The Truth About Project Labor Agreements

Phase 1 of the Dulles Corridor Metrorail Project, commonly known as the Silver Line, opens tomorrow. This milestone is a great opportunity to revisit the project labor agreement (PLA) controversy surrounding Phase 2 of the project.

While the final numbers aren’t in yet, Phase 1 cost about $2.9 billion, or $150 million more than initially planned.

Phase 2 of the Silver Line, extending 11.4 miles west from Reston to Loudoun County, just beyond Dulles International Airport, is expected to cost $2.7 billion and open in 2018.

That puts the total Silver Line tab at an estimated $5.6 billion, which is funded by toll revenue from the Dulles Toll Road, as well as tax dollars from Loudoun and Fairfax Counties, the Commonwealth of Virginia, and federal money and loan guarantees.

Contracts to design and build both phases of the Silver Line are procured by the Metropolitan Washington Airports Authority (MWAA).

Dulles Transit Partners (DTP), the joint venture between Bechtel Infrastructure Inc. and Washington Group International (now URS), constructed Phase 1 of the Silver Line with a PLA it 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, but subcontractors were free to sign a PLA with applicable unions. MWAA could not identify any subcontractors that voluntarily signed the PLA or the number of manhours performed by subcontractors and employees subject to union hiring hall rules contained in the voluntary PLA.

In 2011 and 2012, TheTruthAboutPLAs.com exposed MWAA’s controversial PLA requirement (and later PLA preference/de facto PLA mandate) on Phase 2 of the Silver Line that would have steered billions of dollars worth of construction contracts to unionized contractors and created jobs primarily for union construction members, despite the fact that 95.8 percent of Virginia’s construction workforce does not belong to a union.

After months of controversy, media scrutiny and drastic reforms involving MWAA board members and personnel, MWAA issued a solicitation for Phase 2’s construction contract free from anti-competitive and costly PLA requirements or PLA preferences.

On May 14, 2013, a $1.178 billion design/build Package A contract was awarded 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.”

The bid by Capital Rail Constructors was 16 percent to 27 percent lower than expected and was just $14.2 million less than the second most responsive bid submitted by Bechtel Transit Partners, indicating robust PLA-free competition for Package A of Phase 2 served taxpayers and MWAA well. A $14.2 million difference on a $1.178 billion contract is an incredible feat of estimating.

On July 2, MWAA announced its intent to award a contract to Hensel Phelps Construction Co. of Chantilly, Va., to design and build the rail yard and maintenance facility for Package B of Phase 2 of the Silver Line. Hensel Phelps’ $253 million price proposal for Package B was better than three other competitors.

The Silver Line’s PLA controversy is best summarized in this May 23, 2013, TheTruthAboutPLAs.com blog post: Phase 2 Silver Line Bids Below Budget Without Project Labor Agreement Scheme.

Dec. 16, 2013, The Washington Post reported a PLA voluntarily executed by one of the Capital Rail Constructors contractors is being used for some work self-performed on the second phase of the rail project:

“Clark Foundations, LLC, a subsidiary of Clark Construction Group, LLC, and a partner of Capital Rail Constructors, LLC, has executed a project specific agreement with Laborers’ International Union of North America (LiUNA) to help supply labor to the project,” according to an e-mailed statement from Keith Couch, project director for Capital Rail Constructors. Couch added that: “The use of both union and non-union labor has worked successfully for us on many other major projects in this area.”

Virginia Secretary of Transportation Sean T. Connaughton said the governor had no issue with the use of PLAs as long as they were voluntary.

“It has been the Commonwealth’s position all along that PLAs or other labor arrangements are acceptable if such agreements are entered into voluntarily between the employer and the labor union,” he said in an e-mailed response, adding that, “Our concern with the pending procurement for Phase 2 of Dulles Rail were the proposals to make PLAs mandatory or to give some sort of preference in awarding the construction contract to bidders with PLAs. Such arrangements do not meet the letter or spirit of Virginia law and, accordingly, we opposed them.”

Denny Martire, vice president of LiUNA said having a PLA on that portion of the project will guarantee a “steady source of well-trained workers.”

Martire was an MWAA board member at the time of the pivotal vote. While he had backed including the incentive, he ultimately voted to drop the provision.

It is unclear how many, if any other contractors and subcontractors have signed a similar voluntary PLA.

Silver Line’s Bottom Line

TheTruthAboutPLAs.com’s campaign for fair and open competition on Phase 2 of the Silver Line helped shed light on corruption at MWAA and killed the union-favoring scheme Big Labor boss and MWAA board member Dennis Martire tried to orchestrate behind closed MWAA doors. If successful, this backroom deal for a PLA mandate would have needlessly increased costs and steered billions of dollars worth of construction contracts to unionized firms employing union members to the benefit of Martire’s employer, Laborers International Union of North America (LiUNA), and Martire’s personal financial interest.

Without MWAA’s attempted PLA mandate and preference, taxpayers are sure to benefit from reduced costs as a result of increased competition. In addition, union and nonunion 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.

Numerous stakeholders, lawmakers and citizens deserve credit for taking action and ending this crony contracting scheme while protecting taxpayer interests.

TheTruthAboutPLAs.com will continue to monitor this project closely and wishes the Silver Line success for Phase 1’s opening this weekend. Congratulations to the men and women who built Phase 1.