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Project Labor Agreements in Colorado?  A Lesson From the VA Hospital Project

Alden N. Hall

The reports that the new Veterans Affairs hospital in Aurora may be nearly $200 million over its construction budget should be a cautionary tale for federal, state and local lawmakers who have bought into the bogus arguments put forth by "race to the bottom" contractor associations like the Associated Builders and Contractors (ABC) who seek to formally prohibit the use of project labor agreements (PLAs) in the public sector.
 
The problems with the VA hospital in Aurora are similar to other VA projects around the country.  The Government Accountability Office, the investigative and auditing arm of Congress, studied VA hospital construction projects in Denver, Las Vegas, New Orleans and Orlando, finding the average construction delay was 35 months and the average cost overrun was $366 million.  
 
In Lake Nona Florida, not only is the $600 million project way over budget and behind schedule, but federal and state agencies have twice raided the site because of the rampant use of undocumented workers.  Incredibly, a contractor who was working on that site is being investigated for attempting to shield undocumented workers from detection by hiding some of them in heating and ventilation ducts.    
 
From the outset, the Veterans Administration made a conscious decision not to use PLAs for any of these projects, even though these market-based tools ensure greater efficiencies for large complex projects.  In fact, the use of PLAs is on the upswing in the private sector by profit-oriented and cost-conscious companies such as Toyota, Wal-Mart, Chevron and many others.
 
When designed and implemented properly, PLAs can help projects meet deadlines by guaranteeing a steady supply of highly trained and highly productive LOCAL labor, and by reconciling the various work routines of the many trades. In other words, it’s a project management tool that enables construction owners to manage their jobs and successfully obtain “on time, on budget” results.    
 
Where the VA failed, and where right-wing anti-PLA politicians are failing today, is by not obtaining a more thorough understanding of the two distinct business models that constitute the U.S. construction market today; and which has played itself out in extraordinary fashion in Aurora and at other VA projects around the nation.
 
The first is a business model that is epitomized by the use of PLAs.  It is a business model that offers increased jobsite efficiencies through a steady supply of the safest, most highly trained and productive skilled craft workforce known to mankind – a workforce developed through almost a billion dollars a year nationally in private investments in apprenticeship training programs that, in turn, develops a skilled craft professional who commands pay and benefits that are reflective of his/her training, as well as productivity.  Numerous and rigorous academic studies have shown that paying higher costs for safer, better trained and more productive workers can actually reduce overall costs for public agencies.  And let’s not forget, those higher pay rates contribute to a more fiscally sound local tax base as much of this income is spent in support of local small businesses like car dealerships, restaurants and retail stores.
 
Furthermore, the PLA model promotes career-training opportunities for local residents – particularly women, minorities and military veterans.  
 
And because we live in such a highly polarized and highly politicized world, where anything associated with the word "union" is considered anathema by conservative lawmakers, it bears repeating that PLAs are being increasingly utilized by the profit-oriented and cost-conscious private sector because of one paramount rationale:  THEY WORK!  In fact, Toyota has built all of its North American manufacturing facilities under PLAs, and they have reported that their construction costs are one-third less than their competitors who eschew the use of PLAs.  
 
Now, this PLA model lies in stark contrast to the “race to the bottom” business model that has been deployed on Veteran's Administration projects around the nation.  This business model adheres to the belief that contracts in the construction industry ought to be awarded based primarily upon a contractor’s ability to assemble a low-skill, low-wage, easily exploitable workforce (read: undocumented workers).  Anti-PLA politicians and their political benefactors in the so-called “merit shop” construction sector are fond of embracing the tenets of “fair and open competition,” but that begs the question as to whether the systematic use of undocumented workers, and the rampant practice of misclassifying workers as "independent contractors" in order to avoid the payment of benefits and taxes (which increases their chances of being "low bidder") constitutes “fair and open competition.”
 
To be sure, the taxpayers of Colorado, like taxpayers all across America, ought to be outraged that their tax dollars are being used to subsidize these types of employment practices.  And they should be outraged that their elected leaders, by supporting efforts to outlaw project labor agreements, are not only allowing it - they are encouraging it!

We appreciate the support of Senators Michael Bennet and Mark Udall and U. S. Congressman Ed Perlmutter for supporting PLA’s in the federal contracting process.  Other elected official who do not support PLA’s are further encouraging a “race to the bottom”.  Just look at Aurora.
 
Alden N. Hall is the Business Manager of the Colorado State Building and Construction Trades Council


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