Phase 2 Silver Line Bids Below Budget Without Project Labor Agreement Scheme
Last week the Metropolitan Washington Airports Authority (MWAA) announced the award of a key contract to build the majority of Phase 2 of the controversial Dulles Corridor Metrorail Project, known as the Silver Line.
The $1.178 billion design/build Package A contract was awarded May 14 to Capital Rail Constructors, a joint venture consisting of Clark Construction Group and Kiewit Infrastructure South Co.
“We are very encouraged by the price submitted by Capital Rail Constructors and the potential savings it includes,” said Pat Nowakowski, executive director of the Dulles Corridor Metrorail Project. “This has been a very successful competitive procurement process. The winning proposal is well below our original estimates of $1.4 billion to $1.6 billion for this portion of the project, which hopefully will allow us to pass on additional savings to users of the Dulles Toll Road.”
Capital Rail Constructors will design and build the 11.4-mile segment of the Silver Line, consisting of six stations running from Reston, Va., through Washington Dulles International Airport and into Ashburn in eastern Loudoun County, Va.
According to MWAA, this contract is the largest of several Phase 2 procurement packages and represents approximately 50 percent of Phase 2 work. MWAA will procure the remaining contracts for the rail yard and multiple parking garages in the near future.
Despite the best efforts of MWAA board members catering to special interests instead of taxpayers, the contract was not subject to an anti-competitive and costly project labor agreement (PLA) preference or requirement. Both schemes would have required Phase 2 prime contractors and subcontractors to sign a collective bargaining agreement with multiple unions as a condition of winning and performing work on Phase 2, forcing firms to follow inefficient union work rules, pay into union pension plans and hire most or all construction workers from union hiring halls.
Studies have found PLA mandates typically increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA projects by restricting competition to only firms willing to comply with onerous union requirements. In addition, a PLA would have taken jobs away from Virginia’s hardhats and replaced them with out-of-state workers, as 94.6 percent of the Commonwealth’s construction workforce does not belong to a union.
About the Silver Line
The Silver Line project, a 23-mile extension of Washington region’s Metrorail system into Loudoun County, Va, is estimated to cost more than $6 billion and was undertaken in partnership with the Commonwealth of Virginia and Loudoun and Fairfax counties and will be transferred to the Washington Metropolitan Area Transit Authority for operation upon completion.
Phase 2, budgeted to cost a total of roughly $2.8 billion, is funded by contributions from Loudoun and Fairfax Counties, the Commonwealth of Virginia and Dulles Toll Road revenue collected by MWAA. Construction of Phase 2 is anticipated to be completed in 2018.
Phase 1 of the project, which runs from Falls Church, Va., to Wiehle Ave. in Reston, Va., is currently under construction and is now more than 90 percent complete. Expected to open in 2013, it is funded 43 percent by $900 million of federal funding, 28 percent by a special tax district on commercial property proximate to the Silver Line route, and 28 percent by a $0.50 toll increase on the Dulles Toll Road.
Contractors building Phase 1 and Phase 2 of the Silver Line are required to pay to construction workers prevailing wage and benefit rates determined by the U.S. Department of Labor’s Wage and Hour Division via the Davis-Bacon Act.
Union-Favoring Project Labor Agreement Schemes Rile Virginia
In April 2011, MWAA mandated a PLA on Phase 2 of the project due to the advocacy of MWAA board member and Laborers Union Vice President Dennis Martire.
In the face of months of opposition by Phase 2 funding partners, stakeholders, lawmakers, taxpayers and Virginia’s construction industry against the PLA mandate, MWAA rescinded the PLA mandate in February 2012. However, MWAA replaced the PLA mandate with a PLA preference policy amounting to a de facto PLA mandate.
In April 2012, Gov. Bob McDonnell (R) signed the Fair and Open Competition in Government Contracting Act (HB 33) into law, prohibiting the Commonwealth of Virginia and recipients of state assistance from mandating PLAs and enacting PLA preferences discriminating against bidders unwilling to execute PLAs. The measure checkmated MWAA’s reckless union favoritism by jeopardizing additional funding from the Commonwealth for Phase 2 unless MWAA’s PLA preference was removed.
In response to mounting political pressure, in June 2012, MWAA dropped the PLA preference/de facto PLA mandate, ensuring fair competition from all qualified contractors for Phase 2 construction contracts.
“Advocates of fair and open competition were not surprised that the low bid for Phase 2’s primary construction contract is roughly 16 percent to 27 percent below the $1.4 billion to $1.6 billion estimate,” said Ben Brubeck, ABC National director of labor and federal procurement. “This is what happens when projects are subjected to rigorous competition by eliminating union favoritism inherent in all PLA mandate schemes.”
Below are the names of the five short-listed contractor teams invited by MWAA to submit price proposals following a rigorous qualification process. Bids for the primary Phase 2 design-build contract were publicly read April 19, 2013:
- Bechtel Transit Partners Bechtel Infrastructure Corporation Price Proposal: $1,191,978,777.00
- Capital Rail Constructors Clark Construction Group, LLC Kiewit Infrastructure South Co. Price Proposal: $1,177,777,000.00
- Dulles APC Railbuilders Archer Western Contractors, LLC PCL Civil Constructors, Inc. Corman Construction, Inc. Price Proposal: $1,285,000,000.00
- Dulles Metrorail Connectors Skanska USA Civil Southeast / Granite Construction Company G.A. & F.C. Wagman, Inc. / Trumbull Corporation Facchina Construction Company, Inc. Price Proposal: $1,325,470,000.00
- Silver Line Constructors Fluor Enterprises, Inc. / Tutor Perini Corporation / Stacy and Witbeck, Inc. Price Proposal: $1,378,646,479.00
The second lowest bidder, Bechtel Transit Partners (BTP), is similar to Dulles Transit Partners (DTP), the joint venture that constructed Phase 1 of the Silver Line with a PLA they voluntarily entered into with labor unions, which ensured union labor was used for work self-performed by DTP. The voluntary Phase 1 PLA did not apply to subcontractors and MWAA could not identify any subcontractors who voluntarily signed the PLA. (Note: DTP was the name of the joint venture between Bechtel Infrastructure Inc. and Washington Group International (now URS) that served as the Phase 1 prime contractor. While Bechtel is key to both the DTP and BTP joint ventures, BTP was the legal name used for the Phase 2 competition).
Union Boss At Heart of PLA Controversy and Push for MWAA Reform
In the face of scandal and MWAA dysfunction, in 2012, Gov. McDonnell pushed for reforms to the MWAA board by adding additional Virginia representatives and ousting the architect of the PLA scheme, Dennis Martire. Martire’s removal was justified by a variety of reasons related to lax ethical conduct, including the financial windfall Martire’s employer would receive as a result of the PLA mandate and preference.
Martire, appointed by Virginia Gov. Tim Kaine (D), was chairman of MWAA’s Planning and Construction Committee. He also is a member of LiUNA Local 1058 and is currently employed as the vice president and Mid-Atlantic regional manager of LiUNA with an annual salary of $266,000, plus a generous benefit and pension package totaling $336,270, according to the 2010 financial disclosure filings by LiUNA with the federal government.
According to the Virginia Public Access Project, the Laborers Mid-Atlantic Regional Organizing Coalition donated $419,050 to candidates and political action committees from 2007 to 2011 — overwhelmingly to Democratic candidates. Creigh Deeds, unsuccessful candidate for governor, scooped up $250,000. Moving Virginia Forward, Tim Kaine’s PAC, garnered $55,000. LiUNA kicked in another $200,000 to the Democratic Party of Virginia in 2008. Martire was appointed by Gov. Kaine (D), in July 2009.
Martire’s employer, LiUNA, and its local affiliates (such as LiUNA Local 657, which bused in protestors to disrupt the April 18, 2011, press conference held by U.S. Rep. Frank Wolf and other local politicians addressing concerns about Phase 2 of the project) would have received a significant financial windfall from the Phase 2 PLA exceeding tens of millions of dollars.
The PLA mandate would have forced the prime contractor and subcontractors to hire primarily union labor dispatched from LiUNA hiring halls (and union members performing labor in other trades from their respective union hiring halls) and forced contractors to contribute into union slush funds and pension and benefit plans.
Martire’s MWAAA bio lists him as “a former Trustee to the National Heavy and Highway Alliance” (the same group that drafted the proposed Phase 2 PLA mandate and the Phase 1 PLA voluntarily signed by the Phase 1 prime contractor, DTP).
Martire is also chairman of the Mid-Atlantic Laborers’ Employers Cooperation and Education Trust (LECET), which is a union fund contractors/employees are forced to pay into under the current LiUNA collective bargaining agreement that contractors would have to follow under the PLA.
The wage and benefit schedule contained in the LiUNA collective bargaining agreement for LIUNA Local 657 and Local 11 (the LiUNA locals with jurisdiction over this project) highlight the benefit rates and plans contractors must pay into on behalf of their laborer employees if they are party to the PLA. Appendix A (page 20) lists the following hourly contributions contractors are required to pay to union funds by contractors (after collecting the hourly deductions from each laborer’s paycheck):
Health and Welfare: $3.01
CCC Industry Fund: $0.08
Total: $5.43 per hour
This excel worksheet estimates the financial windfall LiUNA and various LiUNA-affiliated funds will receive from a Phase 2 PLA mandate:
Pension: $21.544 million
Health and Welfare: $32.587 million
Training: $2.706 million
LECET: $1.082 million
CCC Industry Fund: $833,113.22
Dues: $8.081 million
Contractors Pay to CILM: $937,500 max.
This calculation doesn’t factor in benefits other unions besides LiUNA would receive as a result of the PLA mandate.
Despite this obvious conflict of interest and ethics violation of MWAA policy, Martire filed two lawsuits to stay on the board and fight Gov. McDonnell’s accusations, costing MWAA more than $1.5 million dollars in legal fees until Gov. McDonnell and Martire reached a settlement for Martire’s resignation in October 2012.
In November 2012, the Department of Transportation Office of Inspector General’s final report investigating the unethical behavior, wasteful spending and contracting irregularities of MWAA board members and staff uncovered vast corruption at MWAA. It led to intense media coverage and sweeping MWAA reforms, suggesting that anti-competitive and costly PLA schemes go hand in hand with poorly run entities like MWAA.
MWAA is led by a 17-member board of directors appointed by the governors of Virginia (7 members), Maryland (4 members), the mayor of Washington, D.C. (3 members), and the president of the United States (3 members). MWAA was established in 1987 by the governments of Virginia and the District of Columbia to manage and operate Washington’s Ronald Reagan National and Dulles International airports. The Airports Authority operates and maintains the Dulles Airport Access Road and the Dulles Toll Road and manages construction of the Silver Line project.
Silver Line’s Bottom Line
TheTruthAboutPLAs.com’s push for fair and open competition on Phase 2 of the Silver Line helped shed light on corruption at MWAA and killed the backroom deal Big Labor Boss Dennis Martire tried to execute. If successful, this scheme would have needlessly increased costs and steered billions of dollars worth of construction contracts to unionized firms employing union members to the benefit of his employer, LiUNA, and his personal financial interest.
Without MWAA’s attempted PLA mandate and preference, taxpayers will benefit from reduced costs as a result of increased competition. In addition, Virginia construction workers and firms will be more likely to win construction jobs and benefit from this massive investment of tax dollars and toll revenue supplied primarily by Virginia stakeholders.
Too many groups, lawmakers and citizens to list deserve to be thanked for ending this crony contracting scheme and protecting taxpayer interests.
TheTruthAboutPLAs.com will continue to monitor this project closely.
2 Responses to Phase 2 Silver Line Bids Below Budget Without Project Labor Agreement Scheme
[…] The other two links each led to the same article on a website called The Truth About PLAs (TAP), a project created by Associated Builder and Contractors Inc. (ABC), the members of which were among those protesting against PLAs in the Times-Mirror article. A review of information found on the TAP and ABC websites indicates that a PLA can increased the cost of a project by 12 percent to 18 percent “compared to similar non-PLA projects by restricting competition to only firms willing to comply with onerous union requirements.” But nothing refers specifically to savings for the Silver Line project. […]
This article is gold considering how much of a total cluster phase 2 is now with bad concrete, rail ties, being over budget and behind schedule.