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qualification statement was no different from the Special Provisions now required by Order 7-2(1). In both cases the contractor's commitments may indicate mere paper implementation of Executive Order 11246 and section 22 of the FederalAid Highway Act of 1968, or they may constitute the means for the achievement in fact of equal employment opportunity-depending upon how the promises are enforced. And, in the Department's opinion, enhanced effectiveness in enforcement is one of the major contributions of Order 7-2(1). As was explained to the Senate Subcommittee on Administrative Procedure and Practice, “We have made the contract requirements explicit and definite so that they can be enforced.” Statement of Secretary John A. Volpe to the Subcommittee on Administrative Procedure and Practice of the Senate Committee on the Judiciary, March 28, 1969.

Mr. Pollak considered it significant that Order 7-2(1) "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." Except for the required periodic submission and review of prequalification statements,5 Order 7-2 also made no such commitment and set no such timetable. The reason in both cases is that the Federal Highway Administration's compliance program is established in separate instructions. More important, the compliance program the Department has instituted for enforcement of the Special Provisions required by Order 7-2(1) is considerably more strenuous and comprehensive than that existing when Order 7-2 was in force. The answers to questions 3 through 5 below indicate changes made in this regard. By abandoning the relatively ineffective and overly burdensome prequalification procedure, the Department has, in effect, released administrative resources for use in the much more critical area of contract enforcement.

The remainder of Mr. Pollak's comments involved a comparison of the EEO requirements of Order 7-2(1) with those of its predecessor, Order 7–2. Mr. Pollack was correct that the Special Provisions were developed from the guidelines of Order 7-2. The Special Provisions, after all, are nothing more or less than a standard and comprehensive prequalification statement. However, the EEO responsibilities contained in the Special Provisions on the whole constitute an EEO program superior to the separate prequalification statements which contractors in practice could fairly be expected to write for themselves. A brief examination of the comparison of the requirements of the two orders which we furnished the Subcommittee on Administrative Procedure and Practice reveals the great number of instances in which the requirements of Order 7-2 have been supplemented with specific implementing obligations in the Special Provisions. For example, the requirement concerning "company personnel staff" in Order 7-2 read:

"The contractor must give assurance that all members of his staff who are authorized to hire, supervise, promote, and discharge employees, or to recommend such action, or who are substantially involved in such action, are made fully cognizant of, and are committed to, the contractor's equal employment opportunity policy."

Under the prequalification procedure, the prospective contractor was to implement this requirement in his prequalification statement in accordance with the following criteria (which were not mandatory requirements, but mere guidelines):

The contractor should set forth the procedures he has established to insure that such members of his staff are thoroughly indoctrinated in all aspects of the contractor's equal employment opportunity program, i.e., lectures, in-house training, etc., in addition to the internal procedures established to insure that such staff members are complying with the contractor's equal employment opportunity program."

The comparable obligations in the Special Provisions state: (Emphasis added.) "All members of the contractor's staff who are authorized to hire, supervise, promote, and discharge employees, or who recommend such action, or who are substantially involved in such action, will be made fully cognizant of, and will

5 This requirement, it may be noted, would not have been very meaningful-the prequalification statement was merely a list of promises unless the annual review was coupled with a compliance review. Without that there could have been no assurance that promises were being translated into performance. But, as indicated in the text, Order 7-2 did not establish any requirement for such a compliance review.

implement, the contractor's equal employment opportunity policy and contractual responsibilities. To insure that the above agreement will be met, the following actions will be taken as a minimum:

(1) Periodic meetings of supervisory and personnel office employees will be conducted before the start of work and then not less often than once every six months. at which time the contractor's equal employment opportunity policy and its implementation will be reviewed and explained. The meetings will be conducted by the EEO officer or other knowledgeable company official.

(2) All new supervisory or personnel office employees will be given a thorough indoctrination by the EEO Officer or other knowledgeable company official covering all major aspects of the contractor's equal employment opportunity obligations within thirty days following their reporting for duty with the contractor. (3) The EEO Officer or appropriate company official will instruct all employees engaged in the direct recruitment of employees for the project relative to the methods followed by the contractor in locating and hiring minority group employees.

To take another example, the requirements and criteria concerning wages, working conditions, employee benefits, and personnel actions in Order 7-2 provided:

Requirement: The contractor must assure that wages, working conditions and employee benefits are determined and administered on a nondiscriminatory basis.

Criteria: Procedures for periodic review of wage rates, employee benefits and promotional capabilities should be conducted by the contractor to discover and adjust any inequities. Employees should be advised of their right to participate in any contractor-sponsored or authorized recreational and social activities. Requirement: The contractor must assure against discrimination with regard to upgrading, promotions, transfer, demotions, layoffs, and terminations of employment.

Criteria: Procedures should be established which will give reasonable assurance that none of the above actions can occur in a manner which will result in discrimination against minority group employees. Requiring advance clearance of, or participation in, such actions by the contractor's equal employment opportunity officer should be considered by the contractor as a means of protecting the employment rights of minority group employees.

The comparable responsibilities in the Special Provisions read: (Emphasis added.)

"Wages, working conditions, and employee benefits shall be established and administered, and personnel actions of every type, including hiring, upgrading, promotion, transfer, demotion, layoff, and termination, shall be taken without regard to race, color, religion, sex, or national origin. The following procedures shall be followed:

“(1) The contractor will conduct periodic inspections of project sites to insure that working conditions and employee facilities do not indicate discriminatory treatment of project site personnel.

"(2) The contractor will periodically evaluate the spread of wages paid within each classification to determine any evidence of discriminatory wage practices. "(3) The contractor will periodically review selected personnel actions in depth to determine whether there is evidence of discrimination. Where evidence is found, the contractor will promptly take corrective action. If the review indicates that the discrimination may extend beyond the actions reviewed, such corrective action shall include all affected persons.

"(4) The contractor will investigate all complaints of alleged discrimination made to the contractor in connection with his obligations under this contract, will attempt to resolve such complaints, and will take appropriate corrective action. If the investigation indicates that the discrimination may affect persons other than the complainant, such corrective action shall include such other persons. Upon completion of each investigation the contractor will inform every complainant of all of his avenues of appeal."

"The contractor will periodically review the training and promotion potential of minority group employees and will encourage eligible employees to apply for such training and promotion.”

These comparisons suggest the relative indefiniteness of the prequalification requirements and the opportunities for abuse in their implementation. They also

indicate how Order 7-2(1) has spelled out and firmed up the requirements of its predecessor to assure that each contractor's EEO program represents a strenuous and meaningful effort to achieve equal employment opportunity. This is not to say that the Special Provisions are perfect and canot be improved. Like Order 7-2, Order 7-2(1) is entitled an "interim" order, which the Department expects to refine as time goes on. But it is to indicate the basis for our belief that the Special Provisions on the whole contain more meaningful substantive obligations that could be in practice be fairly obtained under the prequalification procedure. In analyzing the substantive obligations of Order 7-2(1) in detail, Mr. Pollak made a number of points. First, he thought it significant tht section 2 of the Special Provisions omitted the language in Order 7-2 that the contractor's "policy statement must recognize and accept the contractor's responsibility . . . 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." The last phrase of the quoted sentence, naturally, was dropped in accordance with the decision to discard the prequalification procedure. The rest of the sentence, on the other hand, has been retained, in effect, as part and parcel of the affirmative action obligation contained in the basic Equal Opportunity Clause as well as of the special provision which, quoting from that clause, states: "It is the policy of this Company to assure that applicants are employed, and that employees are treated during employment, without regard to their race, religion, sex, color, or national origin." Mr. Pollak suggested that the failure to repeat the quoted language of Order 7-2 at least "leaves the contractor's obligations in doubt." Yet it should be obvious that the commitment to correct existing discriminatory practices and conditions is subsumed in the larger obligation to assure that applicants are employed an employees are treated during employment on a nondiscriminatory basis.

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Next, Mr. Pollak found a suggestion in Order 7-2(1) that the Special Provisions "[leave] the contractor free to apply less stringent EEO standards" than are contained in the Special Provisions in his non-Federally assisted employment activities. He based this opinion largely on the statement in the Order that "[t]he requirements set forth in these Special Provisions shall constitute the specific affirmative action requirements for project activities under this contract. . ." Mr. Pollak neglected to quote the rest of this sentence to the effect that the Special Provisions "supplement the equal opportunity requirements [i.e., the basic Equal Opportunity Clause] set forth in the Required Contract Provisions." This language makes clear that the Special Provisions do not relax the requirements of the Equal Opportunity Clause, which bind the Federally assisted construction contractor and subcontractor not to discriminate and to take affirmative action in regard to Federally aided and non-Federally aided projects alike. The Special Provisions implement the affirmative action obligation of the Equal Opportunity Clause in accordance with the requirement of section 22 of the Federal-Aid Highway Act of 1968 that the Secretary obtain assurances that "employment in connection with proposed projects will be provided without regard to race, color, creed or national origin" and, therefore, state the affirmative action responsibilities for the contractor on the Federally assisted project alone. (Emphasis added.) But they hardly suggest that the affirmative action requirements for any other projects which the contractor may have may be any less rigorous.

Third, Mr. Pollak referred to the principal recruitment obligation of the two orders. Although he stated that both orders use "almost the same language" in this regard, he contended that both were deficient in making the contractor's responsibility to recruit minority group applicants contingent upon the absence of any valid bargaining agreement prohibition. The Department agrees with Mr. Pollak that the exclusive hiring hall arrangement presents difficult problems for the achievement of EEO goals, and appreciates his analysis that section 22 of the Federal-Aid Highway Act of 1968 authorizes the Secretary to require EEO assurances directly from the unions themselves. The Department is in the process of examining these questions and will make changes as review and study suggest. It should be kept in mind that the Department did not undertake to resolve all EEO problems in the highway construction industry through the issuance of Order 7-2(1). As stated before the Subcommittee on Administrative Procedure

6 This clause is contained in every nonexempt Federally assisted construction contract and subcontract.

and Practice: (Statement of Secretary John A. Volpe to the Subcommittee on Administrative Procedure and Practice of the Senate Committee on the Judiciary, March 28, 1969.)

"I recognize that FHWA Order 7-2(1) is not necessarily perfect. It is obviously subject to improvement. Anything can be improved. However, while we consider possible improvement, and I invite your suggestions on this, I feel most strongly that we should have a basically sound interim policy. It is important that we act now and not delay a good policy in the hopes that we may be able to develop a better one later. If and when a better policy emerges, we will substitute it." In any case, the Department certainly did not take, in Mr. Pollak's words, "a backward step" in following Order 7-2 on this matter. To the contrary, there is a significant difference in the statement of the contractor's primary recruitment obligation in the two orders. Order 7-2 required: (Emphasis added.) "Unless precluded by a valid bargaining agreement, the contractor must conduct systematic and direct recruitment through public and private employee referral sources likely to yield qualified minority group applicants, including, but not limited to, schools, colleges and minority group organizations. The contractor should have established methods of identifying those sources of minority group employees in any given area of construction."

Order 7-2(1), on the other hand, provides: (Emphasis added.) "The contractor will, unless precluded by a valid bargaining agreement, conduct systematic and direct recruitment through public and private employee referral sources likely to yield qualified minority group applicants, including, but not limited to, State employment agencies, schools, colleges, and minority group organizations. To meet this requirement, the contractor will, through his EEO Officer, identify sources of potential minority group employees, and establish with such identified sources procedures whereby minority group applicants may be referred to the contractor for employment consideration.”

The change from the hortatory (“should”) to the mandatory (“will”) language, though subtle, is significant.

Fourth, Mr. Pollak observed that Order 7-2 required contractors "who rely in whole or in part upon unions as a source of their work force, [to] seek the cooperation of, and work closely with such unions toward the end of effecting referrals by the unions of greater numbers of minority group employees," while the Special Provisions declare that "[if] the contractor relies in whole or in part upon unions as a source of his work force, he will use best efforts to obtain the cooperation of such unions.. to effect referrals by such unions of minority group employees." Mr. Pollak thought that the omission of the words "greater numbers of" might "leave the contractor free to infer that token numbers will satisfy his obligation." In fact, the words were dropped because, for those contractors who had always been equal opportunity employers, urging the referral of greater numbers of minority group persons would have been to encourage preferential treatment. Incidentally, Mr. Pollak neglected to note that the substitution of the "best efforts" language in Order 7-2(1) for the "seek the cooperation of and work closely with" phraseology of the earlier order makes it unmistakably clear that the best rather than token efforts are necessary to satisfy the obligation.

Fifth, Mr. Pollak remarked that "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,” whereas Order 7-2(1) does not. The statement in Order 7-2 referred to was a recommendation rather than a requirement for prequalification. In any case, the failure to include it in the Special Provisions was inadvertent." At the first revision of the Special Provisions the matter will be included as a mandatory obligation.

Sixth, Mr. Pollak noted that Order 7-2(1) omits the provision in the earlier order calling 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. . . ." Again, the provision in question was a guideline rather than an obligation. In any event, the Department found it to be, at best, inappropriate and, at worst, a potential source

7 The Department does not regard the obligation to recruit minority group persons in the event the union is unable to refer applicants, which Mr. Pollak noted Order 7-2(1) added, in any way as a substitute for the provision in question.

of conflicts of interest. Contractors are not and should not be concerned with advising subcontractors how to handle the latters' business arrangements.

Seventh, Mr. Pollak observed that the record-keeping requirements of Order 7-2(1) dropped the obligations under the prequalification procedure to keep records designed to indicate "the general progress being made by each subcontractor regularly used by the contractor, under such subcontractor's equal employment opportunity program" and "to the extent permissible under State law, the name and address of each minority group applicant for employment who was not hired and the reason therefor." Both requirements were omitted because, as stated, they imposed a burden on the contractor outweighing the benefit the Department could expect to derive from them and were, therefore, unreasonable. As A. B. Long, Jr., representing the Tennessee Road Builders Association, declared before the Senate Subcommittee on Roads, "The recordkeeping requirements of the prime contractor regarding subcontractor and supplier compliance is unreasonable, impracticable, and unthinkable. Imagine me, for example, being responsible for the United States Steel Corp., from whom I buy." (Hearings, 91st Cong., 1st Sess.. Serial No. 91-1, at 23 (1969).) Likewise, in the construction industry the benefit of complete records of minority group applicants who are not hired does not justify the cost. Although Mr. Pollak indicated such records have some value, he obviously had in mind in analyzing the expense of keeping them the nonconstruction contractor who has a fixed plant or facility and a relatively stable workforce. But, as J. W. Moore, representing the Arkansas Chapter of the Associated General Contractors of America, explained to the Subcommittee on Roads "Unlike a merchant or manufacturer, a [construction] contractor has a constantly changing work force. The seasonal and progressional nature of construction work not only requires hiring on a job-to-job basis, but also weekly or even daily as particular crafts are required during a phase of construction." (Id. at 87.) Informal hiring of unskilled laborers, who constitute approximately 30 percent of the highway contractor's work force, adds to the complications.

Eighth, Mr. Pollak indicated that Order 7-2(1), like Order 7-2, obligates contractors to recruit affirmatively through newspapers having large circulations among minority groups and public and private employee referral sources likely to yield qualified minority group applicants. He went on to note that Order 7-2(1), unlike its predecessor, does not require that such newspapers and referral sources be designated in the contract specifications and stated: "In my experience companies and unions have generally sought such specific information. . . ." However that may be, the Department found the administrative difficulty of providing such information considerable, while the benefit rendered, rather insignificant. The contract requirements-the descriptions of the newspapers and referral sources concerned-give the contractor sufficient guidance to assure an effective recruitment program.

One final discussion that appears in Mr. Pollak's letter-not in regard to the substantive obligations of the Special Provisions, but in regard to one of the implementing procedures of Order 7-2(1)-deserves comment. Mr. Pollak wrote: "Paragraph 3 of [sic] Order 7-2(1) on 'applicability' includes the following sentence which does not appear in Order 7-2:

"Whenever equal employment opportunity problems are encountered in connection with particular kinds of projects or in particular geographic areas, these special provisions will be modified or supplemented as appropriate to include in the bidding provisions the specific affirmative action requirements designed to meet and overcome these problems.'

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The meaning and reach of this sentence are nowhere explained; nor are procedures for its implementation spelled out. It could be read to authorize inclusion in the advertised bidding proposal of more or less specific or stringent EEO requirements because of "problems encountered." The occasions which would warrant less stringent provisions are difficult to envision, particularly since the order spells out the EEO requirements of the Federal-Aid Highway Act. Problems would generally be encountered with respect to individual contractors whereas bidding advertisements will reach all who wish to bid. My reaction to this sentence is that its presence suggests the wisdom of the prequalification procedure and the difficulties faced under the substitute procedures in dealing meaningfully with problems which arise in individual situations.

8 It should be noted that the record-keeping requirement in question is meaningless insofar as contractors rely on exclusive hiring halls for referrals. It is estimated that a majority of highway construction contractors obtain their employees in that way.

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