Critics Say State’s Call for “Project Labor Agreements” Drives up Costs for Public Projects
ALBANY — In two recent instances, cash-strapped local governments near the Canadian border solicited major construction contracts in ways that ensured unionized workers would win. While that’s been a boon for upstate labor unions, non-union contractors contend taxpayers are getting less while paying more.
Officials from Clinton County, which renovated its airport, and the city of Ogdensburg, which is revamping a wastewater treatment plant, deny they were pressured into adopting the bidding approach by the administration of Gov. Andrew M. Cuomo, who has promised that state projects will be built by union labor.
Cuomo’s spokesmen call the allegation a “conspiracy theory.” At the same time, state grant recipients are generally “expected” to at least consider PLAs.
Ogdensburg, a city of 11,000, has financial problems dire enough to require the intervention of a state restructuring board. City officials are simultaneously wrestling with how to pay for a $35 million wastewater treatment project. Two years ago, the state Department of Environmental Conservation ordered the project and threatened to fine the community amid concerns it was using unclean drinking water from the St. Lawrence River.
In June, Ogdensburg officials opted against taking $1 million from the federal government to pay for the renovation. Instead, they conducted a bidding process that ensured the work would go to union labor.
Since then, the cost of the project has ballooned.
“As we’ve seen with the previous PLA projects, major concessions to the original plans had to be made due to inflated costs,” said Brian Sampson, president of the Associated Builders and Contractors Empire State Chapter, which represents non-union contractors.
But Ogdensburg city manager Sarah Purdy said the decision hadn’t resulted from outside pressure.
“I know of no pressure exerted by the state to use a PLA,” Purdy told the Times Union. “What I do know is that the City Council has consistently looked favorably on the use of a PLA, and preferred to utilize one if possible.”
Building trades unions have strongly backed Cuomo. One political action committee alone, run by the state Building and Construction Trades Council, has given Cuomo’s campaign $280,000. During the 2018 campaign for governor, leaders of trades unions were on the front lines attacking Cuomo’s opponents.
In April 2016, Cuomo was in Washington D.C., where he gave a keynote speech at the North America Building Trades Union’s Legislative Conference, and made a significant promise: “My friends, every project we build is going to be built with organized labor — every project,” he said.
“That is why Gary LaBarbera and Jimmy Cahill are all smiles,” Cuomo added, referring to the leaders of the New York City and state building trades unions. “They have work for the next three generations, and all they have to do is sit at their desk.”
A PLA is a pre-hire, collective bargaining agreement with one or more labor unions establishing employment terms for a construction project. The agreements ensure union labor will be used. In exchange, unions often agree to certain concessions intended to save money, such as synchronizing work hours.
Proponents say PLAs are needed on large government projects. GlobalFoundries in Malta was built with a PLA that ensured some 4,000 construction workers operated under the same schedules and rules, Cahill said. Similarly, work was done safely, ahead of schedule and under budget on the Mario M. Cuomo Bridge. PLAs are also more likely to prevent wage theft and encourage better worker training, Cahill said.
Cahill saw no problem with the Cuomo administration demanding that any state-funded work be bid under a PLA, including local projects funded by state grants.
“How tax money is used to build and pay for construction jobs is the business of anyone,” Cahill said. “The governor is a politician that gets it — he understands that union construction builds jobs safely and on time, and that we protect our workers.”
Non-union contractors counter that if union labor is more cost-effective, it should be able to compete on a level playing field in competitive bidding. Many non-union contractors refuse to bid on projects with mandated PLAs. Only about 21 percent of New York’s construction workforce is unionized, according to Sampson.
Before a PLA can be imposed on a bidding process, the entity conducting the bidding (such as state or local government agencies) must evaluate its financial impact. In recent years, projects backed by the Cuomo administration utilized a Pittsford-based firm, Seeler Engineering, to perform those analyses. In 2018, the firm won contracts worth more than $1.1 million from two Cuomo administration agencies.
Critics of PLAs argue there’s a financial incentive for the company conducting a PLA study to come back with a pro-union finding. If a study finds that a PLA is needed, these same companies are usually hired — for a second time — to negotiate the PLA between a public entity and a union. In Ogdensburg, Seeler was paid $12,000 for the PLA study, which found the approach would save the city $900,000; Seeler is now is being paid $4,000 more to negotiate that same pact.
Seeler officials did not return requests for comment.
About 120 miles to the east, a similar controversy cropped up in Clinton County two years ago. In that instance, Seeler was again used and its study recommended using a PLA.
The Clinton County Legislature voted in 2017 to place a PLA mandate on the bidding for an expansion and improvement project at Plattsburgh International Airport.
It could be illegal under competitive bidding laws for the Cuomo administration to pull funding for a project simply because the bidding did not favor union workers.
But Mark Dame, a Clinton County legislator and a Republican, believes threats were made implicitly in weekly phone calls Clinton County officials held with the state Department of Transportation.
Dame — who wasn’t on the calls but was briefed on them — said some county officials felt future funding from the Cuomo administration would be jeopardized if the county didn’t use a PLA.
“There was definitely the implication that if there wasn’t a PLA, funds could be jeopardized,” Dame said. “I’m not going out on a limb to say that that was the case.”
As in Ogdensburg, the Clinton County project relied heavily on state funding. In his January 2017 State of the State address, Cuomo announced that the airport had received $38.1 million through round two of the Upstate Airport Economic Development and Revitalization Competition.
While county officials were encouraged by state DOT officials to use a PLA, Michael Zurlo, the Clinton County administrator, said they didn’t need to be told the Cuomo administration favored the agreements: It was already in the public record.
“It was clear from the beginning that was the preference,” Zurlo said.
Email records show that in June 2016, a DOT official emailed Clinton County officials asking about their progress in imposing a PLA on the bidding, while also recommending an engineer that could conduct a study.
Robert Hall, a Clinton County legislator and Democrat that oversees the county airports committee, said he doesn’t believe any threats were ever made. A DOT spokesman, Joseph Morrissey, said it was “sad that the Times Union is getting manipulated by anti-union forces.”
“This accusation — from a second-hand source — is categorically false,” he said. “Clinton County conducted a study on the use of a PLA on this project under state labor law, and the study concluded that a PLA was appropriate for the project as it would result in time and cost savings. The state-funded portion of the project was completed last fall on time and on budget.”
The PLA imposed on the bidding called for the winning airport contractor to have two union workers for every non-union worker.
The low bid, however, ended up coming from the non-union contractor, Luck Brothers. Though the company’s proposal was $915,000 lower than the second-place bidder, the Clinton County Legislature chose the second-place bidder because Luck Brothers would not agree to the PLA.
There were consequences, according to Dame. He said the airport project ended up having to be “scaled down” because of the extra costs incurred from accepting the higher bid.
Back in Ogdensburg, Mayor Wayne Ashley initially opposed a PLA, arguing that it would limit how many local and regional companies could bid.
A letter from the federal Department of Agriculture dated June 21, was dismissive of the findings of the Seeler Engineering study, and stated the PLA placed “unreasonable requirements on firms in order for them to do business.” If the PLA requirement went forward, the letter said, the federal agency would likely pull its offer of a $3.9 million loan plus the $1 million grant.
Several days before a June 24 Ogdensburg City Council meeting, the agenda contained a resolution that a PLA would not be used. By the night of the vote, the agenda flipped: A resolution placing a PLA on the contract bidding passed unanimously, including with the support of Mayor Ashley.
In the weekend before the meeting, the Cuomo administration offered a straight $4.9 million loan to replace the federal funds. The state loan did not contain the $1 million grant offered by the federal government, which means Ogdensburg officials chose to forgo $1 million.
“The City Council was willing to accept a long-term loan rather than a loan/grant combination in order to be able to utilize a PLA,” Purdy said.
Patrick Hunter, a spokesman for the Environmental Facilities Corp., a state entity that provided funding, said Ogdensburg chose a PLA at its own discretion.
“The EFC works with municipalities to ensure projects are completed on-time and on-budget by skilled workers, but it does not require PLAs,” Hunter said. “PLAs are not mandated, but whenever there is state funding the recipients are expected to consider the most cost- and time-efficient way to complete the project.”
Mayor Ashley told the Times Union the Seeler study’s promised savings of $900,000 had ended up flipping his vote.
It was not the final time he would change his position.
With the PLA imposed on the bidding, only three companies (all union contractors) submitted proposals. The lowest bid came in more than $6 million over engineering estimates.
The morning before a Sept. 9 Ogdensburg City Council meeting, Ashley told the Times Union that he planned to call for a rebidding — without the PLA requirements — to see if the bids came in lower with non-union contractors in the mix.
On the evening of the City Council meeting, however, Ashley never made his proposal.
Instead, Ogdensburg officials unanimously voted to adopt a substantially scaled-down version of the water treatment project, and voted to award the contract to the lowest bidder among the three, Jett Industries.
With finances already stretched thin, Ogdensburg officials also voted to authorize $9 million in bond sales – a result of the bids coming in so much higher than anticipated.