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Thursday, August 1, 2019
Exclude 2/3 of Contractors from Bidding? Proposal on Council Agenda
By Grassroot Institute @ 5:03 PM :: 5543 Views :: Honolulu County, Ethics, Labor

Grassroot Institute testifies on ‘community workforce agreements’

From Grassroot Institute, August 1, 2019

A proposed ordinance that would effectively exclude two-thirds of Hawaii’s 4,500 licensed contractors from bidding on most county construction projects drew a response last week from the Grassroot Institute of Hawaii.

In testimony submitted to Honolulu City Council Committee on Budget, Joe Kent, executive vice president of the Grassroot Institute of Hawaii, noted that Bill 37 would restrict those who can bid on all county projects worth $250,000 or more by requiring that they be willing to adhere to “community workforce agreements.” He said CWAs, also known as project labor agreements, basically limit the use of nonunion employees on public projects, thereby reducing competition among bidders and adding to the costs for taxpayers. 

The bill was reported out of the budget meeting and likely will be heard at the next Council meeting, Wednesday, Aug. 7.

Background:

  *   *   *   *   *

Testimony on ‘Community Workforce Agreements’ — Bill 37

by Joe Kent, Grassroot Institute, July 26, 2019

This testimony was submitted by the Grassroot Institute of Hawaii to the Honolulu City Council Committee on Budget, July 24, 2019.

RE: Bill 37 (2019) — RELATING TO COMMUNITY WORKFORCE AGREEMENTS. [1] 

Aloha, Chair [Joey] Manahan, Vice Chair [Brandon] Elefante and other members of the Honolulu City Council Committee on Budget.

The Grassroot Institute of Hawaii has concerns about the effect of Bill 37 on both the local construction industry and Honolulu taxpayers.

The proposed ordinance would enact sweeping and restrictive hiring conditions on county projects worth more than $250,000 through the implementation of “community workforce agreements.”

These CWAs, also known as project labor agreements, would drastically limit the use of nonunion employees on public projects, thereby reducing competition among bidding contractors and increasing costs for Honolulu taxpayers.

As you have heard from Jonathan Young, president of the Associated Builders & Contractors, Hawaii chapter, there is a legal question about whether the county even has the authority to regulate procurement. But that aside, Young also noted that about two-thirds of Hawaii’s approximately 4,500 licensed contractors are non-union, and Bill 37 would effectively exclude them from bidding on the county’s smaller construction projects.[2]

Nationwide, states and municipalities have actually been removing PLA requirements. This past March, Kentucky became the 25th state to welcome all qualified bidders to compete for state construction contracts, since studies have shown that PLAs tend to increase the cost of government projects.

The Beacon Hill Institute, for example, found that PLAs increased construction costs per square foot of Ohio schools by 13%.[3] A National University System Institute for Policy Research study found similar results, 13-15%, for new school construction in California.[4]

West Virginia,[5] Massachusetts[6] and New Hampshire[7],[8] found that the removal of PLA requirements resulted in larger pools of bidders and lower final bids. In New Hampshire, a public project that removed its PLA requirements not only lowered its costs, but elicited lower bids from union contractors.[9]

In Hawaii, the state “encourages” PLAs for public projects worth at least $25 million,[10] a more rational threshold that nevertheless still increases the costs of government contracts across the board. Consider, for example, the cost overruns and delays on the Honolulu rail project or the delays that plagued the University of Hawaii at Hilo College of Pharmacy Building, both of which are PLA projects.

Though the rationale for this legislation is phrased in terms of promoting a skilled local workforce and achieving construction efficiency,[11] there is little evidence that it would have the desired effect. The experience with PLA requirements both in Hawaii and nationwide demonstrates that they are associated with rising costs and delays. Nothing in the experience of PLA projects in Hawaii suggests that they are superior in performance and efficiency than non-PLA projects.

On the contrary, instituting $250,000 as the threshold for CWAs to go into effect would only guarantee that even very small county projects would be subject to less competition among bidders and higher prices for taxpayers.

With other states abandoning CWAs and PLAs because of their association with uncompetitive bidding, cost overruns and delays, Bill 37 would be a step backward, a sign that Honolulu is moving in the wrong direction.

At a time when we should be thinking about trimming the county budget, this legislation would guarantee that the county would have to spend more on infrastructure projects — and Honolulu taxpayers would be the ones left to deal with the fallout.

Thank you for your consideration.

Aloha,

Joe Kent
Executive vice president
Grassroot Institute of Hawaii

–––––––––––––

[1] Bill 37, 2019, PDF. See also HTM.

[2] Jonathan Young, “Testimony in Strong Opposition to Bill 37 (2019),” July 24, 2019, p. 13.

[3] Paul Bachman and David G. Tuerck, “Project Labor Agreements and the Cost of School Construction in Ohio,” The Beacon Hill Institute, May 2017, p.1.

[4] Vince Vasquez, Dr. Dale Glaser and W. Erik Bruvold, “Measuring the Cost of Project Labor Agreements on School Construction in California,” National University System Institute for Policy Research, 2011, p. 10.

[5] Maurice Baskin, “Union-only Project Labor Agreements: The Public Record of Poor Performance,” Associated Builders & Contractors, 2005, p. 14.

[6] David G. Tuerck and Paul Bachman, “Project Labor Agreements and Financing School Construction in Massachusetts,” The Beacon Hill Institute, December 2006, p. 23.

[7]Construction of a New Job Corps Center in Manchester, New Hampshire Solicitation Number: DOL121RB20590,” Federal Business Opportunities, U.S. General Services Administration, Nov. 10, 2009.

[8] The Truth About Project Labor Agreements, “An Apples-to-Apples Comparison of Bid Results for a Federal Project Bid With and Without a Government-Mandated Project Labor Agreement (PLA),” TheTruthAboutPLAs.com, April 18, 2013.

[9]PLA/NoPLA Bid Results,” TheTruthAboutPLAs.com, Sept. 9, 2009. See also, “Taxpayers win big without federal project labor agreement on New Hampshire Job Corps Center,” TheTruthAboutPLAs.com, April 24, 2013, .

[10] Hawaii Gov. Neil Abercrombie, “Administrative Directive No. 12-05: Use of Project Labor Agreement for State Construction Projects,” May 22, 2012, .

[11] Bill 37, 2019, PDF See also HTM.

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