Labor Fight Renewed
Republican lawmakers balk at deals that require union pay for contract workers.
Some partisan battles are so well-ingrained in the culture you can virtually set your clock by them. Political street fights over federal spending and taxes are guaranteed in every Congress. Likewise for hot-button social issues, such as abortion and immigration. Another reliable controversy surrounds government guidance on the often obscure labor rules for federal construction projects.
Known as project labor agreements, these prehire deals between the owners of construction firms and labor organizations require collectively bargained wages and benefits for project employees. PLAs typically mandate that the contractor hire its workers through union halls and that workers pay dues for the length of the project, even if they do not belong to a union. Prime and subcontractors must follow union rules on pensions, work conditions and dispute resolution, while workers agree not to walk off the job.
Washington clashes over PLAs have been a constant dating back to 1992, when President George H.W. Bush forbade agencies from requiring construction contractors to use them. President Bill Clinton overturned Bush's order, recommending PLAs on contracts worth more than $5 million. Eight years later, President George W. Bush reversed his predecessor's order, adding a clause stipulating that agencies stay neutral on the use of labor agreements. Like a pingpong ball, PLAs were volleyed again in 2009, when President Obama issued an executive order "encouraging" the use of labor agreements for contracts of $25 million or more. Project labor agreements provide "structure and stability to large-scale construction projects," Obama wrote in the order.
With Republicans now in control of the House and flexing stronger margins in the Senate, opponents are not waiting until the next GOP president is elected to turn back the clock back on PLAs. In February, Rep. John Sullivan, R-Okla., introduced a bill to revive Bush's neutral stance toward PLAs. Sen. David Vitter, R-La., introduced companion legislation.
The measure could garner enough support to pass the House. Rep. Frank Guinta, R-N.H.,earlier this year offered an amendment that would have prohibited government-mandated PLAs. The measure failed by a 210-210 vote, but several Republicans were not present for the final tally, which took place at 1:30 a.m. on a Saturday during a budget debate in February. Guinta, who is co-sponsoring Sullivan's legislation, argues PLAs are an "outrageous and massive waste of scarce tax dollars."
Guinta cites a study by the Beacon Hill Institute at Suffolk University that estimates PLAs increase the costs of public construction projects by 12 percent to 18 percent. The study suggests if Obama's order were in effect in 2008, PLAs would have increased the cost to taxpayers by $1.6 billion to $2.6 billion. Unemployment in the construction industry, meanwhile, is near 22 percent, according to federal statistics.
Proponents, however, say private sector PLAs are common-they were used in the rebuilding of the I-35 W Bridge in Minneapolis after it collapsed and in construction of the Trans-Alaska pipeline-because they attract an abundance of well-qualified labor. The Energy Department also frequently uses these agreements for construction projects at many of its national laboratories. The department says PLA projects often are completed quicker and have lower rates of injuries than other private sector projects.
Using Recovery Act funds, the General Services Administration recently conducted a pilot program to test the use of PLAs in bids for 10 construction projects, each worth more than $100 million. Contractor submissions that included a PLA received a 10 percent increase in their technical bid evaluation, which was then weighed against the company's price proposal. GSA received between three and eight bids for each project, many of which were similar in price, with or without a PLA, says Robert Peck, commissioner of GSA's Public Buildings Service.
In a handful of cases, the PLA bid was higher, but the agency determined "it was worth spending a little more" to guarantee a steady source of labor and prevent work stoppages, Peck says. In total, seven of the 10 contractors selected had PLAs.
Administration officials say Obama's order and a subsequent Federal Acquisition Regulation change merely encourage the use of PLAs and do not require them. "It gives each contracting agency the discretion to decide for itself when, on a project-by-project basis, a PLA may provide economy and efficiency," says Dan Gordon, administrator of the Office of Federal Procurement Policy at the Office of Management and Budget.
But subcommittee Chairman Jim Jordan, R-Ohio, argues Obama's order can be interpreted as a policy mandate. He notes PLAs "tip the scale of an open bid process in favor of organized labor and shut out nonunion shops, many of which are minority- and women-owned. "Only 13 percent of construction workers belong to a labor union," Jordan says.
PLA requirements do not preclude nonunion contractors from bidding on construction projects, but the higher wages and benefits put the contracts out of reach for some small businesses. John Ennis Jr., CEO of Ennis Electric Co. Inc. in Manassas, Va., says his firm lost out on three GSA stimulus funded projects, all to PLAs. "As a result, we have been forced to lay off approximately 15 percent of our workforce, and unless we can find some other opportunities, we could end up laying off over 50 percent of our workforce," Ennis told the subcommittee.