A Red Card for Union Handouts on District Construction Projects
April 25, 2016, District of Columbia officials participated in a groundbreaking and demolition ceremony for the construction of the $300 million DC United Soccer Stadium, which the mayor said will create nearly 1,000 temporary construction and permanent jobs, generate millions of dollars in new tax revenue for the District and establish a $1 billion economic activity area at Buzzard Point.
While many District businesses and residents welcome this redevelopment, qualified construction companies and local construction workers are crying foul about the District of Columbia’s requirement of a union-friendly pact governing stadium construction which steers contracts to unionized firms and grants unions a virtual monopoly in supplying labor to the stadium.
As a September 2013, gift to labor unions during Mayor Vincent Gray’s failed re-election campaign, he announced contracts to build the stadium are subject to a project labor agreement (PLA), pending the city council’s approval of legislation forcing taxpayers to finance roughly $140 million of the stadium’s site development and land swap costs.
Big labor rejoiced. Construction union endorsements and related PAC political contributions poured into the Vince Gray 2014 campaign because this scheme boosted dwindling union membership, which comprises less than 10 percent of the District’s private construction workforce.
Though all businesses are technically free to compete for a construction contract subject to a government-mandated PLA, the terms of the PLA force contractors and subcontractors to recognize unions as the representatives of their employees on a job; use the union hiring hall to obtain most or all construction workers; hire apprentices exclusively through union apprenticeship programs; pay fringe benefits into union-managed benefits and multi-employer pension programs; and obey the unions’ restrictive and inefficient work rules and job classifications.
The PLA also forces 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 benefits plans.
In short, the District’s use of discriminatory government-mandated PLAs discourages competition from qualified local contractors and employees, which drives up costs between 12 percent and 18 percent according to academic research, resulting in fewer infrastructure improvements and reduced construction industry job creation.
Proponents claim government-mandated PLAs reduce costs, keep a project on time and lead to better local hiring outcomes. But the truth is the region’s federal and city government-mandated PLA projects have suffered increased costs, delays and poor local hiring outcomes.
In 2010, the General Services Administration (GSA) awarded a $52.3 million contract to a general contractor to build the Lafayette federal building in Washington, D.C., but then forced the contractor to sign a change order and build it with a union-favoring PLA that cost taxpayers an additional $3.3 million.
Another GSA project, the GSA Headquarters at 1800 F St. in Washington, D.C., suffered a 107-day delay and millions of dollars in cost increases as a result of failed PLA negotiations by labor unions.
In 2013, data collected by Del. Eleanor Holmes-Norton (D) on federal projects subject to PLA mandates located in the District of Columbia demonstrated that PLAs delivered worse local hiring outcomes than other large-scale federal projects not subject to a PLA.
Reports concluded the PLA on the budget-busting Washington Nationals stadium failed to deliver on promises. Just 26 percent of journeymen hours went to D.C. residents, rather than the 50 percent unions promised in the PLA. Half of the contractors involved in the project hired no new apprentices and of the companies that hired new trainees, only 17 of 56 met the PLA requirement that 100 percent of new apprenticeships go to D.C. residents.
In contrast, hundreds of PLA-free private and public projects, such as the District’s recent successful completion of the $376 million 11th Street Bridge project demonstrates PLA mandates are not needed to deliver a project on-time and on-budget, while creating jobs for local companies and construction professionals.
The District of Columbia can shake the ghost of Mayor Vincent Gray’s failed economic policies and blatant cronyism by denying union lobbyists these scams on future construction projects. District residents deserve better and would benefit from fair and open competition, free from corrupt PLA mandates.
Contact the DC Council today and let them know you oppose the anti-competitive and costly government-mandated PLA on this project.
UPDATE July 6, 2016: District of Columbia council members added language (Section 14) on June 21 to The Procurement Integrity, Transparency and Accountability Amendment Act of 2015 (Bill 21-334) mandating the use of union-favoring project labor agreements (PLAs) on District of Columbia-funded construction contracts exceeding $50 million. Click here to write or tweet your D.C. Council members TODAY in opposition to Section 14 of Bill 21-334 and government-mandated PLAs.