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Project Labor Agreements: Pathways to Business Ownership and Workforce Development in Los Angeles

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Project Labor Agreements: Pathways to Business Ownership and Workforce Development in Los Angeles 2011 Project Labor Agreements: Pathways to Business Ownership and Workforce Development in Los Angeles Miguel Contreras Learning Complex Photo for LAUSD by Magnus Stark 2011 By Uyen Le UCLA Labor Center California Construction Academy (CCA) November 2011 Table of Contents Introduction .......................................................................................................................... 3 Small Business Enterprises .................................................................................................................................3 Local Hire and Targeted Hiring of Workers ................................................................................................4 Structure ......................................................................................................................................................................6 Background ........................................................................................................................... 7 What are PLAs? .........................................................................................................................................................7 What is Local and Targeted Hire? ....................................................................................................................8 How are Small Business Enterprises Defined? ....................................................................................... 10 LAUSD Hiring Goals and Procedures ........................................................................................................... 12 LAUSD “We Build” Program............................................................................................................................. 13 Program Outcomes ............................................................................................................11 LAUSD Small Business Participation ........................................................................................................... 15 LAUSD Competitiveness of Bidding and Construction Costs ........................................................... 16 “We Build” Local Hire and Apprenticeship Outcomes ........................................................................ 18 LAUSD Leadership, Administration, and Compliance ......................................................................... 20 Conclusion ...........................................................................................................................25 Appendix ..............................................................................................................................27 Appendices A – D LAUSD Background and Data Documents Appendices E – G Los Angeles Community College District Report & Data Documents 2 Introduction The construction sector is often referred to as an industry with “two faces.” Within the “high- road” construction industry, construction jobs and contracting opportunities can create pathways to safe, middle-class careers, as well as family-supporting wages and benefits. However, there is also the “low-road” construction industry, which is unregulated and creates dangerous, low-paying construction jobs with few career advancement options. This dual character of the construction industry has created challenges for public agencies and private companies that seek to safely and efficiently build and rehabilitate their facilities while also ensuring that their investment results in good jobs for workers and contractors. Project Labor Agreements (PLAs), otherwise known as Project Stabilization Agreements (PSAs), is one policy tool that both private and public sectors have used to build complex construction projects. Those who utilize and support PLAs believe that PLAs help to ensure high quality, safety, and cost standards on construction projects while also creating good economic opportunities for local communities. This report will evaluate to what extent the Los Angeles Unified School District project stabilization agreement (PSA) met its business development, workforce development, and cost control goals. Small Business Enterprises The construction industry creates business ownership opportunities for general contractors and specialized contractors, but as mentioned earlier, it is an industry with “two faces.” Historically, many small, local, emerging, minority, and disadvantaged contractors have faced multiple challenges in accessing construction work. Some challenges facing small, minority, and disadvantaged contractors include: 1) lack of bonding and insurance capacity, 2) low levels of access to business loans, 3) few relationships with developers and large construction purchasers, and 4) lack of familiarity with public and private bidding processes. However, supportive programs and organizations exist to support the development of small, minority, and disadvantaged construction contractors. Some examples of these programs and organizations include the Small Business Administration (SBA) loan, multiple signatory contractor associations, technical assistance programs, and the National Association of Minority Contractors (NAMC). 3 This report will evaluate to what extent the Los Angeles Unified School District has succeeded in meeting the small, local, emerging, and disabled veteran business enterprise goals, and local hire goals established in the Project Stabilization Agreement (PSA). This report will also outline and evaluate the Los Angeles Unified School District’s PSA’s additional strategies to support and develop small and minority contractors, as well as its strategies to ensure compliance. Local Hire and Targeted Hiring of Workers The construction sector provides one of the largest privately funded workforce training programs in the country, namely through joint labor-management apprenticeship training programs. Joint labor-management programs mean that both labor partners and the contractors collaborate to fund the training, and also collaboratively create training opportunities for apprentices. According to the California Department of Industrial Relations, Department of Apprenticeship Standards, 92% of California’s approximately 30,000 apprentices between 2002-2007 graduated from joint labor-management apprenticeship programs.1 These registered apprenticeship training programs provide rigorous on-the-job training as well as in- class instruction, and many programs last 2-5 years (depending on the skilled trade) before participants move from apprenticeship status to journey-level worker status. Thus, registered joint labor-management apprenticeships produce high-quality workers who have both practical and academic experience, and these apprentices are equipped with the skills, training, and certifications to earn family-supporting wages and benefits for a lifetime. Since PLAs often contain language on the percentage of registered apprentices and percentages of local workers on a project, PLAs can be used as a tool to increase participation of these groups on construction worksites. This report will evaluate the effectiveness of the LAUSD PSA in creating access to apprenticeship opportunities and journey-level work opportunities through local hire policies and programs. The report will also evaluate how effective the LAUSD has been in meeting the local hire and other targeted hire goals in the LAUSD PSA. 1 Wilson, Corinne. 2009. Construction Apprenticeship Programs: Career Training for California’s Recovery. Center on Policy Initiatives. 4 Methodology This report draws upon the important previous work to analyze the needs and challenges that small businesses and disadvantaged businesses face in accessing and sustaining contracts in the public sector. Rather than replicating this work, this report will identify and analyze one local example of how a large public agency, the Los Angeles Unified School District, has attempted use the PSA structure to address these barriers to entry for small and disadvantaged businesses. This research will examine outcomes from the PSA at LAUSD for both prime contractors and subcontractors. This report will also evaluate the direct and indirect impacts of PSAs/PLAs on small business participation and local hire outcomes in Los Angeles County. The researcher has compiled data sets and reports on small business participation and local hires under these projects. Los Angeles Unified School District representatives and “We Build” pre-apprenticeship program representatives provided these data sets and reports. The data represents the most current information that these groups have processed. The data consists of detailed information on the PSA outcomes, including the total amount of construction contracts, the percentage of these contracts that went to small and disadvantaged business enterprises, the number of pre-qualified bidders that were registered with these organizations, the percentage of local workers who worked on these projects, and the numbers of apprentices that worked on these projects. Where possible, there is self-reporting of race/ethnicity and gender of workers, but due to existing policies in California, public agencies cannot require certain percentages of workers be hired based on race or gender, and cannot require that public agencies track this information. This report will also build on the work of another report released in 2008 by the UCLA Labor Center – California Construction Academy titled “Construction Careers for Our Communities.” In addition to analysis of the
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