Home / Commentary / What does ‘open competition’ in construction really mean?

What does ‘open competition’ in construction really mean?

There has been a lot of talk of late about the use of project labor agreements on taxpayer-funded construction projects. Contrary to the propaganda being bandied about by contractor associations, a PLA is simply a market-based project management tool that has been utilized successfully in the private sector to achieve greater job site efficiencies that result in on-time and on-budget construction.

For public agencies looking to invest taxpayer dollars in today’s construction market, they — just like corporations in the private sector — essentially have two distinct business models from which to choose.

The first is a business model that is epitomized by the use of PLAs. It is a business model that offers increase job site efficiencies through a 21st century labor-management approach based on cooperation, harmony and partnership. And it is an approach that ensures that the construction owner will have a steady, local supply of the world’s safest, most-highly skilled and productive skilled craft workforce — a workforce that, in turn, receives a pay and benefits package reflective of their skill and productivity levels (which, numerous studies have shown, actually reduces costs for public agencies).

Further, the PLA model promotes the development of additional opportunities for local residents — particularly military veterans, women, and minorities — to gain access to career training opportunities in the skilled trades (a critical issue given the significant future needs for skilled craft workers in the U.S.).

handshakeThis PLA model lies in stark contrast to the business model that permeates the U.S. construction industry today. For taxpayer-funded construction projects, it is usually a “low bid wins” scenario. In such cases, the incentive is for a contractor to assemble the lowest-cost, oftentimes the most vulnerable and exploitable, workforce possible. This is why we now have an epidemic in the construction industry of undocumented workers, wage theft and the practice of misclassifying employees as “independent contractors” in order to avoid the payment of taxes and benefits.

Opponents of PLAs frequently like to talk about ensuring fair and open competition when it comes to public construction, but these types of business practices beg the question as to what constitutes fair and open competition.

Probably the best argument for PLAs in the public sector is that they have been utilized for decades in the private sector by large, sophisticated, experienced and cost-conscious owners, developers, construction managers and contractors, all of whom are driven by a profit motive. They want the best results in the most cost-effective and time-sensitive manner possible. Disney World, Gillette, Reebok, the Trans-Alaska Pipeline, dozens of professional sports stadiums, and all eight of Toyota’s American manufacturing facilities, are a small example of major private projects that have utilized PLAs. Even Wal-Mart, the widely recognized standard-bearer for efficiency and cost-containment, has increasingly turned to PLAs for the construction of its retail outlets.

Most recently, the U.S. Navy returned $267 million it was allocated for an explosive-handling wharf project at the Naval Base Kitsap-Bangor in Washington. When the project was authorized in 2012, the price was projected at $715 million, but a cost decrease notification issued last week by the Navy showed an adjusted price of $448 million.

One of the reasons the money wasn’t needed was because a highly trained, highly productive and safe local workforce was available through a project labor agreement.

If project labor agreements continue to be utilized by the profit-oriented private sector, there must be a reason. Clearly, that reason is this: They work! And if they work for the private sector, they will, and they do, work for the public sector.

Dave Branson

Building and Construction Trades Council of South Central Wisconsin

Dan Bukiewicz

Milwaukee Building and Construction Trades Council

Scott Bartz

Southern Wisconsin Building and Construction Trades Council

Roger Clark

Southeastern Wisconsin Building and Construction Trades Council

Ted Gumieny

Northeast Wisconsin Building and Construction Trades Council

Norm Voorhees

Northern Wisconsin Building and Construction Trades Council

Tony Fox

Western Wisconsin Building and Construction Trades Council

Leave a Reply

Your email address will not be published. Required fields are marked *