two fundamental principles first americans have a right to know that the money washington takes from them is well spent and second americans deserve an efficient effective government that works for them our duty on the oversight and government reform committee is to protect these rights our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government we work tirelessly in partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy this is the mission of the oversight and government reform committee i have an opening statement i ed five minutes mister sullivan thank you chairman lankford and ranking member connolly members of the subcommittee thank you for holding this hearing today every day of this congress has brought us facetoface with tough decisions on spending cuts costsaving proposals policies that encourage job creation and ways to preserve the american dream for our prosperity it is clear now more than ever that each fiscal decision that congress makes has an impact on the sustainability of america's prosperity i bring to your attention today h r h the government neutrality and contract act which will save jobs create jobs and prevent the waste of taxpayer dollars on federal and federally assisted construction projects by reestablishing fair and open competition to begin a project labor agreement is a contract that typically forces contractors and subcontractors to agree to recognize unions as the representatives of their employees on that job in order to win a construction contract plas typically force contractors to use the union hiring hall and pay fringe benefits into unionmanaged benefit and pension  also contain clauses that force contractors and employees to obey the restrictive and inefficient work rules and job classifications common in union and collective bargaining agreements but absent in the standard and subcontractors must agree to the terms and conditions of a pla in order to win a contract the practical effect of these agreements is to discourage competition from contractors opposed to the terms of the p in two thousand and one president george bush issued executive order thirteen thousand two hundred and two and thirteen thousand two hundred and eight to maintain government neutrality in federal contracting these executive orders prohibited the government from requiring contractors to adhere to plas as a condition of winning federal or federallyfunded construction contracts because president bush's executive order was about maintaining neutrality a contractor could also voluntarily enter into a nothing to preserve the neutrality that government should maintain rather it exposes federal procurement officials to intense political pressure from special interest groups politicians and political appointees to require i and other panelists place the facts before you you will see how this dangerous pathh this is a dangerous path governmentmandated plas are not only discriminatory but they are also hurtful to a struggling industry that is already facing unemployment above hpercent for example yesterday the wall street journal reported on a hmillion highway construction contract in new york funded at least hpercent by the federal highway administration that has been scrutinized for the decision to subject it to a pla while hpercent of new york's private construction workforce is unionized that means that the employers of hpercent of new york's construction workforce who have been facing steep jobs losses over the past few years are discouraged from bidding on this project unfortunately limiting competition comes at taxpayer expense the article mentions that the pla cost taxpayers executive order thirteen thousand five hundred and two states its purpose is to promote efficiency however there is little evidence to suggest plas promote efficiency in federal contributing there were no examples of inefficiencies during the bush years when pla mandates were restricted i am aware of anecdotal evidence on recent federal construction projects demonstrating an increase in the construction costs that may not provide corresponding benefits to taxpayers or construction owners for instance the u s general service administration renovation project of lafayette federal building in washington d c was awarded to a federal contractor without a pla at a fifty two dollars thirty cents million  however after the contractor agreed to a pla for the project by the gsa the contractor added three dollars thirty cents million to the cost of the project the added three dollars thirty cents million isn't the result of increased material costs revised blueprints or a more aggressive completion deadline the contract was awarded to the same contractor with the same proposal and the only difference was the pla there are just two examplesh these are just two examples but there is no doubt that there are many more stories reflecting the true colors of governmentmandated plas when mandated by public officials these agreements unfairly discourage competition from hpercent of the entire u s private construction workforce effectually raise the employment rate of the industry cost the government billions more in construction costs and do nothing to increase the efficiency of federal construction projects there is a solution h r h the government neutrality  contracting act will prohibit executive agencies and recipients of federal funds from requiring contractors to agree to plas as a condition of winning a federal construction contract contractors are free to enter into plas if they want to but the government is removed from that decisionmaking process if enacted this bill guarantees that all qualified contractors and their skilled workforces regardless of labor affiliation can compete on a level playing field this expands job opportunities reduces the costs of government and prevents discrimination based on labor affiliation all told h r h will ensure that taxpayers get the best possible product at the best possible price you may or may not know that we have a vote that is coming very soon and there is already debate on the floor which was originally unscheduled during this time period so i appreciate you coming over we will take a short recess to allow the clerks to set up for the second panel real quick and look forward to get a chance to introduce our second w but my staff has informed me that you chairman issa and other chairmen of this committee have adopted a new policy for minority witnesses this policy appears to contradict the rules and the precedent of our committee we  witness it is up to the chairman to accept an additional witness but that witness must be recommended within a hour period in other words if you invite someone from the administration that witness somehow designated as our witness although we didn't ask for him for this hearing we did not request an administrative witness you did we requested doctor peter phillips an expert in economics of the construction industry but you refused to allow him to testify the reason your staff gave was chairman issa's new policy they said we couldn't have our witness because you already invited administrative witnesses here's my inquir already as well two of those being administration officials and i recommended to him at that time that the minority witness submit something at length for the record so we get a chance to include that as well mister cummings well the only reason i am asking is because i think it sets a dangerous precedent because it directly contradicts the rules of the house and the rules of our committee committee rule number two provides for witnesses from the minority may request and it says not the majorityh the minority the same is true in the rules of the house mister chairman it is on obvious point but you can't just invite people to testify and claim that we invited them can you show the members any basis in the rules for this new misguided thing i just want to make it clear because this is a very dangerous precedent and no previous chairman has ever designated who the minority witnesses would be regardless of whether they are administrative officials or anyone else chairman issa's new policy is an extreme edict and i am aware of no other house or senate committee with a similar policy this policy also undermines the integrity of our committee by impairing the ability of minority members to bring balance and additional perspectives to these here's what the letter says apart from these specific objections we are concerned about the direction of your overall approach rather than increasing bipartisan cooperation as you pledged to do many times you have adopted this new policy without identifying any legitimate basis or need for it this leads to the unfortunate conclusion that you are more interested in holding hearings to advance your own personal political agenda rather than objectively gather facts from a variety of sources to improve public to discover that clearly and so we can all walk through it together and see area by area as we've gone back through history to be able to determine that together mister connolly would the chairman acknowledge that he was given verbal objection by this ranking member to this proceeding  discussed that actually prior to your arrival mister connolly i know that since our witnesses are going to be under oath they will testify that i have had no communication the ranking member on the minority of this subcommittee did not request mister as witnesses would the chairman be aware of that mister lankford i would not be would you suggest that they would not be good witnesses to be able to speak to this issue mister connolly no i would suggest they were not my choice and that the minority has a right under the rules of the house and the rules of this committee to choose its own witnesses and this hearing is in violation of those rules and i want to protest that publicly i want the administration witnesses to understand that they are being used and i want that on the record mister lankford without objection project labor agreements in federal construction contracts as the chairman noted we talked earlier this week i do have unfortunately a very firm travel commitment i will have to leave at this morning i am very appreciative of the chairman's and the subcommittee understanding in this regard as an administrator for federal procurement i am responsible for overseeing the development of governmentwide contracting rules and policies and ensuring that those rules and policies promote economy and efficiency in government contracting this morning i am going to very briefly describe the steps that my office has taken to shape the federal acquisition regulation the far rule that plas the far rule does not mandate the use of plas like the executive order the far rule gives each contracting agency the discretion to decide for itself on a projectbyproject basis whether use of a pla will promote economy and efficiency in that specific construction contract the far rule calls plash and i am quoting from the rule a tool that agencies may use to promote economy and efficiency in federal procurement in offering plas as a tool to the contracting agency the far rule on plas is similar to many other provisions of the far for example the far lets contracting agencies decide based on the specifics of their needs and their circumstances whether they should purchase through the federal supply schedule or on the open market whether they should seek bids with price as the only evaluation criterion or rather run a competitive procurement with other selection factors such as past performance in addition to price the far doesn't dictate to our acquisition professionals what choices to make but it gives them the tools to make the choices to tailor a procurement to the individual agency's specific requirement that toolkit approach and the flexibility that comes with it the very heart of our ability to get the best value for every taxpayer dollar we spend whether we are buying lawn mowing services for a national park or war planes for the air force and our approach to plas is no different we have structured the far rule to create a process were decisions are made on a casebycase basis the far rules set out factors that agencies may decide to consider but it does not dictate those factors or prohibit agencies from considering other factors as with other far rules though the pla rule sets boundaries most significantly the agency can require a pla for a specific project only only if it decides that doing that will advance the government's interest in achieving economy and efficiency in federal procurement equally important with respect to the content of any pla created pursuant to the far rule the rule requires that the pla allow all firms to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements that mandate ensures that if a agency decides to use a pla it is done in a way consistent with the principle of open competition a bedrock of our federal procurement similarly taxpayers would not benefit from a rule if agencies were prohibited from taking advantage of opportunities where a pla could help them achieve or increase efficiency and tim with these thoughts in mind our office the office of federal procurement policy intends to work with agencies to facilitate the sharing of experiences and best practices for the consideration and appropriate use of project labor agreements in the federal to discuss gsa's measured business approach to the implementation of project labor agreements in our construction contracts a pla is a proven tool to help provide structure and stability to any project especially on large complex projects the private sector uses plas for a variety of construction projects similar to those that gsa manages plas are also used at the state and local levels for an array of construction projects varying in size and scope plas have been used in all fifty states and the district of columbia they can help reduce risks associated with wage stability avoidance of work stoppage increased labor availability and projectspecific coordination on work rules plas can also include our major construction projects gsa typically selects the proposal representing best value for the government by weighing a number of technical factors against cost our pla recently has been included as one of these technical factors proposals with  pla receive ten percent of the total possible points for evaluation we award to contractors who work with labor organizations as well as contractors who do not shortly after the executive order was signed gsa received five dollars fifty cents billion through the american projects with budgets of over a one hundred dollars million the selected projects covered seven states and the district of columbia of these ten projects seven ended up with plas and three did not from our comparisons in most instances th best value for the american taxpayer we typically receive between three and eight offers for these projects through the construction of these projects gsa plans to assess the use of plas for future implementation of best practices and update our policies this pilot program has enabled gsa to obtain real market data regarding the impact of plas on competition gsa has recently reached out to contractors and union officials to hear their feedback on our pilot projects in order to develop ways to further improve encouraged because of the benefits associated with them plas can provide wage stability for workers establish mechanisms for resolving labor disputes and reduce the risk of work strikes and lockouts to ensure projects continue on schedule in awarding construction contracts gsa considers a variety of technical factors including potential benefits of pla and weighs them against cost to help determine the winning proposal by leveraging our experience and expertise gsa ensures high design and construction excellen pla agreement is made does that change the collective bargaining rights typical for a union when they are coming in do they have to set aside some of those rights to enter into a pla agreement weren't being selected i'm trying to figure out the reason that the executive order is needed if already plas are allowed if already that is in the process and what we are talking about today does not exclude plas and say no they can't be used what was the need for the executive order and how chairman under the prior administration the government was prohibited from requiring the use of plas on federal construction projects it is true that individual contractors could voluntarily use one but what  we have seen is that in both the private sector and in state and local governments there are situations where plas are viewed as helpful and our view was that same tool should be available to the federal government just as it is available for example to toyota when toyota used project labor agreements and as the department of energy required had use of project labor agreements for many decades we wanted that to be possible for the entire federal government we weren't encouraging their use we were encouraging agencies to consider whether they should be required mister lankford is there increased points that are given in the benefits for use of a pla mister gordon i'm not sure what you mean by increased point lankford in the scoring in trying to determine the benefit of how to select what contractor are there increased points that are given if they use a pla mister gordon we have given agencies considerable flexibility in deciding how to implement the far rule what you heard from  what was the reason for the extra points on that ms brita gsa chose to enter into the ten percent preference as you know the executive order encourages agencies to consider we are in the construction business  always looking for ways to increase competition and obviously make things more efficient in the application of the executive order we chose to use the ten percent point system to meet that encouragement to  unanimous consent that we submit this report for the record so agreed mister lankford in this report there are several statements that come out on it in the executive summary even at the beginning of it it talks to these different cities and these different locations was suspended because we wanted to get real market data quickly and we were moving through our recovery projects so we felt that it would be a better use of our time and quite frankly more efficient to try to get real market data quickly by  which states explicitly the minority members of the committee shall be entitled upon request to the chair by a majority of them before the completion of the hearing to call witnesses selected by the minority to testify with respect to that or matter to my knowledge it's never been customary in the house or the senate for the majority to determine who the minority witnesses are let alone to determine on their behalf by the way because the administration happens to be of the same party therefore you are our witnesses i want you to both know that at least this ranking member and perhaps i will be joined by the ranking member of the full committee i'm going to advise the administration to decline all requests by the majority to testify before this subcommittee and the full committee until this matter is resolved because for you to testify is to be unwittingly complicit in the violation of house rules and the committee rules and to tread on the rights of the minority and so i hope you both will take that back to your respective agencies i am going to be talking to the white house and to the administration government relations officials and i would hope that the administration would cooperate with us in a policy of noncooperation until this matter is cleared up but the minority has rights and if the majority wishes to actually join on this issue and dare to tell us who our witnesses will be and to designate administration witnesses as our witnesses against our wishes that we are going to advise the administration to not cooperate with the members of the oversight that is why i am particularly disappointed that chairman lankford decided to deny the minority's request for witness doctor peter phillips chair of the economics department at the university of utah citing a misguided and unprecedented committee policy phillips had been allowed to testify in person today i would have asked him to discuss the credibility of the two thousand and nine study by the beacon hill institute that study criticizes the use of plas on federal construction projects instead i directed and he would go on to say that statistically one could easily show that pompoms stunt teenage growth all you have to do is go to a high school basketball game and put all those holding pompoms on one side of the room and all the similarly beacon hill put all the complex jobs on one side and all the simple jobs on the other lo and behold because the simple jobs did not have plas and most of the complex jobs did plas cost more money th sample of what you so that you had more accurate information ms brita we wanted a better sample but we also wanted information quickly mister cummings because we were trying to evaluate the value quite frankly of plas there's a lot of academic literature out there and we wanted some real today data we felt we had an opportunity with our recovery projects and the application of plas to some of these recovery projects so we put together a list that we thought was a representative sample of what gsa does in realtime every  so i wanted to be able to clarify that this is a different report this is specifically a gsasponsored report that outlines that project labor agreements can cause small and minority businesses to be excluded data to address those very issues about whether it is exclusionary whether it's inclusionary whether we have minority participation women participation we believed that getting realtime data with contracts that we are currently engaged i would much appreciate that just to be able to know if we suspended report because it wasn't consistent with the original executive order to be able to get different sets of data on it i would be interested to know what the cost of this report was that does not support the plas versus the cost of now finding data that does expensive very difficult location that the implementation of a pla was in the best use of the taxpayer dollars it would keep the project on schedule provide stable labor force and the decision was made to amend the contract to include   and my concern is here this additional cost was taxpayer expenditures based upon change of findings and seeing that it would cost more and you're saying it is only as a result of the technology the ability the complexity of the problem ms brit yes i believe that the project team made the decision certainly independent of the report i'm not even sure the project team was aware of the report they made the decision because they felt given the nature of the projecth and it is a very complex expensive multiphased projecth that the application of a pla to this particular project would ultimately be in the best interest of the project and serve best value for the taxpayer and doing it independently and that is gsa i don't want any of the employees at gsa looking at this and questioning whether we believe in what you do i just want to say that with the strongest words that i can muster out of this body is the very reason why we wanted to have our witness the beacon hill report will be discussed extensively within the next panel but we have no way to rebut it because we weren't able to call our witness that is the problem that is what i was trying to get to so  work rules to the specific needs of particular projects robbing the government of pla contracts robs the government of the ability to address this issue that critics claim is salient a n i say to the chairman i am disappointed that we did not have the opportunity to hear directly from dr hphillips by denying the minority its choice of witnesses you have denied the committee and by that i mean the committee of the whole the balance to conduct piece the technical evaluation section of a proposal has several elements to it past performance experience quality of personnel we've added a pla all of those are evaluat against cost first the technical piece is looked at every proposal gets a score then they match it against the cost and they try to determineh the source selection panel determines the best value which is a match of cost plus all the technical  money from a bank the bank doesn't care they are going to be charging your daily rate on interest on the loan that you've incurred to build this project so it is very important that we look for ways to keep projects going once you make the decision a lot of work is done prior to actually signing that contract about a third of all the work associated with these project is done prior to the contract we want to make sure once it's signed we have a process in place to keep that project going forward because it's extremely expensive when it stalls and so we are always stoppages to coordinate one of the big problems is coordinating work schedules making sure that harmonizing the work week between the various labor groups there's a harmonized work week so that everyone is working at the same time mister cummings ms brita thank you very much i just want you to know that what you just said the reason for plas seem to be pretty consistent with our motto for this committee every time we meet the read this we exist to secure two fundamental principlesh first americans have the right to know that the money washington takes from them is well spent by the way this is written by mister issa and second americans deserve an efficient and effective government that works for them our duty on the oversight and government reform committee is to protect these rights i just wanted you know that  deals when you start a real estate deal it is very important mister kelly i understand that but there is another saying that's been out there and it's if it ain't broke don't fix it and i'm trying to understand and believe me i'm not coming here representing republicans and i hope that this panel isn't about republicans versus the democrats it's about us representing the american people and making sure that as stewards of their hardearned money that we are doing the best thing possible i don't see where the plas at all fit in  private sector where i have done a lot of rfps i have got to tell you a ten percent bonus doesn't level the playing field that totally tilts it as a person who's done many bids to see that in there and say okay  fine maybe that would at the end of the day make a difference it's a huge difference i do wonder about these things just as a representative of the taxpayers and the citizens of the united states where is it that we are going with these pla was installed i see it as exclusionary i don't see it as increasing the field of bidders i see it as narrowing it down and actually being exclusionary to those hpercent of people who could bid on this project that will not be able to do it because they don't back cab union labor and i have nothing against unions by the way i represent a lot of union people i have no problem with that what i have a problem with is jobs and jobs are important to anybody whether you're a union member or you're a private citizen we've got to get people back to work so the pla and this report is very troublesome to me it's been there for a yearhand a half if the rfp was put out by the gsa then your officeh maybe not youh your agency knew exactly what it was looking for it seems to me the information they got back is not consistent with what they were looking to find out i would say the landscape has probably changed dramatically in a year and a half so if you could just briefly comment on that i would appreciate that ms brita mr hkelly i just wanted to make one point the hpercent is really not a bonus it's not something that is added over and above the one hundred points it is part  what the proposal is that's not really trying to get to the best price that's changing the scope of who it is that is able to bid listen i can tell you and i mean this sincerely being in the private sector all my life you set those types of parameters you are setting them to get one type of  bidder to get the award i've watched it happen i've lost out on too many bids where there was exclusionary language in there and it makes it impossible for an independent bidder to sometimes get in the door get their foot in the door and that's the purpose of rfps they are supposed to be agency does not believe that plas are exclusionary in fact we think it opens the labor market up because it includes union as well as nonunion workers so we take a differenth it's a tool that the agency can use and that the contractors take advantage of it's a contractor choice mister kelly well let me ask you this you say it opens the market up what was excluding the market from being open before ms brita this is just encouragingh nothing was life when you put language in a bid that gives a point whether it's out of one hundred points or whatever it is advantage that is exclusionary and that is discouraging all bidders from the entire universe to bid on it i have been involved in it too many times and i have been noteworthy in the gsa work that among the ten there were instances where the bidder offering a pla won there were instances where the bidders offering the plas did not win this was not tilted one way or another as i understand it and i don't think the few pointsh and by the way it's really less than ten because cost is separate from that whole point scheme i don't think that there are instances at least not many instances where those few points made any difference in who won or who didn't win mister kelly and i understand where you coming from but i have got to tell you in the private world when you are spending your own money that's a huge difference and only in this time do these matters become insignificant now you are using the ten instances that you looked at but you refuse to look at the report that was draft a year and a half ago in saying well there's not enough information in there yet however we did have ten other studies that we find really don't speak to what it is that we are talking about and i am telling you as a taxpayer and as a person watching taxpayer funds this is not the right road to go on