Project Labor Agreements: The Extent of Their Use and Related Information
(Letter Report, 05/29/98, GAO/GGD-98-82).
Pursuant to a congressional request, GAO provided information on the use
of project labor agreements (PLA) on federal construction contracts and
related matters, focusing on the: (1) number of federal construction and
other projects where PLAs were used and the extent to which PLAs have
been used on projects sponsored by nonfederal organizations, including
public projects with some federal funding; (2) procedures and criteria
for using PLAs established by federal agencies, as required by a
Presidential Memorandum that encourages federal agencies to use PLAs on
construction contracts over $5 million; (3) federal agency procedures
established to comply with a letter from the Chairman of the House
Committee on Education and the Workforce, Subcommitte on Oversight and
Investigations, to federal agencies requesting them to notify his
subcommittee of the planned use of PLAs; and (4) feasibility of
comparing contractor performance under federal construction contracts
with and without PLAs.
GAO noted that: (1) the total number of PLAs in use is unknown because
there is no complete or comprehensive database on the use of PLAs in the
public or private sectors; (2) union and industry organizations maintain
data on certain PLAs that they negotiated at the national level, but
there were no comparable data on ad hoc PLAs negotiated between
contractors and unions at the local level; (3) four of the 13 federal
agencies GAO reviewed have construction projects covered by 26 PLAs that
it could identify; (4) the four agencies are the Department of Energy
(DOE), the Department of Defense (DOD), the Tennessee Valley Authority
(TVA), and the National Aeronautics and Space Administration (NASA); (5)
however, officials at 11 of the 13 agencies, including DOD and NASA,
said PLAs could be used on agency construction projects without their
knowledge because such agreements are generally made between contractors
and unions; and collective bargaining matters are not required to be
reported to the government; (6) available literature and union data show
that PLAs exist on numerous other public and private construction
projects and on other public projects with some federal funding; (7)
also, labor experts and union officials say that the private sector is
the biggest user of PLAs; (8) six of the 13 federal agencies GAO
reviewed had issued various levels of guidance for PLA use as required
by the Presidential Memorandum; (9) however, none specifically provided
for notifying the Subcommittee on Oversight and Investigations of any
planned use of PlAs; (10) recently, the Office of Management and Budget
(OMB) assumed responsibility for assisting the agencies in developing
procedures and criteria for use of PLAs; (11) although OMB's draft
procedures and criteria for implementing the Presidential Memorandum do
not specifically refer to the Subcommittee's request to be notified by
agencies planning to use a PLA, the draft would require the collection
of the type of information requested by the Subcommittee; (12) according
to OMB, it included this provision so that agencies could comply with
the request; (13) PLA proponents and opponents that GAO contacted said
they believe contract performance comparisons between federal
construction projects with PLAs and those without PLAs would be
difficult; (14) this is primarily because they believe it would be
difficult to find projects similar enough to compare; and (15) in
addition, GAO believes that even if similar PLA and non-PLA projects
were found, it would be difficult to demonstrate conclusively that any
performance differences were due to the use of the PLA versus other
factors.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-98-82
TITLE: Project Labor Agreements: The Extent of Their Use and
Related Information
DATE: 05/29/98
SUBJECT: Construction contracts
Collective bargaining agreements
Contractor performance
Labor unions
Reporting requirements
Comparative analysis
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Cover
================================================================ COVER
Report to Congressional Requesters
May 1998
PROJECT LABOR AGREEMENTS - THE
EXTENT OF THEIR USE AND RELATED
INFORMATION
GAO/GGD-98-82
Project Labor Agreements
(240250)
Abbreviations
=============================================================== ABBREV
AFL-CIO - American Federation of Labor-Congress of Industrial
Organizations
DOD - Department of Defense
DOE - Department of Energy
NASA - National Aeronautics and Space Administration
OMB - Office of Management and Budget
PLA - Project Labor Agreement
TVA - Tennessee Valley Authority
Letter
=============================================================== LETTER
B-277866
May 29, 1998
The Honorable Peter Hoekstra
Chairman, Subcommittee on Oversight and Investigations
The Honorable Harris W. Fawell
Chairman, Subcommittee on Employer-Employee Relations
Committee on Education and the Workforce
House of Representatives
This report responds to your request for information about the use of
project labor agreements (PLA) on federal construction contracts and
related matters. The request largely resulted from a June 5, 1997,
Presidential Memorandum that encourages federal agencies to use these
types of collective bargaining agreements on their construction
contracts that are over $5 million and required agencies to establish
procedures and criteria for PLA use within 120 days. As agreed, this
report summarizes information developed on (1) the number of federal
construction and other projects where PLAs were used and the extent
to which PLAs have been used on projects sponsored by nonfederal
organizations, including public projects with some federal funding;
(2) the procedures and criteria for using PLAs established by federal
agencies, as required by the Presidential Memorandum; (3) federal
agency procedures established to comply with Chairman Hoekstra's July
9, 1997, letter to federal agencies requesting them to notify his
Subcommittee of the planned use of PLAs; and (4) the feasibility of
comparing contractor performance under federal construction contracts
with and without PLAs.
PLAs are one form of "prehire" collective bargaining agreements
between contractors, or owners on behalf of contractors, and labor
unions in the construction industry. PLAs are called prehire
agreements because they can be negotiated before employees vote on
union representation or before the contractor hires any workers. The
National Labor Relations Act\1 generally prohibits prehire
agreements, but an exception in the act\2 allows the agreements only
in the construction industry. Proponents say that PLAs provide
economic benefits such as (1) avoidance of work stoppages on
long-term projects during which local collective bargaining
agreements of different craft unions expire, (2) uniform work rules
for different crafts working on the same project, and (3) access to a
skilled labor force through the union referral systems. Opponents
say that, among other things, PLAs, particularly in the public sector
(1) discourage competition by favoring union companies and (2) result
in higher costs due to the restricted number of bidders, higher union
wages, and the imposition of union work rules.
To obtain information on the use of PLAs, we contacted the Office of
Management and Budget (OMB) and 13 federal agencies with the highest
reported construction obligations in fiscal year 1996 (see app. I).
We also judgmentally selected and contacted various construction
industry contractors, unions, and associations; state agencies; and
private-sector labor experts. In addition, we searched the internet
and literature for studies, reports, news articles, and other
documents containing relevant information on PLAs. Our verification
of data included confirmation only of current PLAs identified by any
source on federal construction contracts. We requested comments on a
draft of this report from OMB and the 13 federal agencies we
reviewed. Their comments are discussed at the end of this letter.
We also sent the draft report to labor unions and industry
associations that provided data and asked them to verify that we
correctly reported the data. We did our work from August 1997 to
March 1998 in accordance with generally accepted government auditing
standards. Appendix II contains more details on our scope and
methodology.
--------------------
\1 29 U.S.C. 151 et seq.
\2 29 U.S.C. 158(f)
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The total number of PLAs in use is unknown because there is no
complete or comprehensive database on the use of PLAs in the public
or private sectors. Neither OMB nor the 13 federal agencies we
reviewed maintained any databases concerning the use of PLAs on
construction contracts involving federal funds. Similarly, we found
no source of complete information on the use of PLAs by state
governments or the private sector. Union and industry organizations
maintain data on certain PLAs that they negotiated at the national
level, but there were no comparable data on ad hoc PLAs negotiated
between contractors and unions at the local level.
Four of the 13 federal agencies we reviewed have construction
projects covered by 26 PLAs that we could identify. The four
agencies are the Department of Energy (DOE), the Department of
Defense (DOD), the Tennessee Valley Authority (TVA), and the National
Aeronautics and Space Administration (NASA). However, officials at
11 of the 13 agencies, including DOD and NASA, said PLAs could be
used on agency construction projects without their knowledge because
such agreements are generally made between contractors and unions;
and collective bargaining matters are not required to be reported to
the government. Available literature and union data show that PLAs
exist on numerous other public and private construction projects and
on other public projects with some federal funding. Also, labor
experts and union officials say that the private sector is the
biggest user of PLAs, but use of PLAs is reportedly increasing on
public projects due in part to a 1993 U.S. Supreme Court decision
involving the Boston Harbor cleanup project.\3
Six of the 13 federal agencies we reviewed had issued various levels
of guidance for PLA use as required by the June 5, 1997, Presidential
Memorandum. However, none specifically provided for notifying the
Subcommittee on Oversight and Investigations of any planned use of
PLAs. Recently, OMB assumed responsibility for assisting the
agencies in developing procedures and criteria for use of PLAs.
Although OMB's draft procedures and criteria for implementing the
Presidential Memorandum do not specifically refer to the
Subcommittee's request to be notified by agencies planning to use a
PLA, the draft would require the collection of the type of
information requested by the Subcommittee. According to OMB, it
included this provision so that agencies could comply with the
request. Twelve of the 13 federal agencies do not expect the extent
of their use of PLAs on construction projects to change as a result
of the Presidential Memorandum, while one, the Department of
Transportation, believes that increased awareness of PLAs could
result in PLAs being used.
PLA proponents and opponents that we contacted said they believe
contract performance comparisons between federal construction
projects with PLAs and those without PLAs would be difficult. This
is primarily because they believe it would be difficult to find
projects similar enough to compare. In addition, we believe that
even if similar PLA and non-PLA projects were found, it would be
difficult to demonstrate conclusively that any performance
differences were due to the use of the PLA versus other factors.
--------------------
\3 Building and Construction Trades Council of the Metropolitan
District v. Associated Builders & Contractors of Massachusetts/Rhode
Island, Inc., et.al., 507 U.S. 218, 113 S. Ct. 1190 (1993). The
Supreme Court upheld a state agency's required use of a PLA on a
public works project, reasoning that, ". . .To the extent that a
private purchaser may choose a contractor based upon that
contractor's willingness to enter into a prehire agreement, a public
entity as purchaser should be permitted to do the same. . . ."
BACKGROUND
------------------------------------------------------------ Letter :2
There are two broad forms of PLAs--national and local. National
agreements generally are sponsored by union and industry
organizations, which negotiate and sign the agreements in advance of
the need for them. National agreements are ready for a contractor's
immediate use on a construction project after approval by the
sponsoring organization. In contrast, local agreements result from
direct negotiations between contractors and local unions for specific
projects.
PLAs cover new construction work and maintenance, repairs, and
alterations of existing real property. Their provisions generally
(1) apply to all work performed under a specific contract or project,
or at a specific location; (2) require recognition of the signatory
unions as the sole bargaining representatives for covered workers,
whether or not the workers are union members; (3) supersede all other
collective bargaining agreements; (4) prohibit strikes and lockouts;
(5) require hiring through union referral systems; (6) require all
subcontractors to become signatory to the agreement; (7) establish
uniform work rules covering overtime, working hours, dispute
resolution, and other matters; and (8) prescribe craft wages, either
in the body of the agreement or in an appendix or attachment.
Historically, the use of PLAs on federal and other publicly funded
projects dates back to the construction of the Grand Coulee Dam in
Washington state in 1938 and the Shasta Dam in California in 1940.
During and after World War II, atomic energy and defense construction
projects used PLAs. NASA used PLAs in construction at Cape
Canaveral, FL, during the 1960s. In addition, the private sector has
used PLAs on various projects, including the Trans-Alaska Pipeline
and Disney World.
More recently, PLAs gained particular public attention when, in July
1992, President Bush seemingly endorsed PLAs by siding with organized
labor in litigation before the U.S. Supreme Court over the use of a
PLA on the Boston Harbor cleanup project. However, in October 1992,
he issued an Executive Order\4 forbidding the use of PLAs by any
parties to federal or federally funded construction projects.
President Clinton revoked\5 that Executive Order in February 1993.
In early 1997, President Clinton had planned to issue an Executive
Order requiring federal agencies to use PLAs on their construction
contracts, but the proposal met with considerable political and
industry opposition. Instead, the President issued the June 5, 1997,
memorandum, described earlier, which encourages the use of PLAs on
contracts over $5 million for the construction of facilities to be
owned by a federal department or agency. The memorandum also states
that PLAs can be used in other circumstances, like leasehold
arrangements and federally funded projects. The memorandum defines
"construction" to include not only new construction but also
alteration and repair work.\6
Available literature indicates that the U.S. Supreme Court's March
1993 decision in the Boston Harbor case cleared the way for more
frequent use of PLAs on public-sector construction projects. A lower
court had required the Massachusetts Water Resources Authority, an
independent state agency, to clean up pollution in Boston Harbor.
The Authority's contract bid specification for the project required
the use of a PLA negotiated between its project manager (a private
contractor) and local unions. The bid specification was challenged;
and the case ended up before the U. S. Supreme Court, which upheld
the use of the PLA. During the 1990s, according to one literature
source, the use of PLAs on at least 25 other nonfederal public-sector
projects faced court challenges in nine states (see app. III). Most
challenges reportedly claimed, among other things, that the use of
the PLA violated state or local competitive procurement laws.
However, the courts upheld the use of the PLAs in 17 of the 25 cases
and invalidated the PLAs in the other 8 cases.\7
In addition, there was a court case concerning the PLA at DOE's Oak
Ridge Reservation, Tennessee.\8 The PLA was entered into by DOE's
prime contractor--MK-Ferguson of Oak Ridge Corporation--and the
Knoxville Building and Construction Trades Council. In 1992, the
Sixth Circuit Court of Appeals concluded that the PLA violated
neither the National Labor Relations Act nor the Competition in
Contracting Act.\9 The court held that it was unaware of any reason
why DOE may not directly, or through an agent, enter into such an
agreement, as long as it would be valid if entered into by private
parties. We did not find any other court decisions ruling on the
legality of PLAs, with respect to federal construction contracts.
Under the authority of Public Law 85-804, August 28, 1958, as
amended, certain federal agencies have extraordinary contracting
authority to facilitate the national defense. Those agencies can
take procurement actions they deem necessary, without regard to other
provisions of law relating to the making, performance, amendment, or
modification of contracts. Nine of the 13 federal agencies we
reviewed have this authority, but as discussed later in this report,
only DOE reported using that authority with regard to PLAs.
--------------------
\4 Executive Order 12818, titled "Open Bidding on Federal and
Federally Funded Construction Projects," Oct. 23, 1992.
\5 Executive Order 12836, titled "Revocation of Certain Executive
Orders Concerning Federal Contracting," Feb. 1, 1993.
\6 The Presidential Memorandum gives the term "construction" the same
meaning as section 36.102 of the Federal Acquisition Regulation,
which states in part, "'Construction' means construction, alteration,
or repair (including dredging, excavating, and painting) of
buildings, structures, or other real property. . . ."
\7 We did not determine the ultimate disposition of all 25 cases, but
we confirmed that, on appeal, a higher court later upheld at least 1
of the 8 PLAs shown to be invalidated.
\8 Phoenix Engineering, Inc., v. MK-Ferguson of Oak Ridge Co., 966
F. 2d 1513, (6th Cir. 1992), cert denied, 113 S. Ct. 1577 (1993).
\9 41 U.S.C. 253
TOTAL NUMBER OF PLAS IS UNKNOWN
------------------------------------------------------------ Letter :3
The lack of available complete data on the use of PLAs precludes an
exact count of their total numbers at any level--federal, state
government, or private sector. The federal government has no central
or agency-specific data system with information about PLAs used on
federal construction contracts. In addition, we found no source of
complete data on the use of PLAs at the state government or
private-sector levels. Certain labor union and industry
organizations compile data on standardized national PLAs they
sponsor, but they have little or no data on PLAs negotiated locally.
Nevertheless, our research disclosed that PLAs have been used in all
50 states and the District of Columbia on federal, state, local
government, or private sector construction projects, including
nonfederal projects that involve federal funds.
DATA ON PLAS ARE INCOMPLETE
---------------------------------------------------------- Letter :3.1
The Federal Procurement Data System, maintained for OMB by the
General Services Administration's (GSA) Federal Procurement Data
Center, contains statistical data about U.S. government executive
branch agencies' procurement contracts awarded since October 1, 1978.
However, the Federal Procurement Data System does not collect or
report data about PLAs used on federal construction contracts. In
addition, OMB and the 13 federal agencies we reviewed reported that
they are not aware of any external or internal data systems that
report information about PLAs used on federal construction contracts.
To respond to our requests, most federal agencies had to canvas their
internal procurement organizations to determine any use of PLAs on
their construction projects.
The Building and Construction Trades Department\10 of the American
Federation of Labor-Congress of Industrial Organizations (AFL-CIO),
maintains data on at least three current national PLAs that it
sponsors (see app. IV). In addition, the National Constructors
Association\11 and National Maintenance Agreements Policy Committee,
Inc.,\12 each sponsors a single national agreement and maintains data
on the agreement. The Building and Construction Trades Department
also sponsored at least one other national agreement in the past--the
Nuclear Power Construction Stabilization Agreement. The five current
national agreements cover varying types of construction and
maintenance work performed by workers in various craft unions.
On May 14, 1997, the Building and Construction Trades Department sent
a letter regarding the use of PLAs to the secretaries of its
affiliated state and local building and construction trades councils.
The letter reminded the councils about the Department's procedures
and policies that have been in place, but frequently ignored, since
at least 1976. The letter reiterated existing procedures on the use
of PLAs and stated that councils ignoring the procedures would be
subject to sanctions determined by the Department. In summary, the
letter requires local councils to obtain separate written approval
from the Department to negotiate or execute any PLA. In addition,
the letter transmitted a copy of the Department's standard PLA to
each council, stating that it must be used in the negotiation of all
future PLAs. This action has the potential to eliminate ad hoc local
PLAs, replace them with a more uniform PLA that local parties can
adapt to their projects, and facilitate a more complete database of
PLAs.
The Building and Construction Trades Department had no comprehensive
data on PLAs negotiated locally before May 1997, but it provided
examples of a few such PLAs. Overall, our research identified about
90 locally negotiated PLAs used in at least 20 states. However,
contractors and labor experts told us that locally negotiated PLAs
are used more frequently than national agreements. Therefore, it is
likely that there are many more local agreements than those we
identified. Possible reasons why the local agreements are not more
readily identifiable are that they are common labor-relations tools
used in the construction industry; and they are rarely publicized,
particularly PLAs used in the private sector.
--------------------
\10 The Building and Construction Trades Department represents 15
building and construction trades unions and coordinates the
activities of local building and construction trades councils in all
50 states and the District of Columbia.
\11 The National Constructors Association is a construction industry
association representing member companies who construct industrial
operating or manufacturing facilities.
\12 The National Maintenance Agreements Policy Committee, Inc., is a
joint committee of labor and management representatives. The
committee administers the National Maintenance Agreement program as a
tool for the effective performance of work in industrial construction
maintenance.
FEW FEDERAL AGENCIES REPORT
USING PLAS
---------------------------------------------------------- Letter :3.2
Four of the 13 federal agencies we reviewed have current construction
projects using the 26 PLAs that we could identify (see app. V). The
four agencies are DOE with 12 PLAs, DOD with 10 PLAs, TVA with 2
PLAs, and NASA with 2 PLAs. Officials at the remaining nine agencies
were not aware of any PLAs on their construction contracts. However,
according to officials at 11 of the 13 agencies, including DOD and
NASA, PLAs could be used on their construction projects without the
agencies' knowledge because contractors are not required to report
collective bargaining matters to the government. As an example,
within DOD, we contacted the Corps of Engineers, the Air Force, and
the Navy, and, among them, these agencies identified only one project
using a PLA--a Corps project. However, data provided by the Building
and Construction Trades Department and the National Constructors
Association showed that seven additional current Corps projects and
two Air Force projects involved the use of PLAs. We verified with
the related agencies or contractors that PLAs were in use on these
projects.
TVA and DOE appear to be the most actively involved in the use of
PLAs. TVA negotiates with the Building and Construction Trades
Department and its 15 international unions and also signs agreements
requiring that contractors become signatory to the PLAs. PLAs on
projects of the other three agencies were negotiated and signed by
the contractors and unions. DOE, however, invoked the authority of
P.L. 85-804 at four locations, Colorado, Idaho, Nevada, and
Washington, to require that all contractors and subcontractors follow
certain provisions of the six related PLAs. In addition, bid
solicitations by DOE for construction projects made reference to the
use of PLAs. The 1997 solicitation for construction of the National
Ignition Facility in California stated that a PLA had been
established. The 1989 solicitation for a new construction management
contractor at the Oak Ridge site in Tennessee required bidders to
include plans/alternatives to recognize the PLA already in place at
that location.
Officials of two of the nine federal agencies with no PLAs that we
could identify told us that they considered, but elected not to use,
PLAs on recent construction projects. These agencies were GSA and
the Department of Labor. A GSA official told us that GSA considered
requiring the use of a PLA on a courthouse construction project in
Boston, MA, because other federally funded projects in the Boston
area had used PLAs. However, she said that the agency decided not to
require a PLA because it had no reason to believe that a PLA was
needed and because the agency believed that a neutral posture should
be maintained regarding use of union versus nonunion labor.
Department of Labor officials told us that two factors led its
Employment and Training Administration to consider using a PLA on a
Job Corps construction project in Massachusetts for which bids were
solicited in March 1997. First, a September 24, 1996, letter from
the Building and Construction Trades Department to the Assistant
Secretary of Labor for Employment and Training urged the Department
of Labor to consider using a PLA on the project. Second, other
public entities in Massachusetts use PLAs on construction projects,
such as the Boston Harbor cleanup project in Boston. The Employment
and Training Administration did not require the use of a PLA in the
project solicitation because the agency was uncertain of its legality
under the circumstances and did not want to risk delaying the
project. However, instructions to bidders for the project included
the following statements:
"In connection with this solicitation, a responsive bidder may
have a Project Labor Agreement (PLA) with its subcontractors. .
. .The Employment and Training Administration has a strong
interest in ensuring good labor relations to achieve expeditious
completion of this project. A PLA is one possible method of
meeting this goal. . . ."
See appendix VI for more details about the four federal agencies with
PLAs identified on current construction projects.
OTHER PUBLIC SECTOR PROJECTS
USE PLAS,
---------------------------------------------------------- Letter :3.3
Although we could find no centralized, complete source of data on the
use of PLAs in the nonfederal public sector, our research disclosed
examples of states, counties, and other nonfederal public entities
using PLAs on construction projects with and without federal funding.
Examples of projects with federal funding include the Boston Harbor
cleanup and Central Artery/Tunnel projects in Boston, MA; the Denver
International Airport, Denver, CO; and the 38th and Fox Phase IV and
the Del Camino Interchange projects for the Colorado State Department
of Transportation. The first three projects used locally negotiated
PLAs. The contractor on the latter two projects used a national
PLA--the Heavy and Highway Construction Project Agreement--that was
neither required nor encouraged by the state of Colorado, according
to a state official.
Examples of public projects that used PLAs and, according to
Washington and Colorado state officials, involved no federal funds,
include the Duwamish River Bridge, the 164th Avenue Interchange, and
the SR5 to Blanford Drive projects for the Washington State
Department of Transportation; and the McClellan Interchange, the
C-470 Yosemite Interchange, and the 125th & Mississippi Avenue Bridge
projects for the Colorado State Department of Transportation. State
officials said that neither state required or encouraged the use of
PLAs on these projects. The contractor in each case used the Heavy
and Highway Construction Project Agreement.
Other nonfederal public projects with PLAs include the Inland Feeder
and Eastside Reservoir Projects for the Metropolitan Water District
in Southern California; the Waterfront Park Project for Mercer
County, NJ; and the Tappan Zee Bridge Project for the New York State
Thruway Authority. All used locally negotiated PLAs.
Some labor experts believe that the use of PLAs for public
construction projects will increase due in part to the Boston Harbor
decision. Since that decision, the governors of four states have
issued Executive Orders encouraging the use of PLAs on their states'
public construction projects: Nevada (1994), New Jersey (1994), New
York (1997), and Washington (1996). In addition, the mayors of
Boston, MA (1997) and Philadelphia, PA (1995) issued similar
Executive Orders for their cities' construction work. At least two
other states, Alaska and Illinois, recently considered legislation
that would allow their state agencies to enter into or require PLAs
on public-works projects, but neither bill had passed at the time of
our review. Conversely, in 1995 Utah passed a law that expressly
forbids any state agency or political subdivision to require the use
of a PLA in connection with any public-works project.
PRIVATE-SECTOR PROJECTS USE
PLAS
---------------------------------------------------------- Letter :3.4
Although no complete central source of information exists, according
to labor experts and union officials, most PLAs are used in the
private sector. An official from a large national contractor told us
that virtually all of that company's private-sector domestic work is
covered by PLAs. The vast majority of PLAs under the national
agreements, discussed earlier, are used on private-sector projects.
For example, 93 percent of the projects/contracts under the National
Constructors Association's national PLA are in the private sector.
Percentages are similar for known uses of the other national
agreements, except for the National Heavy and Highway Construction
Project Agreement, which is used predominately on nonfederal public
projects.
Our research disclosed few specific examples of locally negotiated,
private-sector PLAs. We believe that this may be because the
private-sector PLAs receive less publicity than those in the public
sector. The latter seem to make news because public funds are
involved. Some locally negotiated PLAs used on private-sector
projects that we were able to identify include those for Toyota
manufacturing plants in Princeton, IN, and Georgetown, KY; a Coil
Spring Processing Facility in Spencer County, IN; and a project for
Reynolds Metals in Massena, NY.
AGENCIES' PROCEDURES AND
CRITERIA FOR USE OF PLAS
------------------------------------------------------------ Letter :4
The June 5, 1997, Presidential Memorandum required that federal
agencies develop procedures and criteria for the use of PLAs on their
construction contracts by October 3, 1997. Section 6 of the
Memorandum states,
"The heads of executive departments and agencies covered by this
memorandum, in consultation with the Federal Acquisition
Regulatory Council, shall establish, within 120 days of the date
of this memorandum, appropriate written procedures and criteria
for the determinations set forth in section 1."
Six of the 13 federal agencies we reviewed issued some level of
guidance on PLA use, generally by the due date. Officials at five of
the remaining seven agencies said that they were awaiting related
Federal Acquisition Regulation amendments before issuing procedures
and guidelines. OMB eventually assumed responsibility for assisting
the agencies in developing procedures, although the agencies still
have the primary responsibility; and on March 12, 1998, OMB sent a
draft generic PLA guidance document to officials at DOD, GSA, DOE and
the Department of Labor for comment. The memorandum transmitting the
draft guidance states that the draft is not intended to foreclose
agency-specific customization and adds that the draft soon may be
circulated to agencies to assist them in developing their guidance.
The draft guidance does not require agencies to notify the
Subcommittee on Oversight and Investigation of information it
requested on the future planned use of PLAs, but the draft guidance
does provide for the agencies to collect the needed information.
According to OMB, this provision was added so that agencies could
comply with the Subcommittee's request.
The six agencies that issued some guidance were the Department of
Commerce (Commerce), DOD, GSA, the Department of the Interior, NASA,
and the Department of Transportation (Transportation). All agencies
except Commerce included some or all of the following factors for
contracting officials to consider before making a decision on the use
of a PLA: (1) the history of labor disputes in the area of the work,
(2) whether local collective bargaining agreements with needed crafts
are expected to expire during the planned period of the project, (3)
the general availability of qualified craft workers in the area, (4)
the effect on the government of delays in contract performance, and
(5) the probable effect of a PLA on competition.
Commerce's guidelines primarily reiterated the provisions for use of
a PLA included in the Presidential Memorandum. Transportation did
not issue its own guidelines, but distributed the Presidential
Memorandum and GSA's guidelines to its acquisition personnel via the
internet. During the course of our review, officials at each of the
13 agencies we reviewed said that they did not expect any changes in
the extent of their use of PLAs as a result of the Presidential
Memorandum. However, on April 22, 1998, after our field work was
completed, the Secretary of Transportation issued a memorandum to the
heads of all Transportation agencies strongly encouraging the use of
PLAs on agency construction projects as well as projects funded with
agency grants. A Transportation official told us that PLA awareness
brought about by the Secretary's memorandum could result in PLAs
being used.
AGENCIES' RESPONSES TO
SUBCOMMITTEE REQUEST
------------------------------------------------------------ Letter :5
None of the six agencies' guidance for the use of PLAs clearly
provide for responding to the Subcommittee on Oversight and
Investigation's request to federal agencies that it be notified of
any planned use of PLAs. GSA's initial guidance regarding the use of
PLAs made provision for notifying the Subcommittee. That specific
provision was later deleted when the agency revised its procedures
and criteria to conform with OMB's draft guidelines, but those
revised procedures and criteria call for collection of the data GSA
would need to comply with the Subcommittee's request. Commerce's
procedures and criteria acknowledged the congressional interest in
PLAs, but they did not include guidance for providing information to
the Subcommittee. It should be noted that in response to the
Subcommittee's request, agencies may only give notice of PLAs that
are required by the agencies. Therefore, 12 of the 26 PLAs we
identified on federal construction projects likely would not have
been reported to the Subcommittee because the PLAs were initiated by
contractors and not required by the agencies.
PERFORMANCE COMPARISONS BETWEEN
FEDERAL PLA AND NON-PLA
PROJECTS DIFFICULT TO MAKE
------------------------------------------------------------ Letter :6
Proponents and opponents of the use of PLAs said it would be
difficult to compare contractor performance on federal projects with
and without PLAs because it is highly unlikely that two such projects
could be found that were sufficiently similar in cost, size, scope,
and timing. Also, through our own observations, we know that many of
the federal construction projects using PLAs involve unique
facilities. For example, the PLAs used by TVA and many used by DOE
cover all construction at a given site or sites and involve many
contracts. In the case of TVA, work under the PLAs is spread over
seven states. In the case of DOE, its various locations have unique
missions, facilities, and circumstances. Also, officials at the four
federal agencies with current projects using PLAs said they could not
readily identify similar projects not using a PLA. In addition, a
PLA in use on a project that might be appropriate for comparison with
a non-PLA project may not be representative of all PLAs because the
specific provisions of PLAs can vary based on local negotiations.
Finally, in our opinion, based on varied evaluation experience, any
contract performance differences that might be discerned between a
project with a PLA and one without a PLA could be attributable to
factors other than the PLA. Therefore, drawing definitive
conclusions on whether or not the PLA was the cause of any
performance differences would be difficult.
Nevertheless, our research disclosed three analyses of the costs of a
project using a PLA versus not using the PLA on the same project;
however, none compared a PLA project with a similar non-PLA project.
These analyses are described in this report for information purposes
only. We did not verify any of the analyses, nor do we take a
position on the validity of the conclusions drawn.
The first analysis was done in March 1995 by a local chapter of the
Associated Builders and Contractors, East Syracuse, NY.\13 The
chapter compared initial estimates and actual bids both with and
without a required PLA on a construction project for the New York
State Dormitory Authority at the Roswell Park Cancer Institute. This
unusual comparison was possible because several contracts were
awarded before the PLA became effective. The analysis showed that
the bids were 26 percent higher after the PLA requirement began than
before the requirement existed.
In the second case, the New York Thruway Authority hired a consultant
to negotiate a PLA for its 4-year project to refurbish the Tappan Zee
Bridge. The consultant found that without a PLA, 19 local collective
bargaining agreements with varying provisions would apply to the
project and estimated that labor costs under the uniform provisions
of the PLA would be over $6 million less than labor costs under the
19 separate agreements. The savings represented about 13.5 percent
of the $44.7 million estimated total labor costs and about 4.6
percent of the project's total estimated cost of $130 million. In
addition, each of the 19 local agreements would have expired and
required renegotiation one or two times during the life of the
project. Each expiration represented a potential strike situation.
The PLA was adopted in 1994 and survived a court challenge in 1996,
based in part on the consultant's estimate of cost savings and on
unspecified savings of revenue from bridge tolls, as a result of
having a PLA. One of the authority's key objectives was to avoid
work disruptions on this project.
The third analysis involved the use of a PLA for constructing the
National Ignition Facility at DOE's Lawrence Livermore National
Laboratory, Livermore, CA. A Laboratory official provided us with
documents showing that, in January 1997, the project contractor
estimated the PLA would save $2.6 to $4.4 million on the $1.2 billion
construction project, or less than 0.4 percent, and concluded that
these savings alone justified the PLA. Most of the savings resulted
from estimated wage differences from using the PLA and involved such
items as shift differential, overtime pay, use of apprentices, travel
and subsistence pay, and holiday pay. For example, use of the PLA
reportedly resulted in employing more apprentices and fewer,
higher-paid journeymen on the project than would have been the case
without the PLA.
--------------------
\13 The Associated Builders and Contractors, Inc., is a national
association representing more than 20,000 open-shop construction and
construction-related contractors across the United States. It is a
leading opponent of PLAs on public-sector projects.
COMMENTS FROM FEDERAL AGENCIES,
INDUSTRY ASSOCIATIONS, AND
UNIONS AND OUR EVALUATION
------------------------------------------------------------ Letter :7
We requested comments on a draft of this report from OMB and the 13
federal agencies selected for review. GSA's Deputy Associate
Administrator for Acquisition Policy; NASA's Acting Deputy
Administrator; DOE's Director, Office of Worker and Community
Transition; and the Department of Agriculture's Chief, Procurement
Policy Division provided written technical comments that we
incorporated in the report, as appropriate. Program officials from
the Departments of Veterans Affairs, the Interior, Justice, Health
and Human Services, and Commerce responded orally that they generally
agreed with reported information and had no specific comments.
Officials from OMB, TVA, and the Departments of Labor and
Transportation provided oral technical comments that we incorporated
in this report as appropriate. A Program Analyst in DOD's Office of
the Under Secretary of Defense for Acquisition and Technology
provided oral comments that are discussed below. In addition, we
asked the following organizations to verify that we correctly
reported data they provided: the AFL-CIO's Building and Construction
Trades Department, the Associated Builders and Contractors, Inc., the
Associated General Contractors of America, and the National
Constructors Association. The President of the Building and
Construction Trades Department and the Counsel, Labor and Employment
Law, Associated General Contractors of America,\14 provided written
comments that are discussed below. Officials from the other two
organizations provided oral technical comments that we have
incorporated in this report as appropriate.
DOD raised three points. First, it noted that the draft report's
definition of a PLA was much more encompassing than that in the
Presidential Memorandum. The reason is that, in practice, PLAs cover
maintenance, modification, and repair work in addition to new
construction, and our objective was to gather information on all
forms of PLAs. Second, DOD questioned whether three agreements we
classified as PLAs were in fact PLAs. We reevaluated these three
cases and concluded that one--a Navy construction project--is not a
PLA, and we excluded it from the final report; but the other two--Air
Force projects--were PLAs, although the projects primarily involved
maintenance activities rather than new construction. Third, DOD
cautioned that in considering use of a PLA, government personnel must
be careful not to act in a way that would be inconsistent with
existing laws. We agree.
The Building and Construction Trades Department stated that it found
nothing in the draft report that is incorrect concerning the
information that it provided but had three further significant
comments. First, the Department expressed concern that the draft
report did not fully or fairly reflect the benefits offered by PLAs
or the extent of their use. The Department cited several benefits it
believes PLAs provide. Although our report noted most of these
perceived benefits, it did not include all of the ones cited by the
Department, such as (1) joint labor-management safety training
programs and (2) joint labor-management dispute resolution procedures
for all labor and employment disputes affecting craft personnel. As
the report states, our listing of perceived benefits and perceived
disadvantages was intended to be illustrative, not exhaustive. We
did not make any changes to the report to reflect a higher extent of
PLA use because it already reflected all the uses the Department and
others provided, and the Department did not provide any additional
data on PLA usage. The Department also noted its disagreement with
opponents' views that PLAs increase costs and decrease competition;
however, these matters were beyond the scope of our review and are
not discussed in the report.
Second, the Department stated that our description of the Associated
Builders and Contractors of America should show that the organization
is a leading opponent of PLAs. We agree and revised the report
accordingly.
Third, the Department stated that the report provides a misleading
picture of PLA case law in New York state. It refers to at least two
of the reported court decisions where PLAs were overturned, saying
that one was later reversed by a higher court and suggesting that the
other decision was rendered moot by a later decision on another case.
Although we confirmed that the decision for one of these cases was
reversed by a higher court and noted this in our report, we did not
change our report to address the second case because the Department
did not provide any specific information on the case. In general, we
identified the reported state cases from available literature and did
not determine the ultimate disposition of the state cases beyond the
information that was available in the literature we reviewed. We
clarified our report to provide additional emphasis to this aspect of
our methodology.
The Associated General Contractors of America made three main points.
First, it emphasized its opposition to the mandated use of PLAs on
public projects and cited certain disadvantages of PLAs that were not
included in our report. For example, the organization said that (1)
public owners lack needed experience for negotiating PLAs with
unions, which it believes results in agreements more favorable to the
unions than the public owners or contractors; (2) PLAs can only
increase not decrease wages and benefits on any project subject to
the Davis-Bacon Act;\15 and (3) PLAs create inefficiencies by
eliminating contractors' flexibility to employ and deploy
multiskilled and semiskilled personnel and by requiring that
contractors contribute to union benefit funds, which may be in
addition to contributions to their own benefit plans. As we
previously said, our intent was to provide examples of advantages and
disadvantages of PLAs purported by PLA proponents and opponents. We
did not set out to provide an exhaustive list of either, or to make
an assessment of the advantages or disadvantages of PLAs.
Second, the organization disagreed with the draft report statement
that the U.S. Supreme Court's decision in the Boston Harbor case
"cleared the way for more frequent use of PLAs on public-sector
construction projects." The Boston Harbor decision did clear the way
for further use of PLAs on public-sector construction projects
because it overruled the First Circuit's decision that had enjoined
the use of a PLA in a public-sector construction project. The
Supreme Court upheld the state agency's right to require contractors
to agree to be bound by a PLA. The organization also states that the
Boston Harbor case did not address the legality of PLAs in the
context of the Employee Retirement Income Security Act,\16 anti-trust
laws, or competitive bidding statutes. However, our report does not
discuss or attempt to predict how future challenges to PLAs would be
decided by the courts under those laws. We only note that the
Supreme Court has upheld a public agency's bid specification
requiring contractors on a public construction project to agree to
abide by a PLA negotiated by its project manager and labor.
Third, the organization said that we should state in our report the
basis for our statement that many of the PLAs used on federal
contracts were initiated by contractors. We based this statement on
what agency officials and contractors told us and modified our report
to reflect this.
--------------------
\14 The Associated General Contractors of America represents both
union and open-shop construction firms in 99 chapters in all 50
states and Puerto Rico. Its 32,500 member firms are involved in
building, highway, heavy, municipal-utility, and industrial process
construction projects. The organization opposes mandated PLAs on
public projects.
\15 40 U.S.C. 276a - 276a-5. The Davis Bacon Act requires the
payment of prevailing wages and fringe benefits to laborers and
mechanics employed by contractors and subcontractors engaged in
federal construction projects.
\16 29 U.S.C. 1001 et seq.
---------------------------------------------------------- Letter :7.1
We are sending copies of this report to the Ranking Minority Members
of your Subcommittees and the Chairman and Ranking Minority Member of
the Senate Committee on Labor and Human Resources. We also will send
copies to the Director, OMB; the head of each of the 13 agencies
included in our review; and the other organizations we contacted.
Also, we will make copies available to others on request.
Major contributors to this report were Sherrill H. Johnson,
Assistant Director; Louis G. Tutt, Evaluator-in-Charge; Billy W.
Scott and David W. Bennett, Senior Evaluators; Victor B. Goddard,
Senior Attorney; and Hazel J. Bailey, Communications Analyst.
Please contact me on (202) 512-4232 if you or your staff have any
questions.
Bernard L. Ungar
Director, Government Business
Operations Issues
TOP THIRTEEN FEDERAL AGENCIES
RANKED BY FISCAL YEAR 1996
CONSTRUCTION OBLIGATIONS
=========================================================== Appendix I
Fiscal year 1996 construction
obligations
-----------------------------
Total amount
of Percent of
obligations total
Agency ($000) obligations
--------------------------------------- -------------- -------------
Department of Defense $11,247,595 73.6
General Services Administration 965,810 6.3
Department of Veterans Affairs 461,975 3.0
Department of Transportation 422,297 2.8
National Aeronautics and Space 376,522 2.5
Administration
Department of the Interior 338,784 2.2
Tennessee Valley Authority 288,413 1.9
Department of Justice 247,014 1.6
Department of Agriculture 218,978 1.4
Department of Energy 173,204 1.1
Department of Health and Human Services 119,304 0.8
Department of Commerce 90,375 0.6
Department of Labor 80,769 0.5
======================================================================
Subtotal $15,131,040 98.4
======================================================================
Others 251,855 1.6
======================================================================
Total $15,282,895 100.0%
----------------------------------------------------------------------
Note: We used these data only to identify and select for review the
federal agencies that account for most of the federal construction
dollars.
Source: Fiscal Year 1996 Federal Procurement Report, Federal
Procurement Data System, General Services Administration.
SCOPE AND METHODOLOGY
========================================================== Appendix II
To determine the extent to which project labor agreements (PLA) are
used in the federal government, agencies' responses to the June 5,
1997, Presidential Memorandum encouraging federal agencies to use
PLAs, and agencies' plans for responding to the Subcommittee on
Oversight and Investigation's continuing request to be notified of
planned PLA uses, we contacted the Office of Management and Budget
(OMB) and the 13 federal agencies that accounted for more than 98
percent of the total construction obligations in fiscal year 1996, as
reported in the Federal Procurement Data System (see app. I). Each
agency responded to our written request for various data regarding
PLAs, including identification of any PLAs currently in effect. We
interviewed officials at each agency regarding PLAs in general and
PLAs identified. We also visited three locations where current
federal projects have PLAs: Oak Ridge, Tennessee, the Department of
Energy; Knoxville, Tennessee, the Tennessee Valley Authority; and
Houston, Texas, the National Aeronautics and Space Administration.
To obtain information on the use of PLAs in the private sector and
the nonfederal public sector, we contacted several contractors,
industry associations, union officials, state agencies, and
private-sector labor experts. We judgmentally selected contractors
based on their known participation in federal construction projects
and their known use of PLAs. The industry associations were selected
because they represent union and nonunion contractors in the
construction industry. The union officials were from the American
Federation of Labor-Congress of Industrial Organizations' (AFL-CIO)
Building and Construction Trades Department that represents 15
construction craft unions. We contacted state agency officials in
Arizona, Colorado, Florida, Nevada, New York, Pennsylvania, and
Washington primarily because they were among the largest recipients
of federal highway funds in 1996 or because they had projects known
to have PLAs. We selected private labor experts because of their
involvement in the debate on PLAs. In addition, we performed
literature and internet searches to identify specific projects with
PLAs and to develop general subject matter background. We limited
verification of data to confirmation of current PLAs on federal
construction projects, whether identified by the agencies awarding
the contracts or other sources. We did not verify data generated by
the Federal Procurement Data System nor did we make any independent
assessment of the advantages or disadvantages of PLAs.
To evaluate the feasibility of comparing contractor performance on
federal construction projects done with and without PLAs, we asked
each agency with PLAs to identify any similar non-PLA projects. We
also asked contractors, industry associations, and private labor
experts for any known studies or methodologies for comparing federal
projects with and without PLAs.
We requested comments on a draft of this report from OMB and each of
the 13 federal agencies we reviewed. We also sent the draft to the
Building and Construction Trades Department, the National
Constructors Association, the Associated Builders and Contractors,
Inc., and the Associated General Contractors of America and asked
them to verify that we correctly reported data that they provided.
At the end of this letter, we present and evaluate comments we
received. We also made changes in the letter, where appropriate, to
reflect these comments and the technical comments that were provided.
We did our work from August 1997 to March 1998 in accordance with
generally accepted government auditing standards.
SUMMARY OF COURT DECISIONS IN THE
1990S INVOLVING CHALLENGES OF PLAS
ON PUBLIC-SECTOR CONSTRUCTION
PROJECTS AS REPORTED IN LITERATURE
========================================================= Appendix III
Court decisions on PLA
challenges
----------------------
States where public-sector PLAs Total PLA
were challenged in court cases PLA upheld defeated
----------------------------------- --------- ---------- ----------
Alaska 3 3 0
California 4 3 1
Illinois 1 1 0
Massachusetts 1 1 0
Minnesota 2 1 1
Nevada 1 1 0
New Jersey 3 0 3
New York\a 8 5 3
Ohio 2 2 0
======================================================================
Totals 25 17 8
----------------------------------------------------------------------
\a While we did not independently verify all the data in this
enclosure, we are aware that at least one New York court decision, in
which a PLA was said to be invalidated, was later reversed by a
higher court; and the PLA was upheld.
Source: Journal of Labor Research, Winter 1998, Vol. XIX, No 1.
SELECTED INFORMATION ON FIVE
CURRENT NATIONAL PLAS
========================================================== Appendix IV
No. of
Year PLA No. of States\a
National PLAs began times used where used
-------------------------------------------- ---------- ---------- ----------
Heavy and Highway Construction Project 1954 47\e 38\f
Agreement\b
(For heavy and highway construction,
improvements, modifications, or repairs)
General Presidents Project Maintenance 1958 965\g 47
Agreement\b
(For maintenance and repair of existing
facilities)
National Maintenance Agreement\c 1972 N/A\h 50
(For maintenance and repair of existing
facilities)
National Construction Stabilization 1987 76\g 24
Agreement\d
(For construction of industrial operating
and/or manufacturing facilities)
Building and Construction Trades Department 1997 59\g 23
Standard Project Labor Agreement\b
(For new construction work)
--------------------------------------------------------------------------------
Note: We did not verify these data except for those PLAs on current
federal projects.
\a Includes the District of Columbia.
\b Sponsored by the Building and Construction Trades Department of
the American Federation of Labor-Congress of Industrial
Organizations, Washington, D.C.
\c Sponsored by the National Maintenance Agreements Policy Committee,
Inc., Arlington, VA.
\d Sponsored by the National Constructors Association, Washington,
D.C.
\e Active agreements as of March 13, 1998.
\f Since 1983.
\g Since 1958.
\h An accurate count is not available; however, an official of the
National Maintenance Agreements Policy Committee, Inc., estimated
that in any given year, the National Maintenance Agreement is used at
1,500 to 1,700 industrial sites.
Source: Sponsors identified above.
SUMMARY OF CURRENT PLAS ON FEDERAL
AGENCY PROJECTS
=========================================================== Appendix V
Work covered by Current
Agency/location PLA Year PLA use began contractor(s)
------------------ ------------------ ------------------ --------------------
Department of Energy (12 PLAs)
--------------------------------------------------------------------------------
Fernald Site-wide 1982 Fluor Daniel Fernald
Environmental construction
Management
Project, OH
Idaho National Site-wide 1984 Lockheed Martin
Engineering construction Idaho Technologies
Environmental Co.
Laboratory, ID
Nevada Test Site, Site-wide Mid-1960s Bechtel Nevada Corp.
NV construction
Nevada Test Site, Site-wide Mid-1960s Bechtel Nevada Corp.
NV maintenance and
operations
Nevada Test Site, Site-wide tunnel Mid-1960s Bechtel Nevada Corp.
NV construction,
alteration,
renovation
Lawrence Livermore Construction of 1997 Parsons Constructors
National National Ignition Inc.
Laboratory, CA Facility
conventional
facilities
Oak Ridge Site-wide Mid-1950s M-K Ferguson of Oak
Reservation, TN construction Ridge
Oak Ridge Specific 1997 BNFL, Inc.
Reservation, TN construction
related to
decontamination
and
decommissioning
work at the K-25
Facility
Weldon Spring Construction 1996 M-K Ferguson
Site, MO related to
decontamination
Hanford Site, WA Site-wide 1984 Fluor Daniel
construction Hanford/Fluor Daniel
Northwest
Rocky Flats Site-wide 1973 Kaiser-Hill Co.
Environmental construction L.L.C.
Technology Site,
CO
Savannah River Site-wide 1989 Bechtel Savannah
Site, SC construction River, Inc.
Department of Defense, U.S. Army Corps of Engineers (8 PLAs)
--------------------------------------------------------------------------------
Olmstead Lock and Project 1995 Atkinson-
Dam Project, IL construction Dillingham-Lane
(Joint Venture)
Gallipolis Lock Project 1993 Fru-Con Construction
and Dam Project, construction
WV
Winfield Lock and Project 1994 Johnson/Massman
Dam Project, WV construction
Lock and Dam 14 Project 1996 Midwest Foundation
Project, IA construction
Wyoming Valley Project 1997 Fru-Con Construction
Levee Project, PA construction
R. Byrd Lock and Project 1997 Fru-Con Construction
Dam Project, WV construction
Weapon Disposal Project 1997 Raytheon
Facility, construction Constructors
Umatilla, OR
Bonneville Lock Project 1997 Balfour Beatty
and Dam Project, construction Construction
WA
Department of Defense, U.S. Air Force (2 PLAs)
--------------------------------------------------------------------------------
Falcon Air Force Base construction 1986 Management
Base, CO and renovation Logistics, Inc.
Falcon Air Force Base maintenance 1986 Management
Base, CO and repair Logistics, Inc.
Tennessee Valley Authority (2 PLAs)
--------------------------------------------------------------------------------
Tennessee Valley Site-wide 1991 L.E. Myers Co. and
Authority construction\a John W. Cates
Construction Co.
Tennessee Valley Site-wide 1991 NPS Energy Services,
Authority maintenance, Inc., GUBMK
repair, and Constructors, and
modification\a Stone and Webster
Engineering Corp.
National Aeronautics and Space Administration (2 PLAs)
--------------------------------------------------------------------------------
Johnson Space Center operations 1973 BRSP
Center, TX and maintenance
Langley Research Center operations 1989 EG&G Langley, Inc.
Center, VA and maintenance
--------------------------------------------------------------------------------
\a Covers work in seven states.
Sources: Federal agencies and contractors identified above; Building
and Construction Trades Department of the American Federation of
Labor-Congress of Industrial Organizations; and National Constructors
Association.
ADDITIONAL INFORMATION ON FOUR
FEDERAL AGENCIES WITH PLAS
========================================================== Appendix VI
DEPARTMENT OF ENERGY
-------------------------------------------------------- Appendix VI:1
The Department of Energy (DOE) has no data system that reports
information on its PLAs, but our research disclosed that construction
projects of DOE's predecessor agency, the Atomic Energy Commission,
likely had PLAs as early as the 1940s. Currently, DOE has
construction projects in 9 states with at least 12 PLAs. The nine
states include California, Colorado, Idaho, Missouri, Nevada, Ohio,
South Carolina, Tennessee, and Washington (see app. V). The oldest
of these PLAs has been in effect at DOE's Oak Ridge Reservation,
Tennessee, since the mid-1950s. Similarly, PLAs have been in effect
at the Nevada Test Site since the mid-1960s and at the Rocky Flats
Environmental Technology Site, Colorado, since the early 1970s.
DOE is not signatory to any of the 12 current PLAs, but the agency
has effectively sanctioned 6 of the agreements by invoking the
authority of P.L. 85-804 to require that all contractors and
subcontractors adhere to specific provisions of those agreements.
The six PLAs include three at the Nevada Test Site; and one each at
the Colorado Site, the Idaho National Engineering Environmental
Laboratory,\17 and the Hanford Site, Washington. DOE officials said
that the primary reasons for PLAs on their construction projects are
to (1) prevent work stoppages (strikes and slowdowns); (2) ensure
access to a skilled, qualified workforce, with needed security
clearances; and (3) provide cost and wage stability.
Two of the 12 PLAs on current DOE projects cover maintenance and
repair work--one at the Weldon Spring Site, Missouri, and the other
at the Nevada Test Site. Another current PLA covers conventional
construction work\18 on the National Ignition Facility\19
at the Lawrence Livermore National Laboratory, California, while the
newest PLA covers specific construction related to decontamination
and decommissioning work at the K-25 Site on the Oak Ridge
Reservation. The remaining eight PLAs cover all new construction
work at the respective sites where they apply. The PLA at the Weldon
Spring Site is the National Maintenance Agreement,\20 which is
sponsored by the National Maintenance Agreements Policy Committee,
Inc. and requires union membership as a condition of employment.
The remaining 11 PLAs include 10 negotiated locally between DOE's
contractors and local unions and 1 (the Hanford Site PLA) negotiated
between DOE's contractors and the international unions.
--------------------
\17 In 1991, we issued a report on wage rates and other matters under
the PLA at this location. See Labor Management Relations:
Construction Agreement at DOE's Idaho Laboratory Needs Reassessing
(GAO/GGD-91-80BR, May 23, 1991) for further information.
\18 Some work on the National Ignition Facility is not covered by the
PLA because it involves installation of highly specialized equipment.
However, contractors doing that work may voluntarily elect to become
signatory to the PLA.
\19 This facility will house the world's largest laser.
\20 We considered the Weldon Spring Site to have only one PLA,
although the contractor reportedly signed identical National
Maintenance Agreements with each of 14 local craft unions.
DEPARTMENT OF DEFENSE
-------------------------------------------------------- Appendix VI:2
The Department of Defense (DOD) has no central database with
information on PLAs. Our research showed evidence that PLAs were
used in the construction of various military installations, missile
sites, and other defense facilities as far back as World War II. In
addition, data from the Building and Construction Trades Department
of the American Federation of Labor-Congress of Industrial
Organizations showed that General Presidents Project Maintenance
Agreements were used on at least six Air Force contracts during the
1970s and 1980s. Currently, 10 DOD construction projects have PLAs
that we could identify. According to contractors and agency
officials, all 10 PLAs were initiated by the contractors. The oldest
of these PLAs have been in effect at Falcon Air Force Base, Colorado,
since the mid 1980s.
We requested data on the use of PLAs from the U.S. Army Corps of
Engineers, the U.S. Air Force, and the Naval Facilities Engineering
Command. In the initial responses to our requests, the Corps of
Engineers identified one current construction project with a PLA,
while the Air Force and Navy identified none. Each said it does not
require PLAs and that its contractors could have PLAs unknown to the
agencies.
The Naval Facilities Engineering Command response to our inquiry
about PLAs captures the essence of the problem of identifying PLAs on
federal construction projects. The response stated, in part, that
"Without examining each and every contract for construction . .
. we would be unable to provide to you information on whether
or not the Naval Facilities Engineering Command ever awarded a
contract with a contract requirement for a project labor
agreement. The several headquarters and field activity
contracting personnel . . . contacted with regard to your
inquiry did not recollect any occasion where this Command would
have included such a requirement in a solicitation for
construction."
"[We] are unable to determine information concerning the use of
project labor agreements negotiated by a contractor during the
performance of construction contracts. . .since contractors
are not required to report their collective bargaining
agreements to the government . . . ."
"[I]t is likely that some of our contractors elected to use
project labor agreements and in fact negotiated such agreements
applicable to the workers performing on their contract. Without
an extensive, time-consuming survey of all of our construction
contractors performing at present. . .and extensive research
to identify contractors who performed on closed contracts, we
would be unable to provide the information you have requested."
TENNESSEE VALLEY AUTHORITY
-------------------------------------------------------- Appendix VI:3
The Tennessee Valley Authority (TVA) has no data system that reports
information on its PLAs. However, we found evidence that from 1988
to 1991, a TVA contractor used the General Presidents Project
Maintenance Agreement at four TVA locations in Alabama and Tennessee.
Since 1991, TVA has had two PLAs that cover contracts for
construction and maintenance work in its seven-state coverage area.
Previously, that work was managed by TVA and performed primarily by
an in-house workforce represented by 15 craft unions.
TVA is unique among the four federal agencies with projects that have
PLAs, in that it negotiates the PLAs and has agreed to require that
certain contractors become signatory to these PLAs; and a TVA
official told us that the agency believes the U.S. Supreme Court
decision in the Boston Harbor case supports its authority to require
use of PLAs. Also, according to a TVA official, deregulation of the
utility industry increased competitive pressures and forced TVA to
cut costs. The official said that TVA realized its in-house
construction management and safety record needed improvement, and it
began downsizing and restructuring. In 1991, TVA signed the two PLAs
and engaged private contractors to manage construction and
maintenance work under them. The in-house workforce was reduced to
include primarily operational crafts representing six unions while
most construction, maintenance, and modification work was contracted
out under the two PLAs. TVA officials also told us that the primary
reasons for using PLAs at TVA are to ensure harmonious labor
relations, avoid work stoppages, and ensure an adequate supply of
skilled labor.
One PLA covers construction at new or existing plant sites directly
related to new generating capacity or power transmission, and the
construction, modification, or addition to offices, other buildings
or facilities. The other PLA covers maintenance, renovation,
modification, addition, and/or repair to existing plants and
transmission facilities that do not involve the addition of new power
capacity.
All companies working on construction of new generating capacity or
transmission construction for the Nuclear or Fossil and Hydro
groups\21 must become signatory to the construction PLA. Otherwise
both of TVA's PLAs generally require that only companies receiving
contracts over $250,000 must become signatory to the appropriate PLA.
However, in 1994, an additional threshold of $350,000 was added to
each PLA for contracts relating to work for TVA's Transmission and
Power Supply Group. Also, each contractor must ensure that its
subcontractors become signatory to the appropriate PLA except for
those performing specialty work\22 or those with subcontracts for
$100,000 or less. The various dollar thresholds exist, in part, to
help ensure that businesses within the TVA power service area, and
small, disadvantaged, minority- or woman-owned businesses have an
opportunity to compete for TVA work. About 90 to 95 percent of TVA's
construction dollars are awarded to contractors who are signatory to
the two PLAs.
According to TVA officials, TVA is not subject to the Davis Bacon Act
wage rates that normally apply to federal construction contracts.
Instead, section 3 of the TVA Act requires TVA to include a
prevailing wage provision in covered contracts. Pursuant to section
3, TVA conducts its own analysis of prevailing wage rates and
negotiates those rates annually with the Trades and Labor Council,
which is comprised of the 15 unions who signed the PLAs. TVA uses 15
factors in determining its wage rates, including union wages paid in
13 cities, Davis-Bacon wages, and wages at various major projects.
Prior to 1991, TVA used this system to determine wage rates for its
in-house craft union workers. Each year, TVA uses this wage survey
in negotiating PLA wage rates with the unions and contractors. Any
union that disagrees with TVA's wage determinations may appeal to the
Department of Labor. TVA officials told us there is about one appeal
each year.
--------------------
\21 TVA has several organizational groups involved in functions that
use the PLAs. The primary ones are the Nuclear Group, the Fossil and
Hydro Group, and the Transmission and Power Supply Group.
\22 Article VI of each PLA defines specialty work as work not
normally performed by a general contractor and that requires
specialized knowledge, skills, or equipment operation not normally
possessed by the craft and referable out of the union halls.
NATIONAL AERONAUTICS AND SPACE
ADMINISTRATION
-------------------------------------------------------- Appendix VI:4
The National Aeronautics and Space Administration (NASA) has no
database showing information on its use of PLAs, but sources outside
the agency indicate that PLAs were used in the construction of NASA
facilities at Cape Canaveral in the 1960s. We confirmed that a form
of PLA is being used on two current NASA contracts, one at the
Johnson Space Center, Texas, and one at the Langley Research Center,
Virginia. Each PLA covers maintenance and operations of facilities,
rather than new construction work; and, according to agency
officials, each was initiated by the local contractor, not by NASA.
According to NASA officials, each contractor's primary reason for
using a PLA was to ensure labor and wage stability. The General
Presidents Project Maintenance Agreement is being used at Johnson
Space Center, and the Building and Construction Trades Department's
data show that it has been in place since 1973. The PLA at the
Langley Research Center was negotiated locally between the contractor
and local unions, and it began in 1989.
*** End of document. ***