sistent with those prevailing for that type of work in the State-but no corrections were ever forthcoming in that particular instance.

In his 1964 report, B-146842, the Comptroller further observed that his review of Davis-Bacon wage predeterminations on certain federally financed housing projects in Southeastern States "disclosed that the minimum hourly wage rates were improperly established at the higher negotiated rates paid on commercialtype building projects, rather than at the lower wage rates prevailing in the project areas on private housing similar to the proposed project." He added that the extra labor costs amounted to $1.4 million over and above what the same housing built with the same workmen would have cost if privately financed. He urged the Labor Department to make "more realistic wage determinations." How can there be any reasonable doubt that an independent review of wage predeterminations would be in the public interest? What is so desirable about having an administrative agency fumble like this, when a simple statutory addition in the form of a small but authoritative review board would enable it to perform properly?

Fair enforcement

The difficulties and failures in achieving fair enforcement and observance of statutory authority are also well documented in the hearing records of the subcommittee.

A fair reference from the record is the enforcement action against a number of contractors on the Marine Base at Albany, Ga., which is documented on pages 175 and 457 of the subcommittee's June 1962 Davis-Bacon hearings. The gist of the grievance is that the contractors in Albany were unfairly ordered to abide by the area practices as to the use of certain classifications which prevailed in Atlanta, 180 miles away, or be penalized for failure to do so. No relief was ever obtained for the contractors in this case from regular appeals procedures within the agencies or the Depatrment of Labor.

In addition to the subcommittee's records, the Comptroller General has made many rulings on Davis-Bacon enforcement in the exercise of his audit powers and his special powers to refund withheld moneys to underpaid workers and to blacklist willful violators under the Davis-Bacon Act. His rulings substantiate persistent failures to observe statutory authority and rules of fairness in the enforcement of the act. A few typical rulings might be noted briefly although many others are documented in the Comptroller General's reports:

In the spray painters' case (B-132044, dated June 10, 1957), the Labor Department tried to bar the use of spray paint equipment under alleged Davis-Bacon authority. The Comptroller General found that no such statutory authority existed and saved a contractor from unfair treatment.

In the Amarillo Air Force Base case, involving the T. L. James Construction Co. (B-147602, dated Jan. 23, 1963), the Labor Department tried to force the contractor to pay the electricians rate to pipelayers, about twice as much, contrary to a substantial practice of using pipelayers to lay pipe on that type of construction in the area. The Comptroller General again found that no statutory authority existed to use the Davis-Bacon Act to force payment of higher classification rates for work assignments which are being substantially performed by lower classification rates. He also found the enforcement ruling lacking in an understanding of the construction industry, and caused a reversal of the action taken, and saved another contractor from unfair treatment.

In the Euphala Dam case, involving the Hyde Construction Co. (B-148076, dated July 26, 1963), the Labor Department tried to apply Davis-Bacon requirements to an off-site aggregate plant operated by a commercial supplier. Again, the Comptroller found no authority in the Davis-Bacon Act for such coverage in view of the clear words of the act that it applies to laborers and mechanics employed directly upon the site of the construction work.

In the Davis-Monthan Air Force Base case, involving Idaho-Maryland Industries (B-154214, dated Aug. 10, 1964), the Labor Department again tried to apply Davis-Bacon requirements to an off-site plant, this time one used to fabricate large steel doors at a central point for installation on a series of missile installations ranging from 15 to 100 miles away. The Comptroller again found the attempted enforcement action beyond any statutory authority and saved these contractors from unjust enforcement treatment.

The above illustrations, and many others, demonstrates the necessity of an independent review system over both wage predeterminations and enforcement. But granted this point, questions seem to keep arising as to whether the Wage

Appeals Board, the Court of Claims, and the Comptroller General do not afford an adequate review remedy. AGC's experience is that they do not.

Wage Appeals Board

AGC would commend the Secretary of Labor for doing what he could, in the absence of statute, to provide a kind of review of Davis-Bacon decisions by way of the Wage Appeals Board. We would also commend the members of that Board for their conscientious service on it. Nevertheless, we would be less than candid with this subcommittee if we did not report that in our view the Board is not adequate for the long run.

The Board is not adequate because it is merely advisory to the Secretary and limited to reviewing decisions made by his subordinates, and cannot review the Secretary's own actions, such as his confirmation of a subordinate's decision or his issuance of regulations. It is not adequate because it can be abolished by the issuance of an administrative order in the same way it was created.

To be of permanent value, a Wage Appeals Board would, in our view, have to be created by statute, as we have indicated in earlier testimony. Court of Claims

Contrary to the questionable information presented to this subcommittee and on the floor of the House in the fringe benefit debate, the U.S. Court of Claims does not provide an adequate Davis-Bacon review.

AGC's special counsel, Winthrop Johns, of the Reilly-Wells law firm, advised the subcommittee in connection with our previous testimony that "there is no means of getting a review of a determination" in the Court of Claims. He added that the only means of review at all in this court even over enforcement "is an empty one."

The subcommittee should be informed that the Court of Claims has no jurisdiction over Davis-Bacon enforcement on Federal-aid construction. This means that neither contractors, subcontractors, nor construction workers have any Federal court review over Davis-Bacon rights and duties on this large bulk of constuction covered by Davis-Bacon requirements.

While it is true that the Court of Claims does have a certain amount of jurisdiction over claims arising out of Federal contracts, its procedures are too limited to be of any practical value to contractors. Of course, construction workers themselves have no rights of appeal in this court.

One major reason why the Court of Claims cannot provide any adequate review of Davis-Bacon enforcement even on Federal contracts over which it does have jurisdiction is because it cannot stay enforcement sanctions, but only award judgments belatedly for damages arising from an improper or unauthorized Davis-Bacon enforcement action. It can only hear the contractor's claim for damages suffered from the improper and unauthorized Davis-Bacon enforcement action long after the injustice was committed. If it finds the enforcement action was improper and unauthorized, it may reimburse the contractor for damages sustained from such action, which means that the Court of Claims merely passes the costs of improper enforcement orders along to the taxpayers, rather than to prevent the wrong enforcement action in the first place as any remedy would have to do to be considered an adequate review.

The Comptroller General's role

The Comptroller General has earned appreciation of the taxpayers for vigilance against unauthorized costs and expenditures. He serves as auditor of Government for the Congress in addition to his special duties under the DavisBacon Act for paying withheld funds to construction workers and for blacklisting Davis-Bacon violators. But the question arises as to whether he provides an adequate substitute for court review of enforcement and AGC believes the answer is again "No," with full regard to his very noteworthy work in this field.

While his audit of Davis-Bacon wage predeterminations are valuable guidance to the Congress, they necessarily occur "after the fact" and cannot achieve any corrections in a given case, and in fact are not intended to do so. While such audit reports are valuable and ought to be continued, they provide no substitute for the kind of review of wage predeterminations as proposed by AGC.

The Comptroller's review of Davis-Bacon enforcement, on the other hand, exerts a direct impact on private parties and the Government agencies in

volved, as far as Federal contracts are concerned. But his line of authority over Davis-Bacon enforcement actions on Federal-aid contracts has yet to be well established by way of precedent and leaves an unknown quantity at the present time over a vast field of Davis-Bacon enforcement. AGC feels this gap should be filled by a statutory provision to provide review over both types of public contracts equally.

Judicial review as proposed by AGC would, in addition, provide a more complete review of all aspects of a case than the Comptroller can now provide under his present procedures. This means more complete factfinding procedures which are, of course, one of the big problems in any review of Davis-Bacon enforcement actions.

Comptroller is indispensable

The Comptroller General has an indispensable role which even courts cannot fill, even assuming judicial review legislation were enacted. That is the Comptroller's judgment on whether contract provisions are within legal bounds, or without statutory or legal authority. Courts generally do not pass on such questions involving authority of contract provisions, as they are primarily interested as to whether both parties properly agreed to such a provision in the contract. If yes, the verdict is generally a foregone conclusion that both are bound by it, regardless.

So the only check and balance the public has against the use of unauthorized contract provisions will depend on keeping the Comptroller General's present functions intact. AGC is opposed to any legislation that would remove the Comptroller General from this indispensable position of checking against the use of unauthorized contract provisions involving unauthorized costs and expenditures, as H.R. 7075 would do in the Davis-Bacon field.

Review by employees limited

Genuine concern for fairness in Davis-Bacon enforcement cannot overlook the interests of the construction worker himself, as seems to have been done by those who would resist judicial review of Davis-Bacon enforcement at all costs.

Today, construction workers have only recourse to the Miller Act bond to test their rights under Davis-Bacon provisions, and this bond gives them this right only on Federal contracts. This means that Federal law gives construction workers no similar rights of appeal on Federal-aid contracts now comprising the bulk of Davis-Bacon covered construction work.

But the kind of Davis-Bacon review proposed by AGC would provide aggrieved construction workers, contractors, and subcontractors equally, “a day in court" as far as their rights and duties under the Davis-Bacon provisions of Federal and Federal-aid contracts are concerned.

Is AGC's review proposal practical?

Not only has the need for Davis-Bacon review been documented, and not only has the Wage Appeals Board, the Court of Claims, and the Comptroller General been shown to be an inadequate substitute for administrative and judicial review of Davis-Bacon operations, but AGC can show that its review proposal is practical.

One step in AGC's proposal is for a statutory board to review wage predeterminations administratively. The practicality of this proposal is demonstrated by the fact that the Labor Department now has an administrative board functioning in this manner (although not adequate for other reasons noted earlier). The practicality of AGC's proposal is further demonstrated by the fact that Chairman Roosevelt proposes a similar board in H.R. 7075. Another demonstration of practicality is the fact that a construction committee of the American Bar Association recently recommended a Davis-Bacon review system comprising administrative review of wage predeterminations by a statutory board, plus court review of enforcement, along the lines of AGC's proposal. The text of the report is attached.

Another step in AGC's proposal is for court review of enforcement which, as noted, has been recommended by the American Bar Association's committee, and proposed by Congressman Goodell, Republican, of New York, in H.R. 9590, section 2.

In addition, AGC's proposal is so simple the practicality of it speaks for itself. It would entail no disruptive changes in the present contract procedures involving Davis-Bacon enforcement matters. Each awarding agency, which has the primary responsibility for enforcement all along will continue to have it and to

discharge it. In doing so, the agencies would be free to consult with the Labor Department under reorganization plan 14 so enforcement policy would be fully coordinated. After due process in reaching a decision on the facts and the law, the awarding agency would have the responsibility of issuing the final verdict to the contractor, or the construction worker if he is appealing, as to exactly what the contractor's duties are under the Davis-Bacon provisions of the contract, and whether or not he has complied with them.

The procedures up to this point would be in accordance with present procedures, although presently due process is sometimes lacking. However, no sanctions would be imposed on the contractor under our proposal until after the awarding agency's final decision has been handed to the contractor.

When the judicial review point is reached, the contractor would have a short time to decide on appeal during which no sanctions still may be applied. If he appeals, he posts bond to cover alleged underpayments, and the court proceeds to hear the case, as to whether the agency's version of what the contract requires is proper, whether the Davis-Bacon Act is properly applicable to the operations as the agency alleges, whether the contract requires the application of certain classification wages, or the aplication of building heavy or highway schedules, all of which often appear in Davis-Bacon contract specifications, and whether the contractor has in fact committed the violations as alleged, among other things. The court, in brief, will determine the facts and the laws as it may pertain to a given Davis-Bacon violation case. Contractors, subcontractors, or aggrieved construction workers all have this right of appeal. No fairer or more practical Davis-Bacon court review system has been, or in our opinion, can be devised. Present system confuses the experts

Compared with the simplicity of our proposal for review, is the hopeless confusion of existing Davis-Bacon procedures, which is well-documented in the attached article entitled, "Mr. Davis-Mr. Bacon-But Who Is the Enforcer?" by Mr. Stuart R. Wolk, procurement officer in the Air Force Systems Command and member of the New York bar. The article appeared in the June 1964 issue of the Commerce Clearing House Labor Law Journal.

Miscellaneous provisions in H.R. 7075

AGC's August 5 testimony covered our objections to most of the provisions in H.R. 7075 as follows:

(1) Commenting on H.R. 7075, we note that the bill is deficient in that it does not provide for court review of statutory authority which we believe to be essential to all legislation without exception.

(2) Davis-Bacon Appeals Board provided for in section 11 of H.R. 7075 is a step in the right direction in that it attempts to establish an independent board. Such a board, however, would not be qualified to pass on questions of law which is the province of the courts.

(3) H.R. 7075 would strip the Comptroller General of much of his authority under the present act. Such a drastic change should not be made without first providing some additional protection for the public, particularly the taxpayer, by way of court review.

(4) H.R. 7075 would expand the coverage of the Davis-Bacon Act to all Federal-aid projects, including the A-B-C highway system. There has been no showing of need for this additional expense to the taxpayer and burden on the Labor Department. Such an expansion of the Davis-Bacon Act to apply to contracts with the States would certainly increase the cost of our secondary roads and the A-B-C highway program.

(5) Section 9 of H.R. 7075 would authorize the suppression of vital information supplied by an informant. We suggest that this is an unwise policy since there should be no secrets when dealing with such an important subject as the correct prevailing wage in a given area.

In summary on H.R. 7075, may we respectfully submit that H.R. 7075 falls far short of meeting the needs for legislative reform of the Davis-Bacon Act as demonstrated by the voluminous testimony before this committee over a period of 2 years. In many respects, H.R. 7075 appears to create more problems than it solves in that it seeks to add more power and authority to those administering the Davis-Bacon Act. H.R. 7075 fails to come to grips with the real issue, and that is a need for a system of checks and balances in the administration of this controversial law.

But two provisions remain for additional comment, the off-site provision, and the detailed-definitions provision.

Off-site facilities

We are making a special comment on off-site facilities, because this issue not only illustrates improper Davis-Bacon enforcement and lack of observance of statutory authority, but because H.R. 7075 contains a provision to freeze the unrealistic rule into law.

In fact, section 3 in H.R. 7075 has already been cited by the Comptroller General as an indication that the Labor Department has exceeded its authority in this policy. See the Hyde case No. B-148076 and the Idaho-Maryland case No. B-154214, attached. AGC believes that any judicious observer must agree that this is true from an examination of the Davis-Bacon language and the clarity of the legislative history on it. This is well-documented on pages 1109-1120 of the subcommittee records for July 1962.

The language states that the act applies to laborers and mechanics employed directly upon the site of the work.

It does not say: Directly and indirectly upon the site.

It does not say: Directly upon and near the site of the work.

It does not say: Directly upon the site or sites of the work.

Yet the Labor Department's interpretation requires acceptance of these nonexistence phrases.

Attempts to legalize the Labor Department's position by legislation would run counter to the realities of the construction and construction materials industries affected. This should be apparent from the many unanswered and unanswerable questions posed by the present Labor Department off-site policy, as follows:

1. Contractors have no control over a supplier's decision whether to fill an order for material from a headquarters plant or a temporary plant nearer the project. What justice is there in holding the contractors responsible for such situations over which they have no control?

2. Since temporary plants may be set up off the site by the suppliers in different wage areas at their discretion, so that the locations cannot be known at the time the wage predeterminations are made, how can the wage predeterminations be made for them, assuming they would be otherwise authorized?

3. Since orders for materials do not contain the kind of contract provisions used in construction subcontracts, no Davis-Bacon provisions would normally be included. How can Davis-Bacon requirements then be imposed on the supplier, depending as they do upon their inclusion in the contract document to be binding? 4. If there is a prevailing practice to use temporary plants to facilitate deliveries by materialmen to construction work using industrial employees and industrial wages, how can the Davis-Bacon section apply building scales which are not prevailing under authority of a prevailing wage law?

5. Will halfway measures solve this problem, by exempting off-site material plants operated by commercial suppliers while continuing to apply Davis-Bacon requirements to those operated by covered contractors?

Such a halfway measure would permit lower wages by the supplier (as industrial wages are normally lower) than by the contractor on similar off-site material production facilities.

Then, how could the inequity in bidding for Government work, as between contractors who own or control the commercial supply sources in an area on the one hand, and those who do not on the other, be justified under the act that seeks to eliminate labor costs as a competitive factor?

There are no reasonable answers to these questions because it is unrealistic to impose construction wages and conditions on a supply industry or to nonconstruction operations entirely off the construction site.

AGC is accordingly not only opposed to the Labor Department's off-site policy, but opposed to section 3 in H.R. 7075 that would legalize such a policy. Detailed definition provisions

H.R. 7075 undertakes to legislate detailed provisions on what is prevailing, what is similar construction, what is the proper area, etc. AGC would caution against efforts to legislate too much detail into a statute, where it will remain, inflexible, and unadjustable, over a long period of time, whether it fits, or whether it works or not.

While AGC is not satisfied with many of the existing definitions under DavisBacon regulations, we do not at this time recommend legislating them into some other form. More practical solutions are available first, some of which are already in the making, and that is, to bring more realistic judgments and understanding of the construction industry to bear on these problems first.