Editorial: Bill 37 provisions need redrafting

While the city should promote efficient construction work on public works projects, tapping skilled and well-trained local workers, it also should encourage healthy competition among union and non-union contractors through even-handed bidding processes and work agreements.

That’s why the City Council should either scrap or significantly rework a proposal that would require Honolulu Hale to negotiate with construction unions for all projects starting at the $1 million level.

Bill 37, CD1, which requires forging community workforce agreements (CWAs) — pre-hire collective bargaining agreements — with the Hawaii Building and Construction Trades Council and the Hawaii Construction Alliance, was scheduled for a final vote by the Council today.

Supporters say Bill 37 aims to preserve jobs for local workers, reduce delays caused by labor disputes and avoid cases in which low bids are submitted by inept or shady out-of-state contractors. Opponents counter that standing practices already address those objectives; and the envisioned CWAs would create unreasonable obstacles for non-union competition.

Among the anticipated CWA provisions: An expectation that non-union companies, or “merit shop contractors,” will have to hire some union workers; and requiring non-union employees to pay union fees, although union membership may not be required.

Skeptics say such provisions look like a move to knock out non-union competition, as they require that projects be awarded only to contractors and subcontractors that are willing to execute and comply with the terms of the CWA.

The General Contractors Association of Hawaii, which represents firms that operate with collective bargaining agreements and those that run on an “open shop” basis, contends that, in its current form, Bill 37 “creates an uneven playing field” that will result in higher costs on taxpayer-funded projects, since open-shop contractors would likely be tasked with covering the cost of the “duplicate benefits” they have to pay for their workers on CWA projects.

On the mainland, there’s movement in the opposite direction. Earlier this year, Kentucky became the 25th state to enact a law prohibiting government-mandated Project Labor Agreements (PLAs) — another term for CWAs — for public works projects. The law allows for voluntary PLAs, and prevents public agencies from prohibiting PLAs altogether. As proposed, Bill 37 would make Honolulu the state’s first county to make CWAs mandatory, which would be unwise.

At the very least, there should be more flexibility. In addition, the Council should raise the monetary threshold for initiating CWAs.

In 2012, then Gov. Neil Abercrombie issued an administrative directive for use of PLAs for a set of five state construction projects (totaling nearly $520 million). Among them: the $38 million University of Hawaii-Hilo College of Pharmacy and a Honolulu airport concourse project. At the federal level, a PLA is typically considered for projects at or exceeding the $25 million mark.

The UH’s Economic Research Organization’s latest forecast on construction spending predicts that next year Hawaii construction jobs should rise by 700 to 37,200 and then to 37,300 in 2021. Unnecessary restrictions on competition could contribute to a worker shortage, which can push up costs.

Honolulu’s public works projects are expensive enough without creating conditions that could make it harder for some legitimate contractors to submit competitive bids.

Currently, both union and non-union companies are tied to the same quality standards and safety regulations as set forth in plans for each project awarded by the city. The existing system seems to be fair in its treatment of both types of contractors as well as competitive pricing issues. Bill 37 appears to be a solution in search of a problem.