Saving millions on public construction jobs

Overriding an executive order from former Gov. Bob Miller that had added to the cost of many public construction projects, current Nevada Gov. Jim Gibbons signed an order of his own in early January, repealing the requirement that “Project Labor Agreements” be used on state-funded construction jobs.

That’s welcome news. Over time, the step could save taxpayers millions of dollars in unnecessary costs — a common-sense step at a time when government revenues are increasing less exuberantly than usual.

Current PLA projects under way at McCarran International Airport and for the Southern Nevada Water Authority won’t be affected, according to Steve Holloway, executive president of Associated General Contractors. But “I think it effectively ends the use of PLAs on any state public works,” says Warren Hardy, president of Nevada’s Associated Builders and Contractors.

A PLA amounts to a sweetheart deal for labor unions. Under such an agreement, in exchange for a promise not to strike, all workers — even those in nonunion shops — have to abide by union rules.

Not only does the “labor peace” pledge smack of extortion at taxpayer expense, but union restrictions can hamstring supervisors, who are forced to rotate union and nonunion employees on their crews, losing the flexibility to place workers where they’re needed, when they’re needed.

(Many still believe union contracts are primarily about wages and benefits. In fact, full-time workers on state construction projects who earn so little that their immediate families need Medicaid to cover basic medical costs are creatures residing almost entirely in the fevered class-warfare dreams of Senate Minority Leader Dina Titus and a few surviving graduates of Patrice Lumumba University. What really makes union contracts expensive is often the “jurisdictional” issues — entire jobs coming to a halt while a member of the proper “local” is found to move a truck or turn off a water valve, because the contract forbids members of the “wrong” union from performing these simple tasks.)

One up side of an economic slowdown is that it puts public entities in the catbird seat when it comes time to invite bids on new projects. But PLAs lock in higher costs, eliminating some of that competitive edge. That’s why the Clark County School District was so wise to eliminate PLAs on its building projects four years ago.

The School Board was swayed in that decision by a policy study from the Beacon Hill Institute, a Boston think tank. The study found “Costs are substantially higher when a school construction project is executed under a PLA.” Indeed, when the institute surveyed Boston-area school projects since 1995, it found the existence of a PLA increased costs by $31.74 per square foot — more than one-sixth of the total expenditures.

Kara Kelley, president of the Las Vegas Chamber of Commerce, estimates PLAs, which “often feature a requirement to pay into union funds,” add 30 percent to 40 percent to a project’s cost here in Nevada — money that could be better used on, say, highway improvements.

Unfortunately, on any project involving federal funds, the state must still abide by the Davis-Bacon Act, a law dreamed up in 1931 to mandate artificially high wages for such projects — a scheme originally hatched to prevent contractors in Rep. Robert Bacon’s home district on Long Island from using “cheap colored labor” to build a veterans hospital.

Not content with that, Nevada’s union-thralled lawmakers have even enacted our own, state version of Davis-Bacon.

But Gov. Gibbons’ step is still to be applauded. “It puts public works on a level playing field,” enthuses Victor Fuchs, president of Helix Electric, who has long complained his firm was shut out of bidding by the PLAs which applied to projects such as the D-Gate terminal at McCarran. “Everyone has the opportunity to bid on work funded by public tax dollars.”


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