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Repeal of PLAs could save millions

An executive order signed by Gov. Jim Gibbons in early January could save taxpayers millions of dollars, the leader of a local building trades organization said Thursday.

The order repealed the use of project labor agreements on public works construction projects. Project labor agreements, or PLAs, are collective bargaining agreements between public agencies and local construction unions.

Under a PLA, the project owner is required to use only contractors that adhere to the rules set forth in the agreement, which includes wages, hours, benefits and other labor terms. In exchange, union workers pledge not to strike or pursue any other job actions.

Nonunion contractors have long contended that PLAs drive up the cost of construction on public projects such as schools and roads.

Warren Hardy, president of Associated Builders and Contractors, said he doesn’t have a calculated estimate on how much will be saved by Gibbons’ action, but studies have shown that union labor is 20 percent to 30 percent higher than nonunion labor.

He said most public works projects were being justified as PLAs under a 1994 executive order from former Gov. Bob Miller.

Josh Hicks, general counsel for the governor’s office, said the order applies only to projects that have a state funding component. He could not provide figures on cost savings.

“This order doesn’t say you can’t use a PLA, it just sets forth the statutory scheme,” he said.

With Nevada facing a $400 million budget shortfall, it’s important to make the most of taxpayer dollars and spend state funds as efficiently as possible, Hardy said.

“I think it effectively ends the use of PLAs on any state public works,” he said. “I think it gives local governments something to think about. One thing that’s a fact is it’s going to increase competition.”

State Sen. Dina Titus, D-Las Vegas, said there has been a push from some of the smaller, rural counties in Nevada to get rid of PLAs, but there has never been any legislation to override Miller’s order.

Hardy, a Republican state senator who asked Gibbons to consider signing the executive order, said he’s not going to pursue such legislation.

The savings issue is one thing, Hardy said, but the order also speaks to the anticompetitive nature of PLAs.

“It’s a business issue that has become a political issue,” he said.

PLAs may add cost to a project on the front end, but they could save money in the long run, Titus noted.

“The argument is you get what you pay for,” she said. “You can say it costs more to build public buildings, but if you’re not paying benefits, the state’s going to pick up that cost with Medicaid and social services. I just don’t know.”

She said the state still must comply with the Davis-Bacon Act, a 1931 law that determines the local prevailing wages, a set minimum that must be paid on federally funded or assisted construction projects, regardless if the work is being done by union or nonunion contractors. Nevada has its own prevailing wage law that sets minimum wages for projects that don’t use federal funds, too.

Public works projects haven’t been as political at the Clark County level as they’ve been at the state level, but that could change, Titus said.

“This is where you’ll see partisan politics play out on County Commission elections,” she said.

Nevada AFL-CIO Secretary Treasurer Danny Thompson said 60 percent of contractors working on a PLA project for the Southern Nevada Water Authority were nonunion, evidence that PLAs do not discriminate against them. They were able to bid the job and get it, he said.

“At the end of the day, this order only revokes the order by Gov. Miller in 1994. I don’t think it changes a whole lot,” Thompson said. “Here’s the important thing, that it’s done right the first time. Look no further than the Regional Justice Center in Las Vegas to show what happens when you don’t use local skilled craftsmen. Things can get out of hand without these (PLAs) in place.”

Thompson said unions pride themselves on providing trained, skilled labor and when someone asks for 500 certified pipe welders, that’s what they get. Private ventures want that guarantee, he said.

The Las Vegas Chamber of Commerce has a history of actively opposing PLAs.

“We believe they’re unfair to taxpayers and they’re noncompetitive in how they limit workers,” chamber President Kara Kelley said. “Even if they allow nonunion contractors, there’s often a requirement to pay into union funds. It adds cost to the project and it’s pretty arcane.”

Kelley said PLAs probably add 30 percent to 40 percent to a project’s value, taxpayer dollars that could be better used for other projects that would benefit Southern Nevadans, such as road improvement.

Victor Fuchs, president of Helix Electric, is applauding the governor’s move.

He’s complained for nearly a decade about the unfairness of PLAs, which he claims prevented Helix from bidding on big-money projects such as the $200 million D-gate terminal at McCarran International Airport and the $180 million South Hall expansion at Las Vegas Convention Center.

He said Gibbons’ edict opens up large public jobs to “merit shops,” or nonunion contractors, and prevents future state construction jobs from mandating PLAs.

“It puts public works on a level playing field,” he said. “Everyone has the opportunity to bid on work funded by public tax dollars. It gives fair and equal opportunity to everyone.”

Steve Holloway, executive president of Associated General Contractors, said his union members are “not up in arms” about Gibbons’ order, especially since there haven’t been many PLA projects since Miller left office. Clark County School District had a PLA, but dropped it a couple years ago.

“It just didn’t work out that well for them,” Holloway said.

Current PLA projects under way by the Southern Nevada Water Authority and the airport won’t be affected, he said.

Southern Nevada Water Authority spokesman Scott Huntley said the agency has 14 PLA projects planned or in progress and that the action of the governor does not affect them.

The Las Vegas Convention and Visitors Authority recently decided to proceed with an $890 million expansion of the convention center without a PLA, reversing course from previous projects.

The convention authority board approved a PLA in October on the condition that various union representatives sign the agreement by Jan. 18 and that didn’t occur, spokesman Vince Alberta said.

“I don’t think that would have flown because painters and carpenters refused to sign it,” Holloway said. “They had a dispute over the language in the PLA. They (PLAs) haven’t gone too well because it’s been difficult to put one together.”

A few years ago, when all the trades were in the AFL-CIO, there was standard language in the PLA to resolve jurisdictional disputes, Holloway said. For example, a water truck could be driven by a laborer, a Teamster or someone from Operating Engineers. All three unions claim that work and all three would have grievances over jurisdiction.

Now carpenters and laborers have left the AFL-CIO and other trades, such as painters, have stayed. The painters might want jurisdiction language in the PLA that the carpenters don’t want, Holloway said.

It’s not a wage issue, Fuchs said. Contractors still have to pay prevailing wages on public projects, including schools. However, workers must join a union or pay union dues, even if they don’t want to be part of such organization.

Fuchs said he would have had to pay double benefits on PLA jobs and couldn’t rely on his own labor force. Generally, union workers are hired over nonunion workers.

“The reason people work for you is, you treat them right. We provide the best available benefits and pay fair wages and provide steady work,” he said. “All these guys who’ve been working for you, now you tell them, ‘Sorry guys, you can’t work on this job.’ “

He said Gibbons’ executive order opens the process to fair competition and allows the state to use the best contractor for the job at hand. It will expand job opportunities, particularly for smaller businesses, and save taxpayer dollars by reducing construction costs.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or (702) 383-0491.

 

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