Corruption in Philly stifles economic development | Opinion

Over the last few weeks, sunlight has shone on a culture of corruption that has plagued Philadelphia’s City Council and construction industry for decades, thanks to a 116-count federal indictment of John J. “Johnny Doc” Dougherty, business manager of the International Brotherhood of Electrical Workers Local 98; Bobby Henon, Philadelphia city councilman and former IBEW Local 98 political director; and six others. The indictment documents troubling schemes to steer work to union-signatory firms using union-only labor and stifle competition from contractors and construction workers not affiliated with a union.

Among the shocking revelations in the indictment is how the defendants attempted to strong-arm Children’s Hospital of Philadelphia into hiring Local 98-signatory contractors to install an MRI machine by using the Department of Licenses and Inspections “to inspect, and in some cases, shut down operations or construction work at locations outside of his [Henon’s] district, where nonunion laborers were involved in electrical work.”

In another instance, the defendants allegedly conspired to force Comcast to hire a union-signatory electrical contractor, MJK Electric, instead of qualified contractors not affiliated with a union, or else Comcast’s pending franchise agreement before Henon’s City Council committee would not get approved.

Construction- and development-industry insiders aren’t surprised by these alleged shakedowns. They are just another example of the cost of doing business in Philadelphia and a key reason this city has the fourth most-expensive construction costs in the United States, behind New York, Chicago, and Boston, according to Engineering News-Record’s City Cost Index.

Unfortunately, the reach of corruption isn’t limited to backroom deals. It extends into existing and proposed City Hall policies that deny opportunity to local residents and small businesses and strangle development and prosperity in Philadelphia. As a result, taxpayers have unknowingly paid too much for public works projects, while unjust bidding practices have shut out quality cost-effective alternatives.

Taxpayers would benefit from Philadelphia lawmakers attacking corruption by promoting fair and open competition on all public works contracts and prohibiting obvious lawmaker conflicts of interest that have allowed the sort of unethical conduct described in the indictment to flourish for too long.

For starters, it is time to end Philadelphia’s anticompetitive and costly policies promoting government-mandated project labor agreements on taxpayer-funded construction projects. Government-mandated PLAs discourage competition from quality contractors and their employees not affiliated with unions, who make up 74 percent of Pennsylvania’s private construction workforce, because they force contractors to hire most or all workers from union hiring halls and apprenticeship programs instead of utilizing existing employees.

Multiple studies of hundreds of taxpayer-funded school construction projects across the country have found that PLA mandates increase the cost of construction from 12 to 18 percent compared with similar non-PLA projects.

Just last month, Pennsylvania’s Commonwealth Court ruled that the Pennsylvania Department of Transportation’s PLA mandate unfairly tilted competitive bidding against construction companies not signatory to a union on a road improvement project in Montgomery County.

Yet Philadelphia’s pro-PLA policy remains in place. A total of 24 states have passed laws restricting government-mandated PLAs and allowing the free market to determine the best way to deliver a project safely, on time, on budget, and with the best-trained workforce. Philadelphia would be wise to enact similar reforms.

Second, Philadelphia lawmakers must reject Henon’s proposed ordinance creating a new Contractor Review Board under the Department of Licenses and Inspections. Introduced the day after his indictment, this ordinance is a brazen attempt by Henon to steer public contracts to businesses signatory to Philadelphia’s construction unions, which investigative reports have found are overwhelmingly male, white, and live in the suburbs.

Even as Philadelphia was named the best city for millennials to become homeowners and find career opportunities, African American unemployment remains statistically high. We can do better to ensure that minorities, millennials, and local residents get a chance to work on construction projects paid for by their tax dollars. Open competition creates a pathway to careers in construction by providing opportunity for all, but we need lawmakers to support innovative workforce development strategies instead of the status quo preferred by their political patrons.

There’s no shortage of construction projects in our great city. And if Congress passes legislation revitalizing America’s crumbling infrastructure, the demand on our construction workforce will only grow. To meet the challenge, Philadelphia needs to step up and create a level playing field by promoting an inclusive bidding process that has integrity and is ethical.

Joe Perpiglia is president and CEO of Associated Builders and Contractors’ Eastern Pennsylvania Chapter.