48% of LAUSD Construction Dollars Go to Small Businesses

Photo: Miguel Contreras Learning Complex. Credit: Magnus Stark for LAUSD, 2011. 

Nov 18, 2011

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Los Angeles, CA – In the midst of the current jobs crisis, a new UCLA report shows that the Los Angeles Unified School District (LAUSD) has managed to create exceptional opportunities for small and disadvantaged businesses.

The California Construction Academy at the UCLA Labor Center released a report today evaluating construction projects under Los Angeles Unified School District’s Project Stabilization Agreement (PSA) from 2003 to 2011 and found that 48% of construction project dollars went to small and disadvantaged businesses. This far surpassed LAUSD’s goal to ensure that 25% of construction project dollars went to small business enterprises (SBE). Out of a total of $8.68 billion that LAUSD spent on construction projects, $4.15 billion went to small and disadvantaged businesses. Out of 496 total prime contractors, 219 prime contractors were SBEs. 1,194 subcontractors were SBEs out of 4,773 total subcontractors.

These projects also created large numbers of local jobs with family sustaining wages and benefits. Construction projects under the LAUSD PSA employed a total of 96,000 workers who gained an aggregate of $1.46 billion in wages. 41% of these workers live in target zip codes local to LAUSD districts, and 68% of these workers live in Los Angeles County.

“We believe this research shows the importance of implementing construction policies that go beyond just building infrastructure,” says Daniel Villao. “Thoughtful construction policies such as Project Labor Agreements and Project Stabilization Agreements can also build better jobs for local workers and grow small businesses.”

A Project Stabilization Agreement (PSA), more commonly called a Project Labor Agreement (PLA), is a contract between the owner or managing entity of a construction project or a collection of associated projects, and a set of labor unions. Much like “job-site constitutions,” these contracts establish terms regarding worksite conditions, project execution and protocol to resolve labor disputes without resorting to labor strikes and employer lockouts. Most PLAs/PSAs include community workforce goals that increase access to construction jobs for veterans, local residents, disadvantaged workers, and small businesses.

By using a PSA, LAUSD was able to address the dual goals of modernizing schools and creating local job opportunities. “It was critical for the LAUSD to address the problem of overcrowding and inadequate facilities in school and also the problem of students needing to be bussed two hours in order to get to a school that was less crowded,” says Mónica García, LAUSD Board of
Education President. “The board also wanted to create more small business opportunities for contractors who could benefit from working with the LAUSD.”

Key to LAUSD’s success was its dedication to hire a third-party administrator, Parsons Construction Inc. (PCI), and to create direct ties to the “We Build” pre-apprenticeship program. Full-time staff dedicated to PSA compliance and to “We Build” allowed LAUSD to help prepare small businesses to bid and prepare disadvantaged workers for registered apprenticeships. Providing both incentives and enforcement allowed staff to comply with and exceed the small business goals of the PSA.

Anabel Barragan, “We Build” Program Manager, pointed out the importance of linking the LAUSD PSA with a program to connect workers with registered apprenticeships. “This helped ensure that LAUSD leadership at all levels were aware of LAUSD construction program goals, and worked collaboratively to achieve them. It created a culture within the organization of awareness and compliance that continues to help LAUSD.”

Telenet VOIP, a construction contractor that decided to become a union signatory contractor while working with LAUSD, found that the Project Stabilization Agreement opened opportunities for small businesses. “Working with the LAUSD under a Project Stabilization Agreement allowed us a level playing field,” says Thea Leonardo, Labor Compliance Manager at Telenet VOIP, “Because the PSA required a set prevailing wage, we were able to compete fairly and to have a competitive bid.”

The California Construction Academy (CCA) at the UCLA Labor Center is a statewide project dedicated to building a better construction industry through facilitation, research and popular education. CCA envisions a construction industry that leads the state of California in triple bottom line returns in the form of environmental, economic and social benefits.


Contact: Stefanie Ritoper, sritoper@ucla.edu, (213) 375-4841.