PLAs Shut Out Most Veteran-Owned Firms

Picture a veteran-owned construction company, certified by the state, staffed by skilled tradespeople, and ready to bid on a public project. Under a Project Labor Agreement, that firm is often locked out before it can even submit a bid.

Of the construction contractors certified by the Division of Capital Asset Management and Maintenance (DCAMM) to work on public projects, only 20 are designated as veteran-owned business enterprises or service-disabled veteran-owned business enterprises. Twelve of those 20 are merit shops. Eight are signatory to organized labor.

When a PLA is placed on a public project, it blocks the merit shops—including most of those veteran-owned firms—from a fair chance to compete.

The Numbers Are Clear

A closer look at the DCAMM database shows the pattern:

• Eleven firms are designated as veteran-owned business enterprises. Five are merit shops; six are signatory to organized labor.

• Nine are designated as Service-Disabled Veteran-Owned Business Enterprises. Seven of those nine are merit shops.

That’s 12 merit shops out of 20 total. PLAs require the use of union labor under the terms of a collective bargaining agreement. Merit shops employ their own full-time trade workers, pay competitive wages, and already provide benefits. To take a PLA job, they would have to set aside their own workforce, hire temporary union labor, and pay into union benefit funds that their employees would never receive. For most of these firms, the math doesn’t work. Competitive bidding becomes impossible.

The same pattern holds for other certified firms:

• 87.5 percent of minority business enterprises (MBEs) are merit shops.

• 72 percent of women business enterprises (WBEs) are merit shops.

Even a Judge Saw the Problem

“Notwithstanding the lip service the PLA pays to being open to all bidders, it most assuredly is not,” wrote Superior Court Judge Michael K. Callan when he struck down a PLA in Springfield. He explained why: “The evidence before the court is that the PLA poses such a significant disadvantage to open shops as to render a competitive bid impossible.”

The Holyoke Veterans Home Made the Point

During construction of the new Holyoke Veterans Home, a special provision was written into the PLA so that minority-, women-, and veteran-owned merit shops could bid and work without having to follow the union’s collective bargaining agreement. The carve-out applied only to work valued under $1 million.

The PLA was signed by DCAMM, the contractor, and the unions. All three parties were acknowledging, in writing, that the agreement would create barriers for the very firms the project was supposed to include.

“The Parties recognize that there are barriers to entry for many M/W/VBEs on construction projects in Massachusetts,” the PLA states.

The biggest barrier was the PLA itself.

A Giveaway That Costs Taxpayers

Instead of the pretense that PLAs somehow benefit veterans, minorities, and women, state leaders should level with the public. PLAs are a giveaway to organized labor. They cost the unions nothing, while raising costs for taxpayers and limiting opportunities for the majority of certified firms that operate as merit shops.

Open competition serves veterans, small businesses, and the public better than closed agreements. Public projects should be open to every qualified firm regardless of union affiliation.