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U.S. SENATE,

The HONORABLE DAVID PACKARD,

COMMITTEE ON LABOR AND PUBLIC WELFARE,
Washington, D.C., February 11, 1969.

Deputy Secretary of Defense, Department of Defense,
Washington, D.C.

DEAR MR. SECRETARY: I am most concerned that the Department of Defense has approved contracts totaling $9.4 million with three Southern textile companies— J. P. Stevens, Dan River Mills, and Burlington Industries.

Under a textile program plan agreed to by the Department of Defense, the Equal Employment Opportunity Commission, the Department of Justice, and the Office of Federal Contract Compliance in January, 1968, OFCC and DOD agreed to review the employment policies of the eight largest Southern textile firms. The Department of Defense also agreed to consult OFCC and to obtain their concurrence before approving any contracts with these companies.

Essentially, there were three primary complaints against the larger of these companies, including the three involved in the above contracts:

1. Company owned housing for employees was segregated;

2. Few Negro females were being hired, despite the large number of white females employed by these firms;

3. Negro male employees were being discriminated against in terms of promotion.

After an extensive review of these complaints and others, meetings were held between the government and each of the three firms in question in January, 1968. None of the firms made assurances at these meetings which were sufficient for either DOD or OFCC to recommend approval of their contracts.

However, on February 8, 1969, your office announced that contracts with each of these firms were approved on the grounds that the companies had promised "affirmative action" to comply with the Federal Government's regulations banning discrimination in employment on the part of government contractors. Since the terms of the agreements have not yet been announced, I am in no position to determine whether there can be any expectation of compliance on the part of these companies. I would therefore appreciate it if you would inform me as to the content of each of those agreements.

Regardless of the terms of the agreement, I am most disturbed by the fact that these contracts were approved without even consulting OFCC, much less obtaining their concurrence. In fact, as of February 11, 1969, OFCC did not even know the terms of the "affirmative action” plan agreed to by these companies.

While the first line of responsibility for enforcement of Executive Order 11246 rests with the contracting agency, it is OFCC's responsibility to establish general government policy for contract compliance and to oversee the contract compliance programs of the various government agencies to assure a consistent policy. OFCC's role in the present case was even clearer, since it was spelled out by the textile program plan agreed to by the Department of Defense. Since OFCC was completely ignored by DOD when it entered into this particular settlement, it was obviously unable to evaluate the terms of this settlement.

I therefore urge you to hold up DOD approval of these contracts for the purpose of informing OFCC of the settlement and seeking their concurrence. One of the primary dangers in the procedure followed by the Department of Defense is that if OFCC does object to the settlement, as a practical matter, it can only move to bar these companies from bidding on other federal contracts.

I also urge you to consult with OFCC in the future before approving contracts in which OFCC has expressed an interest. To by-pass OFCC in these matters will cause chaos and confusion in the government's contract compliance program.

Executive Order 11246 clearly reflects the policy of the Federal Government that it must not subsidize discrimination. The textile program plan agreed to by all relevant agencies, (including DOD) to deal with employment discrimination in the textile industry was in furtherance of this objective. Your action in approving these contracts clearly jeopardizes that plan.

Sincerely,

WALTER F. MONDALE.

Senator KENNEDY. The copy of the letter that was sent from Mr. Packard to Mr. Shultz, we have placed in the record earlier today.

After listing those four areas where they feel there have been compliance before, as you indicated in your testimony, the letter continues: The chief executives have assured me that their companies will implement affirmative action plans to achieve the results contemplated under the Executive Order.

The only things we have even heard about here today have been these questionnaires. And announcements have been made by one company that certain agreements have been reached, that was announced today, but from the other two companies which have had the most difficult record in terms of compliance we haven't had any affirmative action plans that have been exposed either to date or indicated to us.

I am just wondering if from your research or your background you have come across these action plans.

Senator MONDALE. First of all, the Deputy Secretary of Defense, like all of us, is required to obey the law. He disregarded the Executive order, he disregarded a carefully prepared order and set of procedures. He disregarded an office which is the office that specializes in this field, and which he is required to deal with under the Secretary's order, and he disregarded his own organization and the experts in his own Department which deal with this problem.

And he disappointed and frustrated an effort that has been carried on in a most responsible, thorough, step-by-step fashion for over a year in this one field. And I rather suspect that he sold out at a time when they might have been close to settlement, at least with respect to one of the contractors. So that in all respects he violated the order. When they are in noncompliance he clearly has to have those matters in writing. And there is a good reason for that, because it becomes very complicated. It is not just signing a statement-I will do better; it involves agreements on hiring policies or promotional policies, on back pay, on all other aspects of employment, and where they own housing or other things, agreement on that as well. I can recall last year that there was a Minnesota employer who had to comply with the OFCC rules. And he signed an exhaustively detailed document. He had to make back pay and take all kinds of other steps to not only correct wrong in the future, but to make promotions and make restitution for lost pay, and many, many other steps. None of this to my knowledge is being required here. I have written the Deputy Secretary of Defense and received a "nonanswer" from him. And I think that is the best answer you can give right now. If this continues, the Executive order is dead, and one of the most promising and hopeful tools for requiring equal employment in this country will be destroyed. And I think we will further contribute to the frustration and despair and alienation not only of black Americans, but of the young and concerned in this country that are getting tired of all this baloney that separates us from our announced principles and our practices.

Senator KENNEDY. Any further questions?

Senator Hart?

Senator HART. No. I just thank Senator Mondale for all that he has done. And I want to say that, unhappily, even if this is resolved in a fashion that will meet the views of the chairman and Senator Mondale

and others of us as to the requirements of law, there is still contained in it a signal that maybe the heat is off, unless you are one so big that you attract the attention of somebody like Senator Mondale, in which case maybe it will be straightened out. But even if we resolve this successfully, there is still the danger that there would be a message read in it that the Executive order is half dead. So we oughtn't to kid ourselves into thinking that with this resolution all is well.

Senator MONDALE. I think any fair reading of what has happened thus far would force you to conclude that it is not half dead, it is suffering from late rigor mortis. And any contractor who does not want to comply with the Executive order, in fact, I think should be encouraged to believe with good reason that there is no substantial reason why he should do so, that the new people in Government are going to stand behind him in his efforts to avoid it, and that all assurances that could have been obtained in 1887 are all that will be needed today. Senator KENNEDY. Senator Thurmond?

Senator THURMOND. Thank you.

Senator Mondale, we are glad to have you with us.

Do you know whether there have been any previous cases in which the prior administration has found a firm in noncompliance and has either canceled or denied the contract?

Senator MONDALE. Yes, sir. The institution to which I made reference in Minnesota was told that there would be no further contracts until they came into compliance. There were long and searching negotiations. There was a detailed sweeping agreement made which involved not only new hiring policies, but back pay, housing and every other detail. And it was entered into with the clear understanding that there would be no further business.

Senator THURMOND. What department was that with?

Senator MONDALE. OFCC, and I believe the Department of Defense. Senator THURMOND. What is the name of that case?

Senator MONDALE. Bemus Bag Co.

Senator THURMOND. What business are they in?

Senator MONDALE. Burlap bags.

Senator THURMOND. And the Defense Department canceled the contract?

Senator MONDALE. They said that there would be no further bidding permitted by them unless this was put in order. And the management had changed. The management, I think, is highly responsible. They entered into negotiations with good faith. And I commend the leadership of Bemus Bag for taking this action in good faith.

Senator THURMOND. And it didn't cancel it?

Senator MONDALE. Yes, they did.

This brings me to the second point. Is it fair in bringing in the honest and reputable people who are trying to do better and tying them down with a host of detailed agreements and requiring back pay and the rest, and then taking the recalcitrant, segregated employer, and saying, if you just raise enough hell we won't pin you down in the same fashion? I think that is terribly unfair.

Senator THURMOND. Were the employers segregated?

Senator MONDALE. Throughout the State. I could get you the list. Senator THURMOND. I challenge you to name a single one in my State. And you are not telling the truth if you say they are.

Senator MONDALE. I don't think there is any doubt but that there is discrimination in South Carolina.

Senator THURMOND. That is your opinion. You haven't been to South Carolina. You are merely playing politics in this matter.

Senator MONDALE. I think there is nothing more important in the politics of American life than to remove the disgrace of discrimination. Senator THURMOND. You are living in Minnesota. You know nothing at all about the textile industry. The textile industry is not discriminating in South Carolina, and you are just trying to play politics with the issue. And I hate to tell you that, but that is exactly what you are doing.

Senator MONDALE. Well, I am glad you did, because there is not the slightest doubt in my mind but that they discriminate.

Senator THURMOND. Do you have any evidence of it? I challenge you to go to my State, any plant, and show a person has been turned down for a job on account of his race.

Senator MONDALE. Well, as I pointed out in my testimony, the Department of Defense and the Office of Federal Contract Compliance agreed that the following facts were correct about those textile mills, first, that Negro male employees were being discriminated against in terms of promotion; second, there was discrimination in providing on-the-job training; third, few Negro females were being hired in any capacity despite the large number of white females being employed by these firms; fourth, craft jobs were held by whites only; tests used to fill these jobs were not validated and were therefore not shown to be job-related; and fifth, housing owned by Dan River Mills for its employees was segregated-whites were provided with cottages; Negroes with "shotgun" houses.

And in the testimony by Clifford Alexander it was pointed out that in those textile mills the blacks held only 11.7 percent of all the 133,000 jobs reported, and the compression of blacks into lower paying jobs is starkly drawn by the statistics on individual job categories the companies themselves reported. And they list obvious and blatant discrimination by these firms.

Senator THURMOND. Those are the figures by the Johnson Democratic administration. They are just like they didn't have the courage to cut off school funds while they were in power, they cut them off to take effect after Nixon went in. The same thing applies to these Nixon contracts, they didn't have the courage to act on them before and they arranged it so that Nixon would have to act. The same thing applied about the payment for grains to the farmers, they didn't have the courage to act while they were in, and they wanted to put it off on Mr. Nixon.

Now, did you contact the Defense Department about these things when Mr. McNamara was Secretary of Defense, and did you contact Mr. Alexander when he was there about this matter?

Senator MONDALE. Yes. And the OFCC matters to which I made reference I was strongly in support of their efforts, and told them so. Senator THURMOND. And what did they do?

Senator MONDALE. They were told they have to comply.

Senator THURMOND. And what did they do about it?
Senator MONDALE. I just told you.

Senator THURMOND. And then they did nothing about it, did they? And now you are expecting Secretary Packard to come in here in a few days and take action on an important issue on which the Democrats, of which party you are a member, failed to take action for several years?

Senator MONDALE. He took action all right. He gave contracts to these segregated employers; he did that very fast.

Senator THURMOND. If you will come down to South Carolina, we will take you around and give you an education as to the modern plants, and show you that there is no discrimination, and you will be convinced. But when you sit in an ivory tower, or way up there in Minnesota, where you have practically no minorities, it is easy to talk and easy to criticize. The South has done the best it could on behalf of the minority. And our plants are all open to the minority. I asked the enforcement man today if he knew of a single plant in South Carolina where a person had been turned down because of his race in getting a job. And his answer was "No."

Senator MONDALE. Well, Senator

Senator THURMOND. I suggest that you have got problems at home that could well keep you busy. You go back to Minnesota and look after your problems, and we will look after ours in South Carolina.

Senator MONDALE. Well, Senator, let me say this. Last year when we wanted to pass fair housing some of you laid down the challenge that we would never pass it because we really didn't believe in fair housing, because for the first time fair housing applied to Minnesota as well as South Carolina. I accepted that challenge, and I said, "You are right, we have discrimination in the North as well as in the South. We have people who are bigots in the Democratic Party as well as the Republican Party. This is a national problem, North, South, East, West, Republican and Democrat, 1968 as well as 1969. And what really counts is that we put the regional boundaries behind us, and that we put our political differences behind us, and realize for once in our political lives that human beings are more important than any of that. So when you asked me to explain about the enforcement of the OFCC

Senator THURMOND. We are doing that in South Carolina

Senator MONDALE. I am sure you intend for me to complete my statement; I am sure that is what you have in mind.

Senator THURMOND. I didn't mean to interrupt. I thought you were through.

Senator MONDALE. When you say that contract compliance and enforcement was not adequate under the Johnson administration, I couldn't agree with you more. I agree with the indictment. The thing that was unique about the textile industry was that they were finally starting to develop a strong program in one industry that made sense. All the agencies were in phase. The negotiations were underway. The details of the statistics were known. The findings were made. And then at the last minute when these regulations were finally going to bear fruit and bring many changes to the life of the people who had been discriminated against in the textile industry, the Deputy Secretary sold it out.

Senator THURMOND. How many textile mills do you have in Minnesota?

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