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explicit in drafting a report on it in the construction of our legislative history. For the moment I have nothing more. We have learned a great deal from you and there are a great many questions which occur to me now which the Secretary of Labor can best answer at this point.

So I thank you gentlemen very much. (The supplemental information supplied by the witnesses follows:)

U.S. DEPARTMENT OF LABOR,

OFFICE OF THE SECRETARY,

Washington, March 27, 1970. Re Alfred L. Morgan, Individually and Doing Business as Morgan Janitorial

Service, Respondent. No. SCA-53.
Hon. ELMER B. STAATS,
Comptroller General of the United States,
General Accounting Office,
Washington, D.C.

DEAR MR. STAATS: In the above-listed proceeding under the McNamara-O'Hara Service Contract Act of 1965 (41 U.S.C. 351 et seq.), the Hearing Examiner, on February 13, 1970, rendered a decision holding that respondent violated the minimum wage, fringe benefit, and recordkeeping requirements of the Act and that the sum of $900.42 was due as a result of the underpayments. Under Section 5(a) of the Act, this finding makes respondent ineligible for further service contracts unless the Secretary of Labor recommends that it be relieved from such penalty. The Hearing Examiner recommended that relief be given from the ineligibility list provisions of Section 5(a) of the Act upon payment in full of the amount found to be due. Respondent has made full payment of such sum.

No petition to review this decision has been filed within the time prescribed by the Rules of Practice and the decision has become final in all respects except with regard to the recommendation.

I have considered the matter and have concluded that relief should be given. A copy of the Hearing Examiner's decision is enclosed. Sincerely,

GEORGE P. SHULTZ,

Secretary of Labor.

U.S. DEPARTMENT OF LABOR,

OFFICE OF THE SECRETARY,

Washington, January 22, 1971. Re Broadway Storage & Moving Co., Inc., and A. J. Lamana Moving Co., Inc.,

Respondents. No. SCA-49.
Hon. ELMER B. STAATS,
Comptroller General of the United States,
General Accounting Office,
Washington, D.C.

DEAR MR. STAATS: Pursuant to the authority granted to me under Section 5(a) of the McNamara-O'Hara Service Contract Act of 1965 (41 U.S.C. 351 et seq.), it is hereby recommended that the respondents in the above-listed proceeding not be relieved from the ineligibility list provisions of that Act.

This action is recommended because the respondents have not made restitution of the liquidated damages in the sum of $5,548.09 which were found to be due in the Hearing Examiner's decision rendered December 1, 1970. Upon payment in full of the amount found to be due, relief should be granted, but not until such time.

No petition to review the Hearing Examiner's decision has been filed within the time prescribed by the Rules of Practice and the decision has become final in all respects except with regard to this recommendation. A copy of the Hearing Examiner's decision is enclosed. Sincerely,

J. D. HODGSON.
Secretary of Labor.

U.S. DEPARTMENT OF LABOR,

OFFICE OF THE SECRETARY,

Washington, February 17, 1971. Re Powers Building Maintenance Company, a Corporation, Respondent. No.

SCA-29
Hon. ELMER B. STAATS,
Comptroller General of the United States,
General Accounting Office, Washington, D.C.

DEAR MR. STAATS: Pursuant to the authority granted to me under Section 5(a) of the McNamara-O'Hara Service Contract Act of 1965 (41 U.S.C. 351 et seq.), it is hereby recommended that the respondent in the above-listed proceeding not be relieved from the ineligibility list provisions of that Act.

This action is recommended because the respondent has not made restitution of the liquidated damages in the sum of $4,069.15 which were found to be due in the Hearing Examiner's decision rendered December 18, 1969, and by the Administrator of Wage and Hour and Public Contracts Divisions in his decision on appeal dated December 18, 1970. Both the Hearing Examiner and the Administrator recommended that upon payment in full of the amount found to be due relief should be granted, but not until then. Until such time, respondent should be placed upon the list of ineligible bidders. Please notify the agencies accordingly.

Copies of the decisions of the Hearing Examiner and the Administrator are enclosed herewith. Sincerely,

J. D. HODGSON, Secretary of Labor.

SERVICE CONTRACT ACT VIOLATIONS REPORTED TO THE GENERAL ACCOUNTING OFFICE BY THE DEPARTMENT

OF LABOR FROM THE EFFECTIVE DATE OF THE ACT TO APR. 1, 1971

Date of letter

from Secretary of Labor

Number of
violations i

Amount of Recommendation of

under the Secretary of payments Labor

Names of persons and/or firms listed as respondents

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Feb. 21, 1968 Southwest Sanitation, Inc. and Richard C. Schoor.....
Mar. 22, 1968 Forrest D. Smith, individually, and doing business as

Western Foresters.
Apr. 12, 1968 Federal Food Service, Inc., and Harold E. Gelber.. .

Do. .. Ira Gelber Food Service, Inc., and Ira Gelber.....
June 11, 1968 Robert Lacy, doing business as Nationwide Building

Maintenance.
Do... Superior Building Maintenance, Inc., and Calvin W.

Fordham.
Aug. 1. City Wide Janitorial Service, Inc...
Sept. 12 68 Buhl's Quality Laundry and Dry Cleaners, a corporation.
Sept. 23, 1968 R. B. Wright Co., Inc., and R. B. Wright.

Do... Escalante Garden Apartments, Inc.-
Do.... Edward White, Jr.. individually and doing business as

Active Building Maintenance.
Nov. 8. 1968 John B. Marshall, doing business as Marshall Co......
Feb. 10, 1969 Taylor-Wilkes Helicopter Service, Inc..
Feb. 25, 1969 Stanely Farha, doing business as Manor Enterprises,

and H. G. W., Inc., doing business as Louisville
Manor Motor Court, and Harry G. Clarke, and C. C.
Biair. individually and as president and secretary-

treasurer, respectively, of H. G, W., Inc.
Apr 25, 1959 Space Services of Georgia, Inc., and Space Services

International Corporation, a joint venture, and Jerry

M. Bowden
May 13, 1969 Oxnard Van & Storage, Inc., doing business as Oxnard

Van Lines, and Christopher J. Duarte.
May 20, 1969 James B. Thomas and Pauline L. Thomas, doing busi-

ness as Sunshine Cleaners and Whitey's 1-Hour

Cleaners.
June 24, 1969 American Container Service Corp.....
Aug. 6, 1969 William E. Bittner, and Joe D. Biackard, individually

and Severally, Budson Co., Inc., and Transportation

Services, TIC
i ug. 25, 1969 Paris Laundry Co, a corporation.....
Sept. 23, 1969 R. B. Wright Co. Inc, and R. B. Wrigh
Nov. 7, 1969 Ponca Laundry and Linen, Inc...
Dec. 3, 1969 Phoenix Respirator & Ambulance Service, Inc. and

Billy R. Haines.

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SERVICE CONTRACT ACT VIOLATIONS REPORTED TO THE GENERAL ACCOUNTING OFFICE BY THE DEPARTMENT

OF LABOR FROM THE EFFECTIVE DATE OF THE ACT TO APR. 1, 1971-Contioued

Date of letter

Secretary of Labor

Amount of Recominendation of

under the Secretary of payments Labor

Number of
violations :

Names of persons and/or firms listed as respondents

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Feb. 9.1970 Floridian Uniform Rental...
DO---Guild Services, Inc., Tom Welsh, George Nes, Jr.

and William H. Welsh, doing business as Guild

Laundry & Dry Cleaning,
Feb. 10, 1970 Robert E Douglas, individually and doing business

as Smith & Douglas Janitor Service.
Feb. 13. 1979 Webster Contractors, Inc....
Mar. 9. 1970 KP. Food Service, Inc.....

Doc. Belco Corp .
Mar. 23, 1970 Kenneth b. Holman, doing business as Model Dry

Cleaners.
Mar. 27, 1970 ESS Cleaners, Inc., trading as Jet Cleaners.........

Alfred L. Morgan, individually and doing business as

Morgan Janitorial Service.
May 4. 1970 Baron Maintenance Services, Inc...

DO...... Advanced Data Center, Inc., and Hugh O. Barndollar..

Do. - Ajay Maintenance Co......
May 7, 1970 Valley Custodial Service, Inc., and Edwin Fritz...
June 18, 1970 Whitney Rosenwald Nelson, individually and doing

business as Nelson Development Co.
June 19. 1970 Town House Motor Hotel, Inc...
June 23, 1970 Emile J. Bouchet and Post Cleaners, Inc., doing

business as Bay Area Cleaners.
July 7, 1970 Gertrude Mansfield, doing business as Mansfield

Motel.
DO. .. Ralph M. Phillips, doing business as Phillips Cleaners...
July 1

Litsinger Motor Co., a corporation...
Do

Klate Holt, doing business as Klate H July 17, 1970 Harland H. Selmer ......

Do. Cadillac Overall Supply Co......

Do. Metropolitan Security Service, Inc..
Aug. 5, 1970 Post Patrol Agency and Sam W. Post..
Aug. 7, 1970 Robert L. Jones, doing business as Arkansas Am-

bulance Co.
Sept. 14, 1970 Eastern Service Management Co.....
Sept. 23, 1970 James G. Henderson...
Sept. 28, 1970 Western Janitorial Service, Inc., and Louis R. Feldman.
Oct. 2, 1970 Automatic Container, Inc.
Nov. 3, 1970 Tedcal Services, Inc.-.-.-.--.
Nov. 4, 1970 ....do.........
Do..

U.S. Eagle, Inc., and Wilbur J. Fitch
Nov. 17, 1970 Tim DeLeeuw, individually and doing business as

Tim's Enterprises,
Do....... Lauri Kallio, doing business as Kallio Fixtures..
Dec. 3, 1970 Ventilation and Cleaning Engineers, Inc., and Bernard

Williams.
Nov. 27, 1970 McEntire Brothers, Inc., and Don B. McEntire...--...
Dec. 11, 1970 Robert Gillespie....
Jan. 13, 1971 Inland Service Corp...
Do...-...

Stewart A. Rouse, individually and doing business as

State Line Trucking.
Jan. 22, 1971 Broadway Storage & Moving Co., Inc., and A. J. Lamana

Moving Co., Inc.
Feb. 17, 1971 Powers Building Maintenance Co., a corporation......

500.00 Relieve.
1,008.00 Da.
2,500.00

406.43
8,571.52 Debar.
1,165.99 Relieve.

900.42 Do.
1, 836.00

Do.
5,868.54 Debar.

486.00 Relieve.
4.881. 69
1,939.60 DO.

792.61 Do.
2, 248.43 Debar.
2,541.40 Do.
2,337.45 Relieve.

Do.
1,781. 92 Do.
15,914.06 Debar.

780.00 Relieve.

685. 60 Do. 18, 253.33 Debar Sam W. Post

only. 506.84 Relieve. 160.00 Do.

121.68 Do.
40, 562.14 Debar.

Relieve.
5,566. 86 Debar.
6, 182.75 Do.
8, 207.11 Relieve.
1,300.00 Do.

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() Debar.
3, 103.86 Relieve.

Do.

Do. 2,278. 73 Debar. 19. 236. 12 Relieve. 1, 445.82 Do. 5, 548. 09 Debar until restitu

tion is made. 4,069. 15 Do.

12

1 Shown as number of employees underpaid, or number of charges if safety and health requirements were violated. 2 Over. Exact number not shown in letter from Secretary of Labor. % N/R. Number of underpayments not mentioned in correspondence to this Office.

Removed from debarred list on July 1, 1969. 6 Charges. * Safety and health requirements.

PROVISIONS FOR WAGE ESCALATION IN WAGE RATE DETERMINATIONS We had found no indications during our reviews over the past 10 years (1961 to 1971) that wage determinations issued by the Department of Labor under the Davis-Bacon Act included provisions for wage escalation. This finding was further confirmed by our examination in April 1971, of 120 randomly selected wage determinations issued during the 15-month period immediately preceding the enactment in October 1965 of the Service Contract Act, and five randomly selected determinations issued 2 months prior to the effective date of the act in

January 1966. The randomly selected wage determinations covered 35 counties in seven States and the District of Columbia. Although many union agreements with provisions for wage escalation were applicable to the counties we reviewed, none of the wage determinations issued by the Department incorporated any such provisions.

Our findings are consistent with the statement made by the Under Secretary of Labor before the Subcommittee on April 6, 1971, that the Department did not include provisions for wage escalation in wage determinations made under the Davis-Bacon Act.

Mr. THOMPSON. Our next witness is Mr. Thomas Donahue, executive secretary of the Service Employees International Union of the AFL-CIO.

STATEMENT OF THOMAS R. DONAHUE, EXECUTIVE SECRETARY,

SERVICE EMPLOYEES INTERNATIONAL UNION, AND RICHARD E.
MURPHY, ASSISTANT TO THE GENERAL PRESIDENT
Mr. DONAHUE. Good morning, Mr. Chairman.
Mr. THOMPSON. Good morning, Mr. Donahue. It is nice to see you.

Mr. DONAHUE. Mr. Chairman, I am Thomas R. Donahue. I am executive secretary of the Service Employees International Union, AFL-CIO. I am accompanied by Mr. Richard E. Murphy, assistant to the president.

Our union represents over 450,000 people engaged in work in service occupations. Our members work in public and private buildings, hospitals, nursing homes and other institutions, apartments, hotels, sports arenas, and other places. We have many collective bargaining agreements with Government contractors and subcontracts across the Nation which cover the employment conditions of thousands of people on military installations, in Government office buildings and in other service contract situations.

It is on their behalf that I appear today to express their support of the proposed amendment to the McNamara-O'Hara Service Contract Act of 1965.

Let me just note for the record, that our interest in the Service Contract Act and its operations is a very old one. As long ago as 1958 and 1959 our union made representations to then Secretary of Labor Mitchell to protest to him procedures under which Government contracts were let and to bring to his attention the resultant continuing displacement of contractor after contractor by a successor who could underbid his predecessor by exploiting the workers to some greater degree.

In 1961 we met then Secretary of Labor Goldberg and held an extensive series of discussions with officials of the Department of Defense and its constituent groups and with officials of the General Services Administration. In 1964 when Congressman O'Hara introduced his first bill to provide some measure of relief for the workers who found themselves trapped in these situations, we testified in support of the legislation and did our best to bring this problem to the attention of the Nation.

Since the passage of the act in 1965 we have worked closely with the officials of the Labor Department charged with responsibility for administration of the act.

The Service Contract Act was properly hailed as a giant step for our Nation's service workers when it was passed in 1965. The purpose of the act was to establish minimum standards for compensation, safety, and health protection for employees working for contractors, and subcontractors of service contracts entered with the Federal Government or the District of Columbia.

Basically it provided the service workers with nothing more than the protections already enjoyed by construction workers by means of the Davis-Bacon and Walsh-Healey Acts.

Prior to the act Government agencies awarded service contracts to the low bidding contractor regardless of the wages and conditions that the contractor's employees would have to work under. Contractors would come from out of a locality, underbid a contractor paying the locality's prevailing wage and thereby destroy a decent working condition and the quality of the work performed.

The Service Contract Act aimed to prevent such a situation. We feel that the spirit underlying this act is most admirable. I'nfortunately it now appears that while the flesh of the act remains willing, the spirit is weak. It is our hope that these hearings and the proposed amendment will help restore the original spirit of the act.

There are several current problems with the administration of the act which we would like to bring to your attention.

In recent years there has been an increasing reliance by the Department of Labor on the Bureau of Labor Statistics standard area wage surveys as the basis for Service Contract Act wage rates.

This is perhaps understandable from an administrative standpoint, given the workload and the small staff available for this work in the Wage Hour and Public Contracts Divisions—but it has several disadvantages.

In the first place the area wage surveys cover broad categories of employment and include within any single category many different jobs and types and classifications. The act however calls for the payment of wages to the various classes of employees employed under a service contract, based upon the prevailing rates for such employees in the locality.”

When area wage survey rates are used a higher prevailing rate for a particular job classification is reduced by being lumped into a larger standard category, and a second problem with the use of the area wage surveys is the timelag that exists from the time the survey is taken to the time when it is published.

Three months has been the average delay and further delay of a month or more often occurs between the publication date and the date of wage determination. What can and what has happened during this timelag is most noteworthy. Contracting officers either wittingly or unwittingly put out their bid invitations during this period.

This means that the contractors bid using the old wage determinations, and are only required to pay the old rates. The service worker, therefore, will be paid the old rate for the duration of the contract. Obviously such a situation completely defeats the intent of the Service Contract Act.

There are several ways to resolve this burden and save the service workers from bearing the burden of a contracting officer's slowness or

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