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To: Mayor of the District of Columbia
From: Jane Brunner
Date: June 20, 2005
RE: Project Labor Agreement and The Baseball Stadium
The District of Columbia Government, through the
Mayor’s Office and the D.C. Sports and Entertainment Commission,
recently participated in negotiating a Project Labor Agreement (PLA) for
the District‘s Baseball Stadium. The purpose of these negotiations was
to determine the “type” of PLA that the D.C. . Sports and
Entertainment Commission could enter into with the D.C. Building and
Construction Trades Council (Council) for the Stadium Project. In this
regard, the PLA reveals all applicable labor terms and conditions for
all craft labor employees for the project and also shows what
concessions and/or special arrangements the Council is willing to offer
for this project.
Thus, by knowing exactly what the Council will agree to,
the City is now in the position to evaluate whether application of this
specific PLA to the Stadium Project is in its best interests. The City
itself does not , plan to execute this agreement directly; rather, if it
proceeds with this matter, it will include the PLA as a requirement in
the bidding documents it uses for the construction of this project.
Specially, there will be a “PLA specification” included in the
Request For Proposals document and other solicitation documents to hire
the construction contractors and subcontractors for this project. These
bidding documents will be prepared and issued by the D.C. Sports and
II. Objective of this Report
The objective of the instant report is to review the PLA
in the context of applicable legal, economic and technical criteria, and
determine, to the extent practicable at this point, whether this PLA is
in the best interests of the City and the Stadium Project, particularly
from a proprietary and economic perspective. It is necessary that this
review be conducted for the City in general, not just from the viewpoint
of the D.C. Sports & Entertainment Commission. The fact is that the
massive financial obligations for this project -- including the tax
incremental financing and bond financing and repayment, as well as
potential financial penalties for late project delivery -- are primarily
the responsibility of the whole City Government, not just the D.C.
Sports and Entertainment Commission.
Given the extensive financial liabilities the City faces
and corresponding burden it carries for ensuring that the Stadium is
constructed in a timely manner under a very ambitious and difficult
project schedule, the City decided to explore the use of a PLA for this
project. To assist the City’s efforts in this regard, this report
evaluates whether this particular PLA, could assist the City in promoting the
successful planning, execution and delivery of this project.
As further discussed below, a review of all of the facts,
evidence and circumstances relevant to this project indicate that the
PLA is in the best economic and proprietary interests of the City and
the Stadium Project and that the PLA will benefit stadium construction
by providing a reliable, stable supply of trained and skilled
construction craft labor that will promote timely, cost-effective
project delivery that help the project come in close to budget. Further,
the PLA benefits the project by providing that at least 50% of all
construction jobs go to D.C. residents, to the extent qualified resident
are available. This provides an additional stabilizing effect for the
project by securing a local craft labor supply that is less susceptible
to disruptions and will be more reliable in terms of facilitating
adequate project staffing and timely project delivery
III. Applicable Review Criteria
PLAs are single-site collective bargaining agreements
between building trades unions and site contractors that govern terms
and conditions of employment for all craft labor on a designated
construction project. PLAs provide project owners with: 1) access to
local labor supply sources for construction craft labor; 2) predicable
labor cost forecasts; 3) a no-strike clause/alternative dispute
resolution procedures designed to prevent labor disputes and related
project delays; 4) timely and efficient completion of the project; and
5) safeguards that the project will be completed within budget.
This PLA is included in project specifications at the
direction of the project owner for the purpose of promoting core project
goals of the stadium: schedule, quality, safety and cost-efficiency. The
economic impact reviews (EIRs) for the construction of the Baseball
Stadium will review whether the proposed PLA will serve the above core
The District evaluated the following factors it believed
were relevant to assessing whether the proposed PLA promotes core
project goals, especially cost-efficiency and timely project delivery,
- The size, scope and complexity of project
- The applicability of prevailing wage law to project
- The PLA’s impact on direct project labor costs
- The level of construction activity/volume in local
- The availability of skilled craft labor supply
- The ability of the PLA to promote project cost,
schedule, quality and safety
- The ability of the PLA to promote labor
peace and stability
- The schedule and time constraints of the project
and the consequences, including financial consequences, of untimely project
Insofar as an administrative decision to use a PLA for
the Stadium Project would involve an interpretation by the District of
its general bidding and procurement laws, the above-referenced standard would apply. The District is
afforded wide discretion to apply its administrative expertise in the
fields of procurement and public works construction to determine if the
proposed PLA will benefit the project and the City.
IV. Economic Impact Review of the Proposed PLA
When considered in the context of the above-referenced
economic criteria, the specific facts and circumstances surrounding the
Stadium Project demonstrate that the proposed PLA will strongly promote
core goals and interests of the Stadium Project. Points and authorities
in support of such a finding are as follows:
Factor No. 1: Size, Scope and Complexity of Project
- The Baseball Stadium is a major
capital project, with costs over $$534.8 million.
- Major capital projects support the use of a PLA due
to the inherent challenges involved in planning, manning and executing
such projects, particularly meeting labor supply needs and logistics.
- Because the Stadium Project is a large project in
size, scope and complexity, and is a modern, hi-tech, massive sports
arena, valued at a minimum of $244 million (hard stadium construction
costs; see project documents) this strongly supports the use of the
Factor No. 2: Applicability of Prevailing Wage Law to
- The Stadium Project is subject to prevailing wage
law, 40 U.S.C. §§ 276a-276a-5, and the wage/benefit rates of the
Washington, D.C. Building Trades generally receive the current
prevailing rates mandated under this law.
- Thus, regardless of whether or not there is a PLA,
contractors and subcontractors on the project will, in most cases, be
paying union rates. This factor weighs heavily in favor the proposed PLA,
especially since the PLA provides numerous, substantial benefits to the
project, as identified below.
Factor No. 3: The PLA’s Impact on Direct Craft “Labor
- One major benefit of PLAs is the significantly higher
productivity rates of union-trained workers. Such productivity
advantages, up to 17%, according to one recent industry report, easily
offset any minimal wage differentials.
- The city negotiated and secured, prior to the bidding
to contractors, meaningful labor concessions that translate into
significant direct labor cost-savings, including those which provide:
(a) 4 ten-hour days and 5 ten-hour days; (b) uniform starting times; (c)
uniform holidays; (d) multiple shifts with uniform premium pay.
- Bids for the stadium under the PLA are open to both
union and non-union contractors. The union halls will hire both union
and non-union employees. The flexibility provided from these provisions
also helps to promote competition and limit labor cost.
- With this PLA, contractors’ needs
for predictable costs and a steady supply of skilled labor will be met.
Factor No. 4: Level of Construction Activity/Volume in
- Downtown, D.C., where the Stadium Project is to be
located has been recognized as the “top real estate market in the
country."'1 As a leading national market,
construction dollars are invested -here each year.2
- In the immediate vicinity of the proposed site for
the new stadium, the City is launching its new Anacostia Initiative, a
mega $8 billion+ public works and economic development program.
- In addition, the federal FY 06’ budget for
non-military construction alone is over $500 million and local Pentagon
spending is likely 100s of millions dollars more.3 Other local
jurisdictions in the region include some of the fastest growing in the
country, e.g., Loudoun County, VA, Fairfax, County, VA, Montgomery
- The level of construction impacts everything from the
availability of equipment and supplies to traffic and congestion to the
availability of craft labor resources. All of these can negatively
impact project schedule, especially labor supply.
- The higher the construction ;volume, the greater the
competition there is for an increasingly limited pool of qualified craft
personnel. For this reason, the huge volume of construction in the
Washington, DC metro regions also strongly supports use of the PLA.
Factor No. 5: Availability/Reliability of Skilled Craft
- According to the Construction Users Roundtable
(CURT), the nation’s premiere project owner trade association, craft
labor skill shortages is one of the most critical issues facing the
construction industry today.
- So serious is this problem that CURT
warned in a 2004 report that owners “are experiencing significant
problems in staffing construction projects, resulting in escalating
costs and schedule delays.”4 Given the D.C.’s mega construction
market, availability of trained, skilled local construction workers is
- With respect to labor that is available in D.C.,
there is no question that an excellent source of trained, qualified
craft personnel is the union sector. One major indication of this is
- D.C. apprenticeship records show, for example, that
the union trades represent more than 10 times the number of registered
apprentices than all non-union programs combined.
- Nationally, data from the U.S. Department of Labor
shows that union Building Trade apprenticeship programs train and graduate approximately 75% of apprentices in the nation and enroll and
graduate substantially higher numbers of women and minorities.
- The Building Trades will provide summer youth
programs. The Council will sponsor and finance a six (6) week summer
youth program during the summers of 2006 and 2007 for fifteen (15) bona
fide City residents who are between the ages of 16 and 18. This program
will introduce D.C. residents to a career in the Building Trades.
Factor No. 6: Ability of the PLA to Promote
- Insofar as craft labor is a major, critical component of
any construction project, the quality, productivity and reliability of
the craft labor workforce used on a project has a direct and substantial
impact on the success of any project. Skilled, trained workers are
better able to build a project in accordance with plans and
specifications, generally produce quality workmanship, work more safely
and productively and are more cost-effective and cost-efficient than
workers who do not have formal training.
- The demanding schedule for the Stadium Project will
require timely, efficient deployment of literally hundreds of skilled
craft workers in numerous trades and specialty fields in the midst of a
tight labor market in a booming industry. The DC Building Trades represents over 20,000 local skilled
trade persons and offer the best means for ensuring the Stadium will
receive the workforce it needs to deliver this project in a timely
- The proposed PLA also has several key provisions
designed to promote recruitment of local D.C. residents into the union
skill training programs and referral systems, including apprentice
participation requirements and local community outreach and local hiring
initiatives. These provisions, combined with the existing training and
referral systems operated by the Building Trades provide a carefully
organized craft worker recruitment and deployment infrastructure needed
to meet the critical labor demand for this project.
- By imposing the PLA specification/requirement, the
project owner essentially creates a type of craft labor insurance policy
for the project that allows it to substantially limit risks of schedule
delays, deficient quality workmanship, safety incidents and other
problems caused by insufficient craft labor supply and/or the use of
unskilled or improperly trained construction craft personnel.
- The PLA proposed for the instant project effectively
provides the City with an effective quality-control check over the
entire construction workforce and ensures that the craft labor utilized
for the project will come from known sources connected with the best,
formal skill training systems in the region. The key advantages the PLA
offers in terms of promoting quality, safety, schedule and
cost-efficiency thus strongly justify use of the PLA for the Stadium
- A number of industry reports and studies on PLAs
have found that, by securing access to a highly skilled local workforce,
these agreements promote safe, timely, cost-effective execution of
-capital projects, resulting in innumerable economic benefits to project
owners and other public or private parties responsible for or dependent
upon such projects. See:
- Project Labor Agreements in Iowa: An Important Tool for
Managing Complex Public Construction Projects, Ralph Scharnau &
Michael F. Sheehan, The Iowa Policy Project (2004);
- Project Labor Report (May 2002-November 2003, Contra
Costa County General Services Department, Washington, D.C. (2004);
- Project Labor Agreements: Reliable Staffing Plans for
Capital Construction Projects, Gerard M. Waites, O’Donoghue &
O’Donoghue LLP (2003)
- Comments on The Effects of Project Labor Agreements in
Massachusetts, Dale Belman, Associate Professor, Michigan State
University, Matthew Bodah, Associate Professor, University of Rhode
- Project Labor Agreements, John T. Dunlop, Harvard
University Joint Center for Housing Studies (2002);
- Project Labor Agreements: An Exploratory Study, Daniel
Rounds, UCLA Institute for Labor and Employment (2001);
- Constructing California: A Review of Project Labor
Agreements, Kimberly Johnston-Dodds, California Research Bureau Report
No. 01-010 (2001).6
- Moreover, the PLA for this particular project has
additional cost-efficiency benefits and special provisions to address
other public policy interests of the City. For example, the PLA includes
provisions to provide for competition in order to make sure the project
is completed within budget. There is a cost saving clause that permits
the Sports Commission to re-bid a contract if there are not at least
three subcontractors bidding on a contract. ;This will guarantee the
lowest bid possible. If the Sports Commission needs to re-bid the
contract, the contractor will be exempted from having to recognize the
- In addition, thirty five percent of the contractors
must go to certified Local Small and Disadvantage Businesses Enterprises
(LSDBE’s). All LSDBE’s that are awarded contracts of $10 million or
under will not be required to work under the PLA or recognize the union.
Factor No 7: Ability of PLA to Promote Labor Peace and
- In addition to the benefits discussed above, the
Stadium PLA has a number of important provisions designed to promote
timely project delivery by ensuring labor peace and stability throughout
the duration of the project.
- These provisions impose safeguards
against project delays and disruptions that can occur from labor
disputes during construction by:
- strictly prohibiting work stoppages;
- requiring any disputes regarding employment terms and
conditions for all craft employees on site to be resolved through
uniform grievance and arbitration procedures. There will be a panel of
arbitrators ready to hear any grievances in an expedited procedure.
- Since employees have established legal rights under
federal labor law to strike, initiate work stoppages or engage in other
concerted activities to address grievances, the provisions in this PLA
will promote timely delivery and avoid costly delays.
- The no strike clause means the
workers will continue to work on the stadium even if their regional or
national contracts expire or are in dispute.
Factor No. 8: Schedule and Time Constraints of Project
- This project, massive in size and scope and complex
in design, must be completed in 24 months. Timely delivery under this
schedule will be extremely difficult – even with the local craft labor
resources secured by the PLA.
- The schedule challenges presented here are heightened
by current labor market conditions and the intense level of construction
activity in D.C. Another factor adversely affecting this already
daunting schedule is the project’s location, which presents an
additional, significant burden on the proposed schedule.
- Compliance with the established project schedule is
critical. If the City fails to construct the Stadium in accordance with
this schedule, it faces staggering cost increases and financial
penalties up to $19 million per year, including payment for the cost of
additional rental fees for the RFK Stadium; plus, loss of critical tax
and fee revenues from Stadium operations needed to repay interest and
ultimately principal on hundreds of millions of dollars of municipal
The facts and circumstances surrounding the Stadium
Project demonstrate that the proposed PLA would substantially benefit
the District and its interest in securing timely, cost-effective
delivery of this important project. Accordingly, the District is well
within its discretion applying a PLA specification requirement to the
1. Investors Flock to Washington, DC, Commercial Real
Estate Markets, Pienta, G., Washington Building Congress, February 2004
Report (Reprinted with permission from Commercial Investment Real
Estate, Vol. XXII, 6, p.42–43).
2. See www.fedbizopps.com, listing current federal
project solicitations; see also, Commerce Business Daily reports,
2004-05 project solicitations.
3. Bush Finds Space in Budget for Washington-Area
Projects, Washington Business Journal, March 25, 2005 at: www.bizjournals.com/washington/stories/2005/03/28.
4. Confronting the Skilled Construction Workforce
Shortage, The Construction Users Roundtable, The Owners Voice to the
Construction Industry, WP-401, 2004, p. 14 (Attachment 3 hereto)
(emphasis added). See also, The Perfect Storm: Factors Come
Together Creating a Storm in the Construction Workforce, The
Construction Executive, Associated Builders and Contractors, Inc., June
2004 pp. 21-25.
5. The proposed PLA covers 15 independent local unions,
which are organized along traditional craft lines, such as electricians,
plumbers, pipe fitters, cement masons, laborers, etc.
6. While a few of these studies (specially Nos. 2 and 5
above) are from acknowledged PLA proponents, and should be considered in
that light, the others are from reputable academic institutions and
state or municipal governmental bodies.