Editorial: Why Not Bid Lorain Wasterwater Project With and Without a Government-Mandated Project Labor Agreement?

0 March 28, 2011  State & Local Construction, Transportation & Infrastructure, Uncategorized

Ohio newspaper editorial boards have been keeping tabs on the Lorain (Ohio) City Council, opposing the council’s frequent efforts to implement the anti-competitive, costly and special interest agenda of Big Labor by requiring union-favoring government-mandated project labor agreements (PLAs) on municipal construction projects.

The Lorain Morning Journal’s latest editorial opposing these PLA schemes makes the argument that the Lorain Council is so controlled Big Labor that they refuse to conduct an experiement that could save taxpayers millions of dollars and ensure fairness in local contracting on a $50 million wastewater project (OUR VIEW EDITORIAL: Lorain Council votes to ignore potential savings of millions,” 3/23/11):

The $50 million project to put in a wastewater conveyance tunnel along the Black River is vital for Lorain’s future.

The tunnel is the first step for allowing Lorain to construct a regional treatment plant. Since the money to pay off the state loan financing the project is coming from water and sewer fees paid by residents, city officials need to keep the costs as low as possible.

Unfortunately, City Council Monday night took action certain to increase those costs by millions of dollars when it decided to advertise for bids requiring project labor agreements. Supporters of PLAs say they provide work for local union workers. Opponents say the agreements drive up costs and decrease competition.

Councilman-at-large Dan Given wanted council to advertise for tunnel bids two ways — both with and without the PLA and see how the costs compare. With virtually no discussion, a majority of council rejected Given’s sensible suggestion and approved legislation requiring bidding with the PLA.

Given, who voted against the measure, was livid. “Even if they blow this by 10 percent,” he said, “that’s $5 million that’s wasted, which is totally unacceptable.” He added, “I never heard a taxpayer say, ‘Here, you should spend another million dollars.’ Instead they’re saying, “You better spend the money right.” How true.

With communities and counties around the state and nation desperately looking for ways to cut costs, Lorain city leaders are risking millions in overspending to kowtow to labor at the expense of Lorain citizens living on a tight budget.

Given wants to introduce new legislation that calls for seeking bids with and without the PLA on the tunnel project. He should. And City Council should approve it to make best use of Lorain taxpayers’ money.

Big Labor and their chums on the Lorain City Council are clearly afraid of competition.

They know that if the wastewater project were bid with and without a PLA at the same time, the results will definitively demonstrate that PLAs increase costs and reduce the pool of qualified local companies competing for public works contracts.

The results of this experiment will expose the Lorain Council’s blatant waste of taxpayer dollars, abuse of fiscal responsibility and unfortunate special interest favoritism.  Afterall, they know what happened with the Ohio School for the Deaf, the Ohio School for the Blind, and the Elyria City Hall projects when they were initially subject to a government-mandated PLA. These projects had to be rebid without a PLA after the first round of bids busted budgets and attracted few competitors.

In the face of clear evidence that PLAs increase costs on these three projects, Big Labor spin doctors attempted to claim that the PLA-free offers experienced reduced costs because of cheaper material prices, revised schedules and plans.  Even if that were true, those excuses fail to explain why the three projects received more competition from qualified contractors once the PLAs were removed.

It’s the PLA, stupid!

UPDATE: On Monday, 3/28, by a 6-3 vote, the Lorain City Council rejected legislation calling for tunnel bid specifications to permit bids without a PLA.

They Can’t Compete, So They Cheat. Info on Job Targeting.
Should the Lorain City Council come to their senses and bid the wastewater project with and without a government-mandated PLA, they should prohibit the use of union job targeting/market recovery funds in order to conduct an accurate experiment about the impact of PLAs on construction costs and competition.

What are union job targeting funds?

For example, as documented succinctly by the Cement Masons and Plasteres Union Local 528 (pdf), job targeting programs, also known as “market recovery” funds, collect fees from union members for the purpose of providing subsidies to union contractors on projects where they face competition from merit shop contractors.  Like PLAs, the subsidies are designed to give union contractors an unfair bidding advantage on projects.

The money collected from union workers is pooled into a Market Recovery Fund controlled by union bosses.  Typically, a union contractor reaches an agreement with the union bosses that says that the Market Recovery Fund will subsidize the contractor $X for a specific job to underbid a merit shop competitor.  If the contractor is successful and wins the job, the contractor receives job targeting money from the union, funded by past deductions from every union worker’s wages,  in exchange for using union labor and paying union rates. 

Obviously, job targeting money would skew the results of Lorain’s PLA experiment on the wastewater facility.

If you think job targeting isn’t happening in your community or isn’t a widespread problem, think again.

An April 2009 study published by George Mason University’s John M. Olin Institute for Employment Practice and Policy found that construction industry unions spent more than $1 billion since fiscal year 2000 in job targeting schemes.

In addition to this staggering number, according to this summary, the study also reported that:

  • Job targeting programs needlessly increase public construction costs.
  • Job targeting programs give unions and their subsidy recipients an unfair advantage in the bidding process.
  • Job targeting programs are often unknowingly funded by taxpayers.

The Labor Management Reporting and Disclosure Act (LMRDA) requires unions to disclose job targeting expenditures on financial reports (known as LM-2s) filed with the U.S. Department of Labor’s Office of Labor Management Standards (OLMS).  You can review these disclosure forms at the OLMS Public Disclosure Page and find contractors that have received job targeting money during the reporting year. Unfortunately, you won’t be able to tell which jobs were subject to job targeting schemes in previous reporting years and you won’t be able to tell which contractors have received job targeting money in the current reporting year.

If Lorain City Council is wise enough to rebid the project with and without a PLA, they must forbid the use of job targeting funds. If it is discovered that a union contractor received job targeting funds on this experiment, they should be debarred from public contracting for a defined period of time, fined, and forced to pay restitution to all competing contractors and local employees.

ICYMI, here are the Lorain MJ’s previous stories on PLAs:

Looking at future of Lorain: Project labor agreements evaluate how to carry out city jobs, 12/7/10
Lorain Mayor Supports PLAs, 1/28/11
Lorain to resume talks on project labor agreements, 2/26/11
Sample PLA on page 33
Lorain Council approves PLAs, 3/8/11
Councilman Bret Schuster Defends PLAs, 3/26

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