The Truth About Project Labor Agreements

ObamaClause and his GSA elves are busy giving gifts to Big Labor this holiday season.

 
Executive Order 13502: Obama’s Gift to Big Labor. Image by Elaine Natario courtesy of The Boston Globe, “Obama kowtows to labor unions,” 10/07/09.

A Washington Examiner editorial is critical of White House gifts to Big Labor called project labor agreements (PLAs). At the expense of taxpayers, skilled non-union craft professionals, and their experienced employers, these anti-competitive schemes effectively funnel lucrative federal construction contracts to unionized contractors and carve-out jobs for members of labor unions (“Unions profiting from favoritism by Obama’s GSA,” 12/22):

Why is the federal General Services Administration, the government’s purchasing agent and landlord, sending millions of tax dollars to unions? Last week, 19 members of Congress, including incoming House Oversight Chairman Darrell Issa, R-Calif., sent a letter to Martha Johnson, administrator of the GSA, asking why it is forcing contractors that are refurbishing federal buildings to accept Project Labor Agreements. A PLA mandates the use of union labor on government construction projects, which translates to inflated costs, delays, and inflexible work rules.

The congressional letter was spurred by Examiner columnist Mark Hemingway’s report that the GSA had awarded a $52 million stimulus contract to renovate a Department of Veterans Affairs building, only to turn around and require the winning contractor to sign a PLA that adds at least $3.3 million to the project’s cost. The agency, which received $6.6 billion in stimulus funds for construction projects, imposed the stipulation on the contractor after changing its policy from favoring low bidders to preferring contractors who agree to sign PLAs. This is a sop for a favored Obama constituency because only 14 percent of all construction workers are unionized. The unionized 14 percent now have what is probably an unconstitutional leg up on the nonunion 86 percent.

This PLA policy comes straight from the top. Obama signed Executive Order 13502 just 16 days after taking office, mandating PLAs whenever possible on government projects of $25 million or more. The Beacon Hill Institute, a free-market think tank at Suffolk University in Boston, reports that, on average, PLAs make construction projects 12 percent to 18 percent more expensive. When you consider that the stimulus bill had an estimated $180 billion in funding for construction projects, that is an awfully big favor for Obama’s Big Labor friends. So is the requirement that stimulus-funded contracts comply with the Davis-Bacon Act, which mandates union-scale wages. Heritage Foundation labor policy expert James Sherk estimates that about $17 billion of the $180 billion could be saved if the Davis-Bacon requirement were lifted.

The GSA decision indicates it has been Christmas for the union bosses ever since Obama took office. He bailed out the moribund UAW, gutted Labor Department regulations requiring transparency of union finances, and now he is using PLAs to milk taxpayers for more dough to give to his biggest campaign contributors. Oh yes, Obama has also stopped meaningful oversight of union corruption. Under President Bush, the Department of Labor prosecuted more than 1,000 union officials, winning at least 929 convictions and $93 million in restitution to workers of misspent union funds. Obama’s Labor Department was supposed to release a report tracking union corruption last January. Nearly a year later, the report remains undone. Issa and the incoming Republican House majority should make oversight of Obama’s too-cozy relationship with Big Labor a top priority.

[Note: Links added by www.TheTruthAboutPLAs.com]

Government-mandated PLAs amount to a big problem for taxpayers and the majority of the construction industry. However, while it’s true the White House and congressional Democrats controlled by Big Labor special interests continue to do all they can to pressure federal agencies to utilize PLAs on federal projects exceeding $25 million in total cost, Executive Order 13502 does not mandate the use of PLAs. Federal agencies can utilize discretion when deciding whether a PLA is appropriate.

More often than not, after learning the truth about PLAs, federal agencies have insulated federal procurement from the demands of special interests and appropriately refrained from mandating PLAs. Most federal agencies have not mandated PLAs because they recognize that PLAs increase costs, violate federal competitive bidding laws and are nothing more than a scheme for Big Labor to regain lost market share. Some federal procurement officials even refer to PLAs as a solution in search of a problem. However, when federal officials cave into the discriminatory and costly demands of special interests, ABC stands ready to hold federal agencies accountable.

Since President Obama signed Executive Order 13502, ABC member contractors on four occasions filed bid protests against illegal PLA mandates, which ultimately forced federal agencies to remove PLA mandates from bid solicitations, allowing taxpayers to reap the benefits of full and open competition. In numerous other instances, ABC members, employees and a coalition of construction stakeholders opposed to PLAs convinced procurement officials that PLAs do not advance the economy and efficiency of a specific construction project. These grassroots efforts also resulted in the removal of PLA mandates and led to fair and competitive bidding.

Some agencies, like the GSA, have attempted to avoid the appearance of unethical PLA mandates by taking the carrot and stick approach. On all GSA projects exceeding $25 million in total cost, the GSA’s official policy now encourages bidders to “voluntarily” submit bids with PLAs by rewarding those contractors with extra credit in the technical evaluation scoring utilized under best value procurement. Experienced federal contractors and procurement experts warn this “PLA preference” could potentially become a de facto PLA mandate because a contractor that refuses to build with a PLA can not overcome the “PLA bonus” disadvantage.  Of course, this scheme is no worse than a PLA mandate and the contracting community is waiting to file bid protests against unjustified PLA preferences, which violate competitive bidding laws.

In short, government-mandated PLAs are not in the public interest. If contractors think a voluntary PLA will help their business win a bid and deliver the best possible product at the best possible price to taxpayers, they are free to voluntarily do so under current law. However, they should not receive extra credit for submitting a PLA bid just as they should not be forced to submit a PLA offer. Contractors must compete on a level playing field against all qualified contractors in an environment where an employee’s wage and benefit costs are set by federal prevailing wage laws under the Davis-Bacon Act. Forcing or encouraging inefficient union work rules and employer payments into Big Labor’s under-funded benefit plans onto contractors through typical PLAs kills innovation, disrupts competitive advantages, harms employees and leads to increased costs. 

That’s why it is critical for the 112^th Congress to pass legislation that prohibits federal PLA mandates and preferences nefariously pushed by the White House and political appointees in federal agencies. It’s time for Congress to step in and end these backroom PLA deals once and for all. Taxpayers and the construction industry’s unemployed workforce would be delighted by this gift from good government.