Exhibit 13 Mr. FLOYD E. SMITH, THE BOEING Co., Seattle, Wash., March 19, 1971. International President, International Association of Machinists and Aerospace Workers, Washington, D.C. DEAR MR. SMITH: This is in response to your letter of March 12 to C. R. McGehee of The Boeing Company which letter was received March 15, 1971. Boeing is aware of the fact that the International Association of Machinists has a collective bargaining agreement with Trans World Airlines covering various non-supervisory TWA employees at locations throughout the United States and including certain employees performing on the Installation Support Services contract at Cape Kennedy, Florida. Before responding to the three specific requests contained in your letter, a review of the staffing procedures utilized by Boeing is in order. After The Boeing Company was selected by NASA in November 1970, to enter into negotiations leading to the eventual award of the Installation Support Services Contract, Boeing commenced tentative personnel recruiting with a view toward adequately and effectively staffing the project with approximately 2,000 qualified employees. The target date for the beginning of operations by the successful bidder was such as to make it necessary to issue a majority of the job offers during January 1971. To facilitate the employment process, and to afford opportunity to employees of the incumbent to remain a part of the Installation Support Services Project, Boeing proposed establishment of an on-site employment office to accommodate employees of the incumbent but this was not implemented because of possible interference with TWA operations. Following the November, 1970, announcement that The Boeing Company had been chosen by NASA to enter into negotiations leading to the eventual award of the Installation Support Services contract to Boeing, TWA approached Boeing and offered to cooperate in order to facilitate the transfer of those TWA employees who desired employment with Boeing. On November 30, 1970, officials of The Boeing Company met with Mr. Harry Olander, TWA Vice President in charge of the Kennedy Space Center operations, and at his request. Boeing gave TWA 1,200 Boeing forms of job applications during early December. 1970 and 150 additional in January, 1971, Mr. Olander having requested that Boeing not contact, either directly or indirectly, current TWA employees. Consistent with Boeing's proposal commitment to recruit incumbent employees on a non-interference basis with Kennedy Space Center operations, Boeing agreed and complied with Mr. Olander's request not to directly solicit TWA employees. However, regarding TWA's request that TWA collect all Boeing applications from TWA employees, Mr. Olander was advised that Boeing would accept applications from TWA employees who presented them at Boeing's employment office in the city of Cape Canaveral. TWA was advised by Boeing that Boeing had to initiate the hiring process in January of 1971 and would therefore like to have applications from the TWA employees desiring employment by Boeing by December 31, 1970. TWA agreed that this would be feasible. Mr. Olander was also advised that if Boeing had not received sufficient completed applications by early January, Boeing would be required to run newspaper ads and solicit employees from all available Brevard County sources. Newspaper ads were run for three days, January 7, 8, and 9, 1971. To date Boeing has received over 6,300 applications for the 1.913 available positions. Nearly 3.500 of these applications have been in the hourly, nonoffice category. Boeing has already processed some 860 employees of the type represented by the IAMAW in its collective bargaining agreement with Boeing. Of this figure, 235 are current TWA employees. The remaining 625 are either current or former Boeing employees, or are from outside sources. While Boeing made every effort to make applications readily available to incumbent employees by cooperating with the incumbent contractor, Boeing had reason to conclude that the majority of TWA employees preferred to remain with TWA. This conclusion was reached based on the small number of TWA applicants during January and a statement by Mr. Olander as reported by the Brevard Sentinel of January 17, 1971. He was quoted as follows: "Practically all of our employees at the Space Center have indicated they would like to remain with TWA if possible.' He said TWA will try to find places for them elsewhere if Boeing does get the contract." Those TWA employees who were not offered employment with Boeing were not recruited because they failed to timely complete and file employment applications. With this background information in mind and with the knowledge that at lease 625 of the approximately 1,000 employees of the type mentioned above will be nonincumbent, Boeing is of the opinion for these and other reasons that it cannot be a successor to the TWA-IAM collective bargaining agreement. However, Boeing does intend to abide by its current nationwide agreement with the IAMAW. It is the opinion of Boeing that the employees employed by Boeing April 1, 1971, on the project, will accrete to the group of employees covered by the nationwide Boeing-IAMAW agreement and, therefore, both Boeing and IAMAW will be bound by the terms and conditions of such nationwide agreement which now covers over 21,000 employees. Certainly this conclusion is supported by the history of Boeing-IAMAW labor relations at the Cape. A brief summarization of this history follows. In 1952, Boeing commenced work at the Cape on the Bomarc Missile Project. On October 24, 1955, the IAM petitioned the National Labor Relations Board, Case No. 10-RC-3299, for an election among all Boeing production and maintenance employees employed by Boeing within Brevard County in the State of Florida. The petition indicated there were approximately 138 such employees at the time of filing the petition. Subsequently the IAM won the election and was certified as the bargaining representative of such Boeing employees. Since that date, Boeing has been involved in numerous other Government contracts at the Cape and within Brevard County in the State of Florida-contracts completely unrelated to the project on which Boeing was working at the time of the certification of the IAMAW. As a result, over 1,150 employees have been brought under the terms and conditions of the nationwide Boeing-IAMAW labor agreement under the theory of accretion. This is over eight times the original number of employees and more than the total number of employees eligible for IAM representation on the Installation Support Services Project. Following the NLRB certification, Boeing and the IAMAW entered into a bargaining agreement in January of 1956 and in August, 1960, the Cape functions of Boeing became part of the nationwide agreement between Boeing and the IAM. Specifically, as to accretions: in the late 1950's. Boeing was awarded the Minuteman contract by the Government. At peak employment at the Cape, 456 hourly employees were involved-more than three times the number of such employees in Florida identified with the Bomarc project. Investigation reveals no objection by the IAMAW to treating the Minuteman employees as an accretion. In 1965, employment on the first stage booster portion of the Saturn project be... gan at the Cape, resulting in 691 employees being added to those represented by the IAMAW at the Cape. This was five times the size of the original group. Again, there was no objection by the IAM to the accretion of these employees. In addition to the above examples, another 9 employees were added on the Lunar Orbiter and the Apollo TIE projects without IAMAW objection. The existing bargaining agreement with the IAMAW covers, pursuant to NLRB certification, "all production and maintenance employees in Brevard County." Treating the Kennedy Space Center employees as an accretion to the employees covered by the nationwide Boeing-IAMAW contract is not unique. Based on our review of the TWA-IAMAW labor agreement, we do not understand that the agreement covered employees at the Cape pursuant to any NLRB or NMB certification. The IAMAW treated the employees at the Cape who commenced work for TWA pursuant to the initial Installation Support Services contract in 1964, as an accretion to the employees covered by the nationwide TWA-IAM contract. As to the specific request contained in your letter of March 12, Boeing agrees, on the accretion principle, that the IAMAW is the exclusive bargaining representative of the appropriate Boeing employees on the Installation Support Services Project. Further applying the accretion rationale, both Boeing and the IAMAW are bound by the terms of the existing nationwide agreement between Boeing and the IAMAW and there will be no unilateral changes made by Boeing in its terms and conditions of employment. We do not regard Boeing as a "successor" to the bargaining relationship as that relationship existed between the IAMAW and TWA. Moreover, TWA and the IAMAW have negotiated contracts with terms and conditions of employment which are not applicable to Boeing. Consistent with our view that the employees on the Installation Support Services project are an accretion to the employees covered by the nationwide BoeingIAMAW agreement, IAMAW is to be regarded as representing those employees. Boeing is of the opinion that all terms and conditions of the Boeing-IAMAW contract are appropriate and applicable to such employees. Boeing is ready to meet with you for the purpose of clarifying the position of either party and the basis therefor. Should you desire to pursue this matter further, or should you desire meetings for the purposes outlined herein, please advise the undersigned. Sincerely yours, PHIL BEATTY, Mr. GEORGE E. CONNOLLY, 997 Elkcam Boulevard, Cocoa, Fla. DEAR MR. CONNOLLY: Based on discussions with our representative, The Boeing Company is pleased to offer you employment as a Storekeeper C at a starting salary of $3.32 per hour. This offer is contingent upon the final award by the Government of the Installation Support Services Contract at Kennedy Space Center and the work is scheduled to start by April 1, 1971. We would appreciate a response to our offer within one week. Upon acceptance we will arrange a time for you to be at the Boeing Employment Office located at 7099 North Atlantic Avenue, Cape Canaveral, Florida for processing. You will be required to show your social security card, proof of birthdate, and discharge papers (if you ever served in the armed forces). If we have not been contacted within one week we must assume the offer is rejected. If you have any questions relative to this offer please call 783–1440. C. W. MCGEE, Jr., Employment Supervisor. TRANSPORT WORKERS UNION OF AMERICA, Mr. HUGH DUFFY, LEGISLATIVE DEPARTMENT, Washington, D.C., March 22, 1971. Counsel House Special Labor Sub-committee, U.S. House of Representatives, Rayburn Building, Washington, D.C. DEAR MR. DUFFY: I have enclosed for your information two copies of the NASATWA-Comptroller General material we were discussing earlier this date. I should specifically like to direct your attention to page 2 of Mr. Staat's opinion directed to TWA, dated February 26, 1971, paragraph 4 wherein he states, "the Department of Labor has issued a wage determination establishing a minimum hourly wage of $2.50 per hour including fringe benefits, for janitors, porters and cleaners." As I had informed you the unit of Pan Am Employees TWU represents at Cape Kennedy in this classification at the "Tech Lab" are presently earning an average of $3.85 per hour plus fringe items. This is the unit the Air Force intends to carve out of the Pan Am master contract and put out for bids under Section 8-A of the Small Business Act, with the possible eventual savings of $1.35 plus fringes. However, any savings will be extracted from the hide and pockets of the working man and his family. The worst possible form of economizing. I sincerely appreciate your interest and trust the Sub-Committee will delve into these matters. Very truly yours, Enclosures. FRANCIS A. O'CONNELL, To: STDL-B. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, From: Director of Administration, AD. Subject: Support Services Procurements-Improper Restrictions on the Hiring of Personnel. As you are aware, KSC, as well as several other NASA installations, has been actively engaged in recompeting support services requirements. When this has led to the replacement of an incumbent contractor with a new company, a majority of the existing personnel are usually hired by the new company. In some instances NASA has encouraged the practice of hiring incumbents even to the point of requiring proposers on support services contract procurements to propose that a substantial specified percentage of people to be hired by the proposers must be incumbent personnel and/or from "the local area." By direction from the Director of Procurement, NASA Headquarters, received by TWX at KSC on February 19, 1971, the practice of specifying incumbent hiring is to cease immediately. A quotation from that communication is furnished for your guidance: "It is not, repeat not, NASA policy to impose restrictions on bidders or proposers as to where personnel who will perform the contract effort must be obtained from; and this includes either geographic or 'incumbent' restrictions. No such stipulations are to be made, either formally or informally, in SEB criteria, in the RFP, in discussions, or in any other communications medium." Headquarters further warns that this prohibition should not be construed as requiring the opposite; i.e., that proposers must go nationwide to recruit personnel. It is up to the proposers to use their own judgment as to how they will acquire personnel and to so propose with their own rationale. NASA will evaluate such proposals in accordance with preestablished evaluation criteria. I heartily recommend that this information be disseminated to all personnel in your organization who are involved in the procurement process in any way. GEORGE A. VAN STADEN. COMPTROLLER GENERAL OF THE UNITED STATES, TRANS WORLD AIRLINES, INC., Attention: Raymond R. Fletcher, Jr., Esquire, Vice President and General Counsel. GENTLEMEN: We refer to your protest by telegram dated November 25, 1970, as supplemented by letters dated December 11, 1970, and January 21, 1971, against the selection by the National Aeronautics and Space Administration (NASA) of The Boeing Company (Boeing) for negotiation of a cost-plus-awardfee type contract for the performance at Kennedy Space Center (KSC) of installation support services, including base support work which you are currently providing under a contract which expires on March 31, 1971. You also protest consideration of a proposal submitted by Pan American World Airways, Incorporated (Pan Am), under the same procurement solicitation, Request for Proposals (RFP) 2-370-0, dated June 30, 1970. As discussed in more detail below, it is your position that, as a matter of law in the field of labor relations and as is implied by preproposal advice given by NASA to prospective offerors, the selected contractor will be bound by the "successor employer" doctrine as set forth in various decisions of the courts and in related orders issued by the National Labor Relations Board (NLRB), to abide by the material terms of the current collective bargaining agreements with your incumbent union employees. To be responsive to the RFP, therefore, you contend that each offeror must consent to comply with the "successor employer" doctrine. In line with the foregoing, you assert that Boeing and Pan Am were not responsive to the RFP since each of them proposed union arrangements in conflict with the "successor employer" doctrine. You therefore request that NASA be directed to reject the proposals submitted by Boeing and Pan Am and to make award to a responsive offeror like yourself, who is willing to continue to abide by your existing union bargaining agreements covering the incumbent employees. Is the alternative you assert that, if it is NASA's belief the issue whether the "successor employer" doctrine applies to the procurement is a question of law, resolicitation of the procurement is in order on the basis that the solicitation is fatally defective because NASA did not so advise prospective offerors before the submission of proposals. You further state that NASA now seems to rely on a legal opinion which it did not obtain until December 14, 1970, or after you had filed your protest and after a majority of the offerors had already committed themselves to application of the "successor employer" doctrine, and that the effect of such procedures has been not only to deprive the Government of its right to secure bids capable of just comparison but to deprive you of an opportunity to renegotiate your existing bargaining agreements with your employees with an apparent view to securing lower wage rates and thereby be competitive with other offerors. Performance of the specified services was required for an initial period of one year commencing February 1, 1971, with four extensions of one year each to be available at the Government's option under contract, the first of which was required to be firm priced. Basic proposals were required to be based upon fixed staffing specified in the RFP, but alternate proposals were solicited based upon organization and staffing other than as indicated in the RFP, Article 42 of Appendix III of the proposed contract stated a requirement for continuity of services necessitating phase-in training of the successor contractor during the last 60 days of the contrat term and cooperation of both ccontractors respecting release of employees to the new contractor, among other factors. Article XXXII, which governed the phase-in of the functions to be assumed under the proposed contract from three incumbent contractors, required that allowance for phase-in be made in the cost and fee negotiated under the proposed contract subject to adjustment in the event the functions in question are not fully operational and completely staffed as agreed during negotiations by the dates scheduled in Article XXXII. Article XXIV, entitled "Service Contract Act of 1965," informed offerors of the issuance of a wage determination by the Department of Labor establishing a minimum hourly wage of $2.45 per hour, including fringe benefits, for janitors, porters, and cleaners. Paragraph 2.c., Section 1, Part B, Appendix II, of the RFP, as amended, relating to management structure, reads as follows: "Expain your understanding of the impact, if any, that the collective bargaining agreements covering incumbent employees will have on your assuming the contract responsibilities. Discuss which of your employees, if any, will be covered by collective bargaining agreements and indicate which, if any, supervisory personnel are included. "Prospective offerors are advised that most employees of the incumbent contractors are represented by IAM and that the labor agreements in force are as follows: IAM stands for the International Association of Machinists; UPGWA for the United Plant Guard Workers of America; and TWU for the Transport Workers Union of America. IBT, which is discussed in connection with Pan Am's proposal, stands for the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Paragraph 11 of Appendix I, Part B, relating to evaluation of proposals, informed prospective offerors that failure of a proposal to be accepted for award would not necessarily reflect any deficiencies but would mean only that another proposal was considered to be more advantageous to the Government. The major factors to be considered in the proposal evaluation and their relative order of importance were (a) Technical Work Plans; (b.) Reasonableness of Cost and Fee; (c.) Experience and Past Performance; (d.) Key Personnel; and (e.) Management Structure. Offerors were advised that factor (a) would have slightly |