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obtained from such subcontractors are Miller Act bonds, representatives of the surety industry continue to have concerns about the status of such bonds.

ADDED COSTS TO THE GOVERNMENT

GAO in a recent report 43 on the desirability of expanding the Government's self-insurer role in numerous phases of its activities, devoted considerable attention to the Miller Act requirements for payment and performance bonds on Government construction contracts.

The survey by GAO disclosed that the cost of the bonds was substantial and the number of defaults few." It was indicated that the deletion of the bond requirements and the acceptance of the occasional inconveniences, disruption, and expense of an uninsured default might result in a net benefit to the Government. Agency officials and industry representatives, from whom views were solicited by GAO, expressed the belief that the value of performance and payment bonds lies not so much in the indemnification of Government losses as in the other functions performed by the sureties. The construction industry's chief concerns appear to be the screening out of unqualified contractors and the protection of suppliers and laborers. Government agencies share these concerns and want the assistance of the surety to help to avoid a default and in taking over and completing the construction project when a default does occur.

It was concluded by GAO, however, that further consideration as to the appropriateness of repeal of the Miller Act bond requirements is needed prior to any proposal to Congress for repeal.

CONTRACT WORK HOURS AND SAFETY STANDARDS ACT

The Contract Work Hours Standards Act 45 "U.S. Comptroller General, Report B-168106, Survey of the Application of the Government's Policy on Self-Insurance, June 14,

1972.

"Estimated at between $16.5 million and $20.5 million in fiscal 1970, between $20 million and $24.4 million in fiscal 1971, and between $23 million and $28 million in fiscal 1972. Ibid., pp. 51, 54, 56.

45 Public Law 87-581, 40 U.S.C. 327 et seq.

superseded a series of confusing and overlapping work-standard statutes which were enacted between 1892 and 1940 and, among other things, requires the payment of time and onehalf for work in excess of 8 hours a day or 40 hours a week. Nearly all of the construction contractors queried in the Commission's study reported that this requirement increases costs, as it requires the payment of overtime costs for working over 40 hours in one week to make up for time lost due to bad weather in another week. It is also asserted to bar the adoption of a 4-day, 40-hour work week.

The Secretary of Labor is authorized to provide reasonable limitations and allow variations from the overtime requirements of the act. Recently a variation from the overtime provisions was granted to the Veterans Administration for contracts to provide nursing home care for veterans. Under this variation employees of nursing homes are permitted to work up to 48 hours in a work week without overtime compensation.

The Department of Labor held a public hearing on September 7-10, 1971, concerning adoption of a 4-day, 40-hour work week without payment of time and one-half overtime compensation for workdays exceeding 8 hours but has taken no action with respect to this matter.

The Legislative Research Department of the AFL-CIO and representatives of several AFLCIO unions testified at the Department of Labor hearing that they opposed any variance from the established standards.

SUMMARY

The most critical problems affecting Government construction pertain to labor laws and their administration. The confusion and divergent views with respect to responsibilities and authorities under the Davis-Bacon Act, uncertainty as to the coverage of that act, and practices used in determining "prevailing" wage rates result in increased costs and delays. The dollar thresholds at which the labor and bonding statutes apply increase contract and administrative costs and restrict competition. The work hours provisions apply the same requirements to both supply and con

struction contracts, contracts, although although construction work is very different in character. The requirement for submission of weekly payrolls contributes significantly to the cost of construction.

In Part A we recommend a complete reexamination of the many social and economic objectives implemented through the procurement process. Although we make no recommendations on the approach to solving the problems existing under the labor standards provisions and laws applicable to Government construction projects, we believe their impor

tance means that their review should be given a high priority. In recommending this reexamination we again emphasize our endorsement of the objectives underlying the statutes discussed above. We do not suggest the dilution of any substantive benefits they now provide. However, it would seem that through clarifying the statutes and the responsibilities for their implementation, or perhaps by the adoption of other approaches, real gains in the economy and efficiency of construction procurement could be realized without degrading the protection afforded by the labor laws.

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"(1) The term 'firm' means any individual, firm, partnership, corporation, association, or other legal entity permitted by law to practice the professions of architecture or engineering.

"(2) The term 'agency head' means the Secretary, Administrator, or head of a department, agency, or bureau of the Federal Government. "(3) The term 'architectural and engineering services' includes those professional services of an architectural or engineering nature as well as incidental services that members of these professions and those in 86 STAT. 1279 their employ may logically or justifiably perform.

"POLICY

"SEC. 902. The Congress hereby declares it to be the policy of the Federal Government to publicly announce all requirements for architectural and engineering services, and to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices.

"REQUESTS FOR DATA ON ARCHITECTURAL AND ENGINEERING SERVICES

"SEC. 903. In the procurement of architectural and engineering services, the agency head shall encourage firms engaged in the lawful practice of their profession to submit annually a statement of qualifications and performance data. The agency head, for each proposed project, shall evaluate current statements of qualifications and performance data on file with the agency, together with those that may be submitted by other firms regarding the proposed project, and shall conduct discussions with no less than three firms regarding anticipated concepts and the relative utility of alternative methods of approach for furnishing the required services and then shall select therefrom, in order of preference, based upon criteria established and published by him, no less than three of the firms deemed to be the most highly qualified to provide the services required.

86 STAT 1278

83-081 O

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"SEC. 904. (a) The agency head shall negotiate a contract with the highest qualified firm for architectural and engineering services at compensation which the agency head determines is fair and reasonable to the Government. In making such determination, the agency head shall take into account the estimated value of the services to be rendered, the scope, complexity, and professional nature thereof.

"(b) Should the agency head be unable to negotiate a satisfactory contract with the firm considered to be the most qualified, at a price he determines to be fair and reasonable to the Government, negotiations with that firm should be formally terminated. The agency head should then undertake negotiations with the second most qualified firm. Failing accord with the second most qualified firm, the agency head should terminate negotiations. The agency head should then undertake negotiations with the third most qualified firm.

"(c) Should the agency head be unable to negotiate a satisfactory contract with any of the selected firms, he shall select additional firms in order of their competence and qualification and continue negotiations in accordance with this section until an agreement is reached." Approved October 27, 1972.

LEGISLATIVE HISTORY:

HOUSE REPORT No. 92-1188 (Comm. on Government Operations).
SENATE REPORT No. 92-1219 (Comm. on Government Operations).
CONGRESSIONAL RECORD, Vol. 118 (1972):

July 26, considered and passed House.
Oot. 14, considered and passed Senate.

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In connection with the Commission's study of labor standards on public contracts, we submit the following comments relative to administration of the Davis-Bacon Act, 40 U.S.C. 276a, for your consideration.

The Davis-Bacon Act establishes a minimum wage structure for the employees of Government contractors. The Secretary of Labor is made responsible for determining and prescribing prevailing wages which must be specified in certain Federal construction contracts and which must be paid to various classes of laborers and mechanics employed thereunder (section 1). The General Accounting Office is made responsible, in all instances where compliance with the contract wage provisions has been questioned, for determining whether or not "violations" (disregard of minimum wage obligations) occurred in a sense for which punishment is directed in the form of ineligibility to receive awards of Federal contracts (debarment) for three years and, if underpayments exist and funds have been withheld therefor by a contracting officer, for paying aggrieved employees amounts to which they may be entitled (section 3).

The delegation to GAO under existing law of responsibilities to correct wage underpayments to employees and to determine violations and impose debarments in appropriate instances has the effect of excluding the Department of Labor from exercising final jurisdiction over administrative enforcement activities, and it obviously has interfered with and prevented a full centralization of administrative functions. wise undesirable because the duties so entrusted are not germane to our regular activities; they involve a duplication of work already performed in large part by individual contracting agencies and by the Department of

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