Obama administration hands down rule limiting contract bidding to union shops

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It’s official — federal agencies can now require that contractors be unionized to bid on large federal construction projects. A ruling sent down by the White House on Tuesday finalized an Executive Order President Obama signed last year, which promotes the use of Project Labor Agreements (PLAs) on federal contracts. PLAs are pre-hire, collective-bargaining agreements with unions that establish terms of a large contract.

Supporters say PLAs ensure stability on large-scale projects by preventing strikes and delays. Economist Jared Bernstein blogged on the White House Middle Class Task Force Web site, “PLAs also help ensure compliance with laws and regulations governing workplace safety and health, equal employment opportunity and labor and employment standards.”

Critics argue they needlessly raise costs and are a handout to unions.

“Essentially the administration is picking winners and losers, and we have 25 percent unemployment in the construction industry,” said Ben Brubeck, director of labor and federal procurement at Associated Builders and Contractors, a construction trade organization.

More than 85 percent of the construction industry is not unionized. While the ruling is not a mandate, it encourages agencies to require union labor on any projects with more than $25 million in federal funding.

PLAs require that all contractors who want to bid pay union wages and benefits. They effectively prevent non-union shops from bidding.

“As a public works company we’re already required to pay a prevailing wage,” said Mark Compton, director of government affairs at American Infrastructure, a heavy construction company in Worcester, Pa. “It’s not an issue of us paying people less, the idea that you get away with paying employees less than federal wages is just inaccurate.”

Prevailing wage laws are set at the local level for employees in various industries. Employers have to provide certified payrolls for projects that have prevailing wage requirements.

“We work alongside unions a lot, they often subcontract to us — it’s not a matter of who is capable or not. We have a lot of respect for them and many contractors in the area choose to be union. Because our employees did not opt for union representation we are at a disadvantage,” Compton said.

American Infrastructure employs 1,500 people and says 80 percent of its contracts involved some level of state or federal funds.

Compton said PLAs stifle competition: “If it’s your home, would you rather have five bidding or two? I’m not here to tell you the unions aren’t qualified to do this work, we compete against them every day and sometimes they beat us and sometimes we beat them, but eliminating competition is discrimination.”

“PLAs raise costs — you’re looking at four schools for the price of five, or four bridges for the price of five,” he said.

“We have to go back to our employees, who are taxpayers, and tell them that they aren’t good enough to work on a project that is funded by their tax money,” said Compton. “Some of them have 10, 20, 30 years as a taxpaying employee of our company, and I have to tell them we can’t bid on these jobs now.”

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