Senator rips collective bargaining agreements on federal construction projects

By Robert Brodsky

April 20, 2010

The top Republican on the Senate Homeland Security and Governmental Affairs Committee is speaking out against an Obama administration policy that encourages collective bargaining agreements on large-scale construction contracts, arguing the plan will result in higher procurement costs.

Sen. Susan Collins, R-Maine, said on Friday that promoting project labor agreements changes the government's federal procurement policy from "neutral" on union issues to one that is "pro-labor."

"When it comes to spending taxpayer money, the decisions should always be based on the best value possible," Collins said. "Such decisions should not be driven by partisanship, politics or other agendas. With this change … the administration has eliminated the practice of awarding contracts based on an objective assessment that puts the taxpayers' interests first."

On April 13, the final rule on project labor agreements was published in the Federal Register. The revisions to the Federal Acquisition Regulation implement a February 2009 executive order in which President Obama encouraged agencies to consider requiring PLAs for construction projects worth more than $25 million. The final rule provides agencies with the discretion to decide if using the agreements would reduce costs and result in a more efficient contract.

The February executive order restored a Clinton administration directive that was revoked in February 2001 by President George W. Bush.

Project labor agreements are prehire collective bargaining agreements with one or more labor organizations that establish the terms and conditions of employment for prime and subcontractors on specific construction projects. The agreements require project employees to receive union-approved wages and benefits, even if they do not belong to a union.

"This is one more example where the administration is taking a position that creates barriers for small businesses and blocks the participation of entrepreneurial startup companies," Collins said.

The Energy Department has used project labor agreements for several years for construction contracts at the Savannah River Site in South Carolina, the Oak Ridge Reservation in Tennessee, the Nevada Test Site and the Idaho National Laboratory.

"PLAs have been a valuable tool for the accomplishment of the environmental cleanup and management mission of the Department of Energy," said Ines Triay, assistant secretary for environmental management. "They contribute to the economy and efficiency of Department of Energy construction projects by ensuring timely completion of our projects within budget. They also lead to lower rates of injuries and illnesses."

The April 13 final rule notes large construction projects are vulnerable to cost overruns because employers typically do not have a permanent workforce, making it difficult for them to predict labor costs when bidding on contracts. Challenges also arise because construction projects usually involve multiple employers at a single location.

"A lack of coordination among various employers, or uncertainty about the terms and conditions of employment of various groups of workers, can create frictions and disputes in the absence of an agreed-upon resolution mechanism," the rule states. "These problems threaten the efficient and timely completion of construction projects undertaken by federal contractors. On larger projects, which are generally more complex and of longer duration, these problems tend to be more pronounced."

But critics claim the agreements are little more than thinly disguised contractual set-asides to union-backed firms.

"Anticompetitive project labor agreements are special-interest kickback schemes that end open, fair and competitive bidding on public projects," said Jim Elmer, national chairman of Associated Builders and Contractors, an advocacy group for construction firms. "Government-mandated PLAs are a handout to a politically connected special interest group and come at the taxpayers' expense."

Elmer argued project labor agreements will drive up industry costs by 20 percent and they discriminate against workers who choose not to join a labor union. The group claims the administration's policy also violates the 1984 Competition in Contracting Act and other procurement laws and regulations.

Administration officials disagree with the criticism.

Project labor agreements "help ensure compliance with laws and regulations governing workplace safety and health, equal employment opportunity and labor and employment standards," wrote Jared Bernstein, chief economic adviser to Vice President Joe Biden in a White House blog post last week. "The coordination achieved through PLAs can significantly enhance the economy and efficiency of federal construction projects."

Labor Secretary Hilda Solis commented on the blog that the agreements "are a win-win; they benefit businesses, workers and taxpayers."

By Robert Brodsky

April 20, 2010