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Senator KENNEDY. And there was one civil rights representative who testified there?

Secretary VOLPE. At least one.

Senator KENNEDY. I do not know of any other ones.

Secretary VOLPE. I do not know of any others either.

Senator KENNEDY. And his view on that was an expression as I read into the record before. He expressed his view very clearly on this contemplated change.

Secretary VOLPE. The contemplated change was

Senator KENNEDY. On being in favor of the prequalification?

Secretary VOLPE. Yes, the change was not even contemplated at that time, Mr. Chairman.

Senator KENNEDY. He expressed his support on prequalification? Secretary VOLPE. Yes.

Senator KENNEDY. And yet when you went and considered the change, you did not even consult this

Secretary VOLPE. He was not at all satisfied with the amount of employment that was coming out of that procedure.

Senator KENNEDY. None of us are, are we?

Secretary VOLPE. I am sure we are not, but I might add that the Office of

Senator KENNEDY. And that was a new procedure which had been established, was it not?

Secretary VOLPE. What is that?

Senator KENNEDY. That was a new procedure which had been established, the prequalification?

Secretary VOLPE. It was about 3-months old.

Senator KENNEDY. Yes?

Secretary VOLPE. Yes.

Senator KENNEDY. And you had 4,000 that had already qualified under it?

Secretary VOLPE. Yes, but I had certainly seen from my own vantage point as Governor what was happening in our own Highway Department as well as other highway departments, but I want to say that the Office of Federal Contract Compliance is the government unit that has the leadership and coordinating responsibility insofar as these matters are concerned.

Senator KENNEDY. Mr. Secretary, I would like to send some questions to you in regard to these comparisons. I would like to also ask that there be included at this point in the record a comparison between the regulations, the prequalification procedures and your regulations submitted by Mr. Pollak, formerly Assistant Attorney General in the Justice Department, in charge of the Civil Rights Division, who has analyzed this, and I think the record will be strengthened from his observations and his review, chapter and verse of these new regulations. Washington, D.C., April 16, 1969.

Hon. EDWARD M. KENNEDY,

Chairman, Subcommittee on Administrative Practice and Procedure, Committee on the Judiciary, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: I am pleased to respond to your request for a comparison of Federal Highway Administration Order 7-2(1) of March 17, 1969, with Order 7-2 of October 1, 1968. As the record of the recent hearings before your subcommittee reveals, Order 7-2, issued by Federal Highway Administrator

Lowell K. Bridwell, in implementation of Section 22 of the Federal-Aid Highway Act of 1968, 23 U.S.C. 140, and Presidential Executive Orders 11246 and 11375. established policies and procedures for prequalification of federal-aid highway construction contractors and subcontractors with respect to equal employment opportunity (EEO). Order 7-2(1), issued by the Director of Public Roads, F. C. Turner, replaced the earlier order.

In making this comparison, I have analyzed the texts of the two orders, the comparison prepared by the Federal Highway Administration and submitted to your subcommittee, as well as the transcript of the hearings on Order 7–2 held January 14, 16, 17, 1969, before the Subcommittee on Roads of the Senate Committee on Public Works.

In my judgment the scrapping of the prequalification program established by Order 7-2 constituted a backward step in efforts to achieve and assure equal employment opportunity in the construction of federal highways.

In 1963 President Kennedy issued Executive Order 11114 requiring for the first time the inclusion in federal-aid construction contracts of a clause obligating contractors to guarantee equal opportunity in hiring, upgrading, and other employment practices connected with such projects. In his testimony this past January before Subcommittee on Roads of the Senate Committee on Public Works, Highway Administrator Bridwell described the results of this approach (Hearings, p. 294):

"I think everyone associated with the Federal highway program, and that means the Federal Government, the State governments and the contractors, were very negligent in fulfilling the requirements of the law and Executive orders dating back to 1963 up until the passage of section 22 and the issuance of interim order 7-2.

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We decided to tackle it head on and I think that is one of the reasons why we are having some difficulty."

The prequalification procedure was the heart of the equal opportunity program established by Order 7-2. This procedure called upon highway contractors desiring to qualify to bid on Federal-Aid highway contracts to develop an equal opportunity program tailored to their own situation and to submit this program to the State Highway Department. Order 7-2 set forth in detail guidelines as to the areas which the contractor's EEO program should address, including equal opportunity policy; EEO officer; company personnel staff; employment; apprenticeship and training; unions; subcontracts; program monitoring; and records and reports.

It provided that contractors should submit their plans for review prior to bidding and called upon State and federal highway agencies to review them, to call any deficiencies to the attention of the contractors and to approve satisfactory plans thereby qualifying those contractors to bid upon and receive federal contracts. Procedures were established to afford contractors a hearing before a judgment of nonqualification could be reached. Order 7-2 provided that the prequalification plan framed by the contractor would become a part of any contract which the Highway Administration made with him. That contract would then obligate the contractor to carry out the EEO program which he had framed. In place of this prequalification procedure, Order 7-2(1) sets forth a list of requirements which, by signing the federal-aid contract, the contractor obligates himself to fulfill in carrying out the construction project.

The prequalification procedure had strengths which the substitute order forfeits. It allowed each contractor to survey his own situation-the racial makeup of his work force, the skills available among minority group members, on-going training programs, his relationship to local construction unions (exclusive or nonexclusive hiring hall), etc.—and to draw up a program which fit his needs, met the problems he confronted and took local advantages and difficulties into account. The prequalification procedure placed responsibility for framing a successful EEO program upon the one who was in the best position to know what needed to be done, the contractor himself. It was reasonable to anticipate that the contractor, once he had drawn up his own program, would have a personal commitment to its implementation. He would have a greater understanding of what he had agreed to do to assure equal opportunity than has all too often been the case where the EEO provisions were part of the contract's "boiler-plate".

The prequalification procedure embodied another strength. The incentive of a contractor to frame and adopt an effective EEO program is highest before con

tract awards are made. The prequalification procedure was thus self-enforcing in significant respects, although the State and federal highway agencies needed a qualified staff to review the plans submitted, to discover deficiencies, if any, and to secure their correction. Order 7-2(1) gives up the incentive inherent in prequalification procedures and depends for its effectiveness upon field reviews by the government after contract awards are made. In major respects, the prequalification procedure follows those which have been used effectively by the Department of Health, Education, and Welfare in the enforcement of Title VI with respect to elementary and secondary schools where the framing and submission of constitutional desegregation plans are required before commencement of the school year and the renewed commitment of federal funds.

The prequalification procedure was not a departure from regular Federal Highway Administration contract procedures. Testimony before the Senate Subcommittee on Roads indicates that it is relied upon to assure responsible bidders in important areas other than EEO. The President of the American Association of State Highway Officials, Ross G. Stapp, testified (Hearings, p. 102):

"Further, the prequalification of bidders has always been the prerogative and area of operation for the State highway departments as a means of assuring that their bidders are responsible and have the equipment, experience, capabilities, and finances to satisfactorily complete the type and size of project upon which they might bid.

"The FHWA order 7-2 actually establishes a 'Federal' prequalification requirement in addition to the States' prequalification."

Federal Highway Administrator Bridwell affirmed the point (Hearings, p. 213):

"In reality, this program is not significantly different from a number of other prequalification requirements of various contracting programs that require a bidder to demonstrate his financial responsibility or performance capability prior to bidding."

Contractors criticized the prequalification procedure in the hearings before the Senate Subcommittee on Roads this past January. However, a review of the testimony reveals that the dissatisfactions rested essentially upon delays which were caused by inadequate government personnel and lack of familiarity with new procedures. While these concerns necessitated a remedy, they were not addressed to the substance of the prequalification procedure itself as a means of securing EEO. It is an added ground for concern that under Order 7-2(1) the same lack of manpower for EEO and lack of familiarity with EEO requirements can exist and go entirely unnoticed.

Order 7-2 provided that contractors were to be prequalified not less than once each year. This would have assured periodic review of the implementation of their EEO undertakings. Responsible administration of this provision would have afforded an early check upon the effectiveness of the program with the receipt of future contracts dependent upon the contractor's performance of his prior commitments and his development of needed amendments to his program to meet deficiencies shown by experience. Here again, Order 7-2 built in self-enforcement. There is no comparable requirement in Order 7-2(1). It makes no commitment by federal or State highway agencies to conduct compliance reviews in the field and sets no timetable for any follow-up action by the government. The effectiveness of the program-the achievement of more than paper compliance depends upon these undertakings which are neither announced nor scheduled in the order. As pointed out by Secretary of Transportation Volpe in his prepared statement before your subcommittee, Order 7-2(1) reaches all construction contracts and all subcontracts of $10,000 or more. Order 7-2 reached all prospective contractors and subcontractors who were in a position to anticipate bidding or being retained by subcontract on contracts of $500,000 or more. Secretary Volpe testified that 'Order 7-2(1) "broadening the coverage from some 30% of Federally aided highway construction contracts to almost 100% of Federally aided highway construction contracts." I support the extension of the coverage of the EEO regulations. However. looking at coverage alone, I would question whether the difference between the two orders is as great or as meaningful as the Secretary's testimony would suggest. In a press release of March 9, 1969, the Federal Highway Administration announced that 88% of the $3.6 billion of federal-aid highway construction in 1968 was performed under contracts and subcontracts of $500,000 or more. In addition, since Order 7-2 established a prequalification procedure, it would have reached all contractors who anticipate wanting to bid either alone or jointly

with another on contracts or subcontracts of $500,000 or more. As the Commissioner of the Virginia Department of Highways, Douglas B. Fugate, stated to the Senate Subcommittee on Roads, this reached virtually all contractors (Hearings, p. 143):

"The reason I stated that approximately five hundred contractors were affected in Virginia by these regulations was due to the fact that while only 178 are actually qualified financially for work of $500,000.00 or more, many, if not all, of the smaller contractors do work as subcontractors on these projects in excess of one-half million dollars, and on many occasions one or more of these smaller contractors will submit a joint bid for a contract in excess of one-half million dollars. In view of these two contingencies, it is necessary to have all of these potential contractors prequalified in order to comply with the Federal regulations and in order not to have to disqualify a contractor's joint bid or a subcontractor's request for failure to prequalify on Equal Employment Opportunity." The abandonment of the yearly prequalification procedure is the major change made by the replacement of Order 7-2 by Order 7-2(1).

Order 7-2 set minimum guidelines for an acceptable EEO affirmative action program together with criteria which State and federal highway officials were to apply in determining such acceptability. The requirements of Order 7-2(1) appear to have been prepared from these guidelines. However, certain changes and deletions have been made which in my judgment weaken the EEO requirements of the earlier order and in some instances leave the intention of the federal government unclear.

Section 2 of both orders deals with EEO policy. Order 7-2 called upon the contractor to submit an EEO policy accepting "responsibility to effect equal employment opportunity with respect to all aspects of his employment practices and to correct any and all discriminatory practices and conditions which presently exist, as a condition to being permitted to bid on a Federal-aid construction contract" (emphasis added). The underscored part of this provision properly gives expression to the legal obligation of the contractor to correct any present discriminatory effects of past discrimination. Section 2 or Order 7-2(1) omits this language. I hope that this omission does not reflect an intention to exclude this responsibility from the federal program. At a minimum, the omission leaves the contractor's obligations in doubt and thereby does not fulfill one of the four major features emphasized Secretary Volpe in his testimony: "It places specific and understandable-and for that reason enforceable-responsibilities on the contractors.

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The revisions of the paragraphs on EEO policy make further unfortunate omissions and changes which narrow the reach of the EEO program. Order 7–2 emphasized the contractor's responsibility to effect EEO with respect to "all aspects of his employment practices and to correct any and all discriminatory practices and conditions which presently exist" and "to provide procedures for curing any defects in the contractor's prior equal employment opportunity performance." Order 7-2(1) makes no reference to "all aspects" of the contractor's employment practices and states "the requirements set for [in this Order] shall constitute the specific affirmative action requirements for project activities under this contract. . . ." (emphasis added). These differences suggest that Order 7-2 (1) is intended to be limited to employment on federal projects only, leaving the contractor free to apply less stringent EEO standards in the remainder of his activities. This sort of double standard has been all to characteristic of past performance where Negroes were hired for work on federally-financed projects while the rest of the work force remained all white. The discrimination inherent in such procedures is obvious and should not be encouraged by federal rules. The two orders use almost the same language to describe the obligations of contractors to recruit qualified minority group applicants:

"Unless precluded by a valid bargaining agreement, the contractor must conduct systemic and direct recruitment through public and private employee referral sources likely to yield qualified minority group applicants . . .”

In my judgment both orders are deficient in conditioning the contractor's EEO responsibility upon the absence of preclusion "by a valid bargaining agreement." Section 22 of the Federal Aid Highway Act, Section 703 of the Civil Rights Act of 1964, 42 U.S.C. 2000e-2, and Presidential Executive Order 11246 obligate the contractor to give minority group members access to employment equal to that afforded to nonminority group members. The regulations of the Highway Administration should make clear that the contractor does not avoid

this legal obligation by bargaining away the responsibility for recruiting and selecting employees to a union. At a minimum, the two orders leave the Administrator's intention vague where it should be clear in failing to define what is a "valid bargaining agreement." Where the government is setting guidelines for a national program which depends in large measure upon self-enforcement, it is encumbent upon it to eliminate vagueness wherever possible.

My view is that an agreement which freezes in the effects of past discrimination is unlawful and that the contractor, if satisfactory remedial arrangements with the union cannot be worked out, would be obligated, under the provision as written, to exercise his responsibility for direct recruitment of minority group members. The United States District Court for the Southern District of Ohio ruled union referral priorities unlawful on this ground in Dobbins and United States v. IBEW, Local 212, Civil No. 6473, decided Sept. 12, 1968. Clarification of the Administrator's intention would be helpful.

Section 7 of the Order 7-2 and Section 8 of Order 7-2(1) require contractors who rely in whole or in part upon unions as the source of their work forces, to work closely with those unions to increase minority group opportunities within those unions. Order 7-2 calls upon the contractor to seek referrals by the unions "of greater numbers of minority group employees" (emphasis added). Order 7-2(1) omits the words "greater numbers of" and may leave the contractor free to infer that token numbers will satisfy his obligation.

Order 7-2 calls upon the contractor to make every effort to obtain agreements with unions permitting him to hire other than union employees when minority group union members are not available. There is no comparable provision in Order 7-2(1). A related provision of Order 7-2(1) is Subsection 8c which provides:

"In the event a union is unable to refer applicants as requested by the contractor within the time limit set forth in the union agreement, the contractor will, through his recruitment procedures, fill the employment vacancies without regard to race, color, religion, sex, or national origin, making full efforts to obtain qualified minority group persons."

This provision is limited in scope and comes into play only when the union cannot fill the contractor's requirements for workers-in other words, when the union has no men to refer at all. It does not obligate the contractor to seek to hire minority group workers directly when the union is supplying his needs but doing so only with nonminority workers.

Order 7-2(1) does not include the provisions in paragraph 8 of Order 7-2 which called upon contractors to "counsel and assist minority group subcontractors relative to the methods and procedures to follow in order to qualify as subcontractors on federal aid highway construction work . . ." Contractors had voiced objection to this provision in testimony before the Subcommittee on Roads, taking the position that this should be the responsibility of the Small Business Administration or some other government agency.

The record keeping requirements in paragraph 10 of Order 7-2(1) omit twoimportant provisions from Order 7-2. These called upon the contractor to keep records to indicate

(1) To the extent permissible under State law the name and addresses of each minority group applicant who was not hired and the reason therefor; and

(2) The general progress being made by each subcontractor used by the contractor in the former's equal employment opportunity program. The information described in (1) is vital to any meaningful review of whether a contractor is affording equal employment opportunities.

The requirement that the contractor record the number of minority and nonminority group members employed in each work classification on the project reaches only a portion of the relevant facts. The fact that the contractor may have none, a few, or a large number of minority group members working on a project does not answer the question whether he is assuring or denying equal opportunity. At a minimum, the Administrator should want to know the name, number, and date of minority group applicants and the reason why they were not hired. If the contractor reports no minority employees and no minority applicants, the Administrator can infer that problems, if any, lie in his recruiting; if the contractor reports no minority employees despite a large number of minority applicants, a different inference is suggested; and so on. Also, if the records suggest discrimination, the Administrator should want the names of persons.

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