ness. I felt that it was important to do that, and I felt that this was the way to do it. I saw the records here which indicated that they had been talking for a long time and had not been making any real progress. I was convinced that with the personal interest of the chief executives of these companies we would be able to make some progress, and that is what I propose to do. That is why I took these steps. I did not think it made any sense to continue the discussions that had so far not been very fruitful.

Senator KENNEDY. You may proceed.

Mr. PACKARD. Secretary of Labor Shultz was advised of what I planned to do and he raised no objection. Senator DIRKSEN. That is not what your text says. Will you reread those two lines? It starts with the word "Secretary." Mr. PACKARD. Yes, Senator Dirksen. I reviewed the text and reviewed the timing, and realizing that Secretary Shultz was going to be here today, I thought I should not have in the record my opinion of what his views are. He will be able to put those views in the record directly.

Senator DIRKSEN. You said he had no objection. Your text states he agreed.

Mr. PACKARD. I talked with him before we made the agreement, and at that time this was a correct statement of what he said. I believe that he has agreed with me since then, but I think it is appropriate

Senator KENNEDY. Did he agree with you before?

Mr. PACKARD. I think he agreed with me then, but I think it is appropriate for the committee to get directly from Secretary Shultz his views on the matter.

Senator KENNEDY. Did he know about the agreements before?
Mr. PACKARD. Yes.

Senator KENNEDY. Did he know any specifics about the affirmative action plan?

Mr. PACKARD. I told him that what I planned to do was to call these company presidents in and get their personal commitment, and he raised no objection.

Senator KENNEDY. But he did not know the plan prior to the conversations that you had with the textile executives. That was vaguely worked out in the conversations; is that right?

Mr. PACKARD. Mr. Chairman, I think it would be better if you would get this from Secretary Shultz.

Senator KENNEDY. But what did you tell him?

Mr. PACKARD. I told him that I was going to call the chief executives of these companies, get their personal commitments to stand behind this program because I was sure from my experience

Senator KENNEDY. What are the specifics?

Mr. PACKARD. That I was going to ask them to provide quarterly reports, so I would have a concrete way of determining whether they had or had not made progress.

I called the presidents of all three companies. They said they were interested in working to provide more jobs-and better opportunities for the disadvantaged people in their communities. I explained to them. clearly what was involved-that we both had a job to do.

They assured me that they would take affirmative action to im

prove equal-opportunity employment, and agreed to submit quarterly reports to me to show the progress they were making.

Senator KENNEDY. Mr. Packard, just on this point: They assured you that they would take affirmative action, so can you tell us what affirmative action they agreed to take. We would all like to know what to expect when the questionnaires come back, so we can judge whether they are complying or not complying with what was an oral agree

ment.

Mr. PACKARD. Mr. Chairman, we have Secretary Kelley and Secretary Hodgson working with these people, and they are working out the specifics of what they are going to do.

Senator KENNEDY. But certainly you must have had some specifics at the time—or was it just a gentleman's understanding that everyone was going to sort of shake hands and do the best they could. Or did you outline even orally the same kinds of goals, the same kinds of objectives which appear in any of the written compliance plans, which had been agreed to under the existing regulations?

Mr. PACKARD. Senator Kennedy, we talked about these things in some detail, and I said that the important thing was for them to show progress to provide more jobs to minority people, to provide opportunities for them to move ahead and to undertake plans for training and education. I told them that they had to do these things. I told them a good many of the things that I had done, and they agreed that they would go back and try to get some of these things underway with their personal support.

Senator KENNEDY. Would you say that the oral assurances of those textile companies were as strong as the agreement which you signed as the president of a great company? You said that they had to do many of the things you had done.

Mr. PACKARD. Mr. Chairman, I have confidence that these people realize that there is a job to be done. I cannot assure you whether they can do better or worse than I, but I am quite sure that they will do better by having discussed this with me and by having given their personal commitment than they would have done otherwise.

Senator KENNEDY. Than they would have otherwise done? If they had done otherwise, and you had followed the recommendations of all of the persons who had carefully looked into the matter, they would not have had the contracts. Aud furthermore, procedures could have been initiated for formal sanctions against the companies. In any event, as one witness suggested yesterday, at least one of the mills probably would have signed written assurances before the end of February.

Now that you have accepted oral assurances, how are we going to know whether the plans or reporting procedures finally accepted are consistent with this assurances? Might we not have been further ahead without your oral abstract agreements?

Mr. PACKARD. Senator Kennedy, I do not think I agree that we would have been further ahead if I had not ordered these contracts to go forward. There might not have been jobs at all, and I am not sure that we would have been anywhere near as far along as we are now with the course that I have taken.

Senator KENNEDY. Mr. Packard, isn't it true that there were other textile companies that were ready to comply, who could have done

these jobs? You are not trying to suggest to us that these are the only textile companies in the country that could produce the needed items. Aren't there other companies that could have produced them and would have at the same time complied with the Executive order?

Mr. PACKARD. Senator Kennedy, there were some other companies which could have provided certain products. For some others, we might have had to go offshore for sources of supply. After looking at the problems involved in obtaining the material, I felt it was desirable to get these people to move ahead and provide the jobs and the opportunities. That was my objective.

Senator DIRKSEN. Mr. Moskowitz testified yesterday that if you had looked around for other suppliers, it would have cost more.

Mr. PACKARD. That is true, Senator Dirksen.

Senator KENNEDY. Mr. Packard, you are not trying to suggest that we are going to just abolish the whole equal employment opportunity program because on occasion it might cost a little more, that anybody who comes in with the low bid, no matter what their attitude toward equal employment, is going to get that contract because they're offering the goods at a cheaper price?

Mr. PACKARD. Senator Kennedy, of course I would not do that. What I am trying to achieve here is to have the Defense Department obtain the material that it needs at the lowest price consistent with quality. At the same time that we undertake effective action to be sure that these people provide jobs and opportunities on an equal employment basis, the kind of effort that we should properly expect from them.

Senator KENNEDY. Of course, you could have waited a couple more weeks, as I understand it, without any kind of threat to meeting your responsibilities in the procurement program. Mr. Shillito in a memorandum to you, which I'll insert below in the record, said that "I feel that a week or two delay beyond this date would be acceptable, if it is needed to solve the important issues involved." So there was no real sense of urgency involved. And there were also alternate suppliers that were prepared to meet the terms of the contract and fulfill the requirements of compliance.

ASSISTANT SECRETARY OF DEFENSE,
Washington, D.C., February 3, 1969.

Memorandum for the Deputy Secretary of Defense.

Subject: EEO compliance of Dan River Mills, Inc., and J. P. Stevens Co.

I am responding to the request of the ASD (Manpower) dated January 31, 1969 that I provide you with my views regarding the EEO compliance problem with Dan River Mills and J. P. Stevens Company.

These facts are pertinent:

We urgently need these contractors. They are essential as to our worsted fabric requirements and desirable sources for all textile items. This is especially true with respect to J. P. Stevens. These mills perform the entire manufacturing process. Our experience with suppliers in which a portion of the manufacturing process has been subcontracted has been bad.

The non-award of the current poplin contracts to the low bidders will cost about $760,000. Non-availability of all three principal suppliers as fabric sources of supply would cost us something like $25-$50 million a year.

The Defense Supply Agency states that the contractors involved have made progress in meeting Government demands for "affirmative action". What constitutes adequate progress is contentious.

These contractors cooperated with us in an outstanding way during the early Vietnam build-up.

These contractors are important to the DoD and their non-availability would have a serious impact on our ability to provide uniforms for military personnel. In addition, the non-availability of good quality uniforms could bring on serious morale problems.

These considerations point to the need for a solution to the issues short of a major confrontation and formal sanctions if at all possible. I believe the situation to be serious enough to warrant your personal attention. Lower level activity might be non-productive. Accordingly, I recommend that the issues be clearly delineated and that you then call the presidents of these firms to impress on them the need for a solution. This might well involve further substantial concessions on their part. Thereafter, a further meeting with each company may be necessary so that the remaining issues can be resolved. If these meetings give us optimism that a solution can be found, we can then award the several pending contracts to the low bidders even though no final agreement is reached. If such is not the case, I suggest we escalate the case to the status of formal hearings In such event, the pending contracts could be handled as recommended by General Hedlund in his memorandum of 3 February 1969. A copy of this memo is attached for ready reference.

It is quite important that the meetings I have suggested take place promptly. General Hedlund has asked for an answer by February 10, 1969. However, I feel that a week or two delay beyond this date would be acceptable if it is needed to solve the important issues involved.

At some point, I believe it would be helpful if you discussed this matter with the Secretary of Labor. We will need his understanding and agreement in order to reach a compromise settlement.

In Secretary Fitt's absence, I have coordinated this memorandum with Deputy Assistant Secretary Moskowitz. He agrees with the approach recommended here. (Signed) BARRY J. SHILLITO,

Procurement Chief.

Mr. PACKARD. Senator Kennedy, I considered the other actions which were available to me. I decided that it would be very important regardless of what other actions might be available to obtain a personal commitment from these chief executive officers. After considering all of the aspects of the case I concluded that we would make better progress in terms of the job we are trying to do getting better opportunities for our minority friends-by proceeding on this course and not risking further delays.

Senator DIRKSEN. Mr. Packard, you stated earlier that they had been messing around with these bids for a period of 2 years, and in your statement you say it had been deadlocked since last August. Now I swear I do not understand how anybody can improve upon your technique of calling in the presidents of these companies and just saying "Look here, Charlie, now get off your duff and get busy. You know what it is about." Isn't that the size of it?

Mr. PACKARD. That is essentially the approach that I took, and I am convinced that we are going to make better progress by having these people personally interested in the effort and working with us to achieve what we all need to achieve.

Senator KENNEDY. And I suppose it is an appropriate question to ask what we have achieved with those other two companies, with 50 days gone by, without any affirmative action program on record, with hundreds of thousands in profits going to those companies from the contracts that have been let, and with a clear violation, a clear violation of the terms of the Executive order.

Mr. PACKARD. Senator Kennedy, I will tell you what we have achieved. We have had these chief executive officers personally working with us on this problem, with Secretary Kelley and Secretary

Hodgson. This is something that I am sure would not have been possible had we taken another course. We have these people working with us now, and not against us. I think that is a very important result of the course that I took.

Senator KENNEDY. There is no reason why this contract could not have been handled by another contractor. As a matter of fact, General Hedlund even suggested to you on the 3d of February, in the memorandum which I will insert in the record, how that could be done and exactly where those contracts could be let, how they would be let, and to whom they would be let. He indicated, as a matter of fact, that they not be let to these particular companies. So it seems to me that you took recommendations of persons with considerable experience in this and you gave the contracts to noncomplying companies in spite of their record, with the hope—and that is all it appears to be, Mr. Packard-that sometime in the future they might respond to a questionnaire which might show progress.

I would think that this is not reassuring to all those thousands of people across the country who are interested in knowing whether this administration is really interested in the concept of equal employment opportunity.

DEFENSE SUPPLY AGENCY, HEADQUARTERS, CAMERON STATION, Alexandria, Va., February 3, 1969.

Memorandum for the Secretary of Defense.

Subject: Impact of Equal Opportunity Program on Textile Procurement. 1. The Defense Supply Agency (DSA) is confronted with a substantial problem in procuring textiles because three of the nation's largest suppliers have been found to be in noncompliance with the Equal Employment Opportunity (EEO) requirements set forth in ASPR Section XII, Part 8. These firms are J. P. Stevens, Dan River Mills, and Burlington Industries (including the Erwin Mills Division). The alternative courses of action that present themselves are largely unacceptable for reasons of cost, potential supply failure, and inconsistency in carrying out the EEO program; however, because of the necessity for resolving this matter immediately with a minimum of disruption to our textile procurement program, the facts as they exist and the alternative courses of action are discussed in the ensuing pargaraphs.

2. Cotton rip-stop poplin. On a current solicitatiton for 16,629,000 yards of ripstop poplin Burlington Industries, Dan River Mills, and J. P. Stevens are low bidders on approximately 11.2 million yards of this material. If these companies are rejected for noncompliance with the EEO provisions, this Agency will still be able to obtain coverage for the required amount. The premium cost of this pass over will amount to approximately $761,662. An alternative is to buy a lesser amount, i.e., approximately a 60-day supply or 61⁄2 million yards from other than Burlington Industries, Dan River Mills, and J. P. Stevens. The result, then, of passing over the aforementioned companies will reduce the premium to approximately $195,000. This latter alternative may be resorted to with the hope that the four companies will be in compliance at the time of the next purchase of the item; however, we must make another buy within 30 days and will have a supply failure for approximately 30 days in the tropical combat uniform for which this textile is government furnished property. The alternative is, therefore, recommended, i.e., buy approximately 61⁄2 million yards from other than Burlington Industries, Dan River Mills, and J. P. Stevens.

3. Worsted fabrics. Since World War II the worsted industry in the United States has, through liquidations, mergers, and overall attrition, been reduced to three major concerns, namely, J. P. Stevens, Burlington Industries, and Deering-Milliken, Inc. The latter firm has not bid on our solicitations for the past two years for reasons not divulged. These mills are the only producers remaining in the United States that manufacture worsteds from the scouring of the wool to the finishing of the fabrics. Other existing worsted mills must rely on other firms for some portion of the manufacturing process. These smaller