The Truth About Project Labor Agreements

The California State Senate’s Local Government Committee issued a 212-page report about design-build contracting on February 16 that includes comments from Associated Builders and Contractors of California criticizing language in design-build authorization laws that encourages project labor agreements (PLAs). Local governments as well as Governor Schwarzenegger are fans of the alternative construction delivery method of design-build. This popularity has given the California State Building and Construction Trades Council leverage to inject into design-build authorization laws what one top executive of a prominent California unionized design-build contractor described as “union ornamentation.” Without the inclusion of the union ornamentation, union lobbyists will order Democrats in the state legislature to reject any design-build authorization bill.

The report includes this summary of ABC of California’s testimony at a January 20 committee oversight hearing:

Kevin Dayton represented the Associated Builders and Contractors of California on this panel. Dayton told the Committee that his group does not oppose the design-build concept, but it has opposed design-build bills in the past because of three standard provisions ABC considers to be unnecessary and disadvantageous to non-union contractors. Nevertheless, he was “optimistic” that objectionable statutory provisions will go away. First, the current labor compliance program provision will be phased out because of SB 9xx (Padilla, 2009). Second, the LAO has recommended changes to best value criteria that include the possible elimination of provisions concerning safety records and skilled labor force availability. Dayton criticized the project labor agreement signed as part of the design-build process for the San Joaquin County administration building. His group had difficulty obtaining public records such as subcontractors’ bid lists and payroll records for this project. Dayton recommended that future design-build laws insure timely public access to those documents, and submitted specific draft language. After the hearing, Dayton provided the Committee with six specific proposed amendments to the design-build statutes.

ABC of California’s written submission to the committee, also included in this report, elaborates on the experience of the PLA on the San Joaquin County Administration Building:

We would also like to comment on our observations and experiences with a specific county design-build project – the San Joaquin County Adminstration Building. All contractors on this project were required to sign a Project Labor Agreement with construction unions, and county staff admitted at a meeting of the San Joaquin County Board of Supervisors on July 3, 2007 that the union agreement was imposed because of the relevant provision in the state’s design-build authorization law for counties.

Because of this Project Labor Agreement, our organization was interested in some of the characteristics of the project, in particular to evaluate union claims that the Project Labor Agreement would ensure local contractor participation and contractor compliance with labor laws. As a result, we filed Public Records Act requests with the county at various times to obtain subcontractor bid lists and certified payroll records.

We had a lot of difficulty obtaining the records, because county officials repeatedly claimed that records were in the possession of the design-build entity and they couldn’t provide them. We received such statements as “Since this is private bidding, the contractor is not providing the amounts of the bids to us. He is only giving us the name of the low bidder and who bid it” and “the County is unable to comply with your request, as it seeks a document which is not presently within the County’s possession, custody or control” and “the County is unable to comply with your request, as it seeks a document which is not presently in the possession of the Coun

The legislature should take note that it is granting counties and other public entities an exemption from the state’s traditional competitive bidding laws in order to promote the design-build bidding procedure. We must all admit that using best value criteria to determine winning bids introduces a higher degree of subjectivity into the bidding process, and for this reason there is a new opportunity available for favoritism, fraud, and corruption in public contracting.

Section 100 of the Public Contracting Code states explicitly that the purpose of the code is (a) to clarify the law with respect to competitive bidding requirements, (b) to ensure full compliance with competitive bidding statutes as a means of protecting the public from misuse of public funds, (c) to provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices, and (d) to eliminate favoritism, fraud, and corruption in the awarding of public contracts. In order to fulfill these objectives, ABC of California recommends that future laws authorizing design-build include a specific mechanism for insuring the public has reasonable and timely access to public records requests, as required by law.

ABC of California also recommends that the legislature continue to direct the Legislative Analyst to evaluate the use of design-build, with more attention paid to transparency and the details of how contractors and subcontractors are selected. We groan at the egregious case in 2004 of the University of New Mexico giving bidders additional points on their best value scores if they donated to the athletic department! The biggest threat to the future of design-build in this state is an expensive high-profile project that is found to be riddled with cronyism and corruption. Accountability of public entities to the Legislative Analyst may reduce the chances of such a case occurring.

ABC of California will be watching Senate Bill 879 (2010), introduced by Senate Local Government Committee Chairman Dave Cox (R-Roseville), which will be the legislative vehicle for reauthorization of design-build for counties. It may even become a bill that makes significant amendments to all five sections of the Public Contract Code and Education Code that authorize design-build contracting for various types of local governments. We hope these amendments include the elimination of language encouraging the use of ‘a collective bargaining agreement that binds all of the contractors performing work on the project.’

Incidentally, this may be the most comprehensive report ever assembled about the public policy issues surrounding the implementation and practice of design-build contracting.

Additionally, the February 4 Central Valley Business Journal reported on the union-backed language in design-build authorization laws, including the Project Labor Agreement incentive.

See the full report here: Faster, Cheaper, Better: How Counties Use Design-Build Contracting – The Summary Report from the Oversight Hearing.