Congratulations, Mr. and Mrs. Taxpayer, you just gave Big Labor a $3.3 million tip. Not for exceptional service, mind you. Just for wearing the union label.
As part of the flood of taxpayer cash approved by the American Recovery and Reinvestment Act (ARRA) of 2009, the federal government has about $140 billion worth of federal and federally assisted construction projects to fund and oversee. Most of us would expect that such projects would be awarded to qualified bidders based on whichever contractor submits a bid delivering to taxpayers the best work at the best price.
But that has not been the case under the Obama administration.
After receiving major political dollars and support from Big Labor, President Obama signed Executive Order 13502 just 16 days after taking office. The order repealed a prior executive order in effect since 2001 that kept the government accountable by prohibiting government-mandated project labor agreements (PLAs) on at least $147.1 billion worth of federal construction projects. It had also ensured fair and open competition on hundreds of billions of dollars of important federally assisted schools, jails, bridges, roads and sewers in communities across the United States.
Now, taxpayers are stuck with an executive order that encourages federal agencies, whenever possible, to require a union-favoring PLA on projects exceeding $25 million in total cost.
Think of a government-mandated PLA as a stimulus package for Big Labor at the expense of taxpayers and the construction industry’s non-union workforce. PLA schemes discourage competition from qualified non-union contractors and ensure that most or all the workforce building the federal project will be union members hired through union hiring halls. Such favoritism steers lucrative federal contracts to unionized contractors and is especially appalling since just 14.5 percent of the U.S. private construction workforce belongs to a labor union.
Unfortunately, this favoritism is going to hit taxpayers in the wallet, as evidenced by the results of a PLA forced on a U.S. General Services Administration (GSA) project in the District of Columbia. On Sept. 14, the GSA awarded a $52.3 million ARRA-funded contract to renovate the Lafayette Building at 811 Vermont Ave NW (which houses, among other entities, the U.S. Department of Veterans Affairs) to a contractor offering a non-PLA bid with the best overall experience at the best price.
But then something shocking happened. Politics trumped responsible governing. On the very same day, the GSA ordered the contractor to make it a union-favoring PLA project. The tab for this change to a special interest handout, in a city where union labor makes up a minority of the industry at just 12 percent, was a cool $3.3 million.
That’s taxpayer money being taken from the U.S. Treasury to benefit Big Labor, one of President Obama’s biggest political supporters. While this rigged public bidding system funneled an additional $3.3 million of taxpayer funds to reward special interests — only a drop in the bucket when you consider all federal construction spending — imagine the skyrocketing costs if more federal agencies are nudged by the White House into using costly federal PLAs. Numerous studies have found that government-mandated PLAs can typically increase construction costs up to 18 percent. Can America really afford four schools, jails and hospitals for the price of five?
The Lafayette Building PLA upcharge is a clear example of government waste and crony contracting and taxpayers should be wary of similar PLA schemes in their communities. Contractors have already identified costly and anti-competitive PLA preferences in GSA solicitations for large federal buildings in Hampton, Va. and in Miramar, Fla. In the last year, PLA mandates on federal projects in New Hampshire, New Jersey, Pennsylvania and Washington, D.C. were defeated by legal challenges from members of the federal contracting community concerned about guaranteeing quality and results for hard-working taxpayers.
It is time for Congress, led by new leaders elected on the promise to restore fiscal responsibility in Washington, to hold the White House and federal agencies accountable and end wasteful and corrupt special interest PLA handouts in federal contracting.
Ben Brubeck is the director of labor and federal procurement for Associated Builders and Contractors (ABC). Learn more about government-mandated PLAs at www.TheTruthAboutPLAs.com.