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Pub. Law 92-582

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October 27, 1972

86 STAT. 1279



“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.


HOUSE REPORT No. 92-1188 (Comm. on Government Operations).
SENATE REPORT No. 92-1219 (Comm. on Government Operations).

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. It is otherwise 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


Labor under Plan No. 14, and the processing of cases in different offices delays enforcement action and promotes inconsistencies.

Evidence concerning the observance of Davis-Bacon Act requirements serves three purposes. It establishes bases upon which settlement is made with a contractor for performance, upon which debarment is required, and upon which amounts are withheld from a contractor and disbursed to employees as wage adjustments. Obviously, the participation of three agencies (the contracting agency, the Department of Labor, and the General Accounting Office) in investigations to develop such evidence involves considerable duplication of effort and may be unduly burdensome upon contractors. Obviously, also, the consideration and evaluation of evidence by three separate agencies necessitates repeated transfers of records and further duplication. In addition, the well-established procedures for determining and adjusting matters of compliance with prescribed contract requirements, including appeal procedures, are disrupted and bypassed when contract settlement in the area of labor standards compliance is removed from the jurisdiction of contracting agencies and placed in the Department of Labor, or GAO, or both.

In view thereof, it is our opinion that the enforcement duties now entrusted to our Office more appropriately can be discharged by the Department of Labor and the contracting agencies concerned, and we therefore recommend that all enforcement responsibilities be transferred to their jurisdiction.

In the interest of simplification and savings, we also suggest the practicability of a greater utilization of primary responsibility in the individual contracting agencies for verifying and enforcing compliance. This responsibility would include the duties of making adequate compliance investigations, withholdings and disbursements of wage adjustments to underpaid employees when proper and necessary, and the imposition of debarment where appropriate because of violations. Adequate appeal procedures for the settlement of disagreements as to satisfactory performance of required conditions already exist under standard contract provisions. In instances where disputes arise concerning the existence or extent of a prevailing wage rate or classification, since this is a matter initially determined by the Department of Labor, it appears that appeal procedures should be established in that Department. In the case of appeals concerning the imposition of


debarment, after appropriate statement of charges, hearings if requested, and findings of fact, it may be desirable that, in the interest of a consistent application of this sanction to violators, such appeals also should be decided by the Department of Labor.

Under such an arrangement, the Department of Labor would have responsibility for overall regulation to achieve coordination and consistency of enforcement, as well as all rate making jurisdiction, but only such investigative and appeal (in the case of rates and debarments) functions as are essential to ensure consistency of enforcement. The Department would not engage in fact finding in the contract settlement area. It is believed that, given adequate prevailing wage determinations and such guides in the form of regulations as are necessary to consistency of enforcement, the contracting agencies could take satisfactory steps to ensure compliance, wage adjustments in accordance therewith (including direct payment where necessary), and debarment, and so avoid the disruption of settlement procedures, the expense consequent upon duplication of investigative effort and repeated transfers of evidence, and the inevitable delays of fact finding and review authority in additional separate agencies.

The simplication of enforcement measures suggested would, it is believed, go far toward making possible a current and efficient handling of labor standards problems under construction contracts. There can be little doubt that cumbersome enforcement procedures result in confusion and delays and in the completion of enforcement actions only long after performance. The most pressing need at this time appears to be for simple, direct enforcement machinery which can determine labor standards compliance at the time of performance and provide for the prompt and efficient resolution of all questions (whether involving the ascertainment of prevailing wage rates for classifications of employees utilized, appropriate settlements with contractors on the basis of their performance, the enforcement of wage adjustments by direct payments to employees where necessary, or application of the debarment sanction) in a manner fair to all concerned.

In connection with the direction that the Secretary of Labor distribute lists of debarments to Federal agencies, we recommend a perfecting amendment to the Walsh-Healey Act (which now provides for reporting debarments thereunder to our Office for publication) so that a single combined list can be issued by the Secretary.


We suggest, however, that any legislation, or recommendation for legislation, to accomplish the purposes set out above should clearly indicate that it is intended to apply only to matters involving compliance with, and enforcement of, the obligations of contractors, and is not intended to affect the jurisdiction of this Office to consider and decide other questions, such as those involving application or administration of the Act, which may be raised by protesting bidders, by contractors, by procuring agencies, or may otherwise come to our attention during the performance of our statutory functions.

If any further information or assistance is desired, we shall be pleased to cooperate.

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