TO AMEND THE SERVICE CONTRACT ACT OF 1965

FRIDAY, APRIL 2, 1971

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON LABOR,

COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C.

The special subcommittee met at 10 a.m., pursuant to recess, in room 2261, Rayburn House Office Building, Hon. Frank Thompson, Jr., (chairman of the subcommittee) presiding.

Present: Representatives Thompson, O'Hara and Dellenback. Staff members present: Hugh G. Duffy, counsel; Jeunesse M. Beaumont, clerk; and Michael J. Bernstein, minority counsel for labor.

Mr. THOMPSON. The subcommittee will be in order for further hearings on legislation to amend the Service Contract Act of 1965.

We have a number of witnesses who have some very important things to say, and we want, if possible, to hear everyone. I would suggest that long statements be submitted for printing in the record in full, and orally summarized by the witness so that we will have enough time to ask questions.

Our first witness today is Mr. Chester W. Parrish, President, National Federation of Post Office Motor Vehicle Employees (AFLCIO), who is accompanied by Leon S. Hawkins, national secretarytreasurer. Good morning, gentlemen. I am sorry we did not get to you yesterday.

STATEMENT OF CHESTER W. PARRISH, PRESIDENT, NATIONAL FEDERATION OF POST OFFICE MOTOR VEHICLE EMPLOYEES (AFL-CIO); ACCOMPANIED BY LEON S. HAWKINS, NATIONAL SECRETARY-TREASURER, NATIONAL FEDERATION OF POST OFFICE MOTOR VEHICLE EMPLOYEES

Mr. PARRISH. That is all right, Mr. Chairman, and we appreciate the opportunity to appear before the committee this morning.

I heard your remarks about the number of witnesses to testify. If it will expedite the hearings, we will not read our testimony since it has been submitted and summarize briefly what we have said and then give an opportunity to the committee to ask us now any questions you may have.

(The document referred to follows:)

STATEMENT OF CHESTER W. PARRISH, PRESIDENT OF THE NATIONAL FEDERATION OF POST OFFICE MOTOR VEHICLE EMPLOYEES, AFL-CIO

Mr. Chairman and members of the Subcommittee, My name is Chester W. Parrish, President of the National Federation of Post Office Motor Vehicle

Employees, AFL-CIO, and I am accompanied today by Mr. Leon S. Hawkins, our National Secretary-Treasurer. Our National Headquarters is located at 412 Fifth Street, N. W., Washington, D.C.

Our Organization has National Exclusive Recognition for the Motor Vehicle Craft, and is the sole bargaining representative for all Motor Vehicle employees under the terms of the National Agreement with the Post Office Department. We were organized in 1924 and have maintained an office in Washington, D.C., with full-time representation since 1941!

Our membership is composed of various classifications in both the Operations and the Maintenance Divisions of the Motor Vehicle Service.

We appreciate very much the opportunity to appear before this Committee, today, and to have the opportunity of giving our opinions on the Service Contract Act.

I received a letter from Mr. Robert D. Moran, Administrator for place standards of the Labor Department on March 1, 1971 advising our Union that the General Accounting Office had made a survey of the Service Contract Act, Wage Determination Program, and that on August 31, 1970, this team submitted a preliminary report dealing specifically with wage determinations issued for Postal Service Mail Haul Contracts. In this report the GAO recommended that such wage determinations be based on wage rates and fringe benefits paid to mail-haul-drivers as a separate class rather than on wage rates and fringe benefits paid to truck drivers generally.

He went further to say that the Postal Service supports this approach and that they had received, through GAO, a copy of a letter dated December 28, 1970, from Postmaster General Winton M. Blount, to this effect. He went on to say that this matter had been carefully reviewed, taking into account the views of the GAO and the Postmaster General, and it had been decided to revise their procedures for issuing Service Contract wage determinations and to treat as a separate class all mail-haul-drivers and other truck drivers engaged in performing duties similar to those performed by drivers on mail-haul-contracts.

Mr. Chairman and Members of the Sub-Committee, as the President of the National Federation of Post Office Motor Vehicle Employees, we have checked into the decision made by the Labor Department and the General Accounting Office in their determination to change the method of wage determinations for contractors engaged in mail-haul contracts.

We consider this determination by the Labor Department as nothing but another means through which the contractors would be permitted to pay their employees less than employees doing like-work in a given area. We were very pleased and happy in 1965 when the McNamara-O'Hara Service Contract act was passed by Congress and signed by the President of the United States, now known as Public Law 89-286. After this Law was enacted our Union had many meetings with the Labor Department in working out the system as to how age determinations could be made for people doing like-work, such as Postal employees, in hauling the U.S. Mail. The Labor Department did make many wage determinations as a result of these meetings, however, on April 22, 1967, there was a notice published in the Federal Register by the Labor Department to withdraw 58 wage and fringe benefit determinations decided earlier, under the revisions of the McNamara-O'Hara Service Contract Act of 1965, with respect to Star Route Contracts.

Again, our Union with the support of the AFL-CIO, held additional meetings with the Labor Department and as a result of these meetings, another method was used to determine the wages to be paid to Service Contract employees. Again, we considered this as a "stalling" tactic used by the Post Office Department and the Star Route Contractors, not to adhere to the intent of Congress and the provisions of the Service Contract Act.

Mr. Chairman and Members of the Sub-Committee, we feel strongly that Congress had good intentions in 1965 when they passed the Service Contract Act now known as PL 89-286, and we feel that the wisdom of Congress at that time was correct and proper. We agree whole-heartedly with the statements made by Congressman O'Hara in 1965 when this very important Bill was being considered on the Floor of the House that it was necessary and right that contractors holding contracts with the United States Government should at least, pay their employees a decent wage. As you well know, as does our dear friend Congressman O'Hara, that prior to the enactment of this Law, many contractors were paying their employees a sub-standard wage, and in our particular case

the Star Route Contractors (the contractors hauling the mails in which we are interested) in most cases, were only paying their employees the minimum rate or just barely above the minimum. Many of these Star Route contractors still have not been required to come under the provisions of the Service Contract Act-again because of the delaying tactics used! As you know Mr. Chairman, Star Route contracts are awarded for four year periods and inasmuch as the wage determinations previously made (as I cited after the enactment of this Law) were cancelled in 1967, many of the State Route Contractors were able to renew their contracts for another four year period, never having come under the provisions of this important legislation.

Mr. Chairman and Members of the Sub-Committee, we strongly urge you to, if necessary, pass new legislation which would force the Labor Department, the Postal Service and the General Accounting Office, if you please, to live up to the intent of the United States Congress in 1965 when the McNamara-O'Hara Service Contract Act was enacted into law. We feel now, as we felt then that this was and is, a very important piece of legislation. We strongly urge this Committee to use their influence to see that the intent of Congress at that time is carried out. Mr. Chairman and Members of the Committee, above all, it is our strong opinion that if the real intent of the Service Contract Act were carried out, the Labor Department in making their determinations for employees engaged in hauling the United States Mail by Star Route Contracts, would require these contractors be forced to pay no less than the U.S. Postal Service pays their employees for doing like-work. Therefore, we strongly urge you, rather than the Labor Department, to change the determinations that they have made for a lesser amount, and, that the Labor Department be required to issue wage determinations for Star Route contractors, requiring them to pay their employees (including all fringe benefits) wages equal to that received by Motor Vehicle Operators and TractorTrailer Operators of the U.S. Postal Service.

We feel that this only fair, and we are confident that this was the intent of Congress and Congressman O'Hara when the Bill was introduced back in 1965. As Congressman O'Hara said on the Floor of the House, the reason for introducing this important legislation was due to the fact that he had found out that employees in his own District, hauling the U.S. Mails, were being paid less than $1.00 per hour!

Mr. Chairman and Members of the Sub-Committee, we appreciate very much this opportunity of testifying this morning. Both Mr. Hawkins and I will be very happy to answer any questions that the Sub-Committee may have. I might add that Mr. Hawkins, before coming to Washington, D.C., also resided in the same area as Congressman O'Hara, so I am sure he is well aware of the situation that existed at that time.

Mr. PARRISH. We do appreciate the cooperation, Mr. Chairman, of you and other members of the committee for holding these hearings for we are very interested in any amendments that would be made to the McNamara-O'Hara Service Contract Act. We are very much interested in it. So with that, we will just summarize briefly.

We have been concerned since 1965 when the law was enacted by Congress and signed by the President of the United States. We are interested because of the fact the Post Office Department has used contract employees who were paid just the minimum rate of pay and sometimes not even that when they were caught up, until they were caught up with by the Labor Department or the laws that required them to pay the extra wages. I was quite interested yesterday morning in hearing testimony of Mr. Franklin and we are more or less in the same boat.

We are not competitive as he is. We are not permitted to make bids but we are threatened with our jobs by the postal service. Because contractors could do work cheaper than our employees can do it or members that we represent, then our work is farmed out to private contractors.

This is our prime interest, to protect jobs that we feel should be performed by postal employees rather than private contractors, especially private contractors that are paying substandard wages to their employees and this has been our problem for years and years.

Mr. THOMPSON. We don't yet know, at least I don't yet know, the manner in which this new postal corporation is going to be operated. We are going to be watching that with great interest.

Mr. PARRISH. I am glad to hear you say that, Mr. Chairman, because as you well know, we are now in negotiations with the Post Office and we are going to try to cover up some of the loopholes if we possibly can in this respect.

Mr. THOMPSON. That is a complicated operation. Among other things, they are taking hundreds of buildings, existing buildings, throughout the United States and transferring title to them. We don't yet now know how the real estate part is going to work out, except we do know it is going to be a billion dollar annual operation. We know further that the postmaster general has told postal employees that they are not to contact members of Congress and I would presume that our suggestions here are not particularly welcome either.

So we share, of course, your desire that this work, where possible, be done by postal employees as distinguished from private contractors. Mr. O'Hara?

Mr. O'HARA. Thank you very much, Mr. Chairman. Mr. Parrish is an old friend of ours. I can recall working with Mr. Parrish and his associate, Mr. Hawkins from Michigan, who I used to see around out there every once in awhile.

I can remember working with them on the enactment of this legislation. Mr. Chairman, I have here the report of this committee on the Service Contracts Act originated in this subcommittee. House Report Number 948, 89th Congress first Session, "report to accompany H.R. 10258" starts off this way:

The Committee on Education and Labor, to whom was referred bill H.R. 102382, *** for persons to furnish services to Federal agencies and for other purposes, having considered the same, report favorably thereon with amendment, and recommend that the bill as amended do pass.

The amendment is as follows:

"Page 7, beginning in line 19, strike out transportation, handling, or delivery of the mails' or". And that was the one amendment we made to that administration bill, the administration-supported bill of which I think you and I were cosponsors, that amendment was to strike out the exemption that had been contained in that bill, the exemption that would have applied to people delivering the mails. You remember that as the bill came over, the administration wanted to exempt deliveries of the mails from this and we insisted that they be included and that was the one amendment that we made to the bill in committee. But I am very disturbed because of what is now occurring. You will remember that at that time, at the time we first discussed this bill, a great deal of mail haulage was being let out on contract in large part because the contractor was able to find drivers that would work for a dollar an hour less and the jobs of regular federal employees were in danger and they were being taken by people who were working at substandard wages at which they could not decently support their fami

lies. I am proud to say that enactment of the legislation with the amendment I described did result in some improvement.

At least I thought so. What do you think?

Mr. PARRISH. It certainly did, Mr. O'Hara, and I think this is why the Post Office Department today is disturbed because it had approved some of these employees doing the work, because they are now having to pay the employees a decent wage.

I think this was the intent of Congress in 1965 when you gentlemen introduced the legislation and fought for them. The people have still never come under the provisions of this act because of the delaying tactics of the Labor Department or Post Office Department and this is what we said in our statement. In 1967 when they rescinded all of the wage determinations that had been made, and it took two years for them to make those wage determinations, then they rescinded them and contractors were permitted to renew contracts for another four year period.

Now with the letter Mr. Moran has issued, he is going to give them another chance because these contracts are going to be renewed this July in a lot of cases.

Mr. THOMPSON. They will be renewed this year?

Mr. PARRISH. Mr. Chairman, it varies state by state. All contracts are not renewed at the same time, the State of Georgia maybe could be renewing their contracts this July. The State of Texas and maybe the State of Michigan. It would vary state by state. But they are for four year periods and I will say all of the contracts that took advantage in 1967 are going to get another advantage this July.

Mr. THOMPSON. I don't know what the legislative situation is going to be, but since most of these contracts are multi-year contracts and so many of them are coming up for renewal this year, the question of predetermination has to be given some careful thought, because the contract might well over a four year period include three modest rate increases.

If a determination is made now and future increases are not taken into account, then your wages are going to be locked in for a four year period.

Mr. PARRISH. That is true.

Mr. O'HARA. Mr. Chairman, with respect to that, Mr. Parrish is absolutely right. First to begin with, the Post Office Department has always opposed having to have star route and other mail haul accounts employees paid the prevailing wage. As a matter of fact, the reason the administration bill had that exemption in it as it was admitted to us in the testimony by Mr. Donohu, the then solicitor of the Labor Department, was they had to put the exemption in even though it could not be justified because that was the only way they could get the Post Office Department to sign off on the bill. They knew good and well that their contractors were paying less than the prevailing wage. And so we had trouble getting the Post Office Department to enforce that provision right from the day the law was enacted and finally, as you point out at one stage, all of the existing determinations were withdrawn because of the screaming and howling from the Post Office Department because they were going to have to pay living wages to those contract drivers was just so loud that the whole city was becom