Economy & Budget

Obama Undermines Competitive Bidding

Barnstorming the country to sell his economic “stimulus” package, for which U.S. taxpayers will ultimately fork over more than a trillion dollars in principal and interest, President Barack Obama incessantly touts the construction jobs the package will bankroll.

Capitol Hill observers currently expect that more than $60 billion of the final version of Mr. Obama’s package will go into highway, bridge, mass transit, and other public works projects. Unfortunately, even as the President pitches the benefits of public works construction to the American people, the Obama Administration is undermining competitive-bidding rules that are designed to help taxpayers get the most for their money.

On February 6, Mr. Obama signed an executive order overturning an eight-year-old federal policy that has prohibited federal agencies and recipients of federal tax dollars from requiring contractors to sign union-only “Project Labor Agreements” (PLAs) as a condition for participating in federally funded public works.

To participate in PLAs, nonunion companies routinely have to consent to impose union monopoly bargaining and forced union “agency” fees on their employees and hire workers through discriminatory union hiring halls. Independent workers who already have their own retirement funds are nevertheless forced also to contribute to Big Labor-manipulated pension funds.

Taxpayers Burdened

Rather than compromise the freedom of their employees and the efficiency of their operations, most independent construction firms simply refuse to submit bids on PLAs. And since just 16% of construction employees nationwide are unionized, PLA discrimination against union-free workers and firms sharply reduces the number of potential bidders for public works jobs and, not surprisingly, also jacks up taxpayer costs. Every reputable study of PLAs’ impact on construction costs confirms this fact.

For example, a 2006 study of public-school construction projects in the State of New York conducted by two economists affiliated with the Beacon Hill Institute (BHI) at Suffolk University in Boston, Mass., found that “the presence of a PLA increases a project’s base construction bids by $27 per square foot (in 2004 prices) relative to non-PLA projects.” [emphasis in the original]

Since the average cost per square foot of the projects reviewed was $134.71, that means “PLAs raise the base construction bids of building schools by 20%,” and the potential savings “from not entering into a PLA on a school construction project range from $2.7 million for a 100,000 square-foot structure to $8.1 million for a 300,000 square-foot structure.” The New York study carefully controlled for the size and type of the project and other factors that might affect costs.

The President’s February 6 executive order lifting the ban on discriminatory PLAs in federal taxpayer-funded construction and “encouraging” government agencies to mandate them laughably claims that PLAs “promote economy and efficiency in federal government,” but this contention runs counter to common sense as well as dispassionate, scientific research like that of the BHI. How does tilting contract bidding rules against construction firms employing 84% of construction workers across America promote economy? How does imposing inefficient union-boss work rules on union-free firms promote efficiency in public works?

By all appearances, Barack Obama is too knowledgeable and intelligent to actually believe that his pro-PLA executive order, and other executive orders he signed in January that also promote union monopoly control over employees of federal contractors, are about economy and efficiency. A far more plausible explanation is that the President is wielding the power of the White House to pay back the union officials who last year funneled more than a billion dollars, most of it in unreported, forced union dues-funded “in-kind” contributions, to his ticket and to other likeminded federal and state politicians.

Mr. Obama explained his thinking well in his 2006 political memoir, The Audacity of Hope: “I owe those unions. When their leaders call, I do my best to call them back right away. I don’t consider this corrupting in any way.”

Unfortunately, there’s little pro-right-to-work Americans can do to stop Mr. Obama and Congress from giving multi-billion-dollar, taxpayer-funded handouts to Big Labor under the guise of “economic stimulus.” But we do have a fighting chance to block the even bigger power grabs now on the horizon, such as a federal law giving union officials unchallenged power to impose union monopoly bargaining over workplaces through so-called “card checks.”


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