OGDENSBURG — A letter sent to the city of Ogdensburg by the United States Department of Agriculture Rural Development said that a report on the feasibility of a Project Labor Agreement for the city’s Wastewater System Improvement Project did not provide sufficient supporting documentation to justify its claims of projected savings.
“(It) does not in our view provide sufficient supporting documentation of their calculations of projected savings.” the letter said.
An independent organization of contractors and an engineering academic who has studied PLAs said the savings are not likely to happen.
PLAs quell competition, Joel Howard, an attorney for the Associated General Contractors of New York State said.
“It dampens the ardor of any open shop contractor to pay the plan deposit and get the drawings and start looking at the job,” Mr. Howard said. “They’re not going to bid it because it has a PLA on it.”
Many of the items in the report, prepared by Seeler Engineering, cited as cost savings are already covered by prevailing wage laws, Mr. Howard said.
“On public works there is a prevailing wage rate schedule set by the Commissioner of Labor that provides mandated wage rates and fringe benefit rates for all trades on the job,” Mr. Howard said. “All contractors, whether they be union or open shop are paying the same wages and fringe benefit packages.”
Mike Elmendorf President and Chief Executive Officer at Associated General Contractors of New York State said the Seeler report is unusual only in the response received from the USDA.
“We’ve seen these studies before. They tend to be cut and paste jobs with the same kind of stuff repeated over and over again that may or may not have any particular relevance to the project at hand,” he said. “What’s particularly interesting here is the correspondence with the locality and the U.S. Department of Agriculture about the impermissibility of the PLA because of what they are suggesting is the inadequacy of the study to justify it.”
After learning that the USDA was not likely to go forward with its $5 million package, which included a $1 million grant, the city, on June 24, turned to the New York State Environmental Facilities Corporation for a $5 million, 30-year loan with an interest rate of 1.6 percent.
USDA RD had asked the city for some clarification on the use of a PLA, City Manager Sarah Purdy said.
“That (the lack of adequate documentation) was the one area where they did not find the response that the city gave sufficiently compelling,” Ms. Purdy said.
So, Ms. Purdy said, the city sought additional state money so the project could go forward.
Tim A. Seeler of Seeler Engineering said that he was not authorized to talk about the Ogdensburg study.
Paul G. Carr, former Chief Executive Officer of Bernier Carr and Associates, an engineering firm in Watertown and an Adjunct Associate Professor of Civil and Environmental Engineering at Cornell University said that what affects a project more than a Project Labor Agreement is open and fair competition.
Mr. Carr has studied, as a major area of his research, the relationship between bidder participation and construction costs. The conclusion of his study is, “the greater the bidder participation, the lower the bid prices.”
If a municipality restricts bids, which is what a PLA does, Mr. Carr said, it can expect a cost penalty.
Increasing competition, Mr. Carr said, results in a cost savings that dwarfs anything a PLA might bring.
A study by the Beacon Hill Institute at Suffolk University in Boston applied to New York State school construction projects found that PLAs added 20 percent to a project cost.
Bids were due back on the project on Aug. 7, but the deadline has been moved to Aug. 20 because some firms asked for more time, Ms. Purdy said.