needs additional information from the contracting agency, that information is requested at this point, usually by telephone. If the contract is found not to be a service contract within the purview of the act, the contracting agency is so notified. If the contract is subject to the act, the Department must determine whether an appropriate current wage determination-one which has not been superseded by a later wage determination-or data upon which to base a new or revised wage determination, is available. The decision as to whether a current wage determination applies is based on the following criteria: (1) Is the locality of the proposed work and of the current wage determination the same? (2) Is the nature of the proposed work similar to that for which the current wage determinations were issued? (3) Are the classes of employees expected to be involved in the proposed work similar to those for which the current wage determinations were issued? If a current wage determination is to be applied, a copy of it is attached to the original notice of intention and both are returned to the contracting agency. A decision to revise an applicable current wage determination is made if more recent data are available and can be obtained in time. If no current wage determinations apply, the Department must determine whether data are available upon which to base a new wage determination and whether it can be obtained in time, and if so, whether the expenditure of resources necessary to make a determination is warranted. The Department is more likely to decide to issue a wage determination if: (1) A large number of service employees are expected to be involved in the work; (2) The types of employees expected to be utilized, the type of work to be performed, or the location in which the work is to be performed makes it likely that low wages will be paid under the contract; or (3) The Department expects other similar service contracts to be awarded in the locality to which the wage determination can be applied. If the Department decides to issue a wage determination, it is attached to the original notice of intention, and both are returned to the contracting agency. If no wage determination is issued the original notice of intention is so noted and returned, but the reason for the Department's decision not to issue a determination is not shown. The primary reasons for not issuing wage determinations, according to the Department are the lack of available data and the fact that few employees would be covered. For your information, Mr. Chairman, we have attached to my statement (Attachment 1) a flow chart depicting the basic steps and decision points involved in processing notices of intention and wage determinations. (ATTACHMENT 1) FLOW CHART OF DEPARTMENT OF LABOR'S PROCESSING OF NOTICES OF INTENTION TO ENTER A SERVICE CONTRACT COVERAGE OF WAGE AND FRINGE BENEFIT DETERMINATIONS We were requested to provide information on the number of notices of intention to award contracts subject to the Service Contract Act received by the Department in fiscal years 1970 and 1971 and how many of them were covered by wage and fringe benefit determinations, as well as comparable information relating to the Davis-Bacon Act and the Walsh-Healey Act. As shown on this chart (Attachment 2), the Department received (ATTACHMENT 2) NOTICE OF INTENTION & 21,674 notices of intention under the Service Contract Act in 1970, anu 21,081 in 1971. Of these, 8,017, or about 37 percent, and 7,409, or about 35 percent, respectively, were covered by wage and fringe benefit determinations. The Department estimates that for fiscal years 1970 and 1971, respectively, about 58,000 and 59,000 contracts were covered by determinations issued under the Davis-Bacon Act, which applies to contracts in excess of $2,000 for federally financed construction. The Department estimates the numbers of contracts covered by the Davis-Bacon Act because it does not receive information on all proposed contracts or on those actually awarded which are subject to this act. According to the Department, in fiscal year 1971 about 22,000 wage determinations were issued covering 22,000 contracts. The Department estimated that about 37,000 more contracts were awarded which were subject to the act and which were covered by area determinations the Department has issued and published. When a contracting agency determines that an area determination is applicable, the prescribed minimum wages are incorporated into the contract specifications without the Department being notified that the contract is planned or awarded. The Department issued about 450 area wage determinations in fiscal year 1971. No wage determinations have been issued under the Walsh-Healey Act since a 1964 decision by the U.S. Court of Appeals, District of Columbia Circuit (Wirtz v. Baldor Electric Co., 337 F.2d 518 (1964)). This decision held that since wage determinations under the WalshHealey Act were subject to the Administrative Procedures Act, interested parties had the right to inspect records upon which the determinations were based. The Department maintains that it cannot permit such inspections because much of the information upon which wage determinations are based is of a confidential nature. Mr. THOMPSON. What type of confidential material would this be? Mr. AHART. I think, Mr. Chairman, they were referring to the data which was either submitted voluntarily or gathered by survey people from private industry which would disclose the wage rates paid by particular firms or organizations which they would consider confidential and I think they obtain it from these firms on the basis it will remain confidential. Mr. THOMPSON. I see. So ultimately it would be a matter of competition with some of their neighboring people. Mr. AHART. It is very possible. Consequently, the Department stopped issuing new wage determinations under the Walsh-Healey Act and in the absence of such determinations, the minimum wage requirements under the Fair Labor Standards Act have been applied. The Fair Labor Standards Act sets minimum wage, maximum hours, overtime pay, and child-labor standards for employment subject to the act. It is the Department's position that wage determinations under the Service Contract Act and the Davis-Bacon Act are not subject to the Administrative Procedure Act. This next chart (attachment 3) shows the number of wage and fringe benefit determinations made, the number of contracts covered, and the average number of contracts covered by each determination, under the Service Contract Act and the Davis-Bacon Act in fiscal years 1970 and 1971. I do not believe the information shown needs anv specific comment on my part unless you or the other members of the subcommittee have questions. ATTACHMENT 3 CONTRACTS COVERED RELATED TO NUMBER OF WAGE DETERMINATIONS FISCAL YEARS SERVICE CONTRACT ACT PROPOSED CONTRACTS COVER ED BY WAGE DETERMINATIONS 8,017 7,409 COVERED CONTRACTS PER 4.9 4.1 DAVIS-BACON ACT ESTIMATED NO. OF CONTRACTS 58,000 59,000 COVERED CONTRACTS PER 2.2 2.6 Mr. THOMPSON. Do you have any questions, Mr. O'Hara ? SOURCES OF DATA FOR WAGE AND FRINGE BENEFIT DETERMINATIONS Mr. AHART. The specific sources of data the Department relied upon in making wage determinations under the Service Contract Act and the number of wage determinations in effect as of the end of fiscal years 1970 and 1971 are shown in the next chart (attachment 4). |