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found in which military personnel were substituted for civilian personnel. primarily for reasons beyond the authority of local commanders,

It is requested that you establish procedures to assure that loeal commanders are not placed in the position of having no alternative but to substitute military for civilian personnel in order to perform essential work. Reductions in civilian personnel authorizations should generally be required of local commanders only when associated with a corresponding workload reduction or increased productivity.

Controls should also be established over the authority of commanders to temporarly substitute military for civilian personnel being separated by reduetion-in-force to assure that it is used, as intended, only in exceptional circumstances and after other alternatives have been exhausted and that such substitutions or augmentations are in fact limited to specified and temporary periods of time. In this connection, action should be taken to review those cases where military personnel are now temporarily substituted for civilian personnel to determine what action may be taken to make early staffing adjustments in accord with existing policies on military/civilian staffing. I would appreciate being advised of the actions taken.

ROGER T. KELLEY.

ASSISTANT SECRETARY OF DEFENSE,

Washington, D.C. February 27, 1970. Memorandum for Chairman of the Joint Chiefs of Staff, Assistant Secretaries of

Defense, Assistant Secretaries of the Military Departments (M&RA)

Directors for the Defense Agencies. Subject: Replacement of Civilian Personnel with Military Personnel or Contract

Personnel. Significant manpower reductions are planned through June 30, 1971. Reductions totaling 551,000 military personnel or 16% and 131,000 civilian personnel or 1090 are to be made from June 30, 1969 onboard strengths.

The purpose of this memorandum is to reaffirm existing policy concerning the utilization of personnel in connection with these reductions.

It is the policy of the Department of Defense that civilian personnel will be used in positions which do not require military incumbents for reasons of law, training, security, discipline, rotation or combat readiness, and which do not require a military background for successful performance of the duties involved.

It is also the policy of the Department of Defense that military personnel will not be substituted for civilian personnel being reduced in force. It is recognized that some temporary imbalances in workload may result from the planned reductions. It is also recognized that in these exceptional cases, local commanders may find it necessary, for reasons of operational necessity, to assign temporarils military personnel to positions where the use of civilians would otherwise be indicated. However, as soon as practicable, arrangements should be made for the assignment of military and civilian personnel in accordance with established policies.

This memorandum does not modify existing guidance on the use of contract services. It is emphasized, however, that the planned reductions are not considered to be justification for the use of contract services.

ROGER T. KELLEY.

ASSISTANT SECRETARY OF DEFENSE,

Washington, D.C., April 17, 1970. Memorandum for Assistant Secretaries of the Military Departments, (M&RA),

Directors of Defense Agencies. Subject: Utilization of Manpower During Periods of Reduced Civilian Emloy

ment and Military Strength. The present period and the months ahead present a challenge to local commanders and managers in continuing to assure the effective use of personnel. Difficulties in maintaining an effective work force will arise frequently until managers can adjust operations to accommodate conditions of declining employment.

My memorandum of February 27, 1970, concerning replacement of civilians with military personnel or by contract services provided guidance on one of the more common difficulties. Additional guidance is provided below.

Our objective should be to deal with problems of effective manpower utilization before they grow to serious proportions and impact adversely on efficient operations. This can best be done at the base of operations by local commanders and operating managers, since they have full knowledge of the facts and circumstances.

Local commanders can be assisted in their efforts by taking advantage of onsite surveys, inspections, audits, and staff visits to identify manpower utilization deficiencies for prompt, corrective action. Schedules being developed for these management teams should include installations where the impact of reduced employment is especially significant.

Deficiencies in personnel utilization which should be avoided include the following and should be marked for emphasis and priority attention by local commanders and management teams :

1. Arbitrary use of military personnel in positions otherwise suitable for civilian incumbents.

2. Personnel reductions taken primarily in the lower grades which distort the normal staffing balance between supervisors and their staffs.

3. Assignment of more than one person to duties which can be effectively performed by one individual, commonly referred to as “dual staffing".

4. Inefficient work procedures and scheduling which cause excessive use of overtime by civilian personnel or unreasonable detail of military personnel for extended periods.

5. Failure to discriminate between essential functions and functions which have outlived their usefulness but are continued because of precedent or management inertia.

The above list is by no means complete and you may wish to add to it.

I would appreciate receiving a statement within the next 30 days of the additional actions you plan or have taken to promote the effective use of personnel in your Department or Agency during this period of reduced civilian employment and military strength.

ROGER T. KELLEY. Mr. WEBBER. What is to be done?

You have already received testimony from the Laborers' Internanational Union of North America, AFL-CIO, citing the deplorable conditions under which private contractors make huge profits through the exploitation of their employees. This testimony has already indicated that the contractors often even break their own contracts with the Government, resulting in the work having to be completed by uniformed military personnel. Instances of work stoppages and strikes; of suits for unpaid wages; of disruption of the local community labor market have been cited. I myself could cite several similar cases and, if you desire, I shall submit them to you for incorporation into the record.

Because of the extreme urgency we face, however, I would rather reserve my time before you to suggest three immediate remedies.

The first remedy I suggest concerns me both as a taxpayer as well as a union representative. It would be an amendment to Public Law 89–286 requiring that a copy of every support service contract in excess of $2,500 be filed in a central repository established by the Secretary of Labor; who shall assemble, compile, file, and evaluate these contracts in order to submit annually a report to the Congress as to the total amounts involved; the numbers and categories of personnel employed by contract by agency and department; the pay, including the range of pay, by job classification; and the relationship of fringe benefits to pay rates.

The second remedy which I should like your subcommittee to con sider is provision of a clear and unambiguous definition of "prevailing race" which the Secretary of Labor is to certify as the basis of mini. mal pay for these service contracts. Unfortunately, today, the "prevailing rate” is established by a variety of different, and sometimes inconsistent, means resulting in a wide difference of "prevailing rate" determinations.

THE "PREVAILING RATE”—AS USED FOR FEDERAL “BLUE COLLAR"

EMPLOYEES At first sight, everybody believes that the term “prevailing rate", is simple to understand, since it should obviously mean that it is the rate which prevails.” In fact, however, "prevailing rate" has many definitions and, if the Secretary of Labor is to carry out his duties under P.L. 89–286 properly, the definition he uses should be unambiguous and relevant. If the term "prevailing rate" is used in an equivocal sense, whether knowingly or not, great injustices and inequities follow both to employees and to taxpayers.

I believe that the best formula available today to Federal authorities and to the Secretary of Labor in the matter of the "prevailing rate for Federal support service contracts is the one used by the Federal Government itself in setting the "prevailing rate” pay line for blue collar employees. This pay, or trend line, is based on local surveys of private enterprise.

Through the mechanism of the coordinated federal wage system, the Federal Government has been evolving a uniform, consistent method for establishing blue collar pay rates for 700,000 blue collar employees in a manner consistent with Federal law. Our organization participates with Federal management in the operation of this system. Although we are not reconciled to the absence of a statutory base for the system itself, and we are not in agreement with certain decisions, nevertheless we are fully in agreement with the fundamental concept that blue collar prevailing rates should be established by a responsible Federal authority using consistent and universal standards.

Among the criteria which the present coordinated federal wage system applies are the requirements that there be equal pay for substantially equal work in the same locality; that pay distinctions be maintained in keeping with work and performance distinctions; and that Federal blue collar pay rates be comparable with private enterprise pay rates for the same levels of work.

One of the main provisions of the coordinated Federal wage system assuring a high degree of professional objectivity is the participation, at all levels, of union representatives alongside management representatives. At the policy level, the principal employers of blue collar employees are directly represented on the National Wage Policy Committee; the principal unions with blue collar membership are also represented. At other echelons, joint management-union teams collect the data, evaluate it, participate in the construction of the "prevailing rate” pay line and in the setting of pay rates. Although the system is weighted to favor management, nevertheless the unions have access to the facts and are able to invoke a variety of appeals procedures when they feel it is necessary.

The participation of the unions not only assures a high degree of professional objectivity; it also improves blue collar employee morale because their own representatives are able to explain immediately and directly the nature of the decisions made.

Although all human enterprises are open to error, no matter what the safeguards, nevertheless, it appears to me that such a structured system as that used by the Federal Government to ascertain the “prevailing rate” for its own employees, has a great advantage over the improvised system on which the Secretary of Labor must perforce rely when he is obliged by law to ascertain the “prevailing rate” of private enterprise pay for contract purposes.

THE “PREVAILING RATE”—AS CERTIFIED BY THE SECRETARY OF LABOR FOR

SERVICE CONTRACTS

Whereas the term "prevailing rate" has an unambiguous, consistent and uniform meaning as applied throughout the Federal service for blue-collar Federal employees, the term "prevailing rate” as certified by the Secretary of Labor has an equivocal, inconsistent and nonuniform meaning.

So far as we can ascertain, prevailing rate is established by the Department of Labor for service contracts on any and all of the following bases:

1. Regular area surveys by the Bureau of Labor Statistics;

2. Special selective surveys by the Bureau of Labor Statistics on contract for the Bureau of Service Contracts:

3. Enclave rates, which are specialized local rates carved out or segregated from the standard area surveys;

4. Facility rates, which are rates established by administrative decision for isolated or remote installations.

The interrelationships of these rates and the policy decisions, utilizing facilities at hand, by the Secretary of Labor, regarding them, appear to have been improvised and consequently are inconsistent and erratic, resulting too often in rates certified by the Secretary of Labor which minimum wage paying contractors seek to exploit when competing for contracts with prevailing median wage rate contractors. A further complication appears to be the issue of prospective wages, a term employed in the private sector for union agreements regarding increases in wage rates in the future, either on the basis of fixed schedules or cost-of-living escalators.

A STANDARDIZED DEFINITION FOR PREVAILING RATE IS NEEDED In order to eliminate ambiguity and inequity, equivocation and uncertainty, it appears to me to be in the best interests of the Government that a single standard be used to define the term "prevailing rate”.

Moreover, since the jobs which are involved, except in the relatively few contract situations, are performed by civil service personnel, it would appear to be further in the best interests of the Government that the term which is used should already be familiar and universally used in Federal pay practices within the Government.

Of all terms which might be applied, the one which best qualifies therefore is the one now already used to establish the rates paid

by the Federal departments and agencies to their own blue-collar prevailing rate employees.

If the special subcommittee is agreeable, I should therefore like to propose the following clause immediately following the word "locality" in the first sentence of section 2(a)(1) of Public Law 89–286:

as established by the Federal departments and agencies in setting the pay line for their "prevailing rate" employees,

If Public Law 89–286 were so amended, the entire section would then read as follows: (new text in italic)

Sec. 2(a) * * * *

(1) A provision specifying the minimum monetary wages to be paid the various classes of service employees in the performance of the contract or any subcontract thereunder, as determined by the Secretary, or his authorized representative, in accordance with prevailing rates for such employees in the locality, as established by the Federal departments and agencies in setting the pay line for their prevailing rate employees, which in no case shall be lower than the minimum specified in subsection (b).

"PREVAILING" FRINGE BENEFITS

Public Law 89–286, section 2(a) (2) also stipulates that the Secretary of Labor shall designate "prevailing fringe benefits" which are to apply.

In this area, the obstacles confronting the Secretary of Labor in carrying out his duties are even more severe than he faces in defining "prevailing rates." Apart from the basic requirements of social security statutes, fringe benefits are set by a variety of practices. The best and most stable of these are by collective bargaining union contracts. However, even these vary from contract to contract and, within individual contracts, vary according to the phase of time interval provided for escalator changes. This is increasingly the case as fringe benefits are now mainly seen as a part of the total “wage package."

The Bureau of Labor Statistics, which supplies the data to the Secretary of Labor, is not yet funded well enough to keep current with changes in “fringe benefits” parameters. Although the labor market is dynamic and fluid, the methodology of the Bureau of Labor Statistics is still like that of a flash camera photographing a moving object rather than that of a movie camera. Consequently, the Secretary of Labor is at a great disadvantage in making determinations of prevailing fringe benefits guaranteed to be relevant to any point of time excepting the instant when the BLS survey was taken. Since prospective benefits are not surveyed, even if they are imminent, the data available are rapidly out-of-date.

To overcome this problem, it would appear that it would be best to write into the contracts minimal fringe benefits identical with, or very similar to, those being paid to Federal blue-collar employees performing the same work in the locality where the contract is let. To achieve this, Public Law 89–286 would, of course, have to be amended by language similar to the one we already proposed to clarify the meaning of"prevailing wages.”

ENDORSEMENT OF H.R. 6244 AND H.R. 6245 As the third legislative remedy, our organization, of course, fully endorses H.R. 6244 and H.R. 6245, identical bills introduced by Con

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