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recurrent delays in the implementation of contract awards will also be thereby avoided.

Referring to the mention in your letter of February 7th of quarterly reports, we will plan to submit our first report on or about May 7th 1969. I am sure you will appreciate that it is going to require time to get our affirmative action into high gear but we will do our best.

Yours sincerely,

ROBERT T. STEVENS.

JANUARY 23, 1969.

Mr. M. R. SHAFER,

Chief, Office of Contracts Compliance, Contract Administration Services, Defense Supply Agency, Cameron Station, Alexandria, Va.

DEAR MR. SHAFER: We are writing for the purpose of setting forth our response to the matters discussed at our meeting with you, in Alexandria, on January 17th.

We think it would not be inappropriate to point out first, however, that, as has been the case all along, rather long intervals occur before we hear from you relative to our communications, and then quite suddenly you impose very short time limitations upon us—although the matters at issue are of grave importance and require the most thorough consideration and study on our part.

Thus, on November 29, 1968, pursuant to your instructions, we submitted to you a carefully drawn program for affirmative action, by our company, under Executive Order 11246. We heard nothing from you at all until January 9th, when Mr. Landry called and asked us to come to Alexandria. We offered to come on either January 13th or 14th. Mr. Landry told us to come, instead, either on January 16th or 17th. At the conclusion of the meeting on January 17th, you informed us that you must have in your hands a definite reply on the matters in question by tomorrow, January 24th.

At our meeting, you informed us that the affirmative action program, which we had presented to you, was unsatisfactory in various respects. You refer to these inadequacies in an outline which we received from you at our meeting. We have tried to analyze your outline from every standpoint-and in the light of all that you stated to us during the meeting.

We are entirely willing to undertake to reform and re-draft the program we submitted to you, endeavoring in every way we can to put forward a full and detailed statement of purpose and action to carry out the guiding principle of discriminating neither against majority groups nor minority groups, in matters relating to employment and employees.

We fear, however, that no degree of effort on our part in this direction will prove worthwhile. For your statements to us in our meeting on January 17th, make it clear that you expect and will require of us something other than evenhandedness and non-discrimination. You stated to us that an affirmative action program acceptable to you necessarily means a program involving preferential treatment for minority group individuals. You spoke of the necessity of setting and achieving numerical goals or quotas. You declared, for example, that as to employee housing, we must within brief time limits, evict all white employees from the houses which they now rent from us and begin anew the renting of such houses.

We pointed out to you that we have heretofore tried to assure, and are willing to assure in any way you may wish, that all our dealings with employees, and potential employees, shall be wholly without regard to their race, color, religion, or national origin. We have stated that this is true, and will continue to be true, as to all phases of employment in our company, "including but not limited to recruiting, hiring, placement, training, promotion, transfer, upgrading, demotions, termination, lay-off, recall, compensation, benefits, use of facilities, and participation in all company-conducted employee activities." We are willing to elaborate this principle, and all applications of it, in any way you may desire.

We are not willing, however, to enunciate any program, nor implement any program, which would mean preferential treatment and discrimination in favor of minority group employees and against majority group employees. In expecting us to do so, we do not believe that you are justified or supported by anything in the law or in the Executive Order-nor in fairness or right, for that matter. We have heretofore brought to your attention various examples of affirmative action on our part, demonstrating that we are not in fact discriminating against

employees, or potential employees, on grounds of race or color. As you may remember, among our company's plants included in your “in-depth" analysis, there were five selected by your office which were visited and surveyed by Mr. Landry. The figures for these plants, for the entire period covered by Mr. Landry's survey, with respect to:-(1) the percentages of Negroes hired in relation to the total number of employees hired, and (2) the percentage of Negro employees promoted in relation to the total number of employees promoted, were as follows:

Patterson-24 percent of all persons hired, and 26 percent of all employees promoted, were Negroes.

Whitmire-34 percent of all persons hired, and 31 percent of all employees promoted, were Negroes.

Republic-30 percent of all persons hired, and 35 percent of all employees promoted, were Negroes.

Cleveland-31 percent of all persons hired, and 40 percent of all employees promoted, were Negroes.

Rosemary-29 percent of all persons hired, and 40 percent of all employees promoted, were Negroes.

We realize that our unwillingness to do what you are now demanding of us could result in your recommending that our company not be allowed to perform work for the Government in our plants. This we deeply regret. For contracts with the Government are a significant source of work for our plants and employment for our people. Particularly also, would we regret losing the opportunity of helping to serve the military needs of our country—a contribution of which we have been proud and in which we know our company has made a notable record throughout the years.

Nevertheless, we are not willing to enter upon any program of affrmative action which has as its true purpose that which you have expressed to us, namely, preferential treatment and discrimination based upon race or color.

Respectfully yours,

J. W. JELKS,
Vice President.

Senator KENNEDY. The regulations relating to contract compliance under the Executive order provide that, "Each department will require each prime contractor to develop a written affirmative action compliance program for its establishment." It is most difficult for me to understand how counsel could advise that oral agreements would suffice under the regulations.

Senator DIRKSEN. Mr. Secretary, you asked legal opinion before you took any action, and that must have included whether or not you had to proceed with a written understanding or whether you would do this orally, and you had such an opinion from counsel ?

Mr. PACKARD. Senator Dirksen; yes.

Senator DIRKSEN. Was that opinion to you reduced to writing?

Mr. PACKARD. I have an opinion from our legal advisers that the procedure I proposed was appropriate.

Senator DIRKSEN. Would you care to submit that for the record? Mr. PACKARD. Yes.

GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE,
Washington, D.C. February 5, 1969.

Memorandum for Colonel Ray B. Furlong.
Subject: Dan River Mills.

I believe the absolute crux of this matter is whether or not it is necessary to grant the contractor a hearing before debarment. The Executive Order is inconsistent, providing on the one hand in section 208 (b):

"No order for debarment of any contractor from further Government contracts under section 209(a) (6) shall be made without affording the contractor an opportunity for a hearing."

On the other hand, section 211 provides:

"If the Secretary shall so direct, contracting agencies shall not enter into contracts with any bidder or prospective contractor unless the bidder or pro

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spective contractor has satisfactorily complied with the provisions of this Order or submits a program for compliance acceptable to the Secretary of Labor or, if the Secretary so authorizes, to the contracting agency."

The Labor Department regulations apparently assume that a hearing is not necessary where an individual award is at issue (as distinct from general debarment. To me this is not a realistic distinction.

In a recent case, Crown-Zellerbach vs. U.S., the D.C. District Court in a somewhat analogous situation determined that a company could not be precluded from receiving a future Government contract without the hearing. Considering what is at stake in these contracts, we might expect a court challenge and a judge might react sympathetically to the contractors' complaints about our delays in responding to his proposals for compliance.

Accordingly, your tentative proposal to continue negotiations we consider defensible, subject to one reservation. We suggest that Mr. Packard ask the Secretary of Labor to go along with this course of action rather than rely upon the "urgency of requirement" for the February 10 buy because the record seems to indicate that:

(a) We can get the material elsewhere at an increase in cost, and
(b) We don't have an immediate need for the entire quantity.

In addition, it might be advisable to mention the proposed solution to appropriate people in the White House because of the political sensitivity of this issue. Communications to the Secretary on behalf of Dan River have been received from Senators Thurmond and Stennis; and urgings of vigorous action against Dan River have been received from Senator Javits and the NAACP.

L. NIEDERLEHNER, Acting General Counsel.

Senator KENNEDY. What is the date of that opinion?

Mr. PACKARD. The date of the written opinion was February 5, 1969. Senator KENNEDY. If you are referring to the February 5 memo from the Acting General Counsel to Colonel Furlong, I see nothing there that refers to the question of oral as against written agreements. Nor do I see anything on that issue in the letter from the Assistant Attorney General, Office of Legal Counsel, to Secretary of Labor Shultz, dated February 24, 1969, which has already been placed in the record (p. 58).

Your counsel is here. Can he put his hand on that while I am asking another question? Do you intend, in the future, to make oral agreements, Mr. Packard? Are you going to follow a similar procedure in terms of utilizing oral agreements with executives of other companies that have failed to comply?

Mr. PACKARD. Mr. Chairman, I think that question should depend upon whether we can achieve the results that you and I are seeking to achieve, in this procedure.

Senator KENNEDY. Are we supposed to assume from your answer that you are going to use your own discretion, despite clear regulations to the contrary, as to whether you are going to make oral agreements. Contractors can obviously assume from your response that if they are not going to comply over a period of time, all they have to do is wait and eventually have a conversation with you, and perhaps report periodically about what progress may be made in the future. Mr. PACKARD. No, Mr. Chairman. I would not propose to do that. What I am proposing by this action, is to break a logjam and help move ahead in this textile industry. We are working very closely with the Department of Labor now, and I hope I will not have to involve myself personally any further.

Senator KENNEDY. Mr. Shultz will testify later on, but I have a copy of his statement before me.

Referring to these particular negotiations, Secretary Shultz states: "I wish to emphasize this point. We regard this procedure"-referring to the procedure of accepting oral assurances "we regard this procedure as exceptional and in no way a precedent for preaward negotiations.”

I am trying to compare, Mr. Packard, the attitude of your Department on these regulations, which require

Mr. PACKARD. Mr. Chairman, I can assure you that I would like to see these procedures move ahead in the way that Secretary Shultz has outlined, and I took this action in order to get things off dead center. It is my objective to see things move ahead as best I can in accordance with the procedures.

Senator KENNEDY. And if you feel that the best way to move ahead is by oral compliance, without specifying the terms or the goals or the objectives, you are going to go ahead and do that as well? Is my impression correct?

Mr. PACKARD. Mr. Chairman, I do not believe I would propose to do that. This was a way to get out of this bind we were in, to get ahead with the job, and Secretary Shultz and I are going to work very closely together on procedures from here on in.

Senator KENNEDY. If you would, proceed.

Senator DIRKSEN. Mr. Secretary, you cannot reduce anything to writing and have a specific understanding until you orally explore all of the ground. Then you come to some kind of an agreement. Then you can perform that ministerial function of reducing it to writing, and if that is what the Executive orders require, you are perfectly within the meaning of that word.

Mr. PACKARD. Senator Dirksen, that is right. I felt it was very important to have personal discussions with those people, so I could tell them face to face what I expected them to perform, and get a commitment from them. I considered that in this case it was very important for me to assure myself that they were going to step up and do the job. Senator KENNEDY. Could you tell us what that commitment was, Mr. Packard, because that has been the great $64 question.

Mr. PACKARD. Mr. Chairman, perhaps if I could finish my statement, some of these things will hopefully be answered.

Senator KENNEDY. Just on this point of reducing the agreements to writing, of course you ultimately reduced to writing the Burlington agreement, which you announced yesterday, and those established the specific goals. In short, it was in the end reduced to writing. So I think the question whether we could not initially reduce the agreements to writing is not out of order.

Mr. PACKARD. As a matter of fact, Mr. Chairman, the thing that I expected these people to do is to send in written reports, and it was only to get the whole matter off dead center that I did not ask for any initial written statement.

Senator KENNEDY. In the four points that you indicated earlier in your testimony, you say a study of the issues "confirmed that any action should meet these criteria." I am just wondering if any of these four criteria differ from the criteria employed of the past, or how they differ?

Mr. PACKARD. Mr. Chairman, I did not intend to make any change in terms of the criteria, the objectives. My action here was to try and get

things moving ahead and do the sort of things that I know you are interested in seeing done.

In this practical approach I leaned on my own experience and own involvement in equal-opportunity hiring before coming to the Defense Department. I had in mind certain examples of solid progress in the mid-peninsula area of California.

For instance, I organized an urban coalition program that sought and found jobs for minority people in the area. I was co-chairman with one of the black power leaders of the bay area. We found through experience that by working together with the top executives of a company we could make the maximum progress. We found that without exception the top executives were anxious to get behind the movement once they learned the importance of what we were trying to do. We found-just as one example-700 jobs for minority youngsters in our area last summer. Virtually every one of the youngsters in the area who wanted a job had the opportunity.

Last fall there was a great need for jobs for minority-group students at San Mateo Junior College. We worked directly with company heads and produced the jobs in a matter of hours.

Again, some of the students at San Mateo were headed for a serious confrontation with the college. I went directly to the trustees and got prompt action to resolve the issues.

In my own company, I found a certain concern and resentment among some of the employees over efforts to introduce equal-opportunity employment. I found, however, that when everyone understood that the top executive was behind the program we could get solid. progress. Many employees volunteered to help both inside and outside the company. For instance, one employee developed what he called a "counterpart" program which matched white and black leaders in individual efforts to improve conditions in the black community. He was assigned to spend full time on this project, and his work has resulted in real progress.

The lesson of my experience is that one can move ahead at the fastest pace on these employment issues when one enlists the cooperation and personal backing of the top executives of a company. I believe that this is the best way to achieve what we are working for.

I ask my advisers in the Defense Department if it would be legal and proper for me to talk directly with the presidents of the three textile mills and try to get them personally behind the move toward equal opportunity. They assured me that this was a proper and feasible course of action.

Senator KENNEDY. Mr. Packard, just on that point, I do not know whether Mr. Kelley or the general have been able to find the memorandum to you from counsel that I asked about before. You say you asked your advisers if it would be legal and proper for you to talk directly with the company executives. You are suggesting that you had a legal opinion that in spite of the regulations which have been emphasized throughout yesterday's hearings-that you had a legal opinion indicating that you could make oral agreement to carry through the purposes and scopes of the provisions of the Executive orders. Has Mr. Kelley been able to find exactly what legal opinions you have saying that it is permissible to make an oral agreement not to talk, but to

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