Big Labor Aboard! Beware of Project Labor Agreements on $53 Billion High-Speed Rail Proposal

0 February 10, 2011  Federal Construction, Transportation & Infrastructure, Uncategorized

Today merit shop contractors and their skilled employees building federal construction projects submitted a number of questions to about the Obama Administration’s $53 billion high-speed rail plan unveiled yesterday.  Massive infrastructure spending means more jobs for the construction industry, which is suffering from a staggering 22.5 percent unemployment rate. 

However, quality merit shop contractors and their skilled employees should be wary of special interest schemes that funnel lucrative rail construction contracts to unionized contractors. Taxpayers should be concerned about getting railroaded too, because these arrangements ultimately increase construction costs and will result in the construction of four miles of railroad for the price of five miles of railroad. 

The schemes are called government-mandated project labor agreements (PLAs) and the Obama administration is encouraging federal agencies – such as those in charge of railroad construction and funding – to use them on a case-by-case basis when agencies build federal construction projects costing more than $25 million. build
…to build “high-speed” rail with PLAs. Big Labor, don’t forget to be my Valentine on Election Day! – President Obama and Vice President Biden

The Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, 2010, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations.

It’s a controversial White House gift to Big Labor that has needlessly increased federal construction costs, reduced competition from quality nonunion contractors and their skilled employees, and denied taxpayers the accountability they deserve from government.

A Wall Street Journal editorial blasted the final rule and Obama’s encouragement of government-mandated PLAs (“Crony Contracts. Want federal business? Better be a union shop.” 4/14/10):

“Only 15% of the nation’s construction workers are unionized, so from now on the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment … It’s also a rotten deal for taxpayers.”

Today, political pundits like Michelle Malkin raised fears about waste and corruption contained in this rail proposal. She even referenced PLAs as a key concern and linked to a column she penned last year on these sweetheart PLA deals for Big Labor:

But here’s the rub: Not all workers are equal in Obama’s eyes. And most of them will remain “idled” by the Democrats’ own design. The key is E.O. 13502, a union-friendly executive order signed by Obama in his first weeks in office, which essentially forces contractors who bid on large-scale public construction projects worth $25 million or more to submit to union representation for its employees.

The blunt instrument used to give unions a leg up is the “project labor agreement (PLA),”which in theory sets reasonable pre-work terms and conditions — but in practice, requires contractors to hand over exclusive bargaining control; to pay inflated, above-market wages and benefits; and to fork over dues money and pension funding to corrupt, cash-starved labor organizations. These anti-competitive agreements undermine a fair bidding process on projects that locked-out, nonunion laborers are funding with their own tax dollars. And these PLAs benefit the privileged few at the expense of the vast majority: In the construction industry, 85 percent of the workforce is nonunion by choice.

We don’t need to theorize about how this shakedown works in the real world. Boston’s notorious Big Dig was a union-only construction project thanks to a Massachusetts government-mandated PLA. The original $2.8 billion price tag for the project skyrocketed to $22 billion in state and federal taxpayer subsidies thanks in no small part to ballooning labor costs. In February, the Bay State’s Beacon Hill Institute found that PLAs added 12 percent to 18 percent to school construction costsin Massachusetts and Connecticut. In Washington, D.C., the Department of Veterans Affairs commissioned an independent study showing that PLAs would increase hospital construction costs by as much as 9 percent in some markets.

In short, Obama’s new Union Infrastructure Rescue Plan is a political favoritism scheme that raises the cost of doing business and bars tens of thousands of skilled, nonunion laborers who choose to run open shops from securing work. In the name of patching up America’s highways and byways, Mr. Fix It would create another gaping fiscal sinkhole to appease his special interest donors. Recovery Summer turns to Union Payback Fall.

House Transportation Committee Chairman John L. Mica (R-FL) and Railroads Subcommittee Chairman Bill Shuster (R-PA) today expressed extreme reservations regarding the Obama Administration’s plan to spend $53 billion over the next six years on rail infrastructure projects.

So can the United States afford rail?

Assuming it can, will rail projects be riddled with union-favoring PLA mandates from federal and state governments? It is tough to predict because President Obama’s pro-PLA order is not an all-out PLA mandate, but it is certain that the White House, elected officials in the grasp of Big Labor’s special interests and political appointees in federal agencies will do all that they can to get federal procurement bureacrats to require PLAs on these rail projects.

...My political appointee boss, who doesn't know a lick about federal procurement, told me PLAs are a good idea. I disagree but I enjoy being employed.

 So how can officials ensure that taxpayers get the best possible product at the best possible price?  Here’s a hint:

If rail projects move forward, lawmakers should ensure that the best and most qualified contractors get a fair opportunity to compete and win rail construction contracts through the free enterprise system that makes this country great. Lawmakers can guarantee that all federal and federally-assisted construction projects – including rail projects – are free from anti-competitive and costly government-mandated PLAs by passing the Government Neutrality in Contracting Act in the 112th Congress.

Check back for updates about government-mandated PLAs on future rail construction.

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