Culver Campaign Fails to Understand How PLAs Harm Iowa Businesses

0 July 9, 2010  State & Local Construction, Uncategorized

The executive order signed earlier this year by Iowa Gov. Chet Culver is becoming a gubernatorial campaign issue, as Republican challenger Terry Branstad and others critical of project labor agreements (PLAs) make the case that these anti-competitive schemes will hurt Iowa business and taxpayers (“Culver defends project labor agreements for public projects,” The Iowa Independent, 7/6/10).

Quotes from the Culver campaign unwittingly expose that they are working hand-in-hand with Big Labor to promote PLAs, and they aren’t letting facts get in the way of promoting their special interest agenda.

Culver’s Executive Order 22 requires all state departments and agencies to consider using PLAs on large-scale construction projects valued at $25 million or more. It is similar to President Obama’s Executive Order 13502, only Obama’s order only applies to federal construction projects.

The Iowa Independent article provides some background on the controversy with Gov. Culver’s Executive Order 22 and the Iowa University Board of Regents::

A decision last month by the Iowa Board of Regents to use a PLA for an upcoming project at the University of Iowa has rekindled a fight over labor issues, starting with attacks by the Iowa chapter of Associated Builders and Contractors (ABC). The group sent out a release that claimed PLAs are “blatantly discriminatory,” and accused the Board of Regents of partisanship and acting under direct pressure from Culver.

“This is blatant discrimination and the Culver cronies on the Board of Regents took this partisan action under direct pressure from Gov. Culver,” Greg Spenner, president and CEO of Iowa’s ABC chapter, said in the release. “Iowans deserve leaders who do not make decisions simply meant to reward political donors. In this case, Big Labor is the winner, at the expense of the majority of Iowa workers—hard working, taxpaying citizens who have chosen not to join a union.”

Here is the Branstad campaign’s comment on Culver’s Executive Order:

“This is a covert, back-door way to usurp the legislative process and give payback to those whose support Culver desperately needs: The labor unions,” Branstad’s campaign manager, Jeff Boeyink, said in the February release.

Ali Glisson, communication director for the Culver/Judge campaign, responded to criticisms from the Branstad campaign about Culver’s support for PLAs in an email to The Iowa Independent:

“Throughout the course of the campaign, he’s [Branstad] made false or misleading attacks on Gov. Chet Culver without providing any background or citations for his accusations.”

Moreover, Glisson wanted to set the record straight on PLAs regarding the use of union and nonunion workers.

“The truth is that Project Labor Agreements don’t mean that the contract is always fulfilled by union workers,” she said. “Just look at the Iowa Events Center Project Labor Agreement. Bidding is open to all qualified bidders—both union and nonunion contractors. That was the same case regarding the Boston Harbor project, where, in the end, 102 of 257 subcontractors were nonunion.”

The Culver campaign should be wary about misleading the public about the true nature of anti-competitive PLA schemes. concedes that it is technically true that bidding for PLAs are “open” to both union and nonunion contractors (it would be illegal for a public entity to engage in “closed” contracting requirements based on union affiliation). However, contractors can’t win projects unless they agree to the terms and conditions of a PLA.

In practice, the terms and conditions of PLAs cut competition from qualified and skilled open shop contractors because they restrict the number of existing nonunion employees that contractors are permitted to employ on a PLA project. PLAs also impose inefficient union work rules and pension arrangements that make it extremely difficult for nonunion contractors to win contracts when competing against union contractors.

Big Labor knows the anti-competitive effect of PLAs on nonunion contractors, as do public officials who are in Big Labor’s pocket. Lobbying public officials to adopt PLAs to manipulate competition is the key reason why Big Labor likes PLAs and critics hate PLAs.

The Culver campaign cites an anecdote about nonunion participation on the Boston Harbor PLA project—a favorite example used to defend PLAs—that is fast and loose with the truth and indicates the Culver campaign is being fed bad information from Big Labor.

The Boston Harbor controversy started in 1998, when the late Professor John Dunlop cited a letter from the manager of the Boston Harbor PLA project (ICF Kaiser) in Congressional testimony. The Kaiser letter asserted that 16 open shop general contractors and 102 open shop subcontractors performed work under the union-only requirement.

However, a study of the facts underlying the Boston Harbor construction manager’s letter was published in 1999 by Professor James Andrews of Fitchburg State University.

Fitchburg State researchers obtained a list of the so-called open shop contractors reported in the letter. They then contacted many of the contractors identified by the project manager as being “open shop bidders” and asked the companies to confirm whether they were open shop or union contractors, and whether they bid on or performed construction contracts covered by the PLA.

The results of this research showed that more than 66 percent of the prime contractors surveyed by Fitchburg State, which had been identified as open shop contractors by the project manager, stated they were in fact union contractors. In addition, more than 54 percent of the subcontractors surveyed by Fitchburg, which the manager had claimed to be open shop subcontractors performing work on the project, were either union contractors or did not perform on the project at all.

Of those open shop subcontractors that did perform work on Boston Harbor, more than 64 percent were mere suppliers or professionals, and were not covered by the union-only requirement of the PLA.

The Fitchburg State study confirmed that while a small  number of nonunion companies participated on the Boston Harbor project, the PLA requirement discouraged many nonunion contractors from bidding on or performing the work, to the detriment of taxpayers. Claims to the contrary are wildly misrepresented and distorted.
Pages 11-16 of ABC General Counsel Maury Baskin’s report on PLAs, Union-Only Project Labor Agreements: The Public Record of Poor Performance (2005 Edition), thoroughly documents the adverse impact of PLAs on competition.

The Culver administration and campaign would benefit from knowing about these harmful effects before defending government-mandated PLAs and encouraging them on Iowa projects.

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