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H.R. 735, AND PROJECT LABOR AGREEMENTS,

RESTORING COMPETITION AND NEUTRALITY

TO GOVERNMENT CONSTRUCTION

HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION

POLICY, INTERGOVERNMENTAL RELATIONS AND

PROCUREMENT REFORM

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

ON

H.R. 735

TO PRESERVE OPEN COMPETITION AND FEDERAL GOVERNMENT

NEUTRALITY TOWARDS THE LABOR RELATIONS OF FEDERAL GOVERNMENT CONTRACTORS ON FEDERAL AND FEDERALLY FUNDED

CONSTRUCTION PROJECTS

JUNE 3, 2011

Serial No. 112–60

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY, INTERGOVERNMENTAL

RELATIONS AND PROCUREMENT REFORM

JAMES LANKFORD, Oklahoma, Chairman

MIKE KELLY, Pennsylvania, Vice Chairman

JASON CHAFFETZ, Utah

TIM WALBERG, Michigan

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

BLAKE FARENTHOLD, Texas

GERALD E. CONNOLLY, Virginia, Ranking

Minority Member

CHRISTOPHER S. MURPHY, Connecticut

STEPHEN F. LYNCH, Massachusetts

JACKIE SPEIER, California

(III)

C O N T E N T S

Page

Hearing held on June 3, 2011 ................................................................................. 1

Text of H.R. 735 ....................................................................................................... 3

Statement of:

Baskin, Maurice, counsel, Associated Builders and Contractors, Inc.;

David Tuerk, professor and chairman, Suffolk University and Beacon

Hill Institute; Kirby Wu, president, Wu & Associates; and Mike Kennedy, counsel, the Associated General Contractors of America ................ 53

Baskin, Maurice ........................................................................................ 53

Kennedy, Mike ........................................................................................... 85

Tuerk, David .............................................................................................. 59

Wu, Kirby ................................................................................................... 75

Gordon, Daniel, Administrator, Office of Federal Procurement Policy, Office of Management and Budget; and Susan Brita, Deputy Administrator, General Services Administration ..................................................... 19

Brita, Susan ............................................................................................... 29

Gordon, Daniel ........................................................................................... 19

Sullivan, Hon. John, a Representative in Congress from the State of

Oklahoma ...................................................................................................... 11

Letters, statements, etc., submitted for the record by:

Baskin, Maurice, counsel, Associated Builders and Contractors, Inc., prepared statement of ........................................................................................ 55

Brita, Susan, Deputy Administrator, General Services Administration,

prepared statement of ................................................................................... 31

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland:

Letter dated June 3, 2011 ........................................................................ 16

Prepared statement of Mr. Philips .......................................................... 42

Gordon, Daniel, Administrator, Office of Federal Procurement Policy, Office of Management and Budget, prepared statement of ........................... 22

Kennedy, Mike, counsel, the Associated General Contractors of America,

prepared statement of ................................................................................... 88

Lankford, Hon. James, a Representative in Congress from the State

of Oklahoma, letter dated February 25, 2011 ............................................ 99

Tuerk, David, professor and chairman, Suffolk University and Beacon

Hill Institute, prepared statement of .......................................................... 62

Wu, Kirby, president, Wu & Associates, prepared statement of .................. 77

(1)

H.R. 735, AND PROJECT LABOR AGREEMENTS,

RESTORING COMPETITION AND NEUTRALITY TO GOVERNMENT CONSTRUCTION

FRIDAY, JUNE 3, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY,

INTERGOVERNMENTAL RELATIONS AND PROCUREMENT

REFORM,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

2154, Rayburn House Office Building, Hon. James Lankford (chairman of the subcommittee) presiding.

Present: Representatives Lankford, Kelly, Walberg, Labrador,

Connolly, and Murphy.

Staff present: John Cuaderes, deputy staff director; Richard

Beutel, senior counsel; Christopher Hixon, deputy chief counsel,

oversight; Robert Borden, general counsel; Jeff Solsby, senior communications advisor; Ali Ahmad, deputy press secretary; Jeff

Wease, deputy CIO; Molly Boyl, parliamentarian; Adam Fromm, director of Member liaison and floor operations; Ryan Little, manager

of floor operations; Cheyenne Steel, press assistant; Nadia Zahran,

staff assistant; Linda Good, chief clerk; Laura Rush, deputy chief

clerk; Dave Rapallo, minority staff director; Suzanne Sachsman

Grooms, minority chief counsel; Donald Sherman, minority counsel;

Ronald Allen, minority staff assistant; Lucinda Lessley, minority

policy director; Ashley Ettienne, minority director of communications; Jennifer Hoffman, minority press secretary; Jaron Bourke,

minority director of administration; and Carla Hultberg, minority

chief clerk.

Mr. LANKFORD. The committee will come to order. This is a hearing on H.R. 735, the Project Labor Agreements Restoring Competition Neutrality to Government Construction Projects.

The Oversight Committee mission statement we read at every

one of our committee meetings, let me just go ahead and read it.

We exist to secure 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 watchVerDate 17-JUN-2003 16:50 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70822.TXT KATIE PsN: KATIE
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dogs 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 am going to submit it for the

record for the sake of our time today. I will also allow any Members to have 7 days to submit opening statements and any extraneous material for the record.

[The text of H.R. 735 follows:]

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Mr. LANKFORD. We will now recognize our very first panel. This

is the Honorable John Sullivan, who represents Oklahoma’s First

District. He is up the turnpike from me personally. He introduced

H.R. 735, the Government Neutrality and Contracting Act in February of this year. I am glad to have you, Congressman Sullivan.

Thanks for taking time out of your schedule to get a chance to do

a statement for us today. You are given and yielded 5 minutes.

STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OKLAHOMA

Mr. 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 face-to-face with

tough decisions on spending cuts, cost-saving proposals, policies

that encourage job creation and ways to preserve the American

Dream for our posterity. 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. 735, 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 union-managed

benefit and pension benefit programs. PLAs 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 operation of open shop contractors.

While it is technically true that any contractor is welcome to

compete on or for projects that require a government-mandated

PLA, both general contractors 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 PLA.

In 2001, President George Bush issued Executive Order 13202

and 13208 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 federally funded construction contracts. Because President Bush’s Executive order was about maintaining neutrality, a

contractor could also voluntarily enter into a PLA if they felt it

could make their business competitive and deliver the best product

to the government. However, in 2009, President Obama issued Executive Order 13502, encouraging Federal agencies to require

union-favoring PLAs on Federal construction projects exceeding

$25 million in total costs. While President Obama’s Executive order

does not mandate PLAs on all Federal construction contracts, it

does nothing to preserve the neutrality that government should

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maintain. Rather, it exposes Federal procurement officials to intense political pressure from special interest groups, politicians,

and political appointees to require PLAs.

As I and other panelists place the facts before you, you will see

how this dangerous path—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 17 percent. For example, yesterday The Wall Street

Journal reported on a $70 million highway construction contract in

New York funded at least 80 percent by the Federal Highway Administration that has been scrutinized for the decision to subject it

to a PLA. While 27 percent of New York’s private construction

work force is unionized, that means that the employers of 73 percent of New York’s construction work force 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 an additional $41⁄2 million because the lowest responsible

bidder, a merit shop contractor, was thrown off the project in favor

of a union contractor because the merit shop contractor would not

sign a PLA.

Executive Order 13502 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, DC, was

awarded to a Federal contractor without a PLA at a $52.3 million

cost.

However, after the contractor agreed to a PLA for the project by the GSA, the contractor added $3.3 million to the cost of the

project. The added $3.3 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 examples—these are just two examples, but there is no doubt

that there are many more stories reflecting the true colors of government-mandated PLAs.

When mandated by public officials, these agreements unfairly

discourage competition from 87 percent of the entire U.S. private

construction work force, 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. 735, the Government Neutrality in 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 work forces,

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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. 735 will ensure that taxpayers get the best possible product

at the best possible price.

Once again, thank you, Chairman Lankford, for all you are

doing. Thank you, Ranking Member Connolly, and all the members

of the subcommittee. Thank you very much. I appreciate this opportunity to address your committee.

Mr. LANKFORD. Thank you, Congressman Sullivan, for taking

time out of your schedule today to come over and testify.

Mr. LANKFORD. Many of 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 witnesses. Thank you.

[Recess.]

Mr. LANKFORD. We will now welcome our second panel. The Honorable Daniel Gordon is the administrator for the Federal Procurement Policy, the Office and Management and Budget. Very grateful

to have you here, Mr. Gordon.

For clarification of everyone that is here, Mr. Gordon and I

talked 3 days ago actually about his schedule today; that he has

to get away for a flight by 11. At that time I told him we don’t have

votes scheduled so we should be just fine. Now we have votes

scheduled this morning. So when votes interrupt us, I still will

allow Mr. Gordon to catch that flight and get out of here. So we

are in an accelerated process to get you to that quickly.

Ms. Susan Brita is the Deputy Administrator of the General

Services Administration.

Pursuant to the committee rules, all witnesses are sworn in before they testify. So if you would please stand and raise your right

hands.

[Witnesses sworn.]

Mr. LANKFORD. Let the record reflect the witnesses all answered

in the affirmative.

Mr. CUMMINGS. Mr. Chairman, I have a parliamentary inquiry.

Mr. LANKFORD. Absolutely, sir.

Mr. CUMMINGS. Mr. Chairman, I, too, want to see Mr. Gordon get

out of here on time—and I know you will. 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 received word of this new policy for the first time from

Chairman Issa’s staff in an e-mail on May 25th. And here is are

what it said: If there is an administration witness, then that witness is designated minority witness. It is up to the chairman to accept an additional witness, but that witness must be recommended

within a 24-hour period.

In other words, if you invite someone from the administration,

that witness is somehow designated as our witness, although we

didn’t ask for him.

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For this hearing we did not request an administrative witness.

You did. We requested Dr. 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 inquiry. Has the subcommittee or the full committee

formally adopted this policy?

Mr. LANKFORD. That we will have to determine. I will have to get

with Chairman Issa and get a chance to talk about that specifically. Part of the issue is well—and I had this conversation with

Ranking Member Connolly. Obviously, we have seven people on

this panel 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.

Mr. CUMMINGS. Well, the only reason I am asking is because I

think it sets a dangerous precedent, because quite often, we are opposed to what the administration is doing. And so for people to be

designated our witnesses, it just creates a major problem. So I just

wanted to know that. We just wanted to know, on what basis did

you deny Ranking Member Connolly’s request to invite Dr. Phillips

to today’s hearing. What was the basis of that?

Mr. LANKFORD. The basis was obviously we had seven people already, and two of those being administration officials that we

thought would be very supportive and clear to articulate that position as well.

Mr. CUMMINGS. Second parliamentary inquiry. Mr. Chairman,

this new policy is not only unfair and unprecedented, but it directly

contradicts the rules of the House and the rules of our committee.

Committee rule No. 2 provides for ‘‘Witnesses from the minority

may request’’—and it says not the majority—the minority—‘‘The

same is true in the rules of the House.’’

Mr. 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 policy?

Mr. LANKFORD. Why don’t we get a chance to go through this in

the following days and I will followup and show a previous record

of how this committee has been handled in the past and we will

be able to direct that and be able to determine if this is consistent

with previous actions of the committee.

Mr. CUMMINGS. Just one other 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 proceedings. And I ask that you state

here to our Members that you categorically reject this policy immediately.

Will you do that, Mr. Chairman?

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Mr. LANKFORD. I will not. I want to able to look at the full record

of the history of this committee and be able to determine that. I

understand what you’re saying, but I want to be able to walk

through the history of this committee as well.

Mr. CUMMINGS. I understand. Mr. Chairman, I have a motion.

Today, I join all the ranking members of this committee in sending

a letter to Chairman Issa formally objecting to this new policy and

calling on him to abandon it. 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 policy.

Mr. Chairman, I ask unanimous consent that this letter be entered into the record.

Mr. LANKFORD. Without objection.

Mr. CUMMINGS. Thank you.

[The information referred to follows:]

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Mr. CONNOLLY. Mr. Chairman.

Mr. LANKFORD. By the way, we are very limited in the time that

we have. If this is a conversation that we can have after Mr. Gordon has already testified, it would allow him to be able to slip out

and be able to hear our witnesses.

Mr. CONNOLLY. I understand. As the ranking member of the subcommittee, I have a further parliamentary inquiry following up on

Mr. Cummings’ inquiry. Was the chairman suggesting that he believes there is precedent for the majority dictating to the minority

who their witnesses would be at a hearing?

Mr. LANKFORD. What the chairman is stating is I want to walk

back through the history of this and be able 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.

Mr. CONNOLLY. Would the chairman acknowledge that he was

given verbal objection by this ranking member to this proceeding?

Mr. LANKFORD. Yes. We discussed that actually prior to your arrival.

Mr. 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 Mr. Gordon or Ms. Brita as witnesses. Would the chairman

be aware of that?

Mr. LANKFORD. I would not be. Would you suggest that they

would not be good witnesses to be able to speak to this issue?

Mr. 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.

Mr. LANKFORD. Without objection.

Mr. Gordon, we would very much be greatful to receive your testimony for 5 minutes.

STATEMENTS OF DANIEL GORDON, ADMINISTRATOR, OFFICE

OF FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET; AND SUSAN BRITA, DEPUTY ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION

STATEMENT OF DAN GORDON

Mr. GORDON. Thank you. I will speak briefly, Mr. Chairman.

Chairman Lankford, Ranking Member Connolly, members of the

subcommittee, I appreciate the opportunity to appear before you

today to discuss issues related to the use of 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 11 this morning. I am very

appreciative of the chairman’s and the subcommittee’s understanding in this regard.

As an administrator for Federal procurement, I am responsible

for overseeing the development of governmentwide contracting

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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 implements executive order 13502, which governs the use of

PLAs in Federal construction contracts.

Let me first address a possible misperception about what the

FAR rule says about the use of 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

project-by-project basis whether use of a PLA will promote economy

and efficiency in that specific construction contract. The FAR rule

calls PLAs—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

lie at 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 case-by-case 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 system.

We appreciate that taxpayers would not benefit from a rule that

mandated the use of PLAs even if they didn’t make sense and

didn’t serve economy and efficiency. However, 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 timeliness. With these thoughts

in mind, our office, the Office of Federal Procurement Policy, inVerDate 17-JUN-2003 16:50 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70822.TXT KATIE PsN: KATIE
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tends 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 marketplace.

I am very happy to answer any questions when we come to question time.

Thank you, Mr. Chairman.

Mr. LANKFORD. Thank you, Mr. Gordon.

[The prepared statement of Mr. Gordon follows:]

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Mr. LANKFORD. Ms. Brita, I would be pleased to be able to receive your testimony for 5 minutes.

STATEMENT OF SUSAN BRITA

Ms. BRITA. Good morning, Chairman Lankford and Ranking

Member Connolly, and other members of the subcommittee. Thank

you for inviting me here today 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 50 States and the District of Columbia. They can help reduce risks associated with wage stability,

avoidance of work stoppage, increased labor availability, and

project-specific coordination on work rules. PLAs can also include

provisions that promote career development through valuable job

training for construction workers.

GSA only use PLAs when they promote economy and efficiency

in Federal procurement. Executive Order 13502 and the FAR encourage executive agencies to consider requiring contractors to use

PLAs on projects totaling at least $25 million. The Executive order

does not mandate the agencies, but encourages the consideration of

PLAs. Our procurement process provides for the consideration of

PLAs. GSA allows a contractor to submit a proposal with a PLA,

without a PLA, or you can submit both. We evaluate these proposals on a project-by-project basis. If GSA accepts a PLA proposal,

the awardee is required to execute a PLA in accordance with the

Executive order and the FAR.

In GSA’s contracts, the PLA is an agreement between the contractor and a labor organization rather than between GSA and a

labor organization. For 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 the PLA receive 10 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 $51⁄2

billion through the American Recovery and Reinvestment Act of

2009. These funds, which we use principally to help modernize and

green our federally owned inventory, provided GSA the opportunity

to conduct a PLA pilot program. By this pilot program, GSA selected 10 projects with budgets of over a $100 million. The selected

projects covered seven States and the District of Columbia. Of

these 10 projects, seven ended up with PLAs and three did not.

From our comparisons, in most instances there has been no to little

difference cost difference.

Our experience in this pilot program has shown us that our bidding process has not hindered competition. In all of our projects,

we receive sufficient bids to ensure adequate competition and best

value for the American taxpayer. We typically receive between

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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 the PLA procurement process. As real estate experts, GSA ensures that we are procuring construction goods and

services at best value for the American government on behalf of the

American taxpayer. The consideration of PLAs is 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 excellence at best value for the American taxpayer.

Thank you, Chairman Lankford, and I am here to answer any

questions you may have.

[The prepared statement of Ms. Brita follows:]

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Mr. LANKFORD. Thank you, Ms. Brita. I now yield myself 5 minutes for initial questioning.

Mr. Gordon, as I am going through this issue, when a 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?

Mr. GORDON. Mr. Chairman, unfortunately, I’m not a labor lawyer. I’m a procurement guy. And I’m not sure what the impact

would be on individual collective bargaining agreements.

Mr. LANKFORD. When this was made, the shift that occurred in

the Executive order, was that because PLAs were being excluded?

There was an Executive order done 2 years ago that you said didn’t

elevate the PLAs, but it encouraged the use of PLAs on it. Was

that because PLAs were more efficient but they 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 is that bearing out?

Mr. GORDON. Thank you, Mr. 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

has required 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.

Mr. LANKFORD. Is there increased points that are given in the

benefits for use of a PLA?

Mr. GORDON. I’m not sure what you mean by increased points.

Mr. 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?

Mr. GORDON. We have given agencies considerable flexibility in

deciding how to implement the FAR rule. What you heard from Ms.

Brita was that at GSA, a small percentage of points, it is really

only on the technical side that you can get 10 percent extra points.

But technical is only one factor. There is also past performance and

price. Other agencies aren’t taking that approach.

Mr. LANKFORD. The reason for that would be—the 10 extra

points was because they saw increased efficiency and such, or what

was the reason forgiving the extra points for that?

Mr. GORDON. It would be better to ask Ms. Brita.

Mr. LANKFORD. Let me shift.

Ms. Brita, what was the reason for the extra points on that?

Ms. BRITA. GSA chose to enter into the 10 percent preference. As

you know, the Executive order encourages agencies to consider. We

are in the construction business and always looking for ways to increase competition and obviously make things more efficient. In the

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application of the Executive order, we chose to use the 10 percent

point system to meet that encouragement; to encourage people to

participate and get involved.

Mr. LANKFORD. When you mention the pilot program, is that the

Rider Levett Bucknall report? When you were talking about the

pilot program earlier that did the study on PLAs, is that the report

you’re referring to, the company that did the report?

Ms. BRITA. The pilot program I’m talking about is the 10 projects

that we identified that we were going to run the PLA against and

see how the 10 projects stack up. The report is a different effort.

Mr. LANKFORD. That report, though, you’re familiar with that report?

Ms. BRITA. I am fairly familiar with it.

Mr. LANKFORD. The report I have, I have a draft copy of it, the

last revision of that looks like it was January 27, 2010. Our staff

has been trying to request this report, obviously, because it is good

that you all have done a study. It is the right thing to be able to

do on it. We’ve been trying to get a copy. We were finally able to

get a copy at actually 6 p.m. last night. The last draft was actually

done January 27, 2010.

I would like to ask unanimous consent that we submit this report

for the record.

So agreed.

Mr. 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 and,

for instance, in Cleveland there is a 0.1 percent marginal benefit

to PLA; a 0.6 percent benefit in Honolulu; a 0.3 benefit in San

Francisco. But then it walks through other cities in the PLA studies and saying in other cities, Portland, OR; Nogales, AZ; Denver,

CO; Washington, DC, all had increased costs by using PLAs—some

of them as high as 12 percent more expensive. So it is not 0.12 but

12 percent on the other side. 5.8 more expensive in Colorado. And

then there is a risk in using PLAs excludes small and minority

businesses and may exclude capable merit shop contractors and

other factors related to this.

This was a very interesting report to go through last night. My

question is: This has been out here for a year and a half and it is

still in draft form. At what point is this in its final form and will

actually be released to everyone?

Ms. BRITA. Chairman Lankford, the agency made a decision that

we would suspend further work on that report and really work toward applying forces market forces——

Mr. LANKFORD. Is that because of the findings of this report?

This report does not support what you’re saying on the pilot program. This report is fairly discouraging of PLAs. It does find like

0.3 percent benefit in certain cities. But it’s very discouraging on

the whole of using PLAs.

Ms. BRITA. Well, the report is a draft and it is not final.

Mr. LANKFORD. But it has been draft for a year and a half. How

long does it take to finish a report that’s inconsistent with the government policy?

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Ms. BRITA. Well, we decided to suspend action on that report and

move toward the consideration—letting the marketplace determine,

with the applicability of PLAs, rather than rely on a report.

Mr. LANKFORD. So the report wasn’t consistent with the policy,

and so the report is set aside. And we’ve suspended the report because the policy was inconsistent with it. I’m trying to figure out

the why. Was it sloppily done? The findings weren’t consistent with

other reports that were done. Why was this suspended?

Ms. BRITA. The report 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 encouraging the use of PLAs in this collection of project.

These projects were chosen because we felt they had large cities,

small cities, they were major construction. So we thought that

would be a better way to gather data quickly, quite frankly, than

wait for the report. So we suspended work on the report and went

to the actual application of the PLAs in some of our projects.

Mr. LANKFORD. I’ve exceeded my time. I apologize for that. I

would like to yield to Mr. Connolly, the ranking member.

Mr. CONNOLLY. Thank you, Mr. Chairman. Ms. Brita, by the

way, I recognize that accent. Boston?

Ms. BRITA. Yes, sir.

Mr. CONNOLLY. Where?

Ms. BRITA. Boston, Hyde Park.

Mr. CONNOLLY. My family lives in West Roxbury. I can talk that

way if I have to.

While I’ve got you, Ms. Brita, who invited you to come to this

hearing?

Ms. BRITA. The chairman did.

Mr. CONNOLLY. Did you hear anything from my office or me?

Ms. BRITA. I did not.

Mr. CONNOLLY. So you were not invited by the minority?

Ms. BRITA. No, sir.

Mr. CONNOLLY. You don’t consider yourself a minority witness,

therefore.

Ms. BRITA. I received a letter from the chairman and I had a conversation with his chief counsel.

Mr. CONNOLLY. Mr. Gordon, same question. Who invited you

here?

Mr. GORDON. Same answer, sir.

Mr. CONNOLLY. So you did not hear from me or from my office?

Mr. GORDON. We had, as far as I know, no contact with your office at all.

Mr. CONNOLLY. So as far as you know, you were not invited here

by the minority.

Mr. GORDON. That’s right, sir.

Mr. CONNOLLY. Let me just say again, sadly, you’re both being

used, in violation of House rule 11 clause 2(j)(1), 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 measure or matter.’’

37

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, then we are

going to advise that administration to not cooperate with the Members of the majority until our rights are recognized and respected.

With that, I yield to the my the ranking minority member of the

full committee.

Mr. CUMMINGS. I thank the gentleman for yielding. I want to associate myself with every syllable of the words of Mr. Connolly.

Administrator Gordon and Deputy Administrator Brita, I appreciate your testimony and views you have provided today. As I stated at the start of the hearing, it is critical that this committee conduct fair and responsible oversight. That is why I am particularly

disappointed that Chairman Lankford decided to deny the minority’s request for witness, Dr. Peter Phillips, Chair of the Economics

Department at the university of Utah, citing a misguided and unprecedented committee policy.

If Dr. Phillips had been allowed to testify in person today, I

would have asked him to discuss the credibility of the 2009 study

by the Beacon Hill Institute. That study criticizes the use of PLAs

on Federal construction projects.

Instead, I directed my staff to put this question to Dr. Phillips

in writing, and he has graciously responded in writing. Had the

majority been allowed to bring Dr. Phillips forward, he would have

told the subcommittee that the Beacon Hill Study, ‘‘has not been

vetted in any peer-review process and would be unlikely to survive

a peer review.’’ Had Dr. Phillips been allowed to present live testimony at this hearing, he would have also questioned, using Beacon

Hill’s analysis as a basis for the claim that PLAs raise construction

costs by reducing competition.

Dr. Phillips would have noted that ‘‘Beacon Hill’s work suffers

from the basic statistical fallacy of spurious correlation.’’ And he

would go on to say that, Statistically, one could easily show that

pom-poms stunt teenage growth. All you have to do is go to a high

school basketball game and put all those holding pom-poms on one

side of the room and all the remaining teenagers, who just happen

to be the basketball players, on the other. Lo and behold, all those

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holding pom-poms have stunted growth compare to the control

group. Now this is the witness saying this, Dr. Phillips.

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. This sort of simple-minded statistics just does not

pass muster.’’

I just ask you, Ms. Brita, you said you all changed course. Does

that have anything to do with, in other words trying, to get a better sample of what you so that you had more accurate information?

Ms. BRITA. We wanted a better sample but we also wanted information quickly, Mr. 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 real-time every day and we ran the PLAs against these projects.

So it was really an effort to gain information quickly and to do an

evaluation and to really come to some conclusion—more conclusions about what the value of PLAs in Federal construction projects

as related to GSA.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Yield back.

Mr. LANKFORD. With that, I yield to Mr. Walberg.

Mr. WALBERG. Thank you, Mr. Chairman. In light of the fact

that we have these witnesses in front of us, I guess we might make

best use. So thank you for being here.

Ms. Brita, your list of PLA, non-PLA projects identified the GSA

headquarters building as a ‘‘no PLA.’’ Wasn’t that awarded originally as a PLA project? And what happened to the PLA?

Ms. BRITA. Yes, sir. It was originally awarded as a PLA project.

The contractor was unable to finalize the arrangements with the

various labor units and so the contract was amended to take the

PLA out of the requirements of the contract. The arrangement is

between the contractor and the various labor unions, not GSA, and

when the contract was unable to finalize those agreements, we just

amended the contract and took it out; took that requirement out.

Mr. WALBERG. How much time then did the contractor have to

waste trying to negotiate PLA with unions on this project at GSA’s

intense instance you allowed the project to go forward on a nonPLA basis?

Ms. BRITA. Let me just check. About 45 days, Mr. Walberg.

Mr. WALBERG. Forty-five days.

Ms. BRITA. Yes, sir. That is the standard time to negotiate these

kinds of things after award.

Mr. WALBERG. That is significant, especially when tax dollars are

being wasted.

I would, in deference to the chairman of the committee, yield

back time.

Mr. LANKFORD. Thank you, Mr. Walberg. I just have a quick

question. I would be honored to be able to yield back if you would

like to have that time as well.

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The Beacon Hill report that was being referenced by Mr.

Cummings just a moment ago was not the report I was referencing,

and I hope I didn’t allude to a different report. It is your report,

the GSA report, is the one that I was referencing that was done

by Rider Levett Bucknall, but is actually a GSA-sponsored report

and it’s GSA details. So I’m not familiar with the report that he

was mentioning before on that.

So I wanted to be able to clarify that this is a different report.

This is specifically a GSA-sponsored report that outlines that

project labor agreements can cause small and minority businesses

to be excluded, and that it also shows significant cost differences

in multiple municipalities.

Now I would be one to say PLAs should be in the toolbox. This

is not anti-PLA to say they’re in the toolbox. We’re just questioning

why there’s an encouragement to use them when the GSA’s own

study says it often causes cost increased, based on this study.

Ms. BRITA. Mr. Chairman, I will repeat again, the study is still

in draft form. It’s not finalized. It has never been formally presented. It hasn’t been finalized and we are relying on the real-time

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 real-time data with

contracts that we are currently engaged in was a better approach

and, quite frankly, better use of time because we will get information quicker.

Mr. LANKFORD. Do you have any idea what the cost of this report

is that has been set aside—of forming a report like this?

Ms. BRITA. I can get back to you and submit that information for

the record.

Mr. LANKFORD. Thank you. 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 support PLAs on it.

Ms. BRITA. I will submit that for the record.

Mr. LANKFORD. Thank you. I yield back my time.

Mr. Walberg.

Mr. WALBERG. Thank you, Mr. Chairman. Let me ask a question

again, Ms. Brita. Why did the GSA agree to a $3.3 million change

order in the Lafayette Building in Washington, DC, just to implement the PLA?

Ms. BRITA. Mr. Walberg, the project team, led by the contract officer, felt that in order—because it was a complex project, multiphased project, 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 the PLA.

Mr. WALBERG. Was this the finding in the consultant study that

you set aside related not only to the GSA headquarters, but also

to the Lafayette Building?

Ms. BRITA. I’m unfamiliar with the finding, Mr. Walberg. I don’t

understand. Was there a finding in the report?

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Mr. WALBERG. It appears that in the study, you examined the

issues of the Lafayette Building, the GSA headquarters at 1800 F

Street, the projects, and both had PLA implementation at an additional cost. 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. BRITA. 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 project—and it is a very complex, expensive, multi-phased project—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. That was a decision

made by the project team, led by the contract office.

Mr. WALBERG. I guess I continue to express some of the same

concern that when we have studies that are showing significant

problems with PLAs, that we are willing to use the additional cost

at taxpayers’ expense.

I yield back my time.

Mr. LANKFORD. Thank you. I apologize for having some issues

with the clock. We have reset the clock. That should be about 51⁄2

minutes total in that colloquy.

I recognize Mr. Cummings, the ranking member of the full committee.

Mr. CUMMINGS. Thank you very much. Let me say this to Ms.

Brita. In my 15, almost 16 years in this Congress, there is one

agency that I have a tremendous amount of admiration for accuracy and doing the job right 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. And I want to thank you all for what you do every day.

But I want to go back. I understand what the chairman was saying—Chairman Lankford was saying with regard to the Beacon

Hill report. I know he knows I wasn’t trying to imply that. This

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,

Mr. Zack, I have to do this. We have to do this to try to get our

side’s opinion in on this hearing.

Let me go back to regarding H.R. 735, the legislation we are considering today. This is what I asked Dr. Phillips; I am continuing

to ask what he would have testified to. Dr. Phillips would have explained with regard to this legislation that we just heard about,

‘‘PLAs are precisely the market instrument capable of setting and

adjusting 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.’’

Again, I say to the chairman I am disappointed that we did not

have the opportunity to hear directly from Dr. Phillips. By denying

the minority its choice of witnesses you have denied the committee,

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and by that I mean the committee of the whole, the balance to conduct meaningful oversight.

I ask unanimous consent that the letter from Dr. Phillips with

written responses to my questions be placed in the record.

Mr. LANKFORD. Without objection.

[The information referred to follows:]

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Mr. CUMMINGS. I might also add that I would have preferred to

have him here so he could put up his hand and swear to tell the

truth, too. But this is how we have to do it.

Deputy Administrator Brita, as a branch of government responsible for both levying taxes and authorizing how the Federal Government spends American tax dollars, it is incumbent upon every

Member of Congress to ensure that the American people get the

maximum value for every tax dollar spent. In Commissioner Peck’s

testimony before the OGR Subcommittee on regulatory affairs on

this same topic in March, he stated that, ‘‘GSA only uses PLAs

when they promote economy and efficiency in Federal procurement:

Can you explain the process that GSA uses when determining

whether or not to use a PLA in a construction project?

Ms. BRITA. Yes. Mr. Cummings, when GSA enters into a process

to acquire a new Federal building, they use a process called best

value and source selection. And the source selection panel is put together that evaluates all proposals, generally divided into two sections: The cost piece and a technical evaluation 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 evaluated 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 determine—the source selection panel determines the best value, which is a match of cost, plus all the technical qualities that are associated with the proposal. That is the

process that the agency uses now.

There is virtually no Federal agency now that goes straight to

low bid. They have found that is just a waste of taxpayer dollars.

You’re buying junk with taxpayer dollars. You don’t get best value.

You have things that fall apart, whether it’s a Federal building or

an Air Force fighter. You really get what you pay for. And we try

at the agency, the way we handle our procurements now, is to put

that panel together, break proposals into your technical section and

a price section and wed the two of them at the end of the evaluation period.

Mr. CUMMINGS. So does that go to efficiency and effectiveness in

trying to make sure we get the best value for our dollar?

Ms. BRITA. Yes, particularly in real estate. There is an old saying

in real estate that time wounds all deals. Once you start a real estate process, you need to keep it going. Once you stall, money, particularly on the part of the developer whose borrowed 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 looking for ways. That is why the PLAs

are an attractive tool for GSA, because the contractor makes it is

his responsibility to ensure that the labor is there, to make sure

that there are no work stoppages, to coordinate—one of the big

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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.

Mr. 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 principles—first, Americans have the right to know that the money

Washington takes from them is well spent. By the way, this is

written by Mr. 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 what you just said, the use of

PLAs seems to be consistent with the goals of this committee. And

I want to thank you for your testimony.

Mr. LANKFORD. Thank you. I yield 5 minutes to Mr. Kelly.

Mr. KELLY. Thank you, Mr. Chairman. I would like to thank both

witnesses for being here. Mr. Gordon, I have been with you before,

and I appreciate you taking time to be with us. Also Ms. Brita. You

just said something about real estate. Time wounds all deals.

Ms. BRITA. That is a little saying, time wounds all deals. When

you start a real estate deal, it is very important.

Mr. 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 hard-earned money

that we are doing the best thing possible.

I don’t see where the PLAs at all fit in. And the troubling thing,

the RLB report is something that was commissioned by the GSA.

So I would assume that in your RFP you were very specific at to

what is that you wanted RLB to find out for you. Having come

from the private sector, where I have done a lot of RFPs, I have

to tell you a 10 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, ‘‘OK. 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 programs? I know the President came up

with this just weeks after being put in office. Is there any instance

anywhere where there are specific instances showing where there

are these labor stoppages or abuses or why the 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 87 percent 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.

46

So the PLA and this report is very troublesome to me. It’s been

there for a year and a half. If the RFP was put out by the GSA,

then your office—maybe not you—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. And so if it

doesn’t match my argument, we’ll set it aside and say it’s irrelevant. You can back-shelf that to say it’s still in draft form.

But in a year and a half, I’ve got to tell you, as an automobile

dealer, if I had to wait for a year and a half on any bid that I put

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. Kelly, I just wanted to make one point. The 10

percent is really not a bonus. It’s not something that is added over

and above the 100 points. It is part of the 100 points.

Mr. KELLY. Say that again. If you could repeat that.

Ms. BRITA. I think you used the word the 10 percent or the 10

points is, ‘‘a bonus.’’ It’s really not in addition to the 100 points

that one would normally——

Mr. KELLY. Why is it in there?

Ms. BRITA. It’s part of the hundred. It’s part of the technical——

Mr. KELLY. But it’s a 10-point advantage if you——

Ms. BRITA. It’s a 10-point preference that the contractor can

choose to take advantage of or not.

Mr. KELLY. As a guy that’s been out in the real world, that’s a

heavy cover charge. So if that’s part of 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 a 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

consistent. This tilts it.

Ms. BRITA. Mr. Kelly, one of the reasons that we are doing this

pilot program is to address those very issues. To date, we have not

seen a great variance, quite frankly, between those that bid and

those that don’t bit bid when we have the PLA involved. But when

we finish the report, we will be able to, with much more definition,

get at those very issues that you are talking about. The 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 different—it’s a tool that the agency can use and that the contractors take advantage of. It’s a contractor choice.

Mr. 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 encouraging—nothing was—this just

makes the process more attractive——

Mr. KELLY. See, I differ with you there in that. There is language

set in there that it is exclusionary. That is not including a wider

universe of bidders. What you are doing is you are favoring one

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bidder over another. Ma’am, please, I have done bids all my life.

When you put language in a bid that gives a 10-point—whether it’s

out of 100 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 excluded because I refused to be a partner in that type

of thing. So I would just suggest to you that while you may be saying that it opens the universe to other bidders, it absolutely does

not. It is exclusionary.

Mr. GORDON. May I say a couple of words, Mr. Kelly?

Mr. KELLY. Absolutely.

Mr. GORDON. We in OMB are watching what agencies are doing.

We are giving agencies discretion, but we are very sensitive to the

point you raised. We want to be sure that this is not an exclusionary process. We want to be sure that PLAs are viewed as only

a tool. I think it’s noteworthy in the GSA work that among the 10,

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 points—and by the way, it’s really less than

10, 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.

Mr. KELLY. And I understand where you are coming from. But

I have 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 10 instances

that you looked at. But you refuse to look at the report that was

drafted a year and a half ago in saying, well, there’s not enough

information in there yet.

However, we did have 10 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.

Mr. WALBERG [presiding]. I thank the gentleman. The time has

expired and I would ask deference from Mr. Gordon and Mr. Brita,

if you would be able to stay around a little longer. Our chairman

has left to vote. He will be back to continue the hearing. We have

9 seconds to get to our vote right now, and then we will come back.

Mr. GORDON. We will stay until 11 o’clock. Thank you, sir.

Mr. WALBERG. Thank you. We will stand in recess.

[Recess.]

Mr. LANKFORD [presiding]. Thank you for allowing us in the

quick recess there to be able to go and vote.

Mr. Gordon, we are going to make your time after all. I would

like to be able to yield 5 minutes to Mr. Murphy.

Mr. MURPHY. Thank you very much, Mr. Chairman, and I thank

the witnesses for coming back to join us for just another brief—a

few brief questions.

Let me just begin by associating myself with the remarks of

Ranking Member Connolly on the subcommittee and Ranking

Member Cummings. I get that this committee has often been used

over the years to advance the majority party’s political purposes

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and their agenda. I think we’ve gone too far here, I think, in violating House rules, in violating basic concepts of fairness, across

the line. And I think what you have seen across the country is an

unfortunate willingness on behalf of those who would try to use

their new-found political power to try to undermine organized labor

and collective bargaining rights, to unfortunately cross that line

over again, and over again, whether it’s in Wisconsin with the collective bargaining law that was ruled unconstitutional by the

courts, or here today.

And I hope in the future that, though committee is certainly

going to be used occasionally to advance the political imperatives

of the majority party, that the other side gets a chance to put their

best evidence on.

Mr. LANKFORD. Would the gentleman yield?

Mr. MURPHY. I would yield.

Mr. LANKFORD. If we are able to provide for the record moments

in the past when this committee only had administration witnesses, when the roles were reversed and the Republicans were in

the minority and were only allowed administration officials under

the Bush administration, would that be acceptable?

Mr. MURPHY. If you would like to put that on the record?

Mr. LANKFORD. We will submit that for the record in the days

to come. Thank you.

Mr. MURPHY. Let me direct a question to Mr. Gordon. Mr. Gordon, in October of last year, myself and dozens of other Members

of Congress sent a letter to you requesting information on the Executive order that we’re talking about today. In particular, we were

interested in some direction that you had sent to agencies to report

back on how the Executive order had been complied with, how

many agencies had used PLAs, and to do so on a quarterly basis.

We sent this letter over in October and have not gotten a response

since.

But I would be interested to know from you as to the feedback

and response you’ve gotten from agencies in now the year or so

since the Executive order and then the guidance requiring the

quarterly reports back was issued.

Mr. GORDON. Congressman Murphy, thank you for the question.

I apologize that you haven’t yet gotten a response. My understanding is the response is close to being on its way to you. I will

tell you that for the most part, we have seen few instances of PLAs

being used in construction projects. That is consistent with our

guidance. What we’ve said to agencies is, you need to do this carefully. You need to be sure that the use of a PLA in a particular

project and those specific facts will serve economy and efficiency.

It is not unusual in the procurement system, as I’m sure you

know, that when we have a new tool available—and this is essentially a new tool for our contracting officer—it takes a while for us

to figure out where it makes the most sense, how to use it. I think

that a cautious, balanced approach makes sense.

The fact is that there are lots of academic studies out there.

Some indicate that PLAs save you money, some indicate that you

don’t. Part of the beauty of what GSA has done is you have real

examples, not academic studies, of what’s actually happened, and

I think that’s helpful.

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Mr. MURPHY. Have you received reports back? You asked for

data on a quarterly basis. Are you receiving that information back?

Mr. GORDON. We are. And as I said, the numbers of PLAs being

used is quite low.

Mr. MURPHY. I would appreciate that response as quickly as possible. This was from a group of Republicans and Democrats to show

that there is bipartisan support for the use of PLAs, when appropriate. And I think it could be useful for us to have that data

shared back.

Mr. GORDON. I will ensure that comes to you expeditiously.

Mr. MURPHY. Let me ask one other question to both of you. I

think one of the points that will be made likely by the second panel

is that nonunion contractors are discriminated against when a PLA

is required. Though they can go out and sign collective bargaining

agreement after they are assigned the award, that puts them at a

disadvantage versus contractors who are initially union contractors.

Can you talk about that critique? Again, we won’t have the opportunity to ask this of any minority witness on the second panel,

and I imagine it will be one of the primary criticisms on the second

panel. So I would pose it to both of you as to whether or not you

have seen a discriminatory nature against nonunion contractors

when PLAs have been used.

Mr. GORDON. I could say a few words, and then Ms. Brita is welcome to supplement them. As you know, the Federal Acquisition

Regulation rules says that this is not to be used in a discriminatory

fashion. We are trying to increase competition. I’m confident that

we can do this in a way that will not discriminate.

The fact is that even when project labor agreements are used,

very often the subcontractors, for example, are open shops that are

not unionized in their work forces, as we noted in the preamble to

the Federal Register notice in the rule. But in any event, if a company—if a company feels that an agency is conducting a competition in a way that excludes them and makes it impossible for them

to compete, they have an avenue available. They can file a bid protest and they will get an independent review, whether by the Court

of Federal Claims or GAO, to consider whether in fact they are

being excluded or unfairly discriminated against in that competition.

Ms. BRITA. Mr. Murphy, in the preliminary data that we have,

we have not found that there has been any discrimination between

union and nonunion workers. And that’s based on our just preliminary—these 10 projects, the handful of projects that we are looking

at. But the preliminary indications are that it’s not there.

Mr. MURPHY. Thank you. Thank you, Mr. Chairman.

Mr. LANKFORD. Thank you. I yield 5 minutes to Mr. Labrador.

Mr. LABRADOR. Mr. Chairman, I yield back.

Mr. LANKFORD. Thanks, Mr. Labrador.

Let me ask you a few questions. Ms. Brita, you referred to the

new report that you all are doing, you said it is in a preliminary

form. Is it in a draft form as well right now? Is it complete? Is it

something that we could have?

Ms. BRITA. Are you talking about the 10 projects?

Mr. LANKFORD. Yes, ma’am.

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Ms. BRITA. We are looking at these 10 projects individually. The

individual contracts have been signed by for each one of these

projects. And I would expect at the end of the contract period—because we want to see how this flows out over the next 3 years as

the contract gets put into place.

Mr. LANKFORD. Right. But that report, will that be a complete report? It is currently in draft form? There are 10 isolated pieces.

Ms. BRITA. Right now we are gathering data. I don’t know

whether we’ll do a comprehensive report or whether we’ll do 10 individual reports or whether we’ll put it all together. But we’re

gathering data and the form that the final sort of summary or report, as we call it, will take, but we haven’t decided how that’s

going to look. But it will be some sort of summary data and evaluation of the worth of PLAs.

Mr. LANKFORD. When that gets into a draft form that is available

to be able to be sent to our committee, I would very much like to

request a copy of that. And that would be sent over to us so that

draft report could be added to this draft report that’s already completed, and get a chance to do a side by side on that.

Mr. Gordon, we’re getting very close to your time. I understand

that well. In the past, were you aware—and I know that you are

not familiar with the very earliest days, obviously, of the Obama

administration and some of the transition. I don’t believe you were

right there, right at the very beginning when the Executive order—

do you know if that Executive order was done and was implemented based on the fact that during previous administrations,

PLAs were blocked and were not able to be used?

Mr. GORDON. Mr. Chairman, you are quite correct in that I was

not in the administration at the time. You probably know I was in

the Office of General Counsel at the Government Accountability Office, GAO, and joined the administration only in November 2009 so

I’m not in a position to know what happened.

Mr. LANKFORD. I’ve been trying to process through because, obviously, we want to use PLAs. And I want to reiterate this conversation is not about excluding PLAs; it’s just trying to determine why

there is an encouragement to use them, other than just that’s best

competition, to try to provide that neutral playing field to say—my

question is, has there been a tendency in the agencies that they

didn’t want to use PLAs and so there needs to be an aggressive approach to say, no, we encourage you to use them?

Mr. GORDON. Now I understand the question, and I can speak to

that, Mr. Chairman. Under the prior administration there was an

Executive order that prohibited agencies from saying in this particular project, we need to have a PLA in place. That, they were

not allowed to do.

What we wanted to do was say, agencies should be allowed to

look project by project and say, here is a project where it would not

serve efficiency to have a PLA, but here is a project where it would

serve it. That’s what we’re trying to do. We want that to be available, not to dictate it.

And I should be careful in the words. We are not encouraging the

use of PLAs. We are encouraging agencies to consider whether in

fact they need to require PLAs in a particular project.

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Mr. LANKFORD. But by increasing the point scale on them, as we

talked about before, it gives them an immediate advantage to be

able to engage and say, we may be a little higher in price, but

we’re greater in value because there can’t be a strike during this

time. We’re going to offset our collective bargaining agreement with

this, that we won’t fulfill that to be able to get this project. So it

does skewer somewhat, and it concerns me when this draft summary, one of the statements in it says that there is a risk that

PLAs will exclude. But having PLA in it, that excludes small and

minority businesses.

Mr. GORDON. I understand. And I will be happy to let Ms. Brita

speak about GSA. But as a governmentwide matter, I will tell you

that there are many factors. I have been dealing with solicitations

and procurements for over 20 years now. There are many, many

factors that get far more than 10 percent of the points on the technical side: your past performance, your technical approach, your

use of small businesses. All right? The amount that you commit to

subcontract to small businesses is frequently a factor, and it can

frequently have more than 10 percent of the points.

So that in the mix of things, what you are capturing—and there

are different ways to do this. GSA has taken one approach and

we’re evaluating how well that works. But it seems to me you can

appreciate that in a best-value context where you may get efficiencies through the use of a project labor agreement, you will

want to capture that, just as you typically get more than 10 points

for having a good track record, good past performance.

Mr. LANKFORD. I absolutely understand that. And again, there

may be great location for a PLA to be the perfect tool, to be able

to use that in that toolbox on it. But the last thing we would want

to do is to be able to try to put out the word and say this group

gets a higher score based on the fact that they are unionized, and

discourage other people from engaging in a competitive environment. We want to be able to have a level playing field and a competitive environment so we are getting best value, and as many

contractors as possible are bidding for our projects to get the best

possible price.

If we are pushing in such a way as to say there is a possibility

someone will be excluded, that’s what I am beginning to question;

and to say, if this report is questioning that from GSA, then I’m

also saying, OK, what was the evidence to make the shift when a

year after the shift was made, or 2 years after the shift was made,

there was an immediate look to say, OK, maybe there is a problem

here.

Mr. GORDON. If I could, Mr. Chairman, I would point out that

when GAO, my former employer, looked at project labor agreements, I think in 1998, they reported that there was a wide range

of views. Some people said they were very helpful. Some people

said they were more efficient. They saved costs. They cost costs.

The beauty of what GSA has done is it’s gotten us real examples;

real examples, not theoretical, not hypothetical.

Mr. LANKFORD. Great. I would like to yield one moment for Mr.

Murphy.

Mr. MURPHY. Thank you. Just a followup question. The chairman

was talking about point-scoring systems in which a PLA bidder

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may get more points. Just to clarify, the individual decisions about

how bids are structured is up to individual agencies; is that correct?

Mr. GORDON. Absolutely.

Mr. MURPHY. And some agencies may choose to incorporate an

increased point system for PLA bids, but that is not required by

this Executive order, nor is it required by any other direction from

the administration.

Mr. GORDON. You are absolutely correct. What we are doing at

this point is letting agencies take different approaches. We may

down the road, as we listen to what the agencies are doing, we may

come up with best practices. That’s what we frequently do, whether

we’re dealing with the ways of handling organizational conflicts of

interest, best value, past performance. We let agencies try different

approaches with some guidance. And then as we learn more, we

can give more specific guidance.

Mr. MURPHY. Thank you very much.

Mr. LANKFORD. Mr. Gordon and Ms. Brita, thank you so much

for joining us here. You are excused and you are going to make

your flight on time.

Mr. GORDON. I am very grateful, Mr. Chairman.

Mr. LANKFORD. I am grateful that you all were able to be here.

Thank you. We will take a brief moment to be able to recess—to

reset for the next panel.

[Recess.]

Mr. LANKFORD. I would like to welcome our third panel. Mr.

Maurice Baskin is a partner with the law firm of Venable LLP and

represents the Associated Builders and Contractors. Professor

David Tuerk is the executive director of the Beacon Hill Institute

at Suffolk University. Mr. Kirby Wu is the president at Wu & Associates. And Mr. Mike Kennedy is the general counsel of the Associated General Contractors of America. Pursuant to committee rules,

all witnesses are sworn in before they testify. Please rise and raise

your right hands.

[Witnesses sworn.]

Mr. LANKFORD. Let the record reflect the witnesses answered in

the affirmative. You may be seated.

In order to allow time for discussion, I would like you to limit

your testimony to 5 minutes. Obviously we’d have mercy if you go

a little over on that so we would allow for your testimony. But we

have received your written testimony already and that will be

made part of the record.

Mr. Baskin, I want to be able to recognize you for 5 minutes.

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STATEMENTS OF MAURICE BASKIN, COUNSEL, ASSOCIATED

BUILDERS AND CONTRACTORS, INC.; DAVID TUERK, PROFESSOR AND CHAIRMAN, SUFFOLK UNIVERSITY AND BEACON HILL INSTITUTE; KIRBY WU, PRESIDENT, WU & ASSOCIATES; AND MIKE KENNEDY, COUNSEL, THE ASSOCIATED

GENERAL CONTRACTORS OF AMERICA

STATEMENT OF MAURICE BASKIN

Mr. BASKIN. Good morning, Chairman Lankford, members of the

subcommittee. My name is Maurice Baskin. I am a partner in the

Washington, DC, law firm of Venable LLP.

Mr. LANKFORD. I’m sorry, Mr. Baskin. Is your microphone on?

Can you tell if the light is on?

Mr. BASKIN. How’s that? Any better?

Mr. LANKFORD. That’s perfect. Thank you.

Mr. BASKIN. Do I need to start over? I’ve just said good morning.

I am here representing Associated Builders and Contractors,

which is the national construction industry trade association representing 23,000 merit shop contractors, employing an estimated 2

million workers. I have previously testified before on the subject of

government-mandated PLAs before another subcommittee of this

committee, and I have resubmitted that testimony for the record of

this proceeding so that I can focus today on the very important bill

introduced by Congressman Sullivan, H.R. 735.

This bill is vitally needed to prevent the ongoing waste of taxpayer dollars and corruption of the Federal procurement system

that is being caused by the President’s Executive Order 13502 and

the agency rules that have implemented it.

The President’s PLA Executive order discriminates against 87

percent of construction workers and their contractor employers who

choose not to belong to or have contracts with labor unions. This

order was issued as one of the President’s first acts in February

2009, with no meaningful outreach to the construction community,

no transparency in its formulation—we heard today that the representatives of the administration still don’t know how it came to

be—and no factual justification at all for its findings. Most importantly, there were no significant labor problems on any Federal

construction projects during the 8 years governed by President

Bush’s Executive Order 13202, which prevented Federal agencies

from requiring or prohibiting PLAs on Federal construction projects

or on federally assisted projects.

In the absence of any problems and from the manner in which

the Obama order was put into effect, it is clear that the only reason

for the PLA Executive order now in place was and is politics.

Having heard or read the testimony of representatives from the

Office of Management and Budget and the GSA at now two congressional hearings, we have yet to hear them identify any factual

basis in the form of market research or identified labor problems

previously existing on Federal construction projects that justifies

the Federal Government’s new restriction on competition through

PLA mandates. We heard today that it’s a process and that it’s

open to competition, but as the Members rightly pointed out, there

is a preference. The thumb is on the scale. It is now being tilted,

if not mandated, in favor of these PLAs; and it is impacting comVerDate 17-JUN-2003 16:50 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70822.TXT KATIE PsN: KATIE
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petition. They are doing a pilot program, a pilot program that is

ongoing in nature. Apparently it’s continuing to this day on every

GSA project. That’s a peculiar definition of ‘‘pilot,’’ while they are

supposedly gathering market research data which is contrary to

the way that all other procurements have been done in the past.

GSA has adopted apparently a ‘‘build first and ask questions later’’

policy which is contrary to settled procurement principles.

At the same time, many academic studies—and we’re going to

hear more about that later—and research by the government’s own

consultants, as has already been pointed out, have established that

government-mandated PLAs increase the cost to taxpayers, reduce

the number of potential bidders, and particularly the number of

subcontractors to those bidders who are merit shop. They do nothing to improve the quality, safety, timeliness, or overall efficiency

of government construction projects.

Only Congress can effectively stop the political favoritism in contract awards that is wasting taxpayer dollars and corrupting the

Federal procurement process. And that is what H.R. 735, the Government Neutrality in Contracting Act, will do. H.R. 735 will simply reinforce the existing Federal mandate in favor of full and open

competition in all Federal procurements with specific reference to

PLAs. The bill will prohibit Federal agencies once and for all from

awarding construction projects based on the improper consideration

of whether the contractors are willing to enter into labor agreements. Until this Executive order, that had not been the rule of

law in this country under Federal procurement principles.

As the bill states, agencies shall neither require nor prohibit contractors from adopting PLAs as a condition of being awarded the

work, nor discriminate on that basis.

The bill is neutral. I can’t emphasize that enough. It’s neutral on

the subject of PLAs. It simply keeps the government out of the

process. It closely tracks the Bush Executive orders that were

upheld by the Court of Appeals for the D.C. Circuit in the Alba

case. So there is clearly no basis for a legal challenge to H.R. 735,

and it avoids interfering with Federal labor laws because it specifically says that nothing will be construed to prohibit a contractor

or a subcontractor from voluntarily entering into a PLA on their

own. If they’re so great, let the market show it, and let them come

forward and prove it, without it being tilted or mandated by the

Federal Government.

We applaud your efforts to promote H.R. 735. And I will be

happy to answer questions after the other speakers.

Mr. LANKFORD. Thank you Mr. Baskin.

[The prepared statement of Mr. Baskin follows:]

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Mr. LANKFORD. Mr. Tuerk.

STATEMENT OF DAVID TUERK

Mr. TUERK. I am David Tuerk, and I am a professor and chairman of economics and executive director of the Beacon Hill Institute at Suffolk University in Boston, which is a Ph.D.-granting institution. I would like to thank Chairman Lankford and members

of the subcommittee for inviting me, and I appreciate the opportunity to submit testimony on H.R. 735. My comments are my own

and do not represent the opinions of Suffolk University, nor do they

represent my support for any organization or private interest that

might stand to benefit from the passage of H.R. 735, which I heartily endorse.

I would like to enter into the record studies of project labor

agreements that the Beacon Hill Institute has performed under my

direction over the last 8 years. Of course we’ve already heard about

those. Among these are studies in which BHI estimated the effects

of PLAs on construction costs for school building projects in Massachusetts, Connecticut, and New York. We found that PLAs added

12 to 18 percent to final construction costs in Massachusetts and

Connecticut, and 20 percent to final bids for school construction

projects in New York.

I suppose we’ll get into the comments from Dr. Steel in question

and answer. But since he preempted me, I am going to make a

point about what he had to say. He accuses us of spurious correlation. Well, I have a buzz word that I could use about his work

which is multi-cullinearity. These are the kinds of buzz words that

economists typically use when they are criticizing each other’s work

in an academic study. I’m sorry that he has decided to conduct this

conversation in a way that reflects more his outlandish and bizarre

characterizations of our work than what we actually did, but we

can get back to that later.

In another study, we examine the Federal Government’s experience with the Bush-era ban on government-mandated PLAs. This

study was aimed at determining how the record of construction

projects conducted over this period reflects on President Obama’s

Executive order, encouraging PLAs on construction projects costing

$25 million or more.

President Obama claimed that the order was needed because,

‘‘large-scale construction projects posed special challenges to efficient and timely procurement by the Federal Government.’’

Our study proceeded on the premise that if President Obama is

correct about the need to mandate PLAs in order to overcome

these, ‘‘special challenges,’’ then President Bush’s ban on mandatory PLAs should have produced many instances of the delays,

strikes, cost overruns, etc., against which PLA advocates frequently

warn.

We asked the Associated Builders and Contractors to assist us in

getting the needed data from the Federal Government. Using the

Freedom of Information Act, ABC wrote to Federal agencies with

procurement responsibilities, including OMB and GSA, for information relating to any problems caused by the absence of governmentmandated PLAs over the period of the Bush Executive order. The

result: No respondent to the ABC letters, including the OMB and

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the GSA, could substantiate the occurrence of any delays or cost

overruns on Bush-era projects costing $25 million or more that

were attributable to the absence of a PLA.

This finding should come as no surprise. The real purpose of a

PLA is not to deal with special challenges but to discourage bids

from nonunion contractors and to give the PLA unions control over

the hiring process. PLAs accomplish this purpose by requiring contractors to follow onerous work rules, to turn away from their own

labor force in favor of labor provided by union hiring hall and to

pay fringe benefits a second time that they already provide their

workers.

Consider in this light the fatuous nature of the argument for

PLAs. The argument presupposes that the work will be performed

by the very unions that create the conditions under which the predicted delays, jurisdictional disputes, and work stoppages could

occur if a PLA is not adopted. The unions that create these conditions are predestined to get work, however, only if the PLA is

adopted, and then has the intended effect of discouraging nonunion

contractors from bidding.

I have read a number of studies, most commissioned by State

and local government agencies, which purport to show that a PLA

would save on costs. Typically, however, these studies adopt the

same tortuous logic that the unions employ in support of a PLA.

The studies show cost saving by assuming away the possibility that

a decision not to adopt a PLA might produce lower bids from qualified contractors than a decision to adopt one would produce. However, the best way to avoid cost overruns and delays is to encourage, not to discourage, bids from contractors who are not burdened

by the collective bargaining agreements that hobbled the competitiveness of the PLA union workers and their contractors.

According to government data, the fraction of all construction

workers who belong to unions fell by 25 percent, from 171⁄2 percent

in 2000, to 13.1 percent in 2010. So what we have is a state of affairs in which 13 percent of construction workers are attempting to

protect their jobs against the other 87 percent, and then the added

cost to taxpayers.

These facts show that the real agenda behind government-mandated PLAs is to shore up the market share of a dwindling minority of construction workers at the expense of the vast majority and

taxpayers.

By passing H.R. 735, Congress could take an important step toward rejecting the fatuous reading that lies behind PLA mandates

and ending what amounts to a discriminatory and costly handout

to a group of special pleaders.

I conclude by pointing out that H.R. 735 is not anti-labor, and

in fact it’s not even anti-union. I am currently involved in a case

where a contractor is suing because its union was excluded from

a New York City PLA. PLAs are only about the unions that manage to have the political clout to induce government agencies to require them to form a PLA. Nor has this legislation stripped government of a useful tool for achieving economy in State government.

If the tool is a useful one, then contractors are free on their own

behalf to adopt the PLA. Nothing is standing in the way of that.

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Therefore, I believe that H.R. 735 is clearly in the public interest.

And again, I strongly support its adoption. Thank you.

Mr. LANKFORD. Thank you Mr. Tuerk.

[The prepared statement of Mr. Tuerk follows:]

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Mr. LANKFORD. Mr. Wu.

STATEMENT OF KIRBY WU

Mr. WU. Good morning, Chairman Lankford, Ranking Member

Connolly, and members of the subcommittee. My name is Kirby

Wu. I am the president of Wu & Associates located in Cherry Hill,

New Jersey. On behalf of the Associated Builders and Contractors

and the merit shop contracting community. I would like to thank

you for the opportunity to testify before you today in support of the

Government Neutrality and Contracting Act, H.R. 735. I hope my

testimony sheds some light on how government-mandated project

labor agreements harm qualified contractors and employees that

want nothing more than to compete on a level playing field to build

on-time and on-budget construction projects at the best possible

price.

PLA mandates and preferences by Federal agencies result in increased costs for contractors and unnecessary procurement delays

and uncertainty and favoritism in the Federal procurement process, and stands as a barrier to growth for businesses and job creation in an industry that’s already suffering an unemployment rate

of 17.8 percent.

This is why the industry supports legislative remedies like H.R.

735 which restores fairness in Federal contracting and will eliminate waste so the government can build more projects and create

more construction jobs.

Wu & Associates is a small-business success story. We have

grown into an industry-leading, award-winning general contractor

specializing in design-build projects, lead sustainable design, and

historic preservation for Federal, State, local, and private clients.

Our firm’s success depends on the principles of free enterprise and

attracting the most qualified, talented personnel and companies for

a job, regardless of their labor affiliation.

Over the years we have successfully performed millions of dollars

worth of Federal, State, local, and private construction projects

without the need to enter into a PLA. The contracting policies of

the Federal Government influence the growth and success of small

businesses like Wu & Associates, as well as the economic wellbeing of our employees and their families.

PLA mandates place merit shop competitors at a disadvantage

and promotes discrimination based on labor affiliation. PLAs have

a practical effect of creating jobs exclusively for unionized construction trades people by forcing union representation or compulsory

union membership, inefficient and archaic union work rules, payment of union dues, forced contributions to union pension and benefit plans, and a host of other problems on employees of merit shop

contractors like my firm’s employees that have freely decided not

to join a union.

Injecting PLA mandates into the Federal procurement process

discourages competition from qualified contractors like my own

who employ 87 percent of the U.S. construction work force. It

doesn’t take an economic degree to know that less competition from

a pool of qualified bidders leads to increased costs for the government and taxpayers. If members of this subcommittee think PLA

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ment contracting, please take a look at my written testimony which

describes in great detail my unfortunate experience with a Federal

PLA mandate that resulted in procurement delays, red tape, and

needless litigation costs.

In short, in 2010, U.S. Army Corps of Engineers mandated PLA

on a project in Camden, New Jersey, in the middle of the bidding

process. By doing so, the Corps sent a message to qualified businesses like mine that we were not welcome to build this project unless we agreed to use union labor and follow the terms and conditions of a PLA. This is ironic because we were previously selected

as the prequalified contractor to bid this project. After weeks of uncertainty and attempts to get the Corps to reverse the PLA, we

were left with no choice but to file a bid protest with the Government Accountability Office against the Corps’ illegal and discriminatory mandate. Eventually, in the face of a bid protest, the Corps

abandoned their PLA mandate, but they replaced it with an illegal

and discriminatory PLA preference that enticed contractors to voluntarily submit a PLA offer by giving them additional credit in

their technical evaluation of our offer as part of the best-value procurement process.

We decided not to pursue this contract further because we felt

it was not worth investing the additional company resources to prepare a bid and compete against contractors submitting PLA offers

in this distorted playing field. This exercise resulted in lost time

and money for our small business that we could have invested back

into our work force and company. It also resulted in needless procurement delays, exceeding 2 months, as the Corps bid submission

deadline was extended a number of times to accommodate the PLA

controversy. Remarkably, the contract was eventually awarded to

a merit shop general contractor at a bid priced nearly 15 percent

below the original $161⁄2 million estimate, without a PLA offer. And

today the project is reportedly on time and on budget. The winning

contractor would have been discouraged or eliminated from competing if not for our efforts to fight the PLA mandate.

As a taxpayer it is outrageous that the government is wasting

tax dollars and denying opportunity to quality businesses and their

skilled work forces that cater to just 13.1 percent of the U.S. construction work force.

I ask that the members of the subcommittee support Mr. Sullivan’s Government Neutrality in Contracting Act. Contractors, and

not Federal procurement officials pressured by special interests,

should be the ones deciding whether a PLA is an appropriate tool.

Wu & Associates applauds the Oversight and Government Reform

Committee for its continued interest in the issue of governmentmandated PLAs.

Thank you for the opportunity to testify on behalf of small businesses and the merit shop contracting community. We deserve a

fair opportunity to provide the best construction product at the best

possible price to the taxpayers.

Mr. LANKFORD. Thank you, Mr. Wu.

[The prepared statement of Mr. Wu follows:]

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Mr. LANKFORD. Mr. Kennedy, proceed with your testimony for 5

minutes.

STATEMENT OF MIKE KENNEDY

Mr. KENNEDY. Good morning, Chairman Lankford and members

of the subcommittee. My name is Michael Kennedy. I have the

privilege of serving as the general counsel of the Associated General Contractors of America. I am here to express the Association’s

strong support for H.R. 735 and the neutrality that this bill seeks

to achieve.

AGC is the leading trade association in the construction industry. It has more than 33,000 members in nearly 100 chapters

throughout the United States. Among these members are building,

highway, industrial, and utility contractors. While some of them

are quite large, most are small and closely held. Many are Federal

contractors.

AGC was founded in 1918 and historically a majority of its members have been union contractors. Today such contractors are in a

minority, but they remain a large and very important segment of

the Association’s membership. To this hearing on project labor

agreements and H.R. 735, AGC therefore brings a broad perspective.

Before turning to the central subjects of today’s hearing, I should

explain that the labor unions in the construction industry are

unique. Unlike their industrial counterparts, these unions have organized themselves along craft lines. One union represents carpenters, another represents operating engineers, another represents electricians, and so on down the line. Industrial unions represent everyone in the appropriate bargaining unit without regard

to any differences in their job classifications.

But construction unions are different. No one of them represents

all of the craft workers on a typical construction project. The individual agreements negotiated with each of these unions are similarly limited. Each agreement covers a separate and single craft,

but, on the other hand, the typical agreement applies to all of the

work that the craft performs in a particular area.

PLAs differ from these area-wide agreements in two ways. PLAs

are typically negotiated with several unions and therefore cover

several crafts. And as the name suggests, PLAs are limited to individual projects and are not area-wide.

The historical purpose of PLAs, dating back to a time when

unions represented nearly 90 percent of all construction workers,

was to eliminate inconsistencies in these area-wide agreements

that would otherwise apply to particular projects, such as differences in work rules and expiration dates. Then and now, PLAs

typically supersede such area-wide agreements.

Over the last 60 years, as the percentage of construction workers

that unions represent has fallen below 14 percent, project labor

agreements have become less and less relevant. A large majority of

today’s work is not subject to any agreement with any labor union,

and the need to address differences between and among labor

agreements has greatly diminished. Open shop contractors are free

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tiative and without changing or superseding any prior agreements

with labor unions.

In this new environment, union contractors are more likely to

seek PLAs for the purpose of meeting their open shop competition.

Without seeking to open or reopen their area-wide agreements,

such contractors can seek the more favorable terms or conditions

they may need to compete for individual projects.

AGC neither supports nor opposes PLAs per se. The Association

takes the position that such agreements are just another of the

many tools that contractors—not owners, but contractors—should

have at their disposal as they seek to meet their clients’ needs.

At the same time, AGC strongly opposes government mandates

for PLAs or area-wide agreements or any other labor agreements

for publicly funded construction projects. The National Labor Relations Act commits such matters to the discretion of construction

employers and their employees. And for a host of reasons, AGC believes that government contracting agencies should follow suit.

As we have already heard, government mandates for PLAs discourage competition. They typically require open shop contractors

to make fundamental changes in the way they would approach an

upcoming project and to incur costs that such contractors would not

otherwise incur.

Such mandates may also trouble union contractors. They also

may require union contractors to make significant changes in the

way they would approach a project. Indeed, their typical purpose

and effect is to deprive union contractors of the opportunity to work

under the area-wide agreements that these contractors have already negotiated.

Government mandates can also disrupt the bargaining over areawide agreements. They invite the construction unions to bypass the

contractors for whom their members work and seek to negotiate

with what may be inexperienced public officials. They also give

unions the leverage to make demands that the unions could not

otherwise make.

Beyond that, it remains clear that construction contractors are in

the best position to determine whether and, if so, when a PLA will

help them meet the government’s legitimate interest in having its

projects constructed on time, within budget, and to all specifications.

Federal construction contractors have to post performance bonds

and to provide a host of contractual guarantees that they will meet

their obligations. It follows that these contractors already have

ample incentive to consider any PLA or other labor agreement that

would make it easier or less expensive for them to perform their

work.

In sum, AGC supports H.R. 735. AGC would suggest that the

committee make a technical amendment to section 3(d) where the

bill authorizes an exemption from its substantive provisions under

special circumstances. As currently written, this provision actually

tilts the scale against union contractors. But AGC believes that the

problem is inadvertent and can be quite easily corrected.

Thank you again. Let me simply repeat that AGC opposes Federal mandates for project labor agreements and supports H.R. 735.

Thank you.

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Mr. KELLY [presiding]. Thank you.

[The prepared statement of Mr. Kennedy follows:]

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Mr. KELLY [presiding.] I want to thank all the witnesses for

being here.

Mr. Wu, it’s good to see somebody who has spent a little bit of

time in Pittsburgh in the room besides myself. I saw your time at

Carnegie Mellon.

And Professor Tuerk, I think your background kind of speaks for

itself. I don’t know that anybody could question what you’ve done.

Mr. TUERK. Thank you Congressman. I wonder if I could make

a correction, though. I inadvertently said Dr. Steel and I meant Dr.

Phillips. I have no idea why I said that, but I would like to get the

name right.

Mr. KELLY. OK. That’s fine. We will note that.

I recognize myself for 5 minutes. And I think this is critical because this hearing today is not about unions or nonunions. It’s not

about who gets the bid or doesn’t get the bid. It’s about fairness.

And certainly if the President’s Executive order is based on something that he thought was unfair—anybody in the panel, is there

any instance anywhere that would have caused the President to

issue this Executive order? I can’t find anything in any of the testimony on any of the witnesses that would suggest that there was

a problems that existed in the bidding process. And having done

many RFPs myself and looking at it, I tend to feel the other way;

that it is extremely exclusionary and it does tilt the playing field.

So if anybody—and Mr. Baskin, Mr. Tuerk, Mr. Wu, Mr. Kennedy, if anybody could offer anything that would perhaps shed

some light on why this is in fact issued and why does it have any

importance as to what is it we are trying to do if it’s about fairness?

Mr. BASKIN. If I can respond first, I may also speak to it. But

as indicated and as we’ve heard from the witnesses earlier, they

have no specific labor problems on previous contracts procured

under the Bush order. There was no problem. I think it’s been referred to as a solution in search of a problem. The only justification

for it has to be political because of the way it was implemented,

with no outreach and with no identified real-world circumstances

in which problems had arisen without PLAs being mandated by the

government. It’s just totally unnecessary, and contrary to decades

of law as well as the Competition in Contracting Act that requires

full and open competition on Federal projects.

Mr. KELLY. Professor.

Mr. TUERK. We did all we could to find out if there were any contracts under the Bush administration that suffered for a lack of a

PLA and simply couldn’t come up with one. It was not only the

FOIA letters that ABC sent out, we combed through government

data bases, looked over survey results from a national survey, everything we could to find out if there were any, and there simply

were not.

And I do remember a campaign speech that President Obama

made in which he promised project labor agreements. So again I

think that’s probably the best explanation for the Executive order.

Mr. WU. Well, Wu & Associates, frankly, we would not bid a

project that would have a project labor agreement on it. The previous testimony where the GSA procurement officer stated that

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tainly raise our eyebrows in our office as we look for fair bidding

opportunities in the Federal public and State sectors. That would

be something that would jump out right away, and it would probably be a project that we would not pursue; because I would agree

with you, Mr. Kelly, that on the private-sector side, every dollar

matters. To put together a bid in the millions of dollars takes a tremendous amount of time and resources for our company. And if

there is the slightest disadvantage going in, it would strongly discourage us from bidding the project.

Mr. KELLY. Mr. Kennedy.

Mr. KENNEDY. I’m not aware of any systemic problems that the

Federal Government suffered during the Bush administration as a

result of its Executive order. That Executive order made it abundantly clear that construction contractors were free to pursue

project labor agreements where contractors, knowing the work they

had to do, knowing the commitments that they had to make, believed that a PLA would be in their interest. With that said, I believe we had an era of very open competition. It was healthy for

all sides of the industry.

Mr. KELLY. Mr. Wu, just following up on this, because I have

done the same thing you have. And when you get these RFPs, you

can be excluded from your—your bid can be thrown out if you don’t

dot all the I’s and cross all the T’s.

And what has always bothered me, since getting here 5 months

ago, is we have a continual parade of people who have actually

never done what it is that they’re regulating and people who have

never actually had to have their own skin in the game, determining

how these bids are going to be structured and how they’re going

to be awarded. And I find that completely troublesome.

Just so the general public knows—because not all of us have the

opportunity to do this. When you do submit a bid, 10 points. Critical? Not critical?

Mr. WU. It’s absolutely critical. When we are investing thousands

and thousands of dollars of our own overhead, project managers,

estimators, support staff to put a bid together, a multimillion-dollar

bid could take 3 or 4 weeks for our office to put together, working

along with our subcontractors as well. We can’t afford to invest

that time and money into an RFP process where we feel like there’s

any chance that we would be at a disadvantage because there are

other opportunities out there with a disadvantage not present. I

could go bid another project.

Mr. KELLY. So the addition of this language does not encourage

a wider universe of bidders. It actually does limit those who would

take the time. I have friends that it cost them $50,000 to prepare

a bid. This is private industry. I can’t imagine the hoops they

would have to jump through here to get it ready, and knowing at

the end of the day if they don’t include the PLA language, they’re

at a 10-point disadvantage right off the bat. So I thank you.

Mr. LANKFORD [presiding]. I recognize Mr. Murphy for 5 minutes

of questions.

Mr. MURPHY. Thank you very much, Mr. Chairman. Mr. Chairman, I would like to submit a letter to the record from the president of Toyota, and in it he says this: Toyota has used and required

project labor agreements on many of their biggest and most imporVerDate 17-JUN-2003 16:50 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00100 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70822.TXT KATIE PsN: KATIE
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tant projects. He says that Toyota has consistently employed

project labor agreements for our major construction projects, and

we could not have been more pleased with the results. To date, approximately 45 million man hours have been invested in the construction of nine automobile truck and component plants in the

United States. In each and every instance, these projects were completed on time and on budget and with an exemplary safety record.

Toyota, as well as major American and international companies

like Boeing and Wal-Mart, have made the decision to require

project labor agreements because they think it’s the best business

practice for them.

So let me ask this question to each of the panel members. And

I just need a yes or no answer. I have only got 5 minutes here. Do

you think we should pass legislation as a Congress that would prohibit the requirement of PLAs in private sector construction work?

I just need a yes or no answer to that question.

Mr. BASKIN. No. Nobody is asking for that—well, I’m not.

Mr. MURPHY. I’m asking, would you—would you support that?

Mr. BASKIN. No.

Mr. MURPHY. Would you support that legislation?

Mr. TUERK. Certainly not.

Mr. WU. No, I would not.

Mr. KENNEDY. Where a private owner is backing a decision to require a PLA with its own resources and has the flexibility to use

delivery systems that are not available in the public sector, I see

no reason why the government should step in and interfere with

that.

Mr. MURPHY. Thank you, Mr. Kennedy.

So I hear a lot of talk from my Republican friends and from my

conservative friends about how the government should run more

like a business. But what you are proposing to do here, even in an

act that has some nice words about neutrality, is to take away from

the Federal Government a tool that a lot of private companies use,

which is a decision that they make that a requirement that PLAs

be used in construction projects is good for their particular project.

What we’re asking here today is for that to be taken away from

the Federal Government. And as we’ve heard over and over and

over again, there’s nothing mandating that this be used project by

project. All the Federal Government does is just encourage a look

at whether a PLA would be worthwhile, as many private companies have. So I’m searching here for why we have a double standard, and we’re all searching for why we have a panel with only witnesses that are critical of PLAs. So I look to the underlying political motives here.

Mr. Tuerk, you said in your testimony that you are not here out

of an anti-union bias, that this isn’t about union; this is about the

best use of taxpayer dollars.

But Mr. Tuerk, just about 2 months ago, you wrote a piece entitled ‘‘Let’s Put an End to all Collective Bargaining.’’ And in it you

wrote, referring to what was going on in Wisconsin, ‘‘The Wisconsin

episode is, therefore, just a leading edge of a political movement

that could, if conducted skillfully, make it possible to unravel public support for the unions in so dramatic a fashion as to change the

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face of American politics. This would indeed be a wonderful thing

to behold.’’

So let me ask you this. Do you stand by this blog post, this article that you wrote in which you called for an end to all collective

bargaining?

Mr. TUERK. Well, I most certainly do. But I want to make a distinction here. I am here limiting my remarks to this particular

piece of legislation. And the committee is of course free to evaluate

my remarks here on the basis of things that I have said elsewhere,

like this, for example. But what I’m presenting here are opinions

based on research, not just my broader opinions about how collective bargaining fits into 21st century America.

So yes, I think that we’re finding out in State after State the

harm that collective bargaining has done when it’s allowed between

government workers and their governments. Even Massachusetts

has faced up to the reality and has done something about the excesses of union power within the—among government workers. And

yes, I think that collective bargaining is a tool whose time has

passed.

Mr. MURPHY. Thank you. And so I’m asking that question because your work hasn’t just been criticized by the one author that

we cited here. It’s been criticized over and over. So I’m trying to

figure out why not only we have a panel that seems to be rigged

in favor of the legislation that we’re debating, but also why we

seem to have studies put before us that aren’t based in good empirical and statistical requirements. And I look at your public record.

I look at the agenda you clearly have to end collective bargaining

at large in this country. And I put it together with what seems to

be a systemic approach on behalf of the Republican majority and

on behalf of proponents of organized labor across this country,

whether it be in this committee or in State legislatures across the

country, to take away from individuals the ability to collectively

bargain and to take away from government the very tool that private companies use on a regular basis; which is, if they believe that

it is in the best interest of that particular bid to require a project

labor agreement—that’s all the Executive order does—and because

this seems to be a hearing that is much to do about nothing, I

bring to the table a political agenda which seems hidden but incredibly relevant.

With that, I will yield back the balance of my time.

Mr. TUERK. May I respond?

Mr. LANKFORD. Just a moment. I do want to accept, without objection, the Toyota letter into the record that you mentioned earlier, that you requested to have in the record.

[The information referred to follows:]

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Mr. LANKFORD. Mr. Tuerk, it is actually my moment for questioning at this time. So, yes, you would be free to be able to respond to that.

Mr. TUERK. First of all, the quality of our statistical work that

has nothing to do with anybody’s opinions about collective bargaining or political issues. I am not responsible for the invitations

that went out for this meeting. Had I had anything to say about

it, I would have wanted Dr. Phillips here so I could have rebutted

his attack on our works, as bizarre as it is.

Finally, the work that we have done has in fact appeared in a

peer-reviewed journal. Our study of Massachusetts was published

by an online journal out of Bentley University. So the idea that

these numbers that we are coming up with are just made up out

of thin air is itself completely wrong. We have a lot at stake. We

are a Ph.D.-granting Department of Economics that survives and

prospers only by virtue of the integrity of our work. Our work has

been out there for years. And if anybody wants to find problems

with it, they are free to. Dr. Phillips has tried. His attacks, I think,

are wrong. Again, those are the kinds of things that we could argue

in another forum.

Mr. LANKFORD. Thank you.

Mr. BASKIN. Mr. Chairman, may I respond to the Congressman’s

question that was unanswered about why all the members on the

panel said that we don’t need legislation to prohibit private sector

PLAs; and that is because the National Labor Relations Act already has protections about them to say that they must be voluntarily entered into, not coerced, and only by employers in the construction industry. And what we have going on here under the

Obama order is a mandate. It is coercion of contractors to private

employers on Federal agencies’ projects in which the Executive

order encourages those agencies to in fact mandate or discriminate

in favor of them. And that is what the current laws prohibit. So

that is why we don’t need a change in those laws.

Mr. MURPHY. Mr. Chairman, the gentleman is responding directly to me. Would you yield?

Mr. LANKFORD. I would yield 1 minute.

Mr. MURPHY. You’ve used a lot of words here. You used ‘‘corruption’’ several times in your testimony. You have now used ‘‘coercion.’’ I think we need to tone down the level of rhetoric here when

we’re talking about an Executive order that simply asks individual

agencies to consider PLAs when appropriate.

I think by any reading of that it’s, A, hard to suggest that there’s

anything that is coercive about that Executive order. And certainly

in your testimony in which you suggested that it corrupted the

process, I think those are strong words with legal ramifications

that you should be very careful about using before the U.S. Congress.

Mr. BASKIN. If I may respond.

Mr. LANKFORD. Yes, you may.

Mr. BASKIN. They are merited, because we have been seeing the

Federal procurement process divorced from the rule of law. For decades it was established that labor—backing labor affiliation was irrelevant to responsibility of contractors. And by attaching that to

this process, it is rank favoritism. It is not permissible under the

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law. And until it stops, we have to say what it is, if anything is

to be done about it.

Mr. LANKFORD. Mr. Baskin, are you seeking an advantage in the

contracting process by saying that PLAs are a neutral ground? Is

that some advantage that you’re seeking?

Mr. BASKIN. ‘‘Neutrality’’ is the word.

Mr. LANKFORD. So at this point, based on your testimony before,

it is not an issue if you’re bidding against someone as a PLA or

a non-PLA, union shop, non-union shop. That is irrelevant to you

as long as it’s a level playing field when you go in to actually do

the bidding.

Mr. BASKIN. Yes. ABC has members who have signed union contracts; so does AGC; and many more who have not, because 87 percent of the industry is nonunion. But the merit shop philosophy is:

Work should be awarded and performed regardless of labor affiliation. That should have nothing to do with it. May the best, most

responsible contractor win, do the best work for the best price.

That’s all we’re looking for. And that’s all the Federal taxpayers

should be looking for.

Mr. LANKFORD. Thank you.

Mr. Wu, you had mentioned before that you’ve actually backed

out of a contract during the bidding process when you saw the direction it was going; that it was really going to take a PLA contractor to be able to do that. That is obviously anecdotal evidence

for you personally. Are there other contractors that you’ve related

with to say, I just don’t bid on Federal contracts when they’re over

$25 million and I know those are the specifications?

Mr. WU. I’m sorry; can you repeat that?

Mr. LANKFORD. Have you spoken to other contractors as well on

these contracts that are out there for bid over $25 million that had

the PLA encouragement in them, that are also saying, besides

yourself, I’m just not going to do that bid, it’s not worth the trouble?

Mr. WU. Yes. I encounter contractors all the time on a general

contracting level and a subcontracting level that simply will not bid

projects if a projects labor agreement is part of the RFP process.

Mr. LANKFORD. So it is your belief that it is reducing the amount

of competition in the field.

Mr. WU. I’m very convinced of that. I’ve seen it in the bidding

process. I’ve seen the amount of bidders that have turned out. I’ve

talked to my own subcontractors as to whether or not they’re pursuing PLA projects. And many, if not all of them, have been discouraged.

Mr. LANKFORD. Thank you.

I would like to honor Mr. Cummings with 5 minutes of questions.

Mr. CUMMINGS. Thank you very much.

Mr. Baskin, I want to followup on some questions. I just want

to make a statement with regard to something my colleague, Mr.

Murphy, said. As a fellow lawyer and one who has represented

many people who have been accused wrongfully, and all of us I

think have been trained with regard to certain words and the use

of them and their legal ramifications, I was kind of surprised that

you, of all these witnesses, you’re the only one that talked about

corruption.

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I think we have to be kind of careful with those words. I really

do. And I don’t say that—it just kind of surprised me. And I don’t

know the full basis of it. I heard your explanation to Mr. Murphy.

But I have to tell you that—you’re from Venable? Is that your firm?

Mr. BASKIN. Yes.

Mr. CUMMINGS. I just think that we need to be careful with those

words.

Last year, the Ninth Circuit rejected claims that a PLA entered

into by LA and Orange Counties violated the due process rights of

nonunion contractors. Furthermore, earlier this year the U.S. Supreme Court denied certiorari of a case challenging the seminal

Boston Harbor case, where the court upheld the use of PLAs of

public projects.

Mr. Tuerk, I found it very interesting that you helped me make

my point. You said that you did not like the way Dr. Phillips addressed the issues. And, basically, not putting words in your

mouth, but this is the impression I got; it sounds like you’re almost

wishing he was here so that you could look in his face and say,

You’re inaccurate. I’m sure you would have preferred that, would

you have not?

Mr. TUERK. Yes. I wouldn’t embarrass my host. But, yes, if I’m

going to be accused of economic malpractice by another academic,

I’d like to have him in the room.

Mr. CUMMINGS. Certainly. And we would have, too. That’s why

I said you made my very point. That’s why we—you heard the discussion earlier about how we were concerned on this side that we

were not able to call him. And he was anxious to see you. He was

anxious to look you in the face and say what he had to say. But

we were denied that right.

I also understand that the majority entered into the record instances in which the administration testified, without other witnesses. And that is not surprising. In this subcommittee, the most

recent hearing, Administrator Sunstein testified by himself, and

the minority did not protest because he was not deemed the minority witness by dictate of the majority.

What is unprecedented is that the minority accept the administration’s witness as their own, when the majority has invited them

and invited other private sector witnesses. I would like to make

that very, very clear. And there are instances where this happened

in this way, the way this happened today; that is, the denial of a

witness. Under these circumstances, I would like to—I hope the

chairman, I know you said you’re going to be looking into it, and

I look forward to hearing that from you.

And I want to make it clear the reason why we are spending so

much time on this is because all of you I think want sunshine.

You’re talking about a fair process. That’s all you all have been

talking about—fair process. Somebody, I think it was you, Mr.

Baskin, talked about level playing field. Well, guess what? We

want a level playing field, too.

And so, Mr. Chairman—we had extensive testimony, Mr. Tuerk,

and one of the things—from Dr. Phillips, that is—and I hope that

one day, since we have now had two hearings on this issue, and

at the rate we’re going, I’m sure we’ll have more, so perhaps the

next time we will have a chance to bring you back, Mr. Tuerk. I

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think, Mr. Baskin, you’ve done two. You’re on a roll. And so we

will—well, I just want to say one other thing to you, Mr. Tuerk.

I think somebody over on the other side said something; they were

picking and choosing from the report of the GSA, and one of the

things that they did say, and they were talking about cost, they

said, ‘‘However, these studies’’—talking about the sunshine study—

‘‘did not address the cost impact of scope, timing, markets, schedule, or quality variables. These variables would contribute to increased cost, thereby reducing the level of cost increases that Beacon Hill argue are all strictly attributed to PLAs.’’ And that is on

page 4 of the report.

With that, Mr. Chairman, I would yield back.

Mr. BASKIN. Mr. Chairman, if I may respond to the comment

that was directed at me about the use of the word ‘‘corruption,’’ because I do want to clarify I’m not accusing the President of committing a crime. What I referred to in my statement—I just went back

and checked it—is corruption of the system in the matter of data

corrupting a computer system. It refers to a messing up of the system. I certainly stand behind that. And it does involve the element

of coercion, which I referred to earlier, when an agency mandates

that contractors accept these things as a condition of performing

the work.

So I appreciate the opportunity to clarify.

Mr. CUMMINGS. Mr. Chairman, just 10 seconds.

Mr. LANKFORD. Yes, sir.

Mr. CUMMINGS. I want to thank you for clarifying that because

it is very, very important. I say it all the time in this committee.

I hate for people to come in here and say things, and then it’s like

left on a wall, not to be erased ever. The press picks that up. The

next thing you know, your wife is reading a story that you didn’t

even mean, saying that ‘‘My husband accused the President of the

United States of being corrupt.’’ I know that’s not what you said.

That’s why I want to clear these things up. OK.

Mr. BASKIN. Appreciate the opportunity.

Mr. LANKFORD. Thank you. And thank you to all of you for coming. Very grateful for your time in your very busy schedules and

for you being able to be here as part of this conversation.

With that, this committee stands adjourned.

[Whereupon, at 11:48 a.m., the subcommittee was adjourned.]

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