United States General Accounting Office

GAO Report to Congressional Requesters

May 1998 PROJECT LABOR

AGREEMENTS

The Extent of Their

Use and Related

Information

GAO/GGD-98-82

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

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 Act1

generally prohibits prehire agreements, but an exception in the act2 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

1

29 U.S.C. § 151 et seq.

2

29 U.S.C. § 158(f)

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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.

Results in Brief 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

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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.

Background 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.

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. . . .”

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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 Order4

 forbidding the use of PLAs by any parties to federal or

federally funded construction projects. President Clinton revoked5

 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.

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.

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The memorandum defines “construction” to include not only new

construction but also alteration and repair work.6

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

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

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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.

Total Number of PLAs

Is Unknown

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

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 Department10 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 Association11 and National

10The 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.

11The National Constructors Association is a construction industry association representing member

companies who construct industrial operating or manufacturing facilities.

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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.

Few Federal Agencies

Report Using PLAs

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

12The 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.

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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

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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

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.

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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

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 predominantly 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.

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Agencies’ Procedures

and Criteria for Use of

PLAs

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

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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

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

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

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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

13The 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.

Page 13 GAO/GGD-98-82 Project Labor Agreements
B-277866 

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.

Comments From

Federal Agencies,

Industry Associations,

and Unions and Our

Evaluation

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

14The 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.

Page 14 GAO/GGD-98-82 Project Labor Agreements
B-277866 

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

Page 15 GAO/GGD-98-82 Project Labor Agreements
B-277866 

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

1540 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.

Page 16 GAO/GGD-98-82 Project Labor Agreements
B-277866 

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.

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

1629 U.S.C. § 1001 et seq.

Page 17 GAO/GGD-98-82 Project Labor Agreements
Contents

Letter 1

Appendix I 

Top Thirteen Federal

Agencies Ranked by

Fiscal Year 1996

Construction

Obligations

20

Appendix II 

Scope and

Methodology

21

Appendix III 

Summary of Court

Decisions in the 1990s

Involving Challenges

of PLAs on

Public-Sector

Construction Projects

as Reported in

Literature

23

Appendix IV 

Selected Information

on Five Current

National PLAs

24

Page 18 GAO/GGD-98-82 Project Labor Agreements
Contents

Appendix V 

Summary of Current

PLAs on Federal

Agency Projects

25

Appendix VI 

Additional

Information on Four

Federal Agencies With

PLAs

27

Department of Energy 27

Department of Defense 28

Tennessee Valley Authority 29

National Aeronautics and Space Administration 30

Abbreviations

AFL-CIO American Federation of Labor-Congress of Industrial

 Organizations

DOD Department of Defense

DOE Department of Energy

GSA General Services Administration

NASA National Aeronautics and Space Administration

OMB Office of Management and Budget

PLA Project Labor Agreement

TVA Tennessee Valley Authority

Page 19 GAO/GGD-98-82 Project Labor Agreements
Appendix I 

Top Thirteen Federal Agencies Ranked by

Fiscal Year 1996 Construction Obligations

Fiscal year 1996 construction obligations

Agency

Total amount of

obligations ($000)

Percent of total

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

Administration 376,522 2.5

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 $15,031,040 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.

Page 20 GAO/GGD-98-82 Project Labor Agreements
Appendix II 

Scope and Methodology

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

Page 21 GAO/GGD-98-82 Project Labor Agreements
Appendix II 

Scope and Methodology

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.

Page 22 GAO/GGD-98-82 Project Labor Agreements
Appendix III 

Summary of Court Decisions in the 1990s

Involving Challenges of PLAs on

Public-Sector Construction Projects as

Reported in Literature

Court decisions on PLA

challenges States where public-sector PLAs

were challenged in court Total cases PLA upheld PLA 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 Yorka 8 5 3

Ohio 2 2 0

Totals 25 17 8

aWhile 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.

Page 23 GAO/GGD-98-82 Project Labor Agreements
Appendix IV 

Selected Information on Five Current

National PLAs

National PLAs

Year PLA

began

No. of

times used

No. of

Statesa

where used

Heavy and Highway Construction Project Agreementb

(For heavy and highway construction, improvements, modifications, or repairs) 1954 47e 38f

General Presidents Project Maintenance Agreementb

(For maintenance and repair of existing facilities) 1958 965g 47

National Maintenance Agreementc

(For maintenance and repair of existing facilities) 1972 N/Ah 50

National Construction Stabilization Agreementd

(For construction of industrial operating and/or manufacturing facilities) 1987 76g 24

Building and Construction Trades Department Standard Project Labor Agreementb

(For new construction work) 1997 59g 23

Note: We did not verify these data except for those PLAs on current federal projects.

aIncludes the District of Columbia.

bSponsored by the Building and Construction Trades Department of the American Federation of

Labor-Congress of Industrial Organizations, Washington, D.C.

cSponsored by the National Maintenance Agreements Policy Committee, Inc., Arlington, VA.

dSponsored by the National Constructors Association, Washington, D.C.

eActive agreements as of March 13, 1998.

f

Since 1983.

gSince 1958.

hAn 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.

Page 24 GAO/GGD-98-82 Project Labor Agreements
Appendix V 

Summary of Current PLAs on Federal

Agency Projects

Agency/location Work covered by PLA Year PLA use began Current contractor(s)

Department of Energy (12 PLAs)

Fernald Environmental

Management Project, OH

Site-wide construction 1982 Fluor Daniel Fernald

Idaho National Engineering

Environmental Laboratory, ID

Site-wide construction 1984 Lockheed Martin Idaho

Technologies Co.

Nevada Test Site, NV Site-wide construction Mid-1960s Bechtel Nevada Corp.

Nevada Test Site, NV Site-wide maintenance and

operations

Mid-1960s Bechtel Nevada Corp.

Nevada Test Site, NV Site-wide tunnel construction,

alteration, renovation

Mid-1960s Bechtel Nevada Corp.

Lawrence Livermore National

Laboratory, CA

Construction of National Ignition

Facility conventional facilities

1997 Parsons Constructors Inc.

Oak Ridge Reservation, TN Site-wide construction Mid-1950s M-K Ferguson of Oak Ridge

Oak Ridge Reservation, TN Specific construction related to

decontamination and

decommissioning work at the

K-25 Facility

1997 BNFL, Inc.

Weldon Spring Site, MO Construction related to

decontamination

1996 M-K Ferguson

Hanford Site, WA Site-wide construction 1984 Fluor Daniel Hanford/Fluor

Daniel Northwest

Rocky Flats Environmental

Technology Site, CO

Site-wide construction 1973 Kaiser-Hill Co. L.L.C.

Savannah River Site, SC Site-wide construction 1989 Bechtel Savannah River, Inc.

Department of Defense, U.S. Army Corps of Engineers (8 PLAs)

Olmstead Lock and Dam Project,

IL

Project construction 1995 Atkinson-Dillingham-Lane (Joint

Venture)

Gallipolis Lock and Dam Project,

WV

Project construction 1993 Fru-Con Construction

Winfield Lock and Dam Project,

WV

Project construction 1994 Johnson/Massman

Lock and Dam 14 Project, IA Project construction 1996 Midwest Foundation

Wyoming Valley Levee Project,

PA

Project construction 1997 Fru-Con Construction

R. Byrd Lock and Dam Project,

WV

Project construction 1997 Fru-Con Construction

Weapon Disposal Facility,

Umatilla, OR

Project construction 1997 Raytheon Constructors

Bonneville Lock and Dam

Project, WA

Project construction 1997 Balfour Beatty Construction

Department of Defense, U.S. Air Force (2 PLAs)

Falcon Air Force Base, CO Base construction and

renovation

1986 Management Logistics, Inc.

(continued)

Page 25 GAO/GGD-98-82 Project Labor Agreements
Appendix V 

Summary of Current PLAs on Federal

Agency Projects

Agency/location Work covered by PLA Year PLA use began Current contractor(s)

Falcon Air Force Base, CO Base maintenance and repair 1986 Management Logistics, Inc.

Tennessee Valley Authority (2 PLAs)

Tennessee Valley Authority Site-wide constructiona 1991 L.E. Myers Co. and John W.

Cates Construction Co.

Tennessee Valley Authority Site-wide maintenance, repair,

and modificationa

1991 NPS Energy Services, Inc.,

GUBMK Constructors, and

Stone and Webster Engineering

Corp.

National Aeronautics and Space Administration (2 PLAs)

Johnson Space Center, TX Center operations and

maintenance

1973 BRSP

Langley Research Center, VA Center operations and

maintenance

1989 EG&G Langley, Inc.

aCovers 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.

Page 26 GAO/GGD-98-82 Project Labor Agreements
Appendix VI 

Additional Information on Four Federal

Agencies With PLAs

Department of Energy 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

work18 on the National Ignition Facility19 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,

17In 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.

18Some 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.

19This facility will house the world’s largest laser.

20We 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.

Page 27 GAO/GGD-98-82 Project Labor Agreements
Appendix VI 

Additional Information on Four Federal

Agencies With PLAs

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.

Department of

Defense

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 . . . .”

Page 28 GAO/GGD-98-82 Project Labor Agreements
Appendix VI 

Additional Information on Four Federal

Agencies With PLAs

“[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

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.

Page 29 GAO/GGD-98-82 Project Labor Agreements
Appendix VI 

Additional Information on Four Federal

Agencies With PLAs

All companies working on construction of new generating capacity or

transmission construction for the Nuclear or Fossil and Hydro groups21

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 work22 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.

National Aeronautics

and Space

Administration

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,

21TVA 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.

22Article 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.

Page 30 GAO/GGD-98-82 Project Labor Agreements
Appendix VI 

Additional Information on Four Federal

Agencies With PLAs

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.

(240250) Page 31 GAO/GGD-98-82 Project Labor Agreements
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