Digging into PLAs – Benefit or Boondoggle?

A growing number of local governments and building groups in California are taking aim at project labor agreements, or PLAs, which they claim privilege unions over the rest of the industry, as well as stymie competition and drive up costs.

“Unions are desperate for market share,” said Kevin Dayton, state government affairs director for Associated Builders and Contractors of California, an organization that represents non-union-or merit shop-public works, commercial and industrial contractors. When unemployment in the construction industry in the state is 30 to 40 percent, he said, PLAs “give unions a monopoly.”

Both union and non-union firms can bid on PLA contracts, but they must agree to certain terms, which Dayton claims are untenable for many merit shops.

Most firms “don’t even bother to bid,” Dayton said.

Used by local governments and school districts, among other entities, project labor agreements are pre-hire contracts that often require construction firms to provide health insurance for employees. Some agreements include provisions encouraging local hiring, as well as stipulate that workers be hired through union hiring halls, even if the workers are not union. Regardless of their union status, workers must pay union dues and non-union employers must fund the employees’ benefits by paying into a union trust fund.

The PLAs have garnered critics among some local government officials. Two cities in San Diego County, Chula Vista and Oceanside, have PLA bans on their June 8 ballots. Meanwhile, there is a signature gathering effort in the City of San Diego to place a PLA ban on the November ballot. Such bans prohibit the use of PLAs in government contracts.

Although there was no history of using them locally, Orange County banned the use of project labor agreements in its contracts last October, and San Diego County banned them in March.

Jack Feller, councilman of Oceanside, said the anti-PLA movement is part of a larger concern that local governments are bankrupting themselves by bankrolling salaries and benefits that are higher than in the private industry. “If a contractor wants to pay” higher wages and benefits to workers, “they can,” Feller said. “But I don’t think it’s a requirement.”

Proponents of project labor agreements say they guarantee high quality workmanship, health care benefits and safe working conditions for employees. They also discourage delays because the agreements usually contain “no strike,” or no work stoppage, clauses.

A PLA “might reduce (the number of) bidders, but the reality is, it depends on who you’re losing,” said Lorena Gonzalez, secretary-treasurer of the San Diego and Imperial Counties Labor Council. “Nobody has been able to prove that PLAs raise costs.”

Gonzalez added that using local workers benefits the community. “We are recycling our local tax dollars,” she said.

Merit shop proponents say PLAs indeed raise costs-even for union contractors. When a sanitation agency in Marin County surveyed prospective bidders, it found that half the union contractors questioned said that project labor agreements would increase their costs on a project.

Also, Dayton and others contend that PLAs do not guarantee that strikes will not occur. For example, unionized construction workers held a wildcat strike in 1999 on the San Francisco International Airport terminal project, which had a PLA.

With competition for construction work fiercer than ever in the dragging California economy, Dayton’s group is on a mission to quash pacts between local governments and unions for public works projects. It is part of a coalition of builders whose aim is to spur 20 local governments in California to ban PLAs in 2010. Within that goal, the group wants to get 10 of San Diego County’s most populous cities to enact the bans.

In Northern California, Dayton’s group is making a preemptive effort to thwart a PLA by defeating a school bond measure in Concord.

“We’re sending a message to school districts: You will be accountable,” Dayton said.

If passed on June 8, Measure C would raise $348 million for facility construction and repair and energy efficiency improvements. The Mount Diablo Unified School District has a history of using PLAs for construction projects with bond money, although it has no set plans to use one for the Measure C funds, provided the measure passes.

Gary Eberhart, Mount Diablo school board trustee, is in favor of project labor agreements. “It’s one way that we can insure that the workers have had formal training in the crafts that they are performing in,” said Eberhart, who has been on the board for 15 years.

He added that building standards, when school children are involved, must be high. “School district work is not your typical construction work,” Eberhart said, adding that he has not seen any evidence that PLAs increase costs and reduce competition.

However, in 2006, the Mount Diablo district paid nearly twice the original bid for school construction after a PLA was implemented.

Dayton and other PLA critics counter that merit shops perform work at equally high standards, and now comprise 85 percent of the contractors operating in the United States.

Union advocates say that project labor agreements have a venerable history, having been part of major public works projects going back a century, from the Hoover Dam to the Alaska Pipeline to BART in the Bay Area. Dayton argued that such agreements were more acceptable decades ago, when most of the construction workforce was unionized. Now, it’s the opposite.

Dayton’s group believes it is facing a pro-union, pro-PLA environment in the midst of Barack Obama’s presidency. President George W. Bush issued two executive orders prohibiting PLAs on federally funded construction projects. When Obama got into office, he repealed those decisions. Since the 2008 election, 34 local governments in California have considered or have implemented Project Labor Agreements, Dayton said.

Union advocates are quick to point out that the legality of PLAs has been tested and upheld in both federal and state courts. Also, they say that the majority of PLAs in California are between private firms and unions, and often don’t involve public tax dollars.

One legal challenge to a PLA is pending in California and more will likely be mounted against the agreements, Dayton said. In 2004, seven non-union apprentices filed a lawsuit claiming a project labor agreement for work in the Rancho Santiago Community College District discriminated against them. They lost in the first round, but are appealing to the 9th Circuit Court of Appeals, Dayton said.