TONY KNOWLES
GOVERNOR 

 STATE OF ALASKA
OFFICE OF THE GOVERNOR
JUNEAU

October 1, 2002

ADMINISTRATIVE ORDER NO. 199

I, Tony Knowles, Governor of the State of Alaska, make the following findings concerning construction in rural Alaska that is publicly financed by state grants:

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.

B. Contracting 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 projects.

D. However, 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 practices.


ORDER

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 42.45.200;
(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 cost.

(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 1, 2007.

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.

10. Recognizing 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.

S/S Tony Knowles     
Tony Knowles         
Governor             



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