Hey Ohio, Open Competition Could be on the Way!
The march against wasteful and discriminatory project labor agreements (PLAs) has moved to the Ohio General Assembly, where Rep. Ron Young has introduced the latest measure to prohibit the use of these Big Labor handouts on taxpayer funded work.
Here is the text from Rep. Young’s press release, issued February 11:
YOUNG SPONSORS LEGISLATION TO REDUCE THE COST OF PUBLIC CONSTRUCTION
Columbus – State Representative Ron Young (R-Leroy) today sponsored legislation to reform Ohio’s publicly funded construction rules.
“Government in Ohio needs to learn to do more with less. In order to balance the budget, it is important we find ways to deliver critical services while reducing costs. This legislation is designed to reduce the cost of public construction in Ohio by changing the way we award construction projects. Currently many public entities in Ohio require bidders for construction projects to include what is known as a Project Labor Agreement (PLA) as part of their bid,” Young said. “In general, PLA’s work against the free market system by limiting the number of bids and therefore reduce competition. Most PLA’s require the use of union labor and therefore the preponderance of bids are from union construction companies. Since almost 85% of Ohio’s construction workforce is non-union competition is severely limited by a PLA requirement. Public entities requiring a PLA for a project are in effect paying a very expensive and often unnecessary premium for construction services.”
Specifically this legislation would prohibit state agencies from requiring or prohibiting PLA’s as a condition of performing public works. The legislation would also prohibit the appropriation of state funds for public works when political subdivisions require or prohibit PLA’s.
Young cited an example from November 2010 when the Ohio School Facilities Commission bid a dormitory construction project for the Ohio State School for the Blind and Ohio School for the Deaf with and without a PLA.
First the project was bid with a PLA requirement. However, a small number of bids were received and the lowest bid exceeded the project budget. A new request for bids was released, this time without a PLA requirement.
The winner of the non-PLA bid was 22% lower and six times the number of competitive bids was received. According to Young, this result is in line both with numerous academic studies and with significant anecdotal data collected by various groups.
The amount of potential savings from this legislation is significant. Experts estimate that at least $400M was spent on PLA projects in Ohio over the last two years. If this is the case, Ohio could have saved over $100M during this period had this legislation had been in place.
The legislation is modeled on a George W. Bush-era rule that similarly regulated PLA’s at the Federal level and was found to be Constitutional by the courts.
Rep. Young said he and the bills 21 co-sponsors look forward to working with their legislative colleagues in the House as this bill is assigned to committee and hearings commence on the legislation.
We covered the Ohio School Facilities Commission (OSFC) controversy referenced by Rep. Young at length on this blog. You can read our earlier posts for more in-depth information, although the press release above hit the highlights.
Although the resignation of former OSFC Executive Director and Laborers’ union boss Richard Murray was a positive development, Gov. John Kasich and legislative leaders must take further steps to ensure that these types of special interest handouts don’t rear their ugly heads on state funded work again. Ohio’s budget deficit is hovering around $8 billion and state taxpayers simply cannot afford to buy four schools for the price of five.
The News-Herald in northern Ohio covered the introduction of Rep. Young’s bill. Here are the highlights:
Young said these agreements require the use of union labor, which then require the bulk of construction bids to come from union construction companies.
This concept limits the number of companies that can bid on projects, which reduces competition and leads to higher costs, Young said.
“Public entities requiring a PLA for a project are in effect paying a very expensive and often unnecessary premium for construction services,” Young said. “In order to balance the budget, it is important we find ways to deliver critical services while reducing costs.”
Young said his legislation had been passed into law during his previous tenure in the Ohio House of Representatives when Gov. Bob Taft was in office, but the law was challenged by union organizations and overturned by the Ohio Supreme Court.
This time, Young said, the legislation was modified to indicate that public entities could neither require nor prohibit a PLA. That means if a construction firm wants to include a PLA in their bid they are free to do so and an entity can award a contract to them.
Entities also could choose to include a PLA in bids, but then they would not be eligible for state funding to help pay for the project, Young said.
We commend Rep. Young for standing up for taxpayers and urge the General Assembly to take action on this bill as soon as possible.
We will continue to follow developments on this bill and all others moving through legislatures here on TheTruthAboutPLAs.com.
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