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Home My WebLink About7.2 CWA Themes, Data, and Negotiation TermsItem 7.2: Review of Community Workforce Agreements: Themes, Data, and Proposed Negotiation Terms July 21, 2020 Background •2019: BTC approached the City about establishing a CWA on certain capital improvement projects. •December 3, 2019: City Council report introducing general concepts and key provisions of CWAs. –Council directed staff to undertake additional research, interview agencies with experience negotiating and administering CWAs. Report on Agency Outreach •Staff conducted a series of meetings with various agencies that employ some form of a CWA: –City of Berkeley –City of Hayward –Lowe Consulting –Port of Oakland –EBMUD (negotiated CWA, not fully executed) •Identified five common, key themes that arise in the negotiation and administration of CWAs. Theme 1 Each agency witnessed an increase in project costs after the CWA, at least some of which is likely related to the CWA. Theme 1: Each agency witnessed an increase in project costs after the CWA, at least some of which is likely related to the CWA. •Hayward Example: –18% ($850,000) increase in project cost. •EBMUD contractor survey: –CWAs reduce competition by reducing pool of contractors willing to bid. •Direct costs of admin./compliance: –~0.5% of project costs, commensurate with community benefits. Potential Term & Condition: Waiver or partial waiver of CWA provisions if project does not receive a set minimum number of bids or bids exceed a given percentage over the engineer’s estimate. Theme 2 The Bay Area’s tight labor market means union hiring halls are nearly empty, resulting in project delays because contractors are unable to fill positions. Theme 2:The Bay Area’s tight labor market means union hiring halls are nearly empty, resulting in project delays because contractors are unable to fill positions. •CWAs require use of union labor, some “core workers.” •Constraints in tight labor markets. •Impacts on project delivery. –Hayward Public Library delayed over 600 days in part to this issue. Potential Term & Condition: Allow contractors to bypass core worker provisions if they are unable to fill a role from the hiring hall within a specified amount of time. Theme 3 Local hire provisions in CWAs have not met agency goals for a variety of reasons. However, CWA provisions requiring the use of local apprenticeship programs (and certain categories of apprentices) have the potential to develop a much- needed pipeline of skilled labor to support the Bay Area’s ongoing growth and meet local job-creation goals. Theme 3:Local Hire Performance and Apprenticeship Potential •Hayward and Berkeley missed targets, while BART and Alameda County GSA met or exceeded targets. •Functional issues with current arrangements. •Success requires commitment of contractor on front end. •Economic dynamics further complicate such provisions. Potential Term & Condition (1): Given lack of policy success, the City Council may not wish to direct staff not to seek a local hire provision. Theme 3:Local Hire Performance and Apprenticeship Potential, 2 •Apprenticeships already mandated by State law. •No thresholds for retaining apprentices. –AC Transit BRT: one new apprentice for every 20,000 labor hours for a min. 1,000 labor hours. •Success requires concerted recruiting and outreach. •No existing MC3 programs within the Tri-Valley, but others in the County serve the area. Potential Term & Condition (2): •Set minimum number of hours worked for apprenticeships. •BTC to develop, for approval by the City, an educational outreach program that details how the trades will work with the school district and larger community to recruit residents for pre- apprenticeship programs. Theme 4 Administrative burdens of CWAs impact agencies and contractors, particularly smaller contractor firms. Theme 4:Administrative burdens of CWAs impact agencies and contractors, particularly smaller contractor firms •CWAs require dedicated staff for administering agencies and contractor firms. –May be achieved through third- party administrators. •Administrative burdens can dissuade smaller contractor firms from bidding altogether. •Berkeley example: immigrant owned electrician firm. Potential Term & Condition: Include a carve out for small businesses, releasing them from the requirements of the CWA to ensure the agreements promotes rather than precludes smaller contractors from bidding and receiving work. Theme 5 Equity issues remain regarding union fringe- benefit contribution requirements by non-union contractors and employees. Theme 5:Equity issues remain regarding union fringe-benefit contribution requirements by non-union contractors and employees. •CWAs require contractor employer payments to union benefit trust funds, regardless if they are union or non-union. •Benefits may not materialize for workers due to vesting thresholds, lack of benefit portability. •Non-union contractors' financial disadvantage due to “double benefit” payments. •No agency has resolved this issue. Potential Term & Condition: Craft approach in which non-union contractors have the option to pay into the union trust funds or contribute to the contractor’s own benefit plans so long as those benefits are equal or greater than the applicable prevailing wage. CIP Vendor and Project Analysis •Analysis includes only the labor and construction costs of the projects. –Excludes purchases of physical assets, equipment, and payments to other governmental and utility agencies •Most awarded projects were completed by union or contractor teams that included both union and non- union subcontractors. •The City overwhelmingly utilizes union contractors for capital projects. Breakdown by Project (FY16-20) Breakdown by Projects Projects Percentage Awarded Value Percentage Union 18 62%$30,265,403 51% Non-Union 5 17%$2,546,130 4% Partial Union/Non-Union 6 21%$26,164,606 45% Total 29 100%$58,976,139 100% Breakdown by Vendor (FY16-20) Breakdown by Vendor Type Count Percentage Awarded Value Percentage Union 16 62%$52,087,859 88% Non-Union 10 38%$6,888,280 12% Total 26 100%$58,976,139 100% Next Steps •Staff is seeking feedback and direction on CWAs, particularly the following: –(1) Does the City Council wish to direct staff to initiate negotiations with the BTC? •If so, then: –(2) What community benefits (Local Hire, Apprenticeships, etc.) would the City Council want to obtain from a CWA? –(3) Does the City Council have feedback on the potential terms and conditions included in this Staff Report? Are there other terms or conditions the City Council would like to see incorporated? Potential Terms and Conditions Summary 1. Negotiate for provisions that allow the waiver or partial waiver of CWA provisions if a project does not receive a set minimum number of bids, or if all bids exceed a given percentage over the engineer’s estimate. 2. Seek a provision that allows contractors to bypass core worker provisions if they are unable to fill a role from the hiring hall within a specified amount of time. 3. For a City CWA, Staff has insufficient labor data to recommend a local hire goal. Given the lack of policy success of such provisions, the City Council may wish to direct Staff not to seek a local hire provision if it pursues a CWA. 4. Set minimum number of hours worked for apprenticeships. BTC to develop, for approval by the City, an educational outreach program that details how the trades will work with the school district and larger community to recruit residents for pre-apprenticeship programs. 5. Include a carve out for small businesses, releasing them from the requirements of the CWA to ensure the agreements promotes rather than precludes smaller contractors from bidding and receiving work. 6. Craft approach in which non-union contractors have the option to pay into the union trust funds or contribute to the contractor’s own benefit plans so long as those benefits are equal or greater than the applicable prevailing wage.