[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

H.R. 735, AND PROJECT LABOR AGREEMENTS, RESTORING COMPETITION AND
NEUTRALITY TO GOVERNMENT CONSTRUCTION

=======================================================================

HEARING

before the

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
POLICY, INTERGOVERNMENTAL RELATIONS AND
PROCUREMENT REFORM

of the

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

H.R. 735

TO PRESERVE OPEN COMPETITION AND FEDERAL GOVERNMENT NEUTRALITY TOWARDS
THE LABOR RELATIONS OF FEDERAL GOVERNMENT CONTRACTORS ON FEDERAL AND
FEDERALLY FUNDED CONSTRUCTION PROJECTS

__________

JUNE 3, 2011

__________

Serial No. 112-60

__________

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

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

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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director

Subcommittee on Technology, Information Policy, Intergovernmental
Relations and Procurement Reform

JAMES LANKFORD, Oklahoma, Chairman
MIKE KELLY, Pennsylvania, Vice GERALD E. CONNOLLY, Virginia,
Chairman Ranking Minority Member
JASON CHAFFETZ, Utah CHRISTOPHER S. MURPHY, Connecticut
TIM WALBERG, Michigan STEPHEN F. LYNCH, Massachusetts
RAUL R. LABRADOR, Idaho JACKIE SPEIER, California
PATRICK MEEHAN, Pennsylvania
BLAKE FARENTHOLD, Texas

C O N T E N T S

----------
Page
Hearing held on June 3, 2011..................................... 1
Text of H.R. 735................................................. 3
Statement of:
Baskin, Maurice, counsel, Associated Builders and
Contractors, Inc.; David Tuerk, professor and chairman,
Suffolk University and Beacon Hill Institute; Kirby Wu,
president, Wu & Associates; and Mike Kennedy, counsel, the
Associated General Contractors of America.................. 53
Baskin, Maurice.......................................... 53
Kennedy, Mike............................................ 85
Tuerk, David............................................. 59
Wu, Kirby................................................ 75
Gordon, Daniel, Administrator, Office of Federal Procurement
Policy, Office of Management and Budget; and Susan Brita,
Deputy Administrator, General Services Administration...... 19
Brita, Susan............................................. 29
Gordon, Daniel........................................... 19
Sullivan, Hon. John, a Representative in Congress from the
State of Oklahoma.......................................... 11
Letters, statements, etc., submitted for the record by:
Baskin, Maurice, counsel, Associated Builders and
Contractors, Inc., prepared statement of................... 55
Brita, Susan, Deputy Administrator, General Services
Administration, prepared statement of...................... 31
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland:
Letter dated June 3, 2011................................ 16
Prepared statement of Mr. Philips........................ 42
Gordon, Daniel, Administrator, Office of Federal Procurement
Policy, Office of Management and Budget, prepared statement
of......................................................... 22
Kennedy, Mike, counsel, the Associated General Contractors of
America, prepared statement of............................. 88
Lankford, Hon. James, a Representative in Congress from the
State of Oklahoma, letter dated February 25, 2011.......... 99
Tuerk, David, professor and chairman, Suffolk University and
Beacon Hill Institute, prepared statement of............... 62
Wu, Kirby, president, Wu & Associates, prepared statement of. 77

H.R. 735, AND PROJECT LABOR AGREEMENTS, RESTORING COMPETITION AND
NEUTRALITY TO GOVERNMENT CONSTRUCTION

----------

FRIDAY, JUNE 3, 2011

House of Representatives,
Subcommittee on Technology, Information Policy,
Intergovernmental Relations and Procurement Reform,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:30 a.m., in
room 2154, Rayburn House Office Building, Hon. James Lankford
(chairman of the subcommittee) presiding.
Present: Representatives Lankford, Kelly, Walberg,
Labrador, Connolly, and Murphy.
Staff present: John Cuaderes, deputy staff director;
Richard Beutel, senior counsel; Christopher Hixon, deputy chief
counsel, oversight; Robert Borden, general counsel; Jeff
Solsby, senior communications advisor; Ali Ahmad, deputy press
secretary; Jeff Wease, deputy CIO; Molly Boyl, parliamentarian;
Adam Fromm, director of Member liaison and floor operations;
Ryan Little, manager of floor operations; Cheyenne Steel, press
assistant; Nadia Zahran, staff assistant; Linda Good, chief
clerk; Laura Rush, deputy chief clerk; Dave Rapallo, minority
staff director; Suzanne Sachsman Grooms, minority chief
counsel; Donald Sherman, minority counsel; Ronald Allen,
minority staff assistant; Lucinda Lessley, minority policy
director; Ashley Ettienne, minority director of communications;
Jennifer Hoffman, minority press secretary; Jaron Bourke,
minority director of administration; and Carla Hultberg,
minority chief clerk.
Mr. Lankford. The committee will come to order. This is a
hearing on H.R. 735, the Project Labor Agreements Restoring
Competition Neutrality to Government Construction Projects.
The Oversight Committee mission statement we read at every
one of our committee meetings, let me just go ahead and read
it. We exist to secure two fundamental principles: First,
Americans have a right to know that the money Washington takes
from them is well spent; and, second, Americans deserve an
efficient, effective government that works for them. Our duty
on the oversight and government reform committee is to protect
these rights. Our solemn responsibility is to hold government
accountable to taxpayers because taxpayers have a right to know
what they get from their government. We work tirelessly in
partnership with citizen watchdogs to deliver the facts to the
American people and bring genuine reform to the Federal
bureaucracy.
This is the mission of the Oversight and Government Reform
Committee.
I have an opening statement. I am going to submit it for
the record for the sake of our time today. I will also allow
any Members to have 7 days to submit opening statements and any
extraneous material for the record.
[The text of H.R. 735 follows:]

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Mr. Lankford. We will now recognize our very first panel.
This is the Honorable John Sullivan, who represents Oklahoma's
First District. He is up the turnpike from me personally. He
introduced H.R. 735, the Government Neutrality and Contracting
Act in February of this year. I am glad to have you,
Congressman Sullivan. Thanks for taking time out of your
schedule to get a chance to do a statement for us today. You
are given and yielded 5 minutes.

STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF OKLAHOMA

Mr. Sullivan. Thank You, Chairman Lankford and Ranking
Member Connolly, members of the subcommittee. Thank you for
holding this hearing today.
Every day of this Congress has brought us face-to-face with
tough decisions on spending cuts, cost-saving proposals,
policies that encourage job creation and ways to preserve the
American Dream for our posterity. It is clear now, more than
ever, that each fiscal decision that Congress makes has an
impact on the sustainability of America's prosperity.
I bring to your attention today H.R. 735, the Government
Neutrality and Contract Act, which will save jobs, create jobs,
and prevent the waste of taxpayer dollars on Federal and
federally assisted construction projects by reestablishing fair
and open competition.
To begin, a project labor agreement is a contract that
typically forces contractors and subcontractors to agree to
recognize unions as the representatives of their employees on
that job in order to win a construction contract. PLAs
typically force contractors to use the union hiring hall and
pay fringe benefits into union-managed benefit and pension
benefit programs. PLAs also contain clauses that force
contractors and employees to obey the restrictive and
inefficient work rules and job classifications common in union
and collective bargaining agreements but absent in the standard
operation of open shop contractors.
While it is technically true that any contractor is welcome
to compete on or for projects that require a government-
mandated PLA, both general contractors and subcontractors must
agree to the terms and conditions of a PLA in order to win a
contract. The practical effect of these agreements is to
discourage competition from contractors opposed to the terms of
the PLA.
In 2001, President George Bush issued Executive Order 13202
and 13208 to maintain government neutrality in Federal
contracting. These Executive orders prohibited the government
from requiring contractors to adhere to PLAs as a condition of
winning Federal or federally funded construction contracts.
Because President Bush's Executive order was about maintaining
neutrality, a contractor could also voluntarily enter into a
PLA if they felt it could make their business competitive and
deliver the best product to the government. However, in 2009,
President Obama issued Executive Order 13502, encouraging
Federal agencies to require union-favoring PLAs on Federal
construction projects exceeding $25 million in total costs.
While President Obama's Executive order does not mandate PLAs
on all Federal construction contracts, it does nothing to
preserve the neutrality that government should maintain.
Rather, it exposes Federal procurement officials to intense
political pressure from special interest groups, politicians,
and political appointees to require PLAs.
As I and other panelists place the facts before you, you
will see how this dangerous path--this is a dangerous path.
Government-mandated PLAs are not only discriminatory, but they
are also hurtful to a struggling industry that is already
facing unemployment above 17 percent. For example, yesterday
The Wall Street Journal reported on a $70 million highway
construction contract in New York funded at least 80 percent by
the Federal Highway Administration that has been scrutinized
for the decision to subject it to a PLA. While 27 percent of
New York's private construction work force is unionized, that
means that the employers of 73 percent of New York's
construction work force who have been facing steep jobs losses
over the past few years are discouraged from bidding on this
project. Unfortunately, limiting competition comes at taxpayer
expense. The article mentions that the PLA cost taxpayers an
additional $4\1/2\ million because the lowest responsible
bidder, a merit shop contractor, was thrown off the project in
favor of a union contractor because the merit shop contractor
would not sign a PLA.
Executive Order 13502 states its purpose is to promote
efficiency. However, there is little evidence to suggest PLAs
promote efficiency in Federal contributing. There were no
examples of inefficiencies during the Bush years when PLA
mandates were restricted. I am aware of anecdotal evidence on
recent Federal construction projects demonstrating an increase
in the construction costs that may not provide corresponding
benefits to taxpayers or construction owners. For instance, the
U.S. General Service Administration renovation project of
Lafayette Federal Building in Washington, DC, was awarded to a
Federal contractor without a PLA at a $52.3 million cost.
However, after the contractor agreed to a PLA for the
project by the GSA, the contractor added $3.3 million to the
cost of the project. The added $3.3 million isn't the result of
increased material costs, revised blueprints, or a more
aggressive completion deadline. The contract was awarded to the
same contractor with the same proposal. And the only difference
was the PLA. There are just two examples--these are just two
examples, but there is no doubt that there are many more
stories reflecting the true colors of government-mandated PLAs.
When mandated by public officials, these agreements
unfairly discourage competition from 87 percent of the entire
U.S. private construction work force, effectually raise the
employment rate of the industry, cost the government billions
more in construction costs, and do nothing to increase the
efficiency of Federal construction projects.
There is a solution. H.R. 735, the Government Neutrality in
Contracting Act, will prohibit executive agencies and
recipients of Federal funds from requiring contractors to agree
to PLAs as a condition of winning a Federal construction
contract. Contractors are free to enter into PLAs if they want
to, but the government is removed from that decisionmaking
process. If enacted, this bill guarantees that all qualified
contractors and their skilled work forces, regardless of labor
affiliation, can compete on a level playing field. This expands
job opportunities, reduces the costs of government, and
prevents discrimination based on labor affiliation. All told,
H.R. 735 will ensure that taxpayers get the best possible
product at the best possible price.
Once again, thank you, Chairman Lankford, for all you are
doing. Thank you, Ranking Member Connolly, and all the members
of the subcommittee. Thank you very much. I appreciate this
opportunity to address your committee.
Mr. Lankford. Thank you, Congressman Sullivan, for taking
time out of your schedule today to come over and testify.
Mr. Lankford. Many of you may or may not know that we have
a vote that is coming very soon, and there is already debate on
the floor, which was originally unscheduled during this time
period. So I appreciate you coming over.
We will take a short recess to allow the clerks to set up
for the second panel real quick and look forward to get a
chance to introduce our second witnesses. Thank you.
[Recess.]
Mr. Lankford. We will now welcome our second panel. The
Honorable Daniel Gordon is the administrator for the Federal
Procurement Policy, the Office and Management and Budget. Very
grateful to have you here, Mr. Gordon.
For clarification of everyone that is here, Mr. Gordon and
I talked 3 days ago actually about his schedule today; that he
has to get away for a flight by 11. At that time I told him we
don't have votes scheduled so we should be just fine. Now we
have votes scheduled this morning. So when votes interrupt us,
I still will allow Mr. Gordon to catch that flight and get out
of here. So we are in an accelerated process to get you to that
quickly.
Ms. Susan Brita is the Deputy Administrator of the General
Services Administration.
Pursuant to the committee rules, all witnesses are sworn in
before they testify. So if you would please stand and raise
your right hands.
[Witnesses sworn.]
Mr. Lankford. Let the record reflect the witnesses all
answered in the affirmative.
Mr. Cummings. Mr. Chairman, I have a parliamentary inquiry.
Mr. Lankford. Absolutely, sir.
Mr. Cummings. Mr. Chairman, I, too, want to see Mr. Gordon
get out of here on time--and I know you will. But my staff has
informed me that you, Chairman Issa, and other chairmen of this
committee have adopted a new policy for minority witnesses.
This policy appears to contradict the rules and the precedent
of our committee. We received word of this new policy for the
first time from Chairman Issa's staff in an e-mail on May 25th.
And here is are what it said: If there is an administration
witness, then that witness is designated minority witness. It
is up to the chairman to accept an additional witness, but that
witness must be recommended within a 24-hour period.
In other words, if you invite someone from the
administration, that witness is somehow designated as our
witness, although we didn't ask for him.
For this hearing we did not request an administrative
witness. You did. We requested Dr. Peter Phillips, an expert in
economics of the construction industry, but you refused to
allow him to testify. The reason your staff gave was Chairman
Issa's new policy. They said we couldn't have our witness
because you already invited administrative witnesses.
Here's my inquiry. Has the subcommittee or the full
committee formally adopted this policy?
Mr. Lankford. That we will have to determine. I will have
to get with Chairman Issa and get a chance to talk about that
specifically. Part of the issue is well--and I had this
conversation with Ranking Member Connolly. Obviously, we have
seven people on this panel already as well, two of those being
administration officials. And I recommended to him at that time
that the minority witness submit something at length for the
record so we get a chance to include that as well.
Mr. Cummings. Well, the only reason I am asking is because
I think it sets a dangerous precedent, because quite often, we
are opposed to what the administration is doing. And so for
people to be designated our witnesses, it just creates a major
problem. So I just wanted to know that. We just wanted to know,
on what basis did you deny Ranking Member Connolly's request to
invite Dr. Phillips to today's hearing. What was the basis of
that?
Mr. Lankford. The basis was obviously we had seven people
already, and two of those being administration officials that
we thought would be very supportive and clear to articulate
that position as well.
Mr. Cummings. Second parliamentary inquiry. Mr. Chairman,
this new policy is not only unfair and unprecedented, but it
directly contradicts the rules of the House and the rules of
our committee. Committee rule No. 2 provides for ``Witnesses
from the minority may request''--and it says not the majority--
the minority--``The same is true in the rules of the House.''
Mr. Chairman, it is on obvious point but you can't just
invite people to testify and claim that we invited them. Can
you show the Members any basis in the rules for this new
misguided policy?
Mr. Lankford. Why don't we get a chance to go through this
in the following days and I will followup and show a previous
record of how this committee has been handled in the past and
we will be able to direct that and be able to determine if this
is consistent with previous actions of the committee.
Mr. Cummings. Just one other thing. I just want to make it
clear, because this is a very dangerous precedent and no
previous chairman has ever designated who the minority
witnesses would be, regardless of whether they are
administrative officials or anyone else. Chairman Issa's new
policy is an extreme edict, and I am aware of no other House or
Senate committee with a similar policy. This policy also
undermines the integrity of our committee by impairing the
ability of minority Members to bring balance and additional
perspectives to these proceedings. And I ask that you state
here to our Members that you categorically reject this policy
immediately.
Will you do that, Mr. Chairman?
Mr. Lankford. I will not. I want to able to look at the
full record of the history of this committee and be able to
determine that. I understand what you're saying, but I want to
be able to walk through the history of this committee as well.
Mr. Cummings. I understand. Mr. Chairman, I have a motion.
Today, I join all the ranking members of this committee in
sending a letter to Chairman Issa formally objecting to this
new policy and calling on him to abandon it. Here's what the
letter says: Apart from these specific objections, we are
concerned about the direction of your overall approach. Rather
than increasing bipartisan cooperation, as you pledged to do
many times, you have adopted this new policy without
identifying any legitimate basis or need for it.
This leads to the unfortunate conclusion that you are more
interested in holding hearings to advance your own personal
political agenda rather than objectively gather facts from a
variety of sources to improve public policy.
Mr. Chairman, I ask unanimous consent that this letter be
entered into the record.
Mr. Lankford. Without objection.
Mr. Cummings. Thank you.
[The information referred to follows:]

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Mr. Connolly. Mr. Chairman.
Mr. Lankford. By the way, we are very limited in the time
that we have. If this is a conversation that we can have after
Mr. Gordon has already testified, it would allow him to be able
to slip out and be able to hear our witnesses.
Mr. Connolly. I understand. As the ranking member of the
subcommittee, I have a further parliamentary inquiry following
up on Mr. Cummings' inquiry. Was the chairman suggesting that
he believes there is precedent for the majority dictating to
the minority who their witnesses would be at a hearing?
Mr. Lankford. What the chairman is stating is I want to
walk back through the history of this and be able to discover
that clearly and so we can all walk through it together and see
area by area as we've gone back through history to be able to
determine that together.
Mr. Connolly. Would the chairman acknowledge that he was
given verbal objection by this ranking member to this
proceeding?
Mr. Lankford. Yes. We discussed that actually prior to your
arrival.
Mr. Connolly. I know that since our witnesses are going to
be under oath, they will testify that I have had no
communication. The ranking member on the minority of this
subcommittee did not request Mr. Gordon or Ms. Brita as
witnesses. Would the chairman be aware of that?
Mr. Lankford. I would not be. Would you suggest that they
would not be good witnesses to be able to speak to this issue?
Mr. Connolly. No. I would suggest they were not my choice,
and that the minority has a right under the rules of the House
and the rules of this committee to choose its own witnesses.
And this hearing is in violation of those rules. And I want to
protest that publicly.
I want the administration witnesses to understand that they
are being used. And I want that on the record.
Mr. Lankford. Without objection.
Mr. Gordon, we would very much be greatful to receive your
testimony for 5 minutes.

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

STATEMENT OF DAN GORDON

Mr. Gordon. Thank you. I will speak briefly, Mr. Chairman.
Chairman Lankford, Ranking Member Connolly, members of the
subcommittee, I appreciate the opportunity to appear before you
today to discuss issues related to the use of project labor
agreements in Federal construction contracts. As the chairman
noted, we talked earlier this week. I do have, unfortunately, a
very firm travel commitment. I will have to leave at 11 this
morning. I am very appreciative of the chairman's and the
subcommittee's understanding in this regard.
As an administrator for Federal procurement, I am
responsible for overseeing the development of governmentwide
contracting rules and policies and ensuring that those rules
and policies promote economy and efficiency in government
contracting. This morning I am going to very briefly describe
the steps that my office has taken to shape the Federal
acquisition regulation, the FAR rule, that implements executive
order 13502, which governs the use of PLAs in Federal
construction contracts.
Let me first address a possible misperception about what
the FAR rule says about the use of PLAs. The FAR rule does not
mandate the use of PLAs. Like the Executive order, the FAR rule
gives each contracting agency the discretion to decide for
itself on a project-by-project basis whether use of a PLA will
promote economy and efficiency in that specific construction
contract. The FAR rule calls PLAs--and I am quoting from the
rule: A tool that agencies may use to promote economy and
efficiency in Federal procurement.
In offering PLAs as a tool to the contracting agency, the
FAR rule on PLAs is similar to many other provisions of the
FAR. For example, the FAR lets contracting agencies decide,
based on the specifics of their needs and their circumstances,
whether they should purchase through the Federal supply
schedule or on the open market, whether they should seek bids
with price as the only evaluation criterion or rather run a
competitive procurement with other selection factors, such as
past performance in addition to price. The FAR doesn't dictate
to our acquisition professionals what choices to make, but it
gives them the tools to make the choices to tailor a
procurement to the individual agency's specific requirement.
That toolkit approach and the flexibility that comes with it
lie at the very heart of our ability to get the best value for
every taxpayer dollar we spend, whether we are buying lawn
mowing services for a national park or war planes for the Air
Force. And our approach to PLAs is no different.
We have structured the FAR rule to create a process were
decisions are made on a case-by-case basis. The FAR rules set
out factors that agencies may decide to consider, but it does
not dictate those factors or prohibit agencies from considering
other factors. As with other FAR rules, though, the PLA rule
sets boundaries. Most significantly, the agency can require a
PLA for a specific project only, only, if it decides that doing
that will advance the government's interest in achieving
economy and efficiency in Federal procurement.
Equally important with respect to the content of any PLA
created pursuant to the FAR rule, the rule requires that the
PLA allow all firms to compete for contracts and subcontracts
without regard to whether they are otherwise parties to
collective bargaining agreements. That mandate ensures that if
a agency decides to use a PLA, it is done in a way consistent
with the principle of open competition, a bedrock of our
Federal procurement system.
We appreciate that taxpayers would not benefit from a rule
that mandated the use of PLAs even if they didn't make sense
and didn't serve economy and efficiency. However, similarly,
taxpayers would not benefit from a rule if agencies were
prohibited from taking advantage of opportunities where a PLA
could help them achieve or increase efficiency and timeliness.
With these thoughts in mind, our office, the Office of Federal
Procurement Policy, intends to work with agencies to facilitate
the sharing of experiences and best practices for the
consideration and appropriate use of project labor agreements
in the Federal marketplace.
I am very happy to answer any questions when we come to
question time.
Thank you, Mr. Chairman.
Mr. Lankford. Thank you, Mr. Gordon.
[The prepared statement of Mr. Gordon follows:]

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

STATEMENT OF SUSAN BRITA

Ms. Brita. Good morning, Chairman Lankford and Ranking
Member Connolly, and other members of the subcommittee. Thank
you for inviting me here today to discuss GSA's measured
business approach to the implementation of project labor
agreements in our construction contracts. A PLA is a proven
tool to help provide structure and stability to any project,
especially on large, complex projects. The private sector uses
PLAs for a variety of construction projects similar to those
that GSA manages. PLAs are also used at the State and local
levels for an array of construction projects varying in size
and scope.
PLAs have been used in all 50 States and the District of
Columbia. They can help reduce risks associated with wage
stability, avoidance of work stoppage, increased labor
availability, and project-specific coordination on work rules.
PLAs can also include provisions that promote career
development through valuable job training for construction
workers.
GSA only use PLAs when they promote economy and efficiency
in Federal procurement. Executive Order 13502 and the FAR
encourage executive agencies to consider requiring contractors
to use PLAs on projects totaling at least $25 million. The
Executive order does not mandate the agencies, but encourages
the consideration of PLAs. Our procurement process provides for
the consideration of PLAs. GSA allows a contractor to submit a
proposal with a PLA, without a PLA, or you can submit both. We
evaluate these proposals on a project-by-project basis. If GSA
accepts a PLA proposal, the awardee is required to execute a
PLA in accordance with the Executive order and the FAR.
In GSA's contracts, the PLA is an agreement between the
contractor and a labor organization rather than between GSA and
a labor organization. For our major construction projects, GSA
typically selects the proposal representing best value for the
government by weighing a number of technical factors against
cost. Our PLA recently has been included as one of these
technical factors. Proposals with the PLA receive 10 percent of
the total possible points for evaluation. We award to
contractors who work with labor organizations as well as
contractors who do not.
Shortly after the Executive order was signed, GSA received
$5\1/2\ billion through the American Recovery and Reinvestment
Act of 2009. These funds, which we use principally to help
modernize and green our federally owned inventory, provided GSA
the opportunity to conduct a PLA pilot program. By this pilot
program, GSA selected 10 projects with budgets of over a $100
million. The selected projects covered seven States and the
District of Columbia. Of these 10 projects, seven ended up with
PLAs and three did not. From our comparisons, in most instances
there has been no to little difference cost difference.
Our experience in this pilot program has shown us that our
bidding process has not hindered competition. In all of our
projects, we receive sufficient bids to ensure adequate
competition and best value for the American taxpayer. We
typically receive between three and eight offers for these
projects. Through the construction of these projects, GSA plans
to assess the use of PLAs for future implementation of best
practices and update our policies. This pilot program has
enabled GSA to obtain real market data regarding the impact of
PLAs on competition.
GSA has recently reached out to contractors and union
officials to hear their feedback on our pilot projects in order
to develop ways to further improve the PLA procurement process.
As real estate experts, GSA ensures that we are procuring
construction goods and services at best value for the American
government on behalf of the American taxpayer. The
consideration of PLAs is encouraged because of the benefits
associated with them. PLAs can provide wage stability for
workers, establish mechanisms for resolving labor disputes and
reduce the risk of work strikes and lockouts to ensure projects
continue on schedule.
In awarding construction contracts, GSA considers a variety
of technical factors, including potential benefits of PLA and
weighs them against cost to help determine the winning
proposal. By leveraging our experience and expertise, GSA
ensures high design and construction excellence at best value
for the American taxpayer.
Thank you, Chairman Lankford, and I am here to answer any
questions you may have.
[The prepared statement of Ms. Brita follows:]

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Mr. Lankford. Thank you, Ms. Brita. I now yield myself 5
minutes for initial questioning.
Mr. Gordon, as I am going through this issue, when a PLA
agreement is made, does that change the collective bargaining
rights typical for a union when they are coming in? Do they
have to set aside some of those rights to enter into a PLA
agreement?
Mr. Gordon. Mr. Chairman, unfortunately, I'm not a labor
lawyer. I'm a procurement guy. And I'm not sure what the impact
would be on individual collective bargaining agreements.
Mr. Lankford. When this was made, the shift that occurred
in the Executive order, was that because PLAs were being
excluded? There was an Executive order done 2 years ago that
you said didn't elevate the PLAs, but it encouraged the use of
PLAs on it. Was that because PLAs were more efficient but they
weren't being selected? I'm trying to figure out the reason
that the Executive order is needed. If already PLAs are
allowed, if already that is in the process, and what we are
talking about today does not exclude PLAs, and say, No, they
can't be used, what was the need for the Executive order and
how is that bearing out?
Mr. Gordon. Thank you, Mr. Chairman. Under the prior
administration, the government was prohibited from requiring
the use of PLAs on Federal construction projects. It is true
that individual contractors could voluntarily use one. But what
we have seen is that in both the private sector and in State
and local governments there are situations where PLAs are
viewed as helpful. And our view was that same tool should be
available to the Federal Government just as it is available,
for example, to Toyota when Toyota used project labor
agreements and as the Department of Energy has required use of
project labor agreements for many decades. We wanted that to be
possible for the entire Federal Government. We weren't
encouraging their use. We were encouraging agencies to consider
whether they should be required.
Mr. Lankford. Is there increased points that are given in
the benefits for use of a PLA?
Mr. Gordon. I'm not sure what you mean by increased points.
Mr. Lankford. In the scoring in trying to determine the
benefit of how to select what contractor, are there increased
points that are given if they use a PLA?
Mr. Gordon. We have given agencies considerable flexibility
in deciding how to implement the FAR rule. What you heard from
Ms. Brita was that at GSA, a small percentage of points, it is
really only on the technical side that you can get 10 percent
extra points. But technical is only one factor. There is also
past performance and price. Other agencies aren't taking that
approach.
Mr. Lankford. The reason for that would be--the 10 extra
points was because they saw increased efficiency and such, or
what was the reason forgiving the extra points for that?
Mr. Gordon. It would be better to ask Ms. Brita.
Mr. Lankford. Let me shift.
Ms. Brita, what was the reason for the extra points on
that?
Ms. Brita. GSA chose to enter into the 10 percent
preference. As you know, the Executive order encourages
agencies to consider. We are in the construction business and
always looking for ways to increase competition and obviously
make things more efficient. In the application of the Executive
order, we chose to use the 10 percent point system to meet that
encouragement; to encourage people to participate and get
involved.
Mr. Lankford. When you mention the pilot program, is that
the Rider Levett Bucknall report? When you were talking about
the pilot program earlier that did the study on PLAs, is that
the report you're referring to, the company that did the
report?
Ms. Brita. The pilot program I'm talking about is the 10
projects that we identified that we were going to run the PLA
against and see how the 10 projects stack up. The report is a
different effort.
Mr. Lankford. That report, though, you're familiar with
that report?
Ms. Brita. I am fairly familiar with it.
Mr. Lankford. The report I have, I have a draft copy of it,
the last revision of that looks like it was January 27, 2010.
Our staff has been trying to request this report, obviously,
because it is good that you all have done a study. It is the
right thing to be able to do on it. We've been trying to get a
copy. We were finally able to get a copy at actually 6 p.m.
last night. The last draft was actually done January 27, 2010.
I would like to ask unanimous consent that we submit this
report for the record.
So agreed.
Mr. Lankford. In this report, there are several statements
that come out on it in the executive summary even at the
beginning of it, it talks to these different cities and these
different locations and, for instance, in Cleveland there is a
0.1 percent marginal benefit to PLA; a 0.6 percent benefit in
Honolulu; a 0.3 benefit in San Francisco. But then it walks
through other cities in the PLA studies and saying in other
cities, Portland, OR; Nogales, AZ; Denver, CO; Washington, DC,
all had increased costs by using PLAs--some of them as high as
12 percent more expensive. So it is not 0.12 but 12 percent on
the other side. 5.8 more expensive in Colorado. And then there
is a risk in using PLAs excludes small and minority businesses
and may exclude capable merit shop contractors and other
factors related to this.
This was a very interesting report to go through last
night. My question is: This has been out here for a year and a
half and it is still in draft form. At what point is this in
its final form and will actually be released to everyone?
Ms. Brita. Chairman Lankford, the agency made a decision
that we would suspend further work on that report and really
work toward applying forces market forces----
Mr. Lankford. Is that because of the findings of this
report? This report does not support what you're saying on the
pilot program. This report is fairly discouraging of PLAs. It
does find like 0.3 percent benefit in certain cities. But it's
very discouraging on the whole of using PLAs.
Ms. Brita. Well, the report is a draft and it is not final.
Mr. Lankford. But it has been draft for a year and a half.
How long does it take to finish a report that's inconsistent
with the government policy?
Ms. Brita. Well, we decided to suspend action on that
report and move toward the consideration--letting the
marketplace determine, with the applicability of PLAs, rather
than rely on a report.
Mr. Lankford. So the report wasn't consistent with the
policy, and so the report is set aside. And we've suspended the
report because the policy was inconsistent with it. I'm trying
to figure out the why. Was it sloppily done? The findings
weren't consistent with other reports that were done. Why was
this suspended?
Ms. Brita. The report was suspended because we wanted to
get real market data quickly. And we were moving through our
recovery projects. So we felt that it would be a better use of
our time and quite frankly, more efficient to try to get real
market data quickly by encouraging the use of PLAs in this
collection of project. These projects were chosen because we
felt they had large cities, small cities, they were major
construction. So we thought that would be a better way to
gather data quickly, quite frankly, than wait for the report.
So we suspended work on the report and went to the actual
application of the PLAs in some of our projects.
Mr. Lankford. I've exceeded my time. I apologize for that.
I would like to yield to Mr. Connolly, the ranking member.
Mr. Connolly. Thank you, Mr. Chairman. Ms. Brita, by the
way, I recognize that accent. Boston?
Ms. Brita. Yes, sir.
Mr. Connolly. Where?
Ms. Brita. Boston, Hyde Park.
Mr. Connolly. My family lives in West Roxbury. I can talk
that way if I have to.
While I've got you, Ms. Brita, who invited you to come to
this hearing?
Ms. Brita. The chairman did.
Mr. Connolly. Did you hear anything from my office or me?
Ms. Brita. I did not.
Mr. Connolly. So you were not invited by the minority?
Ms. Brita. No, sir.
Mr. Connolly. You don't consider yourself a minority
witness, therefore.
Ms. Brita. I received a letter from the chairman and I had
a conversation with his chief counsel.
Mr. Connolly. Mr. Gordon, same question. Who invited you
here?
Mr. Gordon. Same answer, sir.
Mr. Connolly. So you did not hear from me or from my
office?
Mr. Gordon. We had, as far as I know, no contact with your
office at all.
Mr. Connolly. So as far as you know, you were not invited
here by the minority.
Mr. Gordon. That's right, sir.
Mr. Connolly. Let me just say again, sadly, you're both
being used, in violation of House rule 11 clause 2(j)(1), which
states explicitly: ``The minority members of the committee
shall be entitled, upon request, to the chair by a majority of
them before the completion of the hearing to call witnesses
selected by the minority to testify with respect to that
measure or matter.''
To my knowledge, it's never been customary in the House or
the Senate for the majority to determine who the minority
witnesses are, let alone to determine on their behalf, by the
way, because the administration happens to be of the same
party, therefore you are our witnesses. I want you to both know
that at least this ranking member, and perhaps I will be joined
by the ranking member of the full committee, I'm going to
advise the administration to decline all requests by the
majority to testify before this subcommittee and the full
committee until this matter is resolved. Because for you to
testify is to be unwittingly complicit in the violation of
House rules and the committee rules and to tread on the rights
of the minority. And so I hope you both will take that back to
your respective agencies.
I am going to be talking to the White House and to the
administration government relations officials. And I would hope
that the administration would cooperate with us in a policy of
noncooperation until this matter is cleared up. But the
minority has rights. And if the majority wishes to actually
join on this issue and dare to tell us who our witnesses will
be and to designate administration witnesses as our witnesses
against our wishes, then we are going to advise that
administration to not cooperate with the Members of the
majority until our rights are recognized and respected.
With that, I yield to the my the ranking minority member of
the full committee.
Mr. Cummings. I thank the gentleman for yielding. I want to
associate myself with every syllable of the words of Mr.
Connolly.
Administrator Gordon and Deputy Administrator Brita, I
appreciate your testimony and views you have provided today. As
I stated at the start of the hearing, it is critical that this
committee conduct fair and responsible oversight. That is why I
am particularly disappointed that Chairman Lankford decided to
deny the minority's request for witness, Dr. Peter Phillips,
Chair of the Economics Department at the university of Utah,
citing a misguided and unprecedented committee policy.
If Dr. Phillips had been allowed to testify in person
today, I would have asked him to discuss the credibility of the
2009 study by the Beacon Hill Institute. That study criticizes
the use of PLAs on Federal construction projects.
Instead, I directed my staff to put this question to Dr.
Phillips in writing, and he has graciously responded in
writing. Had the majority been allowed to bring Dr. Phillips
forward, he would have told the subcommittee that the Beacon
Hill Study, ``has not been vetted in any peer-review process
and would be unlikely to survive a peer review.'' Had Dr.
Phillips been allowed to present live testimony at this
hearing, he would have also questioned, using Beacon Hill's
analysis as a basis for the claim that PLAs raise construction
costs by reducing competition.
Dr. Phillips would have noted that ``Beacon Hill's work
suffers from the basic statistical fallacy of spurious
correlation.'' And he would go on to say that, Statistically,
one could easily show that pom-poms stunt teenage growth. All
you have to do is go to a high school basketball game and put
all those holding pom-poms on one side of the room and all the
remaining teenagers, who just happen to be the basketball
players, on the other. Lo and behold, all those holding pom-
poms have stunted growth compare to the control group. Now this
is the witness saying this, Dr. Phillips.
Similarly, Beacon Hill put all the complex jobs on one side
and all the simple jobs on the other. Lo and behold, because
the simple jobs did not have PLAs and most of the complex jobs
did, PLAs cost more money. This sort of simple-minded
statistics just does not pass muster.''
I just ask you, Ms. Brita, you said you all changed course.
Does that have anything to do with, in other words trying, to
get a better sample of what you so that you had more accurate
information?
Ms. Brita. We wanted a better sample but we also wanted
information quickly, Mr. Cummings, because we were trying to
evaluate the value, quite frankly, of PLAs. There's a lot of
academic literature out there and we wanted some real today
data. We felt we had an opportunity with our recovery projects
and the application of PLAs to some of these recovery projects.
So we put together a list that we thought was a representative
sample of what GSA does in real-time every day and we ran the
PLAs against these projects. So it was really an effort to gain
information quickly and to do an evaluation and to really come
to some conclusion--more conclusions about what the value of
PLAs in Federal construction projects as related to GSA.
Mr. Cummings. Thank you very much, Mr. Chairman.
Yield back.
Mr. Lankford. With that, I yield to Mr. Walberg.
Mr. Walberg. Thank you, Mr. Chairman. In light of the fact
that we have these witnesses in front of us, I guess we might
make best use. So thank you for being here.
Ms. Brita, your list of PLA, non-PLA projects identified
the GSA headquarters building as a ``no PLA.'' Wasn't that
awarded originally as a PLA project? And what happened to the
PLA?
Ms. Brita. Yes, sir. It was originally awarded as a PLA
project. The contractor was unable to finalize the arrangements
with the various labor units and so the contract was amended to
take the PLA out of the requirements of the contract. The
arrangement is between the contractor and the various labor
unions, not GSA, and when the contract was unable to finalize
those agreements, we just amended the contract and took it out;
took that requirement out.
Mr. Walberg. How much time then did the contractor have to
waste trying to negotiate PLA with unions on this project at
GSA's intense instance you allowed the project to go forward on
a non-PLA basis?
Ms. Brita. Let me just check. About 45 days, Mr. Walberg.
Mr. Walberg. Forty-five days.
Ms. Brita. Yes, sir. That is the standard time to negotiate
these kinds of things after award.
Mr. Walberg. That is significant, especially when tax
dollars are being wasted.
I would, in deference to the chairman of the committee,
yield back time.
Mr. Lankford. Thank you, Mr. Walberg. I just have a quick
question. I would be honored to be able to yield back if you
would like to have that time as well.
The Beacon Hill report that was being referenced by Mr.
Cummings just a moment ago was not the report I was
referencing, and I hope I didn't allude to a different report.
It is your report, the GSA report, is the one that I was
referencing that was done by Rider Levett Bucknall, but is
actually a GSA-sponsored report and it's GSA details. So I'm
not familiar with the report that he was mentioning before on
that.
So I wanted to be able to clarify that this is a different
report. This is specifically a GSA-sponsored report that
outlines that project labor agreements can cause small and
minority businesses to be excluded, and that it also shows
significant cost differences in multiple municipalities.
Now I would be one to say PLAs should be in the toolbox.
This is not anti-PLA to say they're in the toolbox. We're just
questioning why there's an encouragement to use them when the
GSA's own study says it often causes cost increased, based on
this study.
Ms. Brita. Mr. Chairman, I will repeat again, the study is
still in draft form. It's not finalized. It has never been
formally presented. It hasn't been finalized and we are relying
on the real-time data to address those very issues about
whether it is exclusionary, whether it's inclusionary, whether
we have minority participation, women participation. We
believed that getting real-time data with contracts that we are
currently engaged in was a better approach and, quite frankly,
better use of time because we will get information quicker.
Mr. Lankford. Do you have any idea what the cost of this
report is that has been set aside--of forming a report like
this?
Ms. Brita. I can get back to you and submit that
information for the record.
Mr. Lankford. Thank you. I would much appreciate that, just
to be able to know if we suspended report because it wasn't
consistent with the original Executive order to be able to get
different sets of data on it, I would be interested to know
what the cost of this report was that does not support the PLAs
versus the cost of now finding data that does support PLAs on
it.
Ms. Brita. I will submit that for the record.
Mr. Lankford. Thank you. I yield back my time.
Mr. Walberg.
Mr. Walberg. Thank you, Mr. Chairman. Let me ask a question
again, Ms. Brita. Why did the GSA agree to a $3.3 million
change order in the Lafayette Building in Washington, DC, just
to implement the PLA?
Ms. Brita. Mr. Walberg, the project team, led by the
contract officer, felt that in order--because it was a complex
project, multi-phased project, expensive, very difficult
location, that the implementation of a PLA was in the best use
of the taxpayer dollars. It would keep the project on schedule,
provide stable labor force, and the decision was made to amend
the contract to include the PLA.
Mr. Walberg. Was this the finding in the consultant study
that you set aside related not only to the GSA headquarters,
but also to the Lafayette Building?
Ms. Brita. I'm unfamiliar with the finding, Mr. Walberg. I
don't understand. Was there a finding in the report?
Mr. Walberg. It appears that in the study, you examined the
issues of the Lafayette Building, the GSA headquarters at 1800
F Street, the projects, and both had PLA implementation at an
additional cost. And my concern is here this additional cost
was taxpayer expenditures based upon change of findings and
seeing that it would cost more. And you're saying it is only as
a result of the technology, the ability, the complexity of the
problem?
Ms. Brita. Yes, I believe that the project team made the
decision certainly independent of the report. I'm not even sure
the project team was aware of the report. They made the
decision because they felt, given the nature of the project--
and it is a very complex, expensive, multi-phased project--that
the application of a PLA to this particular project would
ultimately be in the best interest of the project and serve
best value for the taxpayer. That was a decision made by the
project team, led by the contract office.
Mr. Walberg. I guess I continue to express some of the same
concern that when we have studies that are showing significant
problems with PLAs, that we are willing to use the additional
cost at taxpayers' expense.
I yield back my time.
Mr. Lankford. Thank you. I apologize for having some issues
with the clock. We have reset the clock. That should be about
5\1/2\ minutes total in that colloquy.
I recognize Mr. Cummings, the ranking member of the full
committee.
Mr. Cummings. Thank you very much. Let me say this to Ms.
Brita. In my 15, almost 16 years in this Congress, there is one
agency that I have a tremendous amount of admiration for
accuracy and doing the job right and doing it independently and
that is GSA. I don't want any of the employees at GSA looking
at this and questioning whether we believe in what you do. I
just want to say that with the strongest words that I can
muster out of this body. And I want to thank you all for what
you do every day.
But I want to go back. I understand what the chairman was
saying--Chairman Lankford was saying with regard to the Beacon
Hill report. I know he knows I wasn't trying to imply that.
This is the very reason why we wanted to have our witness. The
Beacon Hill report will be discussed extensively within the
next panel. But we have no way to rebut it because we weren't
able to call our witness. That is the problem. That is what I
was trying to get to. So, Mr. Zack, I have to do this. We have
to do this to try to get our side's opinion in on this hearing.
Let me go back to regarding H.R. 735, the legislation we
are considering today. This is what I asked Dr. Phillips; I am
continuing to ask what he would have testified to. Dr. Phillips
would have explained with regard to this legislation that we
just heard about, ``PLAs are precisely the market instrument
capable of setting and adjusting work rules to the specific
needs of particular projects. Robbing the government of PLA
contracts robs the government of the ability to address this
issue that critics claim is salient.''
Again, I say to the chairman I am disappointed that we did
not have the opportunity to hear directly from Dr. Phillips. By
denying the minority its choice of witnesses you have denied
the committee, and by that I mean the committee of the whole,
the balance to conduct meaningful oversight.
I ask unanimous consent that the letter from Dr. Phillips
with written responses to my questions be placed in the record.
Mr. Lankford. Without objection.
[The information referred to follows:]

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Mr. Cummings. I might also add that I would have preferred
to have him here so he could put up his hand and swear to tell
the truth, too. But this is how we have to do it.
Deputy Administrator Brita, as a branch of government
responsible for both levying taxes and authorizing how the
Federal Government spends American tax dollars, it is incumbent
upon every Member of Congress to ensure that the American
people get the maximum value for every tax dollar spent. In
Commissioner Peck's testimony before the OGR Subcommittee on
regulatory affairs on this same topic in March, he stated that,
``GSA only uses PLAs when they promote economy and efficiency
in Federal procurement: Can you explain the process that GSA
uses when determining whether or not to use a PLA in a
construction project?
Ms. Brita. Yes. Mr. Cummings, when GSA enters into a
process to acquire a new Federal building, they use a process
called best value and source selection. And the source
selection panel is put together that evaluates all proposals,
generally divided into two sections: The cost piece and a
technical evaluation piece. The technical evaluation section of
a proposal has several elements to it--past performance,
experience, quality of personnel. We've added a PLA. All of
those are evaluated against cost. First, the technical piece is
looked at. Every proposal gets a score. Then they match it
against the cost and they try to determine--the source
selection panel determines the best value, which is a match of
cost, plus all the technical qualities that are associated with
the proposal. That is the process that the agency uses now.
There is virtually no Federal agency now that goes straight
to low bid. They have found that is just a waste of taxpayer
dollars. You're buying junk with taxpayer dollars. You don't
get best value. You have things that fall apart, whether it's a
Federal building or an Air Force fighter. You really get what
you pay for. And we try at the agency, the way we handle our
procurements now, is to put that panel together, break
proposals into your technical section and a price section and
wed the two of them at the end of the evaluation period.
Mr. Cummings. So does that go to efficiency and
effectiveness in trying to make sure we get the best value for
our dollar?
Ms. Brita. Yes, particularly in real estate. There is an
old saying in real estate that time wounds all deals. Once you
start a real estate process, you need to keep it going. Once
you stall, money, particularly on the part of the developer
whose borrowed money from a bank, the bank doesn't care. They
are going to be charging your daily rate on interest on the
loan that you've incurred to build this project. So it is very
important that we look for ways to keep projects going. Once
you make the decision, a lot of work is done prior to actually
signing that contract. About a third of all the work associated
with these project is done prior to the contract. We want to
make sure once it's signed we have a process in place to keep
that project going forward because it's extremely expensive
when it stalls.
And so we are always looking for ways. That is why the PLAs
are an attractive tool for GSA, because the contractor makes it
is his responsibility to ensure that the labor is there, to
make sure that there are no work stoppages, to coordinate--one
of the big problems is coordinating work schedules; making sure
that harmonizing the work week--between the various labor
groups there's a harmonized work week so that everyone is
working at the same time.
Mr. Cummings. Ms. Brita, thank you very much. I just want
you to know that what you just said, the reason for PLAs, seem
to be pretty consistent with our motto for this committee.
Every time we meet, the read this: We exist to secure two
fundamental principles--first, Americans have the right to know
that the money Washington takes from them is well spent. By the
way, this is written by Mr. Issa. And second, Americans deserve
an efficient and effective government that works for them. Our
duty on the Oversight and Government Reform Committee is to
protect these rights. I just wanted you know that what you just
said, the use of PLAs seems to be consistent with the goals of
this committee. And I want to thank you for your testimony.
Mr. Lankford. Thank you. I yield 5 minutes to Mr. Kelly.
Mr. Kelly. Thank you, Mr. Chairman. I would like to thank
both witnesses for being here. Mr. Gordon, I have been with you
before, and I appreciate you taking time to be with us. Also
Ms. Brita. You just said something about real estate. Time
wounds all deals.
Ms. Brita. That is a little saying, time wounds all deals.
When you start a real estate deal, it is very important.
Mr. Kelly. I understand that. But there is another saying
that's been out there, and it's: If it ain't broke, don't fix
it. And I'm trying to understand--and believe me, I'm not
coming here representing Republicans, and I hope that this
panel isn't about Republicans versus the Democrats. It's about
us representing the American people and making sure that as
stewards of their hard-earned money that we are doing the best
thing possible.
I don't see where the PLAs at all fit in. And the troubling
thing, the RLB report is something that was commissioned by the
GSA. So I would assume that in your RFP you were very specific
at to what is that you wanted RLB to find out for you. Having
come from the private sector, where I have done a lot of RFPs,
I have to tell you a 10 percent bonus doesn't level the playing
field. That totally tilts it. As a person who's done many bids,
to see that in there and say, ``OK. Fine.'' Maybe that would at
the end of the day make a difference. It's a huge difference.
I do wonder about these things, just as a representative of
the taxpayers and the citizens of the United States. Where is
it that we are going with these programs? I know the President
came up with this just weeks after being put in office. Is
there any instance anywhere where there are specific instances
showing where there are these labor stoppages or abuses or why
the PLA was installed? I see it as exclusionary. I don't see it
as increasing the field of bidders. I see it as narrowing it
down and actually being exclusionary to those 87 percent of
people who could bid on this project that will not be able to
do it because they don't back cab union labor. And I have
nothing against unions, by the way. I represent a lot of union
people. I have no problem with that. What I have a problem with
is jobs. And jobs are important to anybody, whether you're a
union member or you're a private citizen. We've got to get
people back to work.
So the PLA and this report is very troublesome to me. It's
been there for a year and a half. If the RFP was put out by the
GSA, then your office--maybe not you--your agency--knew exactly
what it was looking for. It seems to me the information they
got back is not consistent with what they were looking to find.
And so if it doesn't match my argument, we'll set it aside and
say it's irrelevant. You can back-shelf that to say it's still
in draft form.
But in a year and a half, I've got to tell you, as an
automobile dealer, if I had to wait for a year and a half on
any bid that I put out, I would say the landscape has probably
changed dramatically in a year and a half. So if you could just
briefly comment on that, I would appreciate that.
Ms. Brita. Mr. Kelly, I just wanted to make one point. The
10 percent is really not a bonus. It's not something that is
added over and above the 100 points. It is part of the 100
points.
Mr. Kelly. Say that again. If you could repeat that.
Ms. Brita. I think you used the word the 10 percent or the
10 points is, ``a bonus.'' It's really not in addition to the
100 points that one would normally----
Mr. Kelly. Why is it in there?
Ms. Brita. It's part of the hundred. It's part of the
technical----
Mr. Kelly. But it's a 10-point advantage if you----
Ms. Brita. It's a 10-point preference that the contractor
can choose to take advantage of or not.
Mr. Kelly. As a guy that's been out in the real world,
that's a heavy cover charge. So if that's part of what the
proposal is, that's not really trying to get to the best price.
That's changing the scope of who it is that is able to bid.
Listen, I can tell you--and I mean this sincerely--being in
the private sector all my life, you set those types of
parameters, you are setting them to get one type of a bidder to
get the award. I've watched it happen. I've lost out on too
many bids where there was exclusionary language in there; and
it makes it impossible for an independent bidder to sometimes
get in the door, get their foot in the door. And that's the
purpose of RFPs. They are supposed to be consistent. This tilts
it.
Ms. Brita. Mr. Kelly, one of the reasons that we are doing
this pilot program is to address those very issues. To date, we
have not seen a great variance, quite frankly, between those
that bid and those that don't bit bid when we have the PLA
involved. But when we finish the report, we will be able to,
with much more definition, get at those very issues that you
are talking about. The agency does not believe that PLAs are
exclusionary. In fact, we think it opens the labor market up
because it includes union as well as nonunion workers. So we
take a different--it's a tool that the agency can use and that
the contractors take advantage of. It's a contractor choice.
Mr. Kelly. Well, let me ask you this: You say it opens the
market up. What was excluding the market from being open
before?
Ms. Brita. This is just encouraging--nothing was--this just
makes the process more attractive----
Mr. Kelly. See, I differ with you there in that. There is
language set in there that it is exclusionary. That is not
including a wider universe of bidders. What you are doing is
you are favoring one bidder over another. Ma'am, please, I have
done bids all my life. When you put language in a bid that
gives a 10-point--whether it's out of 100 points or whatever it
is--advantage, that is exclusionary; and that is discouraging
all bidders from the entire universe to bid on it. I have been
involved in it too many times, and I have been excluded because
I refused to be a partner in that type of thing. So I would
just suggest to you that while you may be saying that it opens
the universe to other bidders, it absolutely does not. It is
exclusionary.
Mr. Gordon. May I say a couple of words, Mr. Kelly?
Mr. Kelly. Absolutely.
Mr. Gordon. We in OMB are watching what agencies are doing.
We are giving agencies discretion, but we are very sensitive to
the point you raised. We want to be sure that this is not an
exclusionary process. We want to be sure that PLAs are viewed
as only a tool. I think it's noteworthy in the GSA work that
among the 10, there were instances where the bidder offering a
PLA won. There were instances where the bidders offering the
PLAs did not win. This was not tilted one way or another. As I
understand it--and I don't think the few points--and by the
way, it's really less than 10, because cost is separate from
that whole point scheme. I don't think that there are
instances, at least not many instances, where those few points
made any difference in who won or who didn't win.
Mr. Kelly. And I understand where you are coming from. But
I have to tell you, in the private world, when you are spending
your own money, that's a huge difference. And only in this time
do these matters become insignificant. Now you are using the 10
instances that you looked at. But you refuse to look at the
report that was drafted a year and a half ago in saying, well,
there's not enough information in there yet.
However, we did have 10 other studies that we find really
don't speak to what it is that we are talking about. And I am
telling you, as a taxpayer and as a person watching taxpayer
funds, this is not the right road to go on.
Mr. Walberg [presiding]. I thank the gentleman. The time
has expired and I would ask deference from Mr. Gordon and Mr.
Brita, if you would be able to stay around a little longer. Our
chairman has left to vote. He will be back to continue the
hearing. We have 9 seconds to get to our vote right now, and
then we will come back.
Mr. Gordon. We will stay until 11 o'clock. Thank you, sir.
Mr. Walberg. Thank you. We will stand in recess.
[Recess.]
Mr. Lankford [presiding]. Thank you for allowing us in the
quick recess there to be able to go and vote.
Mr. Gordon, we are going to make your time after all. I
would like to be able to yield 5 minutes to Mr. Murphy.
Mr. Murphy. Thank you very much, Mr. Chairman, and I thank
the witnesses for coming back to join us for just another
brief--a few brief questions.
Let me just begin by associating myself with the remarks of
Ranking Member Connolly on the subcommittee and Ranking Member
Cummings. I get that this committee has often been used over
the years to advance the majority party's political purposes
and their agenda. I think we've gone too far here, I think, in
violating House rules, in violating basic concepts of fairness,
across the line. And I think what you have seen across the
country is an unfortunate willingness on behalf of those who
would try to use their new-found political power to try to
undermine organized labor and collective bargaining rights, to
unfortunately cross that line over again, and over again,
whether it's in Wisconsin with the collective bargaining law
that was ruled unconstitutional by the courts, or here today.
And I hope in the future that, though committee is
certainly going to be used occasionally to advance the
political imperatives of the majority party, that the other
side gets a chance to put their best evidence on.
Mr. Lankford. Would the gentleman yield?
Mr. Murphy. I would yield.
Mr. Lankford. If we are able to provide for the record
moments in the past when this committee only had administration
witnesses, when the roles were reversed and the Republicans
were in the minority and were only allowed administration
officials under the Bush administration, would that be
acceptable?
Mr. Murphy. If you would like to put that on the record?
Mr. Lankford. We will submit that for the record in the
days to come. Thank you.
Mr. Murphy. Let me direct a question to Mr. Gordon. Mr.
Gordon, in October of last year, myself and dozens of other
Members of Congress sent a letter to you requesting information
on the Executive order that we're talking about today. In
particular, we were interested in some direction that you had
sent to agencies to report back on how the Executive order had
been complied with, how many agencies had used PLAs, and to do
so on a quarterly basis. We sent this letter over in October
and have not gotten a response since.
But I would be interested to know from you as to the
feedback and response you've gotten from agencies in now the
year or so since the Executive order and then the guidance
requiring the quarterly reports back was issued.
Mr. Gordon. Congressman Murphy, thank you for the question.
I apologize that you haven't yet gotten a response. My
understanding is the response is close to being on its way to
you. I will tell you that for the most part, we have seen few
instances of PLAs being used in construction projects. That is
consistent with our guidance. What we've said to agencies is,
you need to do this carefully. You need to be sure that the use
of a PLA in a particular project and those specific facts will
serve economy and efficiency.
It is not unusual in the procurement system, as I'm sure
you know, that when we have a new tool available--and this is
essentially a new tool for our contracting officer--it takes a
while for us to figure out where it makes the most sense, how
to use it. I think that a cautious, balanced approach makes
sense.
The fact is that there are lots of academic studies out
there. Some indicate that PLAs save you money, some indicate
that you don't. Part of the beauty of what GSA has done is you
have real examples, not academic studies, of what's actually
happened, and I think that's helpful.
Mr. Murphy. Have you received reports back? You asked for
data on a quarterly basis. Are you receiving that information
back?
Mr. Gordon. We are. And as I said, the numbers of PLAs
being used is quite low.
Mr. Murphy. I would appreciate that response as quickly as
possible. This was from a group of Republicans and Democrats to
show that there is bipartisan support for the use of PLAs, when
appropriate. And I think it could be useful for us to have that
data shared back.
Mr. Gordon. I will ensure that comes to you expeditiously.
Mr. Murphy. Let me ask one other question to both of you. I
think one of the points that will be made likely by the second
panel is that nonunion contractors are discriminated against
when a PLA is required. Though they can go out and sign
collective bargaining agreement after they are assigned the
award, that puts them at a disadvantage versus contractors who
are initially union contractors.
Can you talk about that critique? Again, we won't have the
opportunity to ask this of any minority witness on the second
panel, and I imagine it will be one of the primary criticisms
on the second panel. So I would pose it to both of you as to
whether or not you have seen a discriminatory nature against
nonunion contractors when PLAs have been used.
Mr. Gordon. I could say a few words, and then Ms. Brita is
welcome to supplement them. As you know, the Federal
Acquisition Regulation rules says that this is not to be used
in a discriminatory fashion. We are trying to increase
competition. I'm confident that we can do this in a way that
will not discriminate.
The fact is that even when project labor agreements are
used, very often the subcontractors, for example, are open
shops that are not unionized in their work forces, as we noted
in the preamble to the Federal Register notice in the rule. But
in any event, if a company--if a company feels that an agency
is conducting a competition in a way that excludes them and
makes it impossible for them to compete, they have an avenue
available. They can file a bid protest and they will get an
independent review, whether by the Court of Federal Claims or
GAO, to consider whether in fact they are being excluded or
unfairly discriminated against in that competition.
Ms. Brita. Mr. Murphy, in the preliminary data that we
have, we have not found that there has been any discrimination
between union and nonunion workers. And that's based on our
just preliminary--these 10 projects, the handful of projects
that we are looking at. But the preliminary indications are
that it's not there.
Mr. Murphy. Thank you. Thank you, Mr. Chairman.
Mr. Lankford. Thank you. I yield 5 minutes to Mr. Labrador.
Mr. Labrador. Mr. Chairman, I yield back.
Mr. Lankford. Thanks, Mr. Labrador.
Let me ask you a few questions. Ms. Brita, you referred to
the new report that you all are doing, you said it is in a
preliminary form. Is it in a draft form as well right now? Is
it complete? Is it something that we could have?
Ms. Brita. Are you talking about the 10 projects?
Mr. Lankford. Yes, ma'am.
Ms. Brita. We are looking at these 10 projects
individually. The individual contracts have been signed by for
each one of these projects. And I would expect at the end of
the contract period--because we want to see how this flows out
over the next 3 years as the contract gets put into place.
Mr. Lankford. Right. But that report, will that be a
complete report? It is currently in draft form? There are 10
isolated pieces.
Ms. Brita. Right now we are gathering data. I don't know
whether we'll do a comprehensive report or whether we'll do 10
individual reports or whether we'll put it all together. But
we're gathering data and the form that the final sort of
summary or report, as we call it, will take, but we haven't
decided how that's going to look. But it will be some sort of
summary data and evaluation of the worth of PLAs.
Mr. Lankford. When that gets into a draft form that is
available to be able to be sent to our committee, I would very
much like to request a copy of that. And that would be sent
over to us so that draft report could be added to this draft
report that's already completed, and get a chance to do a side
by side on that.
Mr. Gordon, we're getting very close to your time. I
understand that well. In the past, were you aware--and I know
that you are not familiar with the very earliest days,
obviously, of the Obama administration and some of the
transition. I don't believe you were right there, right at the
very beginning when the Executive order--do you know if that
Executive order was done and was implemented based on the fact
that during previous administrations, PLAs were blocked and
were not able to be used?
Mr. Gordon. Mr. Chairman, you are quite correct in that I
was not in the administration at the time. You probably know I
was in the Office of General Counsel at the Government
Accountability Office, GAO, and joined the administration only
in November 2009 so I'm not in a position to know what
happened.
Mr. Lankford. I've been trying to process through because,
obviously, we want to use PLAs. And I want to reiterate this
conversation is not about excluding PLAs; it's just trying to
determine why there is an encouragement to use them, other than
just that's best competition, to try to provide that neutral
playing field to say--my question is, has there been a tendency
in the agencies that they didn't want to use PLAs and so there
needs to be an aggressive approach to say, no, we encourage you
to use them?
Mr. Gordon. Now I understand the question, and I can speak
to that, Mr. Chairman. Under the prior administration there was
an Executive order that prohibited agencies from saying in this
particular project, we need to have a PLA in place. That, they
were not allowed to do.
What we wanted to do was say, agencies should be allowed to
look project by project and say, here is a project where it
would not serve efficiency to have a PLA, but here is a project
where it would serve it. That's what we're trying to do. We
want that to be available, not to dictate it.
And I should be careful in the words. We are not
encouraging the use of PLAs. We are encouraging agencies to
consider whether in fact they need to require PLAs in a
particular project.
Mr. Lankford. But by increasing the point scale on them, as
we talked about before, it gives them an immediate advantage to
be able to engage and say, we may be a little higher in price,
but we're greater in value because there can't be a strike
during this time. We're going to offset our collective
bargaining agreement with this, that we won't fulfill that to
be able to get this project. So it does skewer somewhat, and it
concerns me when this draft summary, one of the statements in
it says that there is a risk that PLAs will exclude. But having
PLA in it, that excludes small and minority businesses.
Mr. Gordon. I understand. And I will be happy to let Ms.
Brita speak about GSA. But as a governmentwide matter, I will
tell you that there are many factors. I have been dealing with
solicitations and procurements for over 20 years now. There are
many, many factors that get far more than 10 percent of the
points on the technical side: your past performance, your
technical approach, your use of small businesses. All right?
The amount that you commit to subcontract to small businesses
is frequently a factor, and it can frequently have more than 10
percent of the points.
So that in the mix of things, what you are capturing--and
there are different ways to do this. GSA has taken one approach
and we're evaluating how well that works. But it seems to me
you can appreciate that in a best-value context where you may
get efficiencies through the use of a project labor agreement,
you will want to capture that, just as you typically get more
than 10 points for having a good track record, good past
performance.
Mr. Lankford. I absolutely understand that. And again,
there may be great location for a PLA to be the perfect tool,
to be able to use that in that toolbox on it. But the last
thing we would want to do is to be able to try to put out the
word and say this group gets a higher score based on the fact
that they are unionized, and discourage other people from
engaging in a competitive environment. We want to be able to
have a level playing field and a competitive environment so we
are getting best value, and as many contractors as possible are
bidding for our projects to get the best possible price.
If we are pushing in such a way as to say there is a
possibility someone will be excluded, that's what I am
beginning to question; and to say, if this report is
questioning that from GSA, then I'm also saying, OK, what was
the evidence to make the shift when a year after the shift was
made, or 2 years after the shift was made, there was an
immediate look to say, OK, maybe there is a problem here.
Mr. Gordon. If I could, Mr. Chairman, I would point out
that when GAO, my former employer, looked at project labor
agreements, I think in 1998, they reported that there was a
wide range of views. Some people said they were very helpful.
Some people said they were more efficient. They saved costs.
They cost costs. The beauty of what GSA has done is it's gotten
us real examples; real examples, not theoretical, not
hypothetical.
Mr. Lankford. Great. I would like to yield one moment for
Mr. Murphy.
Mr. Murphy. Thank you. Just a followup question. The
chairman was talking about point-scoring systems in which a PLA
bidder may get more points. Just to clarify, the individual
decisions about how bids are structured is up to individual
agencies; is that correct?
Mr. Gordon. Absolutely.
Mr. Murphy. And some agencies may choose to incorporate an
increased point system for PLA bids, but that is not required
by this Executive order, nor is it required by any other
direction from the administration.
Mr. Gordon. You are absolutely correct. What we are doing
at this point is letting agencies take different approaches. We
may down the road, as we listen to what the agencies are doing,
we may come up with best practices. That's what we frequently
do, whether we're dealing with the ways of handling
organizational conflicts of interest, best value, past
performance. We let agencies try different approaches with some
guidance. And then as we learn more, we can give more specific
guidance.
Mr. Murphy. Thank you very much.
Mr. Lankford. Mr. Gordon and Ms. Brita, thank you so much
for joining us here. You are excused and you are going to make
your flight on time.
Mr. Gordon. I am very grateful, Mr. Chairman.
Mr. Lankford. I am grateful that you all were able to be
here. Thank you. We will take a brief moment to be able to
recess--to reset for the next panel.
[Recess.]
Mr. Lankford. I would like to welcome our third panel. Mr.
Maurice Baskin is a partner with the law firm of Venable LLP
and represents the Associated Builders and Contractors.
Professor David Tuerk is the executive director of the Beacon
Hill Institute at Suffolk University. Mr. Kirby Wu is the
president at Wu & Associates. And Mr. Mike Kennedy is the
general counsel of the Associated General Contractors of
America. Pursuant to committee rules, all witnesses are sworn
in before they testify. Please rise and raise your right hands.
[Witnesses sworn.]
Mr. Lankford. Let the record reflect the witnesses answered
in the affirmative. You may be seated.
In order to allow time for discussion, I would like you to
limit your testimony to 5 minutes. Obviously we'd have mercy if
you go a little over on that so we would allow for your
testimony. But we have received your written testimony already
and that will be made part of the record.
Mr. Baskin, I want to be able to recognize you for 5
minutes.

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

STATEMENT OF MAURICE BASKIN

Mr. Baskin. Good morning, Chairman Lankford, members of the
subcommittee. My name is Maurice Baskin. I am a partner in the
Washington, DC, law firm of Venable LLP.
Mr. Lankford. I'm sorry, Mr. Baskin. Is your microphone on?
Can you tell if the light is on?
Mr. Baskin. How's that? Any better?
Mr. Lankford. That's perfect. Thank you.
Mr. Baskin. Do I need to start over? I've just said good
morning.
I am here representing Associated Builders and Contractors,
which is the national construction industry trade association
representing 23,000 merit shop contractors, employing an
estimated 2 million workers. I have previously testified before
on the subject of government-mandated PLAs before another
subcommittee of this committee, and I have resubmitted that
testimony for the record of this proceeding so that I can focus
today on the very important bill introduced by Congressman
Sullivan, H.R. 735.
This bill is vitally needed to prevent the ongoing waste of
taxpayer dollars and corruption of the Federal procurement
system that is being caused by the President's Executive Order
13502 and the agency rules that have implemented it.
The President's PLA Executive order discriminates against
87 percent of construction workers and their contractor
employers who choose not to belong to or have contracts with
labor unions. This order was issued as one of the President's
first acts in February 2009, with no meaningful outreach to the
construction community, no transparency in its formulation--we
heard today that the representatives of the administration
still don't know how it came to be--and no factual
justification at all for its findings. Most importantly, there
were no significant labor problems on any Federal construction
projects during the 8 years governed by President Bush's
Executive Order 13202, which prevented Federal agencies from
requiring or prohibiting PLAs on Federal construction projects
or on federally assisted projects.
In the absence of any problems and from the manner in which
the Obama order was put into effect, it is clear that the only
reason for the PLA Executive order now in place was and is
politics.
Having heard or read the testimony of representatives from
the Office of Management and Budget and the GSA at now two
congressional hearings, we have yet to hear them identify any
factual basis in the form of market research or identified
labor problems previously existing on Federal construction
projects that justifies the Federal Government's new
restriction on competition through PLA mandates. We heard today
that it's a process and that it's open to competition, but as
the Members rightly pointed out, there is a preference. The
thumb is on the scale. It is now being tilted, if not mandated,
in favor of these PLAs; and it is impacting competition. They
are doing a pilot program, a pilot program that is ongoing in
nature. Apparently it's continuing to this day on every GSA
project. That's a peculiar definition of ``pilot,'' while they
are supposedly gathering market research data which is contrary
to the way that all other procurements have been done in the
past. GSA has adopted apparently a ``build first and ask
questions later'' policy which is contrary to settled
procurement principles.
At the same time, many academic studies--and we're going to
hear more about that later--and research by the government's
own consultants, as has already been pointed out, have
established that government-mandated PLAs increase the cost to
taxpayers, reduce the number of potential bidders, and
particularly the number of subcontractors to those bidders who
are merit shop. They do nothing to improve the quality, safety,
timeliness, or overall efficiency of government construction
projects.
Only Congress can effectively stop the political favoritism
in contract awards that is wasting taxpayer dollars and
corrupting the Federal procurement process. And that is what
H.R. 735, the Government Neutrality in Contracting Act, will
do. H.R. 735 will simply reinforce the existing Federal mandate
in favor of full and open competition in all Federal
procurements with specific reference to PLAs. The bill will
prohibit Federal agencies once and for all from awarding
construction projects based on the improper consideration of
whether the contractors are willing to enter into labor
agreements. Until this Executive order, that had not been the
rule of law in this country under Federal procurement
principles.
As the bill states, agencies shall neither require nor
prohibit contractors from adopting PLAs as a condition of being
awarded the work, nor discriminate on that basis.
The bill is neutral. I can't emphasize that enough. It's
neutral on the subject of PLAs. It simply keeps the government
out of the process. It closely tracks the Bush Executive orders
that were upheld by the Court of Appeals for the D.C. Circuit
in the Alba case. So there is clearly no basis for a legal
challenge to H.R. 735, and it avoids interfering with Federal
labor laws because it specifically says that nothing will be
construed to prohibit a contractor or a subcontractor from
voluntarily entering into a PLA on their own. If they're so
great, let the market show it, and let them come forward and
prove it, without it being tilted or mandated by the Federal
Government.
We applaud your efforts to promote H.R. 735. And I will be
happy to answer questions after the other speakers.
Mr. Lankford. Thank you Mr. Baskin.
[The prepared statement of Mr. Baskin follows:]

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Mr. Lankford. Mr. Tuerk.

STATEMENT OF DAVID TUERK

Mr. Tuerk. I am David Tuerk, and I am a professor and
chairman of economics and executive director of the Beacon Hill
Institute at Suffolk University in Boston, which is a Ph.D.-
granting institution. I would like to thank Chairman Lankford
and members of the subcommittee for inviting me, and I
appreciate the opportunity to submit testimony on H.R. 735. My
comments are my own and do not represent the opinions of
Suffolk University, nor do they represent my support for any
organization or private interest that might stand to benefit
from the passage of H.R. 735, which I heartily endorse.
I would like to enter into the record studies of project
labor agreements that the Beacon Hill Institute has performed
under my direction over the last 8 years. Of course we've
already heard about those. Among these are studies in which BHI
estimated the effects of PLAs on construction costs for school
building projects in Massachusetts, Connecticut, and New York.
We found that PLAs added 12 to 18 percent to final construction
costs in Massachusetts and Connecticut, and 20 percent to final
bids for school construction projects in New York.
I suppose we'll get into the comments from Dr. Steel in
question and answer. But since he preempted me, I am going to
make a point about what he had to say. He accuses us of
spurious correlation. Well, I have a buzz word that I could use
about his work which is multi-cullinearity. These are the kinds
of buzz words that economists typically use when they are
criticizing each other's work in an academic study. I'm sorry
that he has decided to conduct this conversation in a way that
reflects more his outlandish and bizarre characterizations of
our work than what we actually did, but we can get back to that
later.
In another study, we examine the Federal Government's
experience with the Bush-era ban on government-mandated PLAs.
This study was aimed at determining how the record of
construction projects conducted over this period reflects on
President Obama's Executive order, encouraging PLAs on
construction projects costing $25 million or more.
President Obama claimed that the order was needed because,
``large-scale construction projects posed special challenges to
efficient and timely procurement by the Federal Government.''
Our study proceeded on the premise that if President Obama
is correct about the need to mandate PLAs in order to overcome
these, ``special challenges,'' then President Bush's ban on
mandatory PLAs should have produced many instances of the
delays, strikes, cost overruns, etc., against which PLA
advocates frequently warn.
We asked the Associated Builders and Contractors to assist
us in getting the needed data from the Federal Government.
Using the Freedom of Information Act, ABC wrote to Federal
agencies with procurement responsibilities, including OMB and
GSA, for information relating to any problems caused by the
absence of government-mandated PLAs over the period of the Bush
Executive order. The result: No respondent to the ABC letters,
including the OMB and the GSA, could substantiate the
occurrence of any delays or cost overruns on Bush-era projects
costing $25 million or more that were attributable to the
absence of a PLA.
This finding should come as no surprise. The real purpose
of a PLA is not to deal with special challenges but to
discourage bids from nonunion contractors and to give the PLA
unions control over the hiring process. PLAs accomplish this
purpose by requiring contractors to follow onerous work rules,
to turn away from their own labor force in favor of labor
provided by union hiring hall and to pay fringe benefits a
second time that they already provide their workers.
Consider in this light the fatuous nature of the argument
for PLAs. The argument presupposes that the work will be
performed by the very unions that create the conditions under
which the predicted delays, jurisdictional disputes, and work
stoppages could occur if a PLA is not adopted. The unions that
create these conditions are predestined to get work, however,
only if the PLA is adopted, and then has the intended effect of
discouraging nonunion contractors from bidding.
I have read a number of studies, most commissioned by State
and local government agencies, which purport to show that a PLA
would save on costs. Typically, however, these studies adopt
the same tortuous logic that the unions employ in support of a
PLA. The studies show cost saving by assuming away the
possibility that a decision not to adopt a PLA might produce
lower bids from qualified contractors than a decision to adopt
one would produce. However, the best way to avoid cost overruns
and delays is to encourage, not to discourage, bids from
contractors who are not burdened by the collective bargaining
agreements that hobbled the competitiveness of the PLA union
workers and their contractors.
According to government data, the fraction of all
construction workers who belong to unions fell by 25 percent,
from 17\1/2\ percent in 2000, to 13.1 percent in 2010. So what
we have is a state of affairs in which 13 percent of
construction workers are attempting to protect their jobs
against the other 87 percent, and then the added cost to
taxpayers.
These facts show that the real agenda behind government-
mandated PLAs is to shore up the market share of a dwindling
minority of construction workers at the expense of the vast
majority and taxpayers.
By passing H.R. 735, Congress could take an important step
toward rejecting the fatuous reading that lies behind PLA
mandates and ending what amounts to a discriminatory and costly
handout to a group of special pleaders.
I conclude by pointing out that H.R. 735 is not anti-labor,
and in fact it's not even anti-union. I am currently involved
in a case where a contractor is suing because its union was
excluded from a New York City PLA. PLAs are only about the
unions that manage to have the political clout to induce
government agencies to require them to form a PLA. Nor has this
legislation stripped government of a useful tool for achieving
economy in State government. If the tool is a useful one, then
contractors are free on their own behalf to adopt the PLA.
Nothing is standing in the way of that.
Therefore, I believe that H.R. 735 is clearly in the public
interest. And again, I strongly support its adoption. Thank
you.
Mr. Lankford. Thank you Mr. Tuerk.
[The prepared statement of Mr. Tuerk follows:]

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Mr. Lankford. Mr. Wu.

STATEMENT OF KIRBY WU

Mr. Wu. Good morning, Chairman Lankford, Ranking Member
Connolly, and members of the subcommittee. My name is Kirby Wu.
I am the president of Wu & Associates located in Cherry Hill,
New Jersey. On behalf of the Associated Builders and
Contractors and the merit shop contracting community. I would
like to thank you for the opportunity to testify before you
today in support of the Government Neutrality and Contracting
Act, H.R. 735. I hope my testimony sheds some light on how
government-mandated project labor agreements harm qualified
contractors and employees that want nothing more than to
compete on a level playing field to build on-time and on-budget
construction projects at the best possible price.
PLA mandates and preferences by Federal agencies result in
increased costs for contractors and unnecessary procurement
delays and uncertainty and favoritism in the Federal
procurement process, and stands as a barrier to growth for
businesses and job creation in an industry that's already
suffering an unemployment rate of 17.8 percent.
This is why the industry supports legislative remedies like
H.R. 735 which restores fairness in Federal contracting and
will eliminate waste so the government can build more projects
and create more construction jobs.
Wu & Associates is a small-business success story. We have
grown into an industry-leading, award-winning general
contractor specializing in design-build projects, lead
sustainable design, and historic preservation for Federal,
State, local, and private clients. Our firm's success depends
on the principles of free enterprise and attracting the most
qualified, talented personnel and companies for a job,
regardless of their labor affiliation.
Over the years we have successfully performed millions of
dollars worth of Federal, State, local, and private
construction projects without the need to enter into a PLA. The
contracting policies of the Federal Government influence the
growth and success of small businesses like Wu & Associates, as
well as the economic well-being of our employees and their
families.
PLA mandates place merit shop competitors at a disadvantage
and promotes discrimination based on labor affiliation. PLAs
have a practical effect of creating jobs exclusively for
unionized construction trades people by forcing union
representation or compulsory union membership, inefficient and
archaic union work rules, payment of union dues, forced
contributions to union pension and benefit plans, and a host of
other problems on employees of merit shop contractors like my
firm's employees that have freely decided not to join a union.
Injecting PLA mandates into the Federal procurement process
discourages competition from qualified contractors like my own
who employ 87 percent of the U.S. construction work force. It
doesn't take an economic degree to know that less competition
from a pool of qualified bidders leads to increased costs for
the government and taxpayers. If members of this subcommittee
think PLA mandates somehow advance the economy and efficiency
in government contracting, please take a look at my written
testimony which describes in great detail my unfortunate
experience with a Federal PLA mandate that resulted in
procurement delays, red tape, and needless litigation costs.
In short, in 2010, U.S. Army Corps of Engineers mandated
PLA on a project in Camden, New Jersey, in the middle of the
bidding process. By doing so, the Corps sent a message to
qualified businesses like mine that we were not welcome to
build this project unless we agreed to use union labor and
follow the terms and conditions of a PLA. This is ironic
because we were previously selected as the prequalified
contractor to bid this project. After weeks of uncertainty and
attempts to get the Corps to reverse the PLA, we were left with
no choice but to file a bid protest with the Government
Accountability Office against the Corps' illegal and
discriminatory mandate. Eventually, in the face of a bid
protest, the Corps abandoned their PLA mandate, but they
replaced it with an illegal and discriminatory PLA preference
that enticed contractors to voluntarily submit a PLA offer by
giving them additional credit in their technical evaluation of
our offer as part of the best-value procurement process.
We decided not to pursue this contract further because we
felt it was not worth investing the additional company
resources to prepare a bid and compete against contractors
submitting PLA offers in this distorted playing field. This
exercise resulted in lost time and money for our small business
that we could have invested back into our work force and
company. It also resulted in needless procurement delays,
exceeding 2 months, as the Corps bid submission deadline was
extended a number of times to accommodate the PLA controversy.
Remarkably, the contract was eventually awarded to a merit shop
general contractor at a bid priced nearly 15 percent below the
original $16\1/2\ million estimate, without a PLA offer. And
today the project is reportedly on time and on budget. The
winning contractor would have been discouraged or eliminated
from competing if not for our efforts to fight the PLA mandate.
As a taxpayer it is outrageous that the government is
wasting tax dollars and denying opportunity to quality
businesses and their skilled work forces that cater to just
13.1 percent of the U.S. construction work force.
I ask that the members of the subcommittee support Mr.
Sullivan's Government Neutrality in Contracting Act.
Contractors, and not Federal procurement officials pressured by
special interests, should be the ones deciding whether a PLA is
an appropriate tool. Wu & Associates applauds the Oversight and
Government Reform Committee for its continued interest in the
issue of government-mandated PLAs.
Thank you for the opportunity to testify on behalf of small
businesses and the merit shop contracting community. We deserve
a fair opportunity to provide the best construction product at
the best possible price to the taxpayers.
Mr. Lankford. Thank you, Mr. Wu.
[The prepared statement of Mr. Wu follows:]

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Mr. Lankford. Mr. Kennedy, proceed with your testimony for
5 minutes.

STATEMENT OF MIKE KENNEDY

Mr. Kennedy. Good morning, Chairman Lankford and members of
the subcommittee. My name is Michael Kennedy. I have the
privilege of serving as the general counsel of the Associated
General Contractors of America. I am here to express the
Association's strong support for H.R. 735 and the neutrality
that this bill seeks to achieve.
AGC is the leading trade association in the construction
industry. It has more than 33,000 members in nearly 100
chapters throughout the United States. Among these members are
building, highway, industrial, and utility contractors. While
some of them are quite large, most are small and closely held.
Many are Federal contractors.
AGC was founded in 1918 and historically a majority of its
members have been union contractors. Today such contractors are
in a minority, but they remain a large and very important
segment of the Association's membership. To this hearing on
project labor agreements and H.R. 735, AGC therefore brings a
broad perspective.
Before turning to the central subjects of today's hearing,
I should explain that the labor unions in the construction
industry are unique. Unlike their industrial counterparts,
these unions have organized themselves along craft lines. One
union represents carpenters, another represents operating
engineers, another represents electricians, and so on down the
line. Industrial unions represent everyone in the appropriate
bargaining unit without regard to any differences in their job
classifications.
But construction unions are different. No one of them
represents all of the craft workers on a typical construction
project. The individual agreements negotiated with each of
these unions are similarly limited. Each agreement covers a
separate and single craft, but, on the other hand, the typical
agreement applies to all of the work that the craft performs in
a particular area.
PLAs differ from these area-wide agreements in two ways.
PLAs are typically negotiated with several unions and therefore
cover several crafts. And as the name suggests, PLAs are
limited to individual projects and are not area-wide.
The historical purpose of PLAs, dating back to a time when
unions represented nearly 90 percent of all construction
workers, was to eliminate inconsistencies in these area-wide
agreements that would otherwise apply to particular projects,
such as differences in work rules and expiration dates. Then
and now, PLAs typically supersede such area-wide agreements.
Over the last 60 years, as the percentage of construction
workers that unions represent has fallen below 14 percent,
project labor agreements have become less and less relevant. A
large majority of today's work is not subject to any agreement
with any labor union, and the need to address differences
between and among labor agreements has greatly diminished. Open
shop contractors are free to coordinate their employment
practices entirely on their own initiative and without changing
or superseding any prior agreements with labor unions.
In this new environment, union contractors are more likely
to seek PLAs for the purpose of meeting their open shop
competition. Without seeking to open or reopen their area-wide
agreements, such contractors can seek the more favorable terms
or conditions they may need to compete for individual projects.
AGC neither supports nor opposes PLAs per se. The
Association takes the position that such agreements are just
another of the many tools that contractors--not owners, but
contractors--should have at their disposal as they seek to meet
their clients' needs.
At the same time, AGC strongly opposes government mandates
for PLAs or area-wide agreements or any other labor agreements
for publicly funded construction projects. The National Labor
Relations Act commits such matters to the discretion of
construction employers and their employees. And for a host of
reasons, AGC believes that government contracting agencies
should follow suit.
As we have already heard, government mandates for PLAs
discourage competition. They typically require open shop
contractors to make fundamental changes in the way they would
approach an upcoming project and to incur costs that such
contractors would not otherwise incur.
Such mandates may also trouble union contractors. They also
may require union contractors to make significant changes in
the way they would approach a project. Indeed, their typical
purpose and effect is to deprive union contractors of the
opportunity to work under the area-wide agreements that these
contractors have already negotiated.
Government mandates can also disrupt the bargaining over
area-wide agreements. They invite the construction unions to
bypass the contractors for whom their members work and seek to
negotiate with what may be inexperienced public officials. They
also give unions the leverage to make demands that the unions
could not otherwise make.
Beyond that, it remains clear that construction contractors
are in the best position to determine whether and, if so, when
a PLA will help them meet the government's legitimate interest
in having its projects constructed on time, within budget, and
to all specifications.
Federal construction contractors have to post performance
bonds and to provide a host of contractual guarantees that they
will meet their obligations. It follows that these contractors
already have ample incentive to consider any PLA or other labor
agreement that would make it easier or less expensive for them
to perform their work.
In sum, AGC supports H.R. 735. AGC would suggest that the
committee make a technical amendment to section 3(d) where the
bill authorizes an exemption from its substantive provisions
under special circumstances. As currently written, this
provision actually tilts the scale against union contractors.
But AGC believes that the problem is inadvertent and can be
quite easily corrected.
Thank you again. Let me simply repeat that AGC opposes
Federal mandates for project labor agreements and supports H.R.
735. Thank you.
Mr. Kelly [presiding]. Thank you.
[The prepared statement of Mr. Kennedy follows:]

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Mr. Kelly [presiding.] I want to thank all the witnesses
for being here.
Mr. Wu, it's good to see somebody who has spent a little
bit of time in Pittsburgh in the room besides myself. I saw
your time at Carnegie Mellon.
And Professor Tuerk, I think your background kind of speaks
for itself. I don't know that anybody could question what
you've done.
Mr. Tuerk. Thank you Congressman. I wonder if I could make
a correction, though. I inadvertently said Dr. Steel and I
meant Dr. Phillips. I have no idea why I said that, but I would
like to get the name right.
Mr. Kelly. OK. That's fine. We will note that.
I recognize myself for 5 minutes. And I think this is
critical because this hearing today is not about unions or
nonunions. It's not about who gets the bid or doesn't get the
bid. It's about fairness. And certainly if the President's
Executive order is based on something that he thought was
unfair--anybody in the panel, is there any instance anywhere
that would have caused the President to issue this Executive
order? I can't find anything in any of the testimony on any of
the witnesses that would suggest that there was a problems that
existed in the bidding process. And having done many RFPs
myself and looking at it, I tend to feel the other way; that it
is extremely exclusionary and it does tilt the playing field.
So if anybody--and Mr. Baskin, Mr. Tuerk, Mr. Wu, Mr.
Kennedy, if anybody could offer anything that would perhaps
shed some light on why this is in fact issued and why does it
have any importance as to what is it we are trying to do if
it's about fairness?
Mr. Baskin. If I can respond first, I may also speak to it.
But as indicated and as we've heard from the witnesses earlier,
they have no specific labor problems on previous contracts
procured under the Bush order. There was no problem. I think
it's been referred to as a solution in search of a problem. The
only justification for it has to be political because of the
way it was implemented, with no outreach and with no identified
real-world circumstances in which problems had arisen without
PLAs being mandated by the government. It's just totally
unnecessary, and contrary to decades of law as well as the
Competition in Contracting Act that requires full and open
competition on Federal projects.
Mr. Kelly. Professor.
Mr. Tuerk. We did all we could to find out if there were
any contracts under the Bush administration that suffered for a
lack of a PLA and simply couldn't come up with one. It was not
only the FOIA letters that ABC sent out, we combed through
government data bases, looked over survey results from a
national survey, everything we could to find out if there were
any, and there simply were not.
And I do remember a campaign speech that President Obama
made in which he promised project labor agreements. So again I
think that's probably the best explanation for the Executive
order.
Mr. Wu. Well, Wu & Associates, frankly, we would not bid a
project that would have a project labor agreement on it. The
previous testimony where the GSA procurement officer stated
that there was a 10-point system built into their RFP process
would certainly raise our eyebrows in our office as we look for
fair bidding opportunities in the Federal public and State
sectors. That would be something that would jump out right
away, and it would probably be a project that we would not
pursue; because I would agree with you, Mr. Kelly, that on the
private-sector side, every dollar matters. To put together a
bid in the millions of dollars takes a tremendous amount of
time and resources for our company. And if there is the
slightest disadvantage going in, it would strongly discourage
us from bidding the project.
Mr. Kelly. Mr. Kennedy.
Mr. Kennedy. I'm not aware of any systemic problems that
the Federal Government suffered during the Bush administration
as a result of its Executive order. That Executive order made
it abundantly clear that construction contractors were free to
pursue project labor agreements where contractors, knowing the
work they had to do, knowing the commitments that they had to
make, believed that a PLA would be in their interest. With that
said, I believe we had an era of very open competition. It was
healthy for all sides of the industry.
Mr. Kelly. Mr. Wu, just following up on this, because I
have done the same thing you have. And when you get these RFPs,
you can be excluded from your--your bid can be thrown out if
you don't dot all the I's and cross all the T's.
And what has always bothered me, since getting here 5
months ago, is we have a continual parade of people who have
actually never done what it is that they're regulating and
people who have never actually had to have their own skin in
the game, determining how these bids are going to be structured
and how they're going to be awarded. And I find that completely
troublesome.
Just so the general public knows--because not all of us
have the opportunity to do this. When you do submit a bid, 10
points. Critical? Not critical?
Mr. Wu. It's absolutely critical. When we are investing
thousands and thousands of dollars of our own overhead, project
managers, estimators, support staff to put a bid together, a
multimillion-dollar bid could take 3 or 4 weeks for our office
to put together, working along with our subcontractors as well.
We can't afford to invest that time and money into an RFP
process where we feel like there's any chance that we would be
at a disadvantage because there are other opportunities out
there with a disadvantage not present. I could go bid another
project.
Mr. Kelly. So the addition of this language does not
encourage a wider universe of bidders. It actually does limit
those who would take the time. I have friends that it cost them
$50,000 to prepare a bid. This is private industry. I can't
imagine the hoops they would have to jump through here to get
it ready, and knowing at the end of the day if they don't
include the PLA language, they're at a 10-point disadvantage
right off the bat. So I thank you.
Mr. Lankford [presiding]. I recognize Mr. Murphy for 5
minutes of questions.
Mr. Murphy. Thank you very much, Mr. Chairman. Mr.
Chairman, I would like to submit a letter to the record from
the president of Toyota, and in it he says this: Toyota has
used and required project labor agreements on many of their
biggest and most important projects. He says that Toyota has
consistently employed project labor agreements for our major
construction projects, and we could not have been more pleased
with the results. To date, approximately 45 million man hours
have been invested in the construction of nine automobile truck
and component plants in the United States. In each and every
instance, these projects were completed on time and on budget
and with an exemplary safety record.
Toyota, as well as major American and international
companies like Boeing and Wal-Mart, have made the decision to
require project labor agreements because they think it's the
best business practice for them.
So let me ask this question to each of the panel members.
And I just need a yes or no answer. I have only got 5 minutes
here. Do you think we should pass legislation as a Congress
that would prohibit the requirement of PLAs in private sector
construction work? I just need a yes or no answer to that
question.
Mr. Baskin. No. Nobody is asking for that--well, I'm not.
Mr. Murphy. I'm asking, would you--would you support that?
Mr. Baskin. No.
Mr. Murphy. Would you support that legislation?
Mr. Tuerk. Certainly not.
Mr. Wu. No, I would not.
Mr. Kennedy. Where a private owner is backing a decision to
require a PLA with its own resources and has the flexibility to
use delivery systems that are not available in the public
sector, I see no reason why the government should step in and
interfere with that.
Mr. Murphy. Thank you, Mr. Kennedy.
So I hear a lot of talk from my Republican friends and from
my conservative friends about how the government should run
more like a business. But what you are proposing to do here,
even in an act that has some nice words about neutrality, is to
take away from the Federal Government a tool that a lot of
private companies use, which is a decision that they make that
a requirement that PLAs be used in construction projects is
good for their particular project.
What we're asking here today is for that to be taken away
from the Federal Government. And as we've heard over and over
and over again, there's nothing mandating that this be used
project by project. All the Federal Government does is just
encourage a look at whether a PLA would be worthwhile, as many
private companies have. So I'm searching here for why we have a
double standard, and we're all searching for why we have a
panel with only witnesses that are critical of PLAs. So I look
to the underlying political motives here.
Mr. Tuerk, you said in your testimony that you are not here
out of an anti-union bias, that this isn't about union; this is
about the best use of taxpayer dollars.
But Mr. Tuerk, just about 2 months ago, you wrote a piece
entitled ``Let's Put an End to all Collective Bargaining.'' And
in it you wrote, referring to what was going on in Wisconsin,
``The Wisconsin episode is, therefore, just a leading edge of a
political movement that could, if conducted skillfully, make it
possible to unravel public support for the unions in so
dramatic a fashion as to change the face of American politics.
This would indeed be a wonderful thing to behold.''
So let me ask you this. Do you stand by this blog post,
this article that you wrote in which you called for an end to
all collective bargaining?
Mr. Tuerk. Well, I most certainly do. But I want to make a
distinction here. I am here limiting my remarks to this
particular piece of legislation. And the committee is of course
free to evaluate my remarks here on the basis of things that I
have said elsewhere, like this, for example. But what I'm
presenting here are opinions based on research, not just my
broader opinions about how collective bargaining fits into 21st
century America.
So yes, I think that we're finding out in State after State
the harm that collective bargaining has done when it's allowed
between government workers and their governments. Even
Massachusetts has faced up to the reality and has done
something about the excesses of union power within the--among
government workers. And yes, I think that collective bargaining
is a tool whose time has passed.
Mr. Murphy. Thank you. And so I'm asking that question
because your work hasn't just been criticized by the one author
that we cited here. It's been criticized over and over. So I'm
trying to figure out why not only we have a panel that seems to
be rigged in favor of the legislation that we're debating, but
also why we seem to have studies put before us that aren't
based in good empirical and statistical requirements. And I
look at your public record. I look at the agenda you clearly
have to end collective bargaining at large in this country. And
I put it together with what seems to be a systemic approach on
behalf of the Republican majority and on behalf of proponents
of organized labor across this country, whether it be in this
committee or in State legislatures across the country, to take
away from individuals the ability to collectively bargain and
to take away from government the very tool that private
companies use on a regular basis; which is, if they believe
that it is in the best interest of that particular bid to
require a project labor agreement--that's all the Executive
order does--and because this seems to be a hearing that is much
to do about nothing, I bring to the table a political agenda
which seems hidden but incredibly relevant.
With that, I will yield back the balance of my time.
Mr. Tuerk. May I respond?
Mr. Lankford. Just a moment. I do want to accept, without
objection, the Toyota letter into the record that you mentioned
earlier, that you requested to have in the record.
[The information referred to follows:]

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Mr. Lankford. Mr. Tuerk, it is actually my moment for
questioning at this time. So, yes, you would be free to be able
to respond to that.
Mr. Tuerk. First of all, the quality of our statistical
work that has nothing to do with anybody's opinions about
collective bargaining or political issues. I am not responsible
for the invitations that went out for this meeting. Had I had
anything to say about it, I would have wanted Dr. Phillips here
so I could have rebutted his attack on our works, as bizarre as
it is.
Finally, the work that we have done has in fact appeared in
a peer-reviewed journal. Our study of Massachusetts was
published by an online journal out of Bentley University. So
the idea that these numbers that we are coming up with are just
made up out of thin air is itself completely wrong. We have a
lot at stake. We are a Ph.D.-granting Department of Economics
that survives and prospers only by virtue of the integrity of
our work. Our work has been out there for years. And if anybody
wants to find problems with it, they are free to. Dr. Phillips
has tried. His attacks, I think, are wrong. Again, those are
the kinds of things that we could argue in another forum.
Mr. Lankford. Thank you.
Mr. Baskin. Mr. Chairman, may I respond to the
Congressman's question that was unanswered about why all the
members on the panel said that we don't need legislation to
prohibit private sector PLAs; and that is because the National
Labor Relations Act already has protections about them to say
that they must be voluntarily entered into, not coerced, and
only by employers in the construction industry. And what we
have going on here under the Obama order is a mandate. It is
coercion of contractors to private employers on Federal
agencies' projects in which the Executive order encourages
those agencies to in fact mandate or discriminate in favor of
them. And that is what the current laws prohibit. So that is
why we don't need a change in those laws.
Mr. Murphy. Mr. Chairman, the gentleman is responding
directly to me. Would you yield?
Mr. Lankford. I would yield 1 minute.
Mr. Murphy. You've used a lot of words here. You used
``corruption'' several times in your testimony. You have now
used ``coercion.'' I think we need to tone down the level of
rhetoric here when we're talking about an Executive order that
simply asks individual agencies to consider PLAs when
appropriate.
I think by any reading of that it's, A, hard to suggest
that there's anything that is coercive about that Executive
order. And certainly in your testimony in which you suggested
that it corrupted the process, I think those are strong words
with legal ramifications that you should be very careful about
using before the U.S. Congress.
Mr. Baskin. If I may respond.
Mr. Lankford. Yes, you may.
Mr. Baskin. They are merited, because we have been seeing
the Federal procurement process divorced from the rule of law.
For decades it was established that labor--backing labor
affiliation was irrelevant to responsibility of contractors.
And by attaching that to this process, it is rank favoritism.
It is not permissible under the law. And until it stops, we
have to say what it is, if anything is to be done about it.
Mr. Lankford. Mr. Baskin, are you seeking an advantage in
the contracting process by saying that PLAs are a neutral
ground? Is that some advantage that you're seeking?
Mr. Baskin. ``Neutrality'' is the word.
Mr. Lankford. So at this point, based on your testimony
before, it is not an issue if you're bidding against someone as
a PLA or a non-PLA, union shop, non-union shop. That is
irrelevant to you as long as it's a level playing field when
you go in to actually do the bidding.
Mr. Baskin. Yes. ABC has members who have signed union
contracts; so does AGC; and many more who have not, because 87
percent of the industry is nonunion. But the merit shop
philosophy is: Work should be awarded and performed regardless
of labor affiliation. That should have nothing to do with it.
May the best, most responsible contractor win, do the best work
for the best price. That's all we're looking for. And that's
all the Federal taxpayers should be looking for.
Mr. Lankford. Thank you.
Mr. Wu, you had mentioned before that you've actually
backed out of a contract during the bidding process when you
saw the direction it was going; that it was really going to
take a PLA contractor to be able to do that. That is obviously
anecdotal evidence for you personally. Are there other
contractors that you've related with to say, I just don't bid
on Federal contracts when they're over $25 million and I know
those are the specifications?
Mr. Wu. I'm sorry; can you repeat that?
Mr. Lankford. Have you spoken to other contractors as well
on these contracts that are out there for bid over $25 million
that had the PLA encouragement in them, that are also saying,
besides yourself, I'm just not going to do that bid, it's not
worth the trouble?
Mr. Wu. Yes. I encounter contractors all the time on a
general contracting level and a subcontracting level that
simply will not bid projects if a projects labor agreement is
part of the RFP process.
Mr. Lankford. So it is your belief that it is reducing the
amount of competition in the field.
Mr. Wu. I'm very convinced of that. I've seen it in the
bidding process. I've seen the amount of bidders that have
turned out. I've talked to my own subcontractors as to whether
or not they're pursuing PLA projects. And many, if not all of
them, have been discouraged.
Mr. Lankford. Thank you.
I would like to honor Mr. Cummings with 5 minutes of
questions.
Mr. Cummings. Thank you very much.
Mr. Baskin, I want to followup on some questions. I just
want to make a statement with regard to something my colleague,
Mr. Murphy, said. As a fellow lawyer and one who has
represented many people who have been accused wrongfully, and
all of us I think have been trained with regard to certain
words and the use of them and their legal ramifications, I was
kind of surprised that you, of all these witnesses, you're the
only one that talked about corruption.
I think we have to be kind of careful with those words. I
really do. And I don't say that--it just kind of surprised me.
And I don't know the full basis of it. I heard your explanation
to Mr. Murphy. But I have to tell you that--you're from
Venable? Is that your firm?
Mr. Baskin. Yes.
Mr. Cummings. I just think that we need to be careful with
those words.
Last year, the Ninth Circuit rejected claims that a PLA
entered into by LA and Orange Counties violated the due process
rights of nonunion contractors. Furthermore, earlier this year
the U.S. Supreme Court denied certiorari of a case challenging
the seminal Boston Harbor case, where the court upheld the use
of PLAs of public projects.
Mr. Tuerk, I found it very interesting that you helped me
make my point. You said that you did not like the way Dr.
Phillips addressed the issues. And, basically, not putting
words in your mouth, but this is the impression I got; it
sounds like you're almost wishing he was here so that you could
look in his face and say, You're inaccurate. I'm sure you would
have preferred that, would you have not?
Mr. Tuerk. Yes. I wouldn't embarrass my host. But, yes, if
I'm going to be accused of economic malpractice by another
academic, I'd like to have him in the room.
Mr. Cummings. Certainly. And we would have, too. That's why
I said you made my very point. That's why we--you heard the
discussion earlier about how we were concerned on this side
that we were not able to call him. And he was anxious to see
you. He was anxious to look you in the face and say what he had
to say. But we were denied that right.
I also understand that the majority entered into the record
instances in which the administration testified, without other
witnesses. And that is not surprising. In this subcommittee,
the most recent hearing, Administrator Sunstein testified by
himself, and the minority did not protest because he was not
deemed the minority witness by dictate of the majority.
What is unprecedented is that the minority accept the
administration's witness as their own, when the majority has
invited them and invited other private sector witnesses. I
would like to make that very, very clear. And there are
instances where this happened in this way, the way this
happened today; that is, the denial of a witness. Under these
circumstances, I would like to--I hope the chairman, I know you
said you're going to be looking into it, and I look forward to
hearing that from you.
And I want to make it clear the reason why we are spending
so much time on this is because all of you I think want
sunshine. You're talking about a fair process. That's all you
all have been talking about--fair process. Somebody, I think it
was you, Mr. Baskin, talked about level playing field. Well,
guess what? We want a level playing field, too.
And so, Mr. Chairman--we had extensive testimony, Mr.
Tuerk, and one of the things--from Dr. Phillips, that is--and I
hope that one day, since we have now had two hearings on this
issue, and at the rate we're going, I'm sure we'll have more,
so perhaps the next time we will have a chance to bring you
back, Mr. Tuerk. I think, Mr. Baskin, you've done two. You're
on a roll. And so we will--well, I just want to say one other
thing to you, Mr. Tuerk. I think somebody over on the other
side said something; they were picking and choosing from the
report of the GSA, and one of the things that they did say, and
they were talking about cost, they said, ``However, these
studies''--talking about the sunshine study--``did not address
the cost impact of scope, timing, markets, schedule, or quality
variables. These variables would contribute to increased cost,
thereby reducing the level of cost increases that Beacon Hill
argue are all strictly attributed to PLAs.'' And that is on
page 4 of the report.
With that, Mr. Chairman, I would yield back.
Mr. Baskin. Mr. Chairman, if I may respond to the comment
that was directed at me about the use of the word
``corruption,'' because I do want to clarify I'm not accusing
the President of committing a crime. What I referred to in my
statement--I just went back and checked it--is corruption of
the system in the matter of data corrupting a computer system.
It refers to a messing up of the system. I certainly stand
behind that. And it does involve the element of coercion, which
I referred to earlier, when an agency mandates that contractors
accept these things as a condition of performing the work.
So I appreciate the opportunity to clarify.
Mr. Cummings. Mr. Chairman, just 10 seconds.
Mr. Lankford. Yes, sir.
Mr. Cummings. I want to thank you for clarifying that
because it is very, very important. I say it all the time in
this committee. I hate for people to come in here and say
things, and then it's like left on a wall, not to be erased
ever. The press picks that up. The next thing you know, your
wife is reading a story that you didn't even mean, saying that
``My husband accused the President of the United States of
being corrupt.'' I know that's not what you said. That's why I
want to clear these things up. OK.
Mr. Baskin. Appreciate the opportunity.
Mr. Lankford. Thank you. And thank you to all of you for
coming. Very grateful for your time in your very busy schedules
and for you being able to be here as part of this conversation.
With that, this committee stands adjourned.
[Whereupon, at 11:48 a.m., the subcommittee was adjourned.]