ABC Wins Another Challenge Against Government-Mandated Project Labor Agreements on Federal Construction Projects

2 January 6, 2011  Federal Construction

TheTruthAboutPLAs.com is pleased to share a news release about ABC’s latest win against anti-competitive and costly federal government-mandated project labor agreements (PLAs). ABC, ABC members and TheTruthAboutPLAs.com continue to lead the fight against special interest PLA schemes on behalf of the construction industry, concerned taxpayers and supporters of the principles of fair and open competition in government construction contracting.

ABC WINS ANOTHER CHALLENGE AGAINST GOVERNMENT-MANDATED PROJECT LABOR AGREEMENTS ON FEDERAL CONSTRUCTION PROJECTS

For Immediate Release
January 6, 2011

 Contact: Gail Raiman, (703) 812-2073
Gerry Fritz, (703) 812-2062

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) today announced another victory in its fight against government-mandated project labor agreements (PLAs) on federal construction projects. As a result of a bid protest filed Oct. 18 with the Government Accountability Office (GAO), a PLA mandate has been removed from the bidding process for the construction of a $50 million U.S. Department of Veterans Affairs’ (VA) Research Office Building in Pittsburgh.

“PLAs are special interest schemes that force all bidders for construction projects to sign a labor agreement with construction unions as a condition of performing work,” said ABC President and CEO Kirk Pickerel. “This is the fourth successful bid protest that ABC has supported on behalf of one of its members against unlawful PLA schemes on federal construction projects. In similar protests filed on projects in New Hampshire, Washington, D.C., and New Jersey, federal agencies have withdrawn the PLA mandates. This case gives us the clearest indication yet that PLAs violate federal competitive bidding laws.”

ABC member company Bridges Construction of Pittsburgh, supported and assisted by ABC, filed a bid protest with the GAO. The protest challenged the VA’s PLA mandate that appeared in a September 10 bid solicitation (pdf) for the Research Office Building. The PLA requirement discriminated against qualified open shop contractors and their employees by imposing union dues requirements and inefficient and costly union work rules as a condition of performing work on the project.

During the course of the GAO protest, the VA revealed that its own PLA impact study found imposing a PLA on the project would increase costs by millions of dollars, would reduce the number of bidders and subcontractors, and would decrease the pool of skilled labor. In spite of this evidence, the VA claimed a PLA was supported by President Obama’s Executive Order 13502, which “encourages” federal agencies to impose PLAs on large construction projects if “consistent with law.”

After reviewing the facts of the case, the GAO strongly indicated it would sustain the protest of ABC’s member contractor under the federal Competition in Contracting Act (CICA), absent corrective action by the VA. In direct response to GAO’s action, on Dec. 21, 2010, the VA announced its withdrawal of the PLA mandate from the Pittsburgh solicitation. On January 5, 2011, the VA confirmed that adoption of a PLA would be completely “optional” for submitting offerors. According to the VA, “No additional points or weight will be assigned to proposals submitted with a PLA.”

“This result confirms ABC’s position that the open competition requirements of the federal CICA law take priority over President Obama’s pro-PLA Executive Order 13502,” said ABC President Pickerel. “The GAO agrees that no PLAs can be imposed on federal contracts in the absence of a compelling showing of need and evidence that PLAs will deliver increased economy and efficiency in federal contracting.”

“It’s time for the Obama administration to stop steering lucrative federal construction contracts to Big Labor – one of their largest political supporters – through unlawful government-mandated PLAs,” Pickerel said. “The American people deserve the best possible construction project at the best possible price. We can’t afford the increased costs, reduced competition and delays created by these special interest handouts. ABC will continue to fight for fair and open competition, and will challenge federal agencies attempting to impose unjustified PLAs on federal projects.”

Numerous studies show that PLAs discourage open shop contractors and subcontractors from competing for federal contracts, thereby increasing costs to taxpayers and discriminating against the majority of the construction industry workforce; or the 85 percent of the construction workforce that are not members of a labor union.

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Here are some interesting facts about this case:

TheTruthAboutPLAs.com readers may recall that in 2009, the VA hired a consulting firm to produce a study about the impact of PLAs in specific construction markets where the VA was looking to renovate and build new facilities (“Independent Study Finds PLAs Increase Construction Costs,” 11/2/09). While that study did not address the Pittsburgh market specifically, a similar study to the 2009 study was completed in 2010 for the VA on the Pittsburgh market. Like the 2009 study, it found a PLA would increase costs by millions of dollars, reduce the number of bidders and subcontractors, and decrease the pool of skilled available labor.

According to www.unionstats.com, just 20.3 percent of Pennsylvania’s private construction workforce belongs to a construction labor union and just 11.2 percent of ALL private workers (in all industries) in Pittsburgh’s Metropolitan Statistical Area (MSA) belong to a labor union.

The VA failed to produce evidence to suggest that a PLA would create economy and efficiency in federal contracting.  It is no surprise because a PLA is a solution in search of a problem.

If PLA advocates claim that PLAs are needed to prevent labor disputes, the public record from 2001 through early 2009 (when PLAs were prohibited on fedearl and federally assisted construction projects by President Bush’s Executive Order 13202 and 13208) clearly demonstrates that a lack of a PLA did not result in strikes and labor disputes on VA projects, as evidenced by this 2009 Freedom of Information Act request filed by ABC.  Aferall, Big Labor is the cause of labor unrest and worksite friction. Why reward such extortionary tactics with a PLA monopoly?

In addition, comments by PLA proponents claiming that a PLA ensures fair wages and benefits on this project are also bogus. All federal projects, regardless of a PLA, are subject to federal prevailing wage laws set by the Davis-Bacon Act. Davis-Bacon “prevailing wage” rates are typically articifially inflated union wage and benefit rates set by the government that must be paid to all workers, regardless of whether or not there is a PLA or they belong to a union. Wage rates can be found at www.wdol.gov. For example, the rate for an electrician engaged in “Building” construction in Allegheney County is $34.26 in wages plus $17.88  in benefits, for a total compensation package of $52.14 per hour. Assuming full employment through the year, that is a wage and benefit package of $108,451. That is without a PLA, folks.

Again, a PLA is a solution in search of a problem. We think the real problem might be that Big Labor needs a handout from politicians in return for Big Labor’s political investment through campaign contributions and endorsements.

We suspect that officials at the VA were pressured into mandating this PLA by politicians, Big Labor bosses, political appointees and possibly White House staff  interested in paying back Big Labor for their political support.

TheTruthAboutPLAs.com believes that fair and open competition, free from government-mandated PLAs, will help the VA deliver to taxpayers the best possible product at the best possible price.

Update: The Washington Examiner’s Mark Hemingway covered this story today (“White House Loses Battle Over Union Paybacks,” 1/6/10):

Bridges Construction of Pittsburgh recently filed a bid protest with the Government Accountability Office after the federal government tried to impose a Project Labor Agreement (PLA) as part of the federal contract in the construction of a $50 mllion Veterans Affairs building. PLAs are construction contracts negotiated in advance that basically mandate union labor — a study from the Beacon Hill institute found that PLAs make construction projects 12 percent to 18 percent more expensive on average.

Last month, I wrote about how the Obama White House signed an executive effectively imposing on all big Federal construction projects as way to pay back unions for their political support. After my column ran, a number of Republican Congressmen wrote a letter to the White House questioning the White House’s PLA policy.

According to today’s press release from Associated Builders and Contractors, Associated Builders and Contractors and Bridges Construction successfully thwarted the PLA on the VA building in Pittsburgh:

[snip].

During the course of the GAO protest, the VA revealed that its own PLA impact study found imposing a PLA on the project would increase costs by millions of dollars, would reduce the number of bidders and subcontractors, and would decrease the pool of skilled labor. In spite of this evidence, the VA claimed a PLA was supported by President Obama’s Executive Order 13502, which “encourages” federal agencies to impose PLAs on large construction projects if “consistent with law.”

[snip]

Emphasis mine. The government’s own study found the PLA was a waste of tax dollars, and yet they still tried to impose one anyway. Remember unions are Democrats biggest campaign donor. PLAs are not about efficient use of your hard earned tax dollars — they’re political payback.

Hemingway hit the nail on the head. Government-mandated PLAs are all about payback.

Update 1/12/11: An editorial in The Pittsburgh Tribune-Review praised the removal of government-mandated project labor agreement (PLA) on the construction of a $50 million U.S. Department of Veterans Affairs’ (VA) Research Office Building in Pittsburgh and heavily criticized politicians and special interests participating in these anti-competitive and costly schemes (“The VA & PLAs: A welcome reversal,” 1/13/11):

Dropping inclusion of union-coddling project labor agreements (PLAs) from bidding requirements for a $50 million Veterans Affairs research office building in Pittsburgh is a step in the right direction — a direction in which all public construction projects must go for taxpayers’ sake.

The VA dropped the requirement — and said it won’t give preference to bids that include PLAs — after North Side contractor Bridges filed an October protest with the Government Accountability Office. Bridges had help from Associated Builders & Contractors, the local trade group that has sued over PLA requirements for Community College of Allegheny County and Penn Hills School District projects.

PLAs should not be part of public construction projects — period. Politicians use PLAs to reward unionized supporters, putting taxpayers on the hook for the higher costs that studies show PLAs impose. Project labor agreements also discriminate against nonunion workers’ — taxpayers who outnumber unionized workers — job opportunities.

The VA decision on the Oakland project must stick, becoming standard procedure for that agency. And the rest of government, at all levels, must follow suit. Taxpayers’ interests must come before those of extorting unions and the politicians who pander to them.

We agree.

BNA’s Construction Labor Report also covered this story with notable interviews from VA and GAO officials (“Contractor Protest Causes VA to Delete PLA Mandate from Research Building Bid Notice,” 1/12/11) [Note: Subscription Required]:

The Department of Veterans Affairs has made the use of a project labor agreement optional for all offers to construct a research building in Pittsburgh for the department after it withdrew a PLA mandate from the project’s bid solicitation, a department official told BNA Jan. 10.

A Veterans Affairs spokesman told BNA that proposals submitted with PLAs on the project to construct the VA Research Office Building in Pittsburgh estimated to cost between $50 million to $100 million, will not be awarded any “additional points or weight” during the bid evaluation process. The spokesman said the decision applies only to this specific project. [snip]

A GAO attorney explains the bid protest and PLA withdrawal, indicating that the GAO would have ruled against the VA’s PLA mandate:

According to Ralph White, managing general counsel of GAO’s procurement law division, the protest was dismissed Dec. 9, 2010, because the VA decided to delete the PLA mandate from the bidding requirements. The Veterans Affairs chose to amend the bid solicitation after concluding that the protest filed by Bridges Construction might be sustained by the GAO, however GAO did not reach a final decision because the VA “decided to take corrective action,” White told BNA.

To learn more about the bid protest and victory for taxpayers and members of the construction community, please visit here.

UPDATE: The VA hired the same consulting firm to update their PLA study from September 2010. The new study, dated May 17, 2011, again recommended against a government-mandated PLA on the Pittsburgh project:

For a Pittsburgh, Pennsylvania project at the present time, we see a potential cost risk premium of 3% to 5% if a PLA is mandated. For a $40 mil. project, this would equate to $1.2 to $2.0 mil.

We see that a mandated PLA will reduce sub-contractors and lower the labor pool to the detriment of the project, and potentially add cost; therefore we believe that a PLA would likely not “advance the federal Government’s interest in achieving economy and efficiency in federal procurement.”

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