreements,” 2/3/10).

Thompson described the New Hampshire ordeal in further detail, “Last September, DOL issued a solicitation for construction of a Job Corps Center in New Hampshire that the Department declared was `urgently needed.’ Without explanation, the Department attempted to impose a Project Labor Agreement. After a local small business filed a protest against the PLA, the Department cancelled the solicitation, and has not re-issued it.

Thompson asked Solis, “Why did the Department cancel the entire solicitation of an `urgently needed’ project in the face of the bid protest instead of simply removing the PLA?”

Solis answered that in many instances PLAs have actually helped to reduce costs and that it is appropriate that the Department look for ways to keep costs down. She did not answer the question about New Hampshire.

Committee Chairman Rep. George Miller (D-CA) asked that Solis answer Thompson’s question in writing at a later date. TheTruthAboutPLAs.com will be sure to cover Solis’ response. You can view the entire exchange at the 85 minute mark at the hearing’s archived webcast.

To date, the DOL has not taken any additional steps to construct this project, demonstrating that special interest politics trump sound public policy and badly-needed job creation. The DOL opted to cancel the project instead of proceeding without a PLA which will not create jobs for New Hampshire residents and will not help the 24.7 percent unemployment rate in the U.S. construction industry.

Rep. Thompson summarizes the situation best.

“This is not an ‘us vs. them’ scenario, this is about American jobs. Contract decisions for the federal government should not be based on politics,” said Thompson. “True competition will provide the lowest cost, union or not. In this economic crisis, we need to maximize the job creation in this country. And while I commend the Secretary for acknowledging the need to mitigate costs, the Secretary of Labor should be making sure jobs are maximized, rather than catering to unions.”

It is concerning that Solis couldn’t answer Thompson’s question and demonstrated a limited understanding of government-mandated PLAs when she stated that PLAs reduce construction costs. In reality, anti-competitive PLAs increase costs, funnel contracts to special interests and deny taxpayers the accountability they deserve from government. Solis’s position on PLAs is alarming, especially since Section 7 of President Obama’s Executive Order 13502 directs Solis to determine the expansion of the federal government’s PLA policy [Emphasis added]:

Section 7. The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6, 180 days sets the deadline at Aug. 5 but an order hasn’t been issued]

States and local communities should take interest in the expansion of Executive Order 13502 via Section 7. Accepting federal assistance for construction projects with attached PLA strings that favor Big Labor could bust strained budgets. Will states and local communities swallow the 18 percent PLA premium? Can they afford to build four schools, hospitals, bridges and courthouses for the price of five?

A PLA mandate on federally-assisted projects will also cost jobs. The impact of higher labor costs on finite budgets translates into fewer construction projects. Less building means less jobs which will harm local, state and federal revenue streams.

TheTruthAboutPLAs.com urges Secretary Solis and elected officials in favor of government-mandated PLAs to reconsider their support of these costly, corrupt and anti-competitive special interest agreements.