[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
REGULATORY IMPEDIMENTS TO JOB CREATION: THE COST OF DOING BUSINESS IN
THE CONSTRUCTION INDUSTRY
=======================================================================
HEARING
before the
SUBCOMMITTEE ON REGULATORY AFFAIRS,
STIMULUS OVERSIGHT AND GOVERNMENT SPENDING
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARCH 16, 2011
__________
Serial No. 112-18
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Regulatory Affairs, Stimulus Oversight and Government
Spending
JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice DENNIS J. KUCINICH, Ohio, Ranking
Chairwoman Minority Member
CONNIE MACK, Florida JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania
C O N T E N T S
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Page
Hearing held on March 16, 2011................................... 1
Statement of:
Ennis, John, Jr., CEO, Ennis Electric, Inc.; Linda Figg,
president and CEO, Figg Engineering Group; Dale Belman,
professor, Michigan State University, School of Industrial
and Labor Relations; John F. Biagas, president and CEO, Bay
Electric Co., Inc.; and Maurice Baskin, esq., partner,
Venable LLC................................................ 7
Baskin, Maurice.......................................... 35
Belman, Dale............................................. 22
Biagas, John F........................................... 30
Ennis, John, Jr.......................................... 7
Figg, Linda.............................................. 9
Gordon, Daniel I., Administrator for Federal Procurement
Policy, Office of Management and Budget; Robert A. Peck,
Commissioner, Public Buildings Service, U.S. General
Services Administration; and David Michaels, PhD., MPH,
Assistant Secretary, Occupational Safety and Health
Administration, U.S. Department of Labor................... 115
Gordon, Daniel I......................................... 115
Michaels, David.......................................... 130
Peck, Robert A........................................... 124
Letters, statements, etc., submitted for the record by:
Baskin, Maurice, esq., partner, Venable LLC, prepared
statement of............................................... 37
Belman, Dale, professor, Michigan State University, School of
Industrial and Labor Relations, prepared statement of...... 25
Biagas, John F., president and CEO, Bay Electric Co., Inc.,
prepared statement of...................................... 32
Braley, Hon. Bruce L., a Representative in Congress from the
State of Iowa, information concerning PLA projects......... 100
Figg, Linda, president and CEO, Figg Engineering Group,
prepared statement of...................................... 12
Gordon, Daniel I., Administrator for Federal Procurement
Policy, Office of Management and Budget, prepared statement
of......................................................... 117
Jordan, Hon. Jim, a Representative in Congress from the State
of Ohio, prepared statement of............................. 4
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio:
Information concerning U.S. Court of Appeals............. 48
Statement of Campaign for Quality Construction........... 106
Michaels, David, PhD., MPH, Assistant Secretary, Occupational
Safety and Health Administration, U.S. Department of Labor,
prepared statement of...................................... 132
Peck, Robert A., Commissioner, Public Buildings Service, U.S.
General Services Administration, prepared statement of..... 126
Speier, Hon. Jackie, a Representative in Congress from the
State of California, various statements.................... 86
REGULATORY IMPEDIMENTS TO JOB CREATION: THE COST OF DOING BUSINESS IN
THE CONSTRUCTION INDUSTRY
----------
WEDNESDAY, MARCH 16, 2011
House of Representatives,
Subcommittee on Regulatory Affairs, Stimulus
Oversight and Government Spending,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:30 p.m. in
room 2154, Rayburn House Office Building, the Honorable Jim
Jordan (chairman of the subcommittee), presiding.
Present: Representatives Jordan, Buerkle, Mack, Guinta,
Kelly, Kucinich, Cooper, Speier, Braley.
Also present: Representatives Issa, Cummings.
Staff present: Ali Ahmad, deputy press secretary; Michael
R. Bebeau, assistant clerk; Molly Boyl, parliamentarian; Daniel
Epstein, counsel; Adam P. Fromm, director of Member liaison and
floor operations; Linda Good, chief clerk; Christopher Hixon,
deputy chief counsel, oversight; Justin LoFranco, press
assistant; Mark D. Marin, senior professional staff member;
Kristina M. Moore, senior counsel; Kristin L. Nelson,
professional staff member; Sharon Meredith Utz, research
analyst; Walker Hanson, legal intern; Sean Sullivan, intern;
Carla Hultberg, minority chief clerk; Donald Sherman, minority
counsel; Mark Stephenson, minority senior policy advisor/
legislative director; Cecelia Thomas, minority counsel/deputy
clerk; and Alex Wolf, minority professional staff member.
Mr. Jordan. The subcommittee will come to order. We will do
opening statements from the chair and the from ranking member,
and then get right to our great panels.
Today's hearing continues this committee's efforts to
expose cumbersome regulations that are stifling private sector
job creation and a full economic recovery. For more than 2
years, the administration has told the American people that $1
trillion of Government spending was needed to put people back
to work. The signature effort of the American Recovery and
Reinvestment Act was supposed to keep unemployment below 8
percent, but obviously it is not there.
Two years later, and $1 trillion later, unemployment is
hovering just above 9 percent, and has reached as high as 10.1
percent since the President took office. In the State that both
I and the ranking member come from, it is even, frankly,
slightly higher.
The situation looks even bleaker when you start looking at
the economy sector by sector. Perhaps most telling are the
statistics from the construction sector, which is of course our
focus today. This important part of our economy encompasses
excavators, pavers, plumbers, bricklayers, roofers and a host
of other contractors and subcontractors on both residential and
commercial projects. It includes architects, engineers,
surveyors and skilled craftsmen of every sort who design and
construct America's infrastructure.
For these millions of Americans, the unemployment rate is
currently 21.8 percent, nearly two and a half times the total
U.S. unemployment rate. No other sector of the economy has been
hit harder by the economic downturn, and no other sector was
supposed to benefit more from the so-called stimulus.
Last December, when Chairman Issa requested direct feedback
from job creators across the entire economy, many employers in
the construction industry were candid with the committee about
the Federal rules that keep them from growing their businesses,
hiring new workers and competing in a fair and open market.
Among the many responses the committee received, two specific
areas stand out.
First, every day in the United States, job creators in the
construction industry are faced with the reality of project
labor agreements. These agreements tip the scale of an open bid
process in favor of organized labor and shut out non-union
shops, many of which are minority-owned and women-owned small
businesses. In fact, the vast majority of U.S. construction
work force, nearly 87 percent is non-unionized.
Moreover, the cost of business increases dramatically
because of PLAs. Several recent studies have found that these
agreements add as much as 18 percent to the cost of
construction. It was not surprising that when the President
issued an executive order barely 2 weeks into his
administration, encouraging a preference for PLAs in Government
contracts, when you calculate the total amount of dollars in
stimulus spending that is going to construction projects, and
tack on 18 percent for the cost of PLAs. The extra cash that
went into the pockets of these organizations is just not what
the taxpayers want.
Second, the committee has heard from job creators that
proposed workplace rules by the Occupational Safety and Health
Administration threaten to impede economic growth in the
construction industry. Fortunately, and I want to compliment
OSHA, they withdrew the proposed rule regarding occupational
noise and work-related physical disorders, after input from
people who would have been most burdened by these rules.
Meanwhile, other rules like OSHA's Injury and Illness
Prevention program indicate that the administration has yet to
comprehend how new layers of regulation can slow and even stop
a full-scale revitalization of our Nation's construction
industry.
Make no mistake about it, workplace safety is a priority
concern. America has built the most successful, robust and
profitable market economy in the world. And we have done so
with an unapologetic commitment to worker safety. Safety and
success are not mutually exclusive in the United States.
But job creators are concerned about the trend at the
Federal regulatory agencies that seem to be moving away from
compliance assistance model toward an enforcement and
penalization model. This is critical as we move forward.
Effective regulation does not require a threatening
adversarial relationship between the Government and the
industries that it monitors. This hearing will continue the
important dialog between private sector job creators, Congress
and the administration about the steps necessary to foster
economic recovery that puts America back to work. The testimony
we hear today from the front line of a major sector of our
domestic work force will help us toward that goal. The
Oversight Committee is one place in Washington where the
Government listens to the people and tells the truth about
policies that are not working.
I welcome our witnesses, and would now be happy to yield to
the ranking member for his opening statement.
[The prepared statement of Hon. Jim Jordan follows:]
[GRAPHIC] [TIFF OMITTED] T7566.001
[GRAPHIC] [TIFF OMITTED] T7566.002
Mr. Kucinich. Thank you very much, Mr. Chairman.
I listened with great interest to your opening statement. I
had some misgivings about the Recovery Act, but mine were on
the other side. I felt it wasn't enough. I felt that especially
in a way you proved it by citing the 21.8 percent of
unemployment among these various trades people. I saw the
battle going on on our side of the aisle, where people like Jim
Oberstar tried to get highway funds for these shovel-ready
projects that could have put people back to work. And the
administration wasn't particularly sympathetic to his point of
view.
So I think that we have to remember that only a quarter of
the money that was spent, rather, a fraction of the money that
went for the Recovery Act went actually for infrastructure and
the kind of jobs that we are talking about here.
As far as PLAs, where I come from they equate to higher
safety standards, higher craftsmanship, reliability. In short,
you don't want public projects built by fly by-night
contractors who aren't into craftsmanship and safety, so you
don't have bridges falling down and schools falling apart. I
have a prepared statement, I will just read a couple notes from
it.
I hope that like other meetings we have, today's discussion
doesn't focus simply on the cost of regulation of industry.
Because in order to have a truly productive conversation about
regulations that yield real results, costs have to be weighed
against benefits. When we hear industry's concern about PLA,
let's not ignore the evidence that shows PLAs not only
facilitate a timely and efficient construction project, but
they can also reinvigorate a community by employing local
craftsmen, educating young apprentices and paying competitive
wages.
The arguments against PLAs that I have been hearing, that
PLAs are exclusionary and costly, are not convincing. So I am
looking forward to addressing these concerns with the
witnesses. I think it is very timely that we are talking about
OSHA as well, because we are going to mark the 100th
anniversary next week of the Triangle Shirtwaist Factory Fire.
That was the workplace disaster that took the lives of 146
workers, because the factory failed to provide workers with any
kind of basic workplace safety plan or provisions.
So I am going to ask unanimous consent to have the rest of
my statement go into the record. But I think, Mr. Chairman,
that the whole idea about PLAs, project labor agreements, it
actually brings together people who, management and labor, so
you can actually have a successful project. I think that is a
model that we ought to be supporting. When we look at those who
want to attack it because they are concerned about higher
wages, it is interesting. But I bet you more often than not,
that is never reflected in a lower cost of the project. What
they really end up arguing about is trying to get a bigger
share of their profits for the corporation and not for the
workers.
So, thank you, Mr. Chairman.
Mr. Jordan. I thank the ranking member. And without
objection, the rest of his statement will be submitted into the
record.
Members have 7 days to submit opening statements. I would
just in response to my good friend from Ohio, I think he is
right, we are going to have a debate about PLAs and the impact.
I get that. But I would make two points. Non-union construction
companies aren't fly by-night companies. They are good
companies as well. And we don't want to disparage either one.
Mr. Kucinich. I would agree with that. I would agree with
that.
Mr. Jordan. And then second, I would say, the Member makes
a good point. The stimulus was way too much of spending
everywhere and not enough focused spending on infrastructure. I
would agree. I was against it, and was against it for a variety
of reasons. But I would agree with the gentleman that
certainly, if you were going to spend that money, it would have
been better spent had it been put more into infrastructure than
all the other things it was spent on.
I thank the gentleman.
We will ask now for our witnesses to come forward, and we
will get started.
Our first panel, we have first of all, Mr. John Ennis is
the CEO of Ennis Electric Co. Welcome to the committee. Ms.
Linda Figg is the CEO of Figg Engineering. Dr. Dale Belman is a
professor at the School of Labor and Industrial Relations at
Michigan State University. Mr. John Biagas is the CEO of Bay
Electric Co., and Mr. Maurice Baskin is partner at the law firm
of Venable LLP.
Pursuant to committee rules, all witnesses will be sworn in
before testimony. If you would please rise and raise your right
hands. It is the standard practice of the committee.
[Witnesses sworn.]
Mr. Jordan. Let the record show that each witness answered
in the affirmative. And we will start right down the line with
Mr. Ennis. You have about 5 minutes. You have the lighting
system in front of your name tag, which we can't see, but you
can see. We have a clock up here, too. So you have 5 minutes,
if you can keep your testimony close to that, that would be
great.
And you are recognized.
STATEMENTS OF JOHN ENNIS, JR., CEO, ENNIS ELECTRIC, INC.; LINDA
FIGG, PRESIDENT AND CEO, FIGG ENGINEERING GROUP; DALE BELMAN,
PROFESSOR, MICHIGAN STATE UNIVERSITY, SCHOOL OF INDUSTRIAL AND
LABOR RELATIONS; JOHN F. BIAGAS, PRESIDENT AND CEO, BAY
ELECTRIC CO., INC.; AND MAURICE BASKIN, ESQ., PARTNER, VENABLE
LLC
STATEMENT OF JOHN ENNIS, JR.
Mr. Ennis. Good afternoon, Chairman Jordan, members of the
subcommittee. On behalf of the National Federation of
Independent Business, I would like to thank you for giving me
the opportunity to speak with you today regarding the impact
that project labor agreements have on small businesses.
I am the owner and CEO of Ennis Electric Co., located in
Manassas, Virginia. Ennis Electric was incorporated in 1974,
and for the last 37 years has performed projects in and around
the Washington Beltway from $10,000 to $27 million. Many of
these projects are with local, State and Federal Governments.
We complete most projects as a subcontractor.
Our experience encompasses many special use facilities for
both Federal and local governments with a special emphasis on
historic renovations and public education facilities. We employ
over 120 individuals, many of which have been in our employ for
years. We strive to foster a loyal work force by providing a
safe, fair and enjoyable workplace, while maintaining the
highest possible quality and craftsmanship on our projects, to
exceed the expectations of our customers.
The majority of the work we obtain is through the bid
process. Most of these solicitations are awarded to the lowest
bidder with varying levels of pre-qualifications and/or
technical proposals requiring previous work experience. In the
past, these solicitations, which are funded by public dollars,
have been free from project labor agreements, and therefore
open to bidders who meet the technical requirements.
However, recent Federal policies have changed this
practice, making it more and more difficult for small
businesses to fairly compete for these contracts. The use of
project labor agreements is a discriminatory tactic that
prevents non-union construction companies from working on
Government construction projects. The U.S. Department of Labor
Bureau of Labor Statistics found in their annual report on
union membership that from 2009 to 2010, membership fell from
14\1/2\ to 13.1 percent of the U.S. construction work force.
Consider the fact that the construction industry currently
has an unemployment rate of over 20 percent, with one-fifth of
the workers in the construction industry unemployed. How can
Congress acknowledge that PLAs and other regulations only serve
as an impediment to job creation?
In August 2010, Ennis Electric made offers to general
contractors for three General Service Administration projects
in Washington, DC. These projects were 1800 F Street
modernization, the Lafayette Building modernization and the St.
Elizabeth's adaptive re-use. Ennis Electric was fully qualified
to execute these projects and our company had more experience
than our competition did in performing these particular jobs.
Bidding on these types of jobs is a very intensive process
for small business, and it can take hundreds of man-hours just
to prepare an estimate prior to submitting the bid. My company
spent 600 hours preparing our bids for these projects.
On all three of these projects our company was listed, as
required by the solicitation, as the electrical contractor for
the Offeror's non-PLA bid. It later came to our attention that
all three of these projects were awarded on the basis that they
adhered to project labor agreements.
So despite being fully qualified to do the work, Ennis
Electric was not selected for the subcontract electrical work
because of a project labor agreement. Further, because this
change in the solicitation was made retroactive, we lost
innumerable man-hours that were spent bidding these projects,
for which we were qualified, but not considered because of our
non-union status.
In this case, the impact of unfair PLA requirement will be
felt by our company for years. The three aforementioned
subcontracts represented over $30 million work over the next
several years. As a result, we have been forced to lay off
approximately 15 percent of our work force. Unless we can find
other opportunities, we could end up laying over 50 percent of
our work force.
The decision to require discriminatory project labor
agreements on these three subcontracts could not have come at a
more unfavorable time for Ennis Electric and our employees, not
to mention the American taxpayers who have to pay for the
increased costs associated with these PLAs.
Thank you for the opportunity to testify on behalf of small
business.
Mr. Jordan. Thank you, Mr. Ennis.
Ms. Figg.
STATEMENT OF LINDA FIGG
Ms. Figg. Mr. Chairman, distinguished members of the
committee, my name is Linda Figg. I am very pleased to be here
to represent the members of the Construction Industry Round
Table, and to participate in this hearing on the critically
important effort to identify the negative impact excessive
regulations may have on job growth in our industry.
The Round Table is composed of slightly over 100 CEOs from
the leading architectural, engineering and construction firms
across the United States. Together, these firms deliver on
billions of dollars of public and private sector infrastructure
projects that enhance the quality of life for all Americans
while directly employing nearly half a million Americans,
easily double that when considering indirect jobs.
As such, as have extensive experience and first-hand
knowledge of the challenges and complexities facing the design
and construction industry when it comes to navigating the vast
regulatory complex that has arisen with respect to our clients'
projects.
Let me state on the onset that CIRT and its members are not
opposed to regulations. What we oppose is the inefficiency,
redundancy and overlapping jurisdictional mazes that have come
to epitomize excessive regulations. America's can-do spirit,
know-how and innovation still exist. It is just hard to find
sometimes under the extensive laws, regulations and rules that
the private sector faces while trying to create jobs that spur
economic growth and expansion.
The uncertainty and unintended consequences of what seems
like a never-ending expansion of Government's reach really
damages the entrepreneurial spirit and desire to take risks
which can help jump start a robust economy. When Government
gives private businesses more freedom, not less, remarkable
achievements can be accomplished to enhance prosperity for
Americans.
In public works infrastructure projects, the Federal
Government spends taxpayers' money to put people to work,
create economic growth, improve America's global
competitiveness and enhance the quality of life in communities.
But oftentimes, these projects are subject to time-consuming
and often redundant rules, which weigh down efficiencies and
delivery time while increasing cost. These excessive procedures
could be accomplished without unnecessary delays and costs.
A good example is the new I-35W bridge replacement. We will
all remember the tragic day on August 1, 2007 when the
interstate bridge carrying I-35W over the Mississippi River in
Minneapolis suddenly collapsed during rush hour traffic,
killing 13 and injuring many more. While rescue efforts
proceeded, the Minnesota Department of Transportation
immediately began a fast track process of building a new
bridge.
Three days after the collapse, a request for qualifications
was issued for design-build teams interested in the replacement
contract, with five teams short-listed 4 days later. Technical
and price proposals were received on September 14th, this is
just over a month from the time of the collapse, and evaluated
on a best value basis by 27 evaluators from 5 agencies
considering both quality and overall price.
The design-build contract was awarded on October 8, 2007,
just a little over 2 months after the accident. To allow
construction to commence so quickly, the Minnesota Department
of Transportation developed strong relationships with
permitting agencies. With good will and a sense of common
mission, the Minnesota Department of Transportation and the
agencies agreed to make and keep reasonable commitments.
Decisions that normally take months and years had to be made in
hours and days.
Through this team effort, a project memorandum was issued,
covering the environmental management issues and permitting the
$234 million construction project to move forward. Construction
of the new, 10-lane interstate bridge proceeded at an
accelerated pace, utilizing a local work force, estimated at
over 600 tradesmen and laborers, with a 504-foot main span over
the Mississippi River erected in just 47 days.
On September 18th, the new bridge opened to traffic, more
than 3 months early. The design and construction of the
important interstate link that serves 141,000 vehicles per day
was completed in just 11 months. This was only possible due to
the spirit of cooperation and teamwork between the Minnesota
DOT and the permitting agencies to eliminate road blocks often
encountered in the environmental and permitting phase of the
project, while still providing a sustainable, eco-friendly
bridge that the community is proud of.
From notice to proceed with construction to opening to
traffic was 339 days. The private sector was given the freedom
to enhance the project quality, introduce innovations and
engage the community in selecting some of the bridge's dominant
visual features. The bridge highlights innovation with smart
bridge technology, 323 sensors that provide long-term valuable
information on the bridge. Landscaping provided better
drainage. Nanotechnology concrete cleans pollution from the
air, and LED lighting, a first for highway, cuts the cost of
energy and maintenance.
But when it came to innovation, there was no regulation
that told anyone that these things needed to be done. These
were choices and benefits that were brought to the project
through an open, streamlined process. It was a triumph of a
recovery and our country can have the same recovery.
The experiences from the new I-35W bridge replacement could
be left for just one project. Or we can take to heart the
clear, unmistakable lessons we have learned and put them to
work across the board on a whole myriad of public projects, so
that America gets the benefit of efficient, science-based and
cost-time sensitive regulations in a manner that gets important
infrastructure built, while still protecting and caring for our
important environment.
Private industry, when given more freedom, can achieve
amazing results to build a stronger America. It is time to
inspire the recharging of the American spirit to help us grow
into a strong economy. CIRT and its members stand ready to
assist the committee in whatever way it can to provide input
into possible approaches and methodologies that will apply the
streamlining lessons of successful work to a larger scope of
Federal projects.
I want to close by thanking you, Mr. Chairman, and the
other distinguished committee members, for your time and
attention.
[The prepared statement of Ms. Figg follows:]
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Mr. Jordan. Thank you for giving us some positive news.
That is good to hear. So often testimony is not that, but it is
good to hear that it worked so well there. And you are exactly
right, that is what we want to foster in the future.
Dr. Belman.
STATEMENT OF DALE BELMAN
Mr. Belman. Let me thank the distinguished members of the
committee for this opportunity to talk about project labor
agreements.
A project labor agreement is an agreement between a public
or private owner, a building trades union or unions, and more
frequently, construction employers. And the owner assures that
the project will be built under union terms and conditions, but
not necessarily by union workers, and receives in turn a number
of benefits. One is an assurance against strikes or other
disruptions of construction activity. And typically, very close
labor-management cooperation, and an informal means of
resolving disputes. An assurance of ready access to
appropriately skilled labor, within 48 hours of the need.
They can and often do obtain concessions from building
trade unions with regard to wages, benefits and working
conditions. And PLAs can be used to achieve socially valued
goals, such as advancing individuals from low income and
disadvantaged groups into construction training programs and
into good jobs in the construction industry.
Now, PLAs can provide value to owners of construction
projects, but that requires choosing the right project, writing
the right PLA. Owners need to know what they need from a PLA,
and how to write the PLA they need. It is used extensively in
the private sector because there is knowledge of this, because
it is possible to do this. We find that Dow Chemical, Toyota,
Pfizer pharmaceuticals, Donald Trump used PLAs to obtain value
in their construction work.
Now, PLAs provide two forms of value. We need to
distinguish these. First of all, there is construction value.
This can be, with a well-written PLA on the right project,
cheaper to complete, on-time completion, better quality
construction, better safety and health outcomes, and reduced
need for oversight by project managers.
There is also social value. And this can be provision of
superior training and access to jobs, family supporting wages
and benefits, adherance to labor and employment law, reduction
in medical-social costs to local community, local hire. It can
also have possibly negative consequences of excluding non-union
employers. But we will talk about that.
Where do we expect to see value from PLAs? In terms of
industrial and commercial projects, my interviews, I have
interviewed more than 200 people, or my co-authors have, larger
projects, $5 million to $10 million is the threshold for
industrial and commercial. Projects where completion time is
important, projects where skill levels and training are
important, projects built under prevailing wage requirements.
How do PLAs create value? First of all, direct concessions.
Change overtime and premium rates, modify apprentice ratios and
so on. There can also be harmonization of working time across
trades, changing start times, holidays, flexible scheduling, a
number of other steps that increase the efficiency of the
utilization of labor. And I should say that these issues face
non-union as well as union contractors in terms of the terms of
the trade and how the employees actually expect to be treated.
Provision of skilled labor on an expedited basis. There was
a big issue in obtaining skilled labor, and it delayed many
projects from 2002 to 2007. In fact, it killed a number of
private sector projects. And yet, a PLA was a good investment
in making sure that if you were going ahead with a project, you
would have the labor when you need it. Employers do not need to
carry excess labor.
We can also talk about how PLAs improve communication and
cooperation on projects, and better coordination in a litigious
and potentially chaotic industry. The management structures in
many of the other parts of the construction industry today make
it very hard for construction managers or DCs to actually
control the project and get the results they want. PLAs become
a tool to improve coordination.
The no strike provision has also allowed numerous PLA
projects to continue during local contract disputes.
I don't have time right now to talk about whether, how PLAs
affect project costs, but would be happy to answer questions on
this. I will say that if one reviews studies that meet minimum
standards of scholarly quality, the evidence isn't there that
PLAs affect project costs. Indeed, most of the work that is
cited is bad quality in the sense that it is quite inaccurate.
But I would like to speak to the issue of exclusion and
this issue of whether it is a bad thing that non-union
contractors are potentially excluded from project labor
agreements. A first point is that the controversy, we should be
clear, this is not about construction value, this is about
social values. This is not about making a project cheaper,
making a project come in on time. This is about social values
and whether the potential exclusion of part of the labor force
is an issue that we should respond to. And it may well be a
public policy issue.
We need to understand that there are a series of other
social values that PLAs advance, such as adherence to labor and
employment law in an industry which has a very mixed record on
following employment law, that PLAs encourage the provision of
training through apprenticeship and pre-apprenticeship
programs, that they assure the provision of family supporting
wages and benefits, even for non-union workers on the job. That
there is, PLAs generally encourage the use of a local labor
force, so that wages and benefits stay in the local area. And
they generally reduce social costs to an area when unbenefited
construction workers use free community medical services.
Now, what I am arguing here is that if a social value is
that we not exclude non-union workers from projects, these need
to be weighed against the positive social values. That seems
legitimate. A second is, it is not that hard to write a PLA
that includes provisions which would make it more possible for
non-union contractors to participate. The Toyota PLA only
requires a letter of assent. It allows non-union contractors to
bring current work force onto the job, and paying union-level
benefits into their own funds and a trust fund for employees.
But they pay union rates, and indeed, Frank Mahomet, who is an
ABC representative at a conference we had at Michigan State
University, said that he could see a PLA which non-union
contractors would not have an issue with.
I am clearly out of time. I thank you for your patience and
look forward to answering your questions.
[The prepared statement of Mr. Belman follows:]
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Mr. Jordan. Thank you, Doctor.
Mr. Biagas.
STATEMENT OF JOHN BIAGAS
Mr. Biagas. Thank you, Mr. Chairman, ranking member,
members of the committee. Thank you for allowing me to give
testimony today.
Being the youngest of 14 children, 8 boys and 6 girls, from
the great State of Louisiana, Lake Charles is where I was born,
I have had the opportunity to work in the electrical and also
join the construction field for many years. The trade is one
that all the males in the family learned from our father, Alvin
Biagas, who was a master electrician. Most of us learned both
on the job and some later served as electrical apprentices,
trained in the classroom through the IBEW, Local 861, in Lake
Charles. I served in Local 26 here in Washington, DC, from 1987
to 1991.
I am a licensed master electrician in the State of
Virginia, Maryland, Georgia, Louisiana, North Carolina,
Washington, DC, and also several other States.
In the spirit of the American dream, I purchased Bay
Electric Co., Inc., in 1997. Bay is a non-union merit shop and
began in business over 47 years ago. The company had revenues
of just over $1 million when I bought it, and over the years,
our team has grown this enterprise to roughly over 85 times
that size. We have grown the size of our work force from 18
when I purchased it to over 190 today.
Our work force has 155 field workers, which are licensed
electricians, apprentices, which are registered in State and
Federal programs, foremen, laborers, superintendents, office
staff of 35 persons, project managers and so on.
Bay performs a large amount of work and service work with
the Department of Defense, the Army, Navy, Air Force and all of
the Defense groups, State and local governments, as well as
private customers from Maine to Florida and as far west as
Louisiana. The projects range in size from $31 million to as
small as a $68 Service order. We perform large-scale, complex
electrical projects which include low voltage fire alarms,
lighting, high voltage, up to 35,000 volts, controls, motors
and many electrical tasks.
Bay also is a full service general contractor. Over the
last 5 years, we have performed in excess of $300 million worth
of design-build and also renovation projects as both prime
contractor and also subcontractor for numerous Federal clients,
such as USDA, DOD and Homeland Security.
All of the projects that we have done were completed on
time and under budget. Bay has a 99.9 on-time project
completion rate, and has never been assessed LDs for late
delivery by any Federal, State or local agency or any other
private customer, for that matter. Bay Electric also has a
99.97 percent budget completion rate, on budget or below
budget. Also on safety, Bay has an EMR rate of 0.91, and after
our audit this year, we expect that rate is going to go down
again. So we are a very safe contractor.
As you will find a listing of the projects we receive,
there are a number of projects, and just in the interest of
time, I am going to move on. But we have done projects as large
as $31 million, we have done for Braddock, we have done work at
Belvoir, just about every State from Maine to Florida, and
certainly continue to do so.
The issue I want to discuss with the committee is the
executive order 13502, which encourages project labor
agreements on Federal projects over $25 million, and
effectively discriminates against over 85 percent of the
construction industry. Unions account for less than 6 percent
of the private work force in Virginia, and over 90 percent of
the work, both public and private, is performed by non-union
firms, such as Bay Electric Co. No merit shop contractor would
sign a PLA because, among other things, the non-union workers
would have wages taken out for health plans, welfare,
retirement and also other deductions to which the worker will
never see a benefit of, and will not be vested in these union
plans.
Union-only agreements drive up costs by limiting
competition and in Virginia, less than 5 percent of the
construction firms are union. These agreements have a chilling
effect on the number of firms which would undertake such bids.
Unions also have a huge issue with unfunded pension
liabilities, and merit shop contractors would be crazy to take
on such massive liabilities with no benefits to the workers.
PLAs also drive up costs by enforcing inefficient work
rules and limiting production, hurting morale and in most
cases, add numerous man-hours to projects and drive up costs,
both direct and indirect. With the tenuous state of our economy
nationally and the difficult times we are in with real
unemployment in construction, nearing over 23 percent, can any
Government entity afford to waste precious funds? As a former
union member, it troubles me that unions would want a special
deal just for them when fair competition is a cornerstone of
our total economic system.
The proponents of PLAs will say that labor work stoppages
are a benefit to using them. The truth is that there has never
been a man-hour lost to strikes, picketing, work stoppages,
slowdowns or other disruptive activity on the non-union merit
side, just the union side. As a former union member, I have
witnessed first-hand the tactics used by unions to slow down
work, drag out projects for the union benefit. PLA proponents
also will say that they help to promote fair wages and higher
pay. This is also a farce. We at Bay Electric pay on average
more than unions in wages, benefits and offer paid vacations,
holiday pay, health insurance and 401(k) plans.
I am going to close, because I have a little bit more to go
in between there. But in closing, most of the folks that are
actually affected by the PLAs are ethnic minorities who do not
belong to a union and not have no hope of being employed by
union shops as shown in the attached Washington National
Stadium studies. Union minority membership rates are horrible.
And the union leadership does not represent minorities in any
fashion, except for a few token positions at union halls.
PLAs on the surface are racist and should not be used or
allowed to be adopted in Federal projects. I thank you, Mr.
Chairman.
[The prepared statement of Mr. Biagas follows:]
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Mr. Jordan. Thank you, Mr. Biagas.
Mr. Baskin.
STATEMENT OF MAURICE BASKIN
Mr. Baskin. Mr. Chairman and members of the subcommittee,
[remarks off microphone] of Venable. I appear before you today
on behalf of the Associated Builders and Contractors. It is a
national construction industry trade association, representing
23,000 merit shop contractors employing 2 million workers.
ABC's members believe that construction contracts should be
awarded to the lowest responsible bidder through full and open
competition based on merit, with no discrimination based on
labor affiliation. These same principles have been written into
Federal law. The Competition in Contracting Act requires
Federal agencies to award procurement contracts on the basis of
full and open competition to the maximum extent practicable.
Those are direct quotes from the law.
Unfortunately, the administration's efforts to impose
project labor agreements as part of the Federal procurement
process threaten to violate the Competition Act at the expense
of taxpayers. As we have already heard, according to official
Government statistics, 87 percent of construction workers
currently choose not to belong to any labor unions. I must
respond to something said a couple of speakers ago, that
exclusion of non-union contractors is a mere social value, I
would think that inclusion of 87 percent of the construction
work force is not only a social value and a construction value,
it is a fundamental right in our country.
Government-mandated PLAs result in the award of Federal
construction contracts primarily to the much smaller group of
unionized contractors and their union employees. This is
special interest favoritism. It is not full and open
competition. It is not what the law requires.
That is why in 2001, President Bush issued an executive
order, which was upheld in the courts, that prohibited the
Federal Government from requiring contractors to enter into
project labor agreements. During the 8 years of that executive
order, there were no significant labor-related problems on any
Federal contracts. The buildings did not fall down. Indeed, it
was on project labor agreements, some of the most notorious
ones, such as the Big Dig, the Iowa Events Center, Miller Park,
all project labor agreements that were Government-mandated,
those did fall down causing fatalities and untold damage.
Open competition on the Federal sector under the Bush
Executive order obviously worked. Nevertheless, with no
evidence of any labor-related problems on Federal construction
projects, President Obama signed his own executive order in
February 2009 which revoked the Bush order that was working,
and instead encouraged Federal agencies to mandate PLAs on
Federal construction projects exceeding $25 million in costs.
But the President does not have the authority to override
the Competition Act's requirement of full and open competition.
There has been no factual justification for the change in
policy offered up by any of the Government agencies, including
those who are in attendance today. We have heard a couple of
rationales for it, that it is to avoid strikes. Well, there
were no strikes going on on Federal projects. To gain access to
a larger pool of labor? Tell us how that is possible when you
exclude 87 percent of the work force, just to name a few of the
false rationales that have been offered up.
That is why ABC members have filed a series of bid protests
with the Government Accountability Office to stop unjustified
PLA mandates from being imposed by Federal agencies. Through
these protests, we have forced a number of agencies to withdraw
those mandates. Yet, we continue to see threatened PLA
requirements showing up on agency procurement around the
country, as was confirmed again in Mr. Peck's testimony today,
that we are going to hear, but that we saw on the
subcommittee's Web site.
We intend to file a protest against the GSA's new
preference policy in favor of PLAs on an upcoming project. That
policy has already resulted in a multi-million dollar increase
in the cost of construction on a project awarded here in the
District of Columbia that Mr. Ennis' company was excluded from.
And GSA should be required to make public the price comparisons
between PLA and non-PLA bids on each of the projects listed in
Mr. Peck's testimony.
Many independent studies, scholarly ones, I might add, have
found that PLAs increase the cost of construction by as much as
18 percent. In fact, studies commissioned by the Federal
Government have found that. Studies commissioned by State
governments have found cost increases from PLAs. The Government
mandates of PLAs will therefore result in reduced job creation
within the construction industry at a time when we have this
staggering 22 percent unemployment figure.
They hurt small businesses, particularly subcontractors.
They discriminate against minorities and women-owned
businesses, which are overwhelmingly non-union. They do nothing
to increase or stabilize construction employee wages, which I
also heard referred to today, because the Davis-Bacon Act
already protects construction industry wages at a very high
rate.
I will refer the rest of my remarks, given I have run out
of time, that is in my written testimony. But I appreciate the
opportunity to speak to you today.
[The prepared statement of Mr. Baskin follows:]
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Mr. Jordan. Thank you, Mr. Baskin.
We appreciate all our witnesses' testimony.
Mr. Biagas, you just want to compete, right, on a fair--
what did you say, you had 13 siblings?
Mr. Biagas. Yes, sir. I learned a young age, being the
youngest, that I needed to compete.
Mr. Jordan. The youngest of 14, so you definitely know how
to compete. You just want to compete.
Now, Mr. Belman and Mr. Baskin, Dr. Belman had talked about
PLAs and the advantage there. But you don't have a problem with
your workers striking, is that right?
Mr. Biagas. No, sir.
Mr. Jordan. No work stoppages, no picketing?
Mr. Biagas. Never have.
Mr. Jordan. Mr. Ennis, have you ever had that problem?
Mr. Ennis. No, sir.
Mr. Jordan. No. So the idea that is in the PLA agreement is
not really a point. You have training programs and apprentice
programs for your employees, I assume?
Mr. Biagas. Yes, sir, full-fledged. Thirty apprentices are
trained in our 4-year program, 788 hours in the classroom, over
8,000 on the job training.
Mr. Jordan. Recognized and given a thumbs-up by the
regulatory agency?
Mr. Biagas. Yes, sir.
Mr. Jordan. Imagine that. Mr. Ennis, is that the same with
you?
Mr. Ennis. Yes, sir, full 4-year apprenticeship, and it is
registered by the State of Virginia.
Mr. Jordan. Yes. The way we do it in Ohio is we work
closely with our vocational schools. It is a big element in our
joint vocational schools and programs. I have been out to see
it. I have actually spoken at many of their banquets. They do a
great job. And these kids, they all get placed. They do a great
job for several of the companies that I have the privilege of
representing in Ohio. So we appreciate that.
I want to get right to the agreement and I want to try to
yield some time, we have some Members who have really been on
this issue, like Mr. Guinta from New Hampshire, I want to give
some time to him. But let me just ask you this. I want to
understand how this works.
We under GSA, and they are going to be on the next panel,
they give a kind of a 10 percent bonus criteria to PLA
agreements. So is it this simple, if you do a bid, Mr. Ennis,
on a public project, and let's say your bid is $91, and the
union shop with the PLA agreement comes in at $100, thereby
they get that 10 percent bonus, so they are really at $90, do
they get the bid on that basis alone, or do we not know that?
Mr. Ennis. We do not know that.
Mr. Jordan. And this is to your point, Mr. Baskin, we want
to know why exactly.
Mr. Baskin. Yes. It is actually worse than that, because
they say it is not based on price. One price could be lower
than the other. The non-union price could be lower, but they
are just going to give this extra bump on the technical phase
of the PLA.
Mr. Jordan. That is my point. Mr. Ennis' bid comes in at
$91, let's say their bid comes in at $100, but it gets some 10
percent bonus, we don't know how that is applied, so they could
apply it just on the dollars and say 10 percent less, well,
they are actually $90, so now we are going to award the bid
based on that. It is actually costing the taxpayers more money
then, because it is still $100?
Mr. Baskin. Correct.
Mr. Jordan. I wanted to make sure I understand.
I want to yield time to first the chairman of the
committee, then we have 2\1/2\ minutes, if we have time, I want
to get Mr. Guinta rolling too, because he had the amendment.
Chairman Issa. Thank you, Mr. Chairman. I am not going to
take any time, except to thank you for looking into what is
undoubtedly costing the American taxpayers an opportunity to
have better roads, better bridges, or at least more of them. I
have nothing else at this time, but I truly appreciate your
attention and yield back.
Mr. Jordan. I am going to yield 2 minutes and 15 seconds to
the gentleman from New Hampshire, who has been working on this
issue very hard.
Mr. Guinta. Thank you, Mr. Chairman.
In full disclosure, I support and proposed an amendment to
ban PLAs. I want the witnesses to know that before we start
this commentary. I personally feel that PLAs, based on the
estimates that I have seen, in 2008 alone, have cost taxpayers
somewhere around $2.6 billion, to $2.8 billion.
In an era when we have to find and do more with less, and
in an era where we have a budget crisis, and I believe it is a
crisis, where we have a $1.6 trillion deficit, and a $14
trillion debt, I think it is incumbent upon us, and the country
expects it is incumbent upon us to really navigate through
these issues and find a better way to invest in our country and
improve on our country. I find it disheartening that we would,
as a PLA does, give greater access to one group and not
another.
That is really the substance of the frustration I have with
this issue. I wouldn't say that asking for equality is anti-
union or pro-small business. I think it is an equity and
fairness issue. I have heard from every small business owner
who is non-union that they would like to do nothing but
compete. And I heard you, Mr. Biagas, say that.
I think that would be better for the market, better for the
project, better for the consumer, better for the taxpayer. And
I would argue, better for both the union and non-union shop.
So with that in mind, I can certainly stay for some
questioning later. I would like to get to the crux of why there
is this assumption that a union must have an advantage over a
non-union shop. That is a question that I think deserves to be
answered, and the American public deserves recognition and
understanding of that and its correlation to the costs of PLAs
in this country.
I yield back. Thank you, sir.
Mr. Jordan. I thank the gentleman.
We now recognize the distinguished ranking member from
Ohio, Mr. Kucinich.
Mr. Kucinich. Thank you very much, Mr. Chairman.
One of the witnesses claimed that PLAs were racist. That is
a pretty serious charge, so I asked staff to look at Federal
cases to see if there are any cases that have been filed on
this question that relates to whether or not people's 14th
Amendment protections are being violated. And I didn't intend
to bring this up, but I just asked staff to come back with it.
What they came back with was a case out of the U.S. Court of
Appeals for the Ninth District that, where the defendants
included the IBEW Local 441, the Construction Trades Council of
Los Angeles and Orange Counties, Building and Construction
Trade Council.
And the findings, substantive and procedural due process
claims, here is what the court said, this is the court of
appeals: ``The plaintiffs contend that the PSA,'' they call
them PSAs there, ``violated their rights to substantive and
procedural due process by depriving them of liberty and
property interests protected by the 14th Amendment.'' And the
court says ``We conclude that plaintiffs cannot make this
threshold showing.''
So I just wanted to submit this for the record.
Mr. Jordan. Without objection.
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Mr. Kucinich. When you say racist, you had better be able
to back it up.
Also, Mr. Chairman, I would like a yes or no answer from
Dr. Belman. Did you say that these project labor agreements
cover both public and private jobs? Yes or no.
Mr. Belman. Yes.
Mr. Kucinich. And yes or no, Ms. Figg, did you say, when
you were talking about that bridge project in Minnesota, was
that done by a project, was there a project labor agreement
involved in that bridge project, yes or no?
Ms. Figg. Yes.
Mr. Kucinich. OK, thank you.
Now, Dr. Belman, you have heard the testimony of several
individuals and associations from the construction industry
claiming that Federal agencies' use of PLAs will negatively
impact competition and drive up construction costs. As you
know, Executive Order 13502 focuses on large-scale construction
projects where the total cost to the Federal Government is $25
million or more and which are generally more complex and of
longer duration. Can you tell us how competition among bidders
for these types of large construction projects impact costs?
Mr. Belman. Yes. There actually is very limited careful
research on this. But what is clear, in some work done by a
colleague of mine, Professor Peter Phillips of Utah, suggests
that on large projects, having three to four bidders is more
than enough to get close to minimum cost, because the gains
from winning a bid are so large that employer bidders want to
make sure that they get it.
Smaller projects, one is more willing to roll the dice,
kind of a Las Vegas approach to construction contracting,
because if you can get, if you put in a high bid but you still
win, you make a lot of money. So the bottom line is it is not
clear that you need to get huge numbers of contractors on a job
for the public to get the low price and the low bid on it.
Mr. Kucinich. Have you found that PLAs have a negative
impact on competition for contracts?
Mr. Belman. I haven't researched that question.
Mr. Kucinich. In his written testimony, Mr. Ennis expressed
concern regarding the Government's insistence that all
Government contracts of a certain size must use union labor,
despite shrinking levels of union membership. Dr. Belman, based
on your research and familiarity with various project labor
agreements, do PLAs prevent non-union contractors from being
included in large Federal construction projects?
Mr. Belman. It depends on the PLA. I know, I am aware of
Federal PLAs that are fairly open. The most recent ones----
Mr. Kucinich. So some are open? They do not prevent them?
Mr. Belman. No, they do not prevent them, nor do they
impose undue burdens on them.
Mr. Kucinich. Some of the other witnesses, Dr. Belman, have
claimed that requiring the use of PLAs for Federal construction
projects increases the costs to taxpayers. In fact, some
reports have supported this claim that PLAs increase the cost
of construction. Your research, however, suggests that these
concerns are overstated. What about this discrepancy?
Mr. Belman. There is considerable anecdotal evidence. You
can find projects where PLAs were more expensive. You can find
examples, case studies of projects where PLAs were less
expensive. In terms of careful research, what I would say is
there are two peer reviewed studies, one by Beacon Hill, that
suggests that PLAs increased project costs in Massachusetts
schools by about 12 percent, 14 percent. My own work in
industrial relations, which takes a much closer look at this,
and allows for the differences, you don't use PLAs on a plain
vanilla school, you use them on a more----
Mr. Kucinich. OK, I----
Mr. Belman. No cost.
Mr. Kucinich. Final question. You don't contend that PLAs
should be used on every single large scale construction
project, is that correct?
Mr. Belman. No.
Mr. Kucinich. OK, no, meaning what?
Mr. Belman. No means right project, right PLA. Then they
make sense to use.
Mr. Jordan. I Thank the gentleman.
I now yield to the vice chairman, Ms. Buerkle.
Ms. Buerkle. Thank you, Mr. Chairman. And thank you to all
of our panelists for being here today.
This Congress has made the economy and job creation our No.
1 priority, as this Nation has faced 20 plus months of
unemployment at 9 percent or above. So to you all in the panel
who are the job creators, thank you, and we look forward to
working with you to create an environment where you can create
jobs and you can be successful, and the Government isn't in the
way of your progress and your success. So thanks for being here
today.
My first question is to Mr. Biagas. And I might say to you,
my chief of staff is the oldest of 14. So you two have a lot in
common, or not so.
I want to give you the opportunity, because the allegation
in what you stated in your statement is a serious one. Maybe
you could cite for us some specific examples.
Mr. Biagas. Yes, ma'am. In the attachment, the handout I
had, there was a study that was done on the Washington National
Stadium, which had a PLA it also had goals, and also hard
goals, for hiring of inner city and minorities that actually
reside in the District of Columbia. Due to the way the work
actually went, that was never fulfilled. I would further say,
if you would look into that study, you would certainly find
that there was an obvious attempt not to hire these inner city
minorities, which the intent, or the bill of goods that was
sold with the PLA was they were going to hire a bunch of inner
city youth and/or folks and put them through the apprenticeship
to let them become trades workers.
It did not happen, nor does it ever happen on PLAs. It is
all smoke and mirrors.
Ms. Buerkle. Thank you very much.
Mr. Baskin. May I supplement that response? It goes to your
question as well as to Congressman Kucinich. In Chicago,
African American and female construction workers were awarded
$1.3 million under a consent decree, arising out of a PLA
project asking for cases of racism. An Alameda County jury
awarded a black construction worker $490,000 for racial
harassment on the PLA San Francisco airport project.
The Philadelphia City Council found that minority standards
were not being met under PLAs in that city. The mayor of
Buffalo, New York made similar criticisms, and the Washington
National Stadium, already referenced to. These and other
specific instances of racism and racist problems and minorities
and women under PLAs are set forth in our reports on the poor
performance of PLAs. A new edition is coming out, and I would
be happy to provide that to the committee.
Ms. Buerkle. Thank you very much.
My next question is to Ms. Figg. Because when you were
asked the yes or no question regarding the PLA project for the
bridge, the I-35 bridge, I had the feeling you wanted to
explain that. But my understanding is you are here to talk to
us about regulations. And that is what this subcommittee is
about. So perhaps you could just give us, first of all, it is
encouraging to know that a project of that magnitude could be
accomplished in that short a period of time.
Had that not been on the fast track, can you give us some
estimate of the cost and what it would have cost with the
standard operating procedure, as well as the length of time?
Ms. Figg. There is some information that would suggest that
a project like that would take anywhere from 10 to 15 years to
bring to actual construction. The processes are overlapping in
that both State and Federal Governments require the same
things. But there is no working together on those. So you have
to go through these review processes.
Private industry knows what the regulations are. So they
put forth a proposal that accomplishes meeting those. It is the
review process that takes so long to just confirm that in fact
what you put forward was meeting the criteria. So we see many
times where you submit information for an environmental
process, for instance, and it goes on for a number of years.
But the project doesn't change from the day you submitted the
original proposal.
So it is just, it is a time waster. And there are
indications that there is at least a 10 percent additional cost
and more. Some have indicated, in our Construction Industry
Round Table sentiment indexes up to 50 percent of additional
cost due to these overlapping regulations.
Ms. Buerkle. Thank you.
Mr. Ennis, just briefly, you mentioned in your opening
statement that you bid on three jobs and you did not
successfully get any of those jobs. Can you just tell us if you
have received any feedback as to why you didn't get the
contract?
Mr. Ennis. Because they were awarded as PLAs. Two of the
three were actually, one was awarded as a PLA and a subsequent
change order was issued, a couple million dollars, to make it
PLA. We were asked on one of the projects to sign a PLA. The
third project, from what I understand, they never could come to
an agreement on a PLA. I believe they withdrew it.
All three of these proposals are technical proposals, of
which any of that information was never available to us. But
with the contractors that we bid with, we were told we were out
because we would not sign a PLA.
Ms. Buerkle. Thank you. I am out of time, but just quickly,
was the shop that it was awarded to a union shop or a non-union
shop?
Mr. Ennis. To a union shop.
Ms. Buerkle. Thank you very much. Thanks to all the
panelists.
Ms. Jordan. I thank the gentlelady.
Mr. Cooper.
Mr. Cooper. Thank you, Mr. Chairman. I thank the witnesses.
Obviously a lot of scar tissue is built up on this issue.
It seems like under the George H.W. Bush administration,
project labor agreements were banned. Then under Clinton they
were encouraged, then under George W. Bush, they were banned
again. Now under Obama they are encouraged. So we have gone
back and forth, back and forth.
And I know Mr. Baskin is a professional at figuring this
stuff out. But it strikes me as odd that in a couple of panels
of sworn witnesses here, we have such a completely different
understanding of the facts. It is almost hard to imagine we
could have such a different impression. Because on the face of
the Executive order, it says that Executive agencies may
require these things. It doesn't say they have to.
And then in the next panel, Mr. Gordon is going to testify,
I believe, I don't want to jump the gun here, that he says on
page 5, ``Any contractor may compete for and win a Federal
contract requiring a project labor agreement, whether or not
the contractor's employees are represented by a labor union.''
And he goes on to describe a lot of other flexible provisions
that these may contain, because these have to be negotiated.
So it is kind of hard for me to understand who is telling
the truth here. Here, we hear from many panelists gloom and
doom, from the other side we hear flexibility.
I don't have a dog in this fight. Who am I supposed to
believe? It just depends on previous scar tissue or previous
experience. As I say, you are all sworn witnesses. How do you
reconcile those conflicts? Mr. Baskin, I will give you an
opportunity, since you are a known professional in this area.
Mr. Baskin. I think we have some agreement on this panel,
which is that Dr. Belman has conceded that PLAs generally do
exclude the non-union contractors. It is a totally false
premise to say, well, they can bid, they just can't perform the
work unless they agree to become----
Mr. Cooper. Well, sir, Dr. Belman is shaking his head. So
you may have spoken, let Dr. Belman speak for himself.
Mr. Baskin. And as well his previous testimony. But you
asked about the Executive orders. President Bush's was the
first Executive order to clearly prohibit but also stay neutral
on the issue.
Mr. Cooper. Which President Bush?
Mr. Baskin. President Bush, George W. Bush. President
Clinton did not issue an Executive order.
Mr. Cooper. His father had also prohibited project labor
agreements, according to Dr. Belman.
Mr. Baskin. At the very end of his administration, when
there was not time to implement it.
Mr. Cooper. But he had still done that, his father had done
it.
Mr. Baskin. And then President Clinton came in with a, did
not issue an Executive order, merely a memorandum.
I guess the point about the current Executive order, let's
talk about the present day. It says they shall encourage
agencies to require. And under what right should any agency be
able to require a restricted bid specification, which is what a
PLA is? That reduces competition. That is really what this is
all about. All we are asking for is full and open competition
in a meaningful way without the restricted bid specifications.
Mr. Cooper. I am sure you would be interested in litigating
that, if there is a fee involved.
Mr. Baskin. We already have been. We already have it. It is
regrettable that money has to be spent on litigating something
that was already in the Competition and Contracting Act. But we
have brought four protests that have all been successful, I
think, because the agencies have Recognized that there is an
over-reach involved here.
Mr. Cooper. But how about this direct statement that any
contractor may enter into the PLA whether or not a contractor's
employees are represented by a labor union?
Mr. Baskin. And because of the discriminatory aspects of
telling, what are you doing there, you are telling a non-union
contractor to completely revamp his way of doing business, that
which has made him successful and would make the Government
successful if they used his services. Certainly, to accept
union representation for employees who don't want it.
Mr. Cooper. Dr. Belman.
Mr. Belman. One, you can write PLAs many different ways, to
be private sector PLAs often do require that a contractor be a
permanent signatory to a local agreement. I haven't done a
thorough enough study of public PLAs to know where they stand.
But they are certainly moving toward greater openness to non-
union contractors, to drag-along clauses and to dealing with
benefit issues.
But I do have to say is, that while open competition is
important, the point of the open competition is to provide the
public with value. And there are projects, and that public
value can be increased through the use of project labor
agreements. I am not sure that it is wise to come up with a
policy that would prevent the public from realizing that value.
Mr. Cooper. My time is expiring. It seems to me that a good
lawyer could write a good PLA.
Mr. Belman. Many have.
Mr. Jordan. I Thank the gentleman.
The gentleman from New Hampshire, Mr. Guinta, is
recognized.
Mr. Guinta. Thank you, Mr. Chairman.
I think the point that I would make is, why does a good
lawyer have to write a good PLA? Mr. Baskin, if your preference
would be, I assume, not to have to engage in writing a PLA,
correct?
Mr. Baskin. Yes, but it is not just me. We are talking
thousands of contractors around the country who have voiced
their opposition to being forced to change their way of doing
business and to force unions on employees who work for them who
don't want it. Have a vote, if that is what the unions want.
Why are they being subjected to this? It is about them, it is
not about me.
Mr. Guinta. And second, if this Executive order was not in
place, you or any other lawyer wouldn't have to sue for a fee,
correct?
Mr. Baskin. Absolutely right. Correct.
Mr. Guinta. Now, I think we all know what the definition of
require is. I just want to read Section 3 of the Executive
Order 13502. And if I am not reading this correctly, I would
like someone to correct me, please.
It states, ``In awarding any contract in connection with a
large-scale construction project, or obligating funds pursuant
to such a contract, executive agencies may, on a project by
project basis, require the use of a project labor agreement by
a contractor.''
So what it says to me is a very clear suggestion that you
should require project labor agreements. Now, technically,
under the law, the word may covers the fact that you don't have
to. But what I would like to know is, how many of these
projects do not require a project labor agreement? Does anyone,
Dr. Belman, would you know the answer to that question?
Mr. Belman. I haven't studied that in terms of Federal
contracts recently.
Mr. Guinta. You had testified earlier, and I would like to
hear about this a little bit more, I apologize, I had to step
out of the room. But you talked about value. Can you just talk
to me a little bit more about the social value that you are
referring to?
Mr. Belman. OK, well, let me give you an example. On the
west coast, there are a number of project labor agreements that
contain very extensive provisions for moving individuals in low
income areas or from minority groups through pre-apprenticeship
training programs into apprenticeship programs and then into
full journeyman status.
Now, having, and there are extensive systems of community
overview, there are extensive joint panels that make sure that
these are effective and every review I have read suggests that
they are extremely effective in moving particularly African
Americans and Hispanics into well-paid, highly trained jobs
where they are very productive members of the work force. So
that is, I interpret that as a positive social value that can
be generated by PLAs, and isn't generated in their absence.
Mr. Guinta. So am I to assume based on that described value
that non-union companies do not engage in apprenticeships with
minorities?
Mr. Belman. What I would tell you is that from my own
research and that of Johannes Beldens, and a number of others,
is that, and also you can read in the engineering news record
and from the construction users round table, is that there is a
crisis in construction training, that there is under-investment
in construction training, and that is largely on the non-union
side.
Can we find good non-union construction companies? You bet.
Are there non-union construction companies that will go out
there and compete for PLA work, get the contracts and do well?
You bet. But on average, non-union companies are much more
dependent on public training contributions and provide much
less training than do union construction firms.
Mr. Guinta. The testimony that I heard from Mr. Ennis and
Mr. Biagas would refute that last statement you made.
Mr. Belman. No, they don't. They simply say, as I said,
there are some great companies, non-union companies out there
that do very well. But the typical non-union company does much
less training and invests much less in training than a union
company. Just like contrary to some of the things that are said
here, there is, African Americans make up a smaller percentage
of the non-union work force today than the do the union work
force. So if you hire a union company, you are more likely to
have an African American worker on the job than if you hire a
non-union company.
Mr. Guinta. So based on that argument, we should apply this
standard to every industry in the country?
Mr. Belman. Which standard?
Mr. Guinta. The requirement that unions participate in any
industry, not just the construction industry. Because unions,
according to what you are saying, spend more time training. Yet
the rest of the free market society would suggest otherwise.
Mr. Belman. There is, you can look at Peter Capelli's work
on this. There is a strong suggestion that the U.S. spends
considerably less on employee training than do most other
industrialized countries. That is a reason why our economy is
not functioning as well as we would like.
Whether unions are the solution to this, I have to be
neutral on. But I do know that in construction, unions and
their signatory employers, I should make that point, these are
through joint labor management committees, spend far more on
training through private means than does the non-union sector.
And that in many times, the non-union sector is dependent on
their, for their most skilled workers, on people who have left
the union sector, people like, to some degree, like Mr. Biagas.
Mr. Guinta. Thank you, Mr. Chairman.
Mr. Jordan. Thank you.
I now recognize the gentlelady, Ms. Speier.
Ms. Speier. Thank you, Mr. Chairman. And thank you for
holding this hearing.
Let me first request unanimous consent that two statements
be submitted for the record, by Tammy Miser and Kathryn Rilett.
Mr. Jordan. Without objection.
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Ms. Speier. Thank you.
Just a couple of points. I think this is just a fascinating
discussion, because as Mr. Cooper had said, it seems like we
are talking over each other and not necessarily getting much
clarity. The project labor agreement that Toyota has embraced
is one that is worth spelling out a little bit. And Jeff
Caldwell said, as the former head of the construction for
Toyota North America, ``I have numerous real world experiences
with PLAs, and I can say without any equivocation that they are
valuable tools for any entity seeking an economical and
efficient construction process. Toyota has constructed numerous
automobile, truck and engine production facilities in the
United States, each of these construction projects was
completed or is being completed under a project labor agreement
that ensures that our facilities were built with a steady
supply of high-skilled and productive workers.''
In every instance, and I underscore this, this process
worked beautifully. And the proof is in the results. Toyota
North America construction costs are roughly one-third less
than other major automobile manufacturers who eschew the use of
project labor agreements.
Now, a big point is being made that somehow the Government,
under the Executive order by President Obama, is forcing these
PLAs by various Federal agencies. Mr. Baskin has made that
point over and over again.
But let me point out, in an article that just appeared,
nine workers were detained in a raid at a VA hospital job site
in Florida. These nine people are in the United States
illegally, were found to be working on the construction of a
new Veterans Administration hospital in Orlando, Florida. It is
estimated costs of over $600 million that the VA project
represents. VA has strongly opposed doing PLAs.
So on the one hand, we have some Federal agencies that are
not interested in doing PLAs. We have an example where one was
clearly not using a PLA and they have nine workers who have
been detained because they are illegal and working in this
country. I am sure they are jobs that American workers would
love to have.
Let me just speak a little bit about Tammy Miser, who is
the sister of a man that was burned to death at a job site in
this country. It was a company that did not follow the U.S.
Chemical Safety and Hazardous Investigation Board's
recommendations relative to dust collectors. And the CSB
concluded that had the company adhered to the National Fire
Protection Association standard for combustible metal dust, the
explosion would have been minimized or prevented altogether.
I guess my question is to you, Dr. Belman, do you think
that we have a productive discussion today about the impact of
OSHA regulations without involving stories like the worker who
lost his life?
Mr. Belman. Any economist would say, if you are going to
take a look at regulations, you need to look at the benefits as
well as the cost. One could of course look at purely the costs
of building a containment vessel on a nuclear reactor and
conclude they are a bad idea. But every now and then their
benefits are very great. So you need to look at the benefits of
regulation, fewer lives lost, and so on, as well as their
costs.
Ms. Speier. Thank you. I think my time has expired.
Mr. Jordan. I thank the gentlelady.
Mr. Belman, the OSHA deciding to back off the noise
regulation that they were initially talking about relative to
machines and manufacturing facilities, do you think that was a
good move? Do you think they heard that in this situation that
what perceived benefit was not there, and that it was a cost
issue?
Mr. Belman. Although as an academic I believe I know all
things, I don't have enough information to answer that question
yes or no.
Mr. Jordan. I appreciate it.
I recognize the gentleman from Iowa, Mr. Braley.
Mr. Braley. Thank you, Mr. Chairman.
Let me begin by stating that I strongly support project
labor agreements. Apparently, the bipartisan majority of the
House of Representatives does as well. Because recently, during
the debate on the job-killing spending bill that we passed, my
colleagues on the other side of the aisle attempted to end all
PLAs on public constructionsites across the country and that
amendment failed on a tie vote in the House. If you do the
math, you realize that would not have passed or would have not
been prevented without Republican support in opposition to that
amendment.
PLAs play an important role for economic development in
Iowa and across the country. They provide good-paying jobs for
hard-working Americans. And now they are under attack, not just
here, but also in my State.
The truth is that PLAs have proven to be very cost-
effective. In the 1990's, in Dubuque, Iowa, the local building
trades council negotiated private sector PLAs for nine sites.
Four of these sites were for the Dupaco Community Credit Union.
These projects were completed ahead of schedule and under
budget. One of them is shown up on the screen.
The President and CEO of Dupaco stated that ``building
construction exceeded our expectation because it was finished
30 days ahead of schedule and 10 percent under budget.'' I have
a list here of 280 PLA projects in the Quad Cities that were
completed either on time or ahead of schedule. Mr. Chairman, I
ask unanimous consent to enter them into the record.
Mr. Jordan. Without objection.
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Mr. Braley. These projects include the Putnam Museum in
Davenport, the St. Ambrose University science library, the
Palmer Chiropractic College. And just recently, our Governor,
Terry Branstead, issued an executive order banning PLAs on
public works projects in Iowa, including an existing PLA in
Cedar Rapids for the Cedar Rapids Convention Center, a city
that was devastated by flooding 2 years ago when its entire
downtown was underwater.
Ironically, Mr. Chairman, the No. 1 supporter for this PLA
project moving forward is the current mayor of Cedar Rapids,
Ron Corbett, who used to be the Republican leader of our State
Senate. After the executive order was issued, Mayor Corbett
asked the Governor to consider using $15 million from a State
jobs fund to finish the project. But our Governor refused the
Mayor's request, and as a result, this enormously important
economic development project is now on hold. Putting a work
stoppage on this project is harmful to Cedar Rapids' community
and to Iowa. If PLAs are banned in Congress, what is happening
in Cedar Rapids will happen all over the country.
That is why I urge my colleagues to continue opposing any
efforts to end PLA funding.
And now I want to talk about that PLA on the bridge in
Minneapolis, which I happen to have in my hand. One thing we
know is that this project finished early and under budget. That
is correct, isn't it, Ms. Figg? It was completed under a PLA in
only 11 months and for less than the $250 million earmarked by
Congress. And the Transportation Secretary, Mary Peters, said
it should not take a tragedy to build a bridge this fast in
America.
And I should point out, this PLA was entered into when
George W. Bush was President. Isn't that correct?
[No audible response.]
Mr. Braley. So then Mr. Baskin, you brought up something I
want to talk about, and you went off script in your opening, so
I wasn't prepared for this, but you mentioned the Iowa Events
Center, something I happen to know a great deal about. You
said, when referring to these building projects, those did fall
down, causing fatalities and untold damages. Do you remember
saying that?
Mr. Baskin. Yes.
Mr. Braley. In fact, the Iowa Events Center did not fall
down, did it?
Mr. Baskin. Only a large crane, which killed a construction
worker.
Mr. Braley. The Events Center did not fall down, did it?
Mr. Baskin. Part of the construction did, yes.
Mr. Braley. Well, semantics. Certainly the building itself
never fell down. And tragically, one worker, a 65-year old
steel erector, was killed. And we know that on massive
construction projects of this size, regrettably, fatalities are
not uncommon, whether or not they are union contractors. Isn't
that true?
Mr. Baskin. Yes, we will agree that the safety level
between union and non-union is roughly the same.
Mr. Braley. And so one of the things that you talk about is
the challenges that your group has filed to these PLAs. In
fact, you filed a challenge in Iowa on that Events Center
project, and the Iowa Supreme Court in a six to one decision
upheld the right of that PLA to move forward, even though my
State is a right to work State, isn't that true?
Mr. Baskin. Well, I didn't, the local chapter did.
Mr. Braley. The local chapter of the group you are here
testifying on behalf of today filed that suit. It went all the
way to our Supreme Court and they upheld this PLA.
Mr. Baskin. Right, and as a result, there were cost
overruns, construction defects, nearly 50 construction
accidents and it was not a model project. There have been
papers written on just that project and the problems that
happened with it.
Mr. Braley. And is it your testimony today that on massive
construction projects built by non-union contractors, those
problems you identified have never occurred.
Mr. Baskin. No, but the risks----
[Simultaneous conversations.]
Mr. Braley. Mr. Chairman, my time is expired, I yield back.
Mr. Baskin. If I might respond, the burden is on those who
are seeking to discriminate. And the justification has been
that PLAs are better somehow, and that PLAs don't have safety
problems and that they don't have delays and all the things we
just heard. And that is simply not the case. They do have these
problems and then some.
And so then what is the justification for discrimination,
which they unquestionably have? That is our only point. And we
are only talking about Government-mandated PLAs. We are not
concerned here today with the private. What the private sector
wants to do with their own money is for them to decide.
Sometimes it is under coercion. We are not arguing about that.
Mr. Braley. So is it your testimony today that the ABC is
not opposed to private PLAs?
Mr. Baskin. We are not, we stand for the proposition that
private employers can decide how to spend their own money.
Mr. Braley. All right, thank you.
Mr. Jordan. I quickly recognize the ranking member, and
then I want to get to the ranking member of the full committee.
Mr. Kucinich. For unanimous consent, to submit to the
record, from the Campaign for Quality Construction, testimony
that says PLA do not discriminate against non-union contractors
and workers.
Mr. Jordan. Without objection it will be entered.
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Mr. Jordan. But we come back to this point that Mr. Cooper
raises, too. When the President of the United States tells the
agencies they may require, that is not just any old citizen
telling how an agency is going to make a decision. So this idea
that somehow that is neutral I just don't think people buy that
concept.
The ranking member of the full committee, the gentleman
from Maryland.
Mr. Cummings. Thank you very much, Mr. Chairman.
Mr. Belman, let me ask you this. In my district, we have
some situations where I would guarantee you that African
American male unemployment is like 65 percent. And I assume
that a PLA would be helpful there. Do you think?
Mr. Belman. A properly designed PLA that was sufficiently
large could be used to move disadvantaged men and women through
various stages of training to much better jobs than they
currently fill.
Mr. Cummings. And what happens so often in these
neighborhoods is that folk come in and they do work right in
front of their houses, and they're sitting on the sidelines,
not having an opportunity to work. They come from everywhere. I
see it all the time.
And so a PLA, I take it, you could have provisions in there
that would help with regard to training, so that they would be
given an opportunity to use their tax dollars to take care of
their families, learn a trade or, and then move forward in
life. Has that been your testimony?
Mr. Belman. In point of fact, most of the west coast port
and other PLAs which have these training programs also have an
effective local hire provision, which sets very clear goals for
movement through pre-apprenticeship into apprenticeship
programs. They are pretty thoroughly reviewed, and there is
oversight by community group as well as by employers, the ports
or other owner organizations in the building trades. And the
reports that I have read and people I have talked to have
indicated they have been very effective in this.
And PLAs have an advantage over any other training program.
Because they are connected, one problem with Government-
supported training programs it that they tend to not be
connected to jobs at the end. You train people, they come out,
there is not a job. For most of the PLA work, there is a job
and there is a clear advancement, pre-apprenticeship,
apprenticeship and then into journeyman status. All relatively
high wage and solid benefits.
Mr. Cummings. So in other words, these folks get an
opportunity to participate in a process that then opens the
door for opportunity. In other words, it is like an engagement
and then hopefully a marriage.
Mr. Belman. Yes, because the pre-apprenticeship programs,
in particular, can do, there are people who this is the perfect
job for. There are people who don't like working outside. If
you are going to be a construction worker, some, figuring out
whether you want to work outside is very good before we invest
a lot of money in training. But that is very important.
So it is not a guarantee, simply because you show up, that
you are going to end up in a wonderful career. But for the
right person, it opens up opportunities that otherwise don't
seem to exist.
Mr. Cummings. And so when you have, for example, the
African American unemployment rate consistently, consistently
almost double the general unemployment rate, and if you are
talking about creation of jobs, and you are talking about long-
term jobs, and you are not just talking about jobs, but you are
talking about careers, and you are talking about people
contributing back into society, a PLA may not be a bad idea if
it is structured right and if it has the proper oversight. Is
that right? Is that a reasonable statement?
Mr. Belman. That is very reasonable. An example would be
the San Jose school system, which used a PLA as a basis for
establishing a construction academy. They were rebuilding a
high school. It has been very successful. Indeed, the
construction academy and the linkage from high school students
taking courses and then doing internships over the summer and
having privileged access to apprenticeship opportunities has
continued, even though the PLA has expired. And indeed, the
construction industry is so enthused about getting very good
students, and into white collar as well as blue collar jobs,
that they have now started a training program for high school
math teachers, so they can take their experiences in
construction back to the classroom and encourage better
students to think about construction careers.
Mr. Cummings. So it is about opportunity?
Mr. Belman. Yes.
Mr. Cummings. I yield back.
Mr. Jordan. I thank the gentleman. We do have to get to a
vote.
One last question, and it may be better for the second
panel. Mr. Biagas, I believe, mentioned in his testimony only 6
percent of the construction firms in Virginia, maybe it is
northern Virginia, are union firms. Is that right, Mr. Biagas?
Mr. Biagas. Yes, sir.
Mr. Jordan. Do we have any data on what percentage of
Federal projects are awarded to, what is the percentage awarded
to union and non-union? Do we have any of that data? To me,
that seems to be the central question. If only 6 percent are
union, if they are getting the vast majority of the contracts,
then that shows you how skewed the system is. Do we have any of
that data?
Mr. Biagas. I don't have that data with me, Congressman.
Mr. Jordan. Mr. Belman.
Mr. Belman. No.
Mr. Jordan. We are going to ask GSA in the next panel.
Mr. Belman. But I would be fascinated to learn.
Mr. Baskin. And it is a moving target, because the PLA
program has not been fully implemented yet. We are fighting as
hard as we can to stop it, and we are calling for help from
Congress.
Mr. Jordan. I understand that.
Thank you all very much. We have to recess for a vote on
the floor.
[Recess.]
Mr. Jordan. We will welcome our second panel of witnesses.
I don't know if any of you were here for the first round, but
it is the practice of the committee to swear our witnesses in.
So if you would just stand up and raise your right hands.
[Witnesses sworn.]
Mr. Jordan. Let the record show that all witnesses answered
in the affirmative.
You guys know the game. Well, I should introduce you, I
apologize. Mr. Gordon is the Administrator for the Office of
Federal Procurement Policy, Executive Office of the President.
The Honorable Robert Peck is the Commissioner for Public
Buildings, U.S. General Services Administration. And the
Honorable David Michaels is Assistant Secretary for
Occupational Health and Safety, U.S. Department of Labor.
We thank each of your gentleman for your public service and
your willingness to be in front of the committee today. We will
probably, as you know, have Members join us, we hope so, but we
want to hear your testimony. So let's go right down the row.
Mr. Gordon, you are up first.
STATEMENTS OF DANIEL I. GORDON, ADMINISTRATOR FOR FEDERAL
PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET; ROBERT A.
PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE, U.S. GENERAL
SERVICES ADMINISTRATION; AND DAVID MICHAELS, PHD., MPH,
ASSISTANT SECRETARY, OCCUPATIONAL SAFETY AND HEALTH
ADMINISTRATION, U.S. DEPARTMENT OF LABOR
STATEMENT OF DANIEL I. GORDON
Mr. Gordon. Thank you, Mr. Chairman.
Mr. Chairman, other members of the subcommittee, I
appreciate the opportunity to appear before you today to
discuss the regulatory implementation of Executive Order 13502,
which governs the use of project labor agreements, PLAs, in
Federal construction contracts.
I was pleased to sit in and listen to the first panel, with
the diverse views that were expressed there, and to hear the
Members' questions. I will be happy to followup with any
questions you want to raise with me.
As Administrator for Federal Procurement Policy, I am
responsible for overseeing the development of Government-wide
contracting rules and policies and ensuring that those rules
and policies promote economy and efficiency. This afternoon, I
would like to briefly describe the steps my office has taken to
shape the Federal Acquisition Regulation [FAR], as we usually
call it, rule implementing the Executive order.
Let me first, though, address a misperception, or a
misconception about what the FAR rule says about the use of
PLAs. Contrary to what the subcommittee members heard from some
people earlier this afternoon, the FAR rule does not require
the use of PLAs. Like the Executive order, the FAR rule gives
each contracting agency the discretion to decide for itself on
a project by project basis whether use of a PLA will in fact
promote economy and efficiency on a specific construction
contract.
The FAR rule calls PLAs, and I am quoting from the rule,
``a tool that agencies may use to promote economy and
efficiency in Federal procurement.'' In offering PLAs as a tool
to the contracting agency, the FAR rule on PLAs is similar to
many other provisions of the Federal Acquisition Regulation.
For example, the FAR lets contracting agencies decide, based on
the specifics of their needs and their circumstances, whether
they should purchase through the Federal supply schedule or on
the open market, whether they should seek bids with price as
the only evaluation criterion, or rather, run a competitive
procurement with other selection factors, such as past
performance or technical excellence, in addition to price.
The FAR does not dictate to our acquisition professionals
which choices to make. It gives them the tools to make the
choices so that they can tailor a procurement to an individual
agency's specific requirement. That tool kit approach and the
flexibility that comes with it lie at the very heart of our
ability to get the best value for every taxpayer dollar that we
spend, whether we are buying lawnmower services or war planes
for the Air Force.
Our approach to PLAs is no different. We have structured
the FAR rule to create a process where decisions are made on a
case by case basis. The FAR rule sets out factors that an
agency may decide to consider. But it doesn't dictate the
factors. It doesn't prohibit agencies from considering other
factors.
Among the factors that are named in the FAR are whether the
project will require multiple construction contractors and/or
subcontractors employing workers in multiple crafts or trades,
and whether completion of the project will require an extended
period of time.
As with other FAR rules, though, the PLA rule sets
boundaries. Most significantly, the agency may require a PLA
for a specific project only, only if it decides that doing that
will advance the Government's interest in achieving economy and
efficiency in Federal procurement.
But equally importantly, with respect to the content of any
PLA created pursuant to the FAR rule, and this is particularly
relevant in light of what the subcommittee heard from the first
panel, the FAR rule requires that any PLA allow all firms to
compete for contracts and subcontracts without regard to
whether they are otherwise parties to collective bargaining
agreements. This mandate ensures that if an agency decides that
they should be using a PLA, it is done consistent with the
principle of open competition, a bedrock of our Federal
procurement system, so that all interested bidders are given an
opportunity to have their offers considered by the Government.
We appreciate that taxpayers would not benefit from a rule
that requires the use of PLAs regardless of circumstances. But
we also don't think taxpayers would benefit if agencies were
prohibited from taking advantage of opportunities where a PLA
could help them achieve or increase efficiency and timeliness.
With these thoughts in mind, my office intends to continue
working with the agency, with the agencies across the executive
branch, to facilitate the sharing of experiences and best
practices for the consideration and appropriate use of project
labor agreements in the Federal marketplace.
I will be delighted afterwards to answer any questions the
subcommittee members have. Thank you.
[The prepared statement of Mr. Gordon follows:]
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Mr. Jordan. Thank you, Mr. Gordon.
Mr. Peck.
STATEMENT OF ROBERT A. PECK
Mr. Peck. Thank you, Mr. Chairman and other members of the
subcommittee.
I too heard the first panel, and I am happy to be here to
set the record straight and discuss GSA's measured business
approach to the implementation of project labor agreements on
our construction contracts. We share with you an interest in
seeing that our construction projects are finished as
expeditiously as possible and with the best value and cost to
the American taxpayer.
A PLA is a proven tool to help provide structure and
stability to a project, especially on certain large projects.
The private sector uses PLAs also for a variety of construction
projects, similar to those GSA manages. PLAs are also used at
the State and local levels for a wide array of construction
projects varying in size and scope.
PLAs have been used in all 50 States and the District of
Columbia. They can help reduce risks associated with wage
stability, avoidance of work stoppages, increase labor
availability and project-specific coordination of work rules.
PLAs can also include provisions that promote career
development through valuable job training for construction
workers.
GSA uses PLAs when they promote economy and efficiency in
Federal procurement. Executive Order 13502 and the FAR
encourage executive agencies to consider requiring contractors
to use PLAs on projects totaling at least $25 million. As Mr.
Gordon said, the Executive order does not mandate that Federal
agencies require PLAs, but encourages the consideration of
PLAs.
Our procurement process provides for the consideration of
PLAs. We allow contractors to submit a proposal with a PLA,
without a PLA or both. We evaluate these proposals on a project
by project basis. If we accept a PLA proposal, the awardee is
required to execute a PLA in accordance with the Executive
order and the FAR. In GSA's contracts, the PLA is an agreement
between the contractor and the labor organization, rather than
between GSA and the labor organization.
As we typically do on our major construction projects, GSA
selects the proposal with the best value to the Government by
weighing a number of technical factors against cost. A PLA
recently has been included as one of those technical factors. I
should note that the other technical factors for many more
points are past performance, key personnel and a management
plan which often includes the requirement of their being a plan
to include small business.
Proposals with a PLA receive 10 percent, 10 of the possible
100 points for technical evaluation. If you consider that then
the technical factors as a whole are balanced against price on
the other hand, you will see that the PLA in and of itself is
far less than 10 percent, more like probably 5 or 6 percent of
total award. And we don't really quantify them that way, which
I will be happy to explain.
We award to contractors who usually work with labor
organizations, and we also award to contractors who do not
usually work with labor organizations.
Shortly after the Executive order was signed, GSA received
$5\1/2\ billion through the American Recovery and Reinvestment
Act of 2009. These funds, which were used principally to help
modernize and green our federally owned inventory, provided GSA
the opportunity to conduct a PLA pilot program. I am proud to
tell you today that in our spending on the Recovery Act so far,
we estimate we have created 16,000 jobs in the American
construction industry.
For the pilot PLA program, GSA selected 10 projects with
budgets of more than $100 million. The selected projects cover
seven States and the District of Columbia. Of the 10, 7 ended
up with PLAs and three did not. From our comparisons, in most
instances, it appears that there has been little to no cost
differences, although I will be the first to tell you, in some
cases, that is hard to tell.
Our experience in this pilot program has shown us that our
bidding process has not hindered competition. In all of our
projects, we received sufficient bids to ensure adequate
competition and the best value to the American taxpayer. We
typically receive between three and eight offers for our
projects, for the pilot projects.
Through the construction of these projects, GSA plans to
assess the use of PLAs for future implementation of best
practices and updates to our policies. This pilot program has
enabled GSA to obtain real market data regarding the impact of
PLAs on competition. We have recently reached out to
contractors and union officials to hear their feedback on our
pilot projects in order to develop ways to further improve our
PLA procurement process.
Mr. Chairman and members of the subcommittee, this
concludes my prepared statement. I am of course happy to answer
any questions.
[The prepared statement of Mr. Peck follows:]
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Mr. Jordan. Thank you, Mr. Peck.
Mr. Michaels.
STATEMENT OF DAVID MICHAELS
Mr. Michaels. Chairman Jordan, Ranking Member Kucinich,
members of the subcommittee, thank you for inviting me to
testify about the important work of the Occupational Safety and
Health Administration, and to listen to your suggestions about
how we can improve the approaches we take to fulfill the
important mission given to us by Congress, protecting the lives
and health of American workers.
In the four decades since the OSHA Act was enacted, the
Nation has made dramatic progress in reducing work-related
deaths and injuries. Since 1970, workplace fatalities have been
reduced by more than 65 percent. Reported occupational injury
and illness rates have decreased by over 67 percent since 1973.
But far too many preventable injuries and fatalities
continue to occur.
I am also glad that you chose the important issue of
construction safety. The safety of construction workers is one
of OSHA's top concerns. Construction is among the most
dangerous industries in the country, and construction
inspections comprise 60 percent of OSHA's total inspections.
In 2009, preliminary data from the Bureau of Labor
Statistics indicate that there were 816 fatal, on the job
injuries to construction workers, more than in any other single
industry sector, and nearly one out of every five work-related
deaths.
But we are talking about much more than just statistics
here. We hear about these tragedies almost every day in the
news. Almost every construction worker that dies leaves behind
a family whose lives are devastated. A breadwinner's serious
injury can throw a family permanently out of the middle class.
It is clear that OSHA enforcement and regulations save
lives, that many workers are alive today because of OSHA's
activity. Since its creation 40 years ago, OSHA has relied on
the same basic strategies to ensure the safety of American
workers. For those many employers who want to do the right
thing, we offer compliance assistance and cooperative programs.
For those employers who endanger workers by cutting corners on
safety, we believe in strong enforcement.
The ultimate goal of OSHA's enforcement is deterrence.
Using penalties is one way to change employer behavior, with a
goal of preventing injuries, illnesses and deaths before they
occur. Strong enforcement not only benefits workers, but it
also levels the playing field for the vast majority of
employers who play by the rules and who make the health and
safety of their employees a priority.
Failing to prevent injuries, illnesses and fatalities is a
major burden on the American economy. Every year, the most
disabling injuries cost American employers more than $53
billion, over $1 billion a week in workers compensation costs
alone. Indirect costs to employers, workers and their families
can double these costs.
One of the primary duties that Congress gave OSHA was to
issue standards to protect workers from these costly injuries
and deaths. OSHA goes through an extensive public consultation
process before issuing new standards. We conduct sophisticated
reviews of the economic impact of proposed regulations. We hold
stakeholder meetings and online Webinars. And we listen to the
input of small employers through the Small Business Regulatory
Enforcement Fairness Act, that is SBREFA panels, for major
regulations. We then hold public hearings and we solicit
extensive written comments.
Finally, all of our significant regulatory proposals and
final standards are extensively reviewed by the Office of
Management and Budget. I will go off script here, Mr. Baskin
referred to a tragedy in Iowa in 2006, where a worker was
killed in a crane collapse. At that point, OSHA was working on
a new crane standard, started in 2000. And only last year, in
November 2010, did our new crane standard finally go into
effect after all those multiple opportunities for public input.
We now have a strong crane standard which we know will prevent
deaths like that from occurring.
OSHA is a full Service organization. Our strong compliance
assistance programs operate under the belief that every
employer should have access to the knowledge he or she needs to
provide a safe workplace, and every employee should be award of
their basic rights under the law and the hazards they face. In
addition to the numerous fact sheets, guidance documents and
online tutorials that can be found on OSHA's Web site, our
onsite consultation program provides free workplace safety and
health evaluations and advice to small businesses that cannot
afford to hire their own safety and health experts. This
program is completely separate and independent from OSHA's
enforcement program.
Last year, the consultation program conducted over 30,000
consultation visits, more than 9,000 in small construction
companies. OSHA also has compliance assistance specialists in
every area office.
OSHA's strong commitment to compliance assistance is
evidenced by the President's request in his fiscal year 2011
and fiscal year 2012 budgets to increase funding for this
onsite consultation program.
Finally, I know this committee is interested in why OSHA
has temporarily withdrawn its musculoskeletal disorder column
proposal in order to solicit more comments, and why we withdrew
our proposed noise reinterpretation in order to take a more
comprehensive approach to preventing work-related hearing loss.
In brief, these actions stand as an example of this
administration's willingness to respond to public concern about
our programs.
I will be glad to answer any questions about these actions
or any other OSHA initiatives. Thank you.
[The prepared statement of Mr. Michaels follows:]
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Mr. Jordan. Thank you, Mr. Michaels, and I do want to get
to that in a few minutes here, on the noise regulation.
But let me start with Mr. Peck. Mr. Peck, what percent of
Federal contracts come through your agency? Do you know? And
what is the overall dollar amount that you award in
construction contracts? Do you have that data?
Mr. Peck. I don't have the number or percent of even
construction projects in the Federal Government. I can tell you
in a typical year, major construction, depending on how much
money Congress gives us in our capital program, we are
somewhere between usually a billion and a billion and a half if
you include new construction and major alterations.
Mr. Jordan. Mr. Gordon in his testimony talked about the
flexibility that the FAR rule has and provides for agencies and
how that is implemented. Isn't it true that GSA has decided
that the project labor agreement is an important part of the
consideration in awarding contracts?
Mr. Peck. Well, as I said, we have actually run a pilot
program on 10 of the projects that we had under the Recovery
Act, that were over $25 million. That is 10 out of 57 projects
that were only over $25 million. As I said, we are using them
as a test to see whether and how we should implement PLAs on
our projects. So that is our record to date, sir.
Mr. Jordan. And what have you found?
Mr. Peck. Well, as I said, so far, you have to know that we
don't have, well, the products that we have awarded on, the one
that was awarded the first, is a little over a year under
construction. So we have not completed the project yet. So it
is hard to make a determination there. What we can tell you is
that on all of our PLA bids, we got adequate competition, the
same kind of competition we get on most construction projects.
Mr. Jordan. How do you weight an encouraging of PLAs? How
do you weight that and preference that in the bid process?
Mr. Peck. Again, let me just reiterate, on the 10 projects
that we have done a pilot on, we included as one of the
technical factors in our bid considerations a PLA and a
willingness of a contractor to offer us a contract with a PLA.
And we balance that, we take that as 10 points out a 100 on the
technical factor and balance that----
Mr. Jordan. So 10 percent----
Mr. Peck. No, sir, and balance that against the price that
we are offered. So in essence, we are trying to let the market
tell us how it values the use of a PLA.
Mr. Jordan. I guess I am not following. You are weighting
it 10 percent? It seems to me you are saying, you are weighting
it 10 percent but we are not.
Mr. Peck. That is correct.
Mr. Jordan. Explain that, then. Maybe that is why I am
confused.
Mr. Peck. Someone on the first panel suggested that if
someone bids $100, we are taking 10 percent off the top of that
for a PLA bid. And that is absolutely not true.
Mr. Jordan. Well, then, how is the 10 percent defined?
Mr. Peck. I will tell you. The Government does it on
construction projects. Some time ago we all realized that just
going low bid, while it sounds good, hardly any of us buy
things that way. And the Government, when we used to do what we
called low bid, we would often find ourselves with a low bidder
who couldn't carry out the project for that low bid, and we
ended up often not getting that value. And we would end up
having to take the project to someone else, or they would file
delay----
Mr. Jordan. Well, let me ask it this way, then. Someone who
was not willing to enter into a PLA, how can they make up for
the 10 percent you weight for those who are willing to enter
into a PLA?
Mr. Peck. Well, in fact, on 10 of the pilots that we have
run, of the 10, three came, we have awarded three of them
without PLAs. So it seems quite clear that you can, under our
process, come in with a non-PLA bid and win it.
Mr. Jordan. Well, that brings me to the question I asked
the last panel. According to Mr. Biagas, and I understand there
is a variation in size, and some union contractors are bigger,
and there is a size component when you are doing this
evaluation project this large, I get that. But he indicated 6
percent of construction companies in Virginia are union. And
yet you are telling me 70 percent of the, so 94 percent aren't.
And you are telling me 70 percent of the 10 you have studied
were awarded to the 6 percent out there, is that right?
Mr. Peck. Well, but there is a----
Mr. Jordan. Is that right?
Mr. Peck. No, sir. No, that is not correct. Because we did
not award, awarding a PLA does not mean you are awarding a
contract to a union construction company, to a closed shop
company. We are awarding the PLAs to open----
Mr. Jordan. In the majority of cases, I would assume in
most cases it does, based on Mr. Baskin's testimony in the last
panel.
Mr. Baskin. That is not, well, that is----
Mr. Jordan. He said most of his members won't enter into a
PLA because of what it means for their work force.
Mr. Peck. Well, I couldn't quite tell what he was talking
about. I can just tell you that we have the facts of who we
have awarded to. And in this market----
Mr. Jordan. You just told me that 70 percent were PLA-
awarded projects.
Mr. Peck. Yes, sir, in this market.
Mr. Jordan. OK, so of this 70 percent, how many were union,
how many were non-union? Do you have that fact?
Mr. Peck. I don't, but I can----
Mr. Jordan. That would be helpful based on what you are
telling me.
Mr. Peck. I can tell you, of the two that have been awarded
in this market, they were both to firms that, three, I am
sorry, all three were to firms that are not union contractors.
This area does not have very many closed, if any closed shops,
any more.
Mr. Jordan. Well, we knew that. Mr. Biagas told us that in
the first panel.
Mr. Peck. That is right. So we awarded contracts with PLAs
to non-union contractors. Awarding a PLA does not mean you are
awarding a contract to a union contractor.
Mr. Jordan. Let me ask you one more, and I do want to get
the ranking member, and I apologize. We will give the ranking
member an additional minute as well.
On your list of PLA/non-PLA projects, it identifies the GSA
headquarters building as a no-PLA. Wasn't this originally
awarded as a PLA project?
Mr. Peck. Yes, it was.
Mr. Jordan. And so what happened?
Mr. Peck. Well, as I said, we allow, we ask, we awarded to
the contractor who said he could get a PLA. In the end, after
we awarded, he was not able to reach agreement with the union.
So we issued a notice to proceed without the PLA. I think it
shows our flexibility. We are not hell-bent for----
Mr. Jordan. But it also raises the question, did it
discriminate, because you initially awarded it, and you said he
could be, enter into a PLA agreement, and his competitor
bidding, who is not willing to enter into a PLA agreement,
i.e., a non-union construction firm, did they get prejudiced in
the bid process, because now obviously the one who said he was
going to do it and is not doing it still has the contract? That
is probably an important question that the taxpayers want to
know the answer to.
Mr. Peck. That is a fair question, and I would be happy to
provide for you in the record an analysis of who bid how on
that project. I don't believe in this case you will find that
to be the--I don't think you will find that to be the case in
the instance of our building.
Mr. Jordan. OK, that would be very helpful for the
committee.
The ranking member is recognized.
Mr. Kucinich. Thank you very much, Mr. Chairman.
Listening to Mr. Peck's testimony and your questions, where
it is clear that PLAs are used for jobs that involve unions and
some that are not unions, Linda Figg, who was a witness on the
previous panel, I guess was somehow involved in creating this
beautiful brochure about the new I-35 bridge. And as I asked
her in the questions, she responded that this was a project
labor agreement.
Mr. Peck. Yes.
Mr. Kucinich. I didn't ask her if it was union or not, just
said it was a project labor agreement, she said yes.
So Commissioner Peck, as you know, in awarding a public
contract, it is of the upmost importance that taxpayers are
getting the best value for their investment. In fact, in your
written testimony, you state that in selecting a contractor for
award, GSA uses the best value method of award, which takes
into consideration both cost and technical qualifications.
Can you elaborate on the best value method?
Mr. Peck. Yes, thank you. As I said, it is not a low bid
method, because it allows us to take quality into account. I
always say to people, if cost was the only factor, we would all
be driving Yugos. People take quality into account.
And what this allows us to do is that we have a panel of
Government experts who take a look at the submissions that
contractors make. And they are required to submit such
technical factors as their past performance on Government and
other projects, the key personnel they are putting on a
project, their plan for performance on the project, which as I
said could include a small business plan, and we then decide
who on technical factors is the best.
Then we look at the bids that they have given us, and our
panel makes a decision about whether the, whether, the
technical factors outweigh the dollar bid or vice versa.
Mr. Kucinich. But we have heard witnesses here today say
that PLAs drive up the cost premiums of public projects. And in
your experience, have you seen that PLAs have a significant
impact on the cost premium of a specific project?
Mr. Peck. I can answer this in a, it is a great question.
Mr. Kucinich. Can you give me a yes or no?
Mr. Peck. No, sir. Because that would be, it would be
misleading to give a yes or a no. I hope I will give you a
straight answer. On a number of our projects, we got PLA and
non-PLA bids that were exactly the same. On two of our
projects, we paid more, the bid with the PLA was more than the
bid without. But on at least, but I have, but I say again, some
of the selections are made not just on whether there is a PLA
or not. But as near as we can tell, isolating it, we can tell
on two products, we paid some kind of, we paid more for the
PLA. And our panel decided in essence, or we decided that there
was a value to that.
Mr. Kucinich. What was the value?
Mr. Peck. In both cases, we thought that the PLA itself, on
a project that was a complex, long-term project, and this is
when people usually find PLAs to be of most value, it was worth
spending a little more. It is the reason that you will find----
Mr. Kucinich. That sounds nebulous. Where was the value? Do
you remember?
Mr. Peck. Sure. The value, well, the value of a PLA is
that, particularly where you need highly skilled labor, you
have a steady source of labor. You know----
Mr. Kucinich. OK, that is what I want to get at. Get
specific, OK.
Mr. Peck. And there are, we definitely are trying to
guarantee against work stoppages where there are projects on
which there are lots of different trades involved. Even on
projects, I have to say this, even on projects that don't have
PLAs that you might say are awarded to a non-union contract,
there are trade crafts in which people who work for the non-
union contractor are members of unions. And so it is useful on
a lot of projects to have an agreement with all the labor
unions about how they are going to coordinate vacation time,
hours, overtime, all those sorts of issues. And on those
projects, as I said, we found that there was value.
Mr. Kucinich. I want to go over one other point here, Mr.
Chairman. Mr. Peck, some of the witnesses on the first panel
expressed concern that the use of PLAs inhibits members of the
construction industry from competing for Government contracting
opportunities. Now, in your written testimony, Mr. Peck, you
state ``By using our optional bidding process, GSA does not
discriminate against contractors. GSA awards to contractors who
work with labor organizations, as well as contractors who work
without such organizations.''
Have you found that PLAs limit competition for Government
contracts?
Mr. Peck. Not that we have seen.
Mr. Kucinich. Can you elaborate on that, how GSA has found
that PLA bidding process has not hindered competition?
Mr. Peck. Yes, sir. On the, as I said, on the 10 pilots
projects that we have had, we have gotten between three and
eight bids. And that is about the same number we get typically
on our large construction projects. Because we can't have mom
and pop firms as our general contractors. We certainly have
small firms as subcontractors to those. But that is about the
competition that we typically get on our construction projects.
Mr. Kucinich. Thank you, Mr. Chairman.
Mr. Jordan. I Thank the ranking member.
We recognize the gentlelady from New York, Ms. Buerkle.
Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our
members of the panel this afternoon. Thanks for bearing with us
through the vote.
Mr. Peck, my first question goes to you, and it is a
followup to the chairman's question. You mentioned in your
opening statement that some contracts are awarded to union
shops and some are not. Now, just to clarify, if my question is
the same as the chairman's, can you give us a number as to how
many go to a union shop and how many go to a non-union shop?
Mr. Peck. Again, of the 10 projects that we have awarded,
is that what you are talking about?
Ms. Buerkle. Overall.
Mr. Peck. That is a number I will have to provide you for
the record. But as the committee has noted, the vast majority
of major, of general contractors in this country are not union
shops.
Ms. Buerkle. The next question is to Mr. Michaels, and
welcome. I must say, as I interview and talk to a lot of the
small businesses and businesses in my district, OSHA tends to
be one of the impediments and one of the obstacles that they
are always trying to get around. So I hope that we can flesh
out some of the issues today. We would like to make you more
user friendly for our business people. Because they are the job
creators, and that is what this committee is about.
You mentioned in your opening statement about compliance
and the compliance assistance that OSHA offers to businesses.
Now, my understanding is that OSHA just recently cut the budget
for the voluntary protection program. And it seems to me that
would indicate that you are moving away from compliance and
more to something punitive when it comes to enforcement.
Mr. Michaels. That is actually not true. There was a
proposal to do that. But the current administration proposal is
to maintain the VPP at the same funding levels. And I have made
a commitment to the program, in fact, I think if you look at my
particular record, I have a real commitment to the program. I
ran that VPP program when I was at the Energy Department some
years ago. So I am doing what I can to make sure that program
thrives.
But beyond VPP, because a relatively small number of
companies, and very few small companies, we are trying to push
those, the basic concepts that the VPP has embraced, down to
all employers, especially the small employers. So we have
tremendous amount of compliance assistance materials, we have a
Web site that gets 183 million hits a year. We have information
for employers. And we have this program that we fund through
the States, an onsite free consultation program. We find that
many small employers don't know about it. So for example, in
New York State, it is run by the New York State labor
department, but it is independent from OSHA, we just fund it.
So we really like to encourage Members, when they hear from
their constituents, to say, have you looked at this program to
get some free help, so you can essentially have your hazards
abated before OSHA comes in, or before someone is hurt.
Ms. Buerkle. Thank you.
Mr. Peck, my last question is for you in the time that I
have left. Has GSA ever conducted a study that looks at these
PLA agreements and determines the impact, whether it is price-
wise or any other wise, in the benefit or the not so good PLA
contracting?
Mr. Peck. Ms. Buerkle, we have not conducted a study of
their effectiveness throughout the course of a construction
project, because these are new to us. We have just begun
awarding them. We are tracking the projects as they go forward
to completion. They take a couple of years to complete. At the
end of that, we hope to have some good data on whether they
provided us the benefits that we thought they would.
Ms. Buerkle. So there was never a study done specifically
on the Lafayette Federal Building, or the Department of
Homeland Security at St. Elizabeth's campus in Washington?
Mr. Peck. No, ma'am, I am sorry. We conducted a study, we
began a study in 2009, I believe it was, to see, that looked
forward to complying with the Executive order before the FAR
was done. We started to look, market by market, at the pilot
areas that we were looking at. For example, we were doing a
project in Cleveland, we were doing a project in Denver. And we
did have a contractor look at those labor markets to see if
they could come up with a formula that would tell us how we
could, on a project by project basis, evaluate the PLAs.
Ms. Buerkle. First of all, if you could provide that study
to the committee, I would appreciate that.
Mr. Peck. We will do that.
Ms. Buerkle. But beyond that, can you just disclose what
the findings of that study showed?
Mr. Peck. On all the projects?
Ms. Buerkle. On those two that I cited.
Mr. Peck. It was Lafayette and?
Ms. Buerkle. It was Lafayette and Department of Homeland
Security at St. Elizabeth's campus.
Mr. Peck. I do not recall on the St. Elizabeth's campus, so
I will provide that for the record.
On Lafayette, the study, which, well, we didn't quite
complete, did question whether a PLA would be valuable on that
project.
Ms. Buerkle. Very good, thank you so much.
Mr. Peck. Yes, ma'am.
Mr. Jordan. The gentleman from Pennsylvania, Mr. Kelly.
Mr. Kelly. Thank you, Mr. Chairman.
My question goes to Dr. Michaels. I am in a private
business, so I have dealt for years with OSHA. I was a little
bit confused. In your written testimony, there is a statement
in there that the fines have not been increased since 1990. Is
that----
Mr. Michaels. Yes. Congress limited our fines. The maximum
level for a fine, for a serious violation, is $7,000. We have
some discretion within that $7,000 to reduce the level of the
fine, which we do on the basis of being a small employer,
history of lack or presence of OSHA violations, and good faith.
But that $7,000 maximum is not inflation-adjusted and hasn't
been changed in almost 20 years, actually in 20 years.
Mr. Kelly. So the figure that I was looking at, the average
OSHA fine for a serious violation in 2010 was only around
$1,000?
Mr. Michaels. That is correct. I know, it is shocking,
isn't it. I sign letters for a fatality investigation where the
fine is $2,400. In fact, the average fine last year, in 2010,
for a fatality, for a violation in connection to a fatality,
was $4,000. It is quite small.
Mr. Kelly. I am trying to understand, though, who defines
what is serious and not serious?
Mr. Michaels. Serious, we have an extensive field
operations manual. Serious is that the hazard could result in
death or serious bodily harm. So certain violations are not
serious, and if a serious violation where someone could be
killed or hurt could get up to a $7,000 fine. Although it is
very rare that we for any violation issue a $7,000 fine.
Mr. Kelly. So part of the determination, did I hear you
say, the history of the company, its safety record, and the
size?
Mr. Michaels. We always discount for a small employer, yes.
Mr. Kelly. And the other thing, if I heard you correctly,
did you tell me that the voluntary protection program is still
in effect, and is not going to be cut?
Mr. Michaels. It hasn't, in our fiscal year 2010 budget, it
is protected. We are now in the continuing resolution, where we
continue at our 2010 levels. In the President's 2012 proposed
budget, it is maintained at that level as well. And we actually
asked for an increase in the funds for consultation for small
employers.
Mr. Kelly. OK, well, I hope you continue that. Being a
small employer myself, it is nice to be involved. I don't think
there is anybody out there who runs a business who thinks, you
know what? I am going to operate unsafely and maybe make a
couple extra dollars but put my people at risk. I don't know of
anybody in business who does that. I have worked for years with
OSHA on a lot of different things. While we may not think it is
burdensome and over-regulating, I have to tell you, from the
guy that has to write the check, sometimes it makes no sense to
me.
I have a body shop. OSHA came in, and made me put a railing
around the top of the paint room. And my question was, how in
the world would anybody even get up there? And they said, that
is not the problem. There is enough space between the top of
your paint room and the ceiling that somebody could get up
there and possibly fall.
So I think the intention of all this is to do a good job.
It is the unintended consequences of some of this. And
depending on who it is that comes to your store, they don't all
look through the same lens as maybe you think they do. I
appreciate your being here today and thank you.
I yield back my time, Mr. Chairman.
Mr. Jordan. I thank the gentleman from Pennsylvania.
We will now go to the ranking member, the gentleman from
Maryland, Mr. Cummings.
Mr. Cummings. Thank you very much, Mr. Chairman. I
appreciate your calling this hearing today, and part of the
title of the hearing, as we were understanding it, was to
address the OSHA standards.
On the first panel, we had an industry representatives,
some of which the on the record identified OSHA standards as
being impediments to job creation and business. But a little
bit earlier, Ms. Speier submitted for the record a letter from
a woman named Tammy Miser. I would like to use my time to make
sure that her voice is heard.
I would like to read excerpts from a statement submitted by
her, Ms. Miser of Kentucky, who lost her brother in a factory
explosion. I just want to read this because it is very
chilling, particularly with the gentleman just talking about
OSHA.
It says, ``My brother, Shawn Boone, worked at the Hayes
Lemmertz plant in Huntington, Indiana, where they made aluminum
wheels. The plant had a history of fires, but workers were told
not to call the fire department. My brother and a couple of co-
workers went in to relight a chip melt furnace. They decided to
stick around a few minutes to make sure everything was OK, and
then went back to gather tools. Shawn's back was toward the
furnace when the first explosion occurred. Someone said that
Shawn got up and started walking toward the doors when there
was a second and more intense blast. The heat from the blast
was hot enough to melt copper piping.
Shawn did not die instantly. He lay on the floor smoldering
while the aluminum dust continued to burn through his flesh and
muscle tissue. The breaths that he took burned his internal
organs and the blast took his eyesight. Shawn was still
conscious and asking for help when the ambulance took him away.
We drove 5 hours to Indiana, wondering if it really was Shawn,
hoping and praying that it wasn't. This still brings about
guilt, because I would not wish this feeling on anyone. We
arrived only to be told that Shawn was being kept alive for us.
The onsite pastor stopped us and told us to prepare ourselves,
adding that he had not seen anything like this since the war.
The doctors refused to treat Shawn, saying even if they took
his limbs, his internal organs were burned beyond repair. This
was apparent by the black sludge they were pumping from his
body.
I went into the burn unit to see my brother. Maybe someone
who didn't know Shawn wouldn't have recognized him. But he was
still my brother. You can't spend a lifetime with someone and
not know who they are. Shawn's face had been cleaned up. It was
very swollen and splitting, but he was still my Bub. My family
immediately started talking about taking Shawn off the life
support. If we did all agree, I would be ultimately giving up
on Shawn. I would have taken his last breath, even if there was
no hope and we weren't to blame. I still had to make that
decision, to watch them stop the machines and watch my brother
die before my eyes.
But we did take him off, and we did stay to see his last
breath. The two things I remember most are Shawn's last words.
I'm in a world of hurt, he said, and then he took his last
breath.
The U.S. Chemical Safety and Hazard Investigation Board
said that the explosion that killed Shawn probably originated
in a dust collector that was not adequately vented or cleaned.
The dust collector was also too close to the aluminum scrap
processing area. Hayes Lemmertz management allowed dust to
accumulate when overhead beams and structures, which caused a
second, more massive explosion. The CSB concluded that had the
company adhered to the National Fire Protection Association
standard for combustible metal dust, the explosion would have
been minimized or prevented altogether. The CSB warned OSHA in
2006 about combustible dust hazards. Had the National Fire
Protection Association standard been implemented as a mandatory
regulation instead of a voluntary consensus code, my brother
Shawn and many others would still be here today.''
A one-sided look at the cost of OSHA rules but excluding
the benefits does a disservice to workers, responsible
employers and families and communities. Mr. Michaels, do you
think that we can have a productive discussion today about the
impact of OSHA regulations without involving people like Tammy?
Mr. Michaels. I think it is very important to hear from
people like Tammy Miser and the families of workers who have
been hurt. Every day, OSHA saves lives. There was just an OSHA
inspector in Ohio last week, 2 weeks ago, Rick Burns, who went
out to, who was called and he was told, there is someone doing
a trench job, down in a different town. He went out there and
saw a man in the trench, the trench was 10 feet deep. He said,
you had better get out of that trench immediately. The man got
out. Five minutes later, that trench collapsed. If he hadn't
been there, that man would be dead.
But we don't hear from his family. We unfortunately hear
from the people who had employers who didn't follow OSHA
standards. And there are far too many of those. So what we are
trying to do is make sure that we can get out there, we can
have stronger standards to ensure that more people like Tammy
don't have to----
Mr. Jordan. Mr. Michaels, was this terrible accident,
tragedy, was it a result of not having the right standards in
place, or the company not following the standard that was in
place?
Mr. Michaels. Well, in that case, I don't know the specific
stuff, but most dust explosions, and there have been some
terrible dust explosions recently, a well-known one in Imperial
Sugar down in Georgia killed several workers, there was one
recently in West Virginia, or Virginia. Two different things.
Generally, the violation of numerous OSHA housekeeping
standards. What OSHA is now doing is try to essentially put out
standards that makes much more clear what they have to do. But
in that case, it is very well known what can be done. In those
cases----
Mr. Jordan. Again, it wasn't a failure to have a regulation
in place that is going to help the safety. It was a failure of
someone not to follow that. So it wasn't deciding that we need
more regulation.
Mr. Michaels. Well, OSHA----
Mr. Jordan. Yes or no?
Mr. Michaels. We do need more regulation, because it is
clearer to employers what they can do. But the obligation
under----
Mr. Jordan. Well, let me be clear. Are you saying we need
clarification or we need more regulation?
Mr. Michaels. You need more regulation.
Mr. Jordan. Really?
Mr. Michaels. Yes. You need clarity. It has to be very,
employers say, well, what should we do?
Mr. Jordan. You are saying both things. You are saying
clarity, you are saying more regulation.
Mr. Michaels. Well, the regulations give you clarity.
Without a regulation, the OSHA law says an employer has the
obligation to provide a workplace free of Recognized serious
hazards. But then they say, what is----
Mr. Jordan. Well, let me ask you this, with the indulgence
of the committee, and we can go a second round quickly with
everyone if we would like. Let's go to the rule. I talked to
you before we started today's hearing, or the second half of
today's hearing, the decision that OSHA made relative to the
noise regulation, walk me through the process there.
Mr. Michaels. Sure.
Mr. Jordan. Let me back up 1 second and preface it by
saying that we heard from manufacturers, I have been in their
plants. We heard from an individual in my home county, and she
runs a very successful business. I have been there, you put the
ear protection in, everything, but now she is talking about,
they were going to have to have guards up and barriers up and
everything else. This is according to a constituent of ours. So
walk me through it.
Mr. Michaels. Well, that is an interesting example, because
that is not actually a change in the regulation. We have a
noise standard that says, anything above 90 decibels you
actually have to use engineering controls. We know that ear
muffs and ear plugs don't always work. But for the last 20 or
so years, we have said to employers, we are not going to
enforce our standards. We are going to essentially allow you to
use, instead of engineering controls, you can use ear muffs.
But we know ear muffs don't work well enough. There are
20,000 to 25,000 new cases of hearing loss reported every year,
and that is a vast underestimate. We know that most
construction workers develop hearing loss by the time they are
retired from work. It is very clear. And we want construction
workers, we want all workers to be able to hear their
grandchildren, when they are old enough to have grandchildren.
So we have to do something. What we did was we said we are
going to enforce our noise standard like we enforce every other
standard. We proposed that. And we heard from many constituents
like yours. So we said, OK, that is clearly going to be more
than we expected. We need to step back and think about other
ways. Because in the last 20 years, there were a huge number of
new technologies. There are a lot of very inexpensive things
employers can do to reduce noise. We are going to work with
them, work with the National Institute for Occupational Safety
and Health to get more compliance materials out. Because we
really do want to reduce noise exposure. But we recognize now
is not the time to change our enforcement rules.
Mr. Jordan. Does the ranking member wish additional time
for questions? You are welcome to, because I think Ms. Buerkle
does.
Mr. Kucinich. Actually, if it please the chair, I do have a
followup with Dr. Michaels. Would that be OK?
Mr. Jordan. Certainly.
Mr. Kucinich. Dr. Michaels, I want to go back to the
testimony of Tammy Miser that was discussed earlier. Through
testimony, Ms. Miser illustrates that OSHA regulations not only
save lives, but they save businesses, too. She gives the
example of the 2009 ConAgra plant explosion in North Carolina.
The explosion occurred because a contractor was purging natural
gas into the indoor work environment. There is currently, as
you know, no OSHA regulation for natural gas purging. Three
workers were killed, 71 workers were injured.
Now, before the explosion, 700 people worked at the
factory. Today the factor is shutting down, 700 lost jobs
because of a workplace disaster. Seven hundred people would be
working, and three families who would not have been torn apart,
had there been more regulation.
Now Ms. Miser also gives the sample of the 2007 explosion
of a Jacksonville, Florida gasoline additive factory. The
explosion killed 4, injured 32 including 28 at surrounding
businesses. Pieces of the building were found a mile away.
A subsequent investigation revealed that the explosion
could have been prevented if OSHA's process safety management
standard covered reactive hazards. So three businesses that
were adjacent to the factory were forced to relocate, a fourth
was forced to completely shut down.
We talk about lives that would have been saved and jobs
that would have been preserved had there been regulation. Dr.
Michaels, do you agree with Ms. Miser that OSHA regulations not
only can save lives but also can save businesses as well?
Mr. Michaels. Yes, I do.
Mr. Kucinich. I know that you touched on this in your
written testimony, but would you elaborate, when you look back,
do you see a history of OSHA regulations being overly
burdensome to industry?
Mr. Michaels. There have been studies on this. The Office
of Technology Assessment was a branch of Congress that actually
studied eight OSHA regulations in 1995. The study is very
valid, there have been very few OSHA regulations since then.
They went back and they looked and they found for the most
part, there was one exception that was questionable, but the
other seven, the companies were able to meet those regulations
without hurting their own profitability, without hurting their
productivity. And in fact, there are some very clear examples
where the OSHA regulations which were opposed by industry ended
up saving jobs and saving money.
The best example is vinyl chloride. Vinyl is a product,
widely used. In 1974, it was discovered to be a carcinogen.
OSHA said, we have to essentially protect workers from those
exposures. Industry said more than a million jobs would be
lost. But OSHA went ahead, they issued a standard saying they
essentially had to fully control exposure in these major
facilities.
The industry very quickly figured out how to do that. Not a
single job was lost, as far as I can tell. The headlines in the
business papers were, vinyl industry celebrates in triumph,
they were able to enclose the materials, save money and move
forward.
So we always hear, and it is understandable, every industry
says, it is going to cost us too much money, because they don't
try. So we want to work with industry to try, to say, we can
save you money, we can save jobs. Look at the Clean Energy
explosion, last Super Bowl Sunday, which killed six workers,
injured 50. It destroyed a billion dollar natural gas power
plant that has to be rebuilt from scratch.
Mr. Kucinich. I thank the gentleman.
Mr. Jordan. Let me just ask the gentleman, you said earlier
when I was questioning that you think we need more regulation.
Mr. Michaels. There are areas that we don't have regulation
that we need regulation on.
Mr. Jordan. So the gentleman's testimony is, you think we
need more regulation.
Mr. Michaels. Yes.
Mr. Jordan. And you would also argue, I understand the
example you talked about, where science had discovered that
this element, then OSHA rules put forward and actually was
helpful and beneficial. But you also would, I assume, say that
there is a compliance cost for business owners relative to
regulation?
Mr. Michaels. Yes.
Mr. Jordan. OK. Need more regulation, there is a compliance
cost.
Mr. Michaels. Yes. And we have to balance those out,
obviously. We have to think about both of those things.
Mr. Jordan. The gentlelady from New York.
Ms. Buerkle. Thank you, Mr. Chairman.
I think that the goal here for this hearing today is
really, we want a win-win situation, where we have safety in
the workplace and we don't deter economic growth and hurt job
creation. I want to just go back to a statement you just made,
because I want to make sure I heard it correctly. In 1995, you
said a study was done on seven regulations?
Mr. Michaels. I believe it was eight.
Ms. Buerkle. Eight, OK. And did you say there haven't been
many more regulations added to that?
Mr. Michaels. There have been very few major regulations in
the last 15 years that OSHA has put out. It takes OSHA a long
time to put out a regulation. There were a number of years in
the George W. Bush administration where OSHA really had no
interest in putting out any regulations. So the only health
standard that OSHA put out during that period was on another
carcinogen, hexavalent chromium, that the Federal court said,
you must put it out.
So it is hard to look at new regulations, because there
haven't been new regulations to look at. We have issued a new
standard on cranes, that is our first big one, and we have a
couple more important ones coming out.
Mr. Buerkle. Thank you, Dr. Michaels.
I want to just talk to you a little bit about this I2P2
regulation that you are proposing. If you could just briefly
explain what that regulation will entail.
Mr. Michaels. This is a very different sort of regulation
where OSHA has a regulation about cranes, it is about how to
operate your crane or what to do about fall protection. This is
telling employers, we don't want to tell you how to do it, but
we want you to think about your hazards and address them. Mr.
Biagas was on the first panel here. His Web site talks about
how my company, it says, Bay Electric develops a detailed and
specific safety plan for each project we perform. We expect
that of all employers, to figure out what your hazards are. If
it is not a serious hazard, then do whatever is appropriate.
But if you have a serious hazard, then you have to address it.
So this approach, which is actually what VPP is,
essentially says, you have to think about your hazards in a
systematic way. Now, we are very early in the process. We are
still considering it, we haven't started the Small Business
Regulatory Enforcement Fairness Act process. So there will be
lots of opportunity for people to have input and talk to us
about it. But we think this will be more effective than trying
to do standards on every specific hazard. Because we can't have
a standard on every hazard. There are so many different things
out there.
So this is telling employers, you figure it out. We trust
you, you know more about it than anybody else. But you have to
figure it out, you have to think about it. And we hope you will
support that and ask us more about it later on.
Ms. Buerkle. When we see it, we will consider it.
With I2P2, what are the penalties that you are talking
about for a violation of that?
Mr. Michaels. We haven't gotten anywhere near that yet. We
are so early in the process. I know that one thing that
industry is concerned about is sort of the double penalty. We
want to make sure, we are not trying to make this an onerous
requirement. We want to work with employers to make sure they
see the purpose of this and they see it is really separate.
We still have all of our rules that issue penalties for
violations of different standards, or just not providing a safe
workplace. This really is very different.
Ms. Buerkle. So what are the employers hearing or seeing,
if this is so new in development, what are they hearing or
seeing that they are concerned about a double penalty?
Mr. Michaels. Well, frankly, it is hard for me to tell. I
know that a couple of big trade organizations that oppose
everything OSHA ever does, they came out and they opposed it.
But I think that is to raise money from their constituents.
Because I hear from employers every day who say, this is
obvious, of course, we do this every day. Every employer does
this, and we will support you.
So we will have to see. Obviously some are concerned. But I
think some just like to raise red flags. We are asking them to
work with us, bring your concerns to us, don't announce you are
opposed to it before you even see it. Because that is what I am
hearing, that there are some people who are saying, well, we
are opposed to it. I don't think that is right.
Ms. Buerkle. And with this I2P2 regulation, do you think
that is going to take us away from the compliance assistance
and more to the punitive? Or do you think it is going to be
more user friendly?
Mr. Michaels. We do both. That is the thing. For employers
who want to do the right thing, who want to do this, we will
give them all the help we can. But there are always going to be
some who don't. We are going to do both. It is not one or the
other.
Ms. Buerkle. How do you know what is right, though? Some of
these, like what we heard earlier, these are subjective,
subjective criteria that when you have someone going into the
work site, he may have a different standard or a different
vision than you have. How are we going to ensure a fair and
equitable distribution of these regulations?
Mr. Michaels. Are you asking specifically about I2P2 or the
general balance?
Ms. Buerkle. I2P2 is what we are talking about.
Mr. Michaels. Well, California has had an I2P2 standard for
almost 20 years. And employers there are very comfortable with
it. We actually are having conversations with stakeholders
around the country. We have had five big meetings. But also
talking directly to the OSHA offices in California, saying, how
do you do this, how do you make sure you have that right
balance.
Ms. Buerkle. But again, I will just go back to my concern,
and that would be a fair application of the law, and the
interpretation of the law.
Mr. Michaels. I certainly appreciate that.
Mr. Jordan. The gentleman from Maryland.
Mr. Cummings. I would certainly agree with the gentlelady.
I think a fair application of the law is so very important. And
I will tell my story until I die. As a young boy in high
school, working at Bethlehem Steel. And after you would blow
your nose, after being on the property for an hour, when you
blew your nose, the mucus was black. A lot of the men who
worked with me died early. I just worked there for a summer.
Some of them worked there for years. And they would breathe it
in and breathe it out, breathe in, and I am sure their lungs
got covered with that stuff.
So I think, and I was just wondering, Mr. Michaels, how
important is enforcement with regard to OSHA regulations? And
are inspections a part of that process?
Mr. Michaels. Our basic view of this is, we have to, it is
deterrence. We have to do everything we can to make sure
employers do the right thing. The law is about employers, they
have to apply the right standards, they have to protect
workers. So we do enforcement, and when we do enforcement and
it is a significant case, we also try to publicize it and we
try to reach out to the industry and say, look, you can do the
right thing, you can get the compliance assistance program. But
at the same time, if we go there and we find a hazard, we are
going to give you a fine. And in many cases, we are going to
put it in a press release so people so it. So we know that we
want to do everything we can to encourage the right behavior.
We are a small agency, so we do as much enforcement as we
can. We have about 2,200 inspectors for the whole country, to
cover 130 million workplaces, 7 million workplaces, 130 million
workers.
Mr. Cummings. How many inspectors do you have?
Mr. Michaels. Right now, about 2,200.
Mr. Cummings. With the budget cuts, how many will you have?
Do you know?
Mr. Michaels. The budget cuts will take us down, in terms
of the number of inspectors, to the number of inspectors we had
in the 1970's, with a work force that is pretty much twice as
big. If those cuts go through permanently. If the cuts go
through in the short run, if the CR is passed immediately, we
would probably have to lay off or furlough almost all the
enforcement personnel we have, because the cuts are really
focused on our enforcement program. And it so late in the year,
that a 20 percent cut on the agency, focused on enforcement,
will have a very, very big impact.
Mr. Cummings. So we don't have to do away with the
regulations, we just stop people, we just fire people or
furlough them, and they won't be able to do their job, is that
right?
Mr. Michaels. That is right.
Mr. Cummings. One of the most interesting articles I have
ever read was by Ezra Klein, it says how House GOP spending
cuts would add up to more spending later. Basically it is a
very interesting article, because what he talks about is March
14th of this year. He talks about how we are doing all this
cutting, cutting, cutting. But it is an issue of whether you
are doing a lot of damage in the process. And what you are
talking about there, if this Congress continues to cut, cut,
cut all of our enforcement people and our inspectors, you don't
have to worry about the regulations, because you take the guts
out of the regulations by doing that. Am I right?
Mr. Michaels. That is right. We know, the thing that drives
compliance assistance, the reason employers go and get the free
consultation, a big reason is they fear an OSHA inspection.
That is reality. It is unfortunate. A lot will do it because
they want to do the right thing. But they also think, well, I
had better do this, because I don't want to get a fine. So if
our inspections disappear, it would have a big impact. I don't
think people would use compliance assistance much, either,
frankly.
Mr. Cummings. There is another thing that kind of bothered
me about this whole idea of costs, regulations that might cost
jobs, job-killing regulations or whatever you call it. And this
is my statement, this is not you, this is me. Nothing
guarantees that even if they got rid of the regulations and
even if they saved the money that would relate to more jobs. It
might just, you don't have to comment on this, it might just be
more profit.
And so I just think, I just hope that we keep sight of
this. This OSHA thing, the reason why I cited my example is
because I will never forget how those older men at Bethlehem
Steel would beg me to stay in school. Although they were making
a lot of money, they said, stay in school. You know why?
Because they knew that I would die early, like they would.
I yield back.
Mr. Jordan. Mr. Michaels, would you agree that the vast
majority of employers care deeply about the well-being of their
employees?
Mr. Michaels. I think so. I don't have evidence, but that
is my feeling as well.
Mr. Jordan. Particularly in the high tech world we live in
today, where there is so much investment in their employees,
they put so much money at stake, and they want their employees
there, because that is what keeps their business profitable in
this high tech international marketplace we are in. I would
venture to say the vast, vast majority of employers care deeply
about their employees.
Mr. Michaels. I would like to agree with you.
Mr. Jordan. Well, let me ask you this. Do you think you
care more about their employees than the employer who employs
them? Is that what you are insinuating?
Mr. Michaels. I am not suggesting that at all.
Mr. Jordan. Do you think a bureaucrat in the Federal
Government cares more about the employees at Mike Kelly's
business than he does?
Mr. Michaels. I would never suggest that.
Mr. Jordan. Well, that is what you were saying when I
asked, do you think the vast majority of employers do not care
passionately and deeply about the well-being of their
employees. I just think that is the norm.
Mr. Michaels. Well, I think you are right.
Mr. Jordan. Well, why did you say that when I asked you the
question?
Mr. Michaels. I think I did say that.
Mr. Jordan. I don't think you did. You said, I would like
to think that.
Mr. Michaels. No, I said I think that, excuse me. But I
think it is also clear that we see employers who, with----
Mr. Jordan. And you have also said you think we need more
regulation.
Mr. Michaels. Yes.
Mr. Jordan. You have also admitted that there is a
compliance cost with that regulation. And if you remember the
first panel that was in front of the full committee that
Chairman Issa had, he had witnesses, he had small business
owners here. And the question was asked by a freshman member,
if you knew then what you know now, would you have started your
business, relative to regulation. Do you know what the answer
was from most of those witnesses?
Mr. Michaels. No, I don't.
Mr. Jordan. They said, no, they would not have started
their business. If they knew then all the regulations, all the
things they were going to have to deal with with government,
they would not have started their business. These are
profitable businesses, employing lots of people. One was from
our district. I know how big of an influence he is in this
community that he comes from.
So that is what we are also trying to get at.
Mr. Michaels. I think what we said before is we are looking
for the right balance between enforcement, because we have to
be cognizant of the fact that if we are not there, and OSHA,
the employer says, well, this time, that man who is going on
the scaffold today, he doesn't have the time, I am going to
tell him to skip the safety harness and that scoffold goes
down. Instead of the photograph in the newspaper of the worker
just hanging there being saved, he is on the ground dead. We
see it too often. So we need that balance.
Mr. Jordan. I want to thank the witnesses.
Mr. Kelly wanted additional time. Then we will stop here
after this. I apologize for going so long.
Mr. Kelly. Thank you, Mr. Chairman. I have to tell you, I
think all of us are trying to do the right thing. The question
becomes, then, how do you get to the right thing. And I have to
tell you, I am a private business person. I understand how
difficult it is. I have friends that work at Armco Steel, I
have friends that worked at Pullman Standard. I have people
that work in my shop.
You know the biggest problem employers have is workers that
won't use the safety. When I go out in the shop, my guys are
supposed to wear a hard hat when they have a car up in the air.
They are supposed to wear goggles when they have a car up in
the air. They are supposed to wear goggles when they use a
grinding wheel.
What people are supposed to do, whether there is a
regulation or not, is kind of secondary. I know this is purely
anecdotal, but everything in these hearings is anecdotal.
Because we all know a guy who knows a guy who knew a guy. But
the question of the hearings were, at some point, is the cost
of regulation reaching a level where we can't legislate
complete safety? It is just impossible, because people's nature
is to take the easy way out of everything. I am talking about
people that work in the job. I have friends that are hurt every
day in the steel mills because they don't follow the safety
standards.
So are we going to get to a regulation where we have to
have somebody who walks with these guys to make sure they do
the right thing all the time? And I think the question becomes
where is the end game with regulation? Because you say we need
more regulations. The chairman says, are you talking about more
regulations or more clear regulations. And I ask you this. Is
there any penalty put on a worker, other than by his employer,
not to follow safety standards by OSHA?
Mr. Michaels. No. The OSHA Act is written only giving OSHA
authority to do something about the employers.
Mr. Kelly. Right. That is my point. Because you cannot
legislate people using common sense. Don't I wish. Don't I
wish. It is like a dog chasing its tail. We keep coming up with
new regulations every day to protect people from doing dumb
things that they do themselves. I wish there were an answer to
all this. I do appreciate your coming here today. But I have to
tell you, from a guy who has lived it, who has paid more in
training and equipment, and I see the same things being done by
the same people who just got hurt the week before and say, what
are you thinking about.
So I am not putting down what you do, by gosh, we all want
everybody to come to work and get through the day healthy and
go back home. I want to see everybody get to be a grandfather.
I am a grandfather. I also want to see my business survive, and
I don't want it to get to the point where I am regulated out of
business because of something that I can't possibly watch 24
hours a day. It just is impossible.
Thank you.
Mr. Kelly. The vice chairman has asked for 15 seconds, then
we will adjourn.
Ms. Buerkle. Thank you, Mr. Chairman.
I just wanted to comment, Dr. Michaels, when you were
talking about businesses fearing an OSHA inspection. I think
that is what we are troubled with. OSHA should be working with
businesses so we all get to that win-win where we have a safe
workplace and we keep jobs and the economy going.
Thank you.
Mr. Jordan. Again, let me thank our witnesses. We
appreciate it. Mr. Gordon, we didn't get you many questions
today, but thank you nonetheless for your testimony and for
spending time with us this afternoon. We are adjourned.
[Whereupon, at 5:12 p.m., the committee was adjourned.]
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