The Springfield Water and Sewer Commission has voted to discriminate against 83% of the state's construction workforce by locking out merit shop contractors and their employees -- who choose not to join organized labor -- from working on a new water treatment plant. As explained in The Republican newspaper, a PLA requires using only union labor, which in Massachusetts is about 16% of the construction workforce.
In doing so, the Board ignored the advice of it's own legal counsel, who said the PLA would not survive a court challenge.
This letter to the Board of Commissioners explains the folly of the decision and that it will hurt ratepayers by reducing competition and raising costs.
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Matthew Donnelan
Commissioner
Vanessa Otero
Commissioner
Daniel Rodriguez
Commissioner
Springfield Water and Sewer Commission
P.O. Box 995
Springfield, MA 01101
VIA US Mail and electronic mail to info@waterandsewer.org
Dear Commissioners:
The Board of Commissioners has erred in imposing a project labor agreement on the West Parish Water Treatment Plant and should rescind the January 11, 2024, vote prior to putting the project out to bid. The Board’s 2-1 majority based its decision on a union threat, disregarded state law and the opinion of its own legal counsel, and failed to consider the PLA will raise the project cost by millions, thereby undermining the goals of the state’s competitive bidding laws.
Keeping the project on schedule was a primary reason stated to support the PLA. At the January 11 meeting, much was made about a Mass. Department of Environmental Protection consent order. The Springfield Water and Sewer Commission faces $100 per day fines if the project is not completed by September 30, 2028 (MassDEP letter, Dec. 29, 2023, item No. 19). That amount is negligible compared to the millions of additional costs a PLA will add to the project, as detailed later in this letter. Had the Board done a cost analysis of the PLA, it would have been clear the PLA is a far greater threat to the project than the MassDEP. At $100 per day, it would take nearly 3 years for the MassDEP fines to reach even $100,000. That is a relatively insignificant sum compared to the millions of dollars a PLA adds to project costs.
Scheduling concerns arose from a union representative who informed the Board that certain collective bargaining agreements would expire during the project. It was suggested this could result in a strike and delay the project beyond the deadline. The unions have raised the specter of a strike, which they alone control, and told you the best solution is to give unions a monopoly on the project as a no-strike guarantee. For the record, merit shop employees do not strike, cause work stoppages, or have disputes over which trades do which work. Only unions do that. The public record is replete with examples of unions striking and delaying PLA projects.
The Board showed great concern about a $100 per day MassDEP fine, yet disregarded credible information provided by contractors’ associations that demonstrate PLAs increase project costs by 10-20 percent or more. PLAs block merit shops from bidding by mandating they replace their employees with temporary, union workers. Merit shops, including those prequalified to bid on this project, will not abandon their employees for the sake of a PLA. With fewer bidders will come higher prices.
There is no record in the meeting minutes of discussion of the financial impact of the PLA. Based on analysis of other PLA projects, it’s fair to estimate the PLA will add more than $25 million to this project. In November, staff and engineers were reportedly gathering wage information, related union costs, and project performance models to determine potential impacts. That information was not reported to the Board at the December or January meetings and apparently never considered in public session. Yet even the union representative told the board the PLA would increase project costs. He reportedly said wages would be higher by “$1-2 per trade hour.” Assuming that number is correct, labor costs alone for this project will be more than $1 million higher with a PLA.
Discussion of the fiscal impact of a PLA is very important because the purpose of the Chapter 149 state construction bidding laws is to protect the taxpayers and establish a system for achieving the best possible price from qualified bidders. The PLA will undermine the goals of the state’s competitive bidding statute, as your own legal counsel, Norm Guz, warned you during the December meeting.
“Atty. Guz recommended the Board not proceed with a PLA for the WTP project.” The minutes state. In fact, meeting minutes indicate no recommendations for a PLA from the project engineers or the Commission’s executive director. The Commission must follow Chapter 149 and the legal precedent set in the landmark Callahan v. Malden case or run the risk of litigation.
In Callahan, the Supreme Judicial Court ruled: “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.” (Emphasis added.)
Nothing in the public record or in the public comments by Board members demonstrates a reasonable process that determined this project is of a size, duration, timing, and complexity that only a PLA could achieve the goals of the competitive bidding statute. Rather, a PLA will impede the goals of the state’s competitive bidding statute and is ripe for a legal challenge.
The Board appears to have been distracted by a red herring offered by organized labor. According to the minutes, a union attorney cited the lack of a legal challenge to the Holyoke Veterans Home project PLA as an indication a PLA on the water treatment plant would go unchallenged. This is false and misleading. First, the absence of a challenge of a PLA is only that: no one chose to litigate. It does not mean the PLA is legally sound. Second, the state Legislature mandated a PLA on the Veterans Home. Only the Legislature can exempt itself from state bidding laws. The Board has no such power.
In December, according to the minutes, “Commissioner Otero noted the Commissioners’ fiduciary responsibility and that their decisions cannot put the Commission at risk of litigation and/or increased project cost or schedule.” Yet, the Board’s 2-1 vote for the PLA has done just that. For the sake of the ratepayers, who will ultimately pay for unnecessary increases in construction costs due to the PLA and any legal costs due to potential litigation, reverse the vote.
Sincerely,
Jason Kauppi
President