HomeMy WebLinkAbout07-10-2018 Item 13 - WRRF Project Labor Agreement Eval
Meeting Date: 7/10/2018
FROM: Derek Johnson, City Manager
J. Christine Dietrick, City Attorney
Carrie Mattingly, Utilities Director
Justin Pickard, Water Systems Consulting, Inc., WRRF Project Consultant
SUBJECT: WATER RESOURCE RECOVERY FACILITY (WRRF) PROJECT LABOR
AGREEMENT EVALUATION
RECOMMENDATION
Receive a report on the potential use of a Project Labor Agreement in connection with the City’s
WRRF Project and provide direction to staff whether to proceed with negotiation of an
Agreement.
REPORT-IN-BRIEF
The purpose of this report is to review typical provisions in project labor agreements (PLAs) and
evaluate the potential impacts of key provisions on the City of San Luis Obispo’s (City) Water
Resource Recovery Facility Project (WRRF Project). The intent of the report is to evaluate the
potential impact of a PLA on the WRRF Project from a practical perspective. The memorandum
is not intended to be an exhaustive review of every provision included in PLAs or to provide an
opinion on the merit of a PLA for the WRRF Project.
PLAs are pre-hire collective bargaining agreements that establish standard terms and conditions
that apply to a specific construction project or category of projects, typically larger and more
complex projects. PLAs are typically negotiated between the project owner and the local
building trades council and/or individual construction trades, although PLAs can be directly
negotiated between contractors and construction trades. The agreements are negotiated prior to
advertisement for bids and become part of the bid package. The general contractor and
subcontractors of any tier must agree to be bound by the requirements of the agreement as part of
their bid submission and they must sign on to the agreement prior to performing any work on a
PLA-covered project.
Key PLA provisions include the establishment of 1) uniform work conditions; 2) hiring
procedures; 3) wages and benefits; 4) management rights; 5) labor dispute resolution procedures;
6) procedures to prevent work stoppages; and 7) agreement to adhere to existing Master Labor
Agreements (MLAs) for the trades subject to the PLA. In addition, PLAs often include
provisions to promote participation in covered projects from targeted categories of workers,
including residents, apprentices, historically underutilized residents and businesses, at-risk
persons, veterans, minority-owned businesses and disadvantaged business enterprises. The
Council expressed interest in the potential of the PLA structure for advancing local hire and local
economic development objectives.
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There are competing positions as to the value, utility and cost impacts of PLAs and this report
does not propose to resolve those conflicting positions. Rather, this report attempts to provide
the Council with as much objective, preliminary information as possible and facilitate a public
discussion of the potential benefits and impacts of a PLA specific to the WRRF Project, looking
at the likely time and expense associated with negotiating and implementing an agreement at this
stage of the WRRF Project planning. The Local Plumbers, Pipefitters and Refrigeration Fitters
Local Union 403 provided the Council with a binder of materials in support of its request that the
Council consider pursuing a PLA for the WRRF Project. Within that material are references to
multiple studies both supporting and opposing the PLA model and that material is available for
public review in the Council reading file.
Following discussion of this report and supporting materials, staff will seek Council direction
whether to pursue negotiations of a PLA for the WRRF Project.
DISCUSSION
The following sections detail typical provisions included in PLAs, and potential considerations
for the WRRF Project regarding each provision.
Work Conditions
Uniform Work Conditions
PLAs commonly include provisions to establish uniform work conditions across each of the
construction trades providing craft labor on the covered project. Conditions typically covered
include work hours, holidays, meal periods, break periods, overtime and double-time pay, shifts,
and shift differential pay. For contractors that are signatory to the unions, the Master Labor
Agreement with each individual trade sets forth standard work conditions. The Master Labor
Agreement for each trade can include slightly different provisions related to work conditions,
and a PLA can serve to standardize these conditions across all trades and simplify the
management process.
Many of the work conditions typically covered in PLAs are also addressed in the California
Labor Code including shift lengths, meal and break periods, and overtime/double-time pay. In
addition, the construction contract sets forth allowable work hours and holidays observed by the
project owner. In the absence of a PLA, California Labor Code and the construction contract
will establish the work conditions for the project in question.
WRRF Project Considerations
Standard work conditions provisions in a PLA are not anticipated to have a significant impact on
the WRRF Project, as many of the provisions typically included are addressed in the California
Labor Code and the construction contract documents.
Hiring Procedures
Union Recognition
PLAs designate the trade unions and the local or regional building trades council as the exclusive
source of craft labor on covered projects and the exclusive bargaining representative for craft
workers. In addition, employers must recognize the jurisdiction and scope of work specific to
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each trade as established in each Master Labor Agreement. Terms requiring compliance with
existing Master Labor Agreements are typically incorporated into the PLA.
Referral Systems
PLAs require that established union referral systems be used exclusively to obtain craft labor on
covered projects. If a union referral system is unable to refer workers within a defined period
(typically 48 hours), contractors are often allowed to hire employees from other sources. PLAs
do not discriminate between union and non-union workers and referrals cannot be based on a
preference for union members over non-union members; however, non-union workers must
register with the union hiring hall to become eligible for assignment to a covered project
Core Employees
PLAs typically limit the number of employees that non-union contractors can bring to a project
without utilizing the union hiring hall system. These employees are termed “core” employees,
and typically include key positions such as foremen. Most agreements exclude key management
employees above the general foreman level from the requirements of the agreement. Employees
must meet specific requirements to be considered a core employee including being recently
active on the contractor’s payroll (i.e., for 60 of the 100 working days immediately prior to the
award of the contract), possessing licenses required for the performance of the project work, and
having the ability to safely perform the duties and functions of the trade for which they are
providing craft labor.
Non-union contractors can hire core employees on a one-to-one ratio with employees referred by
the union hiring hall up to a maximum number of core employees (typical limitations of 5 core
employees appear common but would be a term subject to negotiation). For example, the
contractor can hire a member of its core workforce first, followed by an employee referred from
the union hiring hall second, then another member of its core workforce. This process continues
until the maximum number of core employees specified in the PLA is reached. Core employee
provisions do not apply to union signatory contractors.
Union and Non-Union Contractor Comparison
For union contractors and on PLA-covered projects, Master Labor Agreements clearly define the
scope of work that can be performed by each individual trade, and workers are not allowed to
work outside of their classification/jurisdiction. Non-union contractors on projects not covered
by a PLA can allow their employees to perform a wider range of tasks. For example, a non-
union employee can perform functions of multiple trades (e.g., laborer, operating engineer,
cement mason), provided they are paid the appropriate prevailing wage rate for each
classification while performing the work.
Hiring procedures included in PLAs limit the ability of non-union contractors to utilize their core
workforce on covered projects. PLAs establish the maximum number of core employees that a
non-union contractor can employ on a project and require non-union contractors to use union
referral systems exclusively for obtaining craft labor. While non-union workers can register with
the union and become eligible to work on the project, they are subject to the hiring hall rules of
each specific trade. Union hiring halls maintain out-of-work lists, and applicants are typically
referred to projects based on the order in which they registered with the hiring hall (i.e., first
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come, first served). It is important to note that the hiring procedures and hiring hall rules are
specific to each local union.
Hiring procedures in PLAs do not significantly impact union signatory contractors. Signatory
contractors routinely use union referral systems to obtain craft labor and can request specific
employees by name, rather than requesting workers from the out-of-work list for each trade. In
addition, core employee provisions do not apply to union contractors and union contractors are
able to utilize their core workforce without limitation. Exceptions can include specific
requirements in Master Labor Agreements that restrict or limit participation of “traveling” union
members from their home union to the local union at the project location.
WRRF Project Considerations
The impact of PLA hiring procedure provisions on the WRRF Project depends largely on
whether the prequalified contractors eligible to bid on the Project are signatory to the individual
unions. Non-union contractors will be impacted by limits placed on their ability to utilize their
core workforce. Union contractors will not be significantly impacted by the hiring procedure
provisions as the procedures reflect their standard work practices, except for travel restrictions
imposed by local unions on union members working outside the jurisdiction of their home union.
Specialty Subcontractors
The PLA hiring procedures likely will impact smaller, specialty subcontractors more than the
general contractor and major subcontractors. Specialty subcontractors (e.g., roofers, glaziers, tile
installers, sheet metal workers, etc.) have a smaller role relative to the overall scope of the
WRRF Project, provide fewer employees and less craft hours, and are more likely to be local
contractors. Non-union specialty contractors with a small workforce generally rely more heavily
on their core employees, and limitations on their ability to fully utilize their core workforce could
disproportionately affect their ability to effectively perform their subcontracted scope of work, as
compared to larger contractors. In addition, small non-union contractors may not fully
understand the PLA requirements when submitting subcontract bids and may refuse to sign the
required letter of assent before beginning work on a PLA-covered project. This can result in cost
and schedule impacts associated with subcontractor substitutions.
Careful consideration should be given to the impacts of a PLA on smaller specialty contractors if
the City decides to move forward with an agreement. Negotiations with the building trades
should include a discussion of potential exemptions from the typical PLA hiring provisions and
core worker restrictions for small and specialty subcontractors performing limited scope on the
WRRF Project. Additionally, consideration should be given to mandatory pre-bid meetings to
ensure that all potential bidders and subs are aware of the PLA requirements, understand their
obligations and restrictions under a PLA and have an opportunity to have pre-bid questions
addressed to facilitate fully informed bids.
Construction Inspection
Construction inspectors, materials testers, and other personnel performing quality assurance and
quality control functions may also be impacted by the hiring procedures set forth in a PLA.
Construction inspectors are typically employed by a third-party construction manager through a
professional services agreement with the project owner. Materials testers and specialty
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inspectors (e.g., soils technicians, certified welding inspectors, reinforced concrete inspectors,
etc.) are typically employed as subconsultants to the construction manager. While professional
services are exempt from PLAs, construction inspectors, materials testers, and personnel
performing quality control and quality assurance generally are covered crafts under a PLA and
are subject to the typical hiring procedure provisions discussed in the preceding paragraphs.
The City is currently in the process of procuring a consultant to provide construction
management and inspection services for the WRRF Project. The City’s evaluation of
construction management firms will be partially based on the qualifications of the proposed
inspection staff. Construction inspectors must have experience providing quality assurance for
complex civil, structural, and mechanical treatment facility projects like the WRRF Project. As
providers of professional services, most construction management firms are not signatory to
construction unions and non-union firms will be subject to standard PLA hiring procedures,
including core worker provisions. It is anticipated that five to six inspectors will be employed on
the WRRF Project through the course of construction, and the City’s construction manager could
be required to obtain a portion of its inspection staff through the union hiring system.
The core worker provisions in a PLA will impact the construction manager’s ability to utilize its
inspection staff on the WRRF Project. Should the City elect to move forward with a PLA,
negotiations with the building trades should include a discussion of potential exemption from the
typical PLA hiring provisions and core worker restrictions for project staff performing quality
assurance work, including construction inspectors, specialty inspectors, and materials testers.
In addition, the construction management services contract is tentatively scheduled to be
executed in September 2018. If the City decides to enter into a PLA with the building trades, the
agreement will likely not be finalized before the construction manager is procured and the
construction management services contract will need to be renegotiated to reflect the terms of the
PLA. Depending on the length and complexity of negotiations, this could impact anticipated
contracting timelines.
Wages and Benefits
Wages
Wages for craft workers on public works projects are paid in accordance with applicable state
and federal prevailing wage rates. PLAs do not supersede applicable prevailing wage rates and
wages paid to craft workers are the same for PLA and non-PLA projects.
Benefits
The California Department of Industrial Relations (DIR) establishes basic hourly rates and fringe
benefit amounts that must be provided to the employee by the employer. Fringe benefits include
health and welfare, pension, vacation/holiday, training, and “other” benefits. “Other” benefits
include contributions to management relations boards, industry advancement funds, and other
miscellaneous initiatives specific to each trade. Non-union contractors must provide benefits of
equivalent value as the fringe benefit amounts established by the DIR or pay fringe benefits
directly to their employees in cash. Training benefits must be paid directly to a State-approved
apprenticeship program and are not paid directly to the employee as cash.
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Union contractors provide fringe benefit payments on behalf of their employees directly to union
trusts, who in turn provide benefits to their members. As with non-union contractors, training
benefits must be paid directly to a State-approved apprenticeship program and are not paid
directly to the union trust fund.
Union and Non-Union Contractor Comparison
On PLA-covered projects, all contractors, regardless of union affiliation, must pay fringe benefit
contributions directly to the union trust fund for each employee for the duration of the project.
Union contractors are not affected by this requirement as it reflects their normal business practice
and is in alignment with the Master Labor Agreements between the construction trades and union
employers.
The extent to which payment of fringe benefits to union trusts affects non-union contractors
depends largely on the benefits employers offer to their employees. If non-union contractors
provide retirement benefits such as 401k plans or health insurance, these benefits would no
longer be provided through the employer and would be provided through the union trust. For
non-union contractors that pay fringe benefit contributions directly to employees as cash, the
contractors would simply begin making these payments to the union trust on the employees’
behalf.
Information published by the United States Department of Labor Bureau of Labor Statistics
indicates that union workers have greater participation rates in medical benefit plans than non-
union workers, 79% versus 46%, respectively. In addition, union workers have greater
participation rates in retirement plans than non-union workers, 82% versus 47%, respectively
(United States Department of Labor Bureau of Labor Statistics, 2017).
WRRF Project Considerations
Union members must work a minimum number of hours each year to become vested in union
pension programs. Non-union workers for whom fringe benefits are paid to the union trust by
their employer during the WRRF Project might not work sufficient hours to become vested and
may not ultimately realize any benefit from the trust fund contributions made on their behalf.
This issue may be more pronounced for non-union specialty subcontractor employees
performing limited scope on the WRRF Project (e.g., roofers, glaziers, tile installers, etc.). These
employees may not work sufficient hours to become vested in union trust funds because they
will be performing a discrete scope of work that will be completed in a short period of time on
the WRRF Project.
For non-union workers performing limited scope on the WRRF Project for a limited period,
employers may elect to continue providing their standard retirement and health benefits while
also providing fringe benefit payments directly to the union trust. Provision of benefit payments
to both the union trust and directly to the employee can result in increased costs to the employer.
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If the City decides to consider a PLA for the WRRF Project, negotiations with the building
trades should include a discussion of potential exemptions from the required union trust fund
benefit payments for small contractors performing limited scope on the WRRF Project.
Management Rights
PLAs include provisions detailing the rights maintained by management under the agreement.
PLAs typically give management exclusive rights to plan and direct the work; hire, layoff, and
promote employees; determine the number of employees required to prosecute the work;
determine means and methods of construction; select craft foremen; and assign and schedule the
work. The intent of these provisions is to preserve the ability of management to perform key
duties that are critical to the successful performance of work under the covered project.
WRRF Project Considerations
Management rights provisions are not anticipated to impact the WRRF Project. These provisions
are simply intended to clearly express to signatories that contractors retain the right to manage
the labor force on a covered project.
Work Stoppages
PLAs include provisions expressly prohibiting strikes, picketing, work stoppages, slowdowns,
and lockouts to ensure the continued performance of work and to prevent schedule delays on
covered projects, with limited exceptions. When employers and employees are unable to agree
on the terms and conditions of employment, employees may implement work stoppages such as
strikes, or slowdowns and employers can implement lockouts. Work stoppages are used to
compel either the employer or the employees to agree to the terms and conditions of employment
in dispute. Some PLAs allow unions to withhold craft labor in the event a contractor is
delinquent in payment of its weekly payroll or payments to the union trust.
Work stoppages can significantly impact a construction project as they interrupt the availability
of craft labor and delay performance of the work. Union employees are prevented from striking
on the basis of economic conditions when bound by an active collective bargaining agreement
and can only strike after a good faith effort has been made at collective bargaining. Union
employees are not constrained in their ability to strike on the basis of unfair labor practices when
certain conditions are met. It is beyond the scope of this report to detail the circumstances and
laws surrounding employers’ and employees’ ability to implement work stoppages.
WRRF Project Considerations
The construction trades in California have a long history of successful collective bargaining with
the construction industry. A review of work stoppage data compiled by the United States
Department of Labor Bureau of Labor Statistics did not identify any work stoppages by the
construction trades in California involving 1,000 or more workers over the last ten years (United
States Department of Labor Bureau of Labor Statistics, 2018). Work stoppages resulting from a
lapse in the collective bargaining agreements between the construction trades and the
construction industry do not present a significant risk to the WRRF Project.
Previous public works projects constructed by the City have been picketed by the construction
trades, and in isolated incidents, workers have refused to cross picket lines. In the event of a
picket at the WRRF Project, union workers might refuse to cross picket lines, impacting
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performance of the work. A PLA would expressly prohibit strikes, picketing, and work
stoppages and would mitigate this concern. It is recommended that additional analysis be
performed to better understand the membership rules of each trade regarding the ability of union
members to cross picket lines. This analysis would help quantify the risk of a work slowdown
resulting from a picket if a PLA is not in place for the WRRF Project.
Dispute Resolution
Dispute resolution provisions are included in PLAs to establish a uniform and timely process to
resolve project issues without slowing down or stopping the work. Disputes regarding the
jurisdiction of individual trades are settled in accordance with the Plan for the Settlement of
Jurisdictional Disputes in the Construction Industry (the Plan). The Plan is a broadly recognized
dispute resolution procedure established by the AFL-CIO and construction employer associations
that has been in place since 1984. When a jurisdictional dispute between trades arises on a
project covered by a PLA (e.g., laborer versus pipefitter scope for the installation of underground
pipelines), the issue is referred to the Plan for settlement. PLAs include provisions that prohibit
work slowdowns and stoppages while jurisdictional disputes are being resolved.
PLAs also include provisions related to resolution of grievances and disputes not specifically
related to jurisdictional issues. PLAs establish a defined, step-wise process for dispute resolution
that encourages resolution of project issues on the lowest possible level. The dispute resolution
process typically culminates with arbitration if not settled at a lower level, typically before an
arbitrator selected from an agreed upon list of arbitrators to facilitate timely resolution. As with
jurisdictional disputes, parties to a PLA cannot stop or slow down the work because of a
grievance or dispute.
WRRF Project Considerations
It is difficult to evaluate the impacts of PLA dispute resolution provisions on the WRRF Project.
Disputes on construction projects are typically resolved informally by the general contractor and
subcontractor management teams or through the formal dispute resolution and claims process
detailed in the contract documents on non-PLA projects.
Jurisdictional issues are more likely to arise between union contractors or on PLA-covered
projects where workers are not allowed to work outside of their classification, but where the
scope of work for multiple trades overlaps. For example, the scope of work for both laborers and
pipefitters includes installation of piping in water and wastewater treatment facilities. This
overlap in scope may result in a jurisdictional dispute depending on the amount of work in
question and the willingness of the trades to pursue resolution through the Plan. If a contractor
signatory to the laborers union bids the WRRF Project assuming laborers will install the
mechanical piping and assumes prevailing wage rates for laborers in its bid, but the piping work
is later found to be within the jurisdiction of the pipefitters at pipefitter prevailing wage rates, the
contractor would incur significant additional costs. Non-union contractors on projects not
subject to PLA agreements would not be faced with a jurisdictional dispute and could elect to
perform the work with laborers; however, the pipefitters could file a complaint with the DIR
(Department of Industrial Relations) that the workers were not being paid the appropriate
prevailing wage rate, which would be subject to an investigation by the Division of Labor
Standards Enforcement.
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Targeted Worker Participation
Many PLAs include provisions to increase participation in covered projects by targeted
categories workers. Targeted categories typically include residents, apprentices, at-risk persons
(e.g., economically disadvantaged individuals as defined in the agreement or those with prior low
level criminal records that can create barriers to employment), veterans, and disadvantaged
business enterprises. PLAs establish goals for the percentage of total craft hours on the covered
project to be performed by the targeted workers. Construction contractors can be required to
retain the services of a jobs coordinator, who works with the contractor, unions, local workforce
development agencies, and apprenticeship programs to help the contractor meet the participation
goals for each demographic set forth in the agreement.
WRRF Project Considerations
Targeted worker category provisions can be effective in increasing participation in the WRRF
Project by the targeted demographics and developing the local workforce. The success of
targeted worker participation provisions depends on commitment to the process by all parties to
the PLA through ongoing and active management.
Schedule
PLAs are typically negotiated between the project owner and the local or regional building trades
council, who represents a group of different craft unions. Some crafts anticipated to perform
work on a covered project might not be represented by the building trades council, and the PLA
would need to be negotiated with each of these crafts individually. The amount of time required
to negotiate a PLA varies widely and depends on the content of the agreement initially presented
by the building trades as a starting point to the negotiations. Once the City has reviewed the
draft agreement, it can identify the provisions that warrant additional discussion and negotiations
can begin.
It is estimated that the length of time required to negotiate a PLA for the WRRF Project could
range from two months to one year or more. If the City is willing to accept the standard PLA
agreement presented by the building trades council and detailed negotiations are not required, it
will take approximately two months to work through the City Council approval process and
circulate the final agreement for execution. If provisions of the standard agreement warrant
additional negotiations and the City is required to negotiate with multiple trades not represented
by the Building Trades Council, the process could take up to one year or more.
If the City elects to move forward with a PLA, the agreement must be in place prior to issuing
the bid advertisement for the WRRF Project, which is tentatively scheduled to be issued in
December 2018. The PLA must be included in the contract documents to inform prospective
bidders and subcontractors of their responsibility to comply with the terms and conditions of the
agreement. Implementing a PLA after contract award and start of construction would be difficult
and likely disrupt the WRRF Project.
One of the key drivers of the WRRF project is the Time Schedule Order (TSO) that requires the
City to be in compliance with nutrients and disinfection by-products by the fall of 2019. Delays
have already resulted in the City being unable to meet the disinfection requirements. The City is
in discussions with the Central Coast Water Board (CCWB) on possible regulatory pathways to
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reduce or eliminate fines for the TSO, but this issue has not been resolved. Additional delays
may result in added fines and enforcement actions.
The present construction climate throughout California has been volatile with projects recently
coming in over budget. Additional delays may result in escalation of construction costs and the
need to retain supporting professional services for the project.
Cost
Impacts of a PLA on construction bids are difficult to quantify and are beyond the scope of this
report to assess comprehensively. Proponents of PLAs assert that these agreements save money
by making overall labor reliability and project cost management more predictable, while
opponents argue that PLAs increase project costs due to labor agreement compliance
administration and union/fringe benefits contributions requirements. Information regarding the
arguments on both sides of this issue is readily available through previously published articles
and research. The anecdotal feedback staff received from public entity colleagues who have
completed projects subject to PLAs is that the bids received on their PLA projects did not seem
significantly out of scale in comparison to non-PLA projects of a similar size; however, the
consistent feedback was that it really isn’t possible to know what the cost impacts on a project
might have been absent a parallel bid process, with one including the PLA requirement and the
other not. This section will focus on the costs that are more readily quantifiable including costs
to support contract negotiations, costs to incorporate the PLA into the construction documents,
and costs to administer the PLA through construction.
PLA Negotiation
Negotiation of the PLA will require participation from the City’s Utilities Department, the City
Attorney’s office, outside legal counsel, and the WRRF Project Program Management Team.
Costs to support PLA negotiations will depend on the extent and duration of the negotiations and
can vary widely.
Contract Document Development
The construction contract documents will need to reflect the requirements of the PLA so
prospective bidders and subcontractors will be aware of their responsibilities regarding the
agreement. Language is typically included in the bid advertisement, bid form, agreement, and
the front-end documents to detail PLA requirements. In addition, the complete PLA is included
in the contract documents as part of the front-end documents or as an appendix. It is
recommended that a specification be developed to detail the targeted worker participation
requirements, as the procedures for meeting participation goals and reporting requirements are
typically not explained in detail in the PLA. The targeted worker specification will increase the
likelihood of meeting the participation goals set forth, increase transparency in the process, and
facilitate accountability of all parties to the agreement.
Modification of the construction contract documents to reflect the PLA will require participation
from the City’s Utilities Department, the City Attorney’s office, outside legal counsel, the design
engineer, and the WRRF Project Program Management Team.
PLA Administration
PLAs require that the project owner designate a Project Labor Coordinator to act as the owner’s
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agent and to facilitate implementation and compliance with the PLA. The Project Labor
Coordinator can be a member of the owner’s staff, but an outside contractor with specific
experience administering PLAs is typically used. In many cases, the Project Labor Coordinator
can also function as the labor compliance program administrator, which will be required on the
WRRF Project to satisfy the requirements of outside funding sources. It is assumed the City will
hire an outside contractor to serve as the Project Labor Coordinator if a PLA is negotiated.
PLAs include provisions for the establishment of a Joint Administrative Committee (JAC,
Committee) comprised of representatives from the owner and representatives from the building
trades. The JAC meets regularly to discuss issues associated with the PLA including project
issues, safety concerns, contractor relations, and disputes. The frequency of the JAC meetings is
left to the discretion of the Committee, but meetings are typically held on a quarterly basis. It is
anticipated that the City’s representatives on the JAC will include City Utilities Department staff
and representatives from the WRRF Project Program Management Team.
The City can require the construction contractor to retain the services of a Jobs Coordinator to
assist the contractor in meeting its obligations for targeted worker participation. The Jobs
Coordinator coordinates with the construction trades, apprenticeship programs, and local
workforce development agencies to identify potential workers that meet the criteria necessary to
qualify as a targeted worker for employment on the covered project. The Jobs Coordinator
assists the contractor in the preparation of reports including targeted worker hiring status reports
and manpower utilization plans. It is anticipated that the contractor will retain the services of an
outside consultant to serve as its Jobs Coordinator.
Table 1 below details the estimated costs for PLA implementation and administration for the
WRRF Project.
Table 1. PLA Implementation and Administration Cost Estimate
RESOURCE LowHighLowHighLowHigh
Utilities Department 2,181$ 3,444$ 574$ 574$ 2,985$ 4,362$
City Attorney 2,387$ 6,510$ 651$ 651$ 217$ 434$
Outside Counsel 20,400$ 51,600$ 7,800$ 12,600$ 1,200$ 2,400$
Design Engineer ‐$ ‐$ 8,904$ 11,130$ ‐$ ‐$
Program Management 9,760$ 20,496$ 4,880$ 7,320$ 33,672$ 51,728$
Project Labor Coordinator ‐$ ‐$ ‐$ ‐$ 119,660$ 176,390$
Jobs Coordinator ‐$ ‐$ ‐$ ‐$ 79,000$ 100,500$
SUBTOTAL 34,728$ 82,050$ 22,809$ 32,275$ 236,734$ 335,814$
PLA Negotiation Contract Document
Development PLA Administration
TASK
The total cost for PLA implementation and administration is estimated to cost between $294,271
and $450,139. The cost estimate assumes that the Project Labor Coordinator will also serve as
the administrator of the WRRF Project labor compliance program. Fifty percent of the total cost
of the Project Labor Coordinator has been assigned to PLA administration and the remaining
fifty percent of the cost has been assigned to labor compliance. Consequently, the total cost of
labor compliance and PLA administration is estimated to range between approximately $259,543
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and $368,069. If the City does not move forward with a PLA, it will still need to implement a
labor compliance program to satisfy outside funding requirements at a cost of approximately
$120,000 to $177,000.
Alternative Local Hire Approaches
If the Council’s primary objective in pursuing a PLA is advancing local hire and economic
development objectives, there are other alternatives that can be considered and implemented via
contractual clauses in the bid documents. A good example of such provisions can be found in
the Alameda County General Services Agency contract for the Cherryland Community Center,
which included an “Enhanced Construction Outreach Program” that set goals for participation
and required the contractor to demonstrate enhanced efforts to engage small and local business
enterprises and other, historically disadvantaged groups, to perform project work (see
https://www.acgov.org/gsa/purchasing/bidContent_ftp/rfpDocs/1856_0_002219ECOP.pdf ). A
paper done for the League of California Cities has also been included in the Council reading file
and provides a detailed overview of the legal parameters and practical landscape around local
hire and purchase provisions, highlighting what is and is not legally permissible regarding local
hire preferences outside the PLA context. An effective program would need to incorporate
compliance documentation and monitoring provisions, which could also be incorporated into the
bid documents, so that bidders could factor any costs associated with such provisions into their
bid packages and progress toward objectives could be tracked. The development of the
contractual provisions would be done by project staff and consultants and would not require
negotiations with third parties or third-party compliance monitoring.
CONCURRENCES
The purpose of a Study Session is for informal discussions between staff, advisory bodies,
consultants, the public, and the City Council regarding specific programs, projects or policies.
Council may provide direction, but no formal action to approve the inclusion of a PLA into the
bid package for the WRRF project will be taken during a Study Session. Study Sessions may be
conducted in a variety of formats, including Public Workshops. Should Council direct staff to
move forward with negotiation of a PLA program, all Departments would be engaged in the
development and review of any program, which would be subject to final Council approval.
ENVIRONMENTAL REVIEW
There is no project subject to environmental review associated with the discussion and possible
negotiation of a PLA. Nothing related to the negotiation of a PLA affects otherwise applicable
environmental review of the WRRF project, which is in compliance with all applicable
requirements.
Item 13
Packet Pg. 188
FISCAL IMPACT
The likely fiscal impact of the inclusion of a PLA for the WRRF Project is not precisely
quantifiable, but preliminary anticipated cost impacts have been included in the cost section
above.
ALTERNATIVES
1. Direct staff to proceed with the negotiation of a PLA for inclusion with the bid package for the
WRRF, including local hiring preference components.
2. Direct staff to include provisions for local outreach and/or incentives for local hire in contract
documents, consistent with applicable legal limitations.
3.Direct staff to proceed with preparation of bid package without additional local outreach of
hire provisions.
Attachments:
a - Council Reading File - Binder of PLA Information
b - Council Reading File - League of CA Cities Paper on Local Hiring and Purchasing
Preferences
c - Council Reading File - Example Local Outreach Provisions for Contracts
Item 13
Packet Pg. 189
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blank.
Packet Pg. 190
Item 13Item 13
7/10/2018
1
Water Resource Recovery
Facility Project
Project Labor Agreement
City Council Study Session – July 10, 2018
Recommendation
Receive a report on the potential use of a
Project Labor Agreement (PLA) in
connection with the City's WRRF Project
and provide direction to staff whether to
proceed with negotiation of an Agreement.
2
Staff Presentation - Item 13
7/10/2018
2
PLA Defined
3
A Project Labor Agreement (PLA) is a pre-
hire collective bargaining agreement
between a project owner and the
construction trades. The agreement
establishes the terms and conditions of
employment for the covered project. Also
known as community workforce agreement,
project stabilization agreement, and
community partnership agreement.
City Council Previous Direction
April 17, 2018: Staff report on contractor
prequalification for the WRRF Project was pulled from
the consent calendar for discussion.
• Public comment regarding local hiring and a PLA
was heard.
• City Council directed staff to explore an agreement
which includes a local contracting preference or
incentive component.
4
Staff Presentation - Item 13
7/10/2018
3
Study Session Objective
Review potential options for
incorporating a local hiring preference for
the WRRF Project including a PLA or
other contract terms.
5
Mission
Deliver a Water Resource Recovery
Facility in partnership with
stakeholders that provides economic,
social and environmental value to our
community
Vision
Create a community asset that is
recognized as supporting health, well-
being and quality of life
WRRF Project Charter - 2014
6
JP2
Staff Presentation - Item 13
Slide 6
JP2 Boiler plate slides from all WRRF presentations, not sure we want to spend time here.
Justin Pickard, 7/5/2018
Staff Presentation - Item 13
7/10/2018
4
New NPDES Permit
Aging Infrastructure
Maximizing Reuse
Treatment Capacity
One Water
Project Drivers
7
Time Schedule Order (TSO)
November 30, 2019
Project Update - Funding
8
1. State Revolving Fund (SRF) Low Interest
Loan
2. California Office of Emergency Services
(CalOES) Funding
3. Strategic Growth Council Funding
Staff Presentation - Item 13
7/10/2018
5
Project Update - Process
9
1. Contractor Prequalification
2. Construction Manager Procurement
(review note: this bid process did not
contemplate a PLA and would require a contract
amendment if direction is given to go forward
with a PLA)
3. 95% Design Submittal
Next Steps
10
Identify Prequalified Contractors July 2018
Select Construction Manager September 2018
Finalize Design December 2018
Issue Bid Advertisement January 2019
Award Construction Contract April 2019
Begin Construction May 2019
Staff Presentation - Item 13
7/10/2018
6
Current Schedule
11
Comparison of Provisions
12
Provision Current City
Contract
Modified City
Contract With Local
Hire Preference
PLA
1. Local Hire /
Targeted Worker
Participation
DBE Outreach,
Apprentice
Utilization
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
2. Hiring Procedures Subject to Contractor Discretion Union Referral, Core
Worker Limits
3. Wages and
Benefits
Prevailing Wage Prevailing Wage,
Fringes to Union
Trust (all contractors)
4. Management
Rights
No Restrictions No Restrictions
5. Work Stoppages No Contractual Language; No Ability to
Restrict
Prohibited
6. Dispute
Resolution
Partnering, Public Contract Code, Labor
Compliance
“The Plan”
(jurisdictional
issues),Arbitration
Staff Presentation - Item 13
7/10/2018
7
Local Hire Preference Example
13
Local Hire - The Applicant shall make all efforts to employ local hire
(permanent residents within San Luis Obispo County, including hiring
priority given to residents with County zip codes), with adequate
experience and qualifications, during construction and operations to the
extent possible. To this end, the Applicant shall work with the local unions
and local job fairs, as well as advertise widely in the San Luis Obispo
County media, to promote available positions. Within 60 days of project
approval, or such later time as approved by the County, the Applicant shall
create and mail a flyer to local residents within 3 miles of the project site
describing the types of union and non-union jobs, as well as contact
information on how to pursue employment of those jobs relating to
construction of the project.
From San Luis Obispo County SunPower Project:
Comparison of Provisions
14
Provision Current City
Contract
Modified City
Contract With Local
Hire Preference
PLA
1. Local Hire /
Targeted Worker
Participation
DBE Outreach,
Apprentice
Utilization
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
2. Hiring Procedures Subject to Contractor Discretion Union Referral, Core
Worker Limits
3. Wages and
Benefits
Prevailing Wage Prevailing Wage,
Fringes to Union
Trust (all contractors)
4. Management
Rights
No Restrictions No Restrictions
5. Work Stoppages No Contractual Language; No Ability to
Restrict
Prohibited
6. Dispute
Resolution
Partnering, Public Contract Code, Labor
Compliance
“The Plan”
(jurisdictional
issues),Arbitration
Staff Presentation - Item 13
7/10/2018
8
Current City Contract Modified City Contract With
Local Hire Preference PLA
Benefits
• No schedule impact • Local worker participation
goals established
• No schedule impact
• Broad discretion for other
workforce goals
• Local worker participation
goals established
• Work stoppages
prohibited
Costs
• No additional cost • Local hire program
administration cost
• Potential for increased
construction cost
• Contract language
development cost
• Negotiation costs
• PLA administration costs
• Potential for increased
construction cost
Risks
• Potential for reduced
local worker
participation
• Potential for work
stoppage
• Potential for work
stoppage
• Potential for prolonged
bid review & award
• Potential delay to CM
procurement
• Potential for reduced local
contractor participation
• Potential construction
schedule delay
Potential Risks, Costs & Benefits
15
Negotiation Schedule
16
Staff Presentation - Item 13
7/10/2018
9
Implementation Cost Estimate
17
Total LCP + PLA Cost: $294,000 - $450,000
$118,000 -
$173,000
$176,000 -
$277,000+
Questions for City Council Direction
Yes No
A. Is City Council Interested in Implementing a Local Hire Preference for
WRRF?
B. If yes, above, should Staff Pursue:
1. A Local Hire Preference Contract?
2. A PLA?
C. What are City Council’s Key Objectives?
1. Local worker participation?
2. Local contractor participation?
3. Other objectives?
D. If yes to B.2., what are City Council’s Key Considerations for PLA
Negotiation?
1. Project schedule?
2. QA/QC exemption?
3. Core worker limitations?
4. Equivalent benefits provisions?
5. Exemption for subcontractors with limited scope?
18
Staff Presentation - Item 13
7/10/2018
10
slowrrfproject.org
Questions?
Potential Options for Council Direction
20
1. Direct staff to proceed with the negotiation of a PLA for inclusion with the bid
package for the WRRF, including local hiring preference components.
a. A PLA shall be negotiated by October 12, 2018 and incorporate the PLA
agreement and requirements into WRRF bid documents and return to the City
Council for approval.
b. If a PLA is not negotiated by October 12, 2018, direct staff to proceed with
incorporating local hire preference requirements into WRRF bid documents and
return to the City Council for approval.
c. Direct staff to pursue contract provisions to directly or indirectly control schedule,
cost, and quality.
2. Direct staff to include provisions for local outreach and/or incentives for local hire in
contract documents, consistent with applicable legal limitations into WRRF bid
documents using similar models for guidance, such as but not limited to the
“Alameda model” into bid documents.
3. Direct staff to proceed with preparation of bid package without additional local
outreach of hire provisions into WRRF bid documents.
4. Direct staff to prepare a work program item to consider local hire or PLA
requirements for future public works projects as part of the 2019-2021 Financial
Plan.
Staff Presentation - Item 13
7/10/2018
11
Comparison of Provisions
21
Provision Current City
Contract
Modified City
Contract With Local
Hire Preference
PLA
1. Local Hire /
Targeted Worker
Participation
DBE Outreach,
Apprentice
Utilization
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
Local, At-Risk,
Veteran, Others (to
be determined by
City), Apprentices
2. Hiring Procedures Subject to Contractor Discretion Union Referral, Core
Worker Limits
3. Wages and
Benefits
Prevailing Wage Prevailing Wage,
Fringes to Union
Trust (all contractors)
4. Management
Rights
No Restrictions No Restrictions
5. Work Stoppages No Contractual Language; No Ability to
Restrict
Prohibited
6. Dispute
Resolution
Partnering, Public Contract Code, Labor
Compliance
“The Plan”
(jurisdictional
issues),Arbitration
Staff Presentation - Item 13