Why use a PLA? PLAs allow a Governing Agency like a College - - PDF document

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Cuesta College PLA Presentation

San Luis Obispo County Building Trades Council Presentation

Why use a PLA?

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PLA’s allow a Governing Agency – like a College District – a legal method of

• utlining economic or social goals for their community when the taxpayer’s

money is used  Local Hire goals – your residents at work

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Core Employee Language Limitation Debate

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Less Core Employees = More Local Hire

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More Core Employees = Less Local Hire

 Helmets to Hardhats (H2H) – re‐integrating and employing returning

Armed Forces Veterans.



Since 2007 there has been confirmed placement of over 6,000 returning Veterans into quality careers, including those who have disabled status  Contractor Bid Requirements – setting levels for the number of bidders

to ensure satisfactory competition

 Apprenticeship – providing your local youth a career pathway  PLA’s promote the use of a streamlined highly skilled local workforce,

under the lowest bid, using the least amount of workers in the shortest amount of time. Build it Once, Build it Right.

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 PLA’s have been proven to be such effective construction

management and economic development tools, that the use of PLA’s has expanded greatly in California.

 PLA’s have been used since the 1930’s by private business to ensure

well‐built, efficient and cost effective projects. Their success came to be recognized in the public sector as a viable and replicable management option for Public Works projects.

 Since 2008, PLA’s on K‐12 and CCD Construction in CA have increased

by over 500%, and the number continues to increase due to their proven effectiveness.

 PLA’s have been used on School construction projects from small single

projects to Billion Dollar, District Wide Bond Programs.

 Recent studies from San Diego USD, LAUSD and others have provided

statistical data showing that PLA’s regularly meet or exceed their stated Local Hire Goals

 Money generated in the form of wages has an economic development

multiplier of 2.5, and the money that is spent as disposable income changes hands and average of 12 times.

Trends in CA Policy

 California continues to become more aggressive in

creating enhanced public policy targeted at reducing risk to workers and Public Agencies for the violations of wage theft (wage and hour violations and back wages), workers compensation fraud, failure of an employer to remit benefit contributions, and worker misclassification.

 Labor Law violations have received new and more visible

attention as the economic stress of the past 7 years (“Great Recession”) prompted more willful and blatant contractor violations.

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SB 922 (2011 California)

 SB 922 addresses the following issues:  Codifies into CA Law the permissibility of the use of – and entrance into – PLA by Public Agencies (including School Districts as defied under Section 1100 of the Public Contract Code) under Section 2500 of the Public Contract Code  Section 2500 of the Public Contract Code also codifies the minimum requirements for basic PLA language text.

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“…permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are

• therwise parties to collective bargaining agreements.”

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Codifies drug testing language protocols, reinforces anti –strike language, and resolution by neutral arbitration  SB 922 does not exclude allowing an Entity to enter into a PLA Policy

that adopts PLA’s for all projects meeting a determined set of criteria as determined by the approved policy.  SB 785 (Chaptered into Law on 9.22.2014) created Article 6,

Section 22164 of the Public Contract Code

 Provides language that establishes training requirements for

apprenticeship and Journey level usage on Public Works Projects:

 By January 1, 2016 20% of the workforce must graduate from DAS

approved apprenticeship programs for the occupation they are classified in.

 By January 1, 2017, 30%  By January 1, 2018, 40%  By January 1, 2019, 50%  By January 1, 2020, 60%  Provides that an “entity’s commitment” for the purposes of

satisfying the term of “enforceable commitment” to the Director of the State Public Works Board as defined under Article 6, Section 22164 – in order to meet the above standards – can be demonstrated by the “entity’s” entrance into a PLA.

SB 785

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 SB854 (June 20, 2014) established the Public Works Contractor

Registration program and at the same time eliminated the mandatory Compliance Monitoring Unit for Public Works Projects.

 No longer an umbrella program to monitor compliance (the CMU

fund) with Labor Code on Public Works Projects, it must now be done by the local agencies or a third party “watchdog”.

 Contractors must register with the State in order to bid Public

Works Projects. If they are found – even after they are placed on your project – to be ineligible to work on Public Projects, State Law requires their immediate removal and replacement.

 Replacement of contractors (either General or Subcontractors)

during in‐progress projects is a costly and cumbersome undertaking leading to project delays, legal fees and construction cost impacts

SB 854 PLA vs. Pre‐Qualification

 Key Differences between these policies are:

 PLA is a Project LABOR Agreement. It sets a baseline for the

qualifications, origin and training of your LABOR FORCE

 Pre‐Qualification is a set of baseline standards for your

• CONTRACTORS. It sets a baseline of skills, performance

history, origin, certifications and financial history of the CONTRACTORS the District enters into a contract with.  Is one mutually exclusive of the other?

 No. PLA’s and Pre‐Qualification set performance standards

for two differing groups the owning entity is engaged with. Nothing in a standard Pre‐Qualification will serve to address Labor Force Qualifications or Labor Force Issues.

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What policy combination will best serve your Agency?

 Is there an “Ideal” Combination?

 YES. Ideally, a Governing Agency would overlay the two policies to

create a baseline of expected performance:

 Use of a PLA Policy to address LABOR FORCE qualifications, set

Local Hire Goals, engage returning Veterans for Employment, and engage apprenticeships for youth opportunities

 Use of a Pre‐Qualification Policy – at either the “Better” or “Best”

level – to ensure that your agency is contracting with financially stable, reputable, qualified and committed CONTRACTORS who will most effectively and efficiently serve the City in the Construction/Remodel/Upgrades of Agency Property.  Why just two?

 Local Hire is most effectively and legally addressed via a PLA. To

Maximize effectiveness a PLA should address Local Hire by Zip Code/Geographic Definition preference and include a provision for a nominal number of “core workers”.

So what is this going to cost?

 PLA Policy has no cost increases associated with it. Despite claims to

the contrary, there are no definitive statistics that show increased costs.

 Construction work is economically cyclical. Correlative data showing

cost increases (vs. engineers estimate or bid pricing) is linked to the volume of work available in the current economy, the performance of the contractor/contractors on the site on each project and any managerial (CM, GC, Contractors, Architect, etc.) mistakes that get made.

 Of note: regardless of what you may be told, there are no two projects

alike enough to do an “apples to apples” comparison. The variables fluctuate too widely.

 The National University Study that is pushed by the opponents of

PLA’s and touts that there is a cost of 15‐20% attributed to PLA’s has been openly empirically rebutted by Dr. Bellman ‐ whose data was used to formulate the body of the report – to show that had the data been correctly applied the 15‐20% increase cited would not have been an accurate conclusion.

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The Myth’s about PLA’s

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MYTH: PLA’s are discriminatory to non‐union contractors, because it prevents them from bidding on projects

 Reality: Non‐Union contractors who do not bid under PLA’s CHOOSE to do so, as do any Union Contractors who choose not to bid. There are no bid exclusion terms.  On various PLA projects Statewide where union vs. non‐union participated was surveyed, nearly 60% of the contracts have been awarded to non‐union companies.  State Law and Public Contract Code explicitly prohibit any type of exclusionary language to non‐union contractors Under Section 2500 

MYTH: Local Hire Provisions don’t perform under PLA’s

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MYTH: Contractor’s have to pay “dual benefits” under a PLA

 REALITY: 99% of non‐union contractors DO NOT OFFER benefits, so no dual payments  REALITY: Despite the claims by the ABC, not one instance of dual benefits has been reported under PLA projects  Despite the Affordable Care Act, many employers still do not offer health insurance 

MYTH: Contractor’s can’t cheat when Prevailing Wage applies, so you don’t need a PLA

 REALITY: A contractor can ALWAYS cheat, however, it is less likely under a PLA due to compliance monitoring done by Labor at NO COST to the District. 

MYTH: Our projects are done by Union Contractors, so a PLA isn’t necessary or useful

 REALITY: Using a PLA isn’t about making sure your project is done by a union contractor, it is largely about finding a way to make sure that the workforce being used by the successful biding contractor is from your local area. 

MYTH: PLA’s delay start times on projects due to negotiations

 PLA’s only take as long to negotiate as the parties want them to. There is no benefit for the local Building Trades to engage in unnecessarily lengthy negotiations, as it delays workers having jobs and paychecks. Your labor force is your partner in building your projects, not your adversary.

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MYTH: PLA’s make projects more expensive and are a poor use of Taxpayer Funds

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REALITY: There is no evidence to prove that PLA’s add costs. In fact, the removal of the possibility of strikes and the apprenticeship usage requirement of PLA’s ADD to performance productivity, which saves the District

• money. In fact, the National University Study that is touted as “proof” of cost increases was rebuked by the

Professor whose data was used to produce the study.  MYTH:The Big One: PLA’s are “Union Only Agreements”

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REALITY: Yes, the Unions sign the PLA on behalf of workers, but there is no “NON‐UNION FORBIDDEN” clause. Public Contract Code Section 2500 explicitly prohibits this.  MYTH: PLA’s are Illegal and/or Blanket PLA’s are Illegal

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SB 922 and Public Contract Code 2500 codified permissive and legalized use of PLA’s in CA on public works projects

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Legal Opinions and Court Cases  MYTH: PLA’s are “Fascist”, Marxist”, “Collusionary”, “Political Payback” and “discriminatory against women and minorities”

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REALITY: Public Contract Code Section 2500 makes it illegal to discriminate, as does employment law.  MYTH: You can get the same local hire results if you pre‐qualify your contractor’s, so you don’t need a PLA.

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REALITY: Pre‐qualifying is useful, but it does not contain any mechanism that addresses the contractor’s workforce, only the contractor and it’s management personnel.

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Why Can’t the ABC or a Contractor’s Assn participate in PLA Negotiations?

 A PLA is by definition a Project LABOR Agreement.

 The ABC is not an organization representing Labor or Employees.  Only designated representatives of a LABOR force can negotiate

• n behalf of an Employee.

 A Contractor not yet engaged by the owning entity cannot sit in on

• r negotiate terms of a Labor Agreement it is not yet party to.

 A Contractor or Contractor’s Association cannot represent the

employees of its firm/member.

 The workforce of a non‐union contractor is by definition not

represented, nor does it have collective rights above and beyond those provided to each individual by the State. Therefore, one individual cannot “bargain” for additional terms outside of Basic State Laws.

The Men and Women of the San Luis Obispo area Building and Construction Trades Council, the members of their affiliated Labor Unions, and the working men and women of San Luis Obispo County would like to take this opportunity to thank you for allowing us to present this information to you. We respect the job each of you do, understand that your time is valuable and are honored to have been permitted to present to you in this public forum. Thank you again.