This month the Secaucus Town Council will consider a so-called “responsible contractor ordinance” purportedly in an effort to improve the quality of construction work done on large-scale municipal building and renovation projects. But critics of similar measures elsewhere say such laws only serve to limit the pool of qualified companies eligible to bid on public contracts.
Responsible contractor ordinances, also known as RCOs, have become popular throughout New Jersey and across the country in recent years and have drawn both praise and condemnation. Advocates of RCO legislation argue that such laws level the playing field for contractors bidding on construction projects, protect workers in the construction industry, help guarantee that construction work is done by trained, licensed professionals, and protect taxpayers from having to pay for repairs to shoddy work.
Advocates further state that these protections can be put in place without any measurable increase in building costs. But some companies in the construction industry – especially those that do not employ union workers – say such laws unfairly bar them from bidding on public contracts and favor companies that use organized labor. Detractors add that such laws can also increase construction costs without any measurable improvement in the quality of the work being done.
Some provisions in the Secaucus ordinance are standard and noncontroversial, such as the requirement that contractors have all the “valid, effective licenses, registrations or certificates” required by the law.
It’s two other requirements that don’t sit well with some in the construction industry.
The ordinance includes language that construction companies “pay all craft employees on the project the current wage rates and fringe benefits as required under applicable federal, state, or local wage laws.” Another section of the ordinance requires that the “firm participate in a Class A Apprenticeship Program for each separate trade or classification in which it employees craft employees and [must] continue to participate in such programs for the duration of the project.” For the purposes of the ordinance, a Class A Apprenticeship is defined as a registered program that has been approved by the U.S. Department of Labor or a state agency, and has graduated apprentices for at least three of the last five years.
The ordinance, which was introduced by the Town Council on June 23, mirrors a similar law that was passed at the county level several years ago.
The goal
“The goal behind the ordinance is twofold,” said Town Administrator David Drumeler, who worked with Hudson County Executive Tom DeGise on the county RCO. “One is to hopefully get the best work product you can. Two, since it requires any contractor to have a documented apprenticeship program, it helps to get folks engaged in the trades and at the same time have an outlet for them, which is a good employment tool for local residents. And we think requiring all bidders to pay the prevailing wage puts them all on an even playing field so that some companies aren’t coming in with lower bids just because they happen to be paying their workers less than the going rate.”
Drumeler adds that RCOs also help weed out contractors that hire illegal immigrants and pay less than minimum wage in an effort to keep building costs down.
But a leading builders association claims that such laws limit competition and exclude many competent, experienced companies from public contracts.
“In an area like New York City and New Jersey, about 78 percent of construction companies stand to be excluded from work.” – Ben Brubeck
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Brubeck said RCOs tend to limit competition for construction projects by favoring those that pay higher wages, “and that’s an unintended consequence of a lot of these laws.”
“In an area like New York City and New Jersey, I think about 78 percent of construction companies stand to be excluded from work because of these two provisions, which really only help those companies that hire union workers and pay union scale,” Brubeck added.
The three Independent Town Councilmen, John Bueckner, Michael Gonnelli, and Gary Jeffas, are also concerned about the possibility that the ordinance could exclude smaller firms and they may try to modify the measure.
If passed, the law would only apply to large-scale municipal projects valued at $1 million or more and would have no bearing on private development in town or construction projects approved by the Secaucus Board of Education. At present the town has no major construction projects in the works that would be covered by this law, if passed. Had the law existed years ago, it would have applied to the Secaucus Recreation Center and the Secaucus Public Library and Business Resource Center, the last two large-scale municipal construction projects.
Brubeck also said that recent studies indicate that RCOs increase overall building costs since labor costs tend to be higher wherever such laws have been passed, a claim Drumeler disputes.
“When we did this at the county level and we didn’t notice any real increase in either the number of bids we received or our estimated building costs, Drumeler said.
The Town Council will hear public comments on the measure at its July 28 session, before taking a vote.
E-mail E. Assata Wright at awright@hudsonreporter.com.