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That concerns me in this acute problem, that he does not have more personnel to do this, because he goes on to say that that policy is still reasonable and proper.

He also does start the next paragraph with an interesting sentence, “Wage rates paid service workers at Cape Kennedy have been and continue to be equal to or greater than those paid other workers elsewhere in the general community.” And that is one of the things which I would like very much to get from the witnesses testifying before us today, whether there are facts which would show us that that is not the case; because if, in fact, it is not the case, then I think we have one type of situation in which I will join with a strong push to say, “Then we are really getting a thwarting.”

I must confess I don't quite understand how that has been determined without making the wage determination.

Mr. THOMPSON. If the gentleman will yield, I was going to ask that.

Mr. DELLENBACK. I join the gentleman in this concern, because it seems to me it shows there has been an investigation, although apparently it is not the thorough investigation, craft by craft, that would reach across the lines.

I am neither defending nor attacking the Secretary, because I visualize our task as being investigatory, as the witness that just concluded. None of us is interested in demagoging the issue pro or con, but we are interested in its effect. We do not want the President to demagog or do it ourselves, but we are interested in what the facts are.

Mr. PEPPER. The whole matter involved here is the request that the Secretary discharge his duty as he sees it under the law, and that is about the sum of it.

Mr. DELLENBACK. If I may.

Mr. THOMPSON. I respectfully disagree; it is not for the Secretary to discharge his responsibilities as he sees it.

Mr. PEPPER. I am sorry; as the language of the law provides.
Mr. THOMPSON. As the law intends.
Mr. PEPPER. Yes; I correct that.

Mr. THOMPSON. Of course, we will have Mr. Silberman from the Department here to explain this remarkable inconsistency in the paragraph the gentleman from Oregon read and the first sentence of the next paragraph, which contradicts that which is above. He says: Since 1967 there has been no change, or the pattern cannot be determined because, in effect, he does not have the people to do it.

Then he goes on, in the next sentence, to make a statement that wages paid at Cape Kennedy have been and continue to be equal to or greater than those paid workers elsewhere.

We must find out the basis for that statement, or we must get them to try, if they can, to reconcile those two statements.

Mr. DELLENBACK. I think that is a very legitimate function of our committee, Mr. Chairman. I would say I interpret the function or obligation of the Secretary to be slightly different than your modification of Mr. Pepper's statement-namely, to push him to make the investigation, I gather, even if it is within his discretion not to make it; because, as I read section 4(b), it is not mandatory but it is within his discretion that he may provide such reasonable limitations and may make such rules and regulations allowing reasonable variations, tolerances, and exemptions to all provisions of the act, et cetera, as he thinks necessary and proper in the public interest and to avoid impairment of the conduct of business.

I gather that is what he says to the chairman and to this subcommittee in his letter, that under the perfectly proper authority given to him by this statute, he determined this is an area where the determination should not be made.

Mr. PEPPER. I think the intent of the act is that circumstances be taken into account ; when anybody makes a decision, it is against the background and facts of the situation that are involved. It is simply, under the facts of this case, it was the duty and intent of the act that the Secretary make that determination; that is the only way the standard of wages of these employees, 5,000, can be properly protected and public interest served.

Mr. DELLENBACK. It is this sort of testimony that is of particular value in showing to us that the Secretary has or has not done it, and that is why we need outside testimony.

Mr. THOMPSON. Thank you very much, Mr. Pepper.

Our next witness is Mr. Hugh Evans, Commissioner and Chairman of the Brevard County Commission of Florida. I might comment that Senator Gurney is on his way but has been delayed.

STATEMENT OF HUGH EVANS, CHAIRMAN OF THE BOARD OF

COUNTY COMMISSIONERS, BREVARD COUNTY, FLA. Mr. Evans. Mr. Chairman, my name is Hugh Evans and I am chairman of the Board of County Commissioners of Brevard County, Fla., home of the Kennedy Space Center, John F. Kennedy Air Force Station, and the Air Force Eastern Range.

I would like to interject here, of course, the fact that I am also very pleased to appear before this committee. I think you are doing a remarkable job, and I hope that you can, from these actions, prevail upon the Secretary to solve a very great problem we have in Brevard County. It has become greater in the past 2 years. My interest in presenting testimony to this committee is threefold:

(1) an intense feeling of responsibility toward maintaining the economy of Brevard County at as high a level of activity as possible;

(2) my natural concern with the individual employee who has worked in developing his skills and techniques to a point of excellence and who now faces a possible curtailment in his salary and wage structure without any corresponding reduction in his duties and responsibilities; and

(3) as a citizen of the United States, in doing everything within my power to insure the optimum continuance of the space program which has, in my estimation, been the paramount achievement of this Nation in becoming the focal point of technology and science for the peoples and nations of the world.

In its most recent past, Brevard County has experienced an unemployment rate of over 7 percent in 5 of the past 12 months. This is ample evidence that we do not need another bitter struggle which would throw additional human beings out of work or materially lower their salaries. It is inconceivable to me that the Federal Government would be a party to either creating unemployment or underemployment in Brevard County.

The sole purpose of the Service Contract Act is to establish wage standards to protect the earnings of service workers on Government contracts in the event of a changeover in contractors. In the absence of such standards, competitors for Government business—in order to reduce their bid price will bid the lowest possible wages simply to secure the contract. Even incumbent contractors, under the pressure of competition, must consider wage-cutting as the only means available to meet their competitors' prices and have any chance of retaining the Government business.

Obviously, contractors will be governed only by the Federal minimum wage of $1.60 per hour and by no other determination. Thus, salaries of employees currently on the job will be cut. This is precisely the reason why the Service Contract Act was created. This type of competition can be fair to present employees only if a wage determination survey is accomplished.

The following effects will result immediately if the Service Contract Act is not applied to the contractors bidding the Air Force Eastern Test Range pact:

(1) After the winner of the bidding goes to work July 1, 1972, the majority of the highly trained work force on the ETR, assembled especially for this technical task, will begin leaving their jobs as soon as they can obtain new ones. The result will be a drain of quality workers on the ETR and an economic drain on Brevard County, Fla.

(2) Demand will increase greatly for community relief services while, at the same time, reduced income will be felt by these very same community relief organizations who need the funds to provide services.

(3) Brevard County will find it extremely difficult to attract people who have the education and the skill to perform work in Government contracts, which, in the past, have been an integral part of the county's economy.

Employees who have committed themselves to careers in aerospace work will find that their career progress has been seriously disrupted if the Service Contract Act with a wage determination is not applied here. This will present a serious problem to employees over 10 years of age who might find themselves out of work or forced to take a cut in pay. Manpower cuts at the Kennedy Space Center and the ETR in 1969 and 1970 have already had a highly disruptive influence on both the social character and the economy of Brevard County.

As a result of the sharp manpower cuts, countywide social and welfare organizations are faced with increased demands for their services, but now these organizations have much smaller financial resources to operate with. The decrease in funds is directly related to pay cuts and layoffs.

A large number of Brevard County businesses were forced to close their doors as a result of the layoffs of 1969 and 1970. More of the same kinds of business closings and increased demands for the hardpressed county agencies will occur if pay cuts are allowed at the ETR.

By the commitment of its financial resources here, the U.S. Government has created a professional aerospace team which overcame serious technological problems in the beginning and surpassed early Russian achievements in space. But the Government's actions now will discourage future generations from considering any career in areo

space since an already suspicious younger generation can see what happens to a 43-year-old engineer with 15 years' service who suddenly finds himself out of work or taking a huge slice in pay. The Government cannot attract quality people in aerospace by its actions, and similarly, American business will become uninterested in this type of work.

Finally, I have presented to you 15 reasons why wage determinations are necessary in these contracts in Brevard County. It is my sincere hope that this important committee of the Congress of the United States can prevail upon the Department of Labor to make an immediate wage determination survey to be used in the negotiation of the present contract for the support services of the Air Force Eastern Test Range. If you are successful in this endeavor, you will have done a great service to your fellow man.

Mr. Chairman, I have listed these, and I prefer, on the basis of your letter, not to read them. Mr. THOMPSON. They will be included in your statement. Mr. Evans. Thank you, sir. (The document referred to follows:)

Why WAGE DETERMINATIONS ARE NECESSARY

1. The Secretary of Labor is charged with the duty to specify minimum wages

locality and must not fail to perform that responsibility.

2. If the Secretary fails to act, this negates the effectiveness of the Act, since it serves no purpose without wage determinations.

3. The failure to accomplish wage determinations is obviously contrary to the position of the Labor Department with respect to the purpose and intent of this legislation.

4. By failing to determine minimum wages, the Government is directly forcing substandard wages/salaries on the Aerospace service contractor industry while at the same there is a history of continued escalation in Civil Service wages/salaries with nothing but short postponement of the latest scheduled large increases by the wage/price freeze.

5. The Federal Government has added responsibility in this area because of the legal requirement that contracts be awarded to the lowest responsible bidder. Since labor costs are the predominant factor in most service contracts, the odds on making a successful low bid for a contract are heavily stacked in favor of the contractor paying the lowest wages.

6. Contractors who wish to maintain a fair wage policy will be unable to compete for Government service contracts with those who pay wages to their employees at or below the subsistence level.

7. When a Government contract is awarded to a service contractor with low wage standards, the Government is in effect subsidizing subminimum wages.

8. Large inequities presently exists with Civil Service above service contractor salaries for comparable professional levels and lack of wage determinations will result in a more extreme differential.

9. There are in excess of 5,000 people on the Contract who will be affected by lack of wage determinations. Their subsistence level will be reduced resulting in drastic personal hardships and shrinkage in an already depressed local economy.

10. The effect of competition alone will cause significant reductions in force with resultant economic impact but if those remaining must also suffer reduced wages due to lack of wage determinations, the economic impact will indeed be severe. The entire Brevard County and East Orange County business community will suffer.

11. Contract costs have decreased from approximately $104 million in FY-68 to the present $78 million-an average decline of about 6.5% annually. Lack of wage determinations will cause an abrupt drop greatly exceeding the previous annual average with proportionate economic impact.

12. Relationships with the Unions have been harmonious with all Union contracts containing "no strike" provisions. There have been no interruptions of service since the inception of the contract in 1953 due to the people's concern for the importance of the space and missile programs. Lack of Government concern and failure to establish wage determinations may result in the people's (Uniun) lack of interest in continuing "no strike" agreements with potential impact on our National space programs and international defense posture.

13. Present employees are long-term pioneers in the aerospace industry. The average employee is 46 years old (a peak financial need period for family and education) and has 13 years experience in the present work. More than 1,100 employees are over age 50. Lack of wage determinations will cause the "uprooting" of many of these long term pioneers and area residents adversely affecting those who have so loyally committed themselves to the best national interests. 14. The performance of these people has been outstanding. For example:

(a) Performance ratings have exceeded contract norms since the inception of incentive contracting in FY-66.

(b) During the past six years only two major missile launches (out of a total of 262) were postponed as a result of support services.

(c) Less than .02% of the $300 million of Government property was not accounted for during the past two years. Currently, supply inventory adjustments are less than 1% of the value.

(d) During the past decade the contractor's employees performed with less lost time due to injuries than the national average.

(e) Since the beginning of both the USAF and Defense Contractor's Cost Reduction Programs in 1963 the Contractor has saved the Government over $77.3 million by buying only what was needed, buying at the lowest sound price, and reducing operating costs through better management.

(f) Since initiation of a Value Engineering Program in 1964, savings of over $1.79 million have accrued to the Government by reducing the value of the contract and the cost of Government furnished property and equipment.

(g) The contractual services have been performed efficiently as above, yet the contract target costs have been underrun every year since 1966 with a resultant $15 million savings to the Government. These savings have been available for other uses, thus of benefit to all “taxpayers”.

If wage determinations are not accomplished it will adversely affect the workers attitude toward his job, his employer and especially the Government for placing him in the different environment-thus directly affecting the quality of service which the Government receives in support of national space and missile programs.

15. The work force is comprised of employees in 423 job classifications representing over 100 professions and trades, many of which require unique skills, technical competence and education attainable only through many years of direct experience.

A small number of jobs requiring these highly technical and unique trades and professions which will be lost or degraded if wage determinations are not made a re detailed below :

(a) Launch Complex mechanics stand alone in the unique and special talents required in the maintenance and operation of such exotic and peculiar systems as: Service Structures, Umbilical Towers, Elevators, RP-1 Fuel Systems, Liquid Oxygen Systems, Nitrogen Systems, Helium Systems, Propellant Systems, Oxidizer Systems, Compressed Air Systems, Launcher Systems, Blast Doors, Periscopes, Sequencers, Communications Systems, Fire I'rotection Systems, Blast Gauges, and Pad Abort Measuring Systems. The individual skills required in maintaining and operating these systems is even more peculiar and demanding since 100% reliability is required for launches. Most of these systems are operated on a sporadic basis for launch support and the task of achieving 100% reliability is a tremendous challenge requiring continuity, great experience, ability and motivation.

(b) Compressed Gases mechanics furnish critical skills to operate and maintain equipment and systems used to provide 6,000 to 10,000 pounds per square inch pressurized air, nitrogen, and helium gas to launch vehicles. spacecraft, missiles and nuclear submarines. Their experiences averages 13 years per man. Specialized original skills and critical training are required to repair and rebuild the units that convert liquid nitrogen to gaseous nitrogen. These men were originally trained by factory personnel and their expertise has developed to an unequaled point where the Air Force sends

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