Sacramento Learns the Truth About Project Labor Agreements As It Endures Bidding Failures
In 2018, the Mayor and some members of the Sacramento City Council became obsessed with the idea of requiring construction companies to sign a Project Labor Agreement with unions as a condition of winning a city contract.
On August 21, 2018, the city council voted 7-2 to impose it. A room full of union activists cheered and clapped. They finally overcame their bid competition! They just needed the government to intervene for them.
As the Coalition for Fair Employment in Construction learned from public documents we obtained, union lobbyists and their law firm had been pushing hard for several months behind the scenes to get control of city construction contracts. The attraction of the Project Labor Agreement was obviously not the alleged benefits for construction, but the lure of campaign contributions.
What else is new in California politics? A few blocks from Sacramento City Hall is the California State Capitol, where business is done for whoever pays the most. The Mayor of Sacramento is the former President pro tempore of the California State Senate.
Leading up to the day of the vote, the Coalition for Fair Employment in Construction had been warning the Sacramento City Council what would happen to taxpayer-funded construction projects if they imposed this union-backed mandate. Competition would be cut. Costs would increase.
As usual, we were correct. (Traditional economic theories are still valid, apparently.)
In 2019, the Sacramento City Council voted to reject bids on four separate paving projects because each project only received ONE BID. A company from Southern California appeared to be taking advantage of the Project Labor Agreement and bidding on the contracts, perhaps knowing that the local competition would be minimal or non-existent.
But the contractor miscalculated how much the city council was willing to pay as the price for a union monopoly.
How badly has competition been cut and costs increased? The City of Sacramento received one bid (from the Southern California company) of $1,737,000 for a street seal coat project estimated at $1,227,000. Union officials reportedly promised they would encourage more unionized companies to bid on the second try. The city then rebid with an estimate of $1,737,000 (helping the unions to hide the cost increases) but the same company bid again - this time at $2,030,475.
Everyone knew the reason for the bidding failures, and one city councilmember even dared to say it publicly during a meeting. He had done his job as an elected official and contacted two paving companies that had routinely bid on city work to find out why they stopped bidding. The Project Labor Agreement mandate was to blame.
The disasters continue without end for taxpayers in the City of Sacramento. Another blow was the Fire Station 14 project, which started with optimism when five prospective bidders participated in the pre-bid walk.
In the end, only one company submitted a bid, at 33% over the engineer's estimate. Perhaps that company figured out that at least three of the other four contractors who participated in the Firehouse 14 pre-bid walk weren't going to bid because of the Project Labor Agreement.
There is hope for the future in the City of Sacramento, as the city is now deleting the Project Labor Agreement mandate in some construction contracts advertised for bid. For example, the 2020 Street Seal Coat Phase II had the Project Labor Agreement mandate recently deleted in an addendum (dated June 16, 2020).
But why are other California local governments considering the same costly Project Labor Agreement mandate?
(It must be the campaign contributions!)