The Truth About Project Labor Agreements

Yesterday, The Boston Globe reported that a group of nonunion contractors filed a complaint with the State Ethics Commission alleging that a project labor agreement (PLA) favoring union labor on $750 million worth of construction at the UMass Boston campus violated the state’s conflict of interest law when it was approved by a board that includes two union leaders (“UMass pact is target of complaint,” 8/10/10):

The Merit Construction Alliance alleges that the union officials should have recused themselves when the UMass Building Authority voted in June to require the use of union workers on a massive overhaul of the Boston campus.

The complaint says Francis X. Callahan Jr., president of the Massachusetts Building Trades Council, and Edward W. Collins Jr. of the International Brotherhood of Electrical Workers, represent unions that could collect at least $5.2 million in dues from union workers on the campus project. The Merit Construction Alliance, which represents nonunion contractors and employees, warned after the board’s vote that it would file the ethics complaint against Callahan and Collins, both of whom are appointees of Governor Deval Patrick.

“The union board members were part of an election-year scheme by the Patrick-Murray administration to hand jobs to specials interests, despite the added costs to taxpayers and nonunion workers’’ Ronald N. Cogliano, president of the alliance, said in a statement yesterday.

Callahan told the Globe in June that his lawyers had reviewed his participation in the vote and advised that it would not be a conflict of interest because he will neither sign nor negotiate the contracts involved, nor receive any personal benefit.

In a letter to the Ethics Commission several days before the vote, Callahan asserted that his union’s interests in the project labor agreement were “remote, speculative, and not sufficiently identifiable to require my recusal.’’

“I’m confident there’s no ethical conflict, but I’m not going to comment on the complaint without seeing it,’’ Callahan said yesterday. “I’m not concerned about it.’’

Collins also denied any wrongdoing and called the complaint “a real reach.’’

“I believe I’m in full compliance and my actions as a board member were in full compliance’’ with state ethics laws, he said in an interview yesterday.

The allegation of ethical violations could resonate in the governor’s race because Patrick has strongly supported the union-only work agreement, drawing sharp criticism from his Republican challenger, Charles D. Baker.

Patrick contends that requiring union labor will guarantee a higher quality workforce and eliminate the risk of strikes, thus diminishing the potential for slowing down the complex overhaul and disrupting life on the campus. Baker argues that Patrick pushed the agreement as a favor for politically influential unions, even though it could drive up the cost of the project by $100 million.

The governor has angered many public-sector unions by cutting employee benefits during the economic downturn. He has had better relations with private-sector unions, particularly the construction trades.

In a speech to the Building Trades Council in March, Patrick announced that a labor agreement would be approved for the UMass campus project and that others were being considered for other large projects in the state.

Kyle Sullivan, a Patrick spokesman, declined to comment.

The $750 million in work at UMass Boston is a decadelong undertaking that includes, among other projects, the building of a new science center and the Edward M. Kennedy Institute for the United States Senate.

The 11-member UMass Building Authority, which has five Patrick appointees, approved the agreement on a 9-to-2 vote in mid-June, after Collins and Callahan spoke in favor of the pact.

TheTruthAboutPLAs.com has covered the controversy surrounding Gov. Patrick’s efforts to steer lucrative state construction contracts to his staunchest political supporters: Massachusetts construction trade unions.

Today the Boston Herald editorial board blasted Gov. Patrick’s orchestration of this anti-competitive and “indefensible” crony contracting scheme. The editorial calls the participation of Big Labor bosses Collins and Callahan in the UMass Building Authority’s PLA vote “fishy” (“Challenging labor,” 8/11):

The Patrick administration’s decision to exclude non-union contractors from $750 million worth of construction projects at UMass-Boston over the next decade is, frankly, indefensible.

According to a group that represents non-union tradespeople, it’s also ethically suspect.

[snip]

It will be up to the Ethics Commission to determine whether a true conflict of interest exists, though on the surface it certainly seems fishy. A reversal of the authority’s vote would be the ideal outcome.

But if the complaint serves simply to renew focus on this horrendous policy decision – which amounts to a giveaway to organized labor that leaves thousands of out-of-work tradespeople still out of work and taxpayers on the hook for millions in unnecessary additional costs – then it will have served a useful purpose.

And if it prompts Gov. Deval Patrick to rethink his plan to expand the use of project labor agreements – which steer public construction work exclusively to unions in exchange for labor “harmony” – then all the better.

Unfortunately for taxpayers and unemployed tradespeople, that seems the unlikeliest of outcomes.

The ethics complaint was filed days after another incumbent Democrat governor’s administration became embroiled in an ethics scandal involving PLAs.

On Aug. 5, the Ohio Inspector General released a report blasting Gov. Ted Strickland’s (D) appointee to the Ohio School Facilities Commission (OSFC), Richard Murray — a former construction union advocate with the Laborers-Employers Cooperation and Education Trust (LECET) and union organizer with Local 423 of the Laborers’ International Union of North America (LIUNA) — who has been strong-arming school districts into using PLAs in order to receive OSFC money for school construction.

The investigation revealed that Gov. Strickland appointed Murray because the prior OSFC director wasn’t doing enough to ensure state contracts were awarded to unionized contractors. Murray was encouraged to steer contracts to union contractors so unions and their members would support Strickland in the upcoming election.

The report documents incredible examples of corruption and unethical behavior. For instance, Murray unilaterally instituted a PLA for Ohio blind and deaf schools that will be a $145,000 windfall for his union and the LECET.  Read all about this clear conflict of interest here and here.

The fascinating twist on this story is that the bids for the deaf and blind schools came in 41 percent – about $11 million – over budget with Murray’s PLA mandate. Ohio law says the schools must be rebid. Big Labor spin-doctors are attempting to convince stakeholders that the PLA was not responsible for the increased costs, but the public isn’t buying it.

There is a chance the schools will be rebid without a PLA, allowing the public to see another real-world experiment (see: case studies in Fall River, Mass. and City of Lynn, Mass. English and Classical schools) documenting the cost difference between schools bid with and without PLAs.

Three Ohio newspapers have published editorials that attack Strickland and call for Murray to step down as OSFC director. This likely will hurt Gov. Strickland in November.

Govs. Strickland and Patrick are two of  several incumbent Democrat gubernatorial candidates (see: Iowa and Illinois) who have resorted to funneling lucrative state construction contracts to unions via PLAs in order to secure Big Labor’s support in upcoming elections.

Additionally, President Obama was widely criticized for signing a pro-PLA Executive Order 13502 as part of a series of policy moves executed within his first month in office that benefitted Big Labor.  The order and related Federal Acquisition Regulatory (FAR) Council regulations encourage federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost.