Board of Trustees Study Session

March 8, 2005

PROJECT LABOR AGREEMENTINFORMATION BRIEF

PresentersPresenters

• José NuñezJosé Nuñez, Measure C Executive Director, , Measure C Executive Director, College of MarinCollege of Marin

• Jeff Gee, Program Executive, Jeff Gee, Program Executive, Swinerton Management & ConsultingSwinerton Management & Consulting

• Dave Kirn, Program Manager, Dave Kirn, Program Manager, Swinerton Management & ConsultingSwinerton Management & Consulting

IntentIntent• To present background information To present background information

on Project Labor Agreementson Project Labor Agreements

• Provide components of some recent Provide components of some recent Project Labor AgreementsProject Labor Agreements

• Present comments from Owners and Present comments from Owners and Contractors regarding their opinions Contractors regarding their opinions of Project Labor Agreementsof Project Labor Agreements

• Provide a framework for Board Provide a framework for Board discussion of Project Labor discussion of Project Labor Agreements and their potential Agreements and their potential application for the Bond Program.application for the Bond Program.

PROJECT LABOR AGREEMENT PROJECT LABOR AGREEMENT (PLA)(PLA)

• Unique to the construction industry

• Initially established as an agreement between contractors and groups of building trade unions for specific projects

• Developed to supersede local trade agreements and local trade practices when larger contractors had nationwide agreements with building trades

• Has been expanded to agreements between Owners and groups of building trades to cover multi-project building programs

Common ElementsCommon Elements

These are some of the common These are some of the common elements in a PLA:elements in a PLA:• CBA’s cover a specific geographic CBA’s cover a specific geographic areaarea

– CBA’s usually take into account CBA’s usually take into account local market trendslocal market trends

– CBA’s usually last three to five CBA’s usually last three to five yearsyears

– CBA’s are negotiated between a CBA’s are negotiated between a contractor and a specific tradecontractor and a specific trade

– CBA’s are superceded by Project CBA’s are superceded by Project Labor AgreementsLabor Agreements

Common Elements Common Elements (cont’d)(cont’d)

• Require recognition of the signatory Require recognition of the signatory union(s) as the exclusive bargaining union(s) as the exclusive bargaining representatives for covered workersrepresentatives for covered workers

• Prohibit organized work stoppages Prohibit organized work stoppages (strikes) & lock-outs(strikes) & lock-outs

• Requires hiring through union referral Requires hiring through union referral systems (hiring hall)systems (hiring hall)

• Requires all contractors and Requires all contractors and subcontractors become signatory to the subcontractors become signatory to the PLAPLA

• Requires that all union employees be in Requires that all union employees be in good standing with duesgood standing with dues

Common Elements Common Elements (cont’d)(cont’d)

• Establish standard work rules, hours, Establish standard work rules, hours, holidays, overtime pay and dispute holidays, overtime pay and dispute resolution proceduresresolution procedures

• Establish wages/benefits & drug testingEstablish wages/benefits & drug testing

• Establish management rights regarding Establish management rights regarding hiring, promotion, transfer, discipline, hiring, promotion, transfer, discipline, discharge, and rejection of any discharge, and rejection of any applicant referred by a unionapplicant referred by a union

• Establish pre-job conference prior to Establish pre-job conference prior to commencing construction to clarify the commencing construction to clarify the scope of work between tradesscope of work between trades

• Establish a labor management Establish a labor management committee to meet on a regular basiscommittee to meet on a regular basis

Common ElementsCommon Elements ( (cont’d)cont’d)

• Other PLA elements:Other PLA elements:– Social Justice ProgramSocial Justice Program

•Local Business PreferenceLocal Business Preference•Local Workforce HiringLocal Workforce Hiring

– Supplemental Trust ContributionsSupplemental Trust Contributions– Worker’s Comp “Carve-outs”Worker’s Comp “Carve-outs”– Underutilized Business EnterpriseUnderutilized Business Enterprise

History of PLA’sHistory of PLA’s• Contractors and unions have used PLA’s Contractors and unions have used PLA’s

for major projects of extended duration for major projects of extended duration that require many different trades that require many different trades

• Nationally the use of PLAs has declined Nationally the use of PLAs has declined as union enrollment has declinedas union enrollment has declined

• Examples of California projects with Examples of California projects with PLA’s:PLA’s:

- Shasta Dam- Shasta Dam - BART- BART

- SF Yerba Buena Center- SF Yerba Buena Center - LA Blue Line- LA Blue Line

- National Ignition Facility, - National Ignition Facility, Lawrence Livermore LabsLawrence Livermore Labs

- Diamond Valley - Diamond Valley ReservoirReservoir

- San Francisco International - San Francisco International AirportAirport

- San Joaquin Hills - San Joaquin Hills CorridorCorridor

History of PLA’s History of PLA’s (cont’d)(cont’d)ProjectProject OwnerOwner DateDate CompletioCompletio

nnCost Cost (Unadjusted (Unadjusted to Current to Current Real Dollars)Real Dollars)

Los Angeles Los Angeles Convention CenterConvention Center

City of Los AngelesCity of Los Angeles 19901990 19931993 $390 million$390 million

San Joaquin Hills San Joaquin Hills CorridorCorridor

CalTrans and San CalTrans and San Joaquin Hills Joaquin Hills TransportationTransportation

19931993 19961996 $795 million$795 million

Merrithew Memorial Merrithew Memorial HospitalHospital

Contra Costa CountyContra Costa County 19951995 19981998 $82 million$82 million

Concord Police Concord Police FacilityFacility

City of ConcordCity of Concord 19951995 19961996 $12 million$12 million

Los Vaqueros DamLos Vaqueros Dam Contra Costa Water Contra Costa Water DistrictDistrict

19951995 19971997 $450 million$450 million

Bollman Water Bollman Water TreatmentTreatment

Contra Costa Water Contra Costa Water DistrictDistrict

19951995 19991999 $35 million$35 million

Golden Gate Bridge Golden Gate Bridge Seismic RetrofitSeismic Retrofit

GG Bridge, Highway GG Bridge, Highway & Transportation & Transportation DistrictDistrict

19991999 $120 million$120 million

San Francisco San Francisco International AirportInternational Airport

City/County of San City/County of San FranciscoFrancisco

19961996 20012001 $2.4 billion$2.4 billion

National Ignition National Ignition FacilityFacility

Lawrence Livermore Lawrence Livermore LabsLabs

19971997 20052005 $1.2 billion$1.2 billion

History of PLA’s History of PLA’s (cont’d)(cont’d)

ProjectProject OwnerOwner DateDate CompletioCompletionn

Cost (Unadjusted Cost (Unadjusted to Current Real to Current Real

Dollars)Dollars)

Vista CollegeVista College Peralta Community Peralta Community College DistrictCollege District

20042004 20062006 $67 million$67 million

San Mateo Community San Mateo Community College DistrictCollege District

San Mateo San Mateo Community College Community College DistrictDistrict

20032003 20072007 $90 million$90 million

Oakland USD Bond Oakland USD Bond ProgramProgram

Oakland USD School Oakland USD School BoardBoard

20002000 -- $200 million$200 million

Los Angeles Unified Los Angeles Unified SchoolSchool

District – New School District – New School andand

RehabilitationRehabilitation

Los Angeles Unified Los Angeles Unified School District School District School BoardSchool Board

19991999 -- $2.4 billion $2.4 billion

Santa Ana Unified Santa Ana Unified School DistrictSchool District

Santa Ana Unified Santa Ana Unified School District BoardSchool District Board

20002000 20052005 Projects greater than Projects greater than $250,000$250,000

West Contra Costa West Contra Costa Unified School DistrictUnified School District

West Contra Costa West Contra Costa USD School BoardUSD School Board

20002000 -- $120 million$120 million

Eastside Unified School Eastside Unified School DistrictDistrict

Eastside USD School Eastside USD School BoardBoard

20022002 -- $298 million$298 million

FactsFacts

• Private construction in California much more likely Private construction in California much more likely to use PLA’s (82 Calif. PLA’s surveyed, 72% were to use PLA’s (82 Calif. PLA’s surveyed, 72% were private projects)private projects)

• PLA’s are “valued by contractors on huge PLA’s are “valued by contractors on huge construction projects where a myriad of trades construction projects where a myriad of trades will be brought in to do one particular task.”will be brought in to do one particular task.”

• Bureau of Labor Statistics: Union enrollment has Bureau of Labor Statistics: Union enrollment has declined over the last century. Less than 20% of declined over the last century. Less than 20% of all construction workers nationally are unionized.all construction workers nationally are unionized.

• All contractors must pay workers at least the All contractors must pay workers at least the established prevailing wage, independent of the established prevailing wage, independent of the application of a PLAapplication of a PLA

Recent Political ChangesRecent Political Changes

• June 1999 President Clinton issued June 1999 President Clinton issued Executive Memorandum giving federal Executive Memorandum giving federal departments the option to use PLA’s on departments the option to use PLA’s on large and significant construction projects large and significant construction projects “where a [PLA] will advance the “where a [PLA] will advance the Government’s procurement interest in cost, Government’s procurement interest in cost, efficiency and quality…”efficiency and quality…”

• February 2001 President Bush issued February 2001 President Bush issued Executive Order prohibiting the use of Executive Order prohibiting the use of PLA’s on federally financed construction PLA’s on federally financed construction projectsprojects

• April 2001 President Bush amended his April 2001 President Bush amended his directive to exempt projects with a PLA directive to exempt projects with a PLA established before 2/17/01 from his established before 2/17/01 from his executive orderexecutive order

Argument for PLAArgument for PLA

• Reduces the risk of construction delays Reduces the risk of construction delays from worker shortages or labor disputesfrom worker shortages or labor disputes

• Fosters cooperation between the Fosters cooperation between the construction workforce and management construction workforce and management

• Established divisions of labor provide Established divisions of labor provide benefits:benefits:

- Formal apprenticeship training programs- Formal apprenticeship training programs

- Network referral systems (hiring halls)- Network referral systems (hiring halls)

- Labor discipline- Labor discipline

- Higher skill levels developed by - Higher skill levels developed by specializationspecialization

Argument Against PLAArgument Against PLA

• Possibility for strikes & lockouts still Possibility for strikes & lockouts still exists (wildcat)exists (wildcat)

• Anti-competitive by excluding non-union Anti-competitive by excluding non-union contractorscontractors

• Organizing tool to require construction Organizing tool to require construction workers on a PLA project to pay for workers on a PLA project to pay for union membershipunion membership

• Increased construction costs to Increased construction costs to taxpayerstaxpayers

Argument Against PLAArgument Against PLA (cont’d)(cont’d)

• Rigid divisions of labor and work rules Rigid divisions of labor and work rules slow down productivity. Non-union slow down productivity. Non-union workforce rules allow:workforce rules allow:– Assignment of work across trade linesAssignment of work across trade lines– Use of laborers to move materialsUse of laborers to move materials– Employment of generalized helpersEmployment of generalized helpers– Setting hourly wages based upon Setting hourly wages based upon

specific market requirementsspecific market requirements

• Project-only union members may lose Project-only union members may lose benefit of payments to union controlled benefit of payments to union controlled benefit programs at end of the projectbenefit programs at end of the project

ViewpointsViewpoints““Most important and most clearly set out in the Most important and most clearly set out in the

President’s Memorandum [Clinton] is that PLA’s President’s Memorandum [Clinton] is that PLA’s should be employed where they will advance the should be employed where they will advance the Government’s procurement interest in cost, Government’s procurement interest in cost, efficiency and quality and in promoting labor-efficiency and quality and in promoting labor-management stability as well as compliance with management stability as well as compliance with applicable legal requirements. Accordingly, PLA’s applicable legal requirements. Accordingly, PLA’s should be used where they address broad public should be used where they address broad public and policy interests, not the narrower interests of and policy interests, not the narrower interests of builders, unions or employees.”builders, unions or employees.”

- Nancy McFadden, General Counsel United States Department of Transportation- Nancy McFadden, General Counsel United States Department of Transportation

“…“…union referral systems are positive, well-proven union referral systems are positive, well-proven systems, especially on large complex projects.”systems, especially on large complex projects.”- Bechtel- Bechtel

Viewpoints Viewpoints (cont’d)(cont’d)

Refuting a claim that PLA’s are anti-Refuting a claim that PLA’s are anti-competitive, “We have seen no reduction in competitive, “We have seen no reduction in competition…and [the presence of PLA’s] competition…and [the presence of PLA’s] has consistently produced bids at or below has consistently produced bids at or below the engineer’s estimate.” the engineer’s estimate.” - Michael D’Antuono, President of Parsons Construction Company- Michael D’Antuono, President of Parsons Construction Company

“…“…many in our workforce are multi-trade…I many in our workforce are multi-trade…I was unable to utilize this benefit due to the was unable to utilize this benefit due to the union’s involvement. Laborers are only union’s involvement. Laborers are only allowed to perform labor that fits within allowed to perform labor that fits within their trade.”their trade.” - Rosario Ramirez Girard, Owner Phoenix Construction Services- Rosario Ramirez Girard, Owner Phoenix Construction Services

Viewpoints Viewpoints (cont’d)(cont’d)

““Public owners have a duty to the public to be Public owners have a duty to the public to be fiscally responsible…These interests are not fiscally responsible…These interests are not served when the agency requires a union-served when the agency requires a union-only PLA, which discourages the vast only PLA, which discourages the vast majority of the industry (over 80%) from majority of the industry (over 80%) from bidding, particularly small and minority- or bidding, particularly small and minority- or women-owned businesses.”women-owned businesses.” - - Barbara Hoberock, Owner hth CompaniesBarbara Hoberock, Owner hth Companies

““In its May 1998 report on project labor In its May 1998 report on project labor agreements on federal construction agreements on federal construction contracts, the General Accounting Office contracts, the General Accounting Office was unable to document any cost-was unable to document any cost-efficiencies achieved by [PLA’s].”efficiencies achieved by [PLA’s].” - - Mike La Pointe, Vice President JL Steel IncMike La Pointe, Vice President JL Steel Inc

The previous statements were taken from testimony given at the The previous statements were taken from testimony given at the August 6, 1998 Hearing for the House Small Business CommitteeAugust 6, 1998 Hearing for the House Small Business Committee

Viewpoints Viewpoints (cont’d)(cont’d)

•The Beacon Hill Institute at Suffolk The Beacon Hill Institute at Suffolk University, 2003 Study on PLA’s and University, 2003 Study on PLA’s and School Construction Costs in School Construction Costs in MassachusettsMassachusetts

– Analyzed 126 school construction projects in Analyzed 126 school construction projects in the Boston and Massachusetts areathe Boston and Massachusetts area

– Findings:Findings:Construction costs are 8% - 15% higher on PLA Construction costs are 8% - 15% higher on PLA

projects when compared to non-PLA projectsprojects when compared to non-PLA projects

““..contracts for construction should be ..contracts for construction should be awarded solely on the basis of merit awarded solely on the basis of merit rather than union affiliation.”rather than union affiliation.”

- Associated Building Contractors- Associated Building Contractors

Marin County Master Labor Marin County Master Labor AgreementsAgreements

2005 Contract Expirations2005 Contract Expirations

Trade AgreementTrade Agreement ExpirationExpiration

IBEW (Electricians)IBEW (Electricians) 5/31/055/31/05

Cement MasonsCement Masons 6/15/056/15/05

BAC - BricklayersBAC - Bricklayers 6/30/056/30/05

BAC – Terrazzo & MosaicBAC – Terrazzo & Mosaic 6/30/056/30/05

GlaziersGlaziers 6/30/056/30/05

Hod Carriers – Mason TenderHod Carriers – Mason Tender 6/30/056/30/05

RoofersRoofers 7/31/057/31/05

Sprinkler FittersSprinkler Fitters 7/31/057/31/05

Laborers – Asbestos RenewalLaborers – Asbestos Renewal 11/30/0511/30/05

Laborers – Lead Paint RemovalLaborers – Lead Paint Removal 11/30/0511/30/05

Recent Industry Work Recent Industry Work StoppagesStoppages

YearYear UnionUnion DatesDates AreaArea

20002000 BAC - BricklayersBAC - Bricklayers 7/20 - 257/20 - 25 Greater Bay AreaGreater Bay Area

20002000 TapersTapers 8/1 - 168/1 - 16 Greater Bay AreaGreater Bay Area

20012001 PaintersPainters 7/1 – 207/1 – 20 Greater Bay AreaGreater Bay Area

20012001 Painters (SF)Painters (SF) 7/1 – 307/1 – 30 San FranciscoSan Francisco

20012001 PlasterersPlasterers 7/1 - 207/1 - 20 Greater Bay AreaGreater Bay Area

20022002 Carpet LayersCarpet Layers 7/1 - 207/1 - 20 Greater Bay AreaGreater Bay Area

20022002 GlaziersGlaziers 7/1 - 277/1 - 27 Greater Bay AreaGreater Bay Area

ConclusionConclusion

• PLAs have evolved from large single PLAs have evolved from large single projects to multi-project or program projects to multi-project or program agreementsagreements

• Several Bay Area Programs have PLAsSeveral Bay Area Programs have PLAs

• PLAs are negotiated independently for PLAs are negotiated independently for each project or program, can contain each project or program, can contain many elements, and can apply to:many elements, and can apply to:– An entire Capital Improvement An entire Capital Improvement

Program, orProgram, or– Be project-specific, based on:Be project-specific, based on:

•Project complexity, and/orProject complexity, and/or

•Project construction costProject construction cost

ConclusionConclusion

• A PLA may also satisfy the Labor A PLA may also satisfy the Labor Compliance requirements in Ed Code 81700 Compliance requirements in Ed Code 81700 of a Community College Design-Build of a Community College Design-Build projectproject

• PLAs are not about wages paid workersPLAs are not about wages paid workers

• There are many political, economic and There are many political, economic and social issues surrounding Project Labor social issues surrounding Project Labor AgreementsAgreements

Q & AQ & A