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Both Government and union witnesses who have preceded me during this hearing have recommended that no legislation be reported out at this time. They claim that changes have been made administratively by the Labor Department and these changes make legislation unnecessary. In any event, they claim that few problems exist and that these are "not so currently crucial as to call for current congressional action.”

With this we respectfully disagree. Congress established the DavisBacon Act and if any changes are to be made in the intent of the act, they should be made legislatively-by Congress—not by the Labor Department.

There have been and will continue to be a succession of Labor Secretaries—and if each, as has been the practice, makes administrative changes, confusion can only result. The recent court decision concerning Labor Department administration of the Walsh-Healy Act is a case in point.

Only Congress can stop this erosion of its authority. Perhaps what is needed is a watchdog committee of Congress to look over the shoulders of the agencies to insure that laws are being executed in accordance with congressional intent.

We urge that this subcommittee report out a bill amending the Davis-Bacon Act. And I might say at this point that this would be in agreement with the report that your general subcommittee put out in June 1963, wherein they have eight different examples of where they felt that legislative changes should be made, not administrative changes.

A unique opportunity now exists to amend this law which has not been changed in over 30 years. The time has now come to legislate for fair play in administration of the Davis-Bacon Act.

The major amendment we support is the court review proposal, H.R. 9590, introduced by a member of your committee, Representative Charles Goodell, of New York. This proposal, however, standing alone, cannot achieve the necessary reform in the law without further amendments to the Davis-Bacon Act which would

1. Give employers the right to a fair and impartial hearing in all prevailing wage determination cases before the U.S. Department of Labor.

2. Abolish the 30-percent rule and establish in its place a majority or weighted average rule.

3. Limit the area to be taken into consideration for wage determinations.

4. Require the Labor Department to follow the industry distinctions between types of construction in making wage deter

minations. Davis-Bacon amendments in II.R. 7075, introduced by your chairman, Representative James Roosevelt, unfortunately do not in our opinion accomplish the necessary reform needed. H.R. 7075, for the most part, would put into law many of the Labor Department interpretations that have caused so much criticism.

These include the 30-percent rule, under which a rate paid to 30 percent of a craft is found "prevailing” if there is no majority rate; going outside the county where the work is performed, if necessary, to get “substantial evidence" of prevailing rates; and the definition of "similar work" as including work on "similar larger projects."

H.R. 7075 does recognize the need for some type of review apart from the Labor Department by setting up a presidentially appointed Davis-Bacon Appeals Board. The independence of this Board, however, is diluted by placing it in the Labor Department "for administrative purposes.

With regard to the recent internal changes made by the Labor Department, we cannot endorse the Davis-Bacon Appeals Board setup. I think they call it technically the Wage Appeals Board.

Its independence is questionable. It will be bound by previous Department interpretations. The appointment of the members is for no fixed tenure and they can be removed at the pleasure of the Labor Secretary.

It seems strange that there have been no legislative amendments to the Davis-Bacon Act for more than 30 years and then, suddenly, ad. ministrative changes are made. It is our firm belief that instability , and uncertainty in the administration of this law will continue until Congress enacts fair play amendments.

Who can guarantee that these changes made by the present Labor Secretary will not be revised at some future date by a successor?

Accordingly, we urge adoption of H.R. 9590 introduced by Rep. resentative Charles Goodell of New York. This proposal would amend the Davis-Bacon Act by providing judicial review of wage predeterminations issued by the Secretary of Labor and of enforcement rulings under this act.

Now to review the provisions of H.R. 9590: Section 1 of this bill would add a new section 8 to the Davis-Bacon law permitting "any person (such as contractors, employees, prospective employees, subcontractors, bidders, prospective bidders, labor organizations and public and private contracting agencies) aggrieved by a wage determination" to initiate an action in U.S. district court against the Secretary of Labor and the contracting agency to "enjoin the application of such wage determination to the invitation for bids for the advertised contract and to determine the prevailing wage lawfully applicable thereto." This action must be started within 15 days after publi. cation of the advertised specifications.

The district court is empowered to issue a temporary restraining order relieving all bidders from stipulating that they will comply with the determination being challenged, provided that the court may require any bidder to whom the contract is awarded to post an indemnity bond to guarantee the fulfillment of any wage obligation if the challenged determination is sustained.

The court is then charged with the duty of deciding whether the challenged determination was in accordance with law, and, if not, to establish the prevailing wage.

Thereafter, review by the appropriate U.S. court of appeals and the Supreme Court of the United States is provided.

Section 2 of H.R. 9590 would amend section 7 to provide that whenerer it is claimed that a contractor or subcontractor has failed to pay the prevailing wage, the contracting agency is to investigate the claim and issue a written ruling on the claim.

Any contractor or subcontractor aggrieved by such a ruling may bring an action in the U.S. district court where the violation is alleged to have occurred.

The district court, which may stay any penalty pending the completion of judicial review, is to determine whether the contractor or subcontractor failed to comply with his obligations under the wage provisions of his contract.

Similarly, employees aggrieved or adversely affected by the ruling of the contracting agency may seek review in a U.S. district court.

While employees may maintain such actions on behalf of other employees similarly situated, only those employees who give their consent in writing may become a party plaintiff to any action brought under this section.

Following the decision of the district court, review by the U.S. court of appeals and the Supreme Court of the United States is provided.

We support H.R. 9590 because it will bring about fairplay in the administration of the Davis-Bacon Act. It will require the Department of Labor to account for its decisions.

It will relieve the Department of Labor from the pressures of employers, unions, and Members of Congress to reverse its wage determinations.

It will permit any contractor, subcontractor, bidder, prospective bidder, union, employee, and public or private contracting agency to obtain court review of a wage rate set by the Department of Labor.

The major criticism voiced against H.R. 9590 is that substantial delay will result and thus cause a slowdown of Federal construction programs. There exists, however, considerable administration and discretionary delay in the present administration of the act.

This delay has not resulted in a slow down in Federal construction. Even if H.R. 9590 does cause some delay, the interests of the contracting agency and the need for particular construction must always be balanced against the interests of the taxpayer and the purpose of the act which is to stabilize rather than dislocate prevailing wages in the project area.

When a situation arises which would unduly delay urgent defense projects, H.R. 9590 meets this challenge. It provides that the court may require any bidder to whom the contract is awarded to post an indemnity bond sufficient to guarantee fulfillment of any legal wage obligation should the challenged determination be ultimately sustained.

An additional amendment needed to assure fairplay in administration of the Davis-Bacon Act would be one to give the contracting agency or department a greater voice in the initial designation of contract work.

These Government employees working for the contracting agency are local people who are in the best possible position to determine and resolve the problems that arise in administration of the act.

They are also more technically competent to handle the classification problems that arise from time to time. The Department of Labor, often located far from the scene and locality of the construction, cannot be expected to be acquainted with the intimate details of the project involved.

The Davis-Bacon Act should also be amended to provide that a hearing will be granted as a matter of right whenever there is a dispute over contract designations. At such hearings all interested parties should be given an opportunity to appear and testify.

Legislate a majority or average rule rather than the 30-percent rule: The Davis-Bacon Act provides that laborers and mechanics must be paid not less than the wages prevailing in the area in which the work is to be performed. The Labor Department has determined administratively that if there is not a majority of workers employed in a certain classification, it will consider the rate paid to the greatest number, provided it constitutes 30 percent of those employed.

This 30-percent rule is not legislatively authorized and it has led to many difficulties and criticisms. We recommend that the law specify use of a majority rate, or, where there is no majority rate, a weighted average rate.

When a uniform wage paid to only 30 percent of the workers in a particular classification is designated as the prevailing wage in the community, it is manifestly unfair to the remaining 70 percent of the workers in that classification in the area if the rate established is lower than the various rates they are receiving. On the other hand, it is unfair to a contractor in the area who employs a majority of the workers in a particular classification at a variety of rates due to degrees of worker skill to be required to pay a standard higher rate simply because a 30-percent minority receive a higher but uniform hourly rate.

Restrict the definition of "area" to county involved: Labor Department regulations define "area" as the city, town, village, or other civil subdivision of the State in which the work is to be performed. This is the statutory language.

It appears quite clear that the Labor Department must first look for a similar project in the city, town, or village in which the contract work is to take place.

Failing to find such a project, the Labor Department would then look for a similar project in the county. Thus far, we cannot disagree with this procedure. But, the Labor Department goes further.

It has, on a number of occasions, considered projects beyond the State line. This practice of going outside the county-often up to 100 miles away–has led to distortions in designations of wage levels that do not reflect wage levels that actually prevail at the proposed construction site.

We recommend that Congress change the act to restrict the Labor Department to determinations of prevailing rates based upon wage data within the county and no further.

If no rate exists in the county for a particular craft, then no wage determination should be made based upon wage data outside the county, artificially imported and applied.

Similar work classification should be left to contracting agency: That Davis-Bacon Act states that laborers and mechanics of Government projects shall be paid wages which the Secretary of Labor shall determine to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work.

In general, there are three types of construction work: building construction; highway construction; and heavy construction.

To complicate the matter, building construction is usually divided into large projects; such as, hospitals and office buildings, and much small construction work which is closer to residential housing. Each of these categories has its own set of wage rates.

Administration of the Davis-Bacon Act has bogged down because the determination as to which projects are similar to the proposed contract job is critical and crucial. On occasion, the Labor Department has classified a heavy construction job as “building construction” with the resulting higher rates required by the classification.

On other occasions, a small residential construction job which receives a classification belonging to a large commercial job materially increases costs.

We recommend an amendment to the Davis-Bacon Act so that determinations of what constitutes "similar" are made by contracting agency officials responsible for the construction. These officials are experienced in the actual construction and considerably more qualified than Labor Department personnel who are far removed from the project.

Conclusion: Since the Davis-Bacon Act was enacted in 1931 it has not been substantively amended. This subcommittee has a unique opportunity to restore balance and stability to the area of wage determinations under the Davis-Bacon Act.

Accordingly, we recommend that this subcommittee report out H.R. 9590 which will provide long-needed court review under the DavisBacon Act.

This proposal, however, should be implemented with other amendments to meet the need for a right to a fair and impartial hearing in all wage determination cases before the Department of Labor, abolition of the 30-percent rule, limitation on the area to be taken into consideration, and placing the responsibility for evaluating construction classifications on the contracting agency directly involved.

Thank you very much, Mr. Chairman. That is the complete state

Mr. ROOSEVELT. Thank you very much, Mr. Borth. We appreciate your constructive approach and the suggestions which you have made even though, perhaps, we may not agree with all of them. At least, all of us may not agree with all of them.

Mr. Borth. Yes, sir.

Mr. ROOSEVELT. I think we might have a few questions. On pages 4 and 6, you speak of an amendment needed to give the contracting agencies a greater voice in initial designation of contract work. What constitutes “similar"? You probably are aware—at least I assume you are—that under recently issued regulations, specialized personnel have been added to the Labor Department staff who have had long experience in the construction industry; who can provide, on a regional basis, more accurate information with regard to wage determinations and classification of jobs.

Do you think that this method should at least be given the opportunity to operate to see that it provides adequacy of applications, so that the general thought that you have is carried out by this regulation, before we go so far as to give the contracting agency itself that determination and thereby splitting a basic responsibility involved?

Mr. Borth. I can't disagree with your observation. I am willing to give it a chance. I think anybody is. As a matter of fact, I think that when Mr. Donahue appeared before you on June 23, he had a lot of changes that he had made-a lot, of which, I might say, came out of the hearings that you held previously—and I think he rightfully took advantage of the thoughts and I would not be against

ment.

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