Sioux Falls Argus Leader, March 5, 2009, Thursday

Sioux Falls Argus Leader

March 5, 2009, Thursday

Sioux Falls Argus Leader

Obama's pro-union order worries Thune

WASHINGTON - Sen. John Thune says he's concerned that new contracting rules imposed by President Obama could hurt nonunionized South Dakota contractors vying for millions in federal construction projects included in the economic stimulus plan Congress just passed.

"With all the money that's going to be shoveled out the door - and it is going to be an enormous amount of money ... we just want to make sure that companies in South Dakota which for whatever reason may not be unionized aren't facing any disadvantage when it comes to securing these contracts," the Republican told reporters Wednesday.

Shortly before signing a $787 billion economic stimulus plan into law, Obama last month issued an executive order that allows - but does not require - federal agencies to issue "project labor agreements" when bidding out a contract of $25 million or more. The order reversed a directive under former President Bush.

In his order, Obama said such agreements provide "structure and stability to large-scale construction projects, thereby promoting the efficient and expeditious completion of federal construction contracts."

Would affect few S.D. projects

Under the agreements known as PLAs, nonunion contractors can win the contract but typically are required to employ a work force that may be up to 90 percent unionized, said Fred Kotler, associate director of the Construction Industry Program at Cornell University's School of Industrial and Labor Relations.

For the duration of that project, all contractors and subcontractors would be bound by a collective bargaining agreement, said Julianne Fisher, spokeswoman for Sen. Tim Johnson, D-S.D.

But "there is nothing in the executive order that would give unionized contractors preference in government contracts, and it specifically states that both union and nonunion contractors are allowed to compete for contracts," she said. "Some contractors may not want to be subject to the terms of the agreement, but they would not be prevented from competing."

Toby Crow, executive vice president of the Associated General Contractors of South Dakota, said Obama's order will mean "that federal agencies consider using them - and I want to stress the word 'consider.' "

Crow said he doesn't anticipate the issue coming up often in South Dakota because the vast majority of projects in the state are below the $25 million threshold.

Nathan Stencil, president of Stencil Corp. in Sioux Falls, hadn't seen details of the new rules but agreed federal projects of that scale are scarce in South Dakota.

If a nonunion contractor in South Dakota were required to undertake a major project using a work force that's 90 percent unionized, "it would be difficult to even hire 90 percent union people without hiring them outside of our market," Stencil said. That's because South Dakota has far fewer union workers than states such as Illinois, Ohio and Michigan.

Democratic Rep. Stephanie Herseth Sandlin's spokeswoman, Betsy Hart, said: "This executive order doesn't prevent any firm from competing for contracts, nor does it give preference based on whether or not a company is unionized. It's notable that similar rules were last in place in the 1990s, during a thriving economy."

Critics cite higher labor costs
The Associated Builders and Contractors trade association, which represents 25,000 construction firms nationwide, opposes Obama's order. Its president, Kirk Pickerel, said work performed by union employees can inflate project price tags by as much as 20 percent.

"Union-only PLAs drive up costs for American taxpayers while unfairly discriminating against 84 percent of U.S. construction workers who choose not to join a labor union," he said. "All taxpayers should have the opportunity to compete fairly on any project funded by the federal government."

Thune agrees and said it's especially important now that Congress has passed a massive economic stimulus plan that sets aside billions for roads, schools and buildings. By permitting unions to stake a large claim to these projects, South Dakota taxpayers could be squeezed, he said.

"If all this money goes to unionized companies that are paying higher wage, you might find many of these jobs and much of this money being spent in a way that is going to cost more to the federal government than it would if it were going to some of these companies that come from right-to-work states" such as South Dakota, Thune said.

Kotler disputed the criticism, saying studies show that these agreements save taxpayers money.

"They're convenient. They provide ready access to skilled labor. You have uniform rules about scheduling, days off and they typically include no-strike provisions," he said. "It provides a lot of stability. The job is more likely to get done on time and on budget."

Jeff Martin contributed to this story. Contact Ledyard King at lking@gannett.com