PLAs Block Minority & Women Contractors

The MCA weighed in against a proposed project labor agreement on a new $400 million Holyoke Soldiers' Home. Why is it that lawmakers, who claim to be for hiring minorities and women, support PLAs that lock out nonunion minority- and women-owned construction firms (a majority of them, by the way) and 83.5% of the construction workforce in Massachusetts which is nonunion. It defies logic to think you can reach minority and women hiring goals by narrowing the available workforce to 16.5% of the workforce. It sheds some light on the real priorities of these lawmakers.




April 7, 2021


The Honorable Paul R. Feeney, Senate Chairman

The Honorable Danielle W. Gregoire, House Chairman

Joint Committee on Bonding, Capital Expenditures and State Assets

24 Beacon St., Room 215

Boston, MA 02133


Re: H. 96, An Act Financing the Reconstruction of the Soldiers’ Home in Holyoke


Dear Chairs Feeney and Gregoire:


The Merit Construction Alliance of Massachusetts, Inc., a non-profit trade association representing merit shop building contractors, endorses the passage of the original language of H. 96 (previously H. 64) as filed by Governor Charles D. Baker in an expeditious fashion to meet deadlines to apply for matching federal construction funds. However, the amendment added by the Joint Committee on State Administration and Regulatory Oversight, section 4, should be removed in its entirety.


In the enclosed nine pages of supporting documentation, you will clearly see Section 4 will serve to:


- Discriminate against the majority of construction workforce and contractors who are merit shop and choose to work outside the confines of organized labor.


- Block minority- and women-owned companies from bidding and working on the project as the vast majority are merit shop and wish to remain so.


- Circumvent existing public construction laws and practices, including DCAMM’s Supplier Diversity program. Locking out 83.5% of the workforce that is nonunion will make it even more difficult to reach these goals.


- Increase project costs as PLA projects are shown to cost 10-20% more in numerous studies.

PLAs Lock Out Nonunion Construction Workers

No one, including the MCA, would think it fair to lock out union labor from an opportunity to work on a public project. So why is it acceptable to deny nonunion labor the same opportunity?


· A PLA requires contractors to employ union workers referred by the union local. “The Contractor recognizes the Union as the sole and exclusive bargaining representative of all craft employees working within the scope of this PLA on the Project.” (Source: UMASS-Boston PLA p. 9, 10/20/2010)


· That would require a merit shop to not use its own employees, which may result in layoffs – especially at a smaller contractor – and use union labor.


· It is difficult to imagine that sound public policy would encourage an employer to fire its workforce. In no other area of contracting for services does the Commonwealth contemplate imposing such a requirement on winning bidders.


· In Massachusetts, 83.5% of construction workers are employed by merit shop contractors, according to data from unionstats.com, the only reliable internet database tracking union membership utilizing U.S. Census Bureau data.


· Nonunion workers have made a personal choice to work for merit shops and not join organized labor. They should not be penalized by their government for making this choice.


PLAs Block Merit Shop Contractors from Bidding

Claims that nonunion contractors can bid on PLA projects are disingenuous. While PLAs do not overtly state “nonunion contractors need not apply,” the onerous terms and conditions of PLAs have that very effect:

· Under a PLA, nonunion contractors would be required to obtain most or all workers from the union hiring halls. What are they supposed to do with their loyal, permanent employees? There employees include minorities, women and veterans. Are they supposed to lay them off? They will not abandon their employees.


· Under a PLA, non-union contractors would be forced to exclude apprentices enrolled in registered nonunion apprenticeship programs. “Contractors shall employ apprentices who are registered with the Joint Apprenticeship of the Parties and shall employ qualified journeymen.” (UMass-Boston PLA, p. 11)


· The unions require signatory contractors to meet significant demands that have the effect of barring small contractors, as explained by a minority contractor in the 2017 DCAMM Disparity Study:


“Union requires a $50,000 bond and a million other type of requirement[s] that eliminate small companies to qualify to become a signatory. we are MBE, DBE for a reason; we don’t have the resources like other contractors.”


· In opposing PLAs, the National Black Chamber of Commerce explains:


“Government-mandated project labor agreements, or PLAs, typically require companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain most or all workers, obtain apprentices exclusively from union apprenticeship programs, follow union work rules and pay into union benefit and multi-employer pension plans that any nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans. This forces employers of nonunion workers to pay “double benefits” into existing plans and union plans, and places firms opposed to these costly provisions at a significant competitive disadvantage.”


MBE and WBE Contractors Will Be Harmed by PLA

The directory of DCAMM-certified construction companies includes 77 women-owned, 36 minority-owned and 11 veteran-owned companies. While data does not exist showing what percentage are nonunion or union, a PLA will certainly harm those that are nonunion – and anecdotal evidence suggests the majority are merit shop.


· The 2010 DCAMM Disparity Study quoted a construction-firm owner as saying:


“You find very few of these companies that are union. Okay. And there are lots of MWBE companies out there, but you can’t access them if you’re doing a union job because people tend not to go union.”


· In a report to the City of Worcester in which it recommends against adopting a PLA on the new ballpark, Skanska Building USA stated:


“Historically, the unions are not as able to guarantee a diverse workforce.”


Minority Community Public Opposition to PLAs


Across the nation, members of the minority community have publicly opposed PLAs:


· "[C]laims that a PLA can be a tool to ensure minority construction workers and businesses are used on a public project is a farce," states Harry C. Alford, president & CEO of the National Black Chamber of Commerce.


· “Government-mandated PLAs are opposed by the NBCC because almost all minority-owned contracting firms are not affiliated with unions. African American-owned contracting firms are typically small businesses and employ their own core workforce of skilled construction workers who are not unionized and are generally more diverse than construction workers coming from union hiring halls.” (Harry C. Alford, president & CEO of the National Black Chamber of Commerce.)


· “98% of Black and Hispanic construction companies are non-union shops. Thus, a Project Labor Agreement greatly limits the opportunities for Black and Hispanic firms,” said John Harmon, Sr., IOM, Founder, President & CEO of the African American Chamber of Commerce of New Jersey.


“The possibility of Black and Hispanic labor is greatly suppressed. It is beyond disappointing when we see diversity clauses added to legislation that is fundamentally harmful to minority communities.”


“The diversity language within this bill is a guise of permissive language that has absolutely no benefit to the African American community within the state.”


· “These PLAs promise 'local hire' and outreach to minority neighborhoods, but the unions’ promises have always been empty,” wrote Shane Harris, a San Diego activist.



Laws & Agencies Successfully Govern Public Construction


State laws and DCAMM already provide the legal requirements, rules and oversight. They govern workers’ rights, pay rates and safety. They ensure qualified and experienced of contractors are hired.


"The Massachusetts public procurement laws were established to provide, in a pre-qualified environment, fair and open competition across all trades. This has proved to provide the lowest responsible costs for public projects, and any firm, whether union or not, merely needs to be prequalified by DCAMM to submit a proposal."


(Source: Report to the Worcester Redevelopment Authority, “Project Labor Agreements on Chapter 149a Projects,” Jan. 23, 2019, by Keith Martin, Skanska USA Building.)



DCAMM: As discussed earlier, DCAMM has a robust program to set goals for MWBE contracting and workforce participation, as detailed in the 2020 Supplier Diversity Report.


DLS & Prevailing Wage Law: The Department of Labor Standards (DLS) issues prevailing wage information for construction projects and other types of public work. The Prevailing Wage Law directs the DLS to set rates based on collective bargaining agreements, so there is no need for a PLA to set wage rates. On this project all workers would receive Prevailing Wage, whether union or nonunion. “DLS issues prevailing wage schedules to cities, towns, counties, districts, authorities, and state agencies. Workers must receive these hourly wage rates when working on a public project.” (Source: https://www.mass.gov/prevailing-wage-program)


Legality


The SJC called PLAs “anti-competitive” and established a limited set of circumstances for use on public projects. This has been interpreted by the lower court that PLAs are “presumptively anti-competitive and consequently prohibited from use on most public construction projects.”


In John T. Callahan & Sons, Inc., v. City of Malden, 430 Mass. 124 [1999], the SJC decision stated:

· “We do not articulate a bright-line, litmus-test standard for determining when the use of a PLA is appropriate. Nor do we conclude that a PLA will be justified in all, or even most, circumstances. A project must be of substantial size, duration, timing, and complexity, and the interplay between all four of these factors must be considered. It may be that, in certain cases, the sheer size of a project warrants the adoption of a PLA. In most circumstances, the building of a single school will not, in and of itself, justify the use of a PLA.”


· “A PLA will not be upheld unless (1) a project is of such size, duration, timing, and complexity that the goals of the competitive bidding statute cannot otherwise be achieved and (2) the record demonstrates that the awarding authority undertook a careful, reasoned process to conclude that the adoption of a PLA furthered the statutory goals.”


In 2002 and again in 2005, (Enterprise Equipment, et al v. City of Brockton; and Millis Plumbing, Inc., et al, v. City of Brockton) the Superior Court ruled that Brockton could not impose a PLA on the city’s so-called Twin Schools projects.


In her 2002 ruling in the Enterprise case, Judge Nonnie Burns concluded:


“Project Labor Agreements are presumptively anti-competitive and consequently prohibited from use on most public construction projects.”


Judge Burns’ correct conclusion in the Brockton case that PLAs are “…prohibited from use on most public construction projects” was a direct result of her analysis of the SJC’s ruling in Callahan v. City of Malden, the case often cited by PLA supporters.



What Do PLAs Accomplish?

1. Reduce Competition. PLAs reduce competition from nonunion contractors and create a monopoly for organized labor.


"When a PLA is in place, it grants a union leader the power to call all the shots and determine which locals get total and complete control of multibillion-dollar public and private construction projects. Those in charge decide what it’s going to cost in labor to get the job done. They become the ultimate power brokers, controlling numerous jobs and commanding the loyalty of countless beneficiaries down the line," writes Kevin Barry, director of the construction division of the United Service Workers Union in Queens, in a New York Post opinion column.


"We have long been taught that monopolies are harmful and drive up the cost of business while potentially sidelining the best and brightest workers. It’s time we acknowledge that such excessive powers granted by the government are abhorrent, leading directly to corruption.


2. Solve Union-Made Problems. The problems that a PLA allegedly solves are problems created by organized labor. Strikes, jurisdictional disputes and grievances may be hallmarks of organized labor, but unheard of by merit shop employees. And there is no guarantee a PLA will prevent the issues, as we have seen examples of strikes on PLA projects.


3. Increase Costs. PLAs increase costs due to decreased competition and inefficient union work rules.


a. PLAs and other union-only schemes increase the cost of public construction between 10-20% according to numerous studies comparing PLA and non-PLA project costs.


A recent study of Connecticut school construction found PLAs raised the final costs by 19.84 percent. (The Effects of Project Labor Agreements on School Construction in Connecticut, by Burke and Tuerk, January 2020.)


"Municipal leaders everywhere need to rethink the whole idea of entering into PLAs for school and other construction projects, in that PLAs result in spending more tax dollars than necessary on these projects and thus reduce the number of projects that can be built." - David G. Tuerck, Executive Director, Beacon Hill Institute


b. The cities of Worcester and Lowell chose fair and open competition in 2019. They rejected organized labor's demands for project labor agreements:


i. "According to our consultant a PLA would add 10-15% onto construction costs. With an estimated $270.5 million in construction costs, this would equate to $27-40.5 million added to the project, exclusively funded by the City and residents." Lowell City Manager Eileen Donoghue, May 23, 2019, memo to the Lowell City Council.


ii. The Worcester Redevelopment Authority asked its construction consultant, Skanska Building USA for an opinion on a PLA, and rejected a PLA on the new ballpark. Skanska wrote:


1. "PLA's cost more, historically, and this has been cited in the 2003 and 2017 studies by the Beacon Hill Institute."


2. "One of the factors that increase construction costs on these projects are requirements from the unions to have some number of support workers on site at all times, whether needed or not. These workers merely drive up the cost without a resultant benefit to the project, but the unions require them."


(Source: Project Labor Agreements on Chapter 149a Projects, Jan. 23, 2019, by Keith Martin, Skanska USA Building.)


PLAs Do Not Guarantee Price or Quality


Since PLA advocates claim PLAs guarantee costs, timelines and quality, it is fair to examine those claims. In a review of PLA language, there is no evidence of provisions that guarantee schedules, price or quality, nor provisions that provide consequences for failure to adhere to th PLA. Here are examples of two well-known PLA projects with publicized quality issues:


- The Big Dig – over budget, not on time. When addressing the matter of workmanship and continued spiraling costs on the Big Dig, State Auditor Joseph DeNucci reported: "Not only have taxpayers paid for shoddy work, they are now paying for the repairs." (Source: "Audit: Pike should Dig deeper to recover $$," The Boston Herald, July 31, 2007.)


- UMass Boston dorms – “In the first weeks of school, dorm elevators abruptly fell several floors with students inside. Water shot out of one toilet when you flushed another, students reported. The rooms are often stifling hot, but the showers are frigid.” (Source: https://www.bostonmagazine.com/education/2018/11/12/umass-boston-dorm-problem/)



PLA vs. Non-PLA comparisons


There are instances where we can fairly compare construction projects with and without PLAs. The difference are revealing.


U.S. Dept. of Labor Job Corps Center, Manchester, N.H​


Between 2009 and 2012, the federal government proceeded with bidding on this project. According to public sources:


· Three general contractors bid under the PLA and when the PLA was removed and the project rebid, nine general contractors bid.

· The winning bidder under a PLA bid again when the PLA was dropped, and that company’s bid dropped by $3.6 million – on the same project.

· The original winning bidder, a union contractor based in Florida, did not win the bid on the New Hampshire project.

· A New Hampshire merit shop firm won the project with a bid $6M less than the original winning bid, a 16.47% savings for taxpayers.

The Garage Mahal


The city of Worcester and Lowell both completed $21 million parking garages in 2007. Worcester built 503 parking spaces, while Lowell built 900 spaces. Unlike Lowell, the Worcester project used only union contractors and labor to get 45% fewer spaces in what the Telegram & Gazette dubbed the “Garage Mahal.”


Fall River Forced to Drop PLA


In 2005, the City of Fall River imposed a union-only Project Labor Agreement on that city’s 5-school construction project. The Merit Construction Alliance was forced to file a lawsuit challenging the legality of the PLA top protect the interests of the merit shop community and Fall River taxpayers.


After several rounds of a sparse number of bidders, whose bids came in millions over budget, Fall River’s mayor rescinded the PLA and re-bid the project allowing all qualified, responsible bidders, regardless of union affiliation, to participate. The results were predictable: the number of bidders doubled and bid prices plummeted, which left the mayor to publicly conclude, “With more bidders, you tend to get a better price.”



Section 4 Lacks a Legitimate Public Policy Rationale


The Section 4 amendment is ill-conceived, lacks supporting data and rationale, and contradictory to its stated goals. There is no legitimate reason for this legislation to circumvent the Commonwealth’s existing public construction laws and processes.


The majority of the state’s construction workforce, which is nonunion, will be denied the opportunity to bid and work on a project they are funding with their state and federal tax dollars.


The Commonwealth’s veterans deserve the best services we can provide, and that includes a state-of-the-art, high-quality hospital built by qualified craftspeople in the most economical fashion so that limited public resources are put to their fullest use. In public and private construction, that is achieved through fair and open competition by qualified contractors, regardless of union affiliation.


For more information on the benefits of fair and open competition, contact MCA at jason@mca-ma.com or 781-585-5894, and visit www.mca-ma.com.


Sincerely,


Jason Kauppi

President


cc:

Sen. Nick Collins

Sen. Joseph A. Boncore

Sen. Diana DiZoglio

Sen. Marc. R. Pacheco

Sen. Walter F. Timilty

Sen. Ryan C. Fattman

Sen. Bruce E. Tarr

Rep. Patricia A. Haddad

Rep. Russell E. Holmes

Rep. Mike Connolly

Rep. James K. Hawkins

Rep. Lindsay N. Sabadosa

Rep. Carol A. Doherty

Rep. Rob Consalvo

Rep. Adam J. Scanlon

Rep. David T. Vieira

Rep. Norman J. Orrall

Rep. Kelly W. Pease

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