- The Washington Times - Tuesday, January 26, 2010

ANALYSIS/OPINION:

Through a series of backroom deals, Big Labor’s construction interests have been receiving big hand outs from the Obama administration.

Before the sweetheart deal recently folded into the health care bill exempting unions from Cadillac health care tax penalties, Congress had already added labor-friendly pork to the colossal health care bill.

Five new paragraphs in Senate Majority Leader Harry Reid’s 383-page manager’s amendment require construction contractors with only five full-time employees and at least $250,000 in payroll to provide employee health insurance benefits or pay a fine. The amendment, introduced by Sen. Jeff Merkley, Oregon Democrat, on behalf of his union patrons, treats the construction industry differently than all other industries. For small businesses in every other industry, the health care exemption applies to small businesses with less than 50 employees: a 10-fold difference. The move will impose astronomical costs on small construction employers who cannot afford health insurance to begin with, and inevitably cause more job-loss in an industry already seeing 22 percent unemployment and profit margins in the low single digits.

I suppose this shouldn’t be all that shocking. After all, this Congress has wasted considerable time and effort working behind closed doors on ways to cram the Employee (Forced) Choice Act down our throats. Fortunately, the recent election of Massachusetts Republican Scott Brown to the Senate may put a temporary halt to that unhappy prospect.

So, the District of Columbia is about to witness one of those unhappy occasions where local events become a symptom of the nation’s policy problems We’ll learn the cost of pandering to Big Labor’s agenda through the construction and renovation of three federal buildings in Washington managed by the U.S. General Services Administration (GSA) and funded by stimulus dollars.

These projects will be large, sought-after and likely require bidders to follow pro-Big Labor guidelines set forth in discriminatory and costly project labor agreements (PLAs) that will lock out the 92 percent of the District construction workforce that doesn’t belong to a union.

PLAs give Big Labor a big advantage over nonunion contractors competing for lucrative federal contracts. Those agreements have a public record of poor performance and extra costs (see the Massachusetts Big Dig, running $14 billion over budget and counting).

In fact, the only reason PLAs are even being considered on these projects is that President Obama’s first gift to Big Labor last February included his signature on Executive Order 13502, encouraging agencies like the GSA to require PLAs on all federal jobs over $25 million. The president marketed PLAs as a way to prevent labor unrest and keep federal jobs on-time and on-budget. But a recent study by the Beacon Hill Institute in Boston undermines the claims, finding no evidence of labor unrest from 2001 to 2008 when PLAs were prohibited on federal and federally-assisted projects. In short, the report found that PLAs are a solution in search of a problem.

But Federal agency officials also don’t seem to be familiar with the extensive research showing that PLAs add an average 10-18 percent cost to every job they touch. If your community needs five schools and now you can only afford four, thank the president and his Big Labor pals.

Still who can blame the GSA? Government-mandated PLAs were virtually nonexistent during the last administration when a presidential order prohibited wasteful PLAs on such projects. And there have yet to be any government mandated-PLAs executed under Mr. Obama’s watch because the Federal Acquisition Regulatory (FAR) Council has yet to finalize his order.

Eighty-four percent of the nation’s construction workforce has chosen to work without belonging to a union. We will have to sit and wait on the FAR Council to learn the fate of open competition on job-preserving federal contracts.

As a D.C.-area nonunion contractor, I worry that the GSA’s decision to flirt with PLAs on those three projects - without waiting for the FAR Council to issue a rule - will cause chaos for area construction. Chaos in the form of litigation, badly-needed projects delayed, job-creating opportunities wasted and taxpayers cheated.

The bidding process the GSA uses is riddled with problems that decrease the number of qualified bidders and increase costs. The Washington Times, in fact, recently covered the controversy already brewing.

The truth is that all of us have a vested interest in preserving open competition in the construction industry - whether we’re a contractor or a taxpayer hoping to see our paycheck contributions used wisely. I think District residents are smart enough to know what’s in their best interest - it’s just a shame we’re being undermined by Mr. Obama’s debt to Big Labor.

Brett McMahon is vice president of Miller & Long, a concrete construction subcontractor based in Bethesda, Md., and a member of the Associated Builders and Contractors.

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