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Chapter 4. LABOR CONDITIONS AND LABOR LAWS

AFFECTING FEDERAL PROCUREMENT OF
CONSTRUCTION

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Davis-Bacon Act

Background ------------
Problem areas....

Potential conflicts between the Davis-Bacon Act

and the National Labor Relations Act ---
Threshold for application of the act
Responsibility for enforcement -
Authorities of the Comptroller General and the

Department of Labor under the act ---
Uncertainty as to coverage of the act -
Basis for determining prevailing wages --
Effect of improper wage determinations --

Submission of weekly payroll records -
The Miller Act
Problem areas

Dollar threshold -----
Cost-type contracts -- ------

Added costs to the Government ------
Contract Work Hours and Safety Standards Act
Summary

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A. Public Law 92–582
B. Comptroller General letter, December 27, 1971
C. List of recommendations
D. Acronyms

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CHAPTER 1

Introduction

The Construction Contractor

In 1967, there were approximately 129,000 general building and heavy construction contractors in the United States." In addition there were nearly 240,000 5 specialty trade contractors, who only handle that portion of work for which they are specially suited, such as plumbing, heating and air conditioning, painting and decorating, masonry, roofing, carpentry, excavating and earthmoving, and iron and steel erection.

The Architect-Engineer

Nine percent of Federal procurement funds in fiscal 1972 was used for construction of various civil and public works and military facilities. Our review of construction procurement was initiated through study groups on Architect-Engineer Services and Construction. These groups recommended numerous changes in agency practices. We suggest that the agencies consider the detailed matters covered by the study groups and reflected in their reports.

In addition to direct procurement of construction, the Government also supports construction through grants to State and local governments, educational institutions, and other grantees. Construction accomplished through grant programs usually requires the addition of grantee funds. The individual grantees procure and administer these construction programs under their own procedures, under procedures promulgated by the grantor agency, or under a mixture of Federal and individual procedures. We did not study the procurement of construction by grantees. The general topic of grants is covered in Part F.

The seasonally adjusted annual rate of total new construction put in place in the first quarter of 1972 was $121.8 billion, 11 percent of the estimated 1972 Gross National Product.2 Of the estimated 870,000 construction contractors in the United States, only 1,200 (about one-tenth of 1 percent) employ 100 or more people.? From this data it is apparent that the industry requires the integrated input of many separate participants.

Although the architect-engineer (A-E) furnishes many types of services, the principal one for which the Government contracts with A-E firms is the preparation of the architectural and engineering designs, the final construction plans, and the detailed technical specifications on which construction contractors can bid accurately and competitively.

The procurement of A-E services by the Federal agencies is a very small part of overall Federal procurement. Federal procurement of these services in fiscal 1970 was about $140 million, about 0.3 percent of the total direct Federal procurement reported by agencies. The dollar value of A-E services procured by the Federal agencies is also a relatively small part of the market for A-E services. In 1967, there were 48,809 firms providing architectural, engineering, and land surveying services; annual receipts for firms with a payroll totaled $4.2 billion. However, the Government is the largest single user of engineering and A-E services. 8 The Department of Defense awarded slightly more than half of the 3,400 Federal A-E contracts in 1970. In calendar 1969, approximately 80 percent of these DOD contracts were for $25,000 or less."

1 U.S. Department of Commerce, Report C30-72-7, Value of New Construction Put in Place, Sept. 1972, p. 1 (July 1972 index).

? Calculated by the Commission by comparing the $121.8 billion with the Gross National Product shown in Special Analyses of the United States Government, Fiscal Year 1973, table C-1, p. 34.

Statement of Roger Blough, Chairman, Construction Users AntiInflation Roundtable, before the Joint Economic Committee on Jan. 29, 1971, Hearings, 92d Cong., 1st sess., pt. 2, p. 347.

4 “Selected Construction Industries--Summary by Industry: 1967," Statistical Abstract of the United States, 1971, table 1089, p. 661. 5 lbid.

& Survey of Government agencies by Study Group 13-B (ArchitectEngineer Services). Military prime contract awards for A-E services in fiscal 1972 amounted to over $200 million. DOD Military Prime Contract Awards by Service Category and Federal Supply Classification, fiscal years 1969, 1970, 1971, and 1972, Office of the Assistant Secretary of Defense (Comptroller), Sept. 12, 1972, p. 4.

different times and in varying numbers on the same construction project. Although the wage scales for skilled crafts provide some of the highest hourly wage rates among union workers, the median annual earnings of a full-time construction worker were $7,650 per year for 1969.12 Some construction work is seasonal, hazardous, and subject to extensive downtime due to adverse weather, interruptions due to labor disputes and other causes, and difficulty in integrating and scheduling the work of various crafts.

Construction Craft Labor

Federal Construction Procurement

Historically, construction workers have tended to join together by craft, and there are at least 17 national unions, 10,000 local unions, and 535 building trade councils.10 The prominent unions include bricklayers, carpenters, laborers, electricians, operating engineers, cement masons, iron workers, plumbers, pipefitters, and sheetmetal workers.

While there are separate unions for almost every trade in the industry, the trades are formed into a single organization—the Building and Construction Trade Department, AFLCIO. The Department of Labor reports somewhat more than three-fifths of the construction workers in this industry were employed by firms in which a majority were covered by union-management agreements.11 We estimate that about half of all construction workers are nonunion.

Construction requires labor in different combinations of occupational skills. Operating engineers, for example, are employed in great numbers on large earthmoving projects and road construction, while comparatively few operating engineers are required in building construction. Different crafts are needed at

For fiscal 1972, the amount of direct Federal outlays for public works was estimated to be $5.4 billion, 13 most of it in the United States, representing over 4 percent of all new construction."

The Federal agencies that procure a significant amount of construction are shown in table 1, along with the estimated dollar outlays and percentages of the total direct construction for fiscal 1972.

For civilian agencies, the General Services Administration-Public Buildings Service (GSA-PBS) is the central procurement authority for the construction of all general-purpose public buildings. This includes site acquisition, A-E services, and the overseeing of design, construction, extension, and remodeling of public buildings. During fiscal 1971, GSA-PBS processed $290,881,000 for procurement of construction.15

The civilian agencies utilize the services of GSA-PBS for general purpose building construction but may procure their own construction for special purposes related to their basic missions. For example, in the Federal Aviation Administration of the Department of Transportation, construction procurement is generally related to airport construction and

7 "Architectural, Engineering and Land Surveying Firms--Summary by States ; 1967," Statistical Abstract of the United States, 1971, table 1093, p. 663.

8 Letter from Richard D. Harza to the Comptroller General of the United States, July 27, 1967. included in Appendix C of the U.S. Congress, House, Hearings on H.R. 16443, 91st Cong., 2d sess., June 4, 1970, p. 94.

• Commission Studies Program. 10 Note 3, supra, pp. 346-347.

11 U.S. Department of Labor, News Release USDL-71-312, "Results of BLS Survey of Compensation of Workers Employed by Construction Special Trade Contractors." P. 2.

Longest Job: 1958 to 1969." Statistical Abstract of the United
States, 1971, table 360, p. 229.

19 Special Analyses of the United States Government, Fiscal Year 1973, p. 256.

14 Ibid. Grants and net lending for public works are estimated at $7.8 billion. (Percentage calculated by the Commission.)

16 Letter from the General Services Administration to the Com. mission, subject: GSA Procurement for fiscal 1971, Dec. 7, 1971,

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