Berkeley to vote on costly Project Labor Agreement

Despite the outcry from local construction contractors, on January 18th, 2011, the Berkeley City Council unanimously passed a costly citywide Project Labor Agreement (PLA) on all City construction projects exceeding $1M for three years. And on Wednesday, May 11th, the Berkeley USD will vote on the consent agenda to negotiate a Project Labor Agreement with the Alameda County Building and Construction Trades Council for the $210M Measure I Construction Bond passed in November 2010. What a complete disservice to the Berkeley voters who voted to maximize their dollars for school related construction.

“Taxpayers deserve the best quality at the best price,” said Louis Summerhill, an Oakland based local contractor. “The City of Berkeley Project Labor Agreement denies taxpayers that right.”

A Project Labor Agreement is a handout to the floundering construction trade unions who can’t find work for their workers and whose pensions are in dangerous underfunded status. Under this Agreement, all construction work done under City contracts exceeding $1M must be performed by union-only signatory construction workers. One of the arguments used by City elected officials to pass the PLA policy was to ensure local workers would be employed.

Today, less than four months into the new PLA policy, the City of Berkeley taxpayers are on the hook for an extra $560,000 for the renovation of the Berkeley Public Library North Branch Improvement Project because of the City’s discriminatory policy. The library project is the first project out for bid in the City of Berkeley since the adoption of the costly discriminatory Project Labor Agreement policy.

The original engineer’s estimate for the project was $3,800,000. After the first round of bids, the low bid came in at $4,249,000, 11.8% over the City Engineer’s estimate. The first and third lowest responsible bidders then withdrew their bids. The City Council then directed the City Manager to rebid the project, because the remaining bid amounts were 25% over budget resulting in insufficient funds to allow award of the contract to any of the remaining bidders.

Upon a second round of bidding, only three contractors submitted bids with the lowest bid coming in at $4,360,000, 14.7% over the engineer’s estimate. The winning bidder, BHM Construction, located in Vallejo, CA, is not a local contractor and will not likely be able to fulfill the local hiring goals.

The Berkeley PLA policy has ended open, fair and competitive bidding on public works construction projects, and denied the vast majority of local contractors and small business owners the opportunity to bid on work in their city. The message to over 80% of construction workers in the local area that choose not to be a part of the union is: Non-union Contractors need not apply here for jobs (www.unionstats.com).

Because this most controversial topic in the construction industry has been placed on the consent calendar for approval, there is insufficient time to publicly debate the pros and cons. The opposite should be expected during an advantageous bidding climate in a down economy where most school districts are receiving the most qualified bids for the best possible price without giving political favors to the unions. I urge the Berkeley USD Trustees to remove this item from the consent agenda IMMEDIATELY and schedule a study session with local contractors to learn the true facts about Project Labor Agreements.

Among other things, the PLA will force non-union contractors and their workers to pay union dues, pay into union benefit programs, require all employees to be hired through a union-hiring hall to get work, and would allow for union-only apprentices on the project. Merit-shop or non-union contractors cannot successfully operate their businesses under those constraints; therefore open competition is reduced to favoritism for the chosen few union-signatory companies. By unnecessarily limiting bidders and following outdated and inefficient union work rules, union-only PLAs consistently drive up costs to the taxpayers. Several academic studies indicate PLAs increase the cost of construction between 10 percent and 20 percent when compared to similar projects not subject to union-only PLAs. The Berkeley Public Library North Branch Improvement Project is yet one more example of how a PLA increases the cost of construction and limits competition.

Shame on the City of Berkeley and Berkeley USD!

Nicole Goehring is the Government Affairs Director for the Golden Gate Chapter of the Associated Builders and Contractors. Visit www.thetruthaboutplas.com for the latest news, facts, studies and current information about PLAs before you make any decisions to limit competition for public contracts.

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Comments

  1. anonamom says

    It is also not always smart to choose the lowest bidder. If a local company comes in a bit over the lowest bidder (from out of town) it would be wise to spend a bit more and choose the local company who will most likely spend what they get right there in town. In effect, the town gets its money back. The out of town bidder will take the money and run home to spend it.

  2. says

    PLAs and their country cousin from Davis Bacon land, are nothing more than government sponsored Welfare for Unions. These policies are discriminatory and unjust and ALWAYS cost more than they deliver. Local governments have no business making these kinds of decisions.

  3. Richard S. Colman says

    Do Project Labor Agreements (PLA) mean that women and minorities need not apply? Any entity should be allowed to bid on a project, not just some special, elite group that seeks to manipulate the market to its own advantage.

    Richard S. Colman
    Orinda, CA
    May 11, 2011

  4. says

    Governments at all levels need to understand that it is not their money they are spending – it is the taxpayers. We keep hearing complaints about how few dollars there are to spend, so they should be spent wisely. Bidding should be open to all.