The Real GSA Scandal: Job-Killing Big Labor Payoffs


Stop the presses: Big-spending Democrats are finally up in arms over a federal boondoggle. Details of the U.S. General Services Administration bacchanalia get worse by the day. We’ve graduated from overpriced breakfasts in Vegas, friends-and-family junkets galore and in-house videos mocking their own profligacy to extravagant bonuses, alleged kickbacks, obstructionism and bribes.

But the scandal is still small potatoes compared to the potential billions GSA is pouring down the Big Labor drain.

Whistleblowers and an independent inspector general investigation estimate that the GSA’s Sin City conference cost taxpayers an estimated $1 million in 2010. Washington bureaucrats squandered another $234,000 on public relations damage control. An interim GSA director announced Tuesday on Capitol Hill that 35 upcoming conferences would be canceled at a cost savings of less than $1 million. Democratic Rep. Elijah Cummings of Maryland vowed that GSA officials would be “made to pay back” taxpayers.

The arrogance of these civil servants is, of course, jaw-dropping. Regional Commissioner Jeff Neely, the Paris Hilton of GSA party animals, wrote in an invitation to personal friends: “We’ll get you guys a room near us, and we’ll pick up the room tab. … I know I’m bad, but as Deb and I often say, why not enjoy it while we have it and while we can. Ain’t gonna last forever.”

Neely’s gone, along with seven other top administrators, and the GSA travel budget has dried up for now. But this is just a sliver of the permanently enshrined waste that constitutes the bread-and-butter business of the behemoth agency, which runs on a $45 billion annual budget — including $5.5 billion in federal stimulus money to oversee capital building projects.

Thanks to President Obama (whose White House reflexively tried to blame Party in the GSA-gate on the Bush administration), the federal government is steering that money toward Big Labor patrons with a proven track record of cost overruns, construction delays and corruption.

As I’ve reported previously, the linchpin is E.O. 13502, a union-friendly executive order signed by Obama in his first weeks in office. It essentially forces contractors who bid on large-scale public construction projects worth $25 million or more to submit to union representation for its employees. The blunt instrument used to give unions a leg up is the “project labor agreement,” which in theory sets reasonable pre-work terms and conditions. But in practice, it requires contractors to hand over exclusive bargaining control, to pay inflated, above-market wages and benefits, and to fork over dues money and pension funding to corrupt, cash-starved labor organizations.

These anti-competitive agreements undermine a fair bidding process on projects that locked-out, nonunion laborers are funding with their own tax dollars. And these PLAs benefit the privileged few at the expense of the vast majority: In the construction industry, 85 percent of the workforce is nonunion by choice.

David G. Tuerck of the Department of Economics and Beacon Hill Institute at Suffolk University testified on Capitol Hill last year: “The adoption of a PLA amounts, in effect, to the conferral of monopoly power on a select group of construction unions over the supply of construction labor.” The mandate serves “one purpose: to discourage competition from nonunion contractors (and, in some instances, union contractors) to the end of shoring up declining union power, along with union-mandated wages and benefits, against competitive pressures.” The institute’s studies show that PLAs have added between 12 and 18 percent to school construction costs in Massachusetts and Connecticut.

The total price tag for GSA projects built with PLAs remains unknown. But here’s just one example: The Washington Examiner reported in 2010 that the GSA paid the federal Lafayette Building’s general contractor an additional $3.3 million above the initial $52 million contract to ensure that the project was built with a union payback PLA. The Obama administration had previously tried to slip a PLA mandate into a $35 million jobs center construction project in New Hampshire, but retreated when state contractors challenged the provision as an unfair restriction on competition. According to The Washington Times, just 8.7 percent of construction workers are unionized in New Hampshire.

Among the GSA administrators fired over Vegas-palooza was Robert A. Peck, chief of the agency’s Public Buildings Service. That’s the same office overseeing the $5.5 billion in stimulus contracts for capital projects like the Lafayette Building. But neither Peck nor any other GSA official nor the White House has been held accountable for job-killing union favoritism in its everyday contracting practices.

And as the pro-competition watchdog website The Truth About Project Labor Agreements points out: “Numerous (GSA) projects have been awarded to contractors submitting PLA bids at the expense of qualified firms opposed to PLA mandates. Full and open competition has been curtailed in violation of the federal Competition in Contracting Act. Taxpayer dollars have been wasted. Skilled nonunion craftspeople and their qualified employers have been denied jobs and opportunity as a result of this needless policy.”

For Obama’s union donors and their GSA fixers, the party’s still on.

Michelle Malkin is the author of “Culture of Corruption: Obama and his Team of Tax Cheats, Crooks & Cronies” (Regnery 2010). Her e-mail address is [email protected]

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