The Truth About Project Labor Agreements

Today’s report from the Ohio Inspector General and article in the Columbus Dispatch provides a glimpse into the corrupt underbelly of public construction contracting (“Inspector general: School facilities chief too close to unions,” 8/5/10).  Here, Big Labor bosses all-too-frequently shakedown public officials and school boards for lucrative construction contracts. 

In this instance, TheTruthAboutPLAs.com has covered how former Big Labor boss Richard Murray, Ohio Gov. Ted Strickland’s (D) appointed director of the Ohio School Facilities Commission (OSFC), is under investigation for forcing school districts to utilize anti-competitive project labor agreement (PLA) schemes that funnel lucrative school construction contracts to unionized contractors and union labor after these special interest groups have contributed hundreds of thousands of dollars to Strickland’s campaign.

Besides the obvious corruption inherent in such crony contracting, the real outrage is that taxpayers are forced to shoulder exorbitant premiums – sometimes a 20 percent markup – resulting from inefficient union work rules and a lack of competition from qualified merit shop contractors and their skilled and local nonunion employees who are effectively prevented from competing for contracts because of union-favoring PLAs.

Unfortunately, the PLA crony contracting isn’t limited to Ohio. In one of his first acts after taking office, President Obama signed Executive Order 13502, which encourages federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost. It was widely viewed as a favor to Big Labor after they poured hundreds of millions of dollars into the campaign coffers of Democrats running for office in Congress and around the country during the last election cycle. 

Released this morning, the Ohio Inspector General’s report (and supporting evidence, see exhibit 1-12 and 13-26) is remarkable because the investigation is thorough, the evidence is overwhelming and the findings echo the hundreds of stories and emails sent to TheTruthAboutPLAs.com since we launched this blog in April of 2009 from concerned citizens, elected officials, contractors and construction employees and their families victimized by Big Labor’s special interest PLA racket.

The public and honest elected officials need to understand that this is the unfortunate and frequent reality when building trades union officials with a bias towards union members and union contractors are elected or appointed to positions of public trust.

Check out some key excerpts from Ohio Inspector General’s report after the jump:

• Our investigation found that the administration removed its previous OSFC director and appointed Murray in September 2009, in part, to improve relations with unions and ensure that unions were regarded as “constituents” or “stakeholders” at the OSFC. Murray had been a longtime union leader when he was appointed OSFC director. Rather than put unions on equal footing, we found that Murray provided them with undue access and accommodations. In ways large and small, Murray repeatedly failed in his responsibility to remain neutral on union matters.
• On April 22, 2010, Murray announced to the Commission that he would engage in a PLA for a $37 million project at the combined Columbus campuses of the Ohio School for the Deaf, and the Ohio State School for the Blind. In the absence of a local school district partner, the General Assembly granted the OSFC sole management authority. For Murray, adopting a PLA was more than a controversial policy decision; it posed what we believe to be an appearance of impropriety. Typical of PLAs, the agreement dictates a certain amount of each union employee’s hourly wages will be deducted for the local union hall, as well as for regional and state union umbrella groups. However, in this case, Murray belongs to Local 423, one of the unions engaged in the PLA. Local 423 will receive union dues from employees on the project; and, under the terms of the PLA Murray signed, Murray’s former employer, LECET, also will be paid for each hour of employee work. Separately, LECET’s partner organization, the Ohio Laborers’ District Council, also will receive a portion of each union employee’s wages. While the precise value of the PLA for these three union groups will not be known until the project is completed, we conservatively estimate the payouts could total $145,000. Given his ties to these groups, Murray should not have been involved in negotiating this PLA, nor should he have signed it.
• Encouraging union workers, regardless of whether they worked on a job site, to snoop on non-union contractors was an abuse of Murray’s authority on several levels. Not only was Murray inappropriately making plain his preference for union construction, he literally mobilized union labor against non-union contractors. These two factions compete for OSFC work and sometimes work side-by-side on projects. Promoting discord and taking sides demonstrated exceedingly poor judgment on Murray’s part.
• On numerous occasions Murray also accompanied union officials when they attempted to persuade local school officials to adopt a PLA. During one such meeting, the union representative berated school officials with profanities and racial slurs for 15 minutes while Murray sat silently by his side.
• Murray also made significant personnel and building-design decisions, based solely on complaints from union or trade representatives, without making any effort to substantiate the complaints. Murray immediately fired the OSFC chief legal counsel, who was unpopular with organized labor, and boasted about it at union meetings. When a union official complained about personality clashes with an OSFC project administrator in southern Ohio, Murray pulled her off several projects without verifying the complaint or even reviewing her work history or personnel file.
• Similarly, the Ohio Masonry Association, which represents union and non-union masons, complained about some school districts opting for OSFC-approved poured concrete walls, which eliminate the need for masons and bricklayers. Murray promptly suspended their use. Murray made the decision without checking the association’s claims about poured walls being inferior or soliciting opposing viewpoints.
• On January 8, 2010, Murray sought an Ohio Ethics Commission advisory opinion about whether he could work as a paid consultant for LECET [Murray was previously employed by a construction union advocacy group, the Laborers-Employers Cooperation and Education Trust]. Murray withdrew the request before the Ohio Ethics Commission could issue a determination, but for Murray to even consider such an arrangement was an astonishing indication of his divided loyalties.
• In the course of our investigation, we determined that the OSFC, which spends more than $1 billion a year, relies on a system prone to oversights and inconsistencies in the bidding process. The system, while predating Murray’s tenure, enabled Murray to impose his pro-union biases where there should have been better-defined policies and procedures. In particular, the OSFC lacks a uniform process for evaluating bids and disqualifying bidders that performed poorly on past OSFC projects. These shortcomings made the OSFC and Murray vulnerable to allegations of wrongful acts and omissions, and left them poorly positioned to defend themselves. As part of this report, we are making several recommendations, including standardization of the OSFC’s bid evaluation process, the documentation of contractors’ past performance, and clarification of the process for disqualifying “non-responsible” bidders. We also are recommending that the Commission take action to ensure the executive director demonstrates neutrality regarding school districts’ selection of contractors, regardless of prevailing wage or PLA matters.