GSA Wasted Millions on Union Handout: Where’s the Outrage?

7 April 10, 2012  Federal Construction

Eight senior U.S. General Services Administration (GSA) officials have been disciplined, fired or forced to resign since last Monday’s release of a scathing report by GSA Inspector General (IG) Brian Miller, whose staff spent a year reviewing waste, fraud and abuse related to $823,000 in spending to entertain 300 GSA employees at a regional conference held at the posh M Resort Spa Casino in Las Vegas.

The IG report, documenting the GSA’s excessive, wasteful, and in some cases impermissible spending, forced the resignation of GSA Administrator, Martha N. Johnson, and the firing of Public Buildings Service (PBS) Chief Robert A. Peck and another Johnson deputy. Four regional commissioners who planned the October 2010 conference are on administrative leave.

Linda Chero, previous Mid-Atlantic regional commissioner with the GSA’s Federal Acquisition Service, has replaced Peck. PBS oversaw billions of dollars worth of federal construction projects funded by the federal budget and the American Recovery and Reinvestment Act.

The scandal has grabbed newspaper headlines, sparked outrage from political commentators and drawn White House ire.

Inexplicably, there was little reaction from the media and no investigation from the GSA’s IG office when the GSA’s PBS wasted nearly four times as much money on a blatant handout to Big Labor in 2010.

GSA Policy Funnels Construction Contracts to Obama’s Political Patrons
The GSA approved a change order of an additional $3.3 million on a $52.3 million construction contract to ensure stimulus-funded renovations to the Lafayette Federal Building in Washington, D.C., were built with union labor through a union-favoring project labor agreement (PLA).

As a result of President Obama’s Executive Order 13502, issued Feb. 6, 2009, federal agencies like the GSA are strongly encouraged, on a case-by-case basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost.

The order, which effectively steers federal contracts to unionized contractors and union workers, is a gift to well-connected special interests that have spent hundreds of millions of dollars in support of President Obama and his Democrat colleagues in Congress.

Executive Order 13502: Obama’s Gift to Big Labor. Image courtesy of The Boston Globe, “Obama kowtows to labor unions,” 10/07/09.

What is a Government-Mandated PLA?
Anti-competitive government-mandated PLAs are special interest schemes that require contractors to promise that most or all of their workforce building a PLA project will be hired through a union hiring hall or built by card-carrying (and unfamiliar) union members. The terms of PLAs vary from project to project because these pacts are one-time contracts between contractors and labor unions for a specific construction jobsite. However, when required by local, state and federal agencies, contractors can’t win taxpayer-funded contracts unless they agree to the government-mandated PLA.

In some PLAs, merit shop contractors are permitted to use a limited number of existing nonunion employees, but they 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 a 17.2 percent unemployment rate, according to government data. It is especially discriminatory to the 86 percent of the U.S. construction workforce that choose not to belong to labor union.

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

Finally, PLAs typically force merit employers to pay employee benefits into union-managed multi-employer pension funds, but employees do not see the benefits of the employer contributions unless they join a union and become vested in these plans.

Qualified Nonunion Employees and Experienced Contractors Victimized by PLAs
An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements,” found that nonunion employees of merit contractors forced to work under government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.

Merit contractors that offer their own benefits, including quality health and retirement plans, often continue to contribute to both existing programs and union programs under a PLA.  The McGowan report found that nonunion contractors are forced to pay in excess of 25 percent in benefits costs above and beyond existing prevailing wage laws as a result of this “double payment” attached to PLAs.

These requirements make it difficult for nonunion contractors to compete and results in increased construction costs. It is also unfair to employees who have earned this money for a secure retirement.

PLA Mandates Increase Costs and Reduce Competition
The costly and discriminatory terms and provisions in typical PLAs discourage competition from nonunion contractors and increase the cost of construction. Numerous studies have found that government-mandated PLAs typically increase the cost of construction between 12 percent and 18 percent. That translates into less building and fewer construction industry jobs.

PLA Mandates Are Politically Motivated Solutions in Search of a Problem
The Obama administration justifies the use of government-mandated PLAs because they allegedly produce “economy and efficiency” in government contracting. However, no credible evidence supports this claim. In reality, PLA mandates are an earmark for Big Labor bosses and contractors justified as a solution to a problem that doesn’t exist in federal contracting.

GSA’s PLA Policy Investigated by Congress, but Remains Unchanged
The GSA has taken an aggressive and indiscriminate approach to promoting the use of union-favoring PLA mandates.

GSA policy permits firms to submit a PLA offer or, a nonPLA offer (or both) on all GSA projects exceeding $25 million in total cost. However, PLA offers submitted by bidders receive extra credit in the technical evaluation category of the best value procurement process. The special treatment makes it difficult, if not impossible, for non-PLA offers to win contracts when competing against PLA offerors (see the 9/24/10 PBS Procurement Instructional Bulletin (PIB) 10-04-Revision 1 for more details on this policy).

The GSA’s discriminatory PLA preference policy has led to delays, reduced competition and increased costs. Requests for congressional investigation forced the GSA to testify at two 2011 House Oversight and Government Reform Committee hearings to justify its wasteful favoritism.

See GSA deputy administrator Susan Brita’s attempt to justify the waste on the Lafayette Building at 44:16 of this hearing video and check out more highlights from the hearing after the jump.

Despite the congressional investigation, the GSA’s wasteful and discriminatory PLA preference policy remains unchanged. They refused to answer tough questions regarding their PLA policy and have provided the public with no evidence that it is beneficial to the public.

Union contractors and union construction workers continue to receive a considerable advantage when competing for contracts to build taxpayer-funded GSA construction projects. Numerous projects have been awarded to contractors submitting PLA bids at the expense of qualified firms opposed to PLA mandates. Full and open competition has been curtailed in violation of the federal Competition in Contracting Act. Taxpayer dollars have been wasted. Skilled nonunion craftspeople and their qualified employers have been denied jobs and opportunity as a result of this needless policy.

The waste and favoritism of the GSA’s PLA policy is comparable to the waste documented in the recent IG’s report.  If unchallenged, federal agencies will continue their unfortunate track record of waste, fraud and taxpayer abuse.

Congress and the media should renew their interest in the GSA’s anti-competitive procurement practices and call for reform. The GSA needs to be held accountable for any instance of waste, whether it be procuring conferences or construction services.

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7 Responses to GSA Wasted Millions on Union Handout: Where’s the Outrage?

Stanley McCumber April 12, 2012 at 1:04 pm

When you own a grocery store and find out someone is giving free groceries to the customer they are not only FIRED, but put in JAIL, along with who ever they gave the merchandise to as well as made to make restitution. What makes these people any better than any other THIEF..?????? THIEF????..THIEF???..

areopagitica April 12, 2012 at 1:25 pm

Only 300 and not 3000 carousers on the taxpayer’s nickel? What pikers! This was
a pretty small offense compared to recent
outrages. The root of the matter is why we
have allowed public service unionization, a
monopoly of special interests against the
general interests of citizens and taxpayers.
The Union has shown us their gratitude in
the Wisconsin rioting, the petition stuffing
and nuisance recall elections and Occupy.
Now our answer has to be a pushback on all the union supported candidacies anyplace, until sanity and solvency can if ever return.

openureyes April 19, 2012 at 9:53 pm

On noes GSA violated this, GSA violated that. Were any of you people around during the Carter/Regan years or even remember? Corruption happens everywhere. Look at the FBI/CIA.

joe workerman May 5, 2012 at 3:49 pm

pla`s and prevailing wage are very good for worker,and also no company is forced to double pay for benefits,out right lie.heres how i see it,workers are paid a livable wage,so all contractors are on a even field there,now they must cut other waste,like high ceo salaries and office waste,and bid the lowest,without taking it out of the actual workers pay,and workers are only 13% union,because it is impossible to organize a company,it takes years and all the pro-union workers are fired by the time the vote comes around,these are the facts,no non-union worker in the construction trades make more than a union worker,and a union worker only makes a fair wage,they are not getting rich,ceo`s used to make 30X a wokers pay in the 70`s,now it is 30,000x`s,pla`s seem fair now,and i am a republican,but as union membership went down,so did the middle class`s salaries,these are the facts,very simple,and you can`t deny anything i said,check the statistics to see if i`m lying,union yes,obama no

joe workerman May 5, 2012 at 4:07 pm

pla`s are good for the worker,and no emplyer is made to pay double benefits,simple lie.pla`s are good for worker and fair for companies,because there labor costs are all the same,now they have to find another way to be the lowest bidder,besides just cutting the labor costs,like cutting the waste in the ceo`s pay and the office workers`s pay used to be 30x the workers pay in the `70`s,now it is 30,000x.fact,and no union worker is getting rich off of their union wage,it is just a livable wage,any worker who is in a union makes more than their non-union conter-parts,the reason union membership is down is because of companies shipping there jobs overseas.90& of workers would love to make prevailing wage,which is what the government says a person should make for there trade to live above the poverty line,who would not want that,most people who are non-union make about a third of prevailing wage.the reason more workers aren`t union now,is because of how hard republicans have changed the NLRB`s laws on unionizing,it favors big corps.with the decline in union membership,the decline in the middleclass has followed directly,check all the statistics i have quoted and see if i am lying,the hardest thing is to organize a company,it takes years to get a vote,and all pro-union workers are fired by the timethe vote happens and everyone else is scared by then,these are the facts,people who knew the truth would want to be union,but it`s to hard,UNITED WE BARGAIN,DIVIDED WE BEG!!! why do corps hate unions so much,that tells you it is good for worker,they like their “open door” policy,if you don`t like it here,the door is open,to leave! wake up america,what`s wrong with a worker having a say in their job and some security,and a contract,you have a contract for everything else from corps,even for your cell phone,your car,your home,but they don`t want you to have one for your work and compensation,scumbags

Nicola Cifaretto May 18, 2012 at 12:20 pm

NOT Good at All
If I wanted a union rep as my community organizer I would have voted for tNot Good at All
If I wanted a union rep as my community organizer I would have voted for the great campaigner
Please don’t fall into the trap of “getting along” You promised as a christen (not like Obama) to serve all of the people not a selected group, selected by Obahma,
Do what’s right even if it costs you your seat. You will then be able to look your kids in the eye.
Your pension and financial well being are already established. Now complete the establishment of your integrity.
Nicola Cifaretto, Lavallette, NJ
he great campainger

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