the Government in dollars is fairly high if an annual change in contractor results in the need to obtain security clearance for 10 or 20 or 30 people every year. Gentlemen, I want to repeat that we are not attacking the principle of contracting out as such. Given a responsible contractor with a stable and efficient work force the contracting-out process can result in as good a job as direct employment can, and in some situations, this can even be done at a saving because of greater managerial skills possessed by the contractors and the more efficient use of personnel, equipment, and knowledge. We are arguing here only against the system which favors the use of the fly-by-night contractor who will contract with the Government at any price just to get the job and then cut on work standards and cheat his employees and the Government in order to make a profit. We believe that the bills presently under consideration, H.R. 1678 and H.R. 6088 will do a great deal to alleviate this situation. We believe that one or the other of these bills should be passed for the following reasons: 1. The present system contains no wage standards and provides no protection for these employees. It encourages wage cutting and exploitation and makes the Government a partner in those processes. We have tried to show some examples of the evils brought about by the absence of these standards. We have tried to show that the industries affected are major ones and can have a vital effect on our economy. The destruction of wage standards in those industries must be prevented. We do not attack the principle of contracting out, but rather recognize that the Government will always contract out a certain portion of this type work. It can benefit from proper contracting out if wage and work standards are maintained and work performance standards are thus raised. 2. The cost to the Government will not be great. We are of course fully cognizant of the need for economy in Government and aware of President Johnson's determination to effect economies wherever possible. In connection with the present legislation, we recognize that this will result in some increased costs to the Government. We would, however, call attention to the fact that it does not apply to all Government workers, it does not even apply to all cleaning and maintenance workers but only to a small fraction of them. We feel that the increase in cost will, in part at least, be matched by some economies resulting in the use of more efficient personnel, less turnover in personnel, savings in security clearance costs, and savings in Government supervisory and inspection costs. 3. Workers are entitled to equal treatment. All employees working either directly or indirectly for the Federal Government and who are in the same occupation basically should be given equal treatment. We believe that in any one wage area we should not have a situation where two employees doing exactly the same work (and possibly working side by side) but one working directly for the Government and the other employed by a contractor should have such radically different wage rates as are indicated by the union and nonunion rates in some of the instances quoted. 4. As a part of the present attack on poverty and unemployment the Government should make certain that this large segment of low paid workers are paid a fair and decent rate so that they can live adequately, and through education increase their skills. We are all familiar with President Johnson's eloquent call for an attack on poverty in the current year and we feel that the Federal Government can contribute to that attack on poverty by passing one of these bills. Conversely, if it does nothing and permits the present system of contracting out to continue as it has been, it will be making a contribution to poverty because some of the rates paid by these contractors are simply inadequate to any concept of a decent standard of living. The Government long ago saw fit through the passage of the DavisBacon and Walsh-Healey Acts to provide standards for mechanics and skilled craftsmen and for production workers generally. It is high time we gave some measure of protection to the semiskilled and unskilled employees working under these service contracts. They need the protection most. I would like, in closing, to point out to this committee that our union will probably not gain any members through the passage of either of these two bills. We are not concerned here with acquiring members. We are concerned with affording a measure of protection for lowpaid service workers, a great many of whom are members of the minority groups whose status subjects them to merciless exploitation from many sides. The legislation would at least insure that they would not be exploited by the Government's own contractors while performing work on Government property or providing services to Federal agencies. Finally, I want to thank you for this opportunity to state our views and to urge your consideration and recommendation of this legislation. Thank you. Mr. O'HARA. Thank you, Mr. Sullivan. Mr. Sickles, do you have any questions? Mr. SICKLES. Just a few, Mr. Chairman. I first want to compliment Mr. Sullivan on a very complete presentation here this morning. I notice that in your examples-you gave us quite a few of themstarting with page 11, that as you were reading, paragraph by paragraph, in one instance you would say the prevailing rate; in another instance you would say the prevailing union rate. My understanding is that under the Davis-Bacon Act, the union rate is not necessarily the prevailing rate in each instance. Did you mean to make the distinction or, in each case, were you talking about the union rate? Mr. SULLIVAN. I was talking about the union rate. Mr. SICKLES. In connection with that, what would be the situation in the large, urban areas? What percentage of the employees could be covered by a collective bargaining agreement of your local union? Would it be sufficient so that they would have much impact upon the prevailing rate for that area? Mr. SULLIVAN. Yes; in New York, for instance, we have 95 percent. Mr. SICKLES. How about metropolitan areas? Mr. SULLIVAN. It all depends on the areas. In the large concentrated industrial areas, it would be a higher rate than it would be elsewhere. Mr. SICKLES. As a matter of fact, the union rate would pretty much establish the prevailing rate in those cases? Mr. SULLIVAN. Yes, it would. Mr. SICKLES. What problems have you had with the so-called flyby-night contractor with respect to other installations, other than Government-connected installations? Has that been a problem only with respect to the kind of situation that we are trying to cover by this legislation, or is that a problem in other ends of the industry, too? Mr. SULLIVAN. Well, in other connections, we are in a position to take care of it, because we can strike them, and by force of economic strength, we are able to combat it because, as you know, we are faced with a double kind of a problem here because these contractors who work for Government, first of all, they are not Government employees, and we have a right to strike if we want to, but once the Government takes over the work, then we certainly have to obey the law, and we can expect the Government to operate differently. Mr. SICKLES. Can't you strike or picket? It seems to me there were some pickets around the Federal buildings. Mr. SULLIVAN. That is right. Mr. SICKLES. Isn't that permissible? Mr. SULLIVAN. Because of the fact that you must understand, Mr. Congressman, that the contractor is the employer, and not the Government. So under the law Mr. SICKLES. Yes. Mr. SULLIVAN. But if this work was done directly by the Government itself, then we have to obey the law, because you can't strike against the Government. Now, in the case of private operation, we don't have that problem too much, because we don't get faced with this fly-by-night contractor who comes in from a different State, because basically in the States, you will find out that the standards are set up, and those who are operating within that standard-say, New York, or the State of Washington, or the others-it is only where you get involved with these fly-by-night contractors who come from one State to another, and this happens to be nationwide. Mr. SICKLES. And they focus their attention only Mr. SULLIVAN. You see, the local contractor would get the work normally, and he knows what the conditions are, and what the wage structures are, and what not, but an outside contractor coming in, as you can see, from different States, Florida, Missouri, and whatnot, Kansas City, or vice versa, they will take these jobs based on the fact that they can get them from the Government, because they can bid under the lower bidder. There is no getting away from it. Mr. SICKLES. Wouldn't you have the opportunity to bid on any private installations also? Mr. SULLIVAN. Well, the private installations also, we have established collective bargaining contracts which protect the worker in that instance. Mr. SICKLES. If you were to strike around a Government installation, would the Federal employees be inclined to recognize a picket, or too Mr. SULLIVAN. Well, no, because we, have never yet struck, and I might say in that instance that personally speaking for myself, I have bent backward to avoid even picketing those buildings which we have a right to, because it is a contractor who is the employer. I think in this day and age, I don't think it is the proper thing for us, especially in view of important events, that we should be picketing our Government buildings. It doesn't show-it gives a wrong impression to those who might want to use that for some other purpose. But the Federal employees are prohibited and would not, and I am sure would not in any way affect the operation. And of course you understand, too, Congressman, and I am sure you are aware of it, that the AFL-CIO has signed a pledge which eliminates us in any way from trying to interfere with the operation of Government in any installations and retarding them through strike. Mr. SICKLES. What would cause either the Government or any other person who runs a building to contract out this particular service? Is it more economical for them to do that, under normal circumstances? Mr. SULLIVAN. Well, first I think you should make a distinction here, that the particular thing about it is that you will find very little is in private industry. You will find very little of this done in private industry, where they will contract out to a contractor on the same basis you do it here under your Government setup, because under the Government setup, we have got from every agency of the Government, including the Army, the Navy, and everybody, plenty of sympathy. Everybody recognizes that this is wrong. This system is wrong, because under the law the Administrator, the General Services-they are compelled by law to give this to the lowest bidder. Now, obviously, this becomes a real cutthroat competition, because the lowest bidder goes in, and what are we talking about here, Congressman? We are talking about $1 and $1.25 an hour. No, we are not talking about $3 an hour, or $4 an hour. We are talking for people who are making $1 and $1.25 an hour, and these contractors-in example after example we have shown that these contractors are not responsible, because responsible industry doesn't go in for this kind of chiseling, and we have talked to them and they can't afford to bid on this kind of setup. Mr. SICKLES. I don't think you have really understood my question. Let me rephrase it. Why would the Government want to contract this service out in the first place? Without thinking about this particular problem, is it because they want to end up with a cheaper cost to the Government? Is this why they contract out for the service? Mr. SULLIVAN. Well, I think that you can answer that question in two ways. I guess it is obvious that somebody must have got the idea by doing this that there would be economy in it. There is no getting away from that. But ordinarily, it is also done because, in some respects, the Government doesn't want to have this responsibility of supervising and other situations in regard to it, and they feel, maybe, that a more competent job can be done in the cleaning and the operation of buildings, but to their sorrow, they are finding out that that is not so. Mr. THOMPSON. If I may interject at this point, part of the district which I represent includes the State capital of New Jersey. We are embarked now on a very ambitious new building program for the State. For years we have had lease-purchase agreements, and they are experimenting, the State government, in this area, and are finding that they get more satisfactory work, for some reason or another, at about the same or slightly less cost with outside contractors. This is a tremendously competitive business-shockingly so, as a matter of fact. And I think that our State government's experience is that they are willing for the contractor to pay his employees a decent wage, but at the same time, they rather like the intense competition for the contract, so that the workman gets a decent wage in that circumstance, and the State, I think, is clearly saving money. They don't have as many disciplinary problems. State and Federal employees present, in some instances, disciplinary problems, resulting from the governmental structure to administer them, the civil service commissions, and so on. They don't have that problem, with these private employees. I didn't hear your entire statement, but during this colloquy with Mr. Sickles, I have been looking it over, and I commend you for it. I think it is an excellent one, and I think that this is well justified legislation. I hope that the committee will agree with Mr. O'Hara that it is equitable and it is reasonable and that it should be enacted. Mr. SICKLES. Thank you, Mr. Sullivan. I have no further questions, Mr. Chairman. Mr. O'HARA. Mr. Sullivan, I want you to know that I appreciate the number of very fine examples that you include in your statement. I think this is the best testimony we have had to indicate the need for protection for the workers who work for contractors on the Government service contracts. You have documented the case very well indeed, and I, of course, as well, couldn't agree more with your conclusions. We spoke briefly before the hearing began, and at that time we happened to mention in passing the testimony given this subcommittee on Monday by Mr. McGahey from the United Plant Guard Workers of America. As I recall, Mr. McGahey used two examples to demonstrate the effects that the failure of the Government to provide this kind of protection had upon his industry, and one of them had to do with a contract for security protection at Wallops Island, Va., a NASA contract, which Mr. McGahey indicated is now held by a company in Philadelphia, that to the best of anyone's knowledge has never engaged in any security work before. The second example Mr. McGahey used was one involving security guards at Nike missile sites in the Detroit area where, as he described it, a company known as the Halsil Products Co. of Massachusetts, obtained a contract and he didn't know if they were in the guard business, either, and they then came in to guard these Nike sites in a manner which, as he described it, was very unsatisfactory. Have you had any experience, in your industry, with bidders coming in who, as Halsil and as this other contractor referred to by Mr. McGahey, were in the position of having had no prior experience, not being really a cleaning and maintenance contractor, but somehow or other having no facilities, no equipment, but coming in and getting these contracts in the hope of making some money by cutting some wages? |