ARTICLE
On January 24, 2020, with a three day (Friday afternoon) public notice per California’s Brown Act, the City Council placed an item on their January 28 agenda that could impact local area businesses from contracting with the City. Unfortunately, the City Council did not reach out to the business community in advance to seek our input. When a new policy hits an agenda with limited notice it causes deep concern from those directly impacted — local businesses and local contractors — and it also displays an arrogant attitude that our elected officials don’t respect the business community. Why would the current majority city council members believe it was appropriate to side step the local companies that do business in the City without getting their input? Was something amiss with the current contracting system? Let’s start from scratch: What is a PLA? Where have they been adopted? Do they work for the better good of the local government, the tax payer and the local construction companies/vendors that do our public infrastructure work? A Project Labor Agreement (PLA) is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. Before any workers are hired the construction unions have bargaining rights on benefits and wages for the workers. The agreement can include provisions that prevent strikes, lockouts or other work stoppages for the length of the project. The terms of the agreements will apply to all contractors and subcontractors who successfully bid on the project. The City of Santa Cruz is a small coastal town that prides itself on a “think global — act local mind set.” In fact, Think Local First has 100s if not 1,000s of local businesses that want us to support each other: Think Local First Top 10. I find it ironic that the city council which preaches about buying local, promoting local businesses (not the big box companies from outside the region) would establish a policy that punishes local small businesses who do work with the City. Many small companies and vendors proudly display their “Think Local First” logos. Wouldn’t you think that when a vendor construction policy is being considered, the first call would be to the local businesses who work with you and ask: What is your opinion of this PLA idea? I guess not. This PLA that was presented to the City Council and pushed forward with the Majority Council requesting that city staff “come back to the City Council in sixty days with a Draft Agreement.” In drafting such a document why are we not asking these fundamental questions? Who are the local vendors/contractors? Do they pay prevailing wage? Are they hiring local subcontractors from within the city, county, region? What is the definition of local? Is there something wrong with our current system? Will a PLA produce more employment opportunities for local folks? There are a host of other questions, but I think you get the picture. Is the PLA really a gift to one employment group at the risk to another? The more you begin to think about the current infrastructure needs within the City — it becomes very obvious that our City does not have the in-house capability to do large infrastructure projects without local or outside construction companies doing the work. What is the experience in Watsonville? Watsonville -Watsonville approved the ordinance that will require PLAs on public works projects costing more than $600,000 in 2013. Making it the second city in Northern California and the sixth city in California to enact a policy requiring PLAs. The main reasons for implementing this ordinance is to ensure that local workers get an advantage in order to provide a solution to high unemployment in the city. -The City of Watsonville particularly underlined that city-funded construction projects can involve numerous contractors and have critical timelines. It is therefore essential that there will be no labor disruptions. They believe that this can be ensured through the usage of PLAs. -Reference is made to successful PLAs in San Francisco Bay area. Some examples of these include the San Francisco International Airport, Contra Costa Water District and more. -The City of Watsonville needs to deal with unemployment and therefore want to use pre-apprenticeships and city construction craft jobs. The City believes that PLAs is a good way to accommodate for such programs.[1] Salinas -In Salinas two projects have been voted on to include PLAs. These two are the Monterey County Water Resources Agency Interlake Tunnel Project and the Salinas Union High School District.The Salinas Taxpayers Association raised several concerns with these PLAs. -These concerns include increased costs, favoritism in bidding and the encouraging of Bay area companies and their employees to take Salinas jobs.[2] -The Salinas Valley Chamber of Commerce produced a report that made it clear that local contractors were suffering due to PLAs. See the findings of the report in the chart below. [1]https://www.codepublishing.com/CA/Watsonville/html/Watsonville07/Watsonville0717.html [2]https://salinastaxpayers.org/project-labor-agreements/ It seems to be the case that Watsonville implemented PLAs in order to ensure work and apprenticeship opportunities for the workers in their communities. However, it is unclear whether this has been proven to be successful in Watsonville. In Salinas it is clear that local contractors have been disadvantaged by the PLAs. There are several reports showing that there is no evidence that the usage of PLAs decreases construction costs. Instead it seems to be the opposite - that PLAs increase costs. A report on the building of schools in California particularly highlights this fact.[1] The UC Berkeley Labor Center has, however, produced a report claiming that it was slightly cheaper when PLOs were used when building colleges. Yet, the cost difference was seen as not being statistically significant. The authors did still claim that “Our analysis rejected the hypothesis that PLAs raised the cost of projects relative to the engineer’s estimate compared to nonPLA projects.”[2] We are certain that the City of Santa Cruz has a list of pre-qualified contractors that they turned to over the years to produce quality projects and services. This public bidding system follows a formal process: Submit a RFQ (Request for Qualifications). If deemed qualified, the next step is to begin an RFP (Request for Proposals) process, whereby these companies and organizations can submit bids, which are weighted based upon the above mentioned criteria, and ultimately a vendor is chosen. Based on the summary of information we reviewed, PLAs will add additional layers of bureaucracy to the competitive bidding process and costs associated with the extra steps. When our city is grabbling with so many issues of greater importance — addressing homelessness, advocating for more housing of all types, working to streamline the planning process, looking closely at the city’s financial debt, creating a sustainable water supply, improving our infrastructure and addressing climate change — why take a U turn on construction/vendor process when there is no evidence that this action will produce better and more cost effective projects? [1] http://www.nusinstitute.org/assets/resources/pageResources/Measuring-the-Cost-of-Project-Labor-Agreements-on-School-Construction-in-California.pdf [2] http://laborcenter.berkeley.edu/project-labor-agreements-and-bidding-outcomes/
On January 24, 2020, with a three day (Friday afternoon) public notice per California’s Brown Act, the City Council placed an item on their January 28 agenda that could impact local area businesses from contracting with the City. Unfortunately, the City Council did not reach out to the business community in advance to seek our input. When a new policy hits an agenda with limited notice it causes deep concern from those directly impacted — local businesses and local contractors — and it also displays an arrogant attitude that our elected officials don’t respect the business community.
Why would the current majority city council members believe it was appropriate to side step the local companies that do business in the City without getting their input? Was something amiss with the current contracting system?
Let’s start from scratch: What is a PLA? Where have they been adopted? Do they work for the better good of the local government, the tax payer and the local construction companies/vendors that do our public infrastructure work?
A Project Labor Agreement (PLA) is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. Before any workers are hired the construction unions have bargaining rights on benefits and wages for the workers. The agreement can include provisions that prevent strikes, lockouts or other work stoppages for the length of the project. The terms of the agreements will apply to all contractors and subcontractors who successfully bid on the project.
The City of Santa Cruz is a small coastal town that prides itself on a “think global — act local mind set.” In fact, Think Local First has 100s if not 1,000s of local businesses that want us to support each other: Think Local First Top 10. I find it ironic that the city council which preaches about buying local, promoting local businesses (not the big box companies from outside the region) would establish a policy that punishes local small businesses who do work with the City.
Many small companies and vendors proudly display their “Think Local First” logos. Wouldn’t you think that when a vendor construction policy is being considered, the first call would be to the local businesses who work with you and ask: What is your opinion of this PLA idea? I guess not.
This PLA that was presented to the City Council and pushed forward with the Majority Council requesting that city staff “come back to the City Council in sixty days with a Draft Agreement.” In drafting such a document why are we not asking these fundamental questions? Who are the local vendors/contractors? Do they pay prevailing wage? Are they hiring local subcontractors from within the city, county, region? What is the definition of local? Is there something wrong with our current system? Will a PLA produce more employment opportunities for local folks?
There are a host of other questions, but I think you get the picture. Is the PLA really a gift to one employment group at the risk to another? The more you begin to think about the current infrastructure needs within the City — it becomes very obvious that our City does not have the in-house capability to do large infrastructure projects without local or outside construction companies doing the work.
What is the experience in Watsonville?
Watsonville
-Watsonville approved the ordinance that will require PLAs on public works projects costing more than $600,000 in 2013. Making it the second city in Northern California and the sixth city in California to enact a policy requiring PLAs. The main reasons for implementing this ordinance is to ensure that local workers get an advantage in order to provide a solution to high unemployment in the city. -The City of Watsonville particularly underlined that city-funded construction projects can involve numerous contractors and have critical timelines. It is therefore essential that there will be no labor disruptions. They believe that this can be ensured through the usage of PLAs. -Reference is made to successful PLAs in San Francisco Bay area. Some examples of these include the San Francisco International Airport, Contra Costa Water District and more. -The City of Watsonville needs to deal with unemployment and therefore want to use pre-apprenticeships and city construction craft jobs. The City believes that PLAs is a good way to accommodate for such programs.[1] Salinas
-In Salinas two projects have been voted on to include PLAs. These two are the Monterey County Water Resources Agency Interlake Tunnel Project and the Salinas Union High School District.The Salinas Taxpayers Association raised several concerns with these PLAs. -These concerns include increased costs, favoritism in bidding and the encouraging of Bay area companies and their employees to take Salinas jobs.[2]
-The Salinas Valley Chamber of Commerce produced a report that made it clear that local contractors were suffering due to PLAs. See the findings of the report in the chart below. [1]https://www.codepublishing.com/CA/Watsonville/html/Watsonville07/Watsonville0717.html
[2]https://salinastaxpayers.org/project-labor-agreements/
It seems to be the case that Watsonville implemented PLAs in order to ensure work and apprenticeship opportunities for the workers in their communities. However, it is unclear whether this has been proven to be successful in Watsonville.
In Salinas it is clear that local contractors have been disadvantaged by the PLAs.
There are several reports showing that there is no evidence that the usage of PLAs decreases construction costs. Instead it seems to be the opposite - that PLAs increase costs. A report on the building of schools in California particularly highlights this fact.[1] The UC Berkeley Labor Center has, however, produced a report claiming that it was slightly cheaper when PLOs were used when building colleges. Yet, the cost difference was seen as not being statistically significant. The authors did still claim that “Our analysis rejected the hypothesis that PLAs raised the cost of projects relative to the engineer’s estimate compared to nonPLA projects.”[2]
[2] http://laborcenter.berkeley.edu/project-labor-agreements-and-bidding-outcomes/