GSA’s Policy of Big Labor Favoritism Draws Congressional Inquiry

2 December 18, 2010  Federal Construction, Uncategorized

After recent media reports exposed how the Obama Administration and the U.S. General Services Administration (GSA) have conspired to steer lucrative federal construction contracts to businesses willing to build federal projects utilizing a union-favoring project labor agreement (PLA),  members of Congress are starting to ask questions.

This week, nineteen GOP members of Congress, including the incoming House Oversight and Government Reform Committee chairman Rep. Darrell Issa (R-CA), sent a letter to GSA officials, asking why the agency is giving special treatment to Big Labor and unionized contractors on federal construction projects exceeding $25 million in total cost:

According to the enclosed April 30, 2010, memo from the GSA’s Public Building Service (Instructional Bulletin 10-4), the GSA has changed its procurement policy to encourage the use of PLAs on all GSA construction projects exceeding $25 million. It appears this change gives contractors who agree to execute PLAs an unfair advantage when competing against qualified contractors unwilling to use PLAs.  We are concerned that this violates the longstanding competitive bidding principles governing federal procurement.

The GSA’s PLA preference is problematic.  As members of Congress we have heard numerous complaints from the construction community that PLAs discourage competition from qualified contractors and their skilled employees, including small and minority and women-owned businesses.  PLAs serve as a barrier to new jobs for more than 85 percent of the U.S. construction workforce—those who have decided not to join a labor union—and several studies found that PLAs increase the cost of construction by as much as 18 percent.

The letter is also critical of the GSA’s recent PLA handout to Big Labor on the Lafayette Federal Building in Washington, D.C., which wasted at least $3.3 million of stimulus funds:

As documented on USASpending.gov, the GSA issued a $3.3 million change order for the general contractor on the Lafayette Building and Modernization Project in Washington, D.C. to build the project with a PLA. At a time when spending tax dollars efficiently and wisely must be a priority for all government agencies, this excess use of funds causes us concern.

According to a column by Mark Hemingway in The Washington Examiner (“Mark Hemingway: Mandatory PLAs put tax dollars into union coffers,” Dec. 5), a contract was originally awarded to the Lafayette Building’s general contractor for $52.3 million but the GSA issued a $3.3 million change order to ensure construction was subject to a union-favoring PLA.

Anti-competitive government-mandated PLAs are special interest schemes that force contractors to promise that most or all of their workforce building a PLA project must be hired through a union hiring hall or be card-carrying (and unfamiliar) union members. In some PLAs, open shop contractors are permitted to use a limited number of existing nonunion employees, but employees are forced to join a union and/or pay union dues and fees in order to work on a project funded by their tax dollars. It is a raw deal for an industry workforce already facing 18.8 percent unemployment according to November Bureau of Labor Statistics data.

In addition, PLAs saddle contractors with archaic and inefficient union work rules that inflate construction costs.

The Lafayette Building PLA is a clear example of government waste and crony contracting and it is an unfortunate example of how politics and favoritism are often injected into federal procurement. In return for political dollars and support from Big Labor that helped get President Obama elected to the White House, President Obama signed Executive Order 13502 just 16 days after he took office. The order repealed a prior executive order in effect since 2001 that prohibited government-mandated PLAs and ensured fair and open competition on federal and federally-assisted construction projects.

The Obama order also encourages federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost. The White House rabidly promotes the use of PLAs through Vice President Joe Biden’s Middle Class Task Force in consort with political appointees posted in federal agencies and members of Congress beholden to Big Labor special interests. More government-mandated PLAs mean more money flowing back into Big Labor’s coffers. This money later supports pro-PLA politicians  through campaign donations “voluntarily” deducted from the paychecks of rank and file union members by Big Labor bosses.

Government-mandated PLAs feed the endless cycle of corruption in the federal government (here is an obvious example) and in local and state governments across the country (for starters, evidence here, here and here).

The administration justifies the use of PLAs because they allegedly produce “economy and efficiency” in government contracting. The problem is that there is no credible evidence to support this claim. PLAs are an earmark for Big Labor bosses masked as a solution to a problem that doesn’t exist in federal contracting.

It is likely that Congress will be keeping a watchful eye on federal agencies engaged in unjustified PLA schemes in the 112th Congress.

To learn more about the GSA’s PLA preference and the Lafayette Building controversy, please review these resources:

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2 Responses to GSA’s Policy of Big Labor Favoritism Draws Congressional Inquiry

Michelle Malkin » Watch out: More Obama union pay-offs in the works December 20, 2010 at 12:19 pm

[…] related: According to The Truth about PLAs, 19 House Republicans are challenging the exclusive union preference on federal construction […]

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