ABC Declares Victory as Federal Government Withdraws Project Labor Agreement

1 June 4, 2012  Federal Construction

Associated Builders and Contractors (ABC) is declaring victory in its fight for open competition and taxpayer value on federal construction projects.  ABC issued the following press release earlier today:

ABC DECLARES VICTORY AS FEDERAL GOVERNMENT WITHDRAWS PROJECT LABOR AGREEMENT

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 by three contractors March 19 with the Government Accountability Office (GAO) against a PLA mandated by the U.S. Department of Labor (DOL), the DOL has withdrawn a solicitation that would have required contractors to sign a controversial union agreement—a PLA—as a condition of building a $40 million Job Corps Center in Manchester, N.H. After reviewing the facts of the case, the GAO strongly indicated to the parties that it likely would sustain the contractors’ protest under the federal Competition in Contracting Act, absent corrective action by the DOL. In direct response to the GAO’s action, on May 31, 2012, the DOL announced its withdrawal of the Job Corps Center solicitation that included the PLA mandate.

“This is a big win for taxpayers and the principles of fair and open competition in federal contracting,” said ABC Director of Labor and Federal Procurement Ben Brubeck. “Removing the coercive PLA mandate in New Hampshire will level the playing field and ensure increased competition and construction job creation for all skilled construction workers and their qualified employers, instead of just special interests needlessly favored by this administration.”

This is the second time the DOL has unlawfully tried to mandate a PLA on the Job Corps project and been forced to withdraw it after contractors filed protests at the GAO. “It is shameful that the DOL has delayed construction of this much needed New Hampshire Job Corps Center for more than two years for no reason other than to show favoritism toward the administration’s cronies in organized labor,” said Brubeck. “It is past time for the DOL to carry out its mission of helping create jobs by building this project free from unlawful special interest handouts. ABC calls on the DOL to take immediate action to reissue the Job Corps solicitation without any PLA mandate or preference.”

This is the fifth GAO bid protest ABC has supported on behalf of members objecting to illegal PLA requirements on federal projects. On each occasion, the federal agencies that attempted to mandate PLAs have been forced to withdraw their unlawful solicitations. ABC-supported GAO protests resulted in the removal of PLA mandates from a General Services Administration procurement in Washington, D.C.; an Army project in Camden, N.J.; a Veterans Affairs project in Pittsburgh; and now twice on the New Hampshire Job Corps Center.

“Federal law is clear that Obama’s Executive Order 13502 does not allow federal agencies to discriminate in favor of PLAs without a strong showing of need and evidence that PLAs will deliver increased economy and efficiency in federal contracting,” said Maurice Baskin of Venable LLP, ABC’s general counsel who represented the successful protesters in the New Hampshire case. “We were able to show the DOL’s PLA mandate needlessly restricted competition, increased costs to taxpayers and actually hurt local construction workers, all without any factual justification for the PLA. Of particular significance, the DOL failed to justify the PLA even after spending hundreds of thousands of dollars on a market impact study by Hill International. The Hill report failed to show that a government-mandated PLA was needed to serve any legitimate government needs in New Hampshire, as demonstrated by our own expert witness, Professor David Tuerck of the Beacon Hill Institute.”

“It is time for the Obama administration to stop trying to steer lucrative federal construction contracts to Big Labor—one of the president’s largest political supporters—through unlawful government-mandated PLAs,” Brubeck 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 PLAs discourage merit shop contractors and subcontractors from competing for federal contracts, thereby increasing costs to taxpayers and discriminating against the 86 percent of the construction workforce that does not belong to a labor union. PLAs typically force contractors to hire most or all of their craft employees from union hiring halls; follow inefficient union work rules; hire apprentices exclusively from union apprenticeship programs; and pay into union benefit plans on behalf of employees even if they have their own qualified benefit programs. PLAs force employees to pay union dues; accept unwanted union representation; and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefit plans.

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Associated Builders and Contractors (ABC) is a national association with 74 chapters representing 22,000 merit shop construction and construction-related firms. Visit us at www..

Please review the following for more information:

  • Union Favor on Federal Construction Project in New Hampshire Draws Criticism (2/9/12)
  • U.S. Department of Labor solicitation (DOL121RB20457) for the Manchester Job Corps Center,
  • Here is the Job Corps Center PLA and here are the numerous union collective bargaining agreements (CBAs) contractors must agree to for the life of the project concerning issues not specifically addressed by the PLA.
  • Affidavit of Prof. David G. Tuerck, PhD., professor and Chairman of Economics and Executive Director of the Beacon Hill Institute at Suffolk University in Boston, before the Government Accountability Offce refuting the need for a PLA mandate and the pro-PLA Hill International report.
  • Report by Hill International recommending a PLA mandate on the Manchester, NH, DOL Job Corps Center project (submitted Oct. 28, 2010).
  • Evidence documenting cost to taxpayers for Hill International’s pro-PLA mandate report on the Manchester, NH, DOL Job Corps Center ($128,000, solicitation number DOLJ109630678 paid in two installments).
  • Evidence documenting cost to taxpayers for Feb. 25, 2011, Hill International report for promoting PLA mandates for all federal agencies  ($300,000, solicitation number DOLF09F422062, subcontracted to Hill International by Interactive Elements).
  • 3/28/12 the DOL opened bids for the project subject to the PLA. They only received three bids from out-of-state contractors. The low bidder from Clearwater, FL, submitted a bid for $37.87 million. The other two bidders were from MA and RI.
  • Information about President Obama’s pro-PLA Executive Order 13502.
  • Read a sample government-mandated PLA and learn how it harms nonunion contractors and workers here.

UPDATE 6/9/12:

New Hampshire Union Leader editorial, “Job Corps delay ended: Another blow to labor/Dem axis,” 6/9/12:

…Ironically, President Obama’s Feb. 6, 2009, executive order commanding that PLAs be considered for all federal construction projects of $25 million or more stated that the purpose of using PLAs was “to promote the efficient administration and completion of federal construction projects.”Obama claimed that he wanted the PLAs because construction projects typically involve multiple work crews, and disputes about pay and other issues can delay project completion. He was simply concerned about speed and efficiency, he wrote.

That was a smoke screen. The PLA order was a political repayment to unions that had helped Obama get elected only three months earlier.

Because of that political payoff, Manchester’s Job Corps Center has been delayed for three years. The center itself is unnecessary and will remove prime city land from the tax rolls. But if it is going to be built, at least now it will be done at a lower cost to the taxpayers, and will involve more local rather than Boston contractors.

UPDATE 7/11/12:

July 10, 2012, the DOL formally cancelled the solicitation mandating a PLA on this project and released this statement:

A GAO protest was filed in connection with this solicitation. The U.S. Department of Labor (DOL) continued to evaluate its options throughout the protest and ultimately determined that it was in the best interest of the Government to cancel this solicitation. DOL plans to move forward with a new solicitation for the construction of the New Hampshire Job Corps Center and will be re-issued at a later date. Please continue to monitor www.fbo.gov for updates.

All original copies of bid packages received in response to this IFB will be retained in our procurement file with the exception of the Bid Bonds. All original Bid Bonds will be returned to the bidders.

However, the DOL cancelled the solicitation after it had already received and publicly opened bids March 28, 2012.

March, 28, 2012, PLA Bid Results:

1. Firm A (the low bidder), Clearwater, Fla. ($37,872,000)
2. Firm B, Salem, Mass. ($38,297,000)
3. Firm C, Providence, R.I. ($40,987,000)

Three bidders, all from out of state, is pretty unusual in today’s construction economy. It appears the PLA reduced competition and locked out New Hampshire’s qualified contractors.

Once again the DOL subjected themselves to costly delays and waste by mandating a PLA. Will they attempt to mandate a PLA again when the solicitation is reissued a third time? TheTruthAboutPLAs.com will be monitoring this project closely.

UPDATE 7/24/12:

July 24, 2012, the DOL issued a sources sought notice to determine if there is interest from qualified small business general contractors to construct the estimated $20 million to $50 million project.  There was no mention of a PLA. Responses to the sources sought notice can be submitted only by certified small business contractors, relative to the primary NAICS code 236220 with a Small Business Size Standard of $33.5 million.

The SBA explains how size standards are determined:

“SBA size standards are usually stated either in number of employees over the past 12 months, or average annual receipts over the past three years – whichever number represents the largest size of your business right now (including subsidiaries and affiliates). This number is what you will be using to remain classified as a small business for SBA and to bid on federal contracting programs. Size standards are available for every private sector industry in the U.S. economy, with the North American Industry Classification System (NAICS) used to identify the industries.”

SBA defines and explains average annual receipts calculation:

Receipts means “total income” (or in the case of a sole proprietorship, “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms. Receipts do not include net capital gains or losses; taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees; proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. For size determination purposes, the only exclusions from receipts are those specifically provided for in this paragraph. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, and employee-based costs such as payroll taxes, may not be excluded from receipts.

SBA explains how much of a contract must be performed by a firm to be awarded a federal small business set-aside or 8(a) contract:

“To be awarded a government small business set-aside or 8(a) contract, the contractor must perform at least a given percentage of the contract. This provision limits the amount of subcontracting a contractor may enter into with other firms when performing these types of contracts. The provisions are as follows:

Construction: For general and heavy construction, at least 15 percent of the cost of the contract, not including the cost of materials, must be performed by the prime contractor with its own employees. For special trade construction, such as plumbing, electrical or tile work, this requirement is 25 percent.”

Update October 2012:

In October 2012, more than three years after they issued the original solicitation containing the PLA, the DOL issued a solicitation for the Manchester, NH Job Corps Center construction services without discriminatory and costly PLA mandate or preference language.

Update February 2013:

In February 2013, the DOL opened PLA-mandate free bids, which provided a direct apples-to-apples comparison between a federal project bid with and without a PLA mandate.

Without the PLA mandate, more than three times as many companies bid on the project (10 bidders). The low bidder, a local firm from New Hampshire, submitted a bid of $31 million, which was about 18 percent ($6.872 million) less than the lowest bid submitted by an out-of-state firm during the first round of bidding in 2012.

These results demonstrate government-mandated PLAs create delays, reduce competition, increase costs, harm local businesses and expose the federal government to litigation.

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One Response to ABC Declares Victory as Federal Government Withdraws Project Labor Agreement

Scott Crosby June 5, 2012 at 10:03 am

Glad someone is looking out for the interest of taxpayers!!!!

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