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REGULATORY IMPEDIMENTS TO JOB CREATION:

THE COST OF DOING BUSINESS IN THE CONSTRUCTION INDUSTRY

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS,

STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MARCH 16, 2011

Serial No. 112–18

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 REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman

ANN MARIE BUERKLE, New York, Vice

Chairwoman

CONNIE MACK, Florida

RAU ́ L R. LABRADOR, Idaho

SCOTT DESJARLAIS, Tennessee

FRANK C. GUINTA, New Hampshire

MIKE KELLY, Pennsylvania

DENNIS J. KUCINICH, Ohio, Ranking

Minority Member

JIM COOPER, Tennessee

JACKIE SPEIER, California

BRUCE L. BRALEY, Iowa

(III)

C O N T E N T S

Page

Hearing held on March 16, 2011 ............................................................................ 1

Statement of:

Ennis, John, Jr., CEO, Ennis Electric, Inc.; Linda Figg, president and

CEO, Figg Engineering Group; Dale Belman, professor, Michigan State

University, School of Industrial and Labor Relations; John F. Biagas,

president and CEO, Bay Electric Co., Inc.; and Maurice Baskin, esq.,

partner, Venable LLC ................................................................................... 7

Baskin, Maurice ........................................................................................ 35

Belman, Dale ............................................................................................. 22

Biagas, John F. .......................................................................................... 30

Ennis, John, Jr. ......................................................................................... 7

Figg, Linda ................................................................................................. 9

Gordon, Daniel I., Administrator for Federal Procurement Policy, Office

of Management and Budget; Robert A. Peck, Commissioner, Public

Buildings Service, U.S. General Services Administration; and David

Michaels, PhD., MPH, Assistant Secretary, Occupational Safety and

Health Administration, U.S. Department of Labor .................................... 115

Gordon, Daniel I. ....................................................................................... 115

Michaels, David ......................................................................................... 130

Peck, Robert A. .......................................................................................... 124

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

Baskin, Maurice, esq., partner, Venable LLC, prepared statement of ......... 37

Belman, Dale, professor, Michigan State University, School of Industrial

and Labor Relations, prepared statement of .............................................. 25

Biagas, John F., president and CEO, Bay Electric Co., Inc., prepared

statement of ................................................................................................... 32

Braley, Hon. Bruce L., a Representative in Congress from the State

of Iowa, information concerning PLA projects ............................................ 100

Figg, Linda, president and CEO, Figg Engineering Group, prepared statement of ........................................................................................................... 12

Gordon, Daniel I., Administrator for Federal Procurement Policy, Office

of Management and Budget, prepared statement of .................................. 117

Jordan, Hon. Jim, a Representative in Congress from the State of Ohio,

prepared statement of ................................................................................... 4

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio:

Information concerning U.S. Court of Appeals ....................................... 48

Statement of Campaign for Quality Construction .................................. 106

Michaels, David, PhD., MPH, Assistant Secretary, Occupational Safety

and Health Administration, U.S. Department of Labor, prepared statement of ........................................................................................................... 132

Peck, Robert A., Commissioner, Public Buildings Service, U.S. General

Services Administration, prepared statement of ........................................ 126

Speier, Hon. Jackie, a Representative in Congress from the State of

California, various statements ..................................................................... 86

(1)

REGULATORY IMPEDIMENTS TO JOB CREATION: THE COST OF DOING BUSINESS IN

THE CONSTRUCTION INDUSTRY

WEDNESDAY, MARCH 16, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT AND GOVERNMENT SPENDING,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 1:30 p.m. in room

2154, Rayburn House Office Building, the Honorable Jim Jordan

(chairman of the subcommittee), presiding.

Present: Representatives Jordan, Buerkle, Mack, Guinta, Kelly,

Kucinich, Cooper, Speier, Braley.

Also present: Representatives Issa, Cummings.

Staff present: Ali Ahmad, deputy press secretary; Michael R.

Bebeau, assistant clerk; Molly Boyl, parliamentarian; Daniel Epstein, counsel; Adam P. Fromm, director of Member liaison and

floor operations; Linda Good, chief clerk; Christopher Hixon, deputy chief counsel, oversight; Justin LoFranco, press assistant; Mark

D. Marin, senior professional staff member; Kristina M. Moore,

senior counsel; Kristin L. Nelson, professional staff member; Sharon Meredith Utz, research analyst; Walker Hanson, legal intern;

Sean Sullivan, intern; Carla Hultberg, minority chief clerk; Donald

Sherman, minority counsel; Mark Stephenson, minority senior policy advisor/legislative director; Cecelia Thomas, minority counsel/

deputy clerk; and Alex Wolf, minority professional staff member.

Mr. JORDAN. The subcommittee will come to order. We will do

opening statements from the chair and the from ranking member,

and then get right to our great panels.

Today’s hearing continues this committee’s efforts to expose cumbersome regulations that are stifling private sector job creation and

a full economic recovery. For more than 2 years, the administration

has told the American people that $1 trillion of Government spending was needed to put people back to work. The signature effort of

the American Recovery and Reinvestment Act was supposed to

keep unemployment below 8 percent, but obviously it is not there. Two years later, and $1 trillion later, unemployment is hovering

just above 9 percent, and has reached as high as 10.1 percent since

the President took office. In the State that both I and the ranking

member come from, it is even, frankly, slightly higher.

The situation looks even bleaker when you start looking at the

economy sector by sector. Perhaps most telling are the statistics

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from the construction sector, which is of course our focus today.

This important part of our economy encompasses excavators, pavers, plumbers, bricklayers, roofers and a host of other contractors

and subcontractors on both residential and commercial projects. It

includes architects, engineers, surveyors and skilled craftsmen of

every sort who design and construct America’s infrastructure.

For these millions of Americans, the unemployment rate is currently 21.8 percent, nearly two and a half times the total U.S. unemployment rate. No other sector of the economy has been hit

harder by the economic downturn, and no other sector was supposed to benefit more from the so-called stimulus.

Last December, when Chairman Issa requested direct feedback

from job creators across the entire economy, many employers in the

construction industry were candid with the committee about the

Federal rules that keep them from growing their businesses, hiring

new workers and competing in a fair and open market. Among the

many responses the committee received, two specific areas stand

out.

First, every day in the United States, job creators in the construction industry are faced with the reality of project labor agreements. These agreements tip the scale of an open bid process in

favor of organized labor and shut out non-union shops, many of

which are minority-owned and women-owned small businesses. In

fact, the vast majority of U.S. construction work force, nearly 87

percent is non-unionized.

Moreover, the cost of business increases dramatically because of

PLAs. Several recent studies have found that these agreements add

as much as 18 percent to the cost of construction. It was not surprising that when the President issued an executive order barely

2 weeks into his administration, encouraging a preference for PLAs

in Government contracts, when you calculate the total amount of

dollars in stimulus spending that is going to construction projects,

and tack on 18 percent for the cost of PLAs. The extra cash that

went into the pockets of these organizations is just not what the

taxpayers want.

Second, the committee has heard from job creators that proposed

workplace rules by the Occupational Safety and Health Administration threaten to impede economic growth in the construction industry. Fortunately, and I want to compliment OSHA, they withdrew the proposed rule regarding occupational noise and work-related physical disorders, after input from people who would have

been most burdened by these rules. Meanwhile, other rules like

OSHA’s Injury and Illness Prevention program indicate that the

administration has yet to comprehend how new layers of regulation

can slow and even stop a full-scale revitalization of our Nation’s

construction industry.

Make no mistake about it, workplace safety is a priority concern.

America has built the most successful, robust and profitable market economy in the world. And we have done so with an

unapologetic commitment to worker safety. Safety and success are

not mutually exclusive in the United States.

But job creators are concerned about the trend at the Federal

regulatory agencies that seem to be moving away from compliance

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assistance model toward an enforcement and penalization model.

This is critical as we move forward.

Effective regulation does not require a threatening adversarial

relationship between the Government and the industries that it

monitors. This hearing will continue the important dialog between

private sector job creators, Congress and the administration about

the steps necessary to foster economic recovery that puts America

back to work. The testimony we hear today from the front line of

a major sector of our domestic work force will help us toward that

goal. The Oversight Committee is one place in Washington where

the Government listens to the people and tells the truth about policies that are not working.

I welcome our witnesses, and would now be happy to yield to the

ranking member for his opening statement.

[The prepared statement of Hon. Jim Jordan follows:]

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

I listened with great interest to your opening statement. I had

some misgivings about the Recovery Act, but mine were on the

other side. I felt it wasn’t enough. I felt that especially in a way

you proved it by citing the 21.8 percent of unemployment among

these various trades people. I saw the battle going on on our side

of the aisle, where people like Jim Oberstar tried to get highway

funds for these shovel-ready projects that could have put people

back to work. And the administration wasn’t particularly sympathetic to his point of view.

So I think that we have to remember that only a quarter of the

money that was spent, rather, a fraction of the money that went

for the Recovery Act went actually for infrastructure and the kind

of jobs that we are talking about here.

As far as PLAs, where I come from they equate to higher safety

standards, higher craftsmanship, reliability. In short, you don’t

want public projects built by fly by-night contractors who aren’t

into craftsmanship and safety, so you don’t have bridges falling

down and schools falling apart. I have a prepared statement, I will

just read a couple notes from it.

I hope that like other meetings we have, today’s discussion

doesn’t focus simply on the cost of regulation of industry. Because

in order to have a truly productive conversation about regulations

that yield real results, costs have to be weighed against benefits.

When we hear industry’s concern about PLA, let’s not ignore the

evidence that shows PLAs not only facilitate a timely and efficient

construction project, but they can also reinvigorate a community by

employing local craftsmen, educating young apprentices and paying

competitive wages.

The arguments against PLAs that I have been hearing, that

PLAs are exclusionary and costly, are not convincing. So I am looking forward to addressing these concerns with the witnesses. I

think it is very timely that we are talking about OSHA as well, because we are going to mark the 100th anniversary next week of the

Triangle Shirtwaist Factory Fire. That was the workplace disaster

that took the lives of 146 workers, because the factory failed to provide workers with any kind of basic workplace safety plan or provisions.

So I am going to ask unanimous consent to have the rest of my

statement go into the record. But I think, Mr. Chairman, that the

whole idea about PLAs, project labor agreements, it actually brings

together people who, management and labor, so you can actually

have a successful project. I think that is a model that we ought to

be supporting. When we look at those who want to attack it because they are concerned about higher wages, it is interesting. But

I bet you more often than not, that is never reflected in a lower

cost of the project. What they really end up arguing about is trying

to get a bigger share of their profits for the corporation and not for

the workers.

So, thank you, Mr. Chairman.

Mr. JORDAN. I thank the ranking member. And without objection,

the rest of his statement will be submitted into the record.

Members have 7 days to submit opening statements. I would just

in response to my good friend from Ohio, I think he is right, we

7

are going to have a debate about PLAs and the impact. I get that.

But I would make two points. Non-union construction companies

aren’t fly by-night companies. They are good companies as well.

And we don’t want to disparage either one.

Mr. KUCINICH. I would agree with that. I would agree with that.

Mr. JORDAN. And then second, I would say, the Member makes

a good point. The stimulus was way too much of spending everywhere and not enough focused spending on infrastructure. I would

agree. I was against it, and was against it for a variety of reasons.

But I would agree with the gentleman that certainly, if you were

going to spend that money, it would have been better spent had it

been put more into infrastructure than all the other things it was

spent on.

I thank the gentleman.

We will ask now for our witnesses to come forward, and we will

get started.

Our first panel, we have first of all, Mr. John Ennis is the CEO

of Ennis Electric Co. Welcome to the committee. Ms. Linda Figg is

the CEO of Figg Engineering. Dr. Dale Belman is a professor at the

School of Labor and Industrial Relations at Michigan State University. Mr. John Biagas is the CEO of Bay Electric Co., and Mr. Maurice Baskin is partner at the law firm of Venable LLP.

Pursuant to committee rules, all witnesses will be sworn in before testimony. If you would please rise and raise your right hands.

It is the standard practice of the committee.

[Witnesses sworn.]

Mr. JORDAN. Let the record show that each witness answered in

the affirmative. And we will start right down the line with Mr.

Ennis. You have about 5 minutes. You have the lighting system in

front of your name tag, which we can’t see, but you can see. We

have a clock up here, too. So you have 5 minutes, if you can keep

your testimony close to that, that would be great.

And you are recognized.

STATEMENTS OF JOHN ENNIS, JR., CEO, ENNIS ELECTRIC,

INC.; LINDA FIGG, PRESIDENT AND CEO, FIGG ENGINEERING

GROUP; DALE BELMAN, PROFESSOR, MICHIGAN STATE UNIVERSITY, SCHOOL OF INDUSTRIAL AND LABOR RELATIONS;

JOHN F. BIAGAS, PRESIDENT AND CEO, BAY ELECTRIC CO.,

INC.; AND MAURICE BASKIN, ESQ., PARTNER, VENABLE LLC

STATEMENT OF JOHN ENNIS, JR.

Mr. ENNIS. Good afternoon, Chairman Jordan, members of the

subcommittee. On behalf of the National Federation of Independent

Business, I would like to thank you for giving me the opportunity

to speak with you today regarding the impact that project labor

agreements have on small businesses.

I am the owner and CEO of Ennis Electric Co., located in Manassas, Virginia. Ennis Electric was incorporated in 1974, and for the

last 37 years has performed projects in and around the Washington

Beltway from $10,000 to $27 million. Many of these projects are

with local, State and Federal Governments. We complete most

projects as a subcontractor.

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Our experience encompasses many special use facilities for both

Federal and local governments with a special emphasis on historic

renovations and public education facilities. We employ over 120 individuals, many of which have been in our employ for years. We

strive to foster a loyal work force by providing a safe, fair and enjoyable workplace, while maintaining the highest possible quality

and craftsmanship on our projects, to exceed the expectations of

our customers.

The majority of the work we obtain is through the bid process.

Most of these solicitations are awarded to the lowest bidder with

varying levels of pre-qualifications and/or technical proposals requiring previous work experience. In the past, these solicitations,

which are funded by public dollars, have been free from project

labor agreements, and therefore open to bidders who meet the technical requirements.

However, recent Federal policies have changed this practice,

making it more and more difficult for small businesses to fairly

compete for these contracts. The use of project labor agreements is

a discriminatory tactic that prevents non-union construction companies from working on Government construction projects. The

U.S. Department of Labor Bureau of Labor Statistics found in their

annual report on union membership that from 2009 to 2010, membership fell from 141⁄2 to 13.1 percent of the U.S. construction work

force.

Consider the fact that the construction industry currently has an

unemployment rate of over 20 percent, with one-fifth of the workers in the construction industry unemployed. How can Congress acknowledge that PLAs and other regulations only serve as an impediment to job creation?

In August 2010, Ennis Electric made offers to general contractors

for three General Service Administration projects in Washington,

DC. These projects were 1800 F Street modernization, the Lafayette Building modernization and the St. Elizabeth’s adaptive reuse. Ennis Electric was fully qualified to execute these projects and

our company had more experience than our competition did in performing these particular jobs.

Bidding on these types of jobs is a very intensive process for

small business, and it can take hundreds of man-hours just to prepare an estimate prior to submitting the bid. My company spent

600 hours preparing our bids for these projects.

On all three of these projects our company was listed, as required by the solicitation, as the electrical contractor for the

Offeror’s non-PLA bid. It later came to our attention that all three

of these projects were awarded on the basis that they adhered to

project labor agreements.

So despite being fully qualified to do the work, Ennis Electric

was not selected for the subcontract electrical work because of a

project labor agreement. Further, because this change in the solicitation was made retroactive, we lost innumerable man-hours that

were spent bidding these projects, for which we were qualified, but

not considered because of our non-union status.

In this case, the impact of unfair PLA requirement will be felt

by our company for years. The three aforementioned subcontracts

represented over $30 million work over the next several years. As

9

a result, we have been forced to lay off approximately 15 percent

of our work force. Unless we can find other opportunities, we could

end up laying over 50 percent of our work force.

The decision to require discriminatory project labor agreements

on these three subcontracts could not have come at a more unfavorable time for Ennis Electric and our employees, not to mention the

American taxpayers who have to pay for the increased costs associated with these PLAs.

Thank you for the opportunity to testify on behalf of small business.

Mr. JORDAN. Thank you, Mr. Ennis.

Ms. Figg.

STATEMENT OF LINDA FIGG

Ms. FIGG. Mr. Chairman, distinguished members of the committee, my name is Linda Figg. I am very pleased to be here to represent the members of the Construction Industry Round Table, and

to participate in this hearing on the critically important effort to

identify the negative impact excessive regulations may have on job

growth in our industry.

The Round Table is composed of slightly over 100 CEOs from the

leading architectural, engineering and construction firms across the

United States. Together, these firms deliver on billions of dollars

of public and private sector infrastructure projects that enhance

the quality of life for all Americans while directly employing nearly

half a million Americans, easily double that when considering indirect jobs.

As such, as have extensive experience and first-hand knowledge

of the challenges and complexities facing the design and construction industry when it comes to navigating the vast regulatory complex that has arisen with respect to our clients’ projects.

Let me state on the onset that CIRT and its members are not

opposed to regulations. What we oppose is the inefficiency, redundancy and overlapping jurisdictional mazes that have come to epitomize excessive regulations. America’s can-do spirit, know-how and

innovation still exist. It is just hard to find sometimes under the

extensive laws, regulations and rules that the private sector faces

while trying to create jobs that spur economic growth and expansion.

The uncertainty and unintended consequences of what seems like

a never-ending expansion of Government’s reach really damages

the entrepreneurial spirit and desire to take risks which can help

jump start a robust economy. When Government gives private businesses more freedom, not less, remarkable achievements can be accomplished to enhance prosperity for Americans.

In public works infrastructure projects, the Federal Government

spends taxpayers’ money to put people to work, create economic

growth, improve America’s global competitiveness and enhance the

quality of life in communities. But oftentimes, these projects are

subject to time-consuming and often redundant rules, which weigh

down efficiencies and delivery time while increasing cost. These excessive procedures could be accomplished without unnecessary

delays and costs.

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A good example is the new I–35W bridge replacement. We will

all remember the tragic day on August 1, 2007 when the interstate

bridge carrying I–35W over the Mississippi River in Minneapolis

suddenly collapsed during rush hour traffic, killing 13 and injuring

many more. While rescue efforts proceeded, the Minnesota Department of Transportation immediately began a fast track process of

building a new bridge.

Three days after the collapse, a request for qualifications was

issued for design-build teams interested in the replacement contract, with five teams short-listed 4 days later. Technical and price

proposals were received on September 14th, this is just over a

month from the time of the collapse, and evaluated on a best value

basis by 27 evaluators from 5 agencies considering both quality and

overall price.

The design-build contract was awarded on October 8, 2007, just

a little over 2 months after the accident. To allow construction to

commence so quickly, the Minnesota Department of Transportation

developed strong relationships with permitting agencies. With good

will and a sense of common mission, the Minnesota Department of

Transportation and the agencies agreed to make and keep reasonable commitments. Decisions that normally take months and years

had to be made in hours and days.

Through this team effort, a project memorandum was issued,

covering the environmental management issues and permitting the

$234 million construction project to move forward. Construction of

the new, 10-lane interstate bridge proceeded at an accelerated

pace, utilizing a local work force, estimated at over 600 tradesmen

and laborers, with a 504-foot main span over the Mississippi River

erected in just 47 days.

On September 18th, the new bridge opened to traffic, more than

3 months early. The design and construction of the important interstate link that serves 141,000 vehicles per day was completed in

just 11 months. This was only possible due to the spirit of cooperation and teamwork between the Minnesota DOT and the permitting agencies to eliminate road blocks often encountered in the environmental and permitting phase of the project, while still providing a sustainable, eco-friendly bridge that the community is proud

of.

From notice to proceed with construction to opening to traffic

was 339 days. The private sector was given the freedom to enhance

the project quality, introduce innovations and engage the community in selecting some of the bridge’s dominant visual features. The

bridge highlights innovation with smart bridge technology, 323 sensors that provide long-term valuable information on the bridge.

Landscaping provided better drainage. Nanotechnology concrete

cleans pollution from the air, and LED lighting, a first for highway,

cuts the cost of energy and maintenance.

But when it came to innovation, there was no regulation that

told anyone that these things needed to be done. These were

choices and benefits that were brought to the project through an

open, streamlined process. It was a triumph of a recovery and our

country can have the same recovery.

The experiences from the new I–35W bridge replacement could

be left for just one project. Or we can take to heart the clear, unVerDate 11-MAY-2000 13:53 Aug 11, 2011 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\67566.TXT KATIE PsN: KATIE
11

mistakable lessons we have learned and put them to work across

the board on a whole myriad of public projects, so that America

gets the benefit of efficient, science-based and cost-time sensitive

regulations in a manner that gets important infrastructure built,

while still protecting and caring for our important environment.

Private industry, when given more freedom, can achieve amazing

results to build a stronger America. It is time to inspire the recharging of the American spirit to help us grow into a strong economy. CIRT and its members stand ready to assist the committee

in whatever way it can to provide input into possible approaches

and methodologies that will apply the streamlining lessons of successful work to a larger scope of Federal projects.

I want to close by thanking you, Mr. Chairman, and the other

distinguished committee members, for your time and attention.

[The prepared statement of Ms. Figg follows:]

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Mr. JORDAN. Thank you for giving us some positive news. That

is good to hear. So often testimony is not that, but it is good to

hear that it worked so well there. And you are exactly right, that

is what we want to foster in the future.

Dr. Belman.

STATEMENT OF DALE BELMAN

Mr. BELMAN. Let me thank the distinguished members of the

committee for this opportunity to talk about project labor agreements.

A project labor agreement is an agreement between a public or

private owner, a building trades union or unions, and more frequently, construction employers. And the owner assures that the

project will be built under union terms and conditions, but not necessarily by union workers, and receives in turn a number of benefits. One is an assurance against strikes or other disruptions of

construction activity. And typically, very close labor-management

cooperation, and an informal means of resolving disputes. An assurance of ready access to appropriately skilled labor, within 48

hours of the need.

They can and often do obtain concessions from building trade

unions with regard to wages, benefits and working conditions. And

PLAs can be used to achieve socially valued goals, such as advancing individuals from low income and disadvantaged groups into

construction training programs and into good jobs in the construction industry.

Now, PLAs can provide value to owners of construction projects,

but that requires choosing the right project, writing the right PLA.

Owners need to know what they need from a PLA, and how to

write the PLA they need. It is used extensively in the private sector because there is knowledge of this, because it is possible to do

this. We find that Dow Chemical, Toyota, Pfizer pharmaceuticals,

Donald Trump used PLAs to obtain value in their construction

work.

Now, PLAs provide two forms of value. We need to distinguish

these. First of all, there is construction value. This can be, with a

well-written PLA on the right project, cheaper to complete, on-time

completion, better quality construction, better safety and health

outcomes, and reduced need for oversight by project managers.

There is also social value. And this can be provision of superior

training and access to jobs, family supporting wages and benefits,

adherance to labor and employment law, reduction in medical-social costs to local community, local hire. It can also have possibly

negative consequences of excluding non-union employers. But we

will talk about that.

Where do we expect to see value from PLAs? In terms of industrial and commercial projects, my interviews, I have interviewed

more than 200 people, or my co-authors have, larger projects, $5

million to $10 million is the threshold for industrial and commercial. Projects where completion time is important, projects where

skill levels and training are important, projects built under prevailing wage requirements.

How do PLAs create value? First of all, direct concessions.

Change overtime and premium rates, modify apprentice ratios and

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so on. There can also be harmonization of working time across

trades, changing start times, holidays, flexible scheduling, a number of other steps that increase the efficiency of the utilization of

labor. And I should say that these issues face non-union as well as

union contractors in terms of the terms of the trade and how the

employees actually expect to be treated.

Provision of skilled labor on an expedited basis. There was a big

issue in obtaining skilled labor, and it delayed many projects from

2002 to 2007. In fact, it killed a number of private sector projects.

And yet, a PLA was a good investment in making sure that if you

were going ahead with a project, you would have the labor when

you need it. Employers do not need to carry excess labor.

We can also talk about how PLAs improve communication and

cooperation on projects, and better coordination in a litigious and

potentially chaotic industry. The management structures in many

of the other parts of the construction industry today make it very

hard for construction managers or DCs to actually control the

project and get the results they want. PLAs become a tool to improve coordination.

The no strike provision has also allowed numerous PLA projects

to continue during local contract disputes.

I don’t have time right now to talk about whether, how PLAs affect project costs, but would be happy to answer questions on this.

I will say that if one reviews studies that meet minimum standards

of scholarly quality, the evidence isn’t there that PLAs affect

project costs. Indeed, most of the work that is cited is bad quality

in the sense that it is quite inaccurate.

But I would like to speak to the issue of exclusion and this issue

of whether it is a bad thing that non-union contractors are potentially excluded from project labor agreements. A first point is that

the controversy, we should be clear, this is not about construction

value, this is about social values. This is not about making a

project cheaper, making a project come in on time. This is about

social values and whether the potential exclusion of part of the

labor force is an issue that we should respond to. And it may well

be a public policy issue.

We need to understand that there are a series of other social values that PLAs advance, such as adherence to labor and employment law in an industry which has a very mixed record on following employment law, that PLAs encourage the provision of training

through apprenticeship and pre-apprenticeship programs, that they

assure the provision of family supporting wages and benefits, even

for non-union workers on the job. That there is, PLAs generally encourage the use of a local labor force, so that wages and benefits

stay in the local area. And they generally reduce social costs to an

area when unbenefited construction workers use free community

medical services.

Now, what I am arguing here is that if a social value is that we

not exclude non-union workers from projects, these need to be

weighed against the positive social values. That seems legitimate.

A second is, it is not that hard to write a PLA that includes provisions which would make it more possible for non-union contractors

to participate. The Toyota PLA only requires a letter of assent. It

allows non-union contractors to bring current work force onto the

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job, and paying union-level benefits into their own funds and a

trust fund for employees. But they pay union rates, and indeed,

Frank Mahomet, who is an ABC representative at a conference we

had at Michigan State University, said that he could see a PLA

which non-union contractors would not have an issue with.

I am clearly out of time. I thank you for your patience and look

forward to answering your questions.

[The prepared statement of Mr. Belman follows:]

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Mr. JORDAN. Thank you, Doctor.

Mr. Biagas.

STATEMENT OF JOHN BIAGAS

Mr. BIAGAS. Thank you, Mr. Chairman, ranking member, members of the committee. Thank you for allowing me to give testimony

today.

Being the youngest of 14 children, 8 boys and 6 girls, from the

great State of Louisiana, Lake Charles is where I was born, I have

had the opportunity to work in the electrical and also join the construction field for many years. The trade is one that all the males

in the family learned from our father, Alvin Biagas, who was a

master electrician. Most of us learned both on the job and some

later served as electrical apprentices, trained in the classroom

through the IBEW, Local 861, in Lake Charles. I served in Local

26 here in Washington, DC, from 1987 to 1991.

I am a licensed master electrician in the State of Virginia, Maryland, Georgia, Louisiana, North Carolina, Washington, DC, and

also several other States.

In the spirit of the American dream, I purchased Bay Electric

Co., Inc., in 1997. Bay is a non-union merit shop and began in business over 47 years ago. The company had revenues of just over $1

million when I bought it, and over the years, our team has grown

this enterprise to roughly over 85 times that size. We have grown

the size of our work force from 18 when I purchased it to over 190

today.

Our work force has 155 field workers, which are licensed electricians, apprentices, which are registered in State and Federal

programs, foremen, laborers, superintendents, office staff of 35 persons, project managers and so on.

Bay performs a large amount of work and service work with the

Department of Defense, the Army, Navy, Air Force and all of the

Defense groups, State and local governments, as well as private

customers from Maine to Florida and as far west as Louisiana. The

projects range in size from $31 million to as small as a $68 Service

order. We perform large-scale, complex electrical projects which include low voltage fire alarms, lighting, high voltage, up to 35,000

volts, controls, motors and many electrical tasks.

Bay also is a full service general contractor. Over the last 5

years, we have performed in excess of $300 million worth of designbuild and also renovation projects as both prime contractor and

also subcontractor for numerous Federal clients, such as USDA,

DOD and Homeland Security.

All of the projects that we have done were completed on time and

under budget. Bay has a 99.9 on-time project completion rate, and

has never been assessed LDs for late delivery by any Federal, State

or local agency or any other private customer, for that matter. Bay

Electric also has a 99.97 percent budget completion rate, on budget

or below budget. Also on safety, Bay has an EMR rate of 0.91, and

after our audit this year, we expect that rate is going to go down

again. So we are a very safe contractor.

As you will find a listing of the projects we receive, there are a

number of projects, and just in the interest of time, I am going to

move on. But we have done projects as large as $31 million, we

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have done for Braddock, we have done work at Belvoir, just about

every State from Maine to Florida, and certainly continue to do so.

The issue I want to discuss with the committee is the executive

order 13502, which encourages project labor agreements on Federal

projects over $25 million, and effectively discriminates against over

85 percent of the construction industry. Unions account for less

than 6 percent of the private work force in Virginia, and over 90

percent of the work, both public and private, is performed by nonunion firms, such as Bay Electric Co. No merit shop contractor

would sign a PLA because, among other things, the non-union

workers would have wages taken out for health plans, welfare, retirement and also other deductions to which the worker will never

see a benefit of, and will not be vested in these union plans.

Union-only agreements drive up costs by limiting competition

and in Virginia, less than 5 percent of the construction firms are

union. These agreements have a chilling effect on the number of

firms which would undertake such bids. Unions also have a huge

issue with unfunded pension liabilities, and merit shop contractors

would be crazy to take on such massive liabilities with no benefits

to the workers.

PLAs also drive up costs by enforcing inefficient work rules and

limiting production, hurting morale and in most cases, add numerous man-hours to projects and drive up costs, both direct and indirect. With the tenuous state of our economy nationally and the difficult times we are in with real unemployment in construction,

nearing over 23 percent, can any Government entity afford to

waste precious funds? As a former union member, it troubles me

that unions would want a special deal just for them when fair competition is a cornerstone of our total economic system.

The proponents of PLAs will say that labor work stoppages are

a benefit to using them. The truth is that there has never been a

man-hour lost to strikes, picketing, work stoppages, slowdowns or

other disruptive activity on the non-union merit side, just the

union side. As a former union member, I have witnessed first-hand

the tactics used by unions to slow down work, drag out projects for

the union benefit. PLA proponents also will say that they help to

promote fair wages and higher pay. This is also a farce. We at Bay

Electric pay on average more than unions in wages, benefits and

offer paid vacations, holiday pay, health insurance and 401(k)

plans.

I am going to close, because I have a little bit more to go in between there. But in closing, most of the folks that are actually affected by the PLAs are ethnic minorities who do not belong to a

union and not have no hope of being employed by union shops as

shown in the attached Washington National Stadium studies.

Union minority membership rates are horrible. And the union leadership does not represent minorities in any fashion, except for a

few token positions at union halls.

PLAs on the surface are racist and should not be used or allowed

to be adopted in Federal projects. I thank you, Mr. Chairman.

[The prepared statement of Mr. Biagas follows:]

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Mr. JORDAN. Thank you, Mr. Biagas.

Mr. Baskin.

STATEMENT OF MAURICE BASKIN

Mr. BASKIN. Mr. Chairman and members of the subcommittee,

[remarks off microphone] of Venable. I appear before you today on

behalf of the Associated Builders and Contractors. It is a national

construction industry trade association, representing 23,000 merit

shop contractors employing 2 million workers.

ABC’s members believe that construction contracts should be

awarded to the lowest responsible bidder through full and open

competition based on merit, with no discrimination based on labor

affiliation. These same principles have been written into Federal

law. The Competition in Contracting Act requires Federal agencies

to award procurement contracts on the basis of full and open competition to the maximum extent practicable. Those are direct

quotes from the law.

Unfortunately, the administration’s efforts to impose project

labor agreements as part of the Federal procurement process

threaten to violate the Competition Act at the expense of taxpayers. As we have already heard, according to official Government

statistics, 87 percent of construction workers currently choose not

to belong to any labor unions. I must respond to something said a

couple of speakers ago, that exclusion of non-union contractors is

a mere social value, I would think that inclusion of 87 percent of

the construction work force is not only a social value and a construction value, it is a fundamental right in our country.

Government-mandated PLAs result in the award of Federal construction contracts primarily to the much smaller group of unionized contractors and their union employees. This is special interest

favoritism. It is not full and open competition. It is not what the

law requires.

That is why in 2001, President Bush issued an executive order,

which was upheld in the courts, that prohibited the Federal Government from requiring contractors to enter into project labor

agreements. During the 8 years of that executive order, there were

no significant labor-related problems on any Federal contracts. The

buildings did not fall down. Indeed, it was on project labor agreements, some of the most notorious ones, such as the Big Dig, the

Iowa Events Center, Miller Park, all project labor agreements that

were Government-mandated, those did fall down causing fatalities

and untold damage.

Open competition on the Federal sector under the Bush Executive order obviously worked. Nevertheless, with no evidence of any

labor-related problems on Federal construction projects, President

Obama signed his own executive order in February 2009 which revoked the Bush order that was working, and instead encouraged

Federal agencies to mandate PLAs on Federal construction projects

exceeding $25 million in costs.

But the President does not have the authority to override the

Competition Act’s requirement of full and open competition. There

has been no factual justification for the change in policy offered up

by any of the Government agencies, including those who are in attendance today. We have heard a couple of rationales for it, that

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it is to avoid strikes. Well, there were no strikes going on on Federal projects. To gain access to a larger pool of labor? Tell us how

that is possible when you exclude 87 percent of the work force, just

to name a few of the false rationales that have been offered up.

That is why ABC members have filed a series of bid protests

with the Government Accountability Office to stop unjustified PLA

mandates from being imposed by Federal agencies. Through these

protests, we have forced a number of agencies to withdraw those

mandates. Yet, we continue to see threatened PLA requirements

showing up on agency procurement around the country, as was

confirmed again in Mr. Peck’s testimony today, that we are going

to hear, but that we saw on the subcommittee’s Web site.

We intend to file a protest against the GSA’s new preference policy in favor of PLAs on an upcoming project. That policy has already resulted in a multi-million dollar increase in the cost of construction on a project awarded here in the District of Columbia

that Mr. Ennis’ company was excluded from. And GSA should be

required to make public the price comparisons between PLA and

non-PLA bids on each of the projects listed in Mr. Peck’s testimony.

Many independent studies, scholarly ones, I might add, have

found that PLAs increase the cost of construction by as much as

18 percent. In fact, studies commissioned by the Federal Government have found that. Studies commissioned by State governments

have found cost increases from PLAs. The Government mandates

of PLAs will therefore result in reduced job creation within the construction industry at a time when we have this staggering 22 percent unemployment figure.

They hurt small businesses, particularly subcontractors. They

discriminate against minorities and women-owned businesses,

which are overwhelmingly non-union. They do nothing to increase

or stabilize construction employee wages, which I also heard referred to today, because the Davis-Bacon Act already protects construction industry wages at a very high rate.

I will refer the rest of my remarks, given I have run out of time,

that is in my written testimony. But I appreciate the opportunity

to speak to you today.

[The prepared statement of Mr. Baskin follows:]

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Mr. JORDAN. Thank you, Mr. Baskin.

We appreciate all our witnesses’ testimony.

Mr. Biagas, you just want to compete, right, on a fair—what did

you say, you had 13 siblings?

Mr. BIAGAS. Yes, sir. I learned a young age, being the youngest,

that I needed to compete.

Mr. JORDAN. The youngest of 14, so you definitely know how to

compete. You just want to compete.

Now, Mr. Belman and Mr. Baskin, Dr. Belman had talked about

PLAs and the advantage there. But you don’t have a problem with

your workers striking, is that right?

Mr. BIAGAS. No, sir.

Mr. JORDAN. No work stoppages, no picketing?

Mr. BIAGAS. Never have.

Mr. JORDAN. Mr. Ennis, have you ever had that problem?

Mr. ENNIS. No, sir.

Mr. JORDAN. No. So the idea that is in the PLA agreement is not

really a point. You have training programs and apprentice programs for your employees, I assume?

Mr. BIAGAS. Yes, sir, full-fledged. Thirty apprentices are trained

in our 4-year program, 788 hours in the classroom, over 8,000 on

the job training.

Mr. JORDAN. Recognized and given a thumbs-up by the regulatory agency?

Mr. BIAGAS. Yes, sir.

Mr. JORDAN. Imagine that. Mr. Ennis, is that the same with you?

Mr. ENNIS. Yes, sir, full 4-year apprenticeship, and it is registered by the State of Virginia.

Mr. JORDAN. Yes. The way we do it in Ohio is we work closely

with our vocational schools. It is a big element in our joint vocational schools and programs. I have been out to see it. I have actually spoken at many of their banquets. They do a great job. And

these kids, they all get placed. They do a great job for several of

the companies that I have the privilege of representing in Ohio. So

we appreciate that.

I want to get right to the agreement and I want to try to yield

some time, we have some Members who have really been on this

issue, like Mr. Guinta from New Hampshire, I want to give some

time to him. But let me just ask you this. I want to understand

how this works.

We under GSA, and they are going to be on the next panel, they

give a kind of a 10 percent bonus criteria to PLA agreements. So

is it this simple, if you do a bid, Mr. Ennis, on a public project, and

let’s say your bid is $91, and the union shop with the PLA agreement comes in at $100, thereby they get that 10 percent bonus, so

they are really at $90, do they get the bid on that basis alone, or

do we not know that?

Mr. ENNIS. We do not know that.

Mr. JORDAN. And this is to your point, Mr. Baskin, we want to

know why exactly.

Mr. BASKIN. Yes. It is actually worse than that, because they say

it is not based on price. One price could be lower than the other.

The non-union price could be lower, but they are just going to give

this extra bump on the technical phase of the PLA.

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Mr. JORDAN. That is my point. Mr. Ennis’ bid comes in at $91, let’s say their bid comes in at $100, but it gets some 10 percent

bonus, we don’t know how that is applied, so they could apply it

just on the dollars and say 10 percent less, well, they are actually

$90, so now we are going to award the bid based on that. It is actually costing the taxpayers more money then, because it is still

$100?

Mr. BASKIN. Correct.

Mr. JORDAN. I wanted to make sure I understand.

I want to yield time to first the chairman of the committee, then

we have 21⁄2 minutes, if we have time, I want to get Mr. Guinta

rolling too, because he had the amendment.

Chairman ISSA. Thank you, Mr. Chairman. I am not going to

take any time, except to thank you for looking into what is undoubtedly costing the American taxpayers an opportunity to have

better roads, better bridges, or at least more of them. I have nothing else at this time, but I truly appreciate your attention and yield

back.

Mr. JORDAN. I am going to yield 2 minutes and 15 seconds to the

gentleman from New Hampshire, who has been working on this

issue very hard.

Mr. GUINTA. Thank you, Mr. Chairman.

In full disclosure, I support and proposed an amendment to ban

PLAs. I want the witnesses to know that before we start this commentary. I personally feel that PLAs, based on the estimates that

I have seen, in 2008 alone, have cost taxpayers somewhere around

$2.6 billion, to $2.8 billion.

In an era when we have to find and do more with less, and in

an era where we have a budget crisis, and I believe it is a crisis,

where we have a $1.6 trillion deficit, and a $14 trillion debt, I

think it is incumbent upon us, and the country expects it is incumbent upon us to really navigate through these issues and find a

better way to invest in our country and improve on our country. I

find it disheartening that we would, as a PLA does, give greater

access to one group and not another.

That is really the substance of the frustration I have with this

issue. I wouldn’t say that asking for equality is anti-union or prosmall business. I think it is an equity and fairness issue. I have

heard from every small business owner who is non-union that they

would like to do nothing but compete. And I heard you, Mr. Biagas,

say that.

I think that would be better for the market, better for the

project, better for the consumer, better for the taxpayer. And I

would argue, better for both the union and non-union shop.

So with that in mind, I can certainly stay for some questioning

later. I would like to get to the crux of why there is this assumption that a union must have an advantage over a non-union shop.

That is a question that I think deserves to be answered, and the

American public deserves recognition and understanding of that

and its correlation to the costs of PLAs in this country.

I yield back. Thank you, sir.

Mr. JORDAN. I thank the gentleman.

We now recognize the distinguished ranking member from Ohio,

Mr. Kucinich.

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

One of the witnesses claimed that PLAs were racist. That is a

pretty serious charge, so I asked staff to look at Federal cases to

see if there are any cases that have been filed on this question that

relates to whether or not people’s 14th Amendment protections are

being violated. And I didn’t intend to bring this up, but I just asked

staff to come back with it. What they came back with was a case

out of the U.S. Court of Appeals for the Ninth District that, where

the defendants included the IBEW Local 441, the Construction

Trades Council of Los Angeles and Orange Counties, Building and

Construction Trade Council.

And the findings, substantive and procedural due process claims,

here is what the court said, this is the court of appeals: ‘‘The plaintiffs contend that the PSA,’’ they call them PSAs there, ‘‘violated

their rights to substantive and procedural due process by depriving

them of liberty and property interests protected by the 14th

Amendment.’’ And the court says ‘‘We conclude that plaintiffs cannot make this threshold showing.’’

So I just wanted to submit this for the record.

Mr. JORDAN. Without objection.

[The information referred to follows:]

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Mr. KUCINICH. When you say racist, you had better be able to

back it up.

Also, Mr. Chairman, I would like a yes or no answer from Dr.

Belman. Did you say that these project labor agreements cover

both public and private jobs? Yes or no.

Mr. BELMAN. Yes.

Mr. KUCINICH. And yes or no, Ms. Figg, did you say, when you

were talking about that bridge project in Minnesota, was that done

by a project, was there a project labor agreement involved in that

bridge project, yes or no?

Ms. FIGG. Yes.

Mr. KUCINICH. OK, thank you.

Now, Dr. Belman, you have heard the testimony of several individuals and associations from the construction industry claiming

that Federal agencies’ use of PLAs will negatively impact competition and drive up construction costs. As you know, Executive Order

13502 focuses on large-scale construction projects where the total

cost to the Federal Government is $25 million or more and which

are generally more complex and of longer duration. Can you tell us

how competition among bidders for these types of large construction projects impact costs?

Mr. BELMAN. Yes. There actually is very limited careful research

on this. But what is clear, in some work done by a colleague of

mine, Professor Peter Phillips of Utah, suggests that on large

projects, having three to four bidders is more than enough to get

close to minimum cost, because the gains from winning a bid are

so large that employer bidders want to make sure that they get it.

Smaller projects, one is more willing to roll the dice, kind of a

Las Vegas approach to construction contracting, because if you can

get, if you put in a high bid but you still win, you make a lot of

money. So the bottom line is it is not clear that you need to get

huge numbers of contractors on a job for the public to get the low

price and the low bid on it.

Mr. KUCINICH. Have you found that PLAs have a negative impact on competition for contracts?

Mr. BELMAN. I haven’t researched that question.

Mr. KUCINICH. In his written testimony, Mr. Ennis expressed

concern regarding the Government’s insistence that all Government contracts of a certain size must use union labor, despite

shrinking levels of union membership. Dr. Belman, based on your

research and familiarity with various project labor agreements, do

PLAs prevent non-union contractors from being included in large

Federal construction projects?

Mr. BELMAN. It depends on the PLA. I know, I am aware of Federal PLAs that are fairly open. The most recent ones——

Mr. KUCINICH. So some are open? They do not prevent them?

Mr. BELMAN. No, they do not prevent them, nor do they impose

undue burdens on them.

Mr. KUCINICH. Some of the other witnesses, Dr. Belman, have

claimed that requiring the use of PLAs for Federal construction

projects increases the costs to taxpayers. In fact, some reports have

supported this claim that PLAs increase the cost of construction.

Your research, however, suggests that these concerns are overstated. What about this discrepancy?

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Mr. BELMAN. There is considerable anecdotal evidence. You can

find projects where PLAs were more expensive. You can find examples, case studies of projects where PLAs were less expensive. In

terms of careful research, what I would say is there are two peer

reviewed studies, one by Beacon Hill, that suggests that PLAs increased project costs in Massachusetts schools by about 12 percent,

14 percent. My own work in industrial relations, which takes a

much closer look at this, and allows for the differences, you don’t

use PLAs on a plain vanilla school, you use them on a more——

Mr. KUCINICH. OK, I——

Mr. BELMAN. No cost.

Mr. KUCINICH. Final question. You don’t contend that PLAs

should be used on every single large scale construction project, is

that correct?

Mr. BELMAN. No.

Mr. KUCINICH. OK, no, meaning what?

Mr. BELMAN. No means right project, right PLA. Then they make

sense to use.

Mr. JORDAN. I Thank the gentleman.

I now yield to the vice chairman, Ms. Buerkle.

Ms. BUERKLE. Thank you, Mr. Chairman. And thank you to all

of our panelists for being here today.

This Congress has made the economy and job creation our No.

1 priority, as this Nation has faced 20 plus months of unemployment at 9 percent or above. So to you all in the panel who are the

job creators, thank you, and we look forward to working with you

to create an environment where you can create jobs and you can

be successful, and the Government isn’t in the way of your progress

and your success. So thanks for being here today.

My first question is to Mr. Biagas. And I might say to you, my

chief of staff is the oldest of 14. So you two have a lot in common,

or not so.

I want to give you the opportunity, because the allegation in

what you stated in your statement is a serious one. Maybe you

could cite for us some specific examples.

Mr. BIAGAS. Yes, ma’am. In the attachment, the handout I had,

there was a study that was done on the Washington National Stadium, which had a PLA it also had goals, and also hard goals, for

hiring of inner city and minorities that actually reside in the District of Columbia. Due to the way the work actually went, that was

never fulfilled. I would further say, if you would look into that

study, you would certainly find that there was an obvious attempt

not to hire these inner city minorities, which the intent, or the bill

of goods that was sold with the PLA was they were going to hire

a bunch of inner city youth and/or folks and put them through the

apprenticeship to let them become trades workers.

It did not happen, nor does it ever happen on PLAs. It is all

smoke and mirrors.

Ms. BUERKLE. Thank you very much.

Mr. BASKIN. May I supplement that response? It goes to your

question as well as to Congressman Kucinich. In Chicago, African

American and female construction workers were awarded $1.3 million under a consent decree, arising out of a PLA project asking for

cases of racism. An Alameda County jury awarded a black conVerDate 11-MAY-2000 13:53 Aug 11, 2011 Jkt 000000 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\67566.TXT KATIE PsN: KATIE
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struction worker $490,000 for racial harassment on the PLA San

Francisco airport project.

The Philadelphia City Council found that minority standards

were not being met under PLAs in that city. The mayor of Buffalo,

New York made similar criticisms, and the Washington National

Stadium, already referenced to. These and other specific instances

of racism and racist problems and minorities and women under

PLAs are set forth in our reports on the poor performance of PLAs.

A new edition is coming out, and I would be happy to provide that

to the committee.

Ms. BUERKLE. Thank you very much.

My next question is to Ms. Figg. Because when you were asked

the yes or no question regarding the PLA project for the bridge, the

I–35 bridge, I had the feeling you wanted to explain that. But my

understanding is you are here to talk to us about regulations. And

that is what this subcommittee is about. So perhaps you could just

give us, first of all, it is encouraging to know that a project of that

magnitude could be accomplished in that short a period of time.

Had that not been on the fast track, can you give us some estimate of the cost and what it would have cost with the standard operating procedure, as well as the length of time?

Ms. FIGG. There is some information that would suggest that a

project like that would take anywhere from 10 to 15 years to bring

to actual construction. The processes are overlapping in that both

State and Federal Governments require the same things. But there

is no working together on those. So you have to go through these

review processes.

Private industry knows what the regulations are. So they put

forth a proposal that accomplishes meeting those. It is the review

process that takes so long to just confirm that in fact what you put

forward was meeting the criteria. So we see many times where you

submit information for an environmental process, for instance, and

it goes on for a number of years. But the project doesn’t change

from the day you submitted the original proposal.

So it is just, it is a time waster. And there are indications that

there is at least a 10 percent additional cost and more. Some have

indicated, in our Construction Industry Round Table sentiment indexes up to 50 percent of additional cost due to these overlapping

regulations.

Ms. BUERKLE. Thank you.

Mr. Ennis, just briefly, you mentioned in your opening statement

that you bid on three jobs and you did not successfully get any of

those jobs. Can you just tell us if you have received any feedback

as to why you didn’t get the contract?

Mr. ENNIS. Because they were awarded as PLAs. Two of the

three were actually, one was awarded as a PLA and a subsequent

change order was issued, a couple million dollars, to make it PLA.

We were asked on one of the projects to sign a PLA. The third

project, from what I understand, they never could come to an

agreement on a PLA. I believe they withdrew it.

All three of these proposals are technical proposals, of which any

of that information was never available to us. But with the contractors that we bid with, we were told we were out because we would

not sign a PLA.

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Ms. BUERKLE. Thank you. I am out of time, but just quickly, was

the shop that it was awarded to a union shop or a non-union shop?

Mr. ENNIS. To a union shop.

Ms. BUERKLE. Thank you very much. Thanks to all the panelists.

Ms. JORDAN. I thank the gentlelady.

Mr. Cooper.

Mr. COOPER. Thank you, Mr. Chairman. I thank the witnesses.

Obviously a lot of scar tissue is built up on this issue. It seems

like under the George H.W. Bush administration, project labor

agreements were banned. Then under Clinton they were encouraged, then under George W. Bush, they were banned again. Now

under Obama they are encouraged. So we have gone back and

forth, back and forth.

And I know Mr. Baskin is a professional at figuring this stuff

out. But it strikes me as odd that in a couple of panels of sworn

witnesses here, we have such a completely different understanding

of the facts. It is almost hard to imagine we could have such a different impression. Because on the face of the Executive order, it

says that Executive agencies may require these things. It doesn’t

say they have to.

And then in the next panel, Mr. Gordon is going to testify, I believe, I don’t want to jump the gun here, that he says on page 5,

‘‘Any contractor may compete for and win a Federal contract requiring a project labor agreement, whether or not the contractor’s

employees are represented by a labor union.’’ And he goes on to describe a lot of other flexible provisions that these may contain, because these have to be negotiated.

So it is kind of hard for me to understand who is telling the

truth here. Here, we hear from many panelists gloom and doom,

from the other side we hear flexibility.

I don’t have a dog in this fight. Who am I supposed to believe?

It just depends on previous scar tissue or previous experience. As

I say, you are all sworn witnesses. How do you reconcile those conflicts? Mr. Baskin, I will give you an opportunity, since you are a

known professional in this area.

Mr. BASKIN. I think we have some agreement on this panel,

which is that Dr. Belman has conceded that PLAs generally do exclude the non-union contractors. It is a totally false premise to say,

well, they can bid, they just can’t perform the work unless they

agree to become——

Mr. COOPER. Well, sir, Dr. Belman is shaking his head. So you

may have spoken, let Dr. Belman speak for himself.

Mr. BASKIN. And as well his previous testimony. But you asked

about the Executive orders. President Bush’s was the first Executive order to clearly prohibit but also stay neutral on the issue.

Mr. COOPER. Which President Bush?

Mr. BASKIN. President Bush, George W. Bush. President Clinton

did not issue an Executive order.

Mr. COOPER. His father had also prohibited project labor agreements, according to Dr. Belman.

Mr. BASKIN. At the very end of his administration, when there

was not time to implement it.

Mr. COOPER. But he had still done that, his father had done it.

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Mr. BASKIN. And then President Clinton came in with a, did not

issue an Executive order, merely a memorandum.

I guess the point about the current Executive order, let’s talk

about the present day. It says they shall encourage agencies to require. And under what right should any agency be able to require

a restricted bid specification, which is what a PLA is? That reduces

competition. That is really what this is all about. All we are asking

for is full and open competition in a meaningful way without the

restricted bid specifications.

Mr. COOPER. I am sure you would be interested in litigating that,

if there is a fee involved.

Mr. BASKIN. We already have been. We already have it. It is regrettable that money has to be spent on litigating something that

was already in the Competition and Contracting Act. But we have

brought four protests that have all been successful, I think, because the agencies have Recognized that there is an over-reach involved here.

Mr. COOPER. But how about this direct statement that any contractor may enter into the PLA whether or not a contractor’s employees are represented by a labor union?

Mr. BASKIN. And because of the discriminatory aspects of telling,

what are you doing there, you are telling a non-union contractor to

completely revamp his way of doing business, that which has made

him successful and would make the Government successful if they

used his services. Certainly, to accept union representation for employees who don’t want it.

Mr. COOPER. Dr. Belman.

Mr. BELMAN. One, you can write PLAs many different ways, to

be private sector PLAs often do require that a contractor be a permanent signatory to a local agreement. I haven’t done a thorough

enough study of public PLAs to know where they stand. But they

are certainly moving toward greater openness to non-union contractors, to drag-along clauses and to dealing with benefit issues.

But I do have to say is, that while open competition is important,

the point of the open competition is to provide the public with

value. And there are projects, and that public value can be increased through the use of project labor agreements. I am not sure

that it is wise to come up with a policy that would prevent the public from realizing that value.

Mr. COOPER. My time is expiring. It seems to me that a good

lawyer could write a good PLA.

Mr. BELMAN. Many have.

Mr. JORDAN. I Thank the gentleman.

The gentleman from New Hampshire, Mr. Guinta, is recognized.

Mr. GUINTA. Thank you, Mr. Chairman.

I think the point that I would make is, why does a good lawyer

have to write a good PLA? Mr. Baskin, if your preference would be,

I assume, not to have to engage in writing a PLA, correct?

Mr. BASKIN. Yes, but it is not just me. We are talking thousands

of contractors around the country who have voiced their opposition

to being forced to change their way of doing business and to force

unions on employees who work for them who don’t want it. Have

a vote, if that is what the unions want. Why are they being subjected to this? It is about them, it is not about me.

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Mr. GUINTA. And second, if this Executive order was not in place,

you or any other lawyer wouldn’t have to sue for a fee, correct?

Mr. BASKIN. Absolutely right. Correct.

Mr. GUINTA. Now, I think we all know what the definition of require is. I just want to read Section 3 of the Executive Order

13502. And if I am not reading this correctly, I would like someone

to correct me, please.

It states, ‘‘In awarding any contract in connection with a largescale construction project, or obligating funds pursuant to such a

contract, executive agencies may, on a project by project basis, require the use of a project labor agreement by a contractor.’’

So what it says to me is a very clear suggestion that you should

require project labor agreements. Now, technically, under the law,

the word may covers the fact that you don’t have to. But what I

would like to know is, how many of these projects do not require

a project labor agreement? Does anyone, Dr. Belman, would you

know the answer to that question?

Mr. BELMAN. I haven’t studied that in terms of Federal contracts

recently.

Mr. GUINTA. You had testified earlier, and I would like to hear

about this a little bit more, I apologize, I had to step out of the

room. But you talked about value. Can you just talk to me a little

bit more about the social value that you are referring to?

Mr. BELMAN. OK, well, let me give you an example. On the west

coast, there are a number of project labor agreements that contain

very extensive provisions for moving individuals in low income

areas or from minority groups through pre-apprenticeship training

programs into apprenticeship programs and then into full journeyman status.

Now, having, and there are extensive systems of community

overview, there are extensive joint panels that make sure that

these are effective and every review I have read suggests that they

are extremely effective in moving particularly African Americans

and Hispanics into well-paid, highly trained jobs where they are

very productive members of the work force. So that is, I interpret

that as a positive social value that can be generated by PLAs, and

isn’t generated in their absence.

Mr. GUINTA. So am I to assume based on that described value

that non-union companies do not engage in apprenticeships with

minorities?

Mr. BELMAN. What I would tell you is that from my own research

and that of Johannes Beldens, and a number of others, is that, and

also you can read in the engineering news record and from the construction users round table, is that there is a crisis in construction

training, that there is under-investment in construction training,

and that is largely on the non-union side.

Can we find good non-union construction companies? You bet.

Are there non-union construction companies that will go out there

and compete for PLA work, get the contracts and do well? You bet.

But on average, non-union companies are much more dependent on

public training contributions and provide much less training than

do union construction firms.

Mr. GUINTA. The testimony that I heard from Mr. Ennis and Mr.

Biagas would refute that last statement you made.

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Mr. BELMAN. No, they don’t. They simply say, as I said, there are

some great companies, non-union companies out there that do very

well. But the typical non-union company does much less training

and invests much less in training than a union company. Just like

contrary to some of the things that are said here, there is, African

Americans make up a smaller percentage of the non-union work

force today than the do the union work force. So if you hire a union

company, you are more likely to have an African American worker

on the job than if you hire a non-union company.

Mr. GUINTA. So based on that argument, we should apply this

standard to every industry in the country?

Mr. BELMAN. Which standard?

Mr. GUINTA. The requirement that unions participate in any industry, not just the construction industry. Because unions, according to what you are saying, spend more time training. Yet the rest

of the free market society would suggest otherwise.

Mr. BELMAN. There is, you can look at Peter Capelli’s work on

this. There is a strong suggestion that the U.S. spends considerably

less on employee training than do most other industrialized countries. That is a reason why our economy is not functioning as well

as we would like.

Whether unions are the solution to this, I have to be neutral on.

But I do know that in construction, unions and their signatory employers, I should make that point, these are through joint labor

management committees, spend far more on training through private means than does the non-union sector. And that in many

times, the non-union sector is dependent on their, for their most

skilled workers, on people who have left the union sector, people

like, to some degree, like Mr. Biagas.

Mr. GUINTA. Thank you, Mr. Chairman.

Mr. JORDAN. Thank you.

I now recognize the gentlelady, Ms. Speier.

Ms. SPEIER. Thank you, Mr. Chairman. And thank you for holding this hearing.

Let me first request unanimous consent that two statements be

submitted for the record, by Tammy Miser and Kathryn Rilett.

Mr. JORDAN. Without objection.

[The information referred to follows:]

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Ms. SPEIER. Thank you.

Just a couple of points. I think this is just a fascinating discussion, because as Mr. Cooper had said, it seems like we are talking

over each other and not necessarily getting much clarity. The

project labor agreement that Toyota has embraced is one that is

worth spelling out a little bit. And Jeff Caldwell said, as the former

head of the construction for Toyota North America, ‘‘I have numerous real world experiences with PLAs, and I can say without any

equivocation that they are valuable tools for any entity seeking an

economical and efficient construction process. Toyota has constructed numerous automobile, truck and engine production facilities in the United States, each of these construction projects was

completed or is being completed under a project labor agreement

that ensures that our facilities were built with a steady supply of

high-skilled and productive workers.’’

In every instance, and I underscore this, this process worked

beautifully. And the proof is in the results. Toyota North America

construction costs are roughly one-third less than other major automobile manufacturers who eschew the use of project labor agreements.

Now, a big point is being made that somehow the Government,

under the Executive order by President Obama, is forcing these

PLAs by various Federal agencies. Mr. Baskin has made that point

over and over again.

But let me point out, in an article that just appeared, nine workers were detained in a raid at a VA hospital job site in Florida.

These nine people are in the United States illegally, were found to

be working on the construction of a new Veterans Administration

hospital in Orlando, Florida. It is estimated costs of over $600 million that the VA project represents. VA has strongly opposed doing

PLAs.

So on the one hand, we have some Federal agencies that are not

interested in doing PLAs. We have an example where one was

clearly not using a PLA and they have nine workers who have been

detained because they are illegal and working in this country. I am

sure they are jobs that American workers would love to have.

Let me just speak a little bit about Tammy Miser, who is the sister of a man that was burned to death at a job site in this country.

It was a company that did not follow the U.S. Chemical Safety and

Hazardous Investigation Board’s recommendations relative to dust

collectors. And the CSB concluded that had the company adhered

to the National Fire Protection Association standard for combustible metal dust, the explosion would have been minimized or prevented altogether.

I guess my question is to you, Dr. Belman, do you think that we

have a productive discussion today about the impact of OSHA regulations without involving stories like the worker who lost his life?

Mr. BELMAN. Any economist would say, if you are going to take

a look at regulations, you need to look at the benefits as well as

the cost. One could of course look at purely the costs of building

a containment vessel on a nuclear reactor and conclude they are a

bad idea. But every now and then their benefits are very great. So

you need to look at the benefits of regulation, fewer lives lost, and

so on, as well as their costs.

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Ms. SPEIER. Thank you. I think my time has expired.

Mr. JORDAN. I thank the gentlelady.

Mr. Belman, the OSHA deciding to back off the noise regulation

that they were initially talking about relative to machines and

manufacturing facilities, do you think that was a good move? Do

you think they heard that in this situation that what perceived

benefit was not there, and that it was a cost issue?

Mr. BELMAN. Although as an academic I believe I know all

things, I don’t have enough information to answer that question

yes or no.

Mr. JORDAN. I appreciate it.

I recognize the gentleman from Iowa, Mr. Braley.

Mr. BRALEY. Thank you, Mr. Chairman.

Let me begin by stating that I strongly support project labor

agreements. Apparently, the bipartisan majority of the House of

Representatives does as well. Because recently, during the debate

on the job-killing spending bill that we passed, my colleagues on

the other side of the aisle attempted to end all PLAs on public

constructionsites across the country and that amendment failed on

a tie vote in the House. If you do the math, you realize that would

not have passed or would have not been prevented without Republican support in opposition to that amendment.

PLAs play an important role for economic development in Iowa

and across the country. They provide good-paying jobs for hardworking Americans. And now they are under attack, not just here,

but also in my State.

The truth is that PLAs have proven to be very cost-effective. In

the 1990’s, in Dubuque, Iowa, the local building trades council negotiated private sector PLAs for nine sites. Four of these sites were

for the Dupaco Community Credit Union. These projects were completed ahead of schedule and under budget. One of them is shown

up on the screen.

The President and CEO of Dupaco stated that ‘‘building construction exceeded our expectation because it was finished 30 days

ahead of schedule and 10 percent under budget.’’ I have a list here

of 280 PLA projects in the Quad Cities that were completed either

on time or ahead of schedule. Mr. Chairman, I ask unanimous consent to enter them into the record.

Mr. JORDAN. Without objection.

[The information referred to follows:]

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Mr. BRALEY. These projects include the Putnam Museum in Davenport, the St. Ambrose University science library, the Palmer

Chiropractic College. And just recently, our Governor, Terry

Branstead, issued an executive order banning PLAs on public

works projects in Iowa, including an existing PLA in Cedar Rapids

for the Cedar Rapids Convention Center, a city that was devastated by flooding 2 years ago when its entire downtown was underwater.

Ironically, Mr. Chairman, the No. 1 supporter for this PLA

project moving forward is the current mayor of Cedar Rapids, Ron

Corbett, who used to be the Republican leader of our State Senate.

After the executive order was issued, Mayor Corbett asked the Governor to consider using $15 million from a State jobs fund to finish

the project. But our Governor refused the Mayor’s request, and as

a result, this enormously important economic development project

is now on hold. Putting a work stoppage on this project is harmful

to Cedar Rapids’ community and to Iowa. If PLAs are banned in

Congress, what is happening in Cedar Rapids will happen all over

the country.

That is why I urge my colleagues to continue opposing any efforts to end PLA funding.

And now I want to talk about that PLA on the bridge in Minneapolis, which I happen to have in my hand. One thing we know

is that this project finished early and under budget. That is correct,

isn’t it, Ms. Figg? It was completed under a PLA in only 11 months

and for less than the $250 million earmarked by Congress. And the

Transportation Secretary, Mary Peters, said it should not take a

tragedy to build a bridge this fast in America.

And I should point out, this PLA was entered into when George

W. Bush was President. Isn’t that correct?

[No audible response.]

Mr. BRALEY. So then Mr. Baskin, you brought up something I

want to talk about, and you went off script in your opening, so I

wasn’t prepared for this, but you mentioned the Iowa Events Center, something I happen to know a great deal about. You said,

when referring to these building projects, those did fall down, causing fatalities and untold damages. Do you remember saying that?

Mr. BASKIN. Yes.

Mr. BRALEY. In fact, the Iowa Events Center did not fall down,

did it?

Mr. BASKIN. Only a large crane, which killed a construction

worker.

Mr. BRALEY. The Events Center did not fall down, did it?

Mr. BASKIN. Part of the construction did, yes.

Mr. BRALEY. Well, semantics. Certainly the building itself never

fell down. And tragically, one worker, a 65-year old steel erector,

was killed. And we know that on massive construction projects of

this size, regrettably, fatalities are not uncommon, whether or not

they are union contractors. Isn’t that true?

Mr. BASKIN. Yes, we will agree that the safety level between

union and non-union is roughly the same.

Mr. BRALEY. And so one of the things that you talk about is the

challenges that your group has filed to these PLAs. In fact, you

filed a challenge in Iowa on that Events Center project, and the

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Iowa Supreme Court in a six to one decision upheld the right of

that PLA to move forward, even though my State is a right to work

State, isn’t that true?

Mr. BASKIN. Well, I didn’t, the local chapter did.

Mr. BRALEY. The local chapter of the group you are here testifying on behalf of today filed that suit. It went all the way to our

Supreme Court and they upheld this PLA.

Mr. BASKIN. Right, and as a result, there were cost overruns,

construction defects, nearly 50 construction accidents and it was

not a model project. There have been papers written on just that

project and the problems that happened with it.

Mr. BRALEY. And is it your testimony today that on massive construction projects built by non-union contractors, those problems

you identified have never occurred.

Mr. BASKIN. No, but the risks——

[Simultaneous conversations.]

Mr. BRALEY. Mr. Chairman, my time is expired, I yield back.

Mr. BASKIN. If I might respond, the burden is on those who are

seeking to discriminate. And the justification has been that PLAs

are better somehow, and that PLAs don’t have safety problems and

that they don’t have delays and all the things we just heard. And

that is simply not the case. They do have these problems and then

some.

And so then what is the justification for discrimination, which

they unquestionably have? That is our only point. And we are only

talking about Government-mandated PLAs. We are not concerned

here today with the private. What the private sector wants to do

with their own money is for them to decide. Sometimes it is under

coercion. We are not arguing about that.

Mr. BRALEY. So is it your testimony today that the ABC is not

opposed to private PLAs?

Mr. BASKIN. We are not, we stand for the proposition that private employers can decide how to spend their own money.

Mr. BRALEY. All right, thank you.

Mr. JORDAN. I quickly recognize the ranking member, and then

I want to get to the ranking member of the full committee.

Mr. KUCINICH. For unanimous consent, to submit to the record,

from the Campaign for Quality Construction, testimony that says

PLA do not discriminate against non-union contractors and workers.

Mr. JORDAN. Without objection it will be entered.

[The information referred to follows:]

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Mr. JORDAN. But we come back to this point that Mr. Cooper

raises, too. When the President of the United States tells the agencies they may require, that is not just any old citizen telling how

an agency is going to make a decision. So this idea that somehow

that is neutral I just don’t think people buy that concept.

The ranking member of the full committee, the gentleman from

Maryland.

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

Mr. Belman, let me ask you this. In my district, we have some

situations where I would guarantee you that African American

male unemployment is like 65 percent. And I assume that a PLA

would be helpful there. Do you think?

Mr. BELMAN. A properly designed PLA that was sufficiently large

could be used to move disadvantaged men and women through various stages of training to much better jobs than they currently fill.

Mr. CUMMINGS. And what happens so often in these neighborhoods is that folk come in and they do work right in front of their

houses, and they’re sitting on the sidelines, not having an opportunity to work. They come from everywhere. I see it all the time.

And so a PLA, I take it, you could have provisions in there that

would help with regard to training, so that they would be given an

opportunity to use their tax dollars to take care of their families,

learn a trade or, and then move forward in life. Has that been your

testimony?

Mr. BELMAN. In point of fact, most of the west coast port and

other PLAs which have these training programs also have an effective local hire provision, which sets very clear goals for movement

through pre-apprenticeship into apprenticeship programs. They are

pretty thoroughly reviewed, and there is oversight by community

group as well as by employers, the ports or other owner organizations in the building trades. And the reports that I have read and

people I have talked to have indicated they have been very effective

in this.

And PLAs have an advantage over any other training program.

Because they are connected, one problem with Government-supported training programs it that they tend to not be connected to

jobs at the end. You train people, they come out, there is not a job.

For most of the PLA work, there is a job and there is a clear advancement, pre-apprenticeship, apprenticeship and then into journeyman status. All relatively high wage and solid benefits.

Mr. CUMMINGS. So in other words, these folks get an opportunity

to participate in a process that then opens the door for opportunity.

In other words, it is like an engagement and then hopefully a marriage.

Mr. BELMAN. Yes, because the pre-apprenticeship programs, in

particular, can do, there are people who this is the perfect job for.

There are people who don’t like working outside. If you are going

to be a construction worker, some, figuring out whether you want

to work outside is very good before we invest a lot of money in

training. But that is very important.

So it is not a guarantee, simply because you show up, that you

are going to end up in a wonderful career. But for the right person,

it opens up opportunities that otherwise don’t seem to exist.

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Mr. CUMMINGS. And so when you have, for example, the African

American unemployment rate consistently, consistently almost double the general unemployment rate, and if you are talking about

creation of jobs, and you are talking about long-term jobs, and you

are not just talking about jobs, but you are talking about careers,

and you are talking about people contributing back into society, a

PLA may not be a bad idea if it is structured right and if it has

the proper oversight. Is that right? Is that a reasonable statement?

Mr. BELMAN. That is very reasonable. An example would be the

San Jose school system, which used a PLA as a basis for establishing a construction academy. They were rebuilding a high school. It

has been very successful. Indeed, the construction academy and the

linkage from high school students taking courses and then doing

internships over the summer and having privileged access to apprenticeship opportunities has continued, even though the PLA has

expired. And indeed, the construction industry is so enthused about

getting very good students, and into white collar as well as blue

collar jobs, that they have now started a training program for high

school math teachers, so they can take their experiences in construction back to the classroom and encourage better students to

think about construction careers.

Mr. CUMMINGS. So it is about opportunity?

Mr. BELMAN. Yes.

Mr. CUMMINGS. I yield back.

Mr. JORDAN. I thank the gentleman. We do have to get to a vote.

One last question, and it may be better for the second panel. Mr.

Biagas, I believe, mentioned in his testimony only 6 percent of the

construction firms in Virginia, maybe it is northern Virginia, are

union firms. Is that right, Mr. Biagas?

Mr. BIAGAS. Yes, sir.

Mr. JORDAN. Do we have any data on what percentage of Federal

projects are awarded to, what is the percentage awarded to union

and non-union? Do we have any of that data? To me, that seems

to be the central question. If only 6 percent are union, if they are

getting the vast majority of the contracts, then that shows you how

skewed the system is. Do we have any of that data?

Mr. BIAGAS. I don’t have that data with me, Congressman.

Mr. JORDAN. Mr. Belman.

Mr. BELMAN. No.

Mr. JORDAN. We are going to ask GSA in the next panel.

Mr. BELMAN. But I would be fascinated to learn.

Mr. BASKIN. And it is a moving target, because the PLA program

has not been fully implemented yet. We are fighting as hard as we

can to stop it, and we are calling for help from Congress.

Mr. JORDAN. I understand that.

Thank you all very much. We have to recess for a vote on the

floor.

[Recess.]

Mr. JORDAN. We will welcome our second panel of witnesses. I

don’t know if any of you were here for the first round, but it is the

practice of the committee to swear our witnesses in. So if you

would just stand up and raise your right hands.

[Witnesses sworn.]

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Mr. JORDAN. Let the record show that all witnesses answered in

the affirmative.

You guys know the game. Well, I should introduce you, I apologize. Mr. Gordon is the Administrator for the Office of Federal Procurement Policy, Executive Office of the President. The Honorable

Robert Peck is the Commissioner for Public Buildings, U.S. General

Services Administration. And the Honorable David Michaels is Assistant Secretary for Occupational Health and Safety, U.S. Department of Labor.

We thank each of your gentleman for your public service and

your willingness to be in front of the committee today. We will

probably, as you know, have Members join us, we hope so, but we

want to hear your testimony. So let’s go right down the row. Mr.

Gordon, you are up first.

STATEMENTS OF DANIEL I. GORDON, ADMINISTRATOR FOR

FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET; ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION; AND DAVID MICHAELS, PHD., MPH, ASSISTANT

SECRETARY, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, U.S. DEPARTMENT OF LABOR

STATEMENT OF DANIEL I. GORDON

Mr. GORDON. Thank you, Mr. Chairman.

Mr. Chairman, other members of the subcommittee, I appreciate

the opportunity to appear before you today to discuss the regulatory implementation of Executive Order 13502, which governs the

use of project labor agreements, PLAs, in Federal construction contracts.

I was pleased to sit in and listen to the first panel, with the diverse views that were expressed there, and to hear the Members’

questions. I will be happy to followup with any questions you want

to raise with me.

As Administrator for Federal Procurement Policy, I am responsible for overseeing the development of Government-wide contracting rules and policies and ensuring that those rules and policies

promote economy and efficiency. This afternoon, I would like to

briefly describe the steps my office has taken to shape the Federal

Acquisition Regulation [FAR], as we usually call it, rule implementing the Executive order.

Let me first, though, address a misperception, or a misconception

about what the FAR rule says about the use of PLAs. Contrary to

what the subcommittee members heard from some people earlier

this afternoon, the FAR rule does not require 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 in fact promote economy and efficiency

on a 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 Federal Acquisition Regulation. For example, the FAR lets

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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 or technical excellence, in addition to

price.

The FAR does not dictate to our acquisition professionals which

choices to make. It gives them the tools to make the choices so that

they can tailor a procurement to an individual agency’s specific requirement. That tool kit 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 that we spend, whether we are buying lawnmower services or war planes for the Air Force.

Our approach to PLAs is no different. We have structured the

FAR rule to create a process where decisions are made on a case

by case basis. The FAR rule sets out factors that an agency may

decide to consider. But it doesn’t dictate the factors. It doesn’t prohibit agencies from considering other factors.

Among the factors that are named in the FAR are whether the

project will require multiple construction contractors and/or subcontractors employing workers in multiple crafts or trades, and

whether completion of the project will require an extended period

of time.

As with other FAR rules, though, the PLA rule sets boundaries.

Most significantly, the agency may 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.

But equally importantly, with respect to the content of any PLA

created pursuant to the FAR rule, and this is particularly relevant

in light of what the subcommittee heard from the first panel, the

FAR rule requires that any PLA allow all firms to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements. This mandate ensures that if an agency decides that they should be using a PLA,

it is done consistent with the principle of open competition, a bedrock of our Federal procurement system, so that all interested bidders are given an opportunity to have their offers considered by the

Government.

We appreciate that taxpayers would not benefit from a rule that

requires the use of PLAs regardless of circumstances. But we also

don’t think taxpayers would benefit 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, my office intends to continue working with the agency, with the agencies across the executive branch,

to facilitate the sharing of experiences and best practices for the

consideration and appropriate use of project labor agreements in

the Federal marketplace.

I will be delighted afterwards to answer any questions the subcommittee members have. Thank you.

[The prepared statement of Mr. Gordon follows:]

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Mr. JORDAN. Thank you, Mr. Gordon.

Mr. Peck.

STATEMENT OF ROBERT A. PECK

Mr. PECK. Thank you, Mr. Chairman and other members of the

subcommittee.

I too heard the first panel, and I am happy to be here to set the

record straight and discuss GSA’s measured business approach to

the implementation of project labor agreements on our construction

contracts. We share with you an interest in seeing that our construction projects are finished as expeditiously as possible and with

the best value and cost to the American taxpayer.

A PLA is a proven tool to help provide structure and stability to

a project, especially on certain large projects. The private sector

uses PLAs also for a variety of construction projects, similar to

those GSA manages. PLAs are also used at the State and local levels for a wide 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 stoppages, increase labor availability and

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

provisions that promote career development through valuable job

training for construction workers.

GSA uses 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. As Mr. Gordon said,

the Executive order does not mandate that Federal agencies require PLAs, but encourages the consideration of PLAs.

Our procurement process provides for the consideration of PLAs.

We allow contractors to submit a proposal with a PLA, without a

PLA or both. We evaluate these proposals on a project by project

basis. If we accept 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 the labor organization, rather than between GSA and the

labor organization.

As we typically do on our major construction projects, GSA selects the proposal with the best value to the Government by weighing a number of technical factors against cost. A PLA recently has

been included as one of those technical factors. I should note that

the other technical factors for many more points are past performance, key personnel and a management plan which often includes

the requirement of their being a plan to include small business.

Proposals with a PLA receive 10 percent, 10 of the possible 100

points for technical evaluation. If you consider that then the technical factors as a whole are balanced against price on the other

hand, you will see that the PLA in and of itself is far less than 10

percent, more like probably 5 or 6 percent of total award. And we

don’t really quantify them that way, which I will be happy to explain.

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We award to contractors who usually work with labor organizations, and we also award to contractors who do not usually work

with labor organizations. Shortly after the Executive order was signed, GSA received $51⁄2

billion through the American Recovery and Reinvestment Act of

2009. These funds, which were used principally to help modernize

and green our federally owned inventory, provided GSA the opportunity to conduct a PLA pilot program. I am proud to tell you today

that in our spending on the Recovery Act so far, we estimate we

have created 16,000 jobs in the American construction industry.

For the pilot PLA program, GSA selected 10 projects with budg- ets of more than $100 million. The selected projects cover seven

States and the District of Columbia. Of the 10, 7 ended up with

PLAs and three did not. From our comparisons, in most instances,

it appears that there has been little to no cost differences, although

I will be the first to tell you, in some cases, that is hard to tell.

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

we received sufficient bids to ensure adequate competition and the

best value to the American taxpayer. We typically receive between

three and eight offers for our projects, for the pilot projects.

Through the construction of these projects, GSA plans to assess

the use of PLAs for future implementation of best practices and updates to our policies. This pilot program has enabled GSA to obtain

real market data regarding the impact of PLAs on competition. We

have recently reached out to contractors and union officials to hear

their feedback on our pilot projects in order to develop ways to further improve our PLA procurement process.

Mr. Chairman and members of the subcommittee, this concludes

my prepared statement. I am of course happy to answer any questions.

[The prepared statement of Mr. Peck follows:]

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Mr. JORDAN. Thank you, Mr. Peck.

Mr. Michaels.

STATEMENT OF DAVID MICHAELS

Mr. MICHAELS. Chairman Jordan, Ranking Member Kucinich,

members of the subcommittee, thank you for inviting me to testify

about the important work of the Occupational Safety and Health

Administration, and to listen to your suggestions about how we can

improve the approaches we take to fulfill the important mission

given to us by Congress, protecting the lives and health of American workers.

In the four decades since the OSHA Act was enacted, the Nation

has made dramatic progress in reducing work-related deaths and

injuries. Since 1970, workplace fatalities have been reduced by

more than 65 percent. Reported occupational injury and illness

rates have decreased by over 67 percent since 1973.

But far too many preventable injuries and fatalities continue to

occur.

I am also glad that you chose the important issue of construction

safety. The safety of construction workers is one of OSHA’s top concerns. Construction is among the most dangerous industries in the

country, and construction inspections comprise 60 percent of

OSHA’s total inspections.

In 2009, preliminary data from the Bureau of Labor Statistics indicate that there were 816 fatal, on the job injuries to construction

workers, more than in any other single industry sector, and nearly

one out of every five work-related deaths.

But we are talking about much more than just statistics here.

We hear about these tragedies almost every day in the news. Almost every construction worker that dies leaves behind a family

whose lives are devastated. A breadwinner’s serious injury can

throw a family permanently out of the middle class.

It is clear that OSHA enforcement and regulations save lives,

that many workers are alive today because of OSHA’s activity.

Since its creation 40 years ago, OSHA has relied on the same basic

strategies to ensure the safety of American workers. For those

many employers who want to do the right thing, we offer compliance assistance and cooperative programs. For those employers

who endanger workers by cutting corners on safety, we believe in

strong enforcement.

The ultimate goal of OSHA’s enforcement is deterrence. Using

penalties is one way to change employer behavior, with a goal of

preventing injuries, illnesses and deaths before they occur. Strong

enforcement not only benefits workers, but it also levels the playing field for the vast majority of employers who play by the rules

and who make the health and safety of their employees a priority.

Failing to prevent injuries, illnesses and fatalities is a major burden on the American economy. Every year, the most disabling injuries cost American employers more than $53 billion, over $1 billion

a week in workers compensation costs alone. Indirect costs to employers, workers and their families can double these costs.

One of the primary duties that Congress gave OSHA was to issue

standards to protect workers from these costly injuries and deaths.

OSHA goes through an extensive public consultation process before

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issuing new standards. We conduct sophisticated reviews of the

economic impact of proposed regulations. We hold stakeholder

meetings and online Webinars. And we listen to the input of small

employers through the Small Business Regulatory Enforcement

Fairness Act, that is SBREFA panels, for major regulations. We

then hold public hearings and we solicit extensive written comments.

Finally, all of our significant regulatory proposals and final

standards are extensively reviewed by the Office of Management

and Budget. I will go off script here, Mr. Baskin referred to a tragedy in Iowa in 2006, where a worker was killed in a crane collapse.

At that point, OSHA was working on a new crane standard, started

in 2000. And only last year, in November 2010, did our new crane

standard finally go into effect after all those multiple opportunities

for public input. We now have a strong crane standard which we

know will prevent deaths like that from occurring.

OSHA is a full Service organization. Our strong compliance assistance programs operate under the belief that every employer

should have access to the knowledge he or she needs to provide a

safe workplace, and every employee should be award of their basic

rights under the law and the hazards they face. In addition to the

numerous fact sheets, guidance documents and online tutorials

that can be found on OSHA’s Web site, our onsite consultation program provides free workplace safety and health evaluations and

advice to small businesses that cannot afford to hire their own

safety and health experts. This program is completely separate and

independent from OSHA’s enforcement program.

Last year, the consultation program conducted over 30,000 consultation visits, more than 9,000 in small construction companies.

OSHA also has compliance assistance specialists in every area office.

OSHA’s strong commitment to compliance assistance is evidenced by the President’s request in his fiscal year 2011 and fiscal

year 2012 budgets to increase funding for this onsite consultation

program.

Finally, I know this committee is interested in why OSHA has

temporarily withdrawn its musculoskeletal disorder column proposal in order to solicit more comments, and why we withdrew our

proposed noise reinterpretation in order to take a more comprehensive approach to preventing work-related hearing loss. In brief,

these actions stand as an example of this administration’s willingness to respond to public concern about our programs.

I will be glad to answer any questions about these actions or any

other OSHA initiatives. Thank you.

[The prepared statement of Mr. Michaels follows:]

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Mr. JORDAN. Thank you, Mr. Michaels, and I do want to get to

that in a few minutes here, on the noise regulation.

But let me start with Mr. Peck. Mr. Peck, what percent of Federal contracts come through your agency? Do you know? And what

is the overall dollar amount that you award in construction contracts? Do you have that data?

Mr. PECK. I don’t have the number or percent of even construction projects in the Federal Government. I can tell you in a typical

year, major construction, depending on how much money Congress

gives us in our capital program, we are somewhere between usually

a billion and a billion and a half if you include new construction

and major alterations.

Mr. JORDAN. Mr. Gordon in his testimony talked about the flexibility that the FAR rule has and provides for agencies and how

that is implemented. Isn’t it true that GSA has decided that the

project labor agreement is an important part of the consideration

in awarding contracts?

Mr. PECK. Well, as I said, we have actually run a pilot program

on 10 of the projects that we had under the Recovery Act, that

were over $25 million. That is 10 out of 57 projects that were only

over $25 million. As I said, we are using them as a test to see

whether and how we should implement PLAs on our projects. So

that is our record to date, sir.

Mr. JORDAN. And what have you found?

Mr. PECK. Well, as I said, so far, you have to know that we don’t

have, well, the products that we have awarded on, the one that was

awarded the first, is a little over a year under construction. So we

have not completed the project yet. So it is hard to make a determination there. What we can tell you is that on all of our PLA bids,

we got adequate competition, the same kind of competition we get

on most construction projects.

Mr. JORDAN. How do you weight an encouraging of PLAs? How

do you weight that and preference that in the bid process?

Mr. PECK. Again, let me just reiterate, on the 10 projects that we

have done a pilot on, we included as one of the technical factors

in our bid considerations a PLA and a willingness of a contractor

to offer us a contract with a PLA. And we balance that, we take

that as 10 points out a 100 on the technical factor and balance

that——

Mr. JORDAN. So 10 percent——

Mr. PECK. No, sir, and balance that against the price that we are

offered. So in essence, we are trying to let the market tell us how

it values the use of a PLA.

Mr. JORDAN. I guess I am not following. You are weighting it 10

percent? It seems to me you are saying, you are weighting it 10

percent but we are not.

Mr. PECK. That is correct.

Mr. JORDAN. Explain that, then. Maybe that is why I am confused.

Mr. PECK. Someone on the first panel suggested that if someone

bids $100, we are taking 10 percent off the top of that for a PLA

bid. And that is absolutely not true.

Mr. JORDAN. Well, then, how is the 10 percent defined?

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Mr. PECK. I will tell you. The Government does it on construction

projects. Some time ago we all realized that just going low bid,

while it sounds good, hardly any of us buy things that way. And

the Government, when we used to do what we called low bid, we

would often find ourselves with a low bidder who couldn’t carry out

the project for that low bid, and we ended up often not getting that

value. And we would end up having to take the project to someone

else, or they would file delay——

Mr. JORDAN. Well, let me ask it this way, then. Someone who

was not willing to enter into a PLA, how can they make up for the

10 percent you weight for those who are willing to enter into a

PLA?

Mr. PECK. Well, in fact, on 10 of the pilots that we have run, of

the 10, three came, we have awarded three of them without PLAs.

So it seems quite clear that you can, under our process, come in

with a non-PLA bid and win it.

Mr. JORDAN. Well, that brings me to the question I asked the

last panel. According to Mr. Biagas, and I understand there is a

variation in size, and some union contractors are bigger, and there

is a size component when you are doing this evaluation project this

large, I get that. But he indicated 6 percent of construction companies in Virginia are union. And yet you are telling me 70 percent

of the, so 94 percent aren’t. And you are telling me 70 percent of

the 10 you have studied were awarded to the 6 percent out there,

is that right?

Mr. PECK. Well, but there is a——

Mr. JORDAN. Is that right?

Mr. PECK. No, sir. No, that is not correct. Because we did not

award, awarding a PLA does not mean you are awarding a contract

to a union construction company, to a closed shop company. We are

awarding the PLAs to open——

Mr. JORDAN. In the majority of cases, I would assume in most

cases it does, based on Mr. Baskin’s testimony in the last panel.

Mr. BASKIN. That is not, well, that is——

Mr. JORDAN. He said most of his members won’t enter into a

PLA because of what it means for their work force.

Mr. PECK. Well, I couldn’t quite tell what he was talking about.

I can just tell you that we have the facts of who we have awarded

to. And in this market——

Mr. JORDAN. You just told me that 70 percent were PLA-awarded

projects.

Mr. PECK. Yes, sir, in this market.

Mr. JORDAN. OK, so of this 70 percent, how many were union,

how many were non-union? Do you have that fact?

Mr. PECK. I don’t, but I can——

Mr. JORDAN. That would be helpful based on what you are telling

me.

Mr. PECK. I can tell you, of the two that have been awarded in

this market, they were both to firms that, three, I am sorry, all

three were to firms that are not union contractors. This area does

not have very many closed, if any closed shops, any more.

Mr. JORDAN. Well, we knew that. Mr. Biagas told us that in the

first panel.

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Mr. PECK. That is right. So we awarded contracts with PLAs to

non-union contractors. Awarding a PLA does not mean you are

awarding a contract to a union contractor.

Mr. JORDAN. Let me ask you one more, and I do want to get the

ranking member, and I apologize. We will give the ranking member

an additional minute as well.

On your list of PLA/non-PLA projects, it identifies the GSA headquarters building as a no-PLA. Wasn’t this originally awarded as

a PLA project?

Mr. PECK. Yes, it was.

Mr. JORDAN. And so what happened?

Mr. PECK. Well, as I said, we allow, we ask, we awarded to the

contractor who said he could get a PLA. In the end, after we

awarded, he was not able to reach agreement with the union. So

we issued a notice to proceed without the PLA. I think it shows our

flexibility. We are not hell-bent for——

Mr. JORDAN. But it also raises the question, did it discriminate,

because you initially awarded it, and you said he could be, enter

into a PLA agreement, and his competitor bidding, who is not willing to enter into a PLA agreement, i.e., a non-union construction

firm, did they get prejudiced in the bid process, because now obviously the one who said he was going to do it and is not doing it

still has the contract? That is probably an important question that

the taxpayers want to know the answer to.

Mr. PECK. That is a fair question, and I would be happy to provide for you in the record an analysis of who bid how on that

project. I don’t believe in this case you will find that to be the—

I don’t think you will find that to be the case in the instance of

our building.

Mr. JORDAN. OK, that would be very helpful for the committee.

The ranking member is recognized.

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

Listening to Mr. Peck’s testimony and your questions, where it

is clear that PLAs are used for jobs that involve unions and some

that are not unions, Linda Figg, who was a witness on the previous

panel, I guess was somehow involved in creating this beautiful brochure about the new I–35 bridge. And as I asked her in the questions, she responded that this was a project labor agreement.

Mr. PECK. Yes.

Mr. KUCINICH. I didn’t ask her if it was union or not, just said

it was a project labor agreement, she said yes.

So Commissioner Peck, as you know, in awarding a public contract, it is of the upmost importance that taxpayers are getting the

best value for their investment. In fact, in your written testimony,

you state that in selecting a contractor for award, GSA uses the

best value method of award, which takes into consideration both

cost and technical qualifications.

Can you elaborate on the best value method?

Mr. PECK. Yes, thank you. As I said, it is not a low bid method,

because it allows us to take quality into account. I always say to

people, if cost was the only factor, we would all be driving Yugos.

People take quality into account.

And what this allows us to do is that we have a panel of Government experts who take a look at the submissions that contractors

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make. And they are required to submit such technical factors as

their past performance on Government and other projects, the key

personnel they are putting on a project, their plan for performance

on the project, which as I said could include a small business plan,

and we then decide who on technical factors is the best.

Then we look at the bids that they have given us, and our panel

makes a decision about whether the, whether, the technical factors

outweigh the dollar bid or vice versa.

Mr. KUCINICH. But we have heard witnesses here today say that

PLAs drive up the cost premiums of public projects. And in your

experience, have you seen that PLAs have a significant impact on

the cost premium of a specific project?

Mr. PECK. I can answer this in a, it is a great question.

Mr. KUCINICH. Can you give me a yes or no?

Mr. PECK. No, sir. Because that would be, it would be misleading

to give a yes or a no. I hope I will give you a straight answer. On

a number of our projects, we got PLA and non-PLA bids that were

exactly the same. On two of our projects, we paid more, the bid

with the PLA was more than the bid without. But on at least, but

I have, but I say again, some of the selections are made not just

on whether there is a PLA or not. But as near as we can tell, isolating it, we can tell on two products, we paid some kind of, we

paid more for the PLA. And our panel decided in essence, or we decided that there was a value to that.

Mr. KUCINICH. What was the value?

Mr. PECK. In both cases, we thought that the PLA itself, on a

project that was a complex, long-term project, and this is when people usually find PLAs to be of most value, it was worth spending

a little more. It is the reason that you will find——

Mr. KUCINICH. That sounds nebulous. Where was the value? Do

you remember?

Mr. PECK. Sure. The value, well, the value of a PLA is that, particularly where you need highly skilled labor, you have a steady

source of labor. You know——

Mr. KUCINICH. OK, that is what I want to get at. Get specific,

OK.

Mr. PECK. And there are, we definitely are trying to guarantee

against work stoppages where there are projects on which there are

lots of different trades involved. Even on projects, I have to say

this, even on projects that don’t have PLAs that you might say are

awarded to a non-union contract, there are trade crafts in which

people who work for the non-union contractor are members of

unions. And so it is useful on a lot of projects to have an agreement

with all the labor unions about how they are going to coordinate

vacation time, hours, overtime, all those sorts of issues. And on

those projects, as I said, we found that there was value.

Mr. KUCINICH. I want to go over one other point here, Mr. Chairman. Mr. Peck, some of the witnesses on the first panel expressed

concern that the use of PLAs inhibits members of the construction

industry from competing for Government contracting opportunities.

Now, in your written testimony, Mr. Peck, you state ‘‘By using our

optional bidding process, GSA does not discriminate against contractors. GSA awards to contractors who work with labor organizations, as well as contractors who work without such organizations.’’

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Have you found that PLAs limit competition for Government contracts?

Mr. PECK. Not that we have seen.

Mr. KUCINICH. Can you elaborate on that, how GSA has found

that PLA bidding process has not hindered competition?

Mr. PECK. Yes, sir. On the, as I said, on the 10 pilots projects

that we have had, we have gotten between three and eight bids.

And that is about the same number we get typically on our large

construction projects. Because we can’t have mom and pop firms as

our general contractors. We certainly have small firms as subcontractors to those. But that is about the competition that we typically get on our construction projects.

Mr. KUCINICH. Thank you, Mr. Chairman.

Mr. JORDAN. I Thank the ranking member.

We recognize the gentlelady from New York, Ms. Buerkle.

Ms. BUERKLE. Thank you, Mr. Chairman, and thank you to our

members of the panel this afternoon. Thanks for bearing with us

through the vote.

Mr. Peck, my first question goes to you, and it is a followup to

the chairman’s question. You mentioned in your opening statement

that some contracts are awarded to union shops and some are not.

Now, just to clarify, if my question is the same as the chairman’s,

can you give us a number as to how many go to a union shop and

how many go to a non-union shop?

Mr. PECK. Again, of the 10 projects that we have awarded, is

that what you are talking about?

Ms. BUERKLE. Overall.

Mr. PECK. That is a number I will have to provide you for the

record. But as the committee has noted, the vast majority of major,

of general contractors in this country are not union shops.

Ms. BUERKLE. The next question is to Mr. Michaels, and welcome. I must say, as I interview and talk to a lot of the small businesses and businesses in my district, OSHA tends to be one of the

impediments and one of the obstacles that they are always trying

to get around. So I hope that we can flesh out some of the issues

today. We would like to make you more user friendly for our business people. Because they are the job creators, and that is what

this committee is about.

You mentioned in your opening statement about compliance and

the compliance assistance that OSHA offers to businesses. Now, my

understanding is that OSHA just recently cut the budget for the

voluntary protection program. And it seems to me that would indicate that you are moving away from compliance and more to something punitive when it comes to enforcement.

Mr. MICHAELS. That is actually not true. There was a proposal

to do that. But the current administration proposal is to maintain

the VPP at the same funding levels. And I have made a commitment to the program, in fact, I think if you look at my particular

record, I have a real commitment to the program. I ran that VPP

program when I was at the Energy Department some years ago. So

I am doing what I can to make sure that program thrives.

But beyond VPP, because a relatively small number of companies, and very few small companies, we are trying to push those,

the basic concepts that the VPP has embraced, down to all employVerDate 11-MAY-2000 13:53 Aug 11, 2011 Jkt 000000 PO 00000 Frm 00151 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\67566.TXT KATIE PsN: KATIE
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ers, especially the small employers. So we have tremendous

amount of compliance assistance materials, we have a Web site

that gets 183 million hits a year. We have information for employers. And we have this program that we fund through the States,

an onsite free consultation program. We find that many small employers don’t know about it. So for example, in New York State, it

is run by the New York State labor department, but it is independent from OSHA, we just fund it.

So we really like to encourage Members, when they hear from

their constituents, to say, have you looked at this program to get

some free help, so you can essentially have your hazards abated before OSHA comes in, or before someone is hurt.

Ms. BUERKLE. Thank you.

Mr. Peck, my last question is for you in the time that I have left.

Has GSA ever conducted a study that looks at these PLA agreements and determines the impact, whether it is price-wise or any

other wise, in the benefit or the not so good PLA contracting?

Mr. PECK. Ms. Buerkle, we have not conducted a study of their

effectiveness throughout the course of a construction project, because these are new to us. We have just begun awarding them. We

are tracking the projects as they go forward to completion. They

take a couple of years to complete. At the end of that, we hope to

have some good data on whether they provided us the benefits that

we thought they would.

Ms. BUERKLE. So there was never a study done specifically on

the Lafayette Federal Building, or the Department of Homeland

Security at St. Elizabeth’s campus in Washington?

Mr. PECK. No, ma’am, I am sorry. We conducted a study, we

began a study in 2009, I believe it was, to see, that looked forward

to complying with the Executive order before the FAR was done.

We started to look, market by market, at the pilot areas that we

were looking at. For example, we were doing a project in Cleveland,

we were doing a project in Denver. And we did have a contractor

look at those labor markets to see if they could come up with a formula that would tell us how we could, on a project by project basis,

evaluate the PLAs.

Ms. BUERKLE. First of all, if you could provide that study to the

committee, I would appreciate that.

Mr. PECK. We will do that.

Ms. BUERKLE. But beyond that, can you just disclose what the

findings of that study showed?

Mr. PECK. On all the projects?

Ms. BUERKLE. On those two that I cited.

Mr. PECK. It was Lafayette and?

Ms. BUERKLE. It was Lafayette and Department of Homeland Security at St. Elizabeth’s campus.

Mr. PECK. I do not recall on the St. Elizabeth’s campus, so I will

provide that for the record.

On Lafayette, the study, which, well, we didn’t quite complete,

did question whether a PLA would be valuable on that project.

Ms. BUERKLE. Very good, thank you so much.

Mr. PECK. Yes, ma’am.

Mr. JORDAN. The gentleman from Pennsylvania, Mr. Kelly.

Mr. KELLY. Thank you, Mr. Chairman.

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My question goes to Dr. Michaels. I am in a private business, so

I have dealt for years with OSHA. I was a little bit confused. In

your written testimony, there is a statement in there that the fines

have not been increased since 1990. Is that——

Mr. MICHAELS. Yes. Congress limited our fines. The maximum level for a fine, for a serious violation, is $7,000. We have some discretion within that $7,000 to reduce the level of the fine, which we

do on the basis of being a small employer, history of lack or presence of OSHA violations, and good faith. But that $7,000 maximum

is not inflation-adjusted and hasn’t been changed in almost 20

years, actually in 20 years.

Mr. KELLY. So the figure that I was looking at, the average OSHA fine for a serious violation in 2010 was only around $1,000?

Mr. MICHAELS. That is correct. I know, it is shocking, isn’t it. I sign letters for a fatality investigation where the fine is $2,400. In

fact, the average fine last year, in 2010, for a fatality, for a violation in connection to a fatality, was $4,000. It is quite small.

Mr. KELLY. I am trying to understand, though, who defines what

is serious and not serious?

Mr. MICHAELS. Serious, we have an extensive field operations

manual. Serious is that the hazard could result in death or serious

bodily harm. So certain violations are not serious, and if a serious

violation where someone could be killed or hurt could get up to a

$7,000 fine. Although it is very rare that we for any violation issue

a $7,000 fine.

Mr. KELLY. So part of the determination, did I hear you say, the

history of the company, its safety record, and the size?

Mr. MICHAELS. We always discount for a small employer, yes.

Mr. KELLY. And the other thing, if I heard you correctly, did you

tell me that the voluntary protection program is still in effect, and

is not going to be cut?

Mr. MICHAELS. It hasn’t, in our fiscal year 2010 budget, it is protected. We are now in the continuing resolution, where we continue

at our 2010 levels. In the President’s 2012 proposed budget, it is

maintained at that level as well. And we actually asked for an increase in the funds for consultation for small employers.

Mr. KELLY. OK, well, I hope you continue that. Being a small

employer myself, it is nice to be involved. I don’t think there is anybody out there who runs a business who thinks, you know what?

I am going to operate unsafely and maybe make a couple extra dollars but put my people at risk. I don’t know of anybody in business

who does that. I have worked for years with OSHA on a lot of different things. While we may not think it is burdensome and overregulating, I have to tell you, from the guy that has to write the

check, sometimes it makes no sense to me.

I have a body shop. OSHA came in, and made me put a railing

around the top of the paint room. And my question was, how in the

world would anybody even get up there? And they said, that is not

the problem. There is enough space between the top of your paint

room and the ceiling that somebody could get up there and possibly

fall.

So I think the intention of all this is to do a good job. It is the

unintended consequences of some of this. And depending on who it

is that comes to your store, they don’t all look through the same

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lens as maybe you think they do. I appreciate your being here

today and thank you.

I yield back my time, Mr. Chairman.

Mr. JORDAN. I thank the gentleman from Pennsylvania.

We will now go to the ranking member, the gentleman from

Maryland, Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I appreciate your calling this hearing today, and part of the title of the

hearing, as we were understanding it, was to address the OSHA

standards.

On the first panel, we had an industry representatives, some of

which the on the record identified OSHA standards as being impediments to job creation and business. But a little bit earlier, Ms.

Speier submitted for the record a letter from a woman named

Tammy Miser. I would like to use my time to make sure that her

voice is heard.

I would like to read excerpts from a statement submitted by her,

Ms. Miser of Kentucky, who lost her brother in a factory explosion.

I just want to read this because it is very chilling, particularly with

the gentleman just talking about OSHA.

It says, ‘‘My brother, Shawn Boone, worked at the Hayes

Lemmertz plant in Huntington, Indiana, where they made aluminum wheels. The plant had a history of fires, but workers were

told not to call the fire department. My brother and a couple of coworkers went in to relight a chip melt furnace. They decided to

stick around a few minutes to make sure everything was OK, and

then went back to gather tools. Shawn’s back was toward the furnace when the first explosion occurred. Someone said that Shawn

got up and started walking toward the doors when there was a second and more intense blast. The heat from the blast was hot

enough to melt copper piping.

Shawn did not die instantly. He lay on the floor smoldering while

the aluminum dust continued to burn through his flesh and muscle

tissue. The breaths that he took burned his internal organs and the

blast took his eyesight. Shawn was still conscious and asking for

help when the ambulance took him away. We drove 5 hours to Indiana, wondering if it really was Shawn, hoping and praying that

it wasn’t. This still brings about guilt, because I would not wish

this feeling on anyone. We arrived only to be told that Shawn was

being kept alive for us. The onsite pastor stopped us and told us

to prepare ourselves, adding that he had not seen anything like

this since the war. The doctors refused to treat Shawn, saying even

if they took his limbs, his internal organs were burned beyond repair. This was apparent by the black sludge they were pumping

from his body.

I went into the burn unit to see my brother. Maybe someone who

didn’t know Shawn wouldn’t have recognized him. But he was still

my brother. You can’t spend a lifetime with someone and not know

who they are. Shawn’s face had been cleaned up. It was very swollen and splitting, but he was still my Bub. My family immediately

started talking about taking Shawn off the life support. If we did

all agree, I would be ultimately giving up on Shawn. I would have

taken his last breath, even if there was no hope and we weren’t to

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blame. I still had to make that decision, to watch them stop the

machines and watch my brother die before my eyes.

But we did take him off, and we did stay to see his last breath.

The two things I remember most are Shawn’s last words. I’m in a

world of hurt, he said, and then he took his last breath.

The U.S. Chemical Safety and Hazard Investigation Board said

that the explosion that killed Shawn probably originated in a dust

collector that was not adequately vented or cleaned. The dust collector was also too close to the aluminum scrap processing area.

Hayes Lemmertz management allowed dust to accumulate when

overhead beams and structures, which caused a second, more massive explosion. The CSB concluded that had the company adhered

to the National Fire Protection Association standard for combustible metal dust, the explosion would have been minimized or prevented altogether. The CSB warned OSHA in 2006 about combustible dust hazards. Had the National Fire Protection Association

standard been implemented as a mandatory regulation instead of

a voluntary consensus code, my brother Shawn and many others

would still be here today.’’

A one-sided look at the cost of OSHA rules but excluding the

benefits does a disservice to workers, responsible employers and

families and communities. Mr. Michaels, do you think that we can

have a productive discussion today about the impact of OSHA regulations without involving people like Tammy?

Mr. MICHAELS. I think it is very important to hear from people

like Tammy Miser and the families of workers who have been hurt.

Every day, OSHA saves lives. There was just an OSHA inspector

in Ohio last week, 2 weeks ago, Rick Burns, who went out to, who

was called and he was told, there is someone doing a trench job,

down in a different town. He went out there and saw a man in the

trench, the trench was 10 feet deep. He said, you had better get

out of that trench immediately. The man got out. Five minutes

later, that trench collapsed. If he hadn’t been there, that man

would be dead.

But we don’t hear from his family. We unfortunately hear from

the people who had employers who didn’t follow OSHA standards.

And there are far too many of those. So what we are trying to do

is make sure that we can get out there, we can have stronger

standards to ensure that more people like Tammy don’t have

to——

Mr. JORDAN. Mr. Michaels, was this terrible accident, tragedy,

was it a result of not having the right standards in place, or the

company not following the standard that was in place?

Mr. MICHAELS. Well, in that case, I don’t know the specific stuff,

but most dust explosions, and there have been some terrible dust

explosions recently, a well-known one in Imperial Sugar down in

Georgia killed several workers, there was one recently in West Virginia, or Virginia. Two different things. Generally, the violation of

numerous OSHA housekeeping standards. What OSHA is now

doing is try to essentially put out standards that makes much more

clear what they have to do. But in that case, it is very well known

what can be done. In those cases——

Mr. JORDAN. Again, it wasn’t a failure to have a regulation in

place that is going to help the safety. It was a failure of someone

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not to follow that. So it wasn’t deciding that we need more regulation.

Mr. MICHAELS. Well, OSHA——

Mr. JORDAN. Yes or no?

Mr. MICHAELS. We do need more regulation, because it is clearer

to employers what they can do. But the obligation under——

Mr. JORDAN. Well, let me be clear. Are you saying we need clarification or we need more regulation?

Mr. MICHAELS. You need more regulation.

Mr. JORDAN. Really?

Mr. MICHAELS. Yes. You need clarity. It has to be very, employers say, well, what should we do?

Mr. JORDAN. You are saying both things. You are saying clarity,

you are saying more regulation.

Mr. MICHAELS. Well, the regulations give you clarity. Without a

regulation, the OSHA law says an employer has the obligation to

provide a workplace free of Recognized serious hazards. But then

they say, what is——

Mr. JORDAN. Well, let me ask you this, with the indulgence of the

committee, and we can go a second round quickly with everyone if

we would like. Let’s go to the rule. I talked to you before we started

today’s hearing, or the second half of today’s hearing, the decision

that OSHA made relative to the noise regulation, walk me through

the process there.

Mr. MICHAELS. Sure.

Mr. JORDAN. Let me back up 1 second and preface it by saying

that we heard from manufacturers, I have been in their plants. We

heard from an individual in my home county, and she runs a very

successful business. I have been there, you put the ear protection

in, everything, but now she is talking about, they were going to

have to have guards up and barriers up and everything else. This

is according to a constituent of ours. So walk me through it.

Mr. MICHAELS. Well, that is an interesting example, because that

is not actually a change in the regulation. We have a noise standard that says, anything above 90 decibels you actually have to use

engineering controls. We know that ear muffs and ear plugs don’t

always work. But for the last 20 or so years, we have said to employers, we are not going to enforce our standards. We are going

to essentially allow you to use, instead of engineering controls, you

can use ear muffs.

But we know ear muffs don’t work well enough. There are 20,000

to 25,000 new cases of hearing loss reported every year, and that

is a vast underestimate. We know that most construction workers

develop hearing loss by the time they are retired from work. It is

very clear. And we want construction workers, we want all workers

to be able to hear their grandchildren, when they are old enough

to have grandchildren.

So we have to do something. What we did was we said we are

going to enforce our noise standard like we enforce every other

standard. We proposed that. And we heard from many constituents

like yours. So we said, OK, that is clearly going to be more than

we expected. We need to step back and think about other ways. Because in the last 20 years, there were a huge number of new technologies. There are a lot of very inexpensive things employers can

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do to reduce noise. We are going to work with them, work with the

National Institute for Occupational Safety and Health to get more

compliance materials out. Because we really do want to reduce

noise exposure. But we recognize now is not the time to change our

enforcement rules.

Mr. JORDAN. Does the ranking member wish additional time for

questions? You are welcome to, because I think Ms. Buerkle does.

Mr. KUCINICH. Actually, if it please the chair, I do have a followup with Dr. Michaels. Would that be OK?

Mr. JORDAN. Certainly.

Mr. KUCINICH. Dr. Michaels, I want to go back to the testimony

of Tammy Miser that was discussed earlier. Through testimony,

Ms. Miser illustrates that OSHA regulations not only save lives,

but they save businesses, too. She gives the example of the 2009

ConAgra plant explosion in North Carolina. The explosion occurred

because a contractor was purging natural gas into the indoor work

environment. There is currently, as you know, no OSHA regulation

for natural gas purging. Three workers were killed, 71 workers

were injured.

Now, before the explosion, 700 people worked at the factory.

Today the factor is shutting down, 700 lost jobs because of a workplace disaster. Seven hundred people would be working, and three

families who would not have been torn apart, had there been more

regulation.

Now Ms. Miser also gives the sample of the 2007 explosion of a

Jacksonville, Florida gasoline additive factory. The explosion killed

4, injured 32 including 28 at surrounding businesses. Pieces of the

building were found a mile away.

A subsequent investigation revealed that the explosion could

have been prevented if OSHA’s process safety management standard covered reactive hazards. So three businesses that were adjacent to the factory were forced to relocate, a fourth was forced to

completely shut down.

We talk about lives that would have been saved and jobs that

would have been preserved had there been regulation. Dr. Michaels, do you agree with Ms. Miser that OSHA regulations not

only can save lives but also can save businesses as well?

Mr. MICHAELS. Yes, I do.

Mr. KUCINICH. I know that you touched on this in your written

testimony, but would you elaborate, when you look back, do you see

a history of OSHA regulations being overly burdensome to industry?

Mr. MICHAELS. There have been studies on this. The Office of

Technology Assessment was a branch of Congress that actually

studied eight OSHA regulations in 1995. The study is very valid,

there have been very few OSHA regulations since then. They went

back and they looked and they found for the most part, there was

one exception that was questionable, but the other seven, the companies were able to meet those regulations without hurting their

own profitability, without hurting their productivity. And in fact,

there are some very clear examples where the OSHA regulations

which were opposed by industry ended up saving jobs and saving

money.

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The best example is vinyl chloride. Vinyl is a product, widely

used. In 1974, it was discovered to be a carcinogen. OSHA said, we

have to essentially protect workers from those exposures. Industry

said more than a million jobs would be lost. But OSHA went

ahead, they issued a standard saying they essentially had to fully

control exposure in these major facilities.

The industry very quickly figured out how to do that. Not a single job was lost, as far as I can tell. The headlines in the business

papers were, vinyl industry celebrates in triumph, they were able

to enclose the materials, save money and move forward.

So we always hear, and it is understandable, every industry

says, it is going to cost us too much money, because they don’t try.

So we want to work with industry to try, to say, we can save you

money, we can save jobs. Look at the Clean Energy explosion, last

Super Bowl Sunday, which killed six workers, injured 50. It destroyed a billion dollar natural gas power plant that has to be rebuilt from scratch.

Mr. KUCINICH. I thank the gentleman.

Mr. JORDAN. Let me just ask the gentleman, you said earlier

when I was questioning that you think we need more regulation.

Mr. MICHAELS. There are areas that we don’t have regulation

that we need regulation on.

Mr. JORDAN. So the gentleman’s testimony is, you think we need

more regulation.

Mr. MICHAELS. Yes.

Mr. JORDAN. And you would also argue, I understand the example you talked about, where science had discovered that this element, then OSHA rules put forward and actually was helpful and

beneficial. But you also would, I assume, say that there is a compliance cost for business owners relative to regulation?

Mr. MICHAELS. Yes.

Mr. JORDAN. OK. Need more regulation, there is a compliance

cost.

Mr. MICHAELS. Yes. And we have to balance those out, obviously.

We have to think about both of those things.

Mr. JORDAN. The gentlelady from New York.

Ms. BUERKLE. Thank you, Mr. Chairman.

I think that the goal here for this hearing today is really, we

want a win-win situation, where we have safety in the workplace

and we don’t deter economic growth and hurt job creation. I want

to just go back to a statement you just made, because I want to

make sure I heard it correctly. In 1995, you said a study was done

on seven regulations?

Mr. MICHAELS. I believe it was eight.

Ms. BUERKLE. Eight, OK. And did you say there haven’t been

many more regulations added to that?

Mr. MICHAELS. There have been very few major regulations in

the last 15 years that OSHA has put out. It takes OSHA a long

time to put out a regulation. There were a number of years in the

George W. Bush administration where OSHA really had no interest

in putting out any regulations. So the only health standard that

OSHA put out during that period was on another carcinogen,

hexavalent chromium, that the Federal court said, you must put it

out.

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So it is hard to look at new regulations, because there haven’t

been new regulations to look at. We have issued a new standard

on cranes, that is our first big one, and we have a couple more important ones coming out.

Mr. BUERKLE. Thank you, Dr. Michaels.

I want to just talk to you a little bit about this I2P2 regulation

that you are proposing. If you could just briefly explain what that

regulation will entail.

Mr. MICHAELS. This is a very different sort of regulation where

OSHA has a regulation about cranes, it is about how to operate

your crane or what to do about fall protection. This is telling employers, we don’t want to tell you how to do it, but we want you

to think about your hazards and address them. Mr. Biagas was on

the first panel here. His Web site talks about how my company, it

says, Bay Electric develops a detailed and specific safety plan for

each project we perform. We expect that of all employers, to figure

out what your hazards are. If it is not a serious hazard, then do

whatever is appropriate. But if you have a serious hazard, then you

have to address it.

So this approach, which is actually what VPP is, essentially says,

you have to think about your hazards in a systematic way. Now,

we are very early in the process. We are still considering it, we

haven’t started the Small Business Regulatory Enforcement Fairness Act process. So there will be lots of opportunity for people to

have input and talk to us about it. But we think this will be more

effective than trying to do standards on every specific hazard. Because we can’t have a standard on every hazard. There are so

many different things out there.

So this is telling employers, you figure it out. We trust you, you

know more about it than anybody else. But you have to figure it

out, you have to think about it. And we hope you will support that

and ask us more about it later on.

Ms. BUERKLE. When we see it, we will consider it.

With I2P2, what are the penalties that you are talking about for

a violation of that?

Mr. MICHAELS. We haven’t gotten anywhere near that yet. We

are so early in the process. I know that one thing that industry is

concerned about is sort of the double penalty. We want to make

sure, we are not trying to make this an onerous requirement. We

want to work with employers to make sure they see the purpose

of this and they see it is really separate.

We still have all of our rules that issue penalties for violations

of different standards, or just not providing a safe workplace. This

really is very different.

Ms. BUERKLE. So what are the employers hearing or seeing, if

this is so new in development, what are they hearing or seeing that

they are concerned about a double penalty?

Mr. MICHAELS. Well, frankly, it is hard for me to tell. I know

that a couple of big trade organizations that oppose everything

OSHA ever does, they came out and they opposed it. But I think

that is to raise money from their constituents. Because I hear from

employers every day who say, this is obvious, of course, we do this

every day. Every employer does this, and we will support you.

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So we will have to see. Obviously some are concerned. But I

think some just like to raise red flags. We are asking them to work

with us, bring your concerns to us, don’t announce you are opposed

to it before you even see it. Because that is what I am hearing, that

there are some people who are saying, well, we are opposed to it.

I don’t think that is right.

Ms. BUERKLE. And with this I2P2 regulation, do you think that

is going to take us away from the compliance assistance and more

to the punitive? Or do you think it is going to be more user friendly?

Mr. MICHAELS. We do both. That is the thing. For employers who

want to do the right thing, who want to do this, we will give them

all the help we can. But there are always going to be some who

don’t. We are going to do both. It is not one or the other.

Ms. BUERKLE. How do you know what is right, though? Some of

these, like what we heard earlier, these are subjective, subjective

criteria that when you have someone going into the work site, he

may have a different standard or a different vision than you have.

How are we going to ensure a fair and equitable distribution of

these regulations?

Mr. MICHAELS. Are you asking specifically about I2P2 or the general balance?

Ms. BUERKLE. I2P2 is what we are talking about.

Mr. MICHAELS. Well, California has had an I2P2 standard for almost 20 years. And employers there are very comfortable with it.

We actually are having conversations with stakeholders around the

country. We have had five big meetings. But also talking directly

to the OSHA offices in California, saying, how do you do this, how

do you make sure you have that right balance.

Ms. BUERKLE. But again, I will just go back to my concern, and

that would be a fair application of the law, and the interpretation

of the law.

Mr. MICHAELS. I certainly appreciate that.

Mr. JORDAN. The gentleman from Maryland.

Mr. CUMMINGS. I would certainly agree with the gentlelady. I

think a fair application of the law is so very important. And I will

tell my story until I die. As a young boy in high school, working

at Bethlehem Steel. And after you would blow your nose, after

being on the property for an hour, when you blew your nose, the

mucus was black. A lot of the men who worked with me died early.

I just worked there for a summer. Some of them worked there for

years. And they would breathe it in and breathe it out, breathe in,

and I am sure their lungs got covered with that stuff.

So I think, and I was just wondering, Mr. Michaels, how important is enforcement with regard to OSHA regulations? And are inspections a part of that process?

Mr. MICHAELS. Our basic view of this is, we have to, it is deterrence. We have to do everything we can to make sure employers

do the right thing. The law is about employers, they have to apply

the right standards, they have to protect workers. So we do enforcement, and when we do enforcement and it is a significant case,

we also try to publicize it and we try to reach out to the industry

and say, look, you can do the right thing, you can get the compliance assistance program. But at the same time, if we go there and

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we find a hazard, we are going to give you a fine. And in many

cases, we are going to put it in a press release so people so it. So

we know that we want to do everything we can to encourage the

right behavior.

We are a small agency, so we do as much enforcement as we can.

We have about 2,200 inspectors for the whole country, to cover 130

million workplaces, 7 million workplaces, 130 million workers.

Mr. CUMMINGS. How many inspectors do you have?

Mr. MICHAELS. Right now, about 2,200.

Mr. CUMMINGS. With the budget cuts, how many will you have?

Do you know?

Mr. MICHAELS. The budget cuts will take us down, in terms of

the number of inspectors, to the number of inspectors we had in

the 1970’s, with a work force that is pretty much twice as big. If

those cuts go through permanently. If the cuts go through in the

short run, if the CR is passed immediately, we would probably

have to lay off or furlough almost all the enforcement personnel we

have, because the cuts are really focused on our enforcement program. And it so late in the year, that a 20 percent cut on the agency, focused on enforcement, will have a very, very big impact.

Mr. CUMMINGS. So we don’t have to do away with the regulations, we just stop people, we just fire people or furlough them, and

they won’t be able to do their job, is that right?

Mr. MICHAELS. That is right.

Mr. CUMMINGS. One of the most interesting articles I have ever

read was by Ezra Klein, it says how House GOP spending cuts

would add up to more spending later. Basically it is a very interesting article, because what he talks about is March 14th of this year.

He talks about how we are doing all this cutting, cutting, cutting.

But it is an issue of whether you are doing a lot of damage in the

process. And what you are talking about there, if this Congress

continues to cut, cut, cut all of our enforcement people and our inspectors, you don’t have to worry about the regulations, because

you take the guts out of the regulations by doing that. Am I right?

Mr. MICHAELS. That is right. We know, the thing that drives

compliance assistance, the reason employers go and get the free

consultation, a big reason is they fear an OSHA inspection. That

is reality. It is unfortunate. A lot will do it because they want to

do the right thing. But they also think, well, I had better do this,

because I don’t want to get a fine. So if our inspections disappear,

it would have a big impact. I don’t think people would use compliance assistance much, either, frankly.

Mr. CUMMINGS. There is another thing that kind of bothered me

about this whole idea of costs, regulations that might cost jobs, jobkilling regulations or whatever you call it. And this is my statement, this is not you, this is me. Nothing guarantees that even if

they got rid of the regulations and even if they saved the money

that would relate to more jobs. It might just, you don’t have to comment on this, it might just be more profit.

And so I just think, I just hope that we keep sight of this. This

OSHA thing, the reason why I cited my example is because I will

never forget how those older men at Bethlehem Steel would beg me

to stay in school. Although they were making a lot of money, they

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said, stay in school. You know why? Because they knew that I

would die early, like they would.

I yield back.

Mr. JORDAN. Mr. Michaels, would you agree that the vast majority of employers care deeply about the well-being of their employees?

Mr. MICHAELS. I think so. I don’t have evidence, but that is my

feeling as well.

Mr. JORDAN. Particularly in the high tech world we live in today,

where there is so much investment in their employees, they put so

much money at stake, and they want their employees there, because that is what keeps their business profitable in this high tech

international marketplace we are in. I would venture to say the

vast, vast majority of employers care deeply about their employees.

Mr. MICHAELS. I would like to agree with you.

Mr. JORDAN. Well, let me ask you this. Do you think you care

more about their employees than the employer who employs them?

Is that what you are insinuating?

Mr. MICHAELS. I am not suggesting that at all.

Mr. JORDAN. Do you think a bureaucrat in the Federal Government cares more about the employees at Mike Kelly’s business

than he does?

Mr. MICHAELS. I would never suggest that.

Mr. JORDAN. Well, that is what you were saying when I asked,

do you think the vast majority of employers do not care passionately and deeply about the well-being of their employees. I just

think that is the norm.

Mr. MICHAELS. Well, I think you are right.

Mr. JORDAN. Well, why did you say that when I asked you the

question?

Mr. MICHAELS. I think I did say that.

Mr. JORDAN. I don’t think you did. You said, I would like to think

that.

Mr. MICHAELS. No, I said I think that, excuse me. But I think

it is also clear that we see employers who, with——

Mr. JORDAN. And you have also said you think we need more regulation.

Mr. MICHAELS. Yes.

Mr. JORDAN. You have also admitted that there is a compliance

cost with that regulation. And if you remember the first panel that

was in front of the full committee that Chairman Issa had, he had

witnesses, he had small business owners here. And the question

was asked by a freshman member, if you knew then what you

know now, would you have started your business, relative to regulation. Do you know what the answer was from most of those witnesses?

Mr. MICHAELS. No, I don’t.

Mr. JORDAN. They said, no, they would not have started their

business. If they knew then all the regulations, all the things they

were going to have to deal with with government, they would not

have started their business. These are profitable businesses, employing lots of people. One was from our district. I know how big

of an influence he is in this community that he comes from.

So that is what we are also trying to get at.

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Mr. MICHAELS. I think what we said before is we are looking for

the right balance between enforcement, because we have to be cognizant of the fact that if we are not there, and OSHA, the employer

says, well, this time, that man who is going on the scaffold today,

he doesn’t have the time, I am going to tell him to skip the safety

harness and that scoffold goes down. Instead of the photograph in

the newspaper of the worker just hanging there being saved, he is

on the ground dead. We see it too often. So we need that balance.

Mr. JORDAN. I want to thank the witnesses.

Mr. Kelly wanted additional time. Then we will stop here after

this. I apologize for going so long.

Mr. KELLY. Thank you, Mr. Chairman. I have to tell you, I think

all of us are trying to do the right thing. The question becomes,

then, how do you get to the right thing. And I have to tell you, I

am a private business person. I understand how difficult it is. I

have friends that work at Armco Steel, I have friends that worked

at Pullman Standard. I have people that work in my shop.

You know the biggest problem employers have is workers that

won’t use the safety. When I go out in the shop, my guys are supposed to wear a hard hat when they have a car up in the air. They

are supposed to wear goggles when they have a car up in the air.

They are supposed to wear goggles when they use a grinding

wheel.

What people are supposed to do, whether there is a regulation

or not, is kind of secondary. I know this is purely anecdotal, but

everything in these hearings is anecdotal. Because we all know a

guy who knows a guy who knew a guy. But the question of the

hearings were, at some point, is the cost of regulation reaching a

level where we can’t legislate complete safety? It is just impossible,

because people’s nature is to take the easy way out of everything.

I am talking about people that work in the job. I have friends that

are hurt every day in the steel mills because they don’t follow the

safety standards.

So are we going to get to a regulation where we have to have

somebody who walks with these guys to make sure they do the

right thing all the time? And I think the question becomes where

is the end game with regulation? Because you say we need more

regulations. The chairman says, are you talking about more regulations or more clear regulations. And I ask you this. Is there any

penalty put on a worker, other than by his employer, not to follow

safety standards by OSHA?

Mr. MICHAELS. No. The OSHA Act is written only giving OSHA

authority to do something about the employers.

Mr. KELLY. Right. That is my point. Because you cannot legislate

people using common sense. Don’t I wish. Don’t I wish. It is like

a dog chasing its tail. We keep coming up with new regulations

every day to protect people from doing dumb things that they do

themselves. I wish there were an answer to all this. I do appreciate

your coming here today. But I have to tell you, from a guy who has

lived it, who has paid more in training and equipment, and I see

the same things being done by the same people who just got hurt

the week before and say, what are you thinking about.

So I am not putting down what you do, by gosh, we all want everybody to come to work and get through the day healthy and go

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back home. I want to see everybody get to be a grandfather. I am

a grandfather. I also want to see my business survive, and I don’t

want it to get to the point where I am regulated out of business

because of something that I can’t possibly watch 24 hours a day.

It just is impossible.

Thank you.

Mr. KELLY. The vice chairman has asked for 15 seconds, then we

will adjourn.

Ms. BUERKLE. Thank you, Mr. Chairman.

I just wanted to comment, Dr. Michaels, when you were talking

about businesses fearing an OSHA inspection. I think that is what

we are troubled with. OSHA should be working with businesses so

we all get to that win-win where we have a safe workplace and we

keep jobs and the economy going.

Thank you.

Mr. JORDAN. Again, let me thank our witnesses. We appreciate

it. Mr. Gordon, we didn’t get you many questions today, but thank

you nonetheless for your testimony and for spending time with us

this afternoon. We are adjourned.

[Whereupon, at 5:12 p.m., the committee was adjourned.]

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