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MEMORANDUM
TO: Robert Bobb FROM: Gregory P. Irish Director DATE : June 30, 2005 SUBJECT: Project Labor Agreement and the Baseball Stadium The following is a comprehensive review of the benefits associated with execution of the proposed Project Labor Agreement. OVERVIEWDOES enthusiastically supports the PLA. The proposed baseball stadium is an immense and complex public works project that must be completed by a specific time. History teaches us that a PLA is a useful device to ensure that projects of this size and complexity are completed on time and on budget. Our recent experience with the new Convention Center illustrated the utility of employing PLAs on large projects with demanding construction schedules. The projected cost of the stadium project is over $534.8 million. Direct and indirect construction costs are estimated to be $244 million. For both business and political reasons, it is imperative that the stadium be completed by March of 2008. Therefore, the need for a PLA is manifest. The proposed PLA gives us an advance look at the terms and conditions of the labor portion of the stadium’s costs and includes provisions that make it a “good deal” for the District. Careful analysis of the PLA is demanded by the size of the project, which creates the potential for an enormous fiscal burden on the District if it fails. Bond payments, tax increment financing costs, and penalty charges all may fall back on the District government, even though the Sports and Entertainment Commission will actually sign the PLA. REVIEW CONSIDERATIONSThe purpose of the PLA is to be a single project bargaining agreement between the site contractors and the 15 construction unions. It establishes terms and conditions for all labor employed on the project and should provide the District and the Sports and Entertainment Commission (as “project owners”) the following:
LABOR SUPPLYThe PLA covers 15 independent local craft unions. The signatory Building Trades Council represents over 20,000 local skilled trade workers. Construction industry sources have long recognized that skilled craft labor is more productive and demonstrably capable of completing major public works projects, such as the proposed stadium, on time and on budget. The signatory unions and contractors have agreed to employ District residents for 50% of all journey worker and apprentice hours worked on a craft-by-craft basis. The PLA further provides that 100% of all new apprentices shall be District residents. These provisions greatly benefit the District by increasing employment opportunities for District residents already in the construction trades and providing entry into the skilled trades through the apprenticeship system for other District residents new to the field. In addition, the signatory unions have agreed to modify the seniority system in their referral processes to allow District residents to be referred to stadium construction jobs regardless of union seniority. The unions have also agreed to utilize DOES and community-based organizations to recruit qualified District residents and will allow nonunion resident labor to use the union referral process without having to join the union. We believe that these provisions of the PLA will ensure that stadium project contractors will have access to sufficient skilled labor to meet the construction schedule, while simultaneously increasing the participation of District residents in the skilled labor force. LABOR COSTSBecause this project is subject to the Davis-Bacon Act (40 USC § 276a-§276a5), the cost of labor for the stadium project is largely predetermined and not impacted by the PLA. The Davis-Bacon Act requires that all workers on projects subject to the law receive the “prevailing wage” which is usually the union wage. Accordingly, contractors and subcontractors on the stadium project will be required to pay prevailing wage rates as a matter of law, the existence of the PLA notwithstanding. In addition, the PLA provides certain cost saving concessions from the unions that will lower costs: (1) 4 ten-hour days and 5 ten-hour days; (2) uniform starting times; (3) uniform holidays; (4) multiple shifts with uniform premium pay. Further, the bidding on all contracts is open to union and non-union contractors alike, and there is a substantial set-aside for local small/disadvantaged businesses. Those small/disadvantaged businesses receiving less than $10 million in contracts are not required to use union labor. It is clear that far from restricting competition and inflating costs, the PLA actually encourages a wide range of bidders and fosters cost-limiting competition. Finally, the PLA allows for any trade package that does not receive three bona fide bids to be re-bid. In the re-bid process, certain union involvement requirements are relaxed. Again, this promotes competition and reduces costs. PREVENTION OF LABOR DISPUTESThe size and cost of this project and its virtually fixed completion date necessitate labor peace in order for the stadium to be built on time and on budget. The PLA provides the conditions that assure the required labor peace. All the unions involved have agreed to no strike/stoppage provisions in the PLA (Article VI). Disputes and grievances are to be submitted to arbitration panels governed by the rules of the American Arbitration Association. There will also be a Mayoral Task Force, with all stakeholders represented, that will conduct intensive outreach and recruitment activities to assure that District residents are hired and retained in the skilled construction labor workforce. The Task Force will receive funding for two years from the project owner and the Sports and Entertainment Commission for this purpose. The Task Force will also have the authority to participate in the arbitration process. TIMELY COMPLETION OF PROJECTThe PLA will clearly promote the timely completion of the stadium and the avoidance of substantial penalties for delays. The PLA provides access to over 20,000 local skilled construction workers and enables contractors to add qualified District residents to this workforce. It is important to note that the PLA involves some 15 construction craft unions and that union craft labor has been shown to be more productive and efficient than unskilled labor. Here, the District will have access to an experienced workforce at the journey worker and apprentice levels, as well as new apprentices who will be District residents. The PLA’s provision concerning the prevention of strikes also increases the likelihood of timely completion of the stadium. The article requiring all unions and contractors to seek arbitration and to eschew strikes, lockouts, or work stoppages will be crucial to meeting the construction schedule. In brief, the PLA is the vehicle which integrates both labor access and labor peace and, consequently, benefits the District. INVOLVEMENT OF DISTRICT RESIDENTS AND BUSINESSESThe PLA provides numerous benefits for District residents and small businesses:
CONCLUSIONDOES strongly recommends acceptance of the PLA. The stadium project is large, complex, costly, and must be completed on time. The PLA will facilitate timely completion while not markedly increasing the costs of the project. All contractors are required to pay Davis-Bacon Act “prevailing wages” in any event. Further, the rebidding process, the awarding of contracts to local small/disadvantaged businesses, and the increased opportunities for District residents to enter the skilled labor force are all positive factors. The PLA promotes the labor peace required to keep the complex stadium project on time and on budget. The no strike, no work stoppage agreement is vital for the timely completion of the stadium and the avoidance of penalties for delay. Cooperation between the contractors and the unions would not be assured without the PLA. Finally, the PLA gives the District other substantial benefits including the requirement that 50% of all journey worker and apprentice hours be worked by District residents, the requirement that all new apprenticeship positions be filled by District residents, the provision that allows the referral of District residents to jobs without regard to union seniority, the establishment of the Mayoral Task Force, and the summer youth employment program in the construction trades. Little of this would have occurred without the PLA. On balance, the PLA is beneficial to the District. We strongly recommend its acceptance. |
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