Playing Around with the PLA

The Metropolitan Washington Airports Authority’s cursory decision to mandate a union workforce for Phase 2 of Metrorail-to-Dulles potentially exposes the project to hundreds of millions of dollars in higher costs.

How much will the Project Labor Agreement add to the cost of Phase 2 of the Metrorail-to-Dulles project? That’s the $64 (million) question. Supporters of the PLA, which requires contractors to hire a union workforce, say it will reduce the risk of cost overruns by ensuring that the $3 billion-plus construction project runs smoothly. Critics charge that it would add 10% or more to the cost – as much as $300 million — almost guaranteeing that expenditures exceed projections.

Finding a credible answer is all the more urgent now that the board of the Metropolitan Washington Airports Authority (MWAA), which is managing construction of the heavy rail project, has voted to build an underground Metro station at Dulles airport costing some $330 million more than an above-ground alternative.

The board doesn’t have much leeway for error. Escalating costs could derail the complex project financing, which relies upon a combination of special tax districts in Fairfax and Loudoun counties, revenues from massive toll hikes on the Dulles Toll Road and a contribution from MWAA itself. If bond buyers lose confidence in the cost projections and the stability of the funding sources, they may balk at issuing the bonds needed to fund the construction.

Given the fragility of the Metrorail-to-Dulles financing in the face of mounting cost projections, one would think that the MWAA board would have given careful attention to the question of how much the PLA would affect cost projections. But the board treated the issue very much as an after-thought, deliberating no more than a few minutes before kicking the matter over to the MWAA staff for execution. The cursory handling of that decision calls into question the suitability of the board as a steward of the Metrorail extension project.

Here is the background. Phase 1 of the project, extending the rail line from the existing Metrorail system to Tysons Corner and somewhat beyond, was contracted to Dulles Transit Partners (DTP), a partnership of construction giants Bechtel Corp. and URS. Both companies do business nationally, which means they work with labor unions on many projects. After winning the Phase 1 contract, DTP voluntarily entered into a Project Labor Agreement to provide a reliable, stable supply of labor, resolve disputes and eliminate the threat of strikes or other work actions in the event of a disagreement. PLAs make sense for companies that choose to use union labor.

But there was one very important provision that differed from conventional PLAs: It exempted sub-contractors from the requirement to hire union labor. Therefore, DTP was free to hire non-union subs accounting for roughly 80% of the work.

By all accounts, the PLA covering Phase 1 construction has worked out well so far. DTP had good things to say about the agreement during a meeting of MWAA’s Dulles Corridor Committee, which pondered the measure before it was forwarded to the full board.

“Dulles Transit Partners has recommended to the Authority that a project labor agreement much like the one employed in Phase 1 also be utilized in Phase 2,” asserted the formal resolution passed by the MWAA board in April. The Minutes of the April board meeting also stated that “Dulles Transit Partners … could not have been more pleased” with the PLA. “They have appeared before the Committee to testify how the agreement had assured both labor peace and a ready supply of the trained and skilled construction craft workers, for substantial savings over the life of the project.”

Michael A. Curto, an attorney with lobbying powerhouse Patton Boggs and appointee of the governor of Maryland, introduced the resolution for the board of directors to approve the PLA. He gave a brief presentation which, according to attendees in the audience, generated minimal discussion. The board adopted the resolution in an 11-2 vote. Only former Virginia Congressman Tom Davis and former North Carolina Congressman William W. Cobey voted against the measure. Among those casting a vote in favor was Dennis L. Martire, a senior executive with the Laborers International Union of North American (LiUNA).

Martire’s union, which represents semi-skilled construction laborers, stands to gain significantly from an agreement that requires the use of labor workers. The contractor would be required to hire from LiUNA hiring halls, workers would pay 5% union dues, the contractor would pay into a Construction Industry Labor-Management Trust Fund, which provides unspecified “services” to union members or employees, and the contractor pays into union pensions which its employees may never benefit from. Martire has been a vocal advocate of PLAs, fighting to put one into place in Montgomery County, Md., and penning a paper on the subject.

Martire did more than vote in favor of the PLA agreement, says Ben Brubeck, director of labor and federal affairs for Associated Builders & Contractors, an association of non-union or “merit shop” contractors opposed to the PLA. Martire spoke in favor of the PLA proposal during the Dulles Corridor Committee hearing, and he backed up Curto during his presentation to the full board. In vivid proof that Martire had more than a passing interest in the outcome, LiUNA bused in three busloads of unruly protestors to make their sentiments known during an April press conference called by Rep. Frank Wolf, R-10, to address the escalating costs of Metrorail-to-Dulles. (See a video of the protest.)

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(An aside: While this article is critical of the MWAA for its handling of the PLA, I must give credit to the authority for being very responsive to my request for information. Spokesperson Courtney Mickalonis gave substantive answers to all my queries and did so in a timely basis. Let us hope that the authority remains dedicated to transparency as this controversy unfolds.)

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