Funding of Grievance/Arbitration Costs at GOCO Facilities

GAO examined the methods Federal agencies use to reimburse/fund Government-owned, contractor-operated (GOCO) facilities for costs associated with the grievance and arbitration process. It was requested to determine whether the method used for reimbursing these costs was contributing to a breakdown in labor-management relations at one of the Department of Energy's (DOE) GOCO facilities, and whether this problem was occurring at other GOCO facilities. Statistical and cost data were collected for 15 randomly selected GOCO facilities throughout the United States and the DOE facility in question.

All agencies owning GOCO facilities fully reimburse the contractor for its share of grievance/arbitration costs that may arise at the facility while it is under contract to the Federal Government. These costs, found to be small in relation to the operating costs of the facility, are allowable under Federal procurement regulations and the agencies consider them a normal cost of doing business. Only the one DOE facility and an Air Force facility had labor-management relations problems in terms of grievances filed, arbitration costs, and strikes. Thus, the Government's funding arrangement for GOCO facilties did not generally appear to have an adverse impact on labor-management relations. The president of the labor union at the DOE facility reported that until the operator was replaced, labor-management relations problems would probably continue.