Labor giveaway hits the trail

by Ken Girardin |  | NY Torch

A dispute over the construction contract for a stretch of proposed state-funded public walking and biking trail in Central New York shows how far Governor Andrew Cuomo will go to steer state contracts to construction unions—and how much that’s costing taxpayers.

The state Department of Transportation (DOT) last spring sought bids to construct 3.1 miles of sidewalks and trails in and around Syracuse as part of the proposed Empire State Trail. In May, it received five bids—but, in June, rejected all five without explanation.

The low bidder, CCI Companies of Madison County (a non-union company), had offered to complete the paving and other construction work for $17.3 million. DOT, however, said all five bids came in “considerably more than the Department’s estimate.”

DOT rebid the project a few months later with almost identical specifications—but with the requirement that bidders sign a project labor agreement, or PLA, a contract in which builders agree to steer work to local trade unions. PLAs supposedly give unions an incentive to cooperate with contractors to find ways of reducing costs—but competitive bidding process itself already gives contractors all the financial incentive they need to do the same thing without a state requirement.

A DOT consultant claimed requiring a PLA would save $154,000. But the second round of bidding, which attracted just three offers, proved the opposite: the low bid, from Crane-Hogan Structural Systems of Monroe County (a union firm), came in at just shy of $19 million, almost $1.7 million—or 10 percent—more than CCI’s offer.

CCI Companies moved to block the second award by filing a challenge with the state comptroller’s office. The comptroller’s office responded by noting that changes in “scope, time and schedule” could have driven up the costs, since the project needed to be completed in a shorter period of time.

But regardless of the reason, DOT’s insistence on using a PLA added close to $1.7 million to the price of the project by forcing a company to do business with Syracuse-area construction unions.

The situation mirrors a 2011 controversy in which the Cuomo administration fought in court for its right to steer work to a unionized construction firm after the winning bidder on an Orange County highway project said it wouldn’t sign a PLA. In that case, the state had required a PLA late in the bidding process, and inadvertently created a controlled experiment in which companies filed bids that both would and would not utilize the purported PLA “savings.” The result: a low bid from a non-union company that came in about 6 percent lower than the bidder who would “save” money by using the PLA.

While the comptroller’s office refused to block DOT from awarding work to Crane-Hogan, DOT’s response to the protest included an interesting admission: DOT Commissioner Marie Therese Dominguez herself “directed that a PLA should be included.”

That indicates the directive that forced taxpayers to shoulder greater costs and steered work to the governor’s political supporters came from a political appointee rather than technical or financial considerations.

Which, at this point, should surprise no one.

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- Ken Girardin is the Policy Analyst at the Empire Center for Public Policy.