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Gurney presented us with some statistics yesterday showing the contrary.

Mr. FREY. I think the testimony you are going to receive later this afternoon will show that comparing the wages with, for example, Bell Telephone, they range from $6 to $35 a week less in that area.

Anybody who thinks the conditions in 1967 are the conditions today haven't lived through the last few years. They must be reading 1967 papers. Things have changed, and not for the better.

Mr. THOMPSON. You are quite right, and the Congress, whether it was wise or not, has cut back tremendously in the overall spending for the space effort. But the contract about which you and your colleagues on both sides of the aisle are so deeply concerned involves $78 million, 5,000 jobs, and it certainly isn't going to help the economy to put that out for bid when you know that the bidder is going to bid solely on the basis of the price of his labor. This will reduce the income of the workers, which in turn reduces their spending power.

Now, we had a little discussion yesterday as to whether the Secretary is following the law in thus using his discretion.

I said yesterday, and I repeat today, that this in a sense amounts to the executive branch thumbing its nose at the Congress and at the intent of the Congress. "We are deeply aware of the tragedies involved here, but the fact is that if $78 million is to be spent on this contract, then it should be spent at the wage levels which are comparable to those in the rest of the area.

Mr. FREY. I think that is an important point, Mr. Chairman, because I don't think that anybody down there is saying, “Let's keep inflationary wages."

To begin with, I don't believe they are. But I think certainly in order to ascertain where we are, we ought to make a wage determination..

Mr. THOMPSON. If I understand the wage freeze which is in effect, and Secretary Connally says is going to remain in effect, then it would be impossible on the face of it to increase the wages or to negotiate a contract with wages in excess of those being paid on August 15.

Do you agree with that interpretation?
Mr. FREY. Yes, I think that is right.

I would like to go on with a couple of other thoughts I touched on in my statement, the question of the bidding. I think we can say, for sake of argument, that bidding on these contracts may be necessary in the future, but even if we do say this, I think we should be aware that the Burns case is now before the Supreme Court.

I wrote the Solicitor General and asked him to expedite, if he would, the argument of this case. I would like to put into the record a reply from him, in which in essence he says if the Court decides to hear the case the Government will make every effort to assure the case is heard as soon as possible, consistent with the Court's schedule.

I tried to prod in that direction a little bit. Mr. THOMPSON. Without objection, the letter will be made a part of the record.

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(The letter referred to follows:)


Washington, D.O., September 21, 1971. Hon. Lou FREY, Jr. House of Representatives, Washington, D.C.

DEAR MR. FREY: This is in reply to your letter of September 14, 1971, requesting me to move the Supreme Court to expedite consideration of the pending Burns case involving the validity of the National Labor Relations Board's "successor employer" doctrine. Your request is made because of the impact of that doctrine, which the Court of Appeals for the Second Circuit rejected in this case, upon labor relations at an Air Force installation in Florida.

There are two related cases before the Court growing out of the Second Circuit's decisions. On July 23, 1971, I filed, on behalf of the National Labor Relations Board, a petition for a writ of certiorari (No. 71-123) to review the court of appeals' decision insofar as it rejected the "successor employer" principle. The respondent has filed a brief in opposition. In addition, the employer, on August 9, 1971, filed a petition for certiorari (No. 71-198) seeking review of the portions of the decision of the Second Circuit that upheld the Labor Board : it challenges the Board's designation of the unit for collective bargaining and the agency's determination that the Burns company is in fact a successor employer. The Board has obtained an extension of time to September 23, 1971, for responding to that petition, and it expects to file on that date an opposition which will contend that those issues do not warrant Supreme Court review.

While I am sympathetic to the problems that the Second Circuit's rejection of the successor employer principle may create for your constituents, there is no likelihood, I think, that the Supreme Court would expedite its consideration of the case. When the Court reconvenes in October, it will have to decide which of the many cases that have been filed during the summer recess it will hear. It is likely that the Court will act on the case early in the Term. If the Court decides to hear the case, the government will make every effort to insure that the case is heard as soon as possible, consistent with the Court's own time schedules and the time needed for preparing the best possible brief. Very truly yours,


Solicitor General, Mr. FREY. If we could have delayed the bidding on this contract, until the case was argued and decided, as it will be, this would have made a great deal of sense.

We tried to approach the Air Force on this, but obviously they didn't respond favorably.

I would certainly hope that the committee would strengthen the act, to carry out the legislative intent so that we won't get into a situation such as this where the Secretary has so much discretion.

I hope that through this committee's actions, and frankly through the spotlight turned on this, that maybe the Secretary, when he comes in front of you, will reconsider. I think it is very important,

Mr. THOMPSON. Congressman Frey, I quite agree, and I said yesterday to Senator Gurney and the others that it would be my fervent hope that the Secretary will look once again to the legislative intent, which he will hear about once again from us tomorrow, and make the determination on the basis of the existing law.

I don't want, necessarily, if it can be avoided, to take away the section 4(b) discretion. I would just like to clarify it for him, and I would like him to exercise it.

The fact is that under the existing law he could perfectly well say, “We will make a wage determination and the bids will come in based on the various wage levels, and they will not be higher than any of the existing ones as of August 15.”

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That would preserve his precious economy argument. It would preserve the price level at the August 15 level. It would keep the money flowing to those people who need it so badly, and would keep the economy going down there.

Now, it isn't going to do the economy in Brevard County, or any place else where there are service contracts, one bit of good to reduce the income level of these workers, because they, in turn, will have reduced purchasing power, and my notion of it is that we want to get the economy moving again. We are not asking for inflation.

In your statement you pointed out that one group of workers, represented by the IBEW, has had an increase of only 3.9 percent per year. You know that is 2.9 percent below the current inflation level, and one hundredths of 1 percent above what they hoped to achieve by the present economic policy.

Mr. FREY. If I am not mistaken, too, Mr. Chairman, the Pan-Am employees did not take an increase as was done by other Pan-Am unions around the country in view of the wage situation and the problems there.

So it is, I think, a real sad situation, and it is one that puts both sides, labor and management, in a bind, and nobody knows the rules.

Nobody knows where they stand, and it isn't healthy.

Mr. THOMPSON. We think we know what our intent was in 1964. Mr. O'Hara, who isn't here today, was the author of the bill. I was on the committee. It was reported out of my subcommittee at that time. We know, for instance, that Dynamic Enterprises, a corporation with a record of 18 flagrant violations of the act, hasn't been black listed, and they refuse to black list them. They move from place to place on an annual basis, and what do they do?

Their purpose is perfectly simple. They are really trying to use the federal minimum wage level of $1.60 as the basis of their bidding. They will bid on the basis of $1.60 and hope they can chisel the workers out of more.

The military establishments where they have service contracts have been condoning this, and indeed supporting it, and it has got to stop.

Mr. Frey. I know the time, and I appreciate your letting me come by.

Mr. THOMPSON. To the rest of you, to Mr. Salamone and Mr. Horst, and Mr. Sweeney, I will go and respond to this roll call and be back.

It is obvious that we are not going to have time to listen to the statements in full, but they will be put in the record. If you will cooperate as Congressman Frey did, who has a very thoughtful and complete statement which he briefed, if you will be kind enough to do that when I come back, I assure you of our careful attention to your statements.

I should be back here in about 14 minutes. (Recess taken.) Mr. THOMPSON. Our next witness is Mr. Anthony J. Salamone, who represents Charles H. Pillard, international president of the IBEW, and Mr. William Murphy, president of Local 2088 IBEW, Cape Kennedy Space Center.

Welcome gentlemen. I am sorry for all the delays today..



Mr. SALAMONE. With me is Thomas X. Dunn, Mr. Chairman, associato general counsel.

We realize you are pressed for time and don't have time to listen to the complete statement.

I think if you have read our statement, Mr. Chairman, you will find we have detailed a case at the Pacific Missile Range which has the identical issue, and that is the failure of the Secretary to make a wage determination,

The matter of the Pacific Missile Range is before the courts. We think, and we are confident, that we will prevail in this matter.

That case, as well as the case at Cape Kennedy, I think, pleads to high heaven for relief. I am not really going to get into a big dialog, I would hope, because I realize the chairman is pressed for time and the whole committee is pressed for time.

But as you put it so well, the lame excuse of inflationary rates at Cape Kennedy, especially when applied to the bargaining history of IBEW, is ridiculous.

One thing I want to point out is that during the course of our litigation with respect to the Pacific Missile Range, we had an opportunity to take the deposition of the Secretary of Labor. We submitted that deposition to the committee for its review.

I think that it shows the inconsistencies of the policies, as well as the manual that was submitted to this committee by Under Secretary Silberman in the spring of this year.

I would like, then, to submit our entire statement into the record. Mr. THOMPSON. It will be printed in full.

(The statement referred to follows:) On behalf of President Charles H. Pillard of the International Brotherhood of Electrical Workers in whose place I am appearing today, I would like to say that we appreciate the opportunity to present our views to this committee, in respect to the failure of contracting agencies and the Department of Labor to properly administer the Service Contracts Act of 1965, as this Congress intended when that Act became law. With me is Thomas X. Dunn, Associate General Counsel of the IBEW and Wm. Murphy B/M of L. U. 2088, Cape Kennedy, Fla. and with your permission we will now read into the record a statement of President Pillard.



On August 5, 1970 a contracting officer of the Navy sent to the Department of Labor a notice of intention to make a service contract to operate and maintain Pacific Missile Range Facilities at Barking Sands, Hawaii, plus remote island sites and mobile facilities. That notice was received by the Department of Labor on August 13, 1970 and the contracting officer stated to the Department of Labor in the notice that solicitation of bids for the contract would be August 20, 1970.

Question 7 on the form document required the contracting officer of the Navy to submit "current wage data" and instructed that officer that if no wage determination was currently applicable that he was to attach whatever information was available on wages being paid in the locality. This information as you know permits the Secretary to make a wage determination as he is required under the terms of the Act. That question was unanswered by the Navy. The instructions on the back of the form also clearly indicate that "if no wage de termination has been issued attach whatever information is available on wage and fringe benefits being paid in the locality.” On September 3, 1970 the Department of Labor stated in the box set out for its response that was of this date no wage determination applicable to the specified locality and classes of service employees has been made.” The form also clearly indicated on its face that "Kentron Hawaii Ltd. was the incumbent contractor performing services for the Navy at the Pacific Missile Range." The officer in charge of making a determination in this case made no effort to determine why the Navy had not submitted available information if any there wa's, or why the notice of intention to make the Service Contract was filed outside the time required by the Labor Department's rules and regulations in respect to Service Contracts nor did the Department of Labor seek to determine whether in fact there were employees in the locality" performing services similar or identical to those for whom a wage determination was being requested. As a matter of fact the Department of Labor and the Navy made no effort, whatever, that could possibly have resulted in the issuance of a wage determination, as this Congress clearly intended. Actually, the incumbent contractor, (Kentron) who was then employ. ing some 350 of the very employees for whom a' wage determination should have have been made had been working there for Kentron before the Navy's eyes for the past 10 years. It is ridiculous to assume that those rates were not readily available to the Navy. It is just as ridiculous to assume that the officer in charge of making a determination for the Department of Labor could not make the effort of making a telephone call to determine the rates that were then being paid to these employees.

This matter is now in litigation before the U.S. District Court for the District of Columbia, A decision may be had on Motions for Summary Judgment filed by the IBEW as against both the Secretary of Labor, the Assistant Secretary of Navy, who allegedly "reviewed” the action of the contracting officer, and the contracting officer himself. Notice to take the deposition of the Secretary of Labor was given, and, as permitted, by the Fed. Rules of Civ. 'Proc. à gentleman was produced in his stead, who also happened to have personal knowledge of the wage determination question, but the statements that this deponent makes in his deposition, and particularly the elucidation of this Act by the Derartment may be taken as those of the Secretary himself. This deposition has been made available to the Committée. After refusal by the Department of Labor to make a determination and the failure of the Navy to give available wage data the matter was protested to the Comptroller General of the U.S. During the course of this litigation' and the presentation before the Comptroller General of the United States it has now been determined that statements made by the Navy were inaccurate, and, unfortunately, these statements were relied upon by the Comptroller General in reaching his decision denying our protest. For instance, the Comptroller General had been led to believe by the Navy and the Navy is now trying to get the U.S. District Court to believe that it would have been improper for the Navy to move for a wage determination because at that particular time when the wage determination was requested there were contraet negotiations going on. As a matter of fact as far as IBEW was concerned there were no wage negotiations going on. A certification naming an affiliated local of the IBEW as representative of the employees involved was issued by the NLRB several months after the request for a wage determination. The Navy added to the inaccuracy by stating to the Comptroller General and now is saying to the Court that throughout the procurement the Navy had been aware of turmoil existing in the labor picture in the locality in question. Labor negotiations. elections and certifications occuring within the Pacific Missile Range instrumentation facilities, the Navy stated, coupled with the uncertainties of the ultimate refinement of the "successor-employer doctrine" under the Burns Decision made it incumbent upon the Navy to weigh very carefully "the available method of evaluation of proposals in order to insure that the interests of the Government be protected and that the competitive procurement system be not

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