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service basis for the remaining term of the defaulted contract. Not all of the striking employees were fortunate enough to be hired for this interim period, in spite of Air Force declarations of intent to rehire the strikers. Those who were, however, suddenly joined what was then known as the "affluent society” at wage rates 50 cents to 75 cents an hour higher than they had received from the defaulted contractor. Most of the replacement employees, however, came from the Texas Employment Service and many of our striking members had to wait for periods up to a full year to return to their jobs.

In 1966, this work was again let out on contract. By this time, however, the conditions under which these contracts could be let were entirely changed. The Congress of the United States, concerned over the sordid bidding systems developed by service contractors had enacted the O'Hara-McNamara Service Contract Act of 1965. The intent of this statute was laudible to say the least and was an attempt to provide meaningful labor standards to a class of workers who had suffered unbelievable abuse and exploitation because of the lack of such protection and the lack of a voice. The Secretary of Labor, under the terms of the act, was required to predetermine prevailing minimum wages to be paid these employees during the 1966 contract period. The wages found to be prevailing by the Secretary of Labor were by and large the same as those paid the federal employees at Laredo Air Force Base. In 1967 further benefits were granted contractor employees. The wage determination, including six paid holidays and a week of vacation for employees with one year of service, with a contractor or successor. Benefits such as these had not been enjoyed by service employees at Laredo Air Force Base since the work had been removed from Civil Service employment.

Collective bargaining during this two-year period played an important role in bringing about a few more improvements. A hospitalization plan and a 20¢ wage increase became effective in April of 1968. This was the first wage increase, I would like to point out, since 1965. I do not mean to imply that all our problems were resolved. In 1966, the single multidepartment contract had been broken up into five different contracts creating an unwieldy collective bargaining situation. However, Congress and collective bargaining working together had created a situation in which service contract employees at Laredo Air Force Base were enjoying greater wages and benefits than had been available to them for half a decade. When the time came to issue a predetermination to cover this work in 1968, the Labor Department included in that predetermination the increase which I have previously indicated became effective on April 1, 1968. From this point on, things go downhill.

In 1968, the R. B. Wright Co., one of the five successful bidders on the recently divided service contracts began the cycle of undercutting his employees again. The Company committed a number of violations of Federal Wage and hour regulations, amounting to a total of about $30,000. After numerous protests to the contracting agency, the Department of Labor and other federal agencies and a . strike, the case was brought to hearing.

The hearing officer concluded that the contractor was guilty as charged on each of the alleged violations of the Act. Nevertheless the hearing officer recommended that he be relieved from the ineligibility provisions of the Act because he had agreed that moneys withheld by the Air Force would be released and used to settle the hearing officer's backpay awards to his employees. The hearing officer was overruled, and R. B. Wright Co. was declared ineligible to receive government service contracts for a period of three years. He was also terminated at Laredo Air Force Base. I may add at this time the employer was cheating his employees. He made a down payment on a $30,000 ranch presumably with the employees money. This employer also owed a large amount of taxes to the government, $90,000, according to the sources from which I get the information. I should point out that no part of the moneys mentioned above were used by the Air Force to settle the claims against R. B. Wright Co. Instead, the Air Force disbursed these funds to the Labor Department who in turn paid the salaries of strike breakers hired by the Company and to pay the premiums on a phony health and welfare plan which Wright had established in lieu of contributing to the collectivelybargained program. I may add that the strike breakers, even though they were paid the money, it was not until after a year of waiting. The Air Force then took over the last two months of the Wright contract term and again put the employees on a temporary over-hire, a status for which they would receive Civil Service rates for their work. Again not all of the striking employees were put back to work until the new contract began.

Predetermination for the 1969 contract period did not provide for any increase in wages over the 1968 level. The union and the contractors who were successful bidders for 1969, negotiated collective bargaining agreements for a term of 18 months from April 1, 1969 to September 30, 1970. These agreements continued the 1968 rate through the 1969 contract year and called for a 30 cents per hour increase to become effective April 1, 1970. Aside from receiving no wage increase in 1969, no new problems were encountered in Laredo by service contract workers.

In September of 1969 the Secretary of Labor determined that deferred wage increases could not be included in wage predeterminations. Therefore the predetermination for the 1970 contract year did not include the 30-cent increase effective April 1, 1970. Thus in effect continuing to freeze wages which had been in effect for a period of 2 years at Laredo Air Force Base. The union, however, notified all prospective bidders for the 1970 contract of a continuing collective baragining agreement calling for a deferred wage increase in April and also other benefit improvements.

One contractor, Palomar Corp., a signatory to the union agreements succeeded itself on two contracts held in 1969. During the 1970 contract period, Palomar recognized the collective bargaining agreement and put into effect the 30¢ wage increase due in April. In September 1970, however, when the union's collective bargaining agreement expired, Palomar announced a unilateral 30¢ per hour reduction to conform to

the Labor Department's predetermination for 1970. Thus, the employees of Palomar Corp. were unwillingly moved to the front line in the war on inflation.

Emerald Maintenance, Inc., another successful bidder for 1970, simply refused to recognize the union, to bargain with it or to honor the existing union agreement on the two contracts they had been awarded. Unfair Labor Practice Charges were filed with the NLRB and the trial examiner ruled that Emerald had violated the National Labor Relations Act and that it, as a successor contractor, was bound by the collective bargaining agreement. As a result of these two unfair labor practices, the employees of Palomar Corporation and Emerald Maintenance struck simultaneously in protest of the employers' refusal to bargain. The Refueling Department employees, even though their wages were cut, did not strike in consideration of the important mission of the base. Due to the unemployment rate in Laredo which averages over 10 percent annually, these two employers managed to recruit strikebreakers to replace most of the strikers. Emerald, in fact, went as far as 50 miles southeast of Laredo to recruit workers and some 30 or 40 of these out of town strikebreakers were hauled in daily, like cattle, in a covered truck.

After eight or nine days, an unconditional offer to return to work was made to both companies. Palomar reinstated all strikers within a week, but refused to rescind the unilateral wage cut. Emerald Maintenance, however, chose to punish the strikers and to date it has not reinstated all of the unfair labor practice strikers. The Union filed charges against Emerald and Palomar with the National Labor Relations Board. As indicated, the Trial Examiner found that Emerald was a successor contractor who was bound to terms of the union agreement with its predecessor. The company appealed to the National Labor Relations Board and the Air Force, following its long term policy of supporting the Employer and depressing the wage scale, filed a lengthy brief with the Board essentially urging for policy reasons that the employees of Service Contractors be denied the benefits and protection of the National Labor Relations Act. The National Labor Relations Board ruled that the Employer was obligated to recognize the Union but that he was not bound by the collective bargaining agreement negotiated by his predecessor. In reaching this decision, the Board relied entirely upon the ruling of the Secretary of Labor in refusing to include deferred wage increases in prevailing wage rate predeterminations.

While Emerald has not paid the 30¢ wage increase, it is my opinion that Emerald did take this wage increase into consideration in preparing their bids. Emerald's bid on the Roads and Grounds Maintenance Contract was $70,000 higher than the predecessor contractor had been awarded this contract for in 1969. This can only mean the Emerald stands to net exorbitant profits at the expense of the employees. A clear case of recognition of deferred wages, only that the recipient is Emerald and not the employees.

Apparently this was not enough to satisfy Emerald since it proceeded to undercut employee wages and benefits even more. This is in violation of the applicable determination and to the tune of about $10,000 to $12,000. The Labor Department has conducted an investigation. Emerald attempted to institute its own rules and regulations with respect to fringe benefits, ignoring the rules set by the Secretary of Labor. Emerald put their rules in writing and I have copies of those rules.

In the bid openings conducted in February, Emerald Maintenance again undercut the competition in two contracts where it was incumbent. In a third contract, Emerald was second low bidder, but the low bidder, Nash Sanitoral Services withdrew. So, Emerald was being considered for awards on all three contracts. It is obvious to me that Emerald Maintenance is being rewarded for its predatory policies. The Company's cold and consistent policy of undercutting prevailing labor standards is the only thing that has made it possible for Emerald Maintenance to underbid all other contractors at Laredo Air Force Base. Although these savings, gouged from the hides of Contractor's employees, enable a company to offer the government a lower price than can be offered by fair employers, I cannot believe that it was the intent of the O'Hara-McNamara Act that such employers should be permitted to receive Service Contracts.

I suppose that in one sense we are lucky. One of the contracts on which Emerald was low bidder was a “set-aside" by the Small Business Administration. Emerald has withdrawn from that contract, admitting that it had falsely certified that it was a small business concern under the terms of the Act and we will not have to contend with them for that work at least. It appears, however, that the other two contracts will be awarded to Emerald Maintenance in spite of demonstrated lack of integrity.

The Palomar Corporation case, referred to above has a sequel that would almost be funny if it were not so close to being brutal. As I have indicated, the Department of Labor has not since 1968 included in its Wage Determinations deferred wage increases which become effective during the contract year. Thus, the Wage Determination for the 1968 contract year contains wages that became effective in mid1968. Not until the determinations for 1971, was there any further recognition of a collectively bargained wage increase. On October 12, 1970, the Department of Labor issued a Predetermination for Motorpool Operation and Maintenance Services, the work being performed by Palomar. This Predetermination carried rates which incorporated a 30¢ wage increase which had become effective in April, 1970. Both the Contractor and the Air Force protested this Wage Predetermination since, as result of the unilateral wage reduction in September, 1970, the 30¢ was not being paid in October. Incredibly, the Labor Department, on December 1, 1970, issued a revised Predetermination for the same work at the wage rates 30¢ lower than those they had determined in October. Copies of the two relevant Wage Determinations referred to herein are attached for the Committee's information.

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17 $.125 an our for each employee. z i week paid vacation after 1 year of service with a contractor or successor; 2 weeks after 2 years of

service; 3 weeks after 4 years. 3/ 8 peid holidays per year: New Year's Day, Washington's B!rthday, Memorial Day, Independence Day,

Labor Day, Veterans' Day, Thanksgiving Day, and Christmas Day. (A contractor may substitute for any of the named holidays another day off with pay in accordance with a plan comunicated to the employees

4/ $.10 an hour for each employee.
NOTE: Shirt differentials for 2nd shirt (4:00 p. m. to 12:00 midnight)

and 3rd shirt (12:01 a.m. to 8:00 a.m.) are $.09 and
$.12 an hour, respectively. An employee having worked
5 more hours on either the 2nd or 3rd shift shall re- -
ceive the appropriate shift differential for the entire

Searlbow and Pulke inntari DIVISIO
8 hour shifti





APPENDIX I.— Predetermination relating to Palomar Corp.

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