ADMINISTRATION OF THE DAVIS-BACON ACT WEDNESDAY, JUNE 13, 1962 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON LABOR OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 429, Old House Office Building, Hon. James Roosevelt (chairman of the subcommittee) presiding. Present: Representatives Roosevelt, Pucinski, and Hiestand. Also present: Representatives Frelinghuysen, Griffin, and Martin. Staff members present: Edmund Edelman, subcommittee counsel; Richard T. Burress, minority clerk; and Adrienne Fields, subcommittee clerk. Mr. ROOSEVELT. The committee will come to order, please. The committee has asked Mr. J. E. Welch, the Deputy Counsel of the Office of the Comptroller General of the United States, together with Mr. Blanchard, to kindly come back and be with us this morning. Mr. Welch, if you remember, yesterday, our minority members unfortunately did not have a chance to ask what questions they might have. This morning, if it is agreeable to you, we will commence with the minority and let them ask questions. STATEMENT OF J. E. WELCH, DEPUTY GENERAL COUNSEL, OFFICE OF THE COMPTROLLER GENERAL OF THE UNITED STATES; ACCOMPANIED BY 0. K. BLANCHARD, LEGISLATIVE ATTORNEY— Resumed Mr. WELCH. Mr. Chairman, with your permission, I would like to read an insert into the record, a brief statement which I think will help clarify the discussion we had yesterday concerning the authority of the General Accounting Office. Mr. ROOSEVELT. I will be happy to have you do so. We will proceed. with the statement first then. Mr. WELCH. Thank you. There is a difference between our general authorities, pursuant to which in two instances (the Quantico case and the Spray Painting case) the Secretary of Labor's wage determinations have been reviewed, and the authorities pursuant to which we perform certain enforcement duties under the act. These authorities. are separate and distinct and govern activities serving entirely separate purposes. First, we have, in particular cases, reviewed the wage determinations made by the Secretary of Labor. However, this is not, as might be thought, the exercise of a right to redetermine such wages and it does not mean that ordinarily we examine the Secretary's determinations to ascertain their merits. In the several determinations that we have studied, out of the hundreds or thousands that have been issued and become effective, our study was basically for the purpose of ascertaining whether or not excessive or unnecessary expenditures had been or would be made from funds appropriated for the programs involved. Such examinations are clearly authorized by the laws enacted by the Congress setting forth the duties and responsibilities of the General Accounting Office. Specifically, we direct the subcommittee's attention to the following statutory provisions: BUDGET AND ACCOUNTING ACT, 1921 SEC. 305. All claims and demands whatever by the Government of the United States or against it, and all accounts whatever in which the Government of the United States is concerned, either as debtor or creditor, shall be settled and adjusted in the General Accounting Office (42 Stat. 24; 31 U.S.C. 71). SECTION 312(a) OF THE 1921 ACT The Comptroller General shall investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds *** (42 Stat. 25; 31 U.S.C. 53). LEGISLATIVE REORGANIZATION ACT OF 1946 SEC. 205. The Comptroller General is authorized and directed to make an expenditure analysis of each agency in the executive branch of the Government (including Government corporations), which, in the opinion of the Comptroller General, will enable Congress to determine whether public funds have been economically and efficiently administered and expended. * * (60 Stat. 837; 31 U.S.C. 60). ACCOUNTING AND AUDITING ACT OF 1950 SEC. 117(a). Except as otherwise specifically provided by law, the financial transactions of each executive, legislative, and judicial agency, including but not limited to the accounts of accountable officers, shall be audited by the General Accounting Office in accordance with such principles and procedures and under such rules and regulations as may be prescribed by the Comptroller General of the United States. In the determination of auditing procedures to be followed and the extent of examination of vouchers and other documents, the Comptroller General shall give due regard to generally accepted principles of auditing, including consideration of the effectiveness of accounting organizations and systems, internal audit and control, and related administrative practices of the respective agencies (64 Stat. 837; 31 U.S.C. 67). The policy of the Congress with respect to auditing is set forth in section 111(d) of the Accounting and Auditing Act of 1950, as follows: The auditing for the Government, conducted by the Comptroller General of the United States as an agent of the Congress shall be directed at determining the extent to which accounting and related financial reporting fulfill the purposes specified, financial transactions have been consummated in accordance with laws, regulations or other legal requirements, and adequate internal financial control over operations is exercised, and afford an effective basis for the settlement of acounts of accountable officers (64 Stat. 834; 31 U.S.C. 65). Going back to the Budget and Accounting Act of 1921, section 304 provides: Balances certified by the General Accounting Office, upon the settlement of public accounts, shall be final and conclusive upon the executive branch of the Government * * *. Disbursing officers, or the head of any executive department, or other establishment not under any of the executive departments, may apply for and the Comptroller General shall render his decision upon any question involving a payment to be made by them or under them * Those are the statutory provisions, or some of them, under which our Office operates and from which it derives its authority. Normally, examinations made under these statutory provisions, including examination of wage rate determinations, are on a postaudit basis. One of the purposes of such examination is to enable us to inform the Congress and the executive branch with respect to the manner in which programs are carried out. To clear up any misunderstanding, we would like to make it clear that as a general proposition we do not review the merits of wage determinations made by the Department of Labor. As we pointed out in our testimony of yesterday, special legislative authorization and procedures would be required before we could make a decision on a wage rate determination which would be binding, assuming the Department of Labor was acting within the scope of its authority. However, when the head of a department or agency requests an advance decision from us under the statutory provisions to which I just referred, we are required to render an opinion in the matter. This is what happened in the Spray Painting case reported in 36 Comp. Gen. 806. With respect to our specific enforcement responsibilities under the Davis-Bacon Act, we have attempted to work with the Department of Labor to the greatest extent consistent with our primary responsibilities in our effort to achieve the best possible climate for effective enforcement. Our views concerning the divided responsibility for enforcement under the act have been made known fully to the Solicitor of Labor's representatives since 1935. However, enforcement problems did not become critical until Reorganization Plan 14 was approved in 1950 and the Secretary of Labor's regulations thereunder were issued. We have had informal liaison between representatives of our Office almost constantly during the last 10 years in an attempt to find agreeable working solutions to the many problems encountered. Some of the problems did not, in fact, become fully evident until departmental interpretations of the regulations came to our attention. While we gave general approval to the original regulations, to the extent that interpretations conflicting with our responsibilities could be foreseen, we did state at the time of such approval (B–97060, Aug. 28, 1950). In fact, we concluded our letter in which we gave the approval with this statement : It must be understood, however, that, since the application of the proposed regulations to particular situations might give rise to problems not now anticipated, the fact that the regulations have been submitted here may not be viewed as precluding such future action by this Office as might be necessary to the proper performance of the duties imposed upon it by law. When it became evident about 5 years ago that the Solicitor of Labor's Office entertained its own views concerning our responsibilities under the act, and that the differences of opinion involved were causing difficulties, we not only sought to clarify the issues informally, but in definite terms instructed all Federal agencies concerning our basic responsibilities. We did so in a circular letter (B-3368, dated March 19, 1957) pointing out, among other things, that our Office "is required to make independent legal determinations based upon its own evaluations of evidence in each case" where questions of de barment or wage adjustment are in issue. We have not received formal objections from the Office of the Solicitor of Labor or other agencies with respect to our interpretation of our responsibilities, although the matter has been discussed informally with us by Department of Labor representatives on numerous occasions. Early this year the Solicitor of Labor visited our Office and indicated that uniform and effective enforcement of the minimum wage laws applicable to construction contracts, particularly missile sites contracts, seemed to make it essential that his Office be allowed to make authoritative rulings and interpretations on questions dealing with the application and interpretation of the Davis-Bacon Act. An informal memorandum was left with us at the time setting forth in some detail a proposed basis for a change in our position. We have not been convinced, however, that the provisions of the Davis-Bacon Act and Reorganization Plan 14 permit us to agree with the Solicitor to the extent requested. We feel that if the Department of Labor is to be given final responsibility that should be accomplished by appropriate amendment to the act. Mr. ROOSEVELT. Thank you very much, Mr. Welch, for that clarifying statement. May the committee have sufficient copies for each member of the committee? Mr. WELCH. I would be glad to have them made for you, Mr. Chair- man. Mr. WELCH. I had one copy which I have given to the reporter. Mr. ROOSEVELT. Thank you very much. Mr. Griffin? Mr. GRIFFIN. Mr. Welch, I have no particular questions. However, I, for one, and I am sure that the committee in general, want to commend you and the General Accounting Office and the Comptroller General for doing a good job in a very difficult area, in my humble opinion. In particular I want to call attention to the report on the Capehart housing project at the Marine Corps School, Quantico, Va., which has just been released by the Comptroller General's Office. This is an excellent study, in my opinion, not only of the particular situation there but also of the procedures and the operations of the Department of Labor in administering the Davis-Bacon Act. It is a good review of the legislative history of the Davis-Bacon Act. Mr. Chairman, with that in mind and because this is the first attempt on the part of a committee of Congress to do a thorough job of reviewing the administration of the act in, I guess, over 20 years, I think the record would not be complete if we did not include this report in the record of this hearing, and I would ask unanimous consent that, following the testimony of Mr. Welch, this report be included in the hearings. Mr. ROOSEVELT. Together with the exhibits? Mr. GRIFFIN. Yes. The exhibits could either be put in the appendix of the hearing or immediately following the report. I have no particular preference on that. Mr. ROOSEVELT. Without objection, the report referred to will be included as a separate item following the testimony of Mr. Welch and will include the exhibits. Mr. GRIFFIN. Mr. Chairman, there are 10 opinions issued by the Comptroller General on various phases of the Davis-Bacon Act and its application, most of which have been referred to in the testimony presented by Mr. Welch. I feel that they are key decisions, whether individual members agree with them or not, and bear on the jurisdiction and authority of the Comptroller General in this field. I should like to ask that they be included in the record following the report. Mr. ROOSEVELT. Without objection, it is so ordered, and counsel will review them. Mr. GRIFFIN. If you have question about the pertinency of them. Mr. ROOSEVELT. We will bring it up later before the committee. Mr. GRIFFIN. I have no further questions, Mr. Chairman. Mr. ROOSEVELT. Mr. Martin? Mr. MARTIN. Mr. Welch, I want to refer to this so-called Omaha case about which Mr. Critchfield, manager of the Association of General Contractors, Nebraska chapter, testified last week. To his testimony was attached a copy of a letter from the Comptroller General dated April 11, 1962. This is in regard to beginner operators, in which the Nebraska Highway Department and engineer always recommended that a beginner operator be classified as such as $1.90 an hour, and a beginner operator is one who has worked less than 12 months, has less than 12 months' experience. The experienced dragline operators received $2.35 an hour. This has always been a determination by the solicitor on interstate highway construction in Nebraska, and he has gone along with this recommendation of $1.90 an hour. Then this winter he refused to allow the $1.90 an hour or so determination on these beginner opera tors. In a letter to Senator Curtis of Nebraska, on April 11, which is at long letter, in your concluding paragraph the Comptroller states: For the reasons stated, it is our opinion that the refusal of the Secretary of Labor to include in his prevailing wage determinations for interstate highway projects in the State of Nebraska the classification of beginner operator is not justified by anything appearing in the record submitted by you. Signed by Joseph Campbell. Now your opinion is different than the solicitor's in this case, but what happens is that we still don't have that beginner operator's determination of $1.90 an hour. Mr. WELCH. I am familiar with the case and the letter, but I am not. familiar with subsequent events, what may have happened after that letter was written. Mr. MARTIN. There has not been anything done according to the testimony last week. Mr. WELCH. I see. Mr. MARTIN. In this case, do you have the power to overrule the solicitor's office on this under the law or not, and force him to make a determination along these lines that were requested? Mr. WELCH. I think we do; yes. Mr. MARTIN. In other words, he could be compelled then to issue a beginner operator's schedule? Mr. WELCH. Let us put it this way: If he didn't, and it was certified to us for debarment, if this is a Davis-Bacon Act case, and for wage adjustments to the apprentices involved who were paid a higher wage rate because they were not classified as apprentices, we would not, in all probability, agree that this contractor should be listed on the debarred list and debarred for 3 years, and we wouldn't make the wage adjustments, I don't believe. |