By HOWARD FINE Staff Reporter The Los Angeles Unified School District board is scheduled this week to consider a measure that would likely steer some $2 billion worth of contracts to firms employing union workers. Even more significant is that approval of the “project labor agreement” could set a precedent that would have far-reaching impacts on public-sector contracting throughout Los Angeles. Such agreements typically pertain to specific major public-works projects, like an airport or dam. Their purpose is to head off strikes or other labor unrest that could delay work on such projects by weeks or even months. This is believed to be the first project labor agreement that would cover a host of contracts. “This is a test case for project labor agreements,” said Framroze Virjee, the O’Melveny & Myers attorney who represented the school district through nearly two years of negotiations with the Building Trades and Construction Council. “These agreements generally aren’t done for such geographically diverse and small projects. If the unions get it here, they can move on to the city and the county, as well as other school districts up and down the state.” Even if the measure does not open the door to other such agreements, non-union contractors insist that its approval would effectively shut them out of contracts tied to Proposition BB, the $2.4 billion bond measure passed by L.A. voters two years ago. “This agreement will eliminate 80 percent of the contractors available to bid on Prop. BB projects, simply because they are not union contractors,” said Joe Battaglia, director of the L.A. chapter of the Associated Builders and Contractors, which represents non-union contractors. Battaglia, a non-union landscape contractor, said he would lose about 10 percent of his current $25 million annual revenue stream if the agreement is approved. Union leaders, not surprisingly, support the measure and insist its approval would merely require non-union contractors to pay their workers the “prevailing wage” on those particular projects. The state labor code defines prevailing wage as “a single rate of pay that is paid to the greatest number of workers in a specific craft or classification in a given geographic area,” determined by collecting wage data from unions, surveys of employers and federal data. “The assertion that this contract freezes out non-union contractors is nonsense,” said Richard Slawson, executive secretary of the Building and Construction Trades Council of Los Angeles and Orange counties. “This agreement allows union and non-union contractors to compete for contracts. The non-union contractors simply do not want to have collective bargaining agreements. Without such agreements, they are free to violate overtime and prevailing wage laws with impunity.” Non-union contractors contend that they do not violate employment laws, but that the measure would make Prop. BB contracts unprofitable for them to bid on because they would have to pay union scale, causing their health benefits costs to soar, and labor costs to increase up to 15 percent higher than the prevailing wage. The March 23 vote comes at a critical time for the school board. Four members are up for re-election next month in what is shaping up as the fiercest school board election in years. The election could change the balance of power on the board, which is now dominated by union supporters. Mayor Richard Riordan has raised more than $1.3 million to help fund the campaigns of three challengers, as part of his attempt to remake the board, which he has termed “a bunch of incompetents.” One of the board members facing a challenge from a Riordan-backed candidate is Jeff Horton, an avowed union supporter and major proponent of the project labor agreement. Critics claim Horton is trying to push the agreement through before the election, in part to reinforce his union support and also out of fear that the current pro-union majority could be lost. “This is one of the last board meetings before the election and there is a lot of political pressure being applied to rush this thing through,” said Richard Peters, vice president with Helix Electric Inc., a non-union Garden Grove-based electrical contractor with several Prop. BB contracts. Horton denied having any political motivations. “I’m pushing for this because it will result in better-quality construction work,” Horton said. “The vast majority of the jobs that we have problems with are done by non-union contractors. With this agreement, we won’t have to spend as much to correct these shoddy construction and repair jobs.” But fellow board member David Tokosfy expressed concerns that the agreement could end up costing the district between 10 percent and 15 percent more than current contracts. “This could lead to a shortage of contractors bidding on Prop. BB work. That, in turn, could drive up the bidding prices,” Tokofsky said. “That’s why I have yet to be convinced by the district that this will not result in higher costs.” Two weeks ago, the Prop. BB Oversight Committee, chaired by Riordan’s top adviser Steve Soboroff, recommended that the agreement automatically sunset after a year unless school district staff can prove that it’s saving the district money. The current proposal stipulates that the agreement can be terminated if staff determines it is costing the district more. Both Virjee and Slawson said they would be amenable to the oversight committee’s recommended change. But they remain far apart on another issue: a provision that non-union contractors pay into the unions’ health and benefit funds. Peters, the non-union electrical contractor executive, said many non-union contractors have their own benefit programs. Because they would probably not drop their existing programs just to pursue a single contract, such a provision would essentially require non-union contractors to double their health benefits. “This would put us at such a severe cost disadvantage that many companies like ours simply won’t bother to enter the bidding process,” Peters said. “We will simply have to look for work elsewhere.” As a way around that particular problem, Virjee said that non-union contractors could be required to demonstrate that they provide “substantially equivalent coverage” for health and other benefits. But the unions have so far rejected that approach, saying so few non-union contractors now contribute toward health benefits for their employees that double payment is a non-issue.
