Economy and Small Business

Deal giving edge to unions muddies midfield contracts: Non-union contractors question whether bidding on project is worth the trouble

August 15, 2005

A construction agreement that requires union wages, work rules-and union workers-at the midfield terminal project has big and small businesses alike concerned they'll be shut out of all but the tiniest contracts on the $300 million building.

Unless Janet South's painting firm Deco Group agrees to accept those terms, she'd only qualify for projects of $75,000 or less-the threshold at which the agreement kicks in.

That limitation, contained in the project labor agreement attached to the midfield terminal, contrasts with the rosy contracting opportunities presented at seminars for women- and minority-owned business.

South said she's recently been invited to attend a number of such meetings, encouraging her to bid on the midfield terminal and, later, on the new stadium where the Indianapolis Colts will play.

"Most of the minority owners are nonunion ... It just seems to take away the opportunity for free enterprise in general," South said.

The PLA already has generated sparks with the Associated Builders & Contractors of Indiana. Earlier this month, the group representing non-union contractors asked the Indianapolis Airport Authority to cancel the agreement the authority signed with labor unions last May.

The ABC cites a 2001 executive order signed by President Bush that bans union-only PLAs on projects that receive federal funds.

Midfield project director John Kish said no federal funds are being used on the portion of midfield construction covered by the PLA. "We read the executive order."

Kish also said the PLA doesn't bar non-union contractors from bidding on the Indianapolis International Airport project, only to accede to the terms of the agreement that sets wages and work rules. "A contractor doesn't have to sign a collective bargaining agreement."

But non-union contractors would be forced to use union workers on the project, based on a complex ratio that allows the contractors to use only their own key employees and then a certain percentage of union workers.

Many non-union contractors say they would have no problem with wages and meeting minority hiring goals set by the airport, but balk at having to take on unknown union workers.

"The reality is you're not going to put two or three of your own people in there and hire from the union hall," said J.R. Gaylor, the ABC's president and chief executive officer.

With non-union contractors hesitant to bid, it leaves the work to union contractors. Gaylor said those firms are likely to face labor shortages that may lead to outof-state workers and firms getting the work. Or unions "will strip merit [nonunion] workers to do it locally."

South can't reconcile those prospects with the assurances from airport and city officials that the midfield project will be a boon for local minority and women firms, which, in turn, will spend money in the local economy.

"I do not at all understand the concept of saying, 'We'll bring in outside vendors to service this when we [local firms] can put the money back into the community."

Airport authority Chairman Lacy Johnson said numerous other midfield-related projects have gone to MBE and WBE firms, including those for roads and site preparation. He insists those firms are free to bid on building construction.

Although critics claim the PLA is payback to labor unions that backed Democratic Mayor Bart Peterson, Johnson said the agreement was needed to minimize the odds that labor disputes could slow or otherwise disrupt the project and run up costs.

"At the end of the day, we do have to build the terminal. It's a balancing act," Johnson said.

Gaylor's group disagrees.

"The unions have promised there will be no strikes, picketing, work stoppages, slowdowns or other disruptive activity for any reason. Therefore, the union bosses threaten labor disruption as a means of securing these contracts. That is wrong."

PLAs have been blamed for cost overruns on a number of projects, including Safeco Field in Seattle, a renovation of San Francisco International Airport and the "Big Dig" highway tunnel project in Boston.


Gaylor Kish
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