    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

       H.R. 735, AND PROJECT LABOR AGREEMENTS, RESTORING COMPETITION AND
                     NEUTRALITY TO GOVERNMENT CONSTRUCTION

    =======================================================================

                                    HEARING

                                   before the

                    SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
                    POLICY, INTERGOVERNMENTAL RELATIONS AND
                               PROCUREMENT REFORM

                                     of the

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    H.R. 735

    TO PRESERVE OPEN COMPETITION AND FEDERAL GOVERNMENT NEUTRALITY TOWARDS
     THE LABOR RELATIONS OF FEDERAL GOVERNMENT CONTRACTORS ON FEDERAL AND
                     FEDERALLY FUNDED CONSTRUCTION PROJECTS

                                   __________

                                  JUNE 3, 2011

                                   __________

                               Serial No. 112-60

                                   __________

    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

                      U.S. GOVERNMENT PRINTING OFFICE
    70-822                    WASHINGTON : 2011
    -----------------------------------------------------------------------
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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 Technology, Information Policy, Intergovernmental
                        Relations and Procurement Reform

                       JAMES LANKFORD, Oklahoma, Chairman
    MIKE KELLY, Pennsylvania, Vice       GERALD E. CONNOLLY, Virginia,
        Chairman                             Ranking Minority Member
    JASON CHAFFETZ, Utah                 CHRISTOPHER S. MURPHY, Connecticut
    TIM WALBERG, Michigan                STEPHEN F. LYNCH, Massachusetts
    RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
    PATRICK MEEHAN, Pennsylvania
    BLAKE FARENTHOLD, Texas

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on June 3, 2011.....................................     1
    Text of H.R. 735.................................................     3
    Statement of:
        Baskin, Maurice, counsel, Associated Builders and
          Contractors, Inc.; David Tuerk, professor and chairman,
          Suffolk University and Beacon Hill Institute; Kirby Wu,
          president, Wu & Associates; and Mike Kennedy, counsel, the
          Associated General Contractors of America..................    53
            Baskin, Maurice..........................................    53
            Kennedy, Mike............................................    85
            Tuerk, David.............................................    59
            Wu, Kirby................................................    75
        Gordon, Daniel, Administrator, Office of Federal Procurement
          Policy, Office of Management and Budget; and Susan Brita,
          Deputy Administrator, General Services Administration......    19
            Brita, Susan.............................................    29
            Gordon, Daniel...........................................    19
        Sullivan, Hon. John, a Representative in Congress from the
          State of Oklahoma..........................................    11
    Letters, statements, etc., submitted for the record by:
        Baskin, Maurice, counsel, Associated Builders and
          Contractors, Inc., prepared statement of...................    55
        Brita, Susan, Deputy Administrator, General Services
          Administration, prepared statement of......................    31
        Cummings, Hon. Elijah E., a Representative in Congress from
          the State of Maryland:
            Letter dated June 3, 2011................................    16
            Prepared statement of Mr. Philips........................    42
        Gordon, Daniel, Administrator, Office of Federal Procurement
          Policy, Office of Management and Budget, prepared statement
          of.........................................................    22
        Kennedy, Mike, counsel, the Associated General Contractors of
          America, prepared statement of.............................    88
        Lankford, Hon. James, a Representative in Congress from the
          State of Oklahoma, letter dated February 25, 2011..........    99
        Tuerk, David, professor and chairman, Suffolk University and
          Beacon Hill Institute, prepared statement of...............    62
        Wu, Kirby, president, Wu & Associates, prepared statement of.    77

       H.R. 735, AND PROJECT LABOR AGREEMENTS, RESTORING COMPETITION AND
                     NEUTRALITY TO GOVERNMENT CONSTRUCTION

                                  ----------

                              FRIDAY, JUNE 3, 2011

                      House of Representatives,
       Subcommittee on Technology, Information Policy,
    Intergovernmental Relations and Procurement Reform,
                  Committee on Oversight and Government Reform,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 9:30 a.m., in
    room 2154, Rayburn House Office Building, Hon. James Lankford
    (chairman of the subcommittee) presiding.
        Present: Representatives Lankford, Kelly, Walberg,
    Labrador, Connolly, and Murphy.
        Staff present: John Cuaderes, deputy staff director;
    Richard Beutel, senior counsel; Christopher Hixon, deputy chief
    counsel, oversight; Robert Borden, general counsel; Jeff
    Solsby, senior communications advisor; Ali Ahmad, deputy press
    secretary; Jeff Wease, deputy CIO; Molly Boyl, parliamentarian;
    Adam Fromm, director of Member liaison and floor operations;
    Ryan Little, manager of floor operations; Cheyenne Steel, press
    assistant; Nadia Zahran, staff assistant; Linda Good, chief
    clerk; Laura Rush, deputy chief clerk; Dave Rapallo, minority
    staff director; Suzanne Sachsman Grooms, minority chief
    counsel; Donald Sherman, minority counsel; Ronald Allen,
    minority staff assistant; Lucinda Lessley, minority policy
    director; Ashley Ettienne, minority director of communications;
    Jennifer Hoffman, minority press secretary; Jaron Bourke,
    minority director of administration; and Carla Hultberg,
    minority chief clerk.
        Mr. Lankford. The committee will come to order. This is a
    hearing on H.R. 735, the Project Labor Agreements Restoring
    Competition Neutrality to Government Construction Projects.
        The Oversight Committee mission statement we read at every
    one of our committee meetings, let me just go ahead and read
    it. We exist to secure two fundamental principles: First,
    Americans have a right to know that the money Washington takes
    from them is well spent; and, second, Americans deserve an
    efficient, effective government that works for them. Our duty
    on the oversight and government reform committee is to protect
    these rights. Our solemn responsibility is to hold government
    accountable to taxpayers because taxpayers have a right to know
    what they get from their government. We work tirelessly in
    partnership with citizen watchdogs to deliver the facts to the
    American people and bring genuine reform to the Federal
    bureaucracy.
        This is the mission of the Oversight and Government Reform
    Committee.
        I have an opening statement. I am going to submit it for
    the record for the sake of our time today. I will also allow
    any Members to have 7 days to submit opening statements and any
    extraneous material for the record.
        [The text of H.R. 735 follows:]

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        [GRAPHIC] [TIFF OMITTED] T0822.008

        Mr. Lankford. We will now recognize our very first panel.
    This is the Honorable John Sullivan, who represents Oklahoma's
    First District. He is up the turnpike from me personally. He
    introduced H.R. 735, the Government Neutrality and Contracting
    Act in February of this year. I am glad to have you,
    Congressman Sullivan. Thanks for taking time out of your
    schedule to get a chance to do a statement for us today. You
    are given and yielded 5 minutes.

     STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN CONGRESS
                       FROM THE STATE OF OKLAHOMA

        Mr. Sullivan. Thank You, Chairman Lankford and Ranking
    Member Connolly, members of the subcommittee. Thank you for
    holding this hearing today.
        Every day of this Congress has brought us face-to-face with
    tough decisions on spending cuts, cost-saving proposals,
    policies that encourage job creation and ways to preserve the
    American Dream for our posterity. It is clear now, more than
    ever, that each fiscal decision that Congress makes has an
    impact on the sustainability of America's prosperity.
        I bring to your attention today H.R. 735, the Government
    Neutrality and Contract Act, which will save jobs, create jobs,
    and prevent the waste of taxpayer dollars on Federal and
    federally assisted construction projects by reestablishing fair
    and open competition.
        To begin, a project labor agreement is a contract that
    typically forces contractors and subcontractors to agree to
    recognize unions as the representatives of their employees on
    that job in order to win a construction contract. PLAs
    typically force contractors to use the union hiring hall and
    pay fringe benefits into union-managed benefit and pension
    benefit programs. PLAs also contain clauses that force
    contractors and employees to obey the restrictive and
    inefficient work rules and job classifications common in union
    and collective bargaining agreements but absent in the standard
    operation of open shop contractors.
        While it is technically true that any contractor is welcome
    to compete on or for projects that require a government-
    mandated PLA, both general contractors and subcontractors must
    agree to the terms and conditions of a PLA in order to win a
    contract. The practical effect of these agreements is to
    discourage competition from contractors opposed to the terms of
    the PLA.
        In 2001, President George Bush issued Executive Order 13202
    and 13208 to maintain government neutrality in Federal
    contracting. These Executive orders prohibited the government
    from requiring contractors to adhere to PLAs as a condition of
    winning Federal or federally funded construction contracts.
    Because President Bush's Executive order was about maintaining
    neutrality, a contractor could also voluntarily enter into a
    PLA if they felt it could make their business competitive and
    deliver the best product to the government. However, in 2009,
    President Obama issued Executive Order 13502, encouraging
    Federal agencies to require union-favoring PLAs on Federal
    construction projects exceeding $25 million in total costs.
    While President Obama's Executive order does not mandate PLAs
    on all Federal construction contracts, it does nothing to
    preserve the neutrality that government should maintain.
    Rather, it exposes Federal procurement officials to intense
    political pressure from special interest groups, politicians,
    and political appointees to require PLAs.
        As I and other panelists place the facts before you, you
    will see how this dangerous path--this is a dangerous path.
    Government-mandated PLAs are not only discriminatory, but they
    are also hurtful to a struggling industry that is already
    facing unemployment above 17 percent. For example, yesterday
    The Wall Street Journal reported on a $70 million highway
    construction contract in New York funded at least 80 percent by
    the Federal Highway Administration that has been scrutinized
    for the decision to subject it to a PLA. While 27 percent of
    New York's private construction work force is unionized, that
    means that the employers of 73 percent of New York's
    construction work force who have been facing steep jobs losses
    over the past few years are discouraged from bidding on this
    project. Unfortunately, limiting competition comes at taxpayer
    expense. The article mentions that the PLA cost taxpayers an
    additional $4\1/2\ million because the lowest responsible
    bidder, a merit shop contractor, was thrown off the project in
    favor of a union contractor because the merit shop contractor
    would not sign a PLA.
        Executive Order 13502 states its purpose is to promote
    efficiency. However, there is little evidence to suggest PLAs
    promote efficiency in Federal contributing. There were no
    examples of inefficiencies during the Bush years when PLA
    mandates were restricted. I am aware of anecdotal evidence on
    recent Federal construction projects demonstrating an increase
    in the construction costs that may not provide corresponding
    benefits to taxpayers or construction owners. For instance, the
    U.S. General Service Administration renovation project of
    Lafayette Federal Building in Washington, DC, was awarded to a
    Federal contractor without a PLA at a $52.3 million cost.
        However, after the contractor agreed to a PLA for the
    project by the GSA, the contractor added $3.3 million to the
    cost of the project. The added $3.3 million isn't the result of
    increased material costs, revised blueprints, or a more
    aggressive completion deadline. The contract was awarded to the
    same contractor with the same proposal. And the only difference
    was the PLA. There are just two examples--these are just two
    examples, but there is no doubt that there are many more
    stories reflecting the true colors of government-mandated PLAs.
        When mandated by public officials, these agreements
    unfairly discourage competition from 87 percent of the entire
    U.S. private construction work force, effectually raise the
    employment rate of the industry, cost the government billions
    more in construction costs, and do nothing to increase the
    efficiency of Federal construction projects.
        There is a solution. H.R. 735, the Government Neutrality in
    Contracting Act, will prohibit executive agencies and
    recipients of Federal funds from requiring contractors to agree
    to PLAs as a condition of winning a Federal construction
    contract. Contractors are free to enter into PLAs if they want
    to, but the government is removed from that decisionmaking
    process. If enacted, this bill guarantees that all qualified
    contractors and their skilled work forces, regardless of labor
    affiliation, can compete on a level playing field. This expands
    job opportunities, reduces the costs of government, and
    prevents discrimination based on labor affiliation. All told,
    H.R. 735 will ensure that taxpayers get the best possible
    product at the best possible price.
        Once again, thank you, Chairman Lankford, for all you are
    doing. Thank you, Ranking Member Connolly, and all the members
    of the subcommittee. Thank you very much. I appreciate this
    opportunity to address your committee.
        Mr. Lankford. Thank you, Congressman Sullivan, for taking
    time out of your schedule today to come over and testify.
        Mr. Lankford. Many of you may or may not know that we have
    a vote that is coming very soon, and there is already debate on
    the floor, which was originally unscheduled during this time
    period. So I appreciate you coming over.
        We will take a short recess to allow the clerks to set up
    for the second panel real quick and look forward to get a
    chance to introduce our second witnesses. Thank you.
        [Recess.]
        Mr. Lankford. We will now welcome our second panel. The
    Honorable Daniel Gordon is the administrator for the Federal
    Procurement Policy, the Office and Management and Budget. Very
    grateful to have you here, Mr. Gordon.
        For clarification of everyone that is here, Mr. Gordon and
    I talked 3 days ago actually about his schedule today; that he
    has to get away for a flight by 11. At that time I told him we
    don't have votes scheduled so we should be just fine. Now we
    have votes scheduled this morning. So when votes interrupt us,
    I still will allow Mr. Gordon to catch that flight and get out
    of here. So we are in an accelerated process to get you to that
    quickly.
        Ms. Susan Brita is the Deputy Administrator of the General
    Services Administration.
        Pursuant to the committee rules, all witnesses are sworn in
    before they testify. So if you would please stand and raise
    your right hands.
        [Witnesses sworn.]
        Mr. Lankford. Let the record reflect the witnesses all
    answered in the affirmative.
        Mr. Cummings. Mr. Chairman, I have a parliamentary inquiry.
        Mr. Lankford. Absolutely, sir.
        Mr. Cummings. Mr. Chairman, I, too, want to see Mr. Gordon
    get out of here on time--and I know you will. But my staff has
    informed me that you, Chairman Issa, and other chairmen of this
    committee have adopted a new policy for minority witnesses.
    This policy appears to contradict the rules and the precedent
    of our committee. We received word of this new policy for the
    first time from Chairman Issa's staff in an e-mail on May 25th.
    And here is are what it said: If there is an administration
    witness, then that witness is designated minority witness. It
    is up to the chairman to accept an additional witness, but that
    witness must be recommended within a 24-hour period.
        In other words, if you invite someone from the
    administration, that witness is somehow designated as our
    witness, although we didn't ask for him.
        For this hearing we did not request an administrative
    witness. You did. We requested Dr. Peter Phillips, an expert in
    economics of the construction industry, but you refused to
    allow him to testify. The reason your staff gave was Chairman
    Issa's new policy. They said we couldn't have our witness
    because you already invited administrative witnesses.
        Here's my inquiry. Has the subcommittee or the full
    committee formally adopted this policy?
        Mr. Lankford. That we will have to determine. I will have
    to get with Chairman Issa and get a chance to talk about that
    specifically. Part of the issue is well--and I had this
    conversation with Ranking Member Connolly. Obviously, we have
    seven people on this panel already as well, two of those being
    administration officials. And I recommended to him at that time
    that the minority witness submit something at length for the
    record so we get a chance to include that as well.
        Mr. Cummings. Well, the only reason I am asking is because
    I think it sets a dangerous precedent, because quite often, we
    are opposed to what the administration is doing. And so for
    people to be designated our witnesses, it just creates a major
    problem. So I just wanted to know that. We just wanted to know,
    on what basis did you deny Ranking Member Connolly's request to
    invite Dr. Phillips to today's hearing. What was the basis of
    that?
        Mr. Lankford. The basis was obviously we had seven people
    already, and two of those being administration officials that
    we thought would be very supportive and clear to articulate
    that position as well.
        Mr. Cummings. Second parliamentary inquiry. Mr. Chairman,
    this new policy is not only unfair and unprecedented, but it
    directly contradicts the rules of the House and the rules of
    our committee. Committee rule No. 2 provides for ``Witnesses
    from the minority may request''--and it says not the majority--
    the minority--``The same is true in the rules of the House.''
        Mr. Chairman, it is on obvious point but you can't just
    invite people to testify and claim that we invited them. Can
    you show the Members any basis in the rules for this new
    misguided policy?
        Mr. Lankford. Why don't we get a chance to go through this
    in the following days and I will followup and show a previous
    record of how this committee has been handled in the past and
    we will be able to direct that and be able to determine if this
    is consistent with previous actions of the committee.
        Mr. Cummings. Just one other thing. I just want to make it
    clear, because this is a very dangerous precedent and no
    previous chairman has ever designated who the minority
    witnesses would be, regardless of whether they are
    administrative officials or anyone else. Chairman Issa's new
    policy is an extreme edict, and I am aware of no other House or
    Senate committee with a similar policy. This policy also
    undermines the integrity of our committee by impairing the
    ability of minority Members to bring balance and additional
    perspectives to these proceedings. And I ask that you state
    here to our Members that you categorically reject this policy
    immediately.
        Will you do that, Mr. Chairman?
        Mr. Lankford. I will not. I want to able to look at the
    full record of the history of this committee and be able to
    determine that. I understand what you're saying, but I want to
    be able to walk through the history of this committee as well.
        Mr. Cummings. I understand. Mr. Chairman, I have a motion.
    Today, I join all the ranking members of this committee in
    sending a letter to Chairman Issa formally objecting to this
    new policy and calling on him to abandon it. Here's what the
    letter says: Apart from these specific objections, we are
    concerned about the direction of your overall approach. Rather
    than increasing bipartisan cooperation, as you pledged to do
    many times, you have adopted this new policy without
    identifying any legitimate basis or need for it.
        This leads to the unfortunate conclusion that you are more
    interested in holding hearings to advance your own personal
    political agenda rather than objectively gather facts from a
    variety of sources to improve public policy.
        Mr. Chairman, I ask unanimous consent that this letter be
    entered into the record.
        Mr. Lankford. Without objection.
        Mr. Cummings. Thank you.
        [The information referred to follows:]

        [GRAPHIC] [TIFF OMITTED] T0822.009

        [GRAPHIC] [TIFF OMITTED] T0822.010

        [GRAPHIC] [TIFF OMITTED] T0822.011

        Mr. Connolly. Mr. Chairman.
        Mr. Lankford. By the way, we are very limited in the time
    that we have. If this is a conversation that we can have after
    Mr. Gordon has already testified, it would allow him to be able
    to slip out and be able to hear our witnesses.
        Mr. Connolly. I understand. As the ranking member of the
    subcommittee, I have a further parliamentary inquiry following
    up on Mr. Cummings' inquiry. Was the chairman suggesting that
    he believes there is precedent for the majority dictating to
    the minority who their witnesses would be at a hearing?
        Mr. Lankford. What the chairman is stating is I want to
    walk back through the history of this and be able to discover
    that clearly and so we can all walk through it together and see
    area by area as we've gone back through history to be able to
    determine that together.
        Mr. Connolly. Would the chairman acknowledge that he was
    given verbal objection by this ranking member to this
    proceeding?
        Mr. Lankford. Yes. We discussed that actually prior to your
    arrival.
        Mr. Connolly. I know that since our witnesses are going to
    be under oath, they will testify that I have had no
    communication. The ranking member on the minority of this
    subcommittee did not request Mr. Gordon or Ms. Brita as
    witnesses. Would the chairman be aware of that?
        Mr. Lankford. I would not be. Would you suggest that they
    would not be good witnesses to be able to speak to this issue?
        Mr. Connolly. No. I would suggest they were not my choice,
    and that the minority has a right under the rules of the House
    and the rules of this committee to choose its own witnesses.
    And this hearing is in violation of those rules. And I want to
    protest that publicly.
        I want the administration witnesses to understand that they
    are being used. And I want that on the record.
        Mr. Lankford. Without objection.
        Mr. Gordon, we would very much be greatful to receive your
    testimony for 5 minutes.

     STATEMENTS OF DANIEL GORDON, ADMINISTRATOR, OFFICE OF FEDERAL
    PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET; AND SUSAN
      BRITA, DEPUTY ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION

                        STATEMENT OF DAN GORDON

        Mr. Gordon. Thank you. I will speak briefly, Mr. Chairman.
        Chairman Lankford, Ranking Member Connolly, members of the
    subcommittee, I appreciate the opportunity to appear before you
    today to discuss issues related to the use of project labor
    agreements in Federal construction contracts. As the chairman
    noted, we talked earlier this week. I do have, unfortunately, a
    very firm travel commitment. I will have to leave at 11 this
    morning. I am very appreciative of the chairman's and the
    subcommittee's understanding in this regard.
        As an administrator for Federal procurement, I am
    responsible for overseeing the development of governmentwide
    contracting rules and policies and ensuring that those rules
    and policies promote economy and efficiency in government
    contracting. This morning I am going to very briefly describe
    the steps that my office has taken to shape the Federal
    acquisition regulation, the FAR rule, that implements executive
    order 13502, which governs the use of PLAs in Federal
    construction contracts.
        Let me first address a possible misperception about what
    the FAR rule says about the use of PLAs. The FAR rule does not
    mandate 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
    promote economy and efficiency in that 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
    FAR. 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 in addition to price. The FAR doesn't dictate
    to our acquisition professionals what choices to make, but it
    gives them the tools to make the choices to tailor a
    procurement to the individual agency's specific requirement.
    That toolkit 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 we spend, whether we are buying lawn
    mowing services for a national park or war planes for the Air
    Force. And our approach to PLAs is no different.
        We have structured the FAR rule to create a process were
    decisions are made on a case-by-case basis. The FAR rules set
    out factors that agencies may decide to consider, but it does
    not dictate those factors or prohibit agencies from considering
    other factors. As with other FAR rules, though, the PLA rule
    sets boundaries. Most significantly, the agency can 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.
        Equally important with respect to the content of any PLA
    created pursuant to the FAR rule, the rule requires that the
    PLA allow all firms to compete for contracts and subcontracts
    without regard to whether they are otherwise parties to
    collective bargaining agreements. That mandate ensures that if
    a agency decides to use a PLA, it is done in a way consistent
    with the principle of open competition, a bedrock of our
    Federal procurement system.
        We appreciate that taxpayers would not benefit from a rule
    that mandated the use of PLAs even if they didn't make sense
    and didn't serve economy and efficiency. However, similarly,
    taxpayers would not benefit from a rule 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, our office, the Office of Federal
    Procurement Policy, intends to work with agencies to facilitate
    the sharing of experiences and best practices for the
    consideration and appropriate use of project labor agreements
    in the Federal marketplace.
        I am very happy to answer any questions when we come to
    question time.
        Thank you, Mr. Chairman.
        Mr. Lankford. Thank you, Mr. Gordon.
        [The prepared statement of Mr. Gordon follows:]

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        [GRAPHIC] [TIFF OMITTED] T0822.018

        Mr. Lankford. Ms. Brita, I would be pleased to be able to
    receive your testimony for 5 minutes.

                        STATEMENT OF SUSAN BRITA

        Ms. Brita. Good morning, Chairman Lankford and Ranking
    Member Connolly, and other members of the subcommittee. Thank
    you for inviting me here today to discuss GSA's measured
    business approach to the implementation of project labor
    agreements in our construction contracts. A PLA is a proven
    tool to help provide structure and stability to any project,
    especially on large, complex projects. The private sector uses
    PLAs for a variety of construction projects similar to those
    that GSA manages. PLAs are also used at the State and local
    levels for an 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 stoppage, increased labor
    availability, and project-specific coordination on work rules.
    PLAs can also include provisions that promote career
    development through valuable job training for construction
    workers.
        GSA only use 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. The
    Executive order does not mandate the agencies, but encourages
    the consideration of PLAs. Our procurement process provides for
    the consideration of PLAs. GSA allows a contractor to submit a
    proposal with a PLA, without a PLA, or you can submit both. We
    evaluate these proposals on a project-by-project basis. If GSA
    accepts 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 a labor organization rather than between GSA and
    a labor organization. For our major construction projects, GSA
    typically selects the proposal representing best value for the
    government by weighing a number of technical factors against
    cost. Our PLA recently has been included as one of these
    technical factors. Proposals with the PLA receive 10 percent of
    the total possible points for evaluation. We award to
    contractors who work with labor organizations as well as
    contractors who do not.
        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 we use principally to help
    modernize and green our federally owned inventory, provided GSA
    the opportunity to conduct a PLA pilot program. By this pilot
    program, GSA selected 10 projects with budgets of over a $100
    million. The selected projects covered seven States and the
    District of Columbia. Of these 10 projects, seven ended up with
    PLAs and three did not. From our comparisons, in most instances
    there has been no to little difference cost difference.
        Our experience in this pilot program has shown us that our
    bidding process has not hindered competition. In all of our
    projects, we receive sufficient bids to ensure adequate
    competition and best value for the American taxpayer. We
    typically receive between three and eight offers for these
    projects. Through the construction of these projects, GSA plans
    to assess the use of PLAs for future implementation of best
    practices and update our policies. This pilot program has
    enabled GSA to obtain real market data regarding the impact of
    PLAs on competition.
        GSA has recently reached out to contractors and union
    officials to hear their feedback on our pilot projects in order
    to develop ways to further improve the PLA procurement process.
    As real estate experts, GSA ensures that we are procuring
    construction goods and services at best value for the American
    government on behalf of the American taxpayer. The
    consideration of PLAs is encouraged because of the benefits
    associated with them. PLAs can provide wage stability for
    workers, establish mechanisms for resolving labor disputes and
    reduce the risk of work strikes and lockouts to ensure projects
    continue on schedule.
        In awarding construction contracts, GSA considers a variety
    of technical factors, including potential benefits of PLA and
    weighs them against cost to help determine the winning
    proposal. By leveraging our experience and expertise, GSA
    ensures high design and construction excellence at best value
    for the American taxpayer.
        Thank you, Chairman Lankford, and I am here to answer any
    questions you may have.
        [The prepared statement of Ms. Brita follows:]

        [GRAPHIC] [TIFF OMITTED] T0822.019

        [GRAPHIC] [TIFF OMITTED] T0822.020

        [GRAPHIC] [TIFF OMITTED] T0822.021

        Mr. Lankford. Thank you, Ms. Brita. I now yield myself 5
    minutes for initial questioning.
        Mr. Gordon, as I am going through this issue, when a PLA
    agreement is made, does that change the collective bargaining
    rights typical for a union when they are coming in? Do they
    have to set aside some of those rights to enter into a PLA
    agreement?
        Mr. Gordon. Mr. Chairman, unfortunately, I'm not a labor
    lawyer. I'm a procurement guy. And I'm not sure what the impact
    would be on individual collective bargaining agreements.
        Mr. Lankford. When this was made, the shift that occurred
    in the Executive order, was that because PLAs were being
    excluded? There was an Executive order done 2 years ago that
    you said didn't elevate the PLAs, but it encouraged the use of
    PLAs on it. Was that because PLAs were more efficient but they
    weren't being selected? I'm trying to figure out the reason
    that the Executive order is needed. If already PLAs are
    allowed, if already that is in the process, and what we are
    talking about today does not exclude PLAs, and say, No, they
    can't be used, what was the need for the Executive order and
    how is that bearing out?
        Mr. Gordon. Thank you, Mr. Chairman. Under the prior
    administration, the government was prohibited from requiring
    the use of PLAs on Federal construction projects. It is true
    that individual contractors could voluntarily use one. But what
    we have seen is that in both the private sector and in State
    and local governments there are situations where PLAs are
    viewed as helpful. And our view was that same tool should be
    available to the Federal Government just as it is available,
    for example, to Toyota when Toyota used project labor
    agreements and as the Department of Energy has required use of
    project labor agreements for many decades. We wanted that to be
    possible for the entire Federal Government. We weren't
    encouraging their use. We were encouraging agencies to consider
    whether they should be required.
        Mr. Lankford. Is there increased points that are given in
    the benefits for use of a PLA?
        Mr. Gordon. I'm not sure what you mean by increased points.
        Mr. Lankford. In the scoring in trying to determine the
    benefit of how to select what contractor, are there increased
    points that are given if they use a PLA?
        Mr. Gordon. We have given agencies considerable flexibility
    in deciding how to implement the FAR rule. What you heard from
    Ms. Brita was that at GSA, a small percentage of points, it is
    really only on the technical side that you can get 10 percent
    extra points. But technical is only one factor. There is also
    past performance and price. Other agencies aren't taking that
    approach.
        Mr. Lankford. The reason for that would be--the 10 extra
    points was because they saw increased efficiency and such, or
    what was the reason forgiving the extra points for that?
        Mr. Gordon. It would be better to ask Ms. Brita.
        Mr. Lankford. Let me shift.
        Ms. Brita, what was the reason for the extra points on
    that?
        Ms. Brita. GSA chose to enter into the 10 percent
    preference. As you know, the Executive order encourages
    agencies to consider. We are in the construction business and
    always looking for ways to increase competition and obviously
    make things more efficient. In the application of the Executive
    order, we chose to use the 10 percent point system to meet that
    encouragement; to encourage people to participate and get
    involved.
        Mr. Lankford. When you mention the pilot program, is that
    the Rider Levett Bucknall report? When you were talking about
    the pilot program earlier that did the study on PLAs, is that
    the report you're referring to, the company that did the
    report?
        Ms. Brita. The pilot program I'm talking about is the 10
    projects that we identified that we were going to run the PLA
    against and see how the 10 projects stack up. The report is a
    different effort.
        Mr. Lankford. That report, though, you're familiar with
    that report?
        Ms. Brita. I am fairly familiar with it.
        Mr. Lankford. The report I have, I have a draft copy of it,
    the last revision of that looks like it was January 27, 2010.
    Our staff has been trying to request this report, obviously,
    because it is good that you all have done a study. It is the
    right thing to be able to do on it. We've been trying to get a
    copy. We were finally able to get a copy at actually 6 p.m.
    last night. The last draft was actually done January 27, 2010.
        I would like to ask unanimous consent that we submit this
    report for the record.
        So agreed.
        Mr. Lankford. In this report, there are several statements
    that come out on it in the executive summary even at the
    beginning of it, it talks to these different cities and these
    different locations and, for instance, in Cleveland there is a
    0.1 percent marginal benefit to PLA; a 0.6 percent benefit in
    Honolulu; a 0.3 benefit in San Francisco. But then it walks
    through other cities in the PLA studies and saying in other
    cities, Portland, OR; Nogales, AZ; Denver, CO; Washington, DC,
    all had increased costs by using PLAs--some of them as high as
    12 percent more expensive. So it is not 0.12 but 12 percent on
    the other side. 5.8 more expensive in Colorado. And then there
    is a risk in using PLAs excludes small and minority businesses
    and may exclude capable merit shop contractors and other
    factors related to this.
        This was a very interesting report to go through last
    night. My question is: This has been out here for a year and a
    half and it is still in draft form. At what point is this in
    its final form and will actually be released to everyone?
        Ms. Brita. Chairman Lankford, the agency made a decision
    that we would suspend further work on that report and really
    work toward applying forces market forces----
        Mr. Lankford. Is that because of the findings of this
    report? This report does not support what you're saying on the
    pilot program. This report is fairly discouraging of PLAs. It
    does find like 0.3 percent benefit in certain cities. But it's
    very discouraging on the whole of using PLAs.
        Ms. Brita. Well, the report is a draft and it is not final.
        Mr. Lankford. But it has been draft for a year and a half.
    How long does it take to finish a report that's inconsistent
    with the government policy?
        Ms. Brita. Well, we decided to suspend action on that
    report and move toward the consideration--letting the
    marketplace determine, with the applicability of PLAs, rather
    than rely on a report.
        Mr. Lankford. So the report wasn't consistent with the
    policy, and so the report is set aside. And we've suspended the
    report because the policy was inconsistent with it. I'm trying
    to figure out the why. Was it sloppily done? The findings
    weren't consistent with other reports that were done. Why was
    this suspended?
        Ms. Brita. The report was suspended because we wanted to
    get real market data quickly. And we were moving through our
    recovery projects. So we felt that it would be a better use of
    our time and quite frankly, more efficient to try to get real
    market data quickly by encouraging the use of PLAs in this
    collection of project. These projects were chosen because we
    felt they had large cities, small cities, they were major
    construction. So we thought that would be a better way to
    gather data quickly, quite frankly, than wait for the report.
    So we suspended work on the report and went to the actual
    application of the PLAs in some of our projects.
        Mr. Lankford. I've exceeded my time. I apologize for that.
    I would like to yield to Mr. Connolly, the ranking member.
        Mr. Connolly. Thank you, Mr. Chairman. Ms. Brita, by the
    way, I recognize that accent. Boston?
        Ms. Brita. Yes, sir.
        Mr. Connolly. Where?
        Ms. Brita. Boston, Hyde Park.
        Mr. Connolly. My family lives in West Roxbury. I can talk
    that way if I have to.
        While I've got you, Ms. Brita, who invited you to come to
    this hearing?
        Ms. Brita. The chairman did.
        Mr. Connolly. Did you hear anything from my office or me?
        Ms. Brita. I did not.
        Mr. Connolly. So you were not invited by the minority?
        Ms. Brita. No, sir.
        Mr. Connolly. You don't consider yourself a minority
    witness, therefore.
        Ms. Brita. I received a letter from the chairman and I had
    a conversation with his chief counsel.
        Mr. Connolly. Mr. Gordon, same question. Who invited you
    here?
        Mr. Gordon. Same answer, sir.
        Mr. Connolly. So you did not hear from me or from my
    office?
        Mr. Gordon. We had, as far as I know, no contact with your
    office at all.
        Mr. Connolly. So as far as you know, you were not invited
    here by the minority.
        Mr. Gordon. That's right, sir.
        Mr. Connolly. Let me just say again, sadly, you're both
    being used, in violation of House rule 11 clause 2(j)(1), which
    states explicitly: ``The minority members of the committee
    shall be entitled, upon request, to the chair by a majority of
    them before the completion of the hearing to call witnesses
    selected by the minority to testify with respect to that
    measure or matter.''
        To my knowledge, it's never been customary in the House or
    the Senate for the majority to determine who the minority
    witnesses are, let alone to determine on their behalf, by the
    way, because the administration happens to be of the same
    party, therefore you are our witnesses. I want you to both know
    that at least this ranking member, and perhaps I will be joined
    by the ranking member of the full committee, I'm going to
    advise the administration to decline all requests by the
    majority to testify before this subcommittee and the full
    committee until this matter is resolved. Because for you to
    testify is to be unwittingly complicit in the violation of
    House rules and the committee rules and to tread on the rights
    of the minority. And so I hope you both will take that back to
    your respective agencies.
        I am going to be talking to the White House and to the
    administration government relations officials. And I would hope
    that the administration would cooperate with us in a policy of
    noncooperation until this matter is cleared up. But the
    minority has rights. And if the majority wishes to actually
    join on this issue and dare to tell us who our witnesses will
    be and to designate administration witnesses as our witnesses
    against our wishes, then we are going to advise that
    administration to not cooperate with the Members of the
    majority until our rights are recognized and respected.
        With that, I yield to the my the ranking minority member of
    the full committee.
        Mr. Cummings. I thank the gentleman for yielding. I want to
    associate myself with every syllable of the words of Mr.
    Connolly.
        Administrator Gordon and Deputy Administrator Brita, I
    appreciate your testimony and views you have provided today. As
    I stated at the start of the hearing, it is critical that this
    committee conduct fair and responsible oversight. That is why I
    am particularly disappointed that Chairman Lankford decided to
    deny the minority's request for witness, Dr. Peter Phillips,
    Chair of the Economics Department at the university of Utah,
    citing a misguided and unprecedented committee policy.
        If Dr. Phillips had been allowed to testify in person
    today, I would have asked him to discuss the credibility of the
    2009 study by the Beacon Hill Institute. That study criticizes
    the use of PLAs on Federal construction projects.
        Instead, I directed my staff to put this question to Dr.
    Phillips in writing, and he has graciously responded in
    writing. Had the majority been allowed to bring Dr. Phillips
    forward, he would have told the subcommittee that the Beacon
    Hill Study, ``has not been vetted in any peer-review process
    and would be unlikely to survive a peer review.'' Had Dr.
    Phillips been allowed to present live testimony at this
    hearing, he would have also questioned, using Beacon Hill's
    analysis as a basis for the claim that PLAs raise construction
    costs by reducing competition.
        Dr. Phillips would have noted that ``Beacon Hill's work
    suffers from the basic statistical fallacy of spurious
    correlation.'' And he would go on to say that, Statistically,
    one could easily show that pom-poms stunt teenage growth. All
    you have to do is go to a high school basketball game and put
    all those holding pom-poms on one side of the room and all the
    remaining teenagers, who just happen to be the basketball
    players, on the other. Lo and behold, all those holding pom-
    poms have stunted growth compare to the control group. Now this
    is the witness saying this, Dr. Phillips.
        Similarly, Beacon Hill put all the complex jobs on one side
    and all the simple jobs on the other. Lo and behold, because
    the simple jobs did not have PLAs and most of the complex jobs
    did, PLAs cost more money. This sort of simple-minded
    statistics just does not pass muster.''
        I just ask you, Ms. Brita, you said you all changed course.
    Does that have anything to do with, in other words trying, to
    get a better sample of what you so that you had more accurate
    information?
        Ms. Brita. We wanted a better sample but we also wanted
    information quickly, Mr. Cummings, because we were trying to
    evaluate the value, quite frankly, of PLAs. There's a lot of
    academic literature out there and we wanted some real today
    data. We felt we had an opportunity with our recovery projects
    and the application of PLAs to some of these recovery projects.
    So we put together a list that we thought was a representative
    sample of what GSA does in real-time every day and we ran the
    PLAs against these projects. So it was really an effort to gain
    information quickly and to do an evaluation and to really come
    to some conclusion--more conclusions about what the value of
    PLAs in Federal construction projects as related to GSA.
        Mr. Cummings. Thank you very much, Mr. Chairman.
        Yield back.
        Mr. Lankford. With that, I yield to Mr. Walberg.
        Mr. Walberg. Thank you, Mr. Chairman. In light of the fact
    that we have these witnesses in front of us, I guess we might
    make best use. So thank you for being here.
        Ms. Brita, your list of PLA, non-PLA projects identified
    the GSA headquarters building as a ``no PLA.'' Wasn't that
    awarded originally as a PLA project? And what happened to the
    PLA?
        Ms. Brita. Yes, sir. It was originally awarded as a PLA
    project. The contractor was unable to finalize the arrangements
    with the various labor units and so the contract was amended to
    take the PLA out of the requirements of the contract. The
    arrangement is between the contractor and the various labor
    unions, not GSA, and when the contract was unable to finalize
    those agreements, we just amended the contract and took it out;
    took that requirement out.
        Mr. Walberg. How much time then did the contractor have to
    waste trying to negotiate PLA with unions on this project at
    GSA's intense instance you allowed the project to go forward on
    a non-PLA basis?
        Ms. Brita. Let me just check. About 45 days, Mr. Walberg.
        Mr. Walberg. Forty-five days.
        Ms. Brita. Yes, sir. That is the standard time to negotiate
    these kinds of things after award.
        Mr. Walberg. That is significant, especially when tax
    dollars are being wasted.
        I would, in deference to the chairman of the committee,
    yield back time.
        Mr. Lankford. Thank you, Mr. Walberg. I just have a quick
    question. I would be honored to be able to yield back if you
    would like to have that time as well.
        The Beacon Hill report that was being referenced by Mr.
    Cummings just a moment ago was not the report I was
    referencing, and I hope I didn't allude to a different report.
    It is your report, the GSA report, is the one that I was
    referencing that was done by Rider Levett Bucknall, but is
    actually a GSA-sponsored report and it's GSA details. So I'm
    not familiar with the report that he was mentioning before on
    that.
        So I wanted to be able to clarify that this is a different
    report. This is specifically a GSA-sponsored report that
    outlines that project labor agreements can cause small and
    minority businesses to be excluded, and that it also shows
    significant cost differences in multiple municipalities.
        Now I would be one to say PLAs should be in the toolbox.
    This is not anti-PLA to say they're in the toolbox. We're just
    questioning why there's an encouragement to use them when the
    GSA's own study says it often causes cost increased, based on
    this study.
        Ms. Brita. Mr. Chairman, I will repeat again, the study is
    still in draft form. It's not finalized. It has never been
    formally presented. It hasn't been finalized and we are relying
    on the real-time data to address those very issues about
    whether it is exclusionary, whether it's inclusionary, whether
    we have minority participation, women participation. We
    believed that getting real-time data with contracts that we are
    currently engaged in was a better approach and, quite frankly,
    better use of time because we will get information quicker.
        Mr. Lankford. Do you have any idea what the cost of this
    report is that has been set aside--of forming a report like
    this?
        Ms. Brita. I can get back to you and submit that
    information for the record.
        Mr. Lankford. Thank you. I would much appreciate that, just
    to be able to know if we suspended report because it wasn't
    consistent with the original Executive order to be able to get
    different sets of data on it, I would be interested to know
    what the cost of this report was that does not support the PLAs
    versus the cost of now finding data that does support PLAs on
    it.
        Ms. Brita. I will submit that for the record.
        Mr. Lankford. Thank you. I yield back my time.
        Mr. Walberg.
        Mr. Walberg. Thank you, Mr. Chairman. Let me ask a question
    again, Ms. Brita. Why did the GSA agree to a $3.3 million
    change order in the Lafayette Building in Washington, DC, just
    to implement the PLA?
        Ms. Brita. Mr. Walberg, the project team, led by the
    contract officer, felt that in order--because it was a complex
    project, multi-phased project, expensive, very difficult
    location, that the implementation of a PLA was in the best use
    of the taxpayer dollars. It would keep the project on schedule,
    provide stable labor force, and the decision was made to amend
    the contract to include the PLA.
        Mr. Walberg. Was this the finding in the consultant study
    that you set aside related not only to the GSA headquarters,
    but also to the Lafayette Building?
        Ms. Brita. I'm unfamiliar with the finding, Mr. Walberg. I
    don't understand. Was there a finding in the report?
        Mr. Walberg. It appears that in the study, you examined the
    issues of the Lafayette Building, the GSA headquarters at 1800
    F Street, the projects, and both had PLA implementation at an
    additional cost. And my concern is here this additional cost
    was taxpayer expenditures based upon change of findings and
    seeing that it would cost more. And you're saying it is only as
    a result of the technology, the ability, the complexity of the
    problem?
        Ms. Brita. Yes, I believe that the project team made the
    decision certainly independent of the report. I'm not even sure
    the project team was aware of the report. They made the
    decision because they felt, given the nature of the project--
    and it is a very complex, expensive, multi-phased project--that
    the application of a PLA to this particular project would
    ultimately be in the best interest of the project and serve
    best value for the taxpayer. That was a decision made by the
    project team, led by the contract office.
        Mr. Walberg. I guess I continue to express some of the same
    concern that when we have studies that are showing significant
    problems with PLAs, that we are willing to use the additional
    cost at taxpayers' expense.
        I yield back my time.
        Mr. Lankford. Thank you. I apologize for having some issues
    with the clock. We have reset the clock. That should be about
    5\1/2\ minutes total in that colloquy.
        I recognize Mr. Cummings, the ranking member of the full
    committee.
        Mr. Cummings. Thank you very much. Let me say this to Ms.
    Brita. In my 15, almost 16 years in this Congress, there is one
    agency that I have a tremendous amount of admiration for
    accuracy and doing the job right and doing it independently and
    that is GSA. I don't want any of the employees at GSA looking
    at this and questioning whether we believe in what you do. I
    just want to say that with the strongest words that I can
    muster out of this body. And I want to thank you all for what
    you do every day.
        But I want to go back. I understand what the chairman was
    saying--Chairman Lankford was saying with regard to the Beacon
    Hill report. I know he knows I wasn't trying to imply that.
    This is the very reason why we wanted to have our witness. The
    Beacon Hill report will be discussed extensively within the
    next panel. But we have no way to rebut it because we weren't
    able to call our witness. That is the problem. That is what I
    was trying to get to. So, Mr. Zack, I have to do this. We have
    to do this to try to get our side's opinion in on this hearing.
        Let me go back to regarding H.R. 735, the legislation we
    are considering today. This is what I asked Dr. Phillips; I am
    continuing to ask what he would have testified to. Dr. Phillips
    would have explained with regard to this legislation that we
    just heard about, ``PLAs are precisely the market instrument
    capable of setting and adjusting work rules to the specific
    needs of particular projects. Robbing the government of PLA
    contracts robs the government of the ability to address this
    issue that critics claim is salient.''
        Again, I say to the chairman I am disappointed that we did
    not have the opportunity to hear directly from Dr. Phillips. By
    denying the minority its choice of witnesses you have denied
    the committee, and by that I mean the committee of the whole,
    the balance to conduct meaningful oversight.
        I ask unanimous consent that the letter from Dr. Phillips
    with written responses to my questions be placed in the record.
        Mr. Lankford. Without objection.
        [The information referred to follows:]

        [GRAPHIC] [TIFF OMITTED] T0822.022

        [GRAPHIC] [TIFF OMITTED] T0822.023

        Mr. Cummings. I might also add that I would have preferred
    to have him here so he could put up his hand and swear to tell
    the truth, too. But this is how we have to do it.
        Deputy Administrator Brita, as a branch of government
    responsible for both levying taxes and authorizing how the
    Federal Government spends American tax dollars, it is incumbent
    upon every Member of Congress to ensure that the American
    people get the maximum value for every tax dollar spent. In
    Commissioner Peck's testimony before the OGR Subcommittee on
    regulatory affairs on this same topic in March, he stated that,
    ``GSA only uses PLAs when they promote economy and efficiency
    in Federal procurement: Can you explain the process that GSA
    uses when determining whether or not to use a PLA in a
    construction project?
        Ms. Brita. Yes. Mr. Cummings, when GSA enters into a
    process to acquire a new Federal building, they use a process
    called best value and source selection. And the source
    selection panel is put together that evaluates all proposals,
    generally divided into two sections: The cost piece and a
    technical evaluation piece. The technical evaluation section of
    a proposal has several elements to it--past performance,
    experience, quality of personnel. We've added a PLA. All of
    those are evaluated against cost. First, the technical piece is
    looked at. Every proposal gets a score. Then they match it
    against the cost and they try to determine--the source
    selection panel determines the best value, which is a match of
    cost, plus all the technical qualities that are associated with
    the proposal. That is the process that the agency uses now.
        There is virtually no Federal agency now that goes straight
    to low bid. They have found that is just a waste of taxpayer
    dollars. You're buying junk with taxpayer dollars. You don't
    get best value. You have things that fall apart, whether it's a
    Federal building or an Air Force fighter. You really get what
    you pay for. And we try at the agency, the way we handle our
    procurements now, is to put that panel together, break
    proposals into your technical section and a price section and
    wed the two of them at the end of the evaluation period.
        Mr. Cummings. So does that go to efficiency and
    effectiveness in trying to make sure we get the best value for
    our dollar?
        Ms. Brita. Yes, particularly in real estate. There is an
    old saying in real estate that time wounds all deals. Once you
    start a real estate process, you need to keep it going. Once
    you stall, money, particularly on the part of the developer
    whose borrowed money from a bank, the bank doesn't care. They
    are going to be charging your daily rate on interest on the
    loan that you've incurred to build this project. So it is very
    important that we look for ways to keep projects going. Once
    you make the decision, a lot of work is done prior to actually
    signing that contract. About a third of all the work associated
    with these project is done prior to the contract. We want to
    make sure once it's signed we have a process in place to keep
    that project going forward because it's extremely expensive
    when it stalls.
        And so we are always looking for ways. That is why the PLAs
    are an attractive tool for GSA, because the contractor makes it
    is his responsibility to ensure that the labor is there, to
    make sure that there are no work stoppages, to coordinate--one
    of the big problems is coordinating work schedules; making sure
    that harmonizing the work week--between the various labor
    groups there's a harmonized work week so that everyone is
    working at the same time.
        Mr. Cummings. Ms. Brita, thank you very much. I just want
    you to know that what you just said, the reason for PLAs, seem
    to be pretty consistent with our motto for this committee.
    Every time we meet, the read this: We exist to secure two
    fundamental principles--first, Americans have the right to know
    that the money Washington takes from them is well spent. By the
    way, this is written by Mr. Issa. And second, Americans deserve
    an efficient and effective government that works for them. Our
    duty on the Oversight and Government Reform Committee is to
    protect these rights. I just wanted you know that what you just
    said, the use of PLAs seems to be consistent with the goals of
    this committee. And I want to thank you for your testimony.
        Mr. Lankford. Thank you. I yield 5 minutes to Mr. Kelly.
        Mr. Kelly. Thank you, Mr. Chairman. I would like to thank
    both witnesses for being here. Mr. Gordon, I have been with you
    before, and I appreciate you taking time to be with us. Also
    Ms. Brita. You just said something about real estate. Time
    wounds all deals.
        Ms. Brita. That is a little saying, time wounds all deals.
    When you start a real estate deal, it is very important.
        Mr. Kelly. I understand that. But there is another saying
    that's been out there, and it's: If it ain't broke, don't fix
    it. And I'm trying to understand--and believe me, I'm not
    coming here representing Republicans, and I hope that this
    panel isn't about Republicans versus the Democrats. It's about
    us representing the American people and making sure that as
    stewards of their hard-earned money that we are doing the best
    thing possible.
        I don't see where the PLAs at all fit in. And the troubling
    thing, the RLB report is something that was commissioned by the
    GSA. So I would assume that in your RFP you were very specific
    at to what is that you wanted RLB to find out for you. Having
    come from the private sector, where I have done a lot of RFPs,
    I have to tell you a 10 percent bonus doesn't level the playing
    field. That totally tilts it. As a person who's done many bids,
    to see that in there and say, ``OK. Fine.'' Maybe that would at
    the end of the day make a difference. It's a huge difference.
        I do wonder about these things, just as a representative of
    the taxpayers and the citizens of the United States. Where is
    it that we are going with these programs? I know the President
    came up with this just weeks after being put in office. Is
    there any instance anywhere where there are specific instances
    showing where there are these labor stoppages or abuses or why
    the PLA was installed? I see it as exclusionary. I don't see it
    as increasing the field of bidders. I see it as narrowing it
    down and actually being exclusionary to those 87 percent of
    people who could bid on this project that will not be able to
    do it because they don't back cab union labor. And I have
    nothing against unions, by the way. I represent a lot of union
    people. I have no problem with that. What I have a problem with
    is jobs. And jobs are important to anybody, whether you're a
    union member or you're a private citizen. We've got to get
    people back to work.
        So the PLA and this report is very troublesome to me. It's
    been there for a year and a half. If the RFP was put out by the
    GSA, then your office--maybe not you--your agency--knew exactly
    what it was looking for. It seems to me the information they
    got back is not consistent with what they were looking to find.
    And so if it doesn't match my argument, we'll set it aside and
    say it's irrelevant. You can back-shelf that to say it's still
    in draft form.
        But in a year and a half, I've got to tell you, as an
    automobile dealer, if I had to wait for a year and a half on
    any bid that I put out, I would say the landscape has probably
    changed dramatically in a year and a half. So if you could just
    briefly comment on that, I would appreciate that.
        Ms. Brita. Mr. Kelly, I just wanted to make one point. The
    10 percent is really not a bonus. It's not something that is
    added over and above the 100 points. It is part of the 100
    points.
        Mr. Kelly. Say that again. If you could repeat that.
        Ms. Brita. I think you used the word the 10 percent or the
    10 points is, ``a bonus.'' It's really not in addition to the
    100 points that one would normally----
        Mr. Kelly. Why is it in there?
        Ms. Brita. It's part of the hundred. It's part of the
    technical----
        Mr. Kelly. But it's a 10-point advantage if you----
        Ms. Brita. It's a 10-point preference that the contractor
    can choose to take advantage of or not.
        Mr. Kelly. As a guy that's been out in the real world,
    that's a heavy cover charge. So if that's part of what the
    proposal is, that's not really trying to get to the best price.
    That's changing the scope of who it is that is able to bid.
        Listen, I can tell you--and I mean this sincerely--being in
    the private sector all my life, you set those types of
    parameters, you are setting them to get one type of a bidder to
    get the award. I've watched it happen. I've lost out on too
    many bids where there was exclusionary language in there; and
    it makes it impossible for an independent bidder to sometimes
    get in the door, get their foot in the door. And that's the
    purpose of RFPs. They are supposed to be consistent. This tilts
    it.
        Ms. Brita. Mr. Kelly, one of the reasons that we are doing
    this pilot program is to address those very issues. To date, we
    have not seen a great variance, quite frankly, between those
    that bid and those that don't bit bid when we have the PLA
    involved. But when we finish the report, we will be able to,
    with much more definition, get at those very issues that you
    are talking about. The agency does not believe that PLAs are
    exclusionary. In fact, we think it opens the labor market up
    because it includes union as well as nonunion workers. So we
    take a different--it's a tool that the agency can use and that
    the contractors take advantage of. It's a contractor choice.
        Mr. Kelly. Well, let me ask you this: You say it opens the
    market up. What was excluding the market from being open
    before?
        Ms. Brita. This is just encouraging--nothing was--this just
    makes the process more attractive----
        Mr. Kelly. See, I differ with you there in that. There is
    language set in there that it is exclusionary. That is not
    including a wider universe of bidders. What you are doing is
    you are favoring one bidder over another. Ma'am, please, I have
    done bids all my life. When you put language in a bid that
    gives a 10-point--whether it's out of 100 points or whatever it
    is--advantage, that is exclusionary; and that is discouraging
    all bidders from the entire universe to bid on it. I have been
    involved in it too many times, and I have been excluded because
    I refused to be a partner in that type of thing. So I would
    just suggest to you that while you may be saying that it opens
    the universe to other bidders, it absolutely does not. It is
    exclusionary.
        Mr. Gordon. May I say a couple of words, Mr. Kelly?
        Mr. Kelly. Absolutely.
        Mr. Gordon. We in OMB are watching what agencies are doing.
    We are giving agencies discretion, but we are very sensitive to
    the point you raised. We want to be sure that this is not an
    exclusionary process. We want to be sure that PLAs are viewed
    as only a tool. I think it's noteworthy in the GSA work that
    among the 10, there were instances where the bidder offering a
    PLA won. There were instances where the bidders offering the
    PLAs did not win. This was not tilted one way or another. As I
    understand it--and I don't think the few points--and by the
    way, it's really less than 10, because cost is separate from
    that whole point scheme. I don't think that there are
    instances, at least not many instances, where those few points
    made any difference in who won or who didn't win.
        Mr. Kelly. And I understand where you are coming from. But
    I have to tell you, in the private world, when you are spending
    your own money, that's a huge difference. And only in this time
    do these matters become insignificant. Now you are using the 10
    instances that you looked at. But you refuse to look at the
    report that was drafted a year and a half ago in saying, well,
    there's not enough information in there yet.
        However, we did have 10 other studies that we find really
    don't speak to what it is that we are talking about. And I am
    telling you, as a taxpayer and as a person watching taxpayer
    funds, this is not the right road to go on.
        Mr. Walberg [presiding]. I thank the gentleman. The time
    has expired and I would ask deference from Mr. Gordon and Mr.
    Brita, if you would be able to stay around a little longer. Our
    chairman has left to vote. He will be back to continue the
    hearing. We have 9 seconds to get to our vote right now, and
    then we will come back.
        Mr. Gordon. We will stay until 11 o'clock. Thank you, sir.
        Mr. Walberg. Thank you. We will stand in recess.
        [Recess.]
        Mr. Lankford [presiding]. Thank you for allowing us in the
    quick recess there to be able to go and vote.
        Mr. Gordon, we are going to make your time after all. I
    would like to be able to yield 5 minutes to Mr. Murphy.
        Mr. Murphy. Thank you very much, Mr. Chairman, and I thank
    the witnesses for coming back to join us for just another
    brief--a few brief questions.
        Let me just begin by associating myself with the remarks of
    Ranking Member Connolly on the subcommittee and Ranking Member
    Cummings. I get that this committee has often been used over
    the years to advance the majority party's political purposes
    and their agenda. I think we've gone too far here, I think, in
    violating House rules, in violating basic concepts of fairness,
    across the line. And I think what you have seen across the
    country is an unfortunate willingness on behalf of those who
    would try to use their new-found political power to try to
    undermine organized labor and collective bargaining rights, to
    unfortunately cross that line over again, and over again,
    whether it's in Wisconsin with the collective bargaining law
    that was ruled unconstitutional by the courts, or here today.
        And I hope in the future that, though committee is
    certainly going to be used occasionally to advance the
    political imperatives of the majority party, that the other
    side gets a chance to put their best evidence on.
        Mr. Lankford. Would the gentleman yield?
        Mr. Murphy. I would yield.
        Mr. Lankford. If we are able to provide for the record
    moments in the past when this committee only had administration
    witnesses, when the roles were reversed and the Republicans
    were in the minority and were only allowed administration
    officials under the Bush administration, would that be
    acceptable?
        Mr. Murphy. If you would like to put that on the record?
        Mr. Lankford. We will submit that for the record in the
    days to come. Thank you.
        Mr. Murphy. Let me direct a question to Mr. Gordon. Mr.
    Gordon, in October of last year, myself and dozens of other
    Members of Congress sent a letter to you requesting information
    on the Executive order that we're talking about today. In
    particular, we were interested in some direction that you had
    sent to agencies to report back on how the Executive order had
    been complied with, how many agencies had used PLAs, and to do
    so on a quarterly basis. We sent this letter over in October
    and have not gotten a response since.
        But I would be interested to know from you as to the
    feedback and response you've gotten from agencies in now the
    year or so since the Executive order and then the guidance
    requiring the quarterly reports back was issued.
        Mr. Gordon. Congressman Murphy, thank you for the question.
    I apologize that you haven't yet gotten a response. My
    understanding is the response is close to being on its way to
    you. I will tell you that for the most part, we have seen few
    instances of PLAs being used in construction projects. That is
    consistent with our guidance. What we've said to agencies is,
    you need to do this carefully. You need to be sure that the use
    of a PLA in a particular project and those specific facts will
    serve economy and efficiency.
        It is not unusual in the procurement system, as I'm sure
    you know, that when we have a new tool available--and this is
    essentially a new tool for our contracting officer--it takes a
    while for us to figure out where it makes the most sense, how
    to use it. I think that a cautious, balanced approach makes
    sense.
        The fact is that there are lots of academic studies out
    there. Some indicate that PLAs save you money, some indicate
    that you don't. Part of the beauty of what GSA has done is you
    have real examples, not academic studies, of what's actually
    happened, and I think that's helpful.
        Mr. Murphy. Have you received reports back? You asked for
    data on a quarterly basis. Are you receiving that information
    back?
        Mr. Gordon. We are. And as I said, the numbers of PLAs
    being used is quite low.
        Mr. Murphy. I would appreciate that response as quickly as
    possible. This was from a group of Republicans and Democrats to
    show that there is bipartisan support for the use of PLAs, when
    appropriate. And I think it could be useful for us to have that
    data shared back.
        Mr. Gordon. I will ensure that comes to you expeditiously.
        Mr. Murphy. Let me ask one other question to both of you. I
    think one of the points that will be made likely by the second
    panel is that nonunion contractors are discriminated against
    when a PLA is required. Though they can go out and sign
    collective bargaining agreement after they are assigned the
    award, that puts them at a disadvantage versus contractors who
    are initially union contractors.
        Can you talk about that critique? Again, we won't have the
    opportunity to ask this of any minority witness on the second
    panel, and I imagine it will be one of the primary criticisms
    on the second panel. So I would pose it to both of you as to
    whether or not you have seen a discriminatory nature against
    nonunion contractors when PLAs have been used.
        Mr. Gordon. I could say a few words, and then Ms. Brita is
    welcome to supplement them. As you know, the Federal
    Acquisition Regulation rules says that this is not to be used
    in a discriminatory fashion. We are trying to increase
    competition. I'm confident that we can do this in a way that
    will not discriminate.
        The fact is that even when project labor agreements are
    used, very often the subcontractors, for example, are open
    shops that are not unionized in their work forces, as we noted
    in the preamble to the Federal Register notice in the rule. But
    in any event, if a company--if a company feels that an agency
    is conducting a competition in a way that excludes them and
    makes it impossible for them to compete, they have an avenue
    available. They can file a bid protest and they will get an
    independent review, whether by the Court of Federal Claims or
    GAO, to consider whether in fact they are being excluded or
    unfairly discriminated against in that competition.
        Ms. Brita. Mr. Murphy, in the preliminary data that we
    have, we have not found that there has been any discrimination
    between union and nonunion workers. And that's based on our
    just preliminary--these 10 projects, the handful of projects
    that we are looking at. But the preliminary indications are
    that it's not there.
        Mr. Murphy. Thank you. Thank you, Mr. Chairman.
        Mr. Lankford. Thank you. I yield 5 minutes to Mr. Labrador.
        Mr. Labrador. Mr. Chairman, I yield back.
        Mr. Lankford. Thanks, Mr. Labrador.
        Let me ask you a few questions. Ms. Brita, you referred to
    the new report that you all are doing, you said it is in a
    preliminary form. Is it in a draft form as well right now? Is
    it complete? Is it something that we could have?
        Ms. Brita. Are you talking about the 10 projects?
        Mr. Lankford. Yes, ma'am.
        Ms. Brita. We are looking at these 10 projects
    individually. The individual contracts have been signed by for
    each one of these projects. And I would expect at the end of
    the contract period--because we want to see how this flows out
    over the next 3 years as the contract gets put into place.
        Mr. Lankford. Right. But that report, will that be a
    complete report? It is currently in draft form? There are 10
    isolated pieces.
        Ms. Brita. Right now we are gathering data. I don't know
    whether we'll do a comprehensive report or whether we'll do 10
    individual reports or whether we'll put it all together. But
    we're gathering data and the form that the final sort of
    summary or report, as we call it, will take, but we haven't
    decided how that's going to look. But it will be some sort of
    summary data and evaluation of the worth of PLAs.
        Mr. Lankford. When that gets into a draft form that is
    available to be able to be sent to our committee, I would very
    much like to request a copy of that. And that would be sent
    over to us so that draft report could be added to this draft
    report that's already completed, and get a chance to do a side
    by side on that.
        Mr. Gordon, we're getting very close to your time. I
    understand that well. In the past, were you aware--and I know
    that you are not familiar with the very earliest days,
    obviously, of the Obama administration and some of the
    transition. I don't believe you were right there, right at the
    very beginning when the Executive order--do you know if that
    Executive order was done and was implemented based on the fact
    that during previous administrations, PLAs were blocked and
    were not able to be used?
        Mr. Gordon. Mr. Chairman, you are quite correct in that I
    was not in the administration at the time. You probably know I
    was in the Office of General Counsel at the Government
    Accountability Office, GAO, and joined the administration only
    in November 2009 so I'm not in a position to know what
    happened.
        Mr. Lankford. I've been trying to process through because,
    obviously, we want to use PLAs. And I want to reiterate this
    conversation is not about excluding PLAs; it's just trying to
    determine why there is an encouragement to use them, other than
    just that's best competition, to try to provide that neutral
    playing field to say--my question is, has there been a tendency
    in the agencies that they didn't want to use PLAs and so there
    needs to be an aggressive approach to say, no, we encourage you
    to use them?
        Mr. Gordon. Now I understand the question, and I can speak
    to that, Mr. Chairman. Under the prior administration there was
    an Executive order that prohibited agencies from saying in this
    particular project, we need to have a PLA in place. That, they
    were not allowed to do.
        What we wanted to do was say, agencies should be allowed to
    look project by project and say, here is a project where it
    would not serve efficiency to have a PLA, but here is a project
    where it would serve it. That's what we're trying to do. We
    want that to be available, not to dictate it.
        And I should be careful in the words. We are not
    encouraging the use of PLAs. We are encouraging agencies to
    consider whether in fact they need to require PLAs in a
    particular project.
        Mr. Lankford. But by increasing the point scale on them, as
    we talked about before, it gives them an immediate advantage to
    be able to engage and say, we may be a little higher in price,
    but we're greater in value because there can't be a strike
    during this time. We're going to offset our collective
    bargaining agreement with this, that we won't fulfill that to
    be able to get this project. So it does skewer somewhat, and it
    concerns me when this draft summary, one of the statements in
    it says that there is a risk that PLAs will exclude. But having
    PLA in it, that excludes small and minority businesses.
        Mr. Gordon. I understand. And I will be happy to let Ms.
    Brita speak about GSA. But as a governmentwide matter, I will
    tell you that there are many factors. I have been dealing with
    solicitations and procurements for over 20 years now. There are
    many, many factors that get far more than 10 percent of the
    points on the technical side: your past performance, your
    technical approach, your use of small businesses. All right?
    The amount that you commit to subcontract to small businesses
    is frequently a factor, and it can frequently have more than 10
    percent of the points.
        So that in the mix of things, what you are capturing--and
    there are different ways to do this. GSA has taken one approach
    and we're evaluating how well that works. But it seems to me
    you can appreciate that in a best-value context where you may
    get efficiencies through the use of a project labor agreement,
    you will want to capture that, just as you typically get more
    than 10 points for having a good track record, good past
    performance.
        Mr. Lankford. I absolutely understand that. And again,
    there may be great location for a PLA to be the perfect tool,
    to be able to use that in that toolbox on it. But the last
    thing we would want to do is to be able to try to put out the
    word and say this group gets a higher score based on the fact
    that they are unionized, and discourage other people from
    engaging in a competitive environment. We want to be able to
    have a level playing field and a competitive environment so we
    are getting best value, and as many contractors as possible are
    bidding for our projects to get the best possible price.
        If we are pushing in such a way as to say there is a
    possibility someone will be excluded, that's what I am
    beginning to question; and to say, if this report is
    questioning that from GSA, then I'm also saying, OK, what was
    the evidence to make the shift when a year after the shift was
    made, or 2 years after the shift was made, there was an
    immediate look to say, OK, maybe there is a problem here.
        Mr. Gordon. If I could, Mr. Chairman, I would point out
    that when GAO, my former employer, looked at project labor
    agreements, I think in 1998, they reported that there was a
    wide range of views. Some people said they were very helpful.
    Some people said they were more efficient. They saved costs.
    They cost costs. The beauty of what GSA has done is it's gotten
    us real examples; real examples, not theoretical, not
    hypothetical.
        Mr. Lankford. Great. I would like to yield one moment for
    Mr. Murphy.
        Mr. Murphy. Thank you. Just a followup question. The
    chairman was talking about point-scoring systems in which a PLA
    bidder may get more points. Just to clarify, the individual
    decisions about how bids are structured is up to individual
    agencies; is that correct?
        Mr. Gordon. Absolutely.
        Mr. Murphy. And some agencies may choose to incorporate an
    increased point system for PLA bids, but that is not required
    by this Executive order, nor is it required by any other
    direction from the administration.
        Mr. Gordon. You are absolutely correct. What we are doing
    at this point is letting agencies take different approaches. We
    may down the road, as we listen to what the agencies are doing,
    we may come up with best practices. That's what we frequently
    do, whether we're dealing with the ways of handling
    organizational conflicts of interest, best value, past
    performance. We let agencies try different approaches with some
    guidance. And then as we learn more, we can give more specific
    guidance.
        Mr. Murphy. Thank you very much.
        Mr. Lankford. Mr. Gordon and Ms. Brita, thank you so much
    for joining us here. You are excused and you are going to make
    your flight on time.
        Mr. Gordon. I am very grateful, Mr. Chairman.
        Mr. Lankford. I am grateful that you all were able to be
    here. Thank you. We will take a brief moment to be able to
    recess--to reset for the next panel.
        [Recess.]
        Mr. Lankford. I would like to welcome our third panel. Mr.
    Maurice Baskin is a partner with the law firm of Venable LLP
    and represents the Associated Builders and Contractors.
    Professor David Tuerk is the executive director of the Beacon
    Hill Institute at Suffolk University. Mr. Kirby Wu is the
    president at Wu & Associates. And Mr. Mike Kennedy is the
    general counsel of the Associated General Contractors of
    America. Pursuant to committee rules, all witnesses are sworn
    in before they testify. Please rise and raise your right hands.
        [Witnesses sworn.]
        Mr. Lankford. Let the record reflect the witnesses answered
    in the affirmative. You may be seated.
        In order to allow time for discussion, I would like you to
    limit your testimony to 5 minutes. Obviously we'd have mercy if
    you go a little over on that so we would allow for your
    testimony. But we have received your written testimony already
    and that will be made part of the record.
        Mr. Baskin, I want to be able to recognize you for 5
    minutes.

    STATEMENTS OF MAURICE BASKIN, COUNSEL, ASSOCIATED BUILDERS AND
    CONTRACTORS, INC.; DAVID TUERK, PROFESSOR AND CHAIRMAN, SUFFOLK
    UNIVERSITY AND BEACON HILL INSTITUTE; KIRBY WU, PRESIDENT, WU &
     ASSOCIATES; AND MIKE KENNEDY, COUNSEL, THE ASSOCIATED GENERAL
                         CONTRACTORS OF AMERICA

                      STATEMENT OF MAURICE BASKIN

        Mr. Baskin. Good morning, Chairman Lankford, members of the
    subcommittee. My name is Maurice Baskin. I am a partner in the
    Washington, DC, law firm of Venable LLP.
        Mr. Lankford. I'm sorry, Mr. Baskin. Is your microphone on?
    Can you tell if the light is on?
        Mr. Baskin. How's that? Any better?
        Mr. Lankford. That's perfect. Thank you.
        Mr. Baskin. Do I need to start over? I've just said good
    morning.
        I am here representing Associated Builders and Contractors,
    which is the national construction industry trade association
    representing 23,000 merit shop contractors, employing an
    estimated 2 million workers. I have previously testified before
    on the subject of government-mandated PLAs before another
    subcommittee of this committee, and I have resubmitted that
    testimony for the record of this proceeding so that I can focus
    today on the very important bill introduced by Congressman
    Sullivan, H.R. 735.
        This bill is vitally needed to prevent the ongoing waste of
    taxpayer dollars and corruption of the Federal procurement
    system that is being caused by the President's Executive Order
    13502 and the agency rules that have implemented it.
        The President's PLA Executive order discriminates against
    87 percent of construction workers and their contractor
    employers who choose not to belong to or have contracts with
    labor unions. This order was issued as one of the President's
    first acts in February 2009, with no meaningful outreach to the
    construction community, no transparency in its formulation--we
    heard today that the representatives of the administration
    still don't know how it came to be--and no factual
    justification at all for its findings. Most importantly, there
    were no significant labor problems on any Federal construction
    projects during the 8 years governed by President Bush's
    Executive Order 13202, which prevented Federal agencies from
    requiring or prohibiting PLAs on Federal construction projects
    or on federally assisted projects.
        In the absence of any problems and from the manner in which
    the Obama order was put into effect, it is clear that the only
    reason for the PLA Executive order now in place was and is
    politics.
        Having heard or read the testimony of representatives from
    the Office of Management and Budget and the GSA at now two
    congressional hearings, we have yet to hear them identify any
    factual basis in the form of market research or identified
    labor problems previously existing on Federal construction
    projects that justifies the Federal Government's new
    restriction on competition through PLA mandates. We heard today
    that it's a process and that it's open to competition, but as
    the Members rightly pointed out, there is a preference. The
    thumb is on the scale. It is now being tilted, if not mandated,
    in favor of these PLAs; and it is impacting competition. They
    are doing a pilot program, a pilot program that is ongoing in
    nature. Apparently it's continuing to this day on every GSA
    project. That's a peculiar definition of ``pilot,'' while they
    are supposedly gathering market research data which is contrary
    to the way that all other procurements have been done in the
    past. GSA has adopted apparently a ``build first and ask
    questions later'' policy which is contrary to settled
    procurement principles.
        At the same time, many academic studies--and we're going to
    hear more about that later--and research by the government's
    own consultants, as has already been pointed out, have
    established that government-mandated PLAs increase the cost to
    taxpayers, reduce the number of potential bidders, and
    particularly the number of subcontractors to those bidders who
    are merit shop. They do nothing to improve the quality, safety,
    timeliness, or overall efficiency of government construction
    projects.
        Only Congress can effectively stop the political favoritism
    in contract awards that is wasting taxpayer dollars and
    corrupting the Federal procurement process. And that is what
    H.R. 735, the Government Neutrality in Contracting Act, will
    do. H.R. 735 will simply reinforce the existing Federal mandate
    in favor of full and open competition in all Federal
    procurements with specific reference to PLAs. The bill will
    prohibit Federal agencies once and for all from awarding
    construction projects based on the improper consideration of
    whether the contractors are willing to enter into labor
    agreements. Until this Executive order, that had not been the
    rule of law in this country under Federal procurement
    principles.
        As the bill states, agencies shall neither require nor
    prohibit contractors from adopting PLAs as a condition of being
    awarded the work, nor discriminate on that basis.
        The bill is neutral. I can't emphasize that enough. It's
    neutral on the subject of PLAs. It simply keeps the government
    out of the process. It closely tracks the Bush Executive orders
    that were upheld by the Court of Appeals for the D.C. Circuit
    in the Alba case. So there is clearly no basis for a legal
    challenge to H.R. 735, and it avoids interfering with Federal
    labor laws because it specifically says that nothing will be
    construed to prohibit a contractor or a subcontractor from
    voluntarily entering into a PLA on their own. If they're so
    great, let the market show it, and let them come forward and
    prove it, without it being tilted or mandated by the Federal
    Government.
        We applaud your efforts to promote H.R. 735. And I will be
    happy to answer questions after the other speakers.
        Mr. Lankford. Thank you Mr. Baskin.
        [The prepared statement of Mr. Baskin follows:]

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        Mr. Lankford. Mr. Tuerk.

                        STATEMENT OF DAVID TUERK

        Mr. Tuerk. I am David Tuerk, and I am a professor and
    chairman of economics and executive director of the Beacon Hill
    Institute at Suffolk University in Boston, which is a Ph.D.-
    granting institution. I would like to thank Chairman Lankford
    and members of the subcommittee for inviting me, and I
    appreciate the opportunity to submit testimony on H.R. 735. My
    comments are my own and do not represent the opinions of
    Suffolk University, nor do they represent my support for any
    organization or private interest that might stand to benefit
    from the passage of H.R. 735, which I heartily endorse.
        I would like to enter into the record studies of project
    labor agreements that the Beacon Hill Institute has performed
    under my direction over the last 8 years. Of course we've
    already heard about those. Among these are studies in which BHI
    estimated the effects of PLAs on construction costs for school
    building projects in Massachusetts, Connecticut, and New York.
    We found that PLAs added 12 to 18 percent to final construction
    costs in Massachusetts and Connecticut, and 20 percent to final
    bids for school construction projects in New York.
        I suppose we'll get into the comments from Dr. Steel in
    question and answer. But since he preempted me, I am going to
    make a point about what he had to say. He accuses us of
    spurious correlation. Well, I have a buzz word that I could use
    about his work which is multi-cullinearity. These are the kinds
    of buzz words that economists typically use when they are
    criticizing each other's work in an academic study. I'm sorry
    that he has decided to conduct this conversation in a way that
    reflects more his outlandish and bizarre characterizations of
    our work than what we actually did, but we can get back to that
    later.
        In another study, we examine the Federal Government's
    experience with the Bush-era ban on government-mandated PLAs.
    This study was aimed at determining how the record of
    construction projects conducted over this period reflects on
    President Obama's Executive order, encouraging PLAs on
    construction projects costing $25 million or more.
        President Obama claimed that the order was needed because,
    ``large-scale construction projects posed special challenges to
    efficient and timely procurement by the Federal Government.''
        Our study proceeded on the premise that if President Obama
    is correct about the need to mandate PLAs in order to overcome
    these, ``special challenges,'' then President Bush's ban on
    mandatory PLAs should have produced many instances of the
    delays, strikes, cost overruns, etc., against which PLA
    advocates frequently warn.
        We asked the Associated Builders and Contractors to assist
    us in getting the needed data from the Federal Government.
    Using the Freedom of Information Act, ABC wrote to Federal
    agencies with procurement responsibilities, including OMB and
    GSA, for information relating to any problems caused by the
    absence of government-mandated PLAs over the period of the Bush
    Executive order. The result: No respondent to the ABC letters,
    including the OMB and the GSA, could substantiate the
    occurrence of any delays or cost overruns on Bush-era projects
    costing $25 million or more that were attributable to the
    absence of a PLA.
        This finding should come as no surprise. The real purpose
    of a PLA is not to deal with special challenges but to
    discourage bids from nonunion contractors and to give the PLA
    unions control over the hiring process. PLAs accomplish this
    purpose by requiring contractors to follow onerous work rules,
    to turn away from their own labor force in favor of labor
    provided by union hiring hall and to pay fringe benefits a
    second time that they already provide their workers.
        Consider in this light the fatuous nature of the argument
    for PLAs. The argument presupposes that the work will be
    performed by the very unions that create the conditions under
    which the predicted delays, jurisdictional disputes, and work
    stoppages could occur if a PLA is not adopted. The unions that
    create these conditions are predestined to get work, however,
    only if the PLA is adopted, and then has the intended effect of
    discouraging nonunion contractors from bidding.
        I have read a number of studies, most commissioned by State
    and local government agencies, which purport to show that a PLA
    would save on costs. Typically, however, these studies adopt
    the same tortuous logic that the unions employ in support of a
    PLA. The studies show cost saving by assuming away the
    possibility that a decision not to adopt a PLA might produce
    lower bids from qualified contractors than a decision to adopt
    one would produce. However, the best way to avoid cost overruns
    and delays is to encourage, not to discourage, bids from
    contractors who are not burdened by the collective bargaining
    agreements that hobbled the competitiveness of the PLA union
    workers and their contractors.
        According to government data, the fraction of all
    construction workers who belong to unions fell by 25 percent,
    from 17\1/2\ percent in 2000, to 13.1 percent in 2010. So what
    we have is a state of affairs in which 13 percent of
    construction workers are attempting to protect their jobs
    against the other 87 percent, and then the added cost to
    taxpayers.
        These facts show that the real agenda behind government-
    mandated PLAs is to shore up the market share of a dwindling
    minority of construction workers at the expense of the vast
    majority and taxpayers.
        By passing H.R. 735, Congress could take an important step
    toward rejecting the fatuous reading that lies behind PLA
    mandates and ending what amounts to a discriminatory and costly
    handout to a group of special pleaders.
        I conclude by pointing out that H.R. 735 is not anti-labor,
    and in fact it's not even anti-union. I am currently involved
    in a case where a contractor is suing because its union was
    excluded from a New York City PLA. PLAs are only about the
    unions that manage to have the political clout to induce
    government agencies to require them to form a PLA. Nor has this
    legislation stripped government of a useful tool for achieving
    economy in State government. If the tool is a useful one, then
    contractors are free on their own behalf to adopt the PLA.
    Nothing is standing in the way of that.
        Therefore, I believe that H.R. 735 is clearly in the public
    interest. And again, I strongly support its adoption. Thank
    you.
        Mr. Lankford. Thank you Mr. Tuerk.
        [The prepared statement of Mr. Tuerk follows:]

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        Mr. Lankford. Mr. Wu.

                         STATEMENT OF KIRBY WU

        Mr. Wu. Good morning, Chairman Lankford, Ranking Member
    Connolly, and members of the subcommittee. My name is Kirby Wu.
    I am the president of Wu & Associates located in Cherry Hill,
    New Jersey. On behalf of the Associated Builders and
    Contractors and the merit shop contracting community. I would
    like to thank you for the opportunity to testify before you
    today in support of the Government Neutrality and Contracting
    Act, H.R. 735. I hope my testimony sheds some light on how
    government-mandated project labor agreements harm qualified
    contractors and employees that want nothing more than to
    compete on a level playing field to build on-time and on-budget
    construction projects at the best possible price.
        PLA mandates and preferences by Federal agencies result in
    increased costs for contractors and unnecessary procurement
    delays and uncertainty and favoritism in the Federal
    procurement process, and stands as a barrier to growth for
    businesses and job creation in an industry that's already
    suffering an unemployment rate of 17.8 percent.
        This is why the industry supports legislative remedies like
    H.R. 735 which restores fairness in Federal contracting and
    will eliminate waste so the government can build more projects
    and create more construction jobs.
        Wu & Associates is a small-business success story. We have
    grown into an industry-leading, award-winning general
    contractor specializing in design-build projects, lead
    sustainable design, and historic preservation for Federal,
    State, local, and private clients. Our firm's success depends
    on the principles of free enterprise and attracting the most
    qualified, talented personnel and companies for a job,
    regardless of their labor affiliation.
        Over the years we have successfully performed millions of
    dollars worth of Federal, State, local, and private
    construction projects without the need to enter into a PLA. The
    contracting policies of the Federal Government influence the
    growth and success of small businesses like Wu & Associates, as
    well as the economic well-being of our employees and their
    families.
        PLA mandates place merit shop competitors at a disadvantage
    and promotes discrimination based on labor affiliation. PLAs
    have a practical effect of creating jobs exclusively for
    unionized construction trades people by forcing union
    representation or compulsory union membership, inefficient and
    archaic union work rules, payment of union dues, forced
    contributions to union pension and benefit plans, and a host of
    other problems on employees of merit shop contractors like my
    firm's employees that have freely decided not to join a union.
        Injecting PLA mandates into the Federal procurement process
    discourages competition from qualified contractors like my own
    who employ 87 percent of the U.S. construction work force. It
    doesn't take an economic degree to know that less competition
    from a pool of qualified bidders leads to increased costs for
    the government and taxpayers. If members of this subcommittee
    think PLA mandates somehow advance the economy and efficiency
    in government contracting, please take a look at my written
    testimony which describes in great detail my unfortunate
    experience with a Federal PLA mandate that resulted in
    procurement delays, red tape, and needless litigation costs.
        In short, in 2010, U.S. Army Corps of Engineers mandated
    PLA on a project in Camden, New Jersey, in the middle of the
    bidding process. By doing so, the Corps sent a message to
    qualified businesses like mine that we were not welcome to
    build this project unless we agreed to use union labor and
    follow the terms and conditions of a PLA. This is ironic
    because we were previously selected as the prequalified
    contractor to bid this project. After weeks of uncertainty and
    attempts to get the Corps to reverse the PLA, we were left with
    no choice but to file a bid protest with the Government
    Accountability Office against the Corps' illegal and
    discriminatory mandate. Eventually, in the face of a bid
    protest, the Corps abandoned their PLA mandate, but they
    replaced it with an illegal and discriminatory PLA preference
    that enticed contractors to voluntarily submit a PLA offer by
    giving them additional credit in their technical evaluation of
    our offer as part of the best-value procurement process.
        We decided not to pursue this contract further because we
    felt it was not worth investing the additional company
    resources to prepare a bid and compete against contractors
    submitting PLA offers in this distorted playing field. This
    exercise resulted in lost time and money for our small business
    that we could have invested back into our work force and
    company. It also resulted in needless procurement delays,
    exceeding 2 months, as the Corps bid submission deadline was
    extended a number of times to accommodate the PLA controversy.
    Remarkably, the contract was eventually awarded to a merit shop
    general contractor at a bid priced nearly 15 percent below the
    original $16\1/2\ million estimate, without a PLA offer. And
    today the project is reportedly on time and on budget. The
    winning contractor would have been discouraged or eliminated
    from competing if not for our efforts to fight the PLA mandate.
        As a taxpayer it is outrageous that the government is
    wasting tax dollars and denying opportunity to quality
    businesses and their skilled work forces that cater to just
    13.1 percent of the U.S. construction work force.
        I ask that the members of the subcommittee support Mr.
    Sullivan's Government Neutrality in Contracting Act.
    Contractors, and not Federal procurement officials pressured by
    special interests, should be the ones deciding whether a PLA is
    an appropriate tool. Wu & Associates applauds the Oversight and
    Government Reform Committee for its continued interest in the
    issue of government-mandated PLAs.
        Thank you for the opportunity to testify on behalf of small
    businesses and the merit shop contracting community. We deserve
    a fair opportunity to provide the best construction product at
    the best possible price to the taxpayers.
        Mr. Lankford. Thank you, Mr. Wu.
        [The prepared statement of Mr. Wu follows:]

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        Mr. Lankford. Mr. Kennedy, proceed with your testimony for
    5 minutes.

                       STATEMENT OF MIKE KENNEDY

        Mr. Kennedy. Good morning, Chairman Lankford and members of
    the subcommittee. My name is Michael Kennedy. I have the
    privilege of serving as the general counsel of the Associated
    General Contractors of America. I am here to express the
    Association's strong support for H.R. 735 and the neutrality
    that this bill seeks to achieve.
        AGC is the leading trade association in the construction
    industry. It has more than 33,000 members in nearly 100
    chapters throughout the United States. Among these members are
    building, highway, industrial, and utility contractors. While
    some of them are quite large, most are small and closely held.
    Many are Federal contractors.
        AGC was founded in 1918 and historically a majority of its
    members have been union contractors. Today such contractors are
    in a minority, but they remain a large and very important
    segment of the Association's membership. To this hearing on
    project labor agreements and H.R. 735, AGC therefore brings a
    broad perspective.
        Before turning to the central subjects of today's hearing,
    I should explain that the labor unions in the construction
    industry are unique. Unlike their industrial counterparts,
    these unions have organized themselves along craft lines. One
    union represents carpenters, another represents operating
    engineers, another represents electricians, and so on down the
    line. Industrial unions represent everyone in the appropriate
    bargaining unit without regard to any differences in their job
    classifications.
        But construction unions are different. No one of them
    represents all of the craft workers on a typical construction
    project. The individual agreements negotiated with each of
    these unions are similarly limited. Each agreement covers a
    separate and single craft, but, on the other hand, the typical
    agreement applies to all of the work that the craft performs in
    a particular area.
        PLAs differ from these area-wide agreements in two ways.
    PLAs are typically negotiated with several unions and therefore
    cover several crafts. And as the name suggests, PLAs are
    limited to individual projects and are not area-wide.
        The historical purpose of PLAs, dating back to a time when
    unions represented nearly 90 percent of all construction
    workers, was to eliminate inconsistencies in these area-wide
    agreements that would otherwise apply to particular projects,
    such as differences in work rules and expiration dates. Then
    and now, PLAs typically supersede such area-wide agreements.
        Over the last 60 years, as the percentage of construction
    workers that unions represent has fallen below 14 percent,
    project labor agreements have become less and less relevant. A
    large majority of today's work is not subject to any agreement
    with any labor union, and the need to address differences
    between and among labor agreements has greatly diminished. Open
    shop contractors are free to coordinate their employment
    practices entirely on their own initiative and without changing
    or superseding any prior agreements with labor unions.
        In this new environment, union contractors are more likely
    to seek PLAs for the purpose of meeting their open shop
    competition. Without seeking to open or reopen their area-wide
    agreements, such contractors can seek the more favorable terms
    or conditions they may need to compete for individual projects.
        AGC neither supports nor opposes PLAs per se. The
    Association takes the position that such agreements are just
    another of the many tools that contractors--not owners, but
    contractors--should have at their disposal as they seek to meet
    their clients' needs.
        At the same time, AGC strongly opposes government mandates
    for PLAs or area-wide agreements or any other labor agreements
    for publicly funded construction projects. The National Labor
    Relations Act commits such matters to the discretion of
    construction employers and their employees. And for a host of
    reasons, AGC believes that government contracting agencies
    should follow suit.
        As we have already heard, government mandates for PLAs
    discourage competition. They typically require open shop
    contractors to make fundamental changes in the way they would
    approach an upcoming project and to incur costs that such
    contractors would not otherwise incur.
        Such mandates may also trouble union contractors. They also
    may require union contractors to make significant changes in
    the way they would approach a project. Indeed, their typical
    purpose and effect is to deprive union contractors of the
    opportunity to work under the area-wide agreements that these
    contractors have already negotiated.
        Government mandates can also disrupt the bargaining over
    area-wide agreements. They invite the construction unions to
    bypass the contractors for whom their members work and seek to
    negotiate with what may be inexperienced public officials. They
    also give unions the leverage to make demands that the unions
    could not otherwise make.
        Beyond that, it remains clear that construction contractors
    are in the best position to determine whether and, if so, when
    a PLA will help them meet the government's legitimate interest
    in having its projects constructed on time, within budget, and
    to all specifications.
        Federal construction contractors have to post performance
    bonds and to provide a host of contractual guarantees that they
    will meet their obligations. It follows that these contractors
    already have ample incentive to consider any PLA or other labor
    agreement that would make it easier or less expensive for them
    to perform their work.
        In sum, AGC supports H.R. 735. AGC would suggest that the
    committee make a technical amendment to section 3(d) where the
    bill authorizes an exemption from its substantive provisions
    under special circumstances. As currently written, this
    provision actually tilts the scale against union contractors.
    But AGC believes that the problem is inadvertent and can be
    quite easily corrected.
        Thank you again. Let me simply repeat that AGC opposes
    Federal mandates for project labor agreements and supports H.R.
    735. Thank you.
        Mr. Kelly [presiding]. Thank you.
        [The prepared statement of Mr. Kennedy follows:]

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        Mr. Kelly [presiding.] I want to thank all the witnesses
    for being here.
        Mr. Wu, it's good to see somebody who has spent a little
    bit of time in Pittsburgh in the room besides myself. I saw
    your time at Carnegie Mellon.
        And Professor Tuerk, I think your background kind of speaks
    for itself. I don't know that anybody could question what
    you've done.
        Mr. Tuerk. Thank you Congressman. I wonder if I could make
    a correction, though. I inadvertently said Dr. Steel and I
    meant Dr. Phillips. I have no idea why I said that, but I would
    like to get the name right.
        Mr. Kelly. OK. That's fine. We will note that.
        I recognize myself for 5 minutes. And I think this is
    critical because this hearing today is not about unions or
    nonunions. It's not about who gets the bid or doesn't get the
    bid. It's about fairness. And certainly if the President's
    Executive order is based on something that he thought was
    unfair--anybody in the panel, is there any instance anywhere
    that would have caused the President to issue this Executive
    order? I can't find anything in any of the testimony on any of
    the witnesses that would suggest that there was a problems that
    existed in the bidding process. And having done many RFPs
    myself and looking at it, I tend to feel the other way; that it
    is extremely exclusionary and it does tilt the playing field.
        So if anybody--and Mr. Baskin, Mr. Tuerk, Mr. Wu, Mr.
    Kennedy, if anybody could offer anything that would perhaps
    shed some light on why this is in fact issued and why does it
    have any importance as to what is it we are trying to do if
    it's about fairness?
        Mr. Baskin. If I can respond first, I may also speak to it.
    But as indicated and as we've heard from the witnesses earlier,
    they have no specific labor problems on previous contracts
    procured under the Bush order. There was no problem. I think
    it's been referred to as a solution in search of a problem. The
    only justification for it has to be political because of the
    way it was implemented, with no outreach and with no identified
    real-world circumstances in which problems had arisen without
    PLAs being mandated by the government. It's just totally
    unnecessary, and contrary to decades of law as well as the
    Competition in Contracting Act that requires full and open
    competition on Federal projects.
        Mr. Kelly. Professor.
        Mr. Tuerk. We did all we could to find out if there were
    any contracts under the Bush administration that suffered for a
    lack of a PLA and simply couldn't come up with one. It was not
    only the FOIA letters that ABC sent out, we combed through
    government data bases, looked over survey results from a
    national survey, everything we could to find out if there were
    any, and there simply were not.
        And I do remember a campaign speech that President Obama
    made in which he promised project labor agreements. So again I
    think that's probably the best explanation for the Executive
    order.
        Mr. Wu. Well, Wu & Associates, frankly, we would not bid a
    project that would have a project labor agreement on it. The
    previous testimony where the GSA procurement officer stated
    that there was a 10-point system built into their RFP process
    would certainly raise our eyebrows in our office as we look for
    fair bidding opportunities in the Federal public and State
    sectors. That would be something that would jump out right
    away, and it would probably be a project that we would not
    pursue; because I would agree with you, Mr. Kelly, that on the
    private-sector side, every dollar matters. To put together a
    bid in the millions of dollars takes a tremendous amount of
    time and resources for our company. And if there is the
    slightest disadvantage going in, it would strongly discourage
    us from bidding the project.
        Mr. Kelly. Mr. Kennedy.
        Mr. Kennedy. I'm not aware of any systemic problems that
    the Federal Government suffered during the Bush administration
    as a result of its Executive order. That Executive order made
    it abundantly clear that construction contractors were free to
    pursue project labor agreements where contractors, knowing the
    work they had to do, knowing the commitments that they had to
    make, believed that a PLA would be in their interest. With that
    said, I believe we had an era of very open competition. It was
    healthy for all sides of the industry.
        Mr. Kelly. Mr. Wu, just following up on this, because I
    have done the same thing you have. And when you get these RFPs,
    you can be excluded from your--your bid can be thrown out if
    you don't dot all the I's and cross all the T's.
        And what has always bothered me, since getting here 5
    months ago, is we have a continual parade of people who have
    actually never done what it is that they're regulating and
    people who have never actually had to have their own skin in
    the game, determining how these bids are going to be structured
    and how they're going to be awarded. And I find that completely
    troublesome.
        Just so the general public knows--because not all of us
    have the opportunity to do this. When you do submit a bid, 10
    points. Critical? Not critical?
        Mr. Wu. It's absolutely critical. When we are investing
    thousands and thousands of dollars of our own overhead, project
    managers, estimators, support staff to put a bid together, a
    multimillion-dollar bid could take 3 or 4 weeks for our office
    to put together, working along with our subcontractors as well.
    We can't afford to invest that time and money into an RFP
    process where we feel like there's any chance that we would be
    at a disadvantage because there are other opportunities out
    there with a disadvantage not present. I could go bid another
    project.
        Mr. Kelly. So the addition of this language does not
    encourage a wider universe of bidders. It actually does limit
    those who would take the time. I have friends that it cost them
    $50,000 to prepare a bid. This is private industry. I can't
    imagine the hoops they would have to jump through here to get
    it ready, and knowing at the end of the day if they don't
    include the PLA language, they're at a 10-point disadvantage
    right off the bat. So I thank you.
        Mr. Lankford [presiding]. I recognize Mr. Murphy for 5
    minutes of questions.
        Mr. Murphy. Thank you very much, Mr. Chairman. Mr.
    Chairman, I would like to submit a letter to the record from
    the president of Toyota, and in it he says this: Toyota has
    used and required project labor agreements on many of their
    biggest and most important projects. He says that Toyota has
    consistently employed project labor agreements for our major
    construction projects, and we could not have been more pleased
    with the results. To date, approximately 45 million man hours
    have been invested in the construction of nine automobile truck
    and component plants in the United States. In each and every
    instance, these projects were completed on time and on budget
    and with an exemplary safety record.
        Toyota, as well as major American and international
    companies like Boeing and Wal-Mart, have made the decision to
    require project labor agreements because they think it's the
    best business practice for them.
        So let me ask this question to each of the panel members.
    And I just need a yes or no answer. I have only got 5 minutes
    here. Do you think we should pass legislation as a Congress
    that would prohibit the requirement of PLAs in private sector
    construction work? I just need a yes or no answer to that
    question.
        Mr. Baskin. No. Nobody is asking for that--well, I'm not.
        Mr. Murphy. I'm asking, would you--would you support that?
        Mr. Baskin. No.
        Mr. Murphy. Would you support that legislation?
        Mr. Tuerk. Certainly not.
        Mr. Wu. No, I would not.
        Mr. Kennedy. Where a private owner is backing a decision to
    require a PLA with its own resources and has the flexibility to
    use delivery systems that are not available in the public
    sector, I see no reason why the government should step in and
    interfere with that.
        Mr. Murphy. Thank you, Mr. Kennedy.
        So I hear a lot of talk from my Republican friends and from
    my conservative friends about how the government should run
    more like a business. But what you are proposing to do here,
    even in an act that has some nice words about neutrality, is to
    take away from the Federal Government a tool that a lot of
    private companies use, which is a decision that they make that
    a requirement that PLAs be used in construction projects is
    good for their particular project.
        What we're asking here today is for that to be taken away
    from the Federal Government. And as we've heard over and over
    and over again, there's nothing mandating that this be used
    project by project. All the Federal Government does is just
    encourage a look at whether a PLA would be worthwhile, as many
    private companies have. So I'm searching here for why we have a
    double standard, and we're all searching for why we have a
    panel with only witnesses that are critical of PLAs. So I look
    to the underlying political motives here.
        Mr. Tuerk, you said in your testimony that you are not here
    out of an anti-union bias, that this isn't about union; this is
    about the best use of taxpayer dollars.
        But Mr. Tuerk, just about 2 months ago, you wrote a piece
    entitled ``Let's Put an End to all Collective Bargaining.'' And
    in it you wrote, referring to what was going on in Wisconsin,
    ``The Wisconsin episode is, therefore, just a leading edge of a
    political movement that could, if conducted skillfully, make it
    possible to unravel public support for the unions in so
    dramatic a fashion as to change the face of American politics.
    This would indeed be a wonderful thing to behold.''
        So let me ask you this. Do you stand by this blog post,
    this article that you wrote in which you called for an end to
    all collective bargaining?
        Mr. Tuerk. Well, I most certainly do. But I want to make a
    distinction here. I am here limiting my remarks to this
    particular piece of legislation. And the committee is of course
    free to evaluate my remarks here on the basis of things that I
    have said elsewhere, like this, for example. But what I'm
    presenting here are opinions based on research, not just my
    broader opinions about how collective bargaining fits into 21st
    century America.
        So yes, I think that we're finding out in State after State
    the harm that collective bargaining has done when it's allowed
    between government workers and their governments. Even
    Massachusetts has faced up to the reality and has done
    something about the excesses of union power within the--among
    government workers. And yes, I think that collective bargaining
    is a tool whose time has passed.
        Mr. Murphy. Thank you. And so I'm asking that question
    because your work hasn't just been criticized by the one author
    that we cited here. It's been criticized over and over. So I'm
    trying to figure out why not only we have a panel that seems to
    be rigged in favor of the legislation that we're debating, but
    also why we seem to have studies put before us that aren't
    based in good empirical and statistical requirements. And I
    look at your public record. I look at the agenda you clearly
    have to end collective bargaining at large in this country. And
    I put it together with what seems to be a systemic approach on
    behalf of the Republican majority and on behalf of proponents
    of organized labor across this country, whether it be in this
    committee or in State legislatures across the country, to take
    away from individuals the ability to collectively bargain and
    to take away from government the very tool that private
    companies use on a regular basis; which is, if they believe
    that it is in the best interest of that particular bid to
    require a project labor agreement--that's all the Executive
    order does--and because this seems to be a hearing that is much
    to do about nothing, I bring to the table a political agenda
    which seems hidden but incredibly relevant.
        With that, I will yield back the balance of my time.
        Mr. Tuerk. May I respond?
        Mr. Lankford. Just a moment. I do want to accept, without
    objection, the Toyota letter into the record that you mentioned
    earlier, that you requested to have in the record.
        [The information referred to follows:]

        [GRAPHIC] [TIFF OMITTED] T0822.056

        [GRAPHIC] [TIFF OMITTED] T0822.057

        Mr. Lankford. Mr. Tuerk, it is actually my moment for
    questioning at this time. So, yes, you would be free to be able
    to respond to that.
        Mr. Tuerk. First of all, the quality of our statistical
    work that has nothing to do with anybody's opinions about
    collective bargaining or political issues. I am not responsible
    for the invitations that went out for this meeting. Had I had
    anything to say about it, I would have wanted Dr. Phillips here
    so I could have rebutted his attack on our works, as bizarre as
    it is.
        Finally, the work that we have done has in fact appeared in
    a peer-reviewed journal. Our study of Massachusetts was
    published by an online journal out of Bentley University. So
    the idea that these numbers that we are coming up with are just
    made up out of thin air is itself completely wrong. We have a
    lot at stake. We are a Ph.D.-granting Department of Economics
    that survives and prospers only by virtue of the integrity of
    our work. Our work has been out there for years. And if anybody
    wants to find problems with it, they are free to. Dr. Phillips
    has tried. His attacks, I think, are wrong. Again, those are
    the kinds of things that we could argue in another forum.
        Mr. Lankford. Thank you.
        Mr. Baskin. Mr. Chairman, may I respond to the
    Congressman's question that was unanswered about why all the
    members on the panel said that we don't need legislation to
    prohibit private sector PLAs; and that is because the National
    Labor Relations Act already has protections about them to say
    that they must be voluntarily entered into, not coerced, and
    only by employers in the construction industry. And what we
    have going on here under the Obama order is a mandate. It is
    coercion of contractors to private employers on Federal
    agencies' projects in which the Executive order encourages
    those agencies to in fact mandate or discriminate in favor of
    them. And that is what the current laws prohibit. So that is
    why we don't need a change in those laws.
        Mr. Murphy. Mr. Chairman, the gentleman is responding
    directly to me. Would you yield?
        Mr. Lankford. I would yield 1 minute.
        Mr. Murphy. You've used a lot of words here. You used
    ``corruption'' several times in your testimony. You have now
    used ``coercion.'' I think we need to tone down the level of
    rhetoric here when we're talking about an Executive order that
    simply asks individual agencies to consider PLAs when
    appropriate.
        I think by any reading of that it's, A, hard to suggest
    that there's anything that is coercive about that Executive
    order. And certainly in your testimony in which you suggested
    that it corrupted the process, I think those are strong words
    with legal ramifications that you should be very careful about
    using before the U.S. Congress.
        Mr. Baskin. If I may respond.
        Mr. Lankford. Yes, you may.
        Mr. Baskin. They are merited, because we have been seeing
    the Federal procurement process divorced from the rule of law.
    For decades it was established that labor--backing labor
    affiliation was irrelevant to responsibility of contractors.
    And by attaching that to this process, it is rank favoritism.
    It is not permissible under the law. And until it stops, we
    have to say what it is, if anything is to be done about it.
        Mr. Lankford. Mr. Baskin, are you seeking an advantage in
    the contracting process by saying that PLAs are a neutral
    ground? Is that some advantage that you're seeking?
        Mr. Baskin. ``Neutrality'' is the word.
        Mr. Lankford. So at this point, based on your testimony
    before, it is not an issue if you're bidding against someone as
    a PLA or a non-PLA, union shop, non-union shop. That is
    irrelevant to you as long as it's a level playing field when
    you go in to actually do the bidding.
        Mr. Baskin. Yes. ABC has members who have signed union
    contracts; so does AGC; and many more who have not, because 87
    percent of the industry is nonunion. But the merit shop
    philosophy is: Work should be awarded and performed regardless
    of labor affiliation. That should have nothing to do with it.
    May the best, most responsible contractor win, do the best work
    for the best price. That's all we're looking for. And that's
    all the Federal taxpayers should be looking for.
        Mr. Lankford. Thank you.
        Mr. Wu, you had mentioned before that you've actually
    backed out of a contract during the bidding process when you
    saw the direction it was going; that it was really going to
    take a PLA contractor to be able to do that. That is obviously
    anecdotal evidence for you personally. Are there other
    contractors that you've related with to say, I just don't bid
    on Federal contracts when they're over $25 million and I know
    those are the specifications?
        Mr. Wu. I'm sorry; can you repeat that?
        Mr. Lankford. Have you spoken to other contractors as well
    on these contracts that are out there for bid over $25 million
    that had the PLA encouragement in them, that are also saying,
    besides yourself, I'm just not going to do that bid, it's not
    worth the trouble?
        Mr. Wu. Yes. I encounter contractors all the time on a
    general contracting level and a subcontracting level that
    simply will not bid projects if a projects labor agreement is
    part of the RFP process.
        Mr. Lankford. So it is your belief that it is reducing the
    amount of competition in the field.
        Mr. Wu. I'm very convinced of that. I've seen it in the
    bidding process. I've seen the amount of bidders that have
    turned out. I've talked to my own subcontractors as to whether
    or not they're pursuing PLA projects. And many, if not all of
    them, have been discouraged.
        Mr. Lankford. Thank you.
        I would like to honor Mr. Cummings with 5 minutes of
    questions.
        Mr. Cummings. Thank you very much.
        Mr. Baskin, I want to followup on some questions. I just
    want to make a statement with regard to something my colleague,
    Mr. Murphy, said. As a fellow lawyer and one who has
    represented many people who have been accused wrongfully, and
    all of us I think have been trained with regard to certain
    words and the use of them and their legal ramifications, I was
    kind of surprised that you, of all these witnesses, you're the
    only one that talked about corruption.
        I think we have to be kind of careful with those words. I
    really do. And I don't say that--it just kind of surprised me.
    And I don't know the full basis of it. I heard your explanation
    to Mr. Murphy. But I have to tell you that--you're from
    Venable? Is that your firm?
        Mr. Baskin. Yes.
        Mr. Cummings. I just think that we need to be careful with
    those words.
        Last year, the Ninth Circuit rejected claims that a PLA
    entered into by LA and Orange Counties violated the due process
    rights of nonunion contractors. Furthermore, earlier this year
    the U.S. Supreme Court denied certiorari of a case challenging
    the seminal Boston Harbor case, where the court upheld the use
    of PLAs of public projects.
        Mr. Tuerk, I found it very interesting that you helped me
    make my point. You said that you did not like the way Dr.
    Phillips addressed the issues. And, basically, not putting
    words in your mouth, but this is the impression I got; it
    sounds like you're almost wishing he was here so that you could
    look in his face and say, You're inaccurate. I'm sure you would
    have preferred that, would you have not?
        Mr. Tuerk. Yes. I wouldn't embarrass my host. But, yes, if
    I'm going to be accused of economic malpractice by another
    academic, I'd like to have him in the room.
        Mr. Cummings. Certainly. And we would have, too. That's why
    I said you made my very point. That's why we--you heard the
    discussion earlier about how we were concerned on this side
    that we were not able to call him. And he was anxious to see
    you. He was anxious to look you in the face and say what he had
    to say. But we were denied that right.
        I also understand that the majority entered into the record
    instances in which the administration testified, without other
    witnesses. And that is not surprising. In this subcommittee,
    the most recent hearing, Administrator Sunstein testified by
    himself, and the minority did not protest because he was not
    deemed the minority witness by dictate of the majority.
        What is unprecedented is that the minority accept the
    administration's witness as their own, when the majority has
    invited them and invited other private sector witnesses. I
    would like to make that very, very clear. And there are
    instances where this happened in this way, the way this
    happened today; that is, the denial of a witness. Under these
    circumstances, I would like to--I hope the chairman, I know you
    said you're going to be looking into it, and I look forward to
    hearing that from you.
        And I want to make it clear the reason why we are spending
    so much time on this is because all of you I think want
    sunshine. You're talking about a fair process. That's all you
    all have been talking about--fair process. Somebody, I think it
    was you, Mr. Baskin, talked about level playing field. Well,
    guess what? We want a level playing field, too.
        And so, Mr. Chairman--we had extensive testimony, Mr.
    Tuerk, and one of the things--from Dr. Phillips, that is--and I
    hope that one day, since we have now had two hearings on this
    issue, and at the rate we're going, I'm sure we'll have more,
    so perhaps the next time we will have a chance to bring you
    back, Mr. Tuerk. I think, Mr. Baskin, you've done two. You're
    on a roll. And so we will--well, I just want to say one other
    thing to you, Mr. Tuerk. I think somebody over on the other
    side said something; they were picking and choosing from the
    report of the GSA, and one of the things that they did say, and
    they were talking about cost, they said, ``However, these
    studies''--talking about the sunshine study--``did not address
    the cost impact of scope, timing, markets, schedule, or quality
    variables. These variables would contribute to increased cost,
    thereby reducing the level of cost increases that Beacon Hill
    argue are all strictly attributed to PLAs.'' And that is on
    page 4 of the report.
        With that, Mr. Chairman, I would yield back.
        Mr. Baskin. Mr. Chairman, if I may respond to the comment
    that was directed at me about the use of the word
    ``corruption,'' because I do want to clarify I'm not accusing
    the President of committing a crime. What I referred to in my
    statement--I just went back and checked it--is corruption of
    the system in the matter of data corrupting a computer system.
    It refers to a messing up of the system. I certainly stand
    behind that. And it does involve the element of coercion, which
    I referred to earlier, when an agency mandates that contractors
    accept these things as a condition of performing the work.
        So I appreciate the opportunity to clarify.
        Mr. Cummings. Mr. Chairman, just 10 seconds.
        Mr. Lankford. Yes, sir.
        Mr. Cummings. I want to thank you for clarifying that
    because it is very, very important. I say it all the time in
    this committee. I hate for people to come in here and say
    things, and then it's like left on a wall, not to be erased
    ever. The press picks that up. The next thing you know, your
    wife is reading a story that you didn't even mean, saying that
    ``My husband accused the President of the United States of
    being corrupt.'' I know that's not what you said. That's why I
    want to clear these things up. OK.
        Mr. Baskin. Appreciate the opportunity.
        Mr. Lankford. Thank you. And thank you to all of you for
    coming. Very grateful for your time in your very busy schedules
    and for you being able to be here as part of this conversation.
        With that, this committee stands adjourned.
        [Whereupon, at 11:48 a.m., the subcommittee was adjourned.]