ADMINISTRATIVE ORDER NO. 199
OFFICE OF THE GOVERNOR
October 1, 2002
I, Tony Knowles,
Governor of the State of Alaska, make the following findings concerning
construction in rural Alaska that is publicly financed by state
A. Payment of
prevailing wages to construction workers employed by contractors
on most public construction projects is a long-standing requirement
under federal and state law.
with private construction companies through competitive bidding
on these projects is an effective means of ensuring high-quality
construction, completed in a timely fashion at a fair cost, but
frequently results in low utilization of the local workers in
rural areas of Alaska.
C. Some programs
allow grantees of public money to use force account labor, which
occurs when the grantee employs its own workers to perform publicly-financed
construction work instead of contracting with a private contractor.
The use of force account labor for these publicly-financed construction
projects, especially in rural Alaska, yields enhanced local control
and ownership of these projects and high levels of local hire,
and certain state and federal programs have evolved to favor the
use of force account labor on these publicly-financed construction
the use of force account labor for publicly financed construction
projects is frequently justified as less expensive and therefore
preferable to competitive bidding by paying workers considerably
lower wages and benefits than contractors pay their employees
covered under the Little Davis Bacon Act under AS 36.05.010 or
the Davis Bacon Act under 40 U.S.C. 276a.
E. Wage rates
on publicly-financed construction projects in rural Alaska that
include fringe benefits, retirement plans, and other incentives
help encourage rural workers to consider construction as a viable
career with continued opportunities for training and employment.
F. The construction
industry in Alaska needs new entrants to meet ongoing and future
needs for workers. Access to training opportunities directly related
to construction projects in rural Alaska is essential to increase
productivity and earning power of rural Alaskans and enable them
to establish careers in the construction industry.
G. Over the
years, the use of force account construction, especially in rural
Alaska, has increased significantly. To ensure that the construction
of public improvements is most efficient, occurs at the lowest
price, and provides maximum local job and economic opportunities,
while recognizing the significant role of communities and federal
agencies in guiding these programs, all current construction,
wage, employment, and training practices should be evaluated.
Communities and granting agencies should work cooperatively to
offer communities more effective alternatives to present construction
Under the authority
of art. III, secs. 1 and 24, of the Alaska Constitution, I, Tony
Knowles, Governor of the State of Alaska, hereby order that, to
the maximum extent possible consistent with existing law:
1. State agencies
that administer grants for state-financed construction shall offer
communities in rural Alaska a choice between the use of force
account labor and private contracting for those projects where
the use of force account labor is the predominant purchasing method
by the state agency, while allowing communities in rural Alaska
to select methods optimizing benefits to rural Alaska.
2. The Department
of Environmental Conservation, village safe water program, shall
provide one or more demonstration projects to evaluate innovative
contracting methods that include consideration of items such as
hiring practices, on-site management procedures, local equipment
and materials use, training plans, and other relevant items in
awarding contracts for rural sanitation projects administered
by that program.
3. (a) Grant
agreements for projects first funded for construction after the
date of this Order under the following state programs shall include
a requirement for the payment of prevailing wages, including contributions
to a pension or retirement account, equal to the prevailing wages
under AS 36.05, as modified through the use of the progressive,
graduated pay scale developed under (b) of this paragraph, on
all public construction projects:
(1) the village
safe water program under AS 46.07.010 - 46.07.080;
(2) bulk fuel storage tank construction grants made or administered
by the Alaska Energy Authority under AS 44.83.080;
(3) rural power systems upgrade grants made or administered by
the Alaska Energy Authority under AS 44.83.080;
(4) grants from the power project fund under AS 42.45.180;
(5) grants from the electrical service extension fund under AS
(6) community priority program grants administered under AS 44.33.020(20)
by the Department of Community and Economic Development that exceed
$100,000 and constitute at least 25 percent of the total project
(b) The Department
of Labor and Workforce Development, in consultation with communities,
state and federal agencies, and groups involved in employment
and training for rural construction, shall lead a technical assistance
effort to develop a progressive, graduated pay scale that reflects
varying skill levels of workers and the on-the-job acquisition
of skill and experience.
(c) The state
administrators of the grant programs listed in (a) of this paragraph
shall grant, in accordance with this provision, an exemption from
the requirements of (a) of this paragraph for specific projects.
Unless a state administrator issues a documented finding that
granting the exemption would violate the legal requirements or
the intent of the grant program, the administrator shall grant
an exemption upon receipt of a resolution making such a request
that was adopted by the governing body of the grantee or prospective
grantee after the governing body gave public notice and held a
public hearing on the exemption request. A state administrator
may not grant an exemption under this provision after October
4. State granting
agencies shall incorporate the payment of prevailing wages as
provided in paragraph 3 of this Order in preparing budgets and
plans for the programs listed in paragraph 3(a) of this Order.
5. The Department
of Community and Economic Development shall create and regularly
update a construction project directory designed to inform communities
and contractors about upcoming work.
6. The Department
of Labor and Workforce Development and the Department of Community
and Economic Development shall continue and expand their jobs
summit program, designed to match rural Alaskans with training
and employment opportunities and to promote communication between
contractors and rural communities.
7. The Department
of Labor and Workforce Development, in consultation with organizations
serving rural Alaska, shall continue and expand efforts to train
rural Alaskans for careers in the construction industry.
8. The Department
of Transportation and Public Facilities shall continue and expand
its pilot project mandating local pre-bid or post-award conferences
for public projects in rural Alaska.
9. The commissioner
of the Department of Environmental Conservation shall lead an
administration-wide effort to develop and implement a strategy
to convince the United States Department of Health and Human Services
to adopt rural sanitation project "cost caps" within
the Indian Health Service that more realistically reflect the
actual cost of construction in rural Alaska. The Department of
Environmental Conservation shall give a priority consideration
for funding under the village safe water program for any projects
rendered "infeasible" in the Indian Health Service Sanitation
Deficiency System by increases in the project's budget as a result
of this Order.
that the source of much of the funding for rural construction
is federal money, this Order shall be implemented in cooperation
with federal agencies and non-profit partner agencies in a manner
that does not negatively impact federal funding formulas resulting
in a reduction of the overall amount of federal funding for construction
under any program, does not diminish the number of federally funded
projects, and does not conflict with federal statutes and regulations.
Additionally, recognizing that the intent of these programs is
to promote the overall well being of communities, nothing in this
Order should be construed to diminish the concepts of local control
and local hire.
11. The commissioners
of the departments of environmental conservation, community and
economic development, labor and workforce development, and transportation
and public facilities, and the executive director of AIDEA, in
consultation with communities, state and federal agencies, and
groups involved in employment and training for rural construction,
shall provide the Governor with a joint report one year from the
effective date of this Order that evaluates the results to date
of this Order, and shall report annually thereafter. The report
shall include: (a) a description of the actions taken by agencies
and grantees to implement and comply with this Order; (b) an assessment
of the effect of this Order on employment, hiring practices, wages,
benefits, training, career development, number of construction
projects, project costs, and choice of construction management
methods; (c) the impact of this Order on the budgets and the funding
available for programs listed in paragraph 3(a) of this Order;
(d) the results of the demonstration projects specified in paragraph
2 of this Order; (e) the results of the local pre-bid and post-award
conferences specified in paragraph 8 of this Order; and (f) other
information relevant to the findings of this Order.
This Order takes effect immediately.
Dated at Fairbanks,
Alaska, this 1st day of October 2002.