Perhaps if that could be added, it would be very interesting to us. I have another question which relates to this bill.

On page 3 of the bill, I see we have written out the 30-percent formula.

Mr. Haggerty, do you consider this a wise thing to do in the bill, itself, and does it raise any particular problems?

Mr. HAGGERTY. Well, I think it probably develops some opposition from certain sources to a system which has been in effect for many, many years. I see that problem. If it is put in the statute, of course it just merely ratifies what has been the custom and system for as long as I can remember by the Labor Department in its investigations and determinations. Otherwise, I think it is a very beneficial part of the bill but I do have that concern. You are trading horses then with opposition to the general idea.

Mr. ROOSEVELT. Will the gentleman yield?

The testimony, however, in previous hearings was very strong, the attack on this 30 percent was very strong. There is a possibility, I don't say it will happen, but there is a possibility that same case may get appealed to this Appeals Board which they may well say there is in the law no statutory right of the Secretary to apply this arbitrarily as a 30-percent rule.

Now, lacking this provision, it is perfectly within the realm of possibility that they might remand it to the Secretary saying to apply some other kind of formula that they may dream up or almost anything could happen and thereby completely destroy the continuity of the application.

I think our effort here was simply to give recognition to an existing practice with a good deal of foundation behind it. The decision, of course, would have to be made by the Congress whether the facts justified its being continued.

I think undoubtedly somewhere along the line we will have to face the fact this will come up and we will have to meet it at that time.

Mr. HAGGERTY. I think you are correct, Mr. Chairman, that that is an added concern we have with respect to this provision of the bill. It may be tested by way of the Appeals Board. Whether or not they go on existence of a statute right of accretion, I don't know.

Mr. ROOSEVELT. But you will recognize that if we don't put this in statutory form and the Appeals Board should overturn it, we will have much more of an attack on the basis that some appeals board has already said that this is not necessary or this is not wise or some other thing. Then we will have much more of a hornet's nest on our hands if we put it into law and thereby remove it from the judgment of the Appeals Board.

Mr. HAGGERTY. I am in complete agreement with that portion of the Appeals Board, as I stated in my statement to the committee. I think Mr. Gill raised the possible problems involved in it, either statutory or administrative. Statutory makes it final and binding and there is no question about it, whereas the present circumstances you point out there have been attacks made on it already or will continue to be.

Mr. GILL. While we are talking about the Appeals Board, on page 9 of the bill you see the straight requirement, "The Board shall decide questions of law," period.

The query I would like to put to you is whether or not we are really setting up a special court here and providing a form of judicial review

even though I gather your position is that there should be no judicial

review.

Isn't it likely that this should become a form of special court, and whether it is good or not the the lawyers might take over?

Mr. HAGGERTY. May I ask a lawyer to answer that, Mr. Gill?
Mr. GILL. Surely.

Mr. SHERMAN. I think that in these things it is a question of labels and a question of reality. I suppose it could very well happen just as with the Tax Court which was a board for many years. Ultimately, the members thought it would be nice to be called judge rather than member but it is still the same thing.

The fact is that if there is to be a statutory appeals board, and we recognize that that will have to be faced as to its desirability when there has been adequate experience on the Appeals Board, if there is to be an Appeals Board, it can hardly be a true Appeals Board unless it has power to act not only with respect to questions of fact but also with respect to what is in the law.

This check and balance function which is so desirable in terms of the action of the initial officers making their decision, and most of this thing is what the effect is on the normal operation, in anticipation would be rather limited if you did not vest the function in the Appeals Board. It seems to me the respective question of law.

Now, Mr. Haggerty touched very lightly on one of the issues which he was talking about without going into detail about it. That is a question of law, a question of interpretation, where it may be necessary to raise the question from the hands of the Solicitor into the hands of the Appeals Board if they were to be barred from doing that.

Now, on the other hand, in reality, our objection to judicial review is not a matter of objection in principle. The objection is in terms of workability. In other words, if theoretically these matters could be disposed of very promptly by one court alone but it is not in the cards; the judicial system is not going to change because of the Davis-Bacon Act.

So, you set up a single appeal which is the Appeals Board, and it would seem to us that you have got to give them power to decide questions of law.

Mr. GILL. Certainly, but you have touched on the key to this thing. What you really got here is the type of jurisdiction you would normally find in the courts themselves. They decide questions of law and under the normal administrative appeal the findings of the Secretary with respect to questions of fact, if supported by substantial evidence, shall be conclusive, so their actual function here is almost identical, I think, to what you would find in the courts under a normal administrative appeal.

Mr. SHERMAN. Yes. Actually, it seem to me the effort of the Secretary and the effort of the draftsman of the bill is to give good faith. satisfaction. Those people are asking for the judicial way but do it in a workable way rather than an unworkable way.

Mr. GILL. This raises another point.

On page 10 of the bill, subsection (j), on line 12, refers to the "receipt of a certification from the head of a Federal agency that in his opinion review by the Board of a determination (or redetermination) of prevailing wages by the Secretary under a statute which the

38-263-64——7

agency head administers would cause delay in construction," and so forth, and therefore that the review should be stopped.

Now, this provision puzzles me slightly. Does that mean, then, that any agency that is handling Federal work can, in effect, stop review of a wage determination merely by this certification, and does that not somehow diffuse the authority under the act?

Mr. SHERMAN. I think it is a question of how you interpret the word, the Board shall decline the review. Perhaps that should be given consideration. Both President Haggerty and I have discussed about the discretionary matter of right. In other words, I cannot see any objection to the agency head making a certification of that sort but it seems to me the power should be in the Board as to whether it wishes to decline or not.

You see, the difficulty in this area is that you have such a volume of individual decisions that may be the subject of review that unless you take that into account and give your appellate body-assuming a matter of reasonable discretion and good faith, and I am sure there will be some power to sift out what is important from what is unimportant, they can get submerged in a mass of detail and also the process of contracting

Mr. GILL. I know that, but the point that bothers me is that the discretion is not with the Board to refuse but with the agency head to certify and remove the case from the Board's decision.

Mr. SHERMAN. I wonder whether the draftsman really meant that, whether he did not really mean the Board is authorized to decline. Mr. ROOSEVELT. Will the gentleman yield?

I think the primary problem here was one of national defense. Let's say in a missile area a matter of this kind came up and it was certified by the Department of Defense that any delay in the proceeding or construction would result in stopping it and it was of such urgent nature that it would affect national defense.

I think the thought was that it should be the ability to take care of such an emergency. However, I would agree that I think an amendment would well apply here which would say that the Department should have a right to present this to the Board as such an urgent matter that the Board should make the final decision, and I think that was what was meant.

Mr. SHERMAN. I rather read it that way, even though dramatically. Mr. ROOSEVELT. Matter of interpretation.

Mr. GILL. One further comment here.

I notice it says "the certification would seriously impair the national defense or welfare."

Perhaps this is broader than just defense.

Mr. SHERMAN. Well, in the terms of what we were talking about, which implies really a broad power on the part of the Board to decide what kind of appeals it would take into account, as long as they are the ones that are making the determination, you can be fairly loose

about it.

Mr. GILL. Yes.

One final question, Mr. Haggerty, in relation to your comment on page 6 of your statement that

The liquidated damage penalty may serve as the deterrent to those who are willing to take such risk.

It does not mean risks of violation of the act. I wonder whether it really is a deterrent or whether it would be just added into the bid

cost.

Mr. HAGGERTY. Well, that is a possibility, but I doubt it very much. What we are talking about here is the suggestion made in the presentation that too often a contractor will violate the Davis-Bacon Act by paying less than the rate of pay on the hope that he won't get caught, and if he is caught later on then he is just penalized the differences of the rate he should have paid against what he did pay and that is the end of that.

Now, if he should fold up and decide to do nothing about it, there is no other recourse; that is the end of it. This was suggested as another added safeguard, I think, in the whole picture.

Mr. GILL. How would you collect liquidated damages if a man folded up? Would there have to be a bond posted?

Mr. HAGGERTY. There generally is a bond posted.

Mr. SHERMAN. Well, I think that

Mr. ROOSEVELT. When you say generally, if there is not now, you

mean on

Mr. SHERMAN. Each contractor files a bond, as President Haggerty says, under which the employees can sue as can material men and other contractors under the Miller-Herd Act.

Mr. ROOSEVELT. How would you judge how much the bond would have to be to provide for liquidated damages?

Mr. SHERMAN. I think there is a bond of pretty substantial amount that may not-I don't think they would have to vary it much as far as liquidated damages are concerned. I think we have a pretty clear answer to Congressman Gill.

Take an area where it is highly organized and the union rate would actually and, in fact, and all that sort of thing, be the prevailing rate. A union contractor that bids on that basis, he has not got any place to move around in; he cannot fool around. He does not have to take the $10 liquidated damage into account in making his bid.

Now, the other contractor who may not be bound by an agreement or enforcement mechanism that he has to take into account now can take and can continue to take a business risk of saying, "Well, I will classify some fellows as laborers who are really iron workers and things of that sort, and if they catch up with me, I will give them the money."

There is an awful lot of construction and a lot of people working. I am sure the investigating agents don't catch up with everybody. A good many slip through. But if they knew in the Work Hours Act this is not an unusual proposal, that there would be a $10 penalty per day for each day of violation, then you might be able to reduce your investigation forces because they figure it would not be worth it.

Entirely apart from the question whether the money and the contract and the bond is there, the man is in business; if he has any assets, they would be the subject of the suit and, of course, that money would go to the Government, not to the individual.

Mr. GILL. In other words, this liquidated damage, the penalty is to the contracting agency but not to the employees of the employer. Mr. SHERMAN. Yes.

Mr. GILL. How does that $10 per day work, $10 per day per man?

Mr. SHERMAN. Yes; that is the way it is in the Work Hours Act which came through this committee. The same way with the Child Labor. You have a $10 penalty in Walsh-Healy.

Mr. HAGGERTY. That is the same in every State, Mr. Gill, $10 per person per day penalty for violation.

Mr. SHERMAN. I think the whole idea is, without frightening anybody, to create a deterrent so you don't have to expend vast amounts of money on investigators and keep somebody checking all the time. Mr. ROOSEVELT. Is this a willful violation?

Mr. SHERMAN. I think it is.

You have disbarment now and that comes in only when you have a very aggravated violation. There is a terrific area where a man of that type of skill can look not too willful and still try to save himself a little profit money on the contract. We have not gotten very specific about it. We say the committee should look into it. Perhaps there are other devices to accomplish the same purpose. We think if you do look into it, you are going to find-I am talking about the facts now, not the way it is written down on regulations or piece of paper-there is quite an area of evasion here that really has not been caught up with.

Mr. GILL. I was merely concerned, Mr. Chairman, that we move into an area of this sort, that the liability is as defined, so that we don't get into this never-never land on bonding such as we have in another section of the law.

I think that is all I have at the moment.

Thank you very much.

Mr. ROOSEVELT. May the Chair say that, first, I want to thank you, Mr. Haggerty and Mr. Sherman. You are always a great help to the committee and a help to your president.

Could I ask you to do one other thing?

The poverty bill is not the subject of this hearing, but in the poverty bill we wrote certain sections into the act, as you know, dealing with the building trades. My recollection is we didn't write any Davis-Bacon provision into the act at all.

Mr. HAGGERTY. I think you did, Mr. Chairman.

Mr. ROOSEVELT. Make sure that we did the proper job.

Mr. SHERMAN. Mr. Mason, who is, unfortunately, out ill, has been checking with me on that, and I understand the committee has been doing quite a job protecting that situation.

Mr. ROOSEVELT. We did the best we could. I hope it is all right but I would like to have you have a good look at it.

Mr. HAGGERTY. We can check it.

Mr. ROOSEVELT. Again let me thank you very, very much for your help to the committee.

Until the committee has further requests for hearings on the subject, there are no more hearings planned for the present and the committee will adjourn, subject to the call of the Chair.

Mr. HAGGERTY. Thank you, Mr. Chairman, and members of the committee, for your courtesy.

(Mr. Haggerty submitted the following analysis.)