ment contracts and are proceeding under this very Executive order. However, I will not say much more except to say that I have admired your legal ingenuity. Now, we are talking about the Philadelphia Plan, and I have always heard that the most marvelous lawyers on earth are Philadelphia lawyers. But there is not a single Philadelphia lawyer who has ever lived who can obviate or can erase the plain, obvious fact that the Philadelphia Plan requires contractors to take into consideration matters of race when they hire people, in order that they might achieve what you call a goal and I call a quota.

I have already ordered that your statement be put in the record in full. Would you like the Attorney General's opinion, also?

Mr. LEONARD. Senator, I think the opinion should be in the record. Senator ERVIN. Let the record show that the Attorney General's opinion of Sept. 22, 1969, will be submitted in full in the appendix to the record. Also let the record show that title VII of the Civil Rights Act of 1964 will be printed in the record.

Mr. LEONARD. Thank you, Mr. Chairman.

Senator ERVIN. Counsel will call the next witness.

Mr. EDMISTEN. Mr. Chairman, the next witness is the Honorable George P. Shultz, Secretary of Labor. He is accompanied by Mr. Arthur A. Fletcher, Mr. John L. Wilks, and Mr. Laurence H. Silberman.

Senator ERVIN. Mr. Secretary, I want to welcome you to the committee and express our appreciation to you for your willingness to come and give us the benefit of your observations on this matter.

You have a prepared statement. You may read it or proceed as you see fit.

STATEMENT OF HON. GEORGE P. SHULTZ, SECRETARY OF LABOR; ACCOMPANIED BY ARTHUR A. FLETCHER, JOHN L. WILKS, LAURENCE H. SILBERMAN, AND HORACE E. MENASCO, DEPUTY ASSISTANT SECRETARY OF LABOR

Secretary SHULTZ. Thank you, Mr. Chairman.

In addition to those that you called we took the liberty of asking the Deputy Assistant Secretary, Mr. Horace Menasco, to join us since he has been very much involved in the process of working out this plan.

Mr. Chairman and members of the committee, I welcome the opportunity to appear before you today to present the Department of Labor's views regarding the revised Philadelphia Plan.

As you know, in the fall of 1967 the Federal Executive Board with Department of Labor approval issued, pursuant to Executive Order 11246, the original Philadelphia Plan which required Government contractors in the Philadelphia area to submit an "acceptable" affirmative action program for the employment of minorities in the construction industry prior to the award of Federal or federally assisted construction contracts. In several opinions issued during 1968 and 1969 the Comptroller General ruled that such a requirement violated the principles of competitive bidding when no specific standards were included in the invitation for bids.

The Philadelphia Plan was revised to meet these objections of the

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Comptroller General and was issued by the Department of Labor on June 27, 1969.

The revised Philadelphia Plan sets forth ranges for minority manpower utilization on federally involved construction projects. These ranges are expressed for six designated trades-ironworkers, sheet metal workers, electricians, plumbers and pipefitters, steamfitters, and elevator construction workers-which have less than 2 percent minority membership. The ranges are based on a realistic evaluation of existing labor force factors in Philadelphia and were issued on September 23, 1969.

To be eligible for award, a contractor must include in his bid a goal for the utilization of minority persons in the designated trades which meets these standards. If he fails to submit a goal or his goal does not meet the established standards the contractor's bid will be rejected as nonresponsive. If a contractor meets his goals he will be presumed in compliance. However, if he fails, he will not automatically be in noncompliance with his obligations under the plan and Executive Order 11246. All that is required is a "good faith" effort to satisfy his goals. We have specified criteria for the measurement of "good faith” which include among others efforts by the contractor to broaden his recruitment base by soliciting employment applicants from known sources of minority workers and from training programs established within the Philadelphia area.

Numerous questions have arisen in the months since the revised Philadelphia Plan was issued concerning the authority of the Department of Labor to take such action. Thus, a brief review of the Department's position regarding the revised plan seems in order here.

The authority of the President to issue Executive orders requiring fair employment practices by Government contractors has been exercised for more than 28 years. Since 1941, Presidents have issued Executive orders requiring equal employment opportunity of those persons doing business with the Federal Government and the validity of these Executive orders has been upheld by opinions of the Attorney General, the Comptroller General, and several courts which have dealt with that issue.

This authority derives from the right of the Government to decide with whom and upon what conditions it will do business. Indeed, under the reasoning of certain cases, Federal contracts or assistance to private employers who discriminate would amount to unconstitutional discrimination by the Government.

The passage of the Civil Rights Act of 1964 did not deprive the President of his authority nor relieve him of his responsibility to achieve equal employment opportunity among Government contractors. Far from the Executive order or the Civil Rights Act frustrating the purposes of one another, the objective of both is equality of employment opportunity for all Americans, and the procedures of one law complement the procedures of the other.

Executive Order 11246 imposes more than a duty not to discriminate. It requires "affirmative action" to insure equal employment opportunity for minority groups. The Congress recognized this separate obligation when it enacted title VII of the 1964 Civil Rights Act.

The legislative history and the statutory language of that act, and several court decisions make manifestly clear the fact that title VII was not intended as a general mandate to replace all laws and actions of the Executive to achieve the goal of equal job opportunity. In the construction industry, special measures are required to implement the "affirmative action" requirements of Executive Order 11246 and to overcome the effects of past discrimination in the designated trades. This is so because—

1. Contractors rely upon labor unions as their source of labor supply; and

2. Contractors often hire a new employee labor complement for each job.

In order to achieve equal employment opportunity in the construction trades it is necessary, therefore, to require that bidders on federally involved construction projects commit themselves to "goals" of minority manpower utilization.

Allegations have been made that the revised Philadelphia Plan sets required quotas for the hiring of minorities and, as such, contravenes title VII of the Civil Rights Act of 1964 and Executive Order

11246.

Initially, I believe it is important to understand that the plan does not require, nor does it allow, discriminatory hiring practices as implied by the use of the word "quota." Instead, the plan establishes a range of desirable hiring within which the contractor must set his goal.

To emphasize the point that there is no magic in these numbers or percentages we established ranges and allowed the contractors to set their own hiring goals within these ranges. Furthermore, we do not require that such goals be met but rather that the Government contractor make every good faith effort-as defined in the implementing order of September 23-to meet those goals.

Thus, we require what any effective business, Government, or other organization requires of itself: the establishment of goals for achievement and the requirement of a good faith, but lawful effort to meet those goals.

We, of course, do not contend that the ranges and goals as well as the contractor's good faith efforts are to be defined in a color vacuum. But, as stated by the Attorney General, title VII does not prohibit and the Executive order may require encouraging the employment of members of minority groups.

We do not intend by this plan to hold any contractor responsible for the exclusionary practices of any union or unions. That responsibility rests upon the union itself.

However, under the Executive order, contractors and subcontractors have a responsibility to provide equal employment opportunity if they want to participate in federally involved contracts. To the extent that they have delegated the responsibility for some of their employment practices to another organization or agency which prevents them from providing equal employment opportunity, they cannot be considered in compliance with the Executive order.

Otherwise, the affirmative action obligation might be nullified particularly in the construction industry..

Again, I wish to emphasize that what the Philadelphia Plan "requires" of a contractor in that area is a good faith effort. He is required to broaden his recruitment base, and thus the size and makeup of the pool of available employees, by informing minority recruitment organizations and training programs that he is willing to hire minority group persons and by urging these sources to refer minorities to him for employment. We have reviewed the availability of minority manpower in the area and have determined that such efforts should produce minority applicants for employment in sufficient numbers that a contractor may satisfy his goal of minority employment as a matter of course.

We have attempted to rectify the defects in the original plan relative to procurement law as pointed out by the Comptroller General. It is our understanding that these weaknesses have been cured. The Attorney General advised me in his recent opinion that the other features of the revised Philadelphia plan are legal and consistent with the requirements of the Executive order and title VII of the 1964 Civil Rights Act. We have proceeded with the implementation of the plan on that basis.

Mr. Chairman, yesterday afternoon I received a copy of your opening statement, and in it you asked for the Labor Department's views on a very probing variety of questions, and you also make quite a point out of the desire to talk straight about it.

I am a little hesitant to do this in a room full of eminent attorneys, but let me go through this. I know at least one of them quite well, Phil Kurland over here who is a former colleague at the University of Chicago, perhaps I should say still a colleague. As I say about my role as a dean at the University of Chicago, I had to get out while the getting was good before it became true that in my case old deans never die, they just lose their faculties. I hope I have not lost mine already. I am sure that you will probe into that.

What I thought I would do is go through this with you and give my comments, in as straightforward a way as I can about the points that you raise.

In the second paragraph you point to the fact that the Labor Department contends the plan is legal and intends to implement it in nine cities with or without the Comptroller General's approval.

Let me say that procedurally as I understood my position as Secretary of Labor, in doing something of this kind, particularly when it is challenged by the Comptroller General it would be incumbent upon me to seek the advice or the Attorney General as well as the Solicitor in the Department of Labor, and before proceeding in the issuance of the precise limitation as distinct from the general context of the Philadelphia Plan, I did seek the Attorney General's opinion, and received an affirmative opinion from him, so procedurally I think that was the process that I intended to go through.

Now, insofar as the nine other cities are concerned, of course to the extent that we have a program for gaining equal opportunity in the construction industry, that is a legal program, a proper program, then we feel we have a responsibility to go ahead and apply that else

where.

The resources we have are quite meager. We have had requests from a great many cities to come and put in the so-called Philadelphia Plan.

We on the whole, in the light of our meager resources, have suggested to people that they try to develop hometown solutions, and that we will move along as fast as we can, but in the meantime it is preferable for people to work out their problems for themselves if they can.

Now, of course in saying that a hometown solution is a good solution, we do not mean just anything. We mean a program that has real bite to it, and particularly a program that does have in it the conception of people actually winding up on a job as distinct from being in an outreach program or in a training program or something else. It is employment that is the payoff there.

In the first paragraph you say that:

The wisdom of the Philadelphia plan has been challenged in the Congress, clearly, and in the streets of Chicago, Pittsburgh, and Seattle.

Well, we are very familiar with the problems in the streets of Chicago, Pittsburgh, and Seattle. We have been trying to work on those problems. They are very difficult problems, very explosive problems. We do not think that the Philadelphia Plan is responsible for them. They came about through a great variety of ways. In fact, we think that the Philadelphia Plan as a systematic approach to many of these problems offers a means of solution that is open, fair, systematic, and could be quite helpful.

We have been working in various ways in the three cities that you have mentioned in trying to bring more peace and order there, and I think that there is an implication that the Philadelphia Plan is responsible for the trouble in the streets of Chicago, Pittsburgh, and Seattle. I would have to differ with that.

Going on down the page, and particularly picking up the statements quoted from Jobs and Civil Rights, a Brookings Institution publication, I am inclined to think that the material you quoted has a good deal of merit in it, and indeed when I first took office as Secretary of Labor, I had quite a few employers and unions come in and call on me to say that the OFCC is driving us crazy.

I said why, what is the trouble?

Well, they are too big. You cannot find out what it is that they want to do. They just say they want you to do better or they want you to do something or other, but you cannot pin it down. There is no way to figure out whether you are in the compliance or not. And you get a lot of phraseology that you cannot deal with in any concrete operational way.

They have come in to me and they have said:

Now, Mr. Secretary, we want to do the right thing here. We want to be in compliance. We want to be equal employment opportunity employers. Just tell us what it is that you have in mind in a way that we can understand. Be specific. Don't be so vague.

So I think that there is a good deal of merit to that. I think the Comptroller General brought that up in some of these initial criticisms of the Philadelphia Plan, and we have tried to meet that criticism, not by being highly precise but by being definite enough so that it is clear enough what we are talking about, and so I believe and hope that we have tried not to sort of dance around in what is quoted here as the standard of semantics, but rightly or wrongly--and I take it from listening in the last half hour or so that you feel wrongly, but we feel rightly-but at any rate at least we are right out there on the table where everybody can see what we are doing. It is explicit and concrete.