subverted." It is difficult to understand what the Navy is talking about here but it is clear that its statement that there "was turmoil in the labor picture" or that there were elections and certifications occuring within the Pacific Missile Range was absolutely not a fact.

The Comptroller General cited the authority for the Labor Department under this Act and under the regulations permitting a non-determination of wages and then the Comptroller General stated what he viewed as a fair reason why the Department of Labor could or should not have made a wage determination in this case. So the Comptroller General stated as follows:

It is reported, however, that on September 14, 1970, the negotiator for NRPOLA called the Department of Labor and inquired as to the reason for the failure of the Department to issue a wage determination. He was advised that were a determination to be made, it would cover only a portion of the applicable labor categories (approximately one-third) and that, for it to be useful, the Navy would be required (presumably in its evaluation of offers ( to interpolate from such a determination compatible rates for non-covered categories. Such interpolations, it was felt, would have constituted fixed rations between the two classes of labor categories (those who were and those who were not covered by the Department of Labor determination), which would have been an improper injection of the Government into the negotiations then under way. The Department of Labor strongly advised, and the Department of the Navy concurred, that in light of these effects, a wage determination would be inadvisable.

You will not that this conversation upon which the Comptroller General relied in making his decision is reported to have been made September 14, 1970. Let's see what the Department of Labor gentleman testified under oath said in respect to this conversation.

Q. Didn't you get some telephone call from the Navy in respect to the question of the application of a wage determination?

A. Yes, sir.

Q. When did you get that?

A. My records show it was on the 14th.

Q. Of September?

A. Yes, sir.

Q. 1970?

A. And that is the only record I have of any telephone call in which I participated with the Navy. I think at that time I talked with Mr. Haindl.

Q. You had a conversation with Mr. Haindl?

A. Yes.

Q. Who is he with, the Navy?

A. I believe he is the contracting officer, as well as my memory serves me. Q. What is your memory in respect to that conversation on September 14th? A. My memory is that he said-or asked if there would be a wage determination in this case. I told him no. That is the substance of it.

Now there was a conversation that the Department of Labor had with the contracting officer of the Navy on September 4, 1970. Mr. Tybursky the gentleman from Labor kept a memo of this conversation. The last part of which is as follows: "We discussed possibility of using incumbent rates after conclusion of negotiations but they indicated the timing on the contract would not permit this. Also, I assume the firm would be reluctant to negotiate increases on the possibility we might issue. The gentlemen also indicated that a WD would be needed soon if one were to be issued (within a couple of weeks as I recall) so that all prospective bidders could be advised of the applicable rates. It was left that they would contact Hall or Landis if they decided to push for a WD but they hinted that they might not because of the problems which would result." You can see that the Navy indicated to the Department of Labor that the "timing on the contract" was an element which would not permit a wage determination. Actually the contract was not awarded until May 21, 1971, nine months later so that there was abundant time for the making of a determination. The "negotiations" that the Navy were discussing in this conversation with the Department of Labor referred to negotiations then going on between the Inland Boatman's Union and Kentron involving 23 employees. The Navy failed to point out this fact to the Department of Labor and failed to point out that there were 375 employees for whom no negotiations were going on since as I stated above certifications did not issue for the unit covered by the IBEW until December, 1970. The Navy also pointed out that it did not push for any wage determination "because of the problems which woud result". You can see also

that the Navy was determined to avoid a wage determination based on the incumbent contractor's rates, using as an excuse that "the timing on the contract would not permit this". (Emphasis supplied.)

You will recall as I previously stated that the Navy reported to the Comptroller General that its contracting officer had a conversation with the Department of Labor on September 14, 1970. The Comptroller General adopted word for word the position of the Navy in respect to that conversation which was to the effect that it would have been "an improper injection of the Government into the negotiations then underway" for the Department of Labor to make a determination. Mind you this was the advice allegedly given by the Department of Labor to the Navy. The Department of Labor is reported to have "strongly advised that in the light of these effects a wage determination would be inadvisable." Now you can see from the following examination of the very officer with whom apparently this "strong" advice was given there was a categorical denial of that statement of the position of the Navy which was relied upon by the Comptroller General. This is what the Department of Labor testified in respect to what was said.

Q. Starting from the second-to-the-last sentence of the first paragraph of that letter, in the middle of the page: (The Comp. Gen. Op.)

Such interpolations, it was felt, would have constituted fixed ratios-incidentally, I am talking about the Navy's position-"between the two classes of labor categories, those who were and those who were not covered by the Department of Labor determination, which would have the effect of a ratesetting by the Navy and would have been an improper injection of the Government into the negotiations then underway.

The Department of Labor strongly advised and the Department of Navy concurred that in the light of these effects-injection into labor negotiations—a wage determination would be inadvisable.

Is that an accurate statement as far as the position of the Department of Labor is concerned?

A. This is a misquotation, so far as I am personally concerned. We have no such policy.

Q. Did you get a copy of the position of the Navy submitted to the General Accounting Office?

A. No, sir.

Q. Did the Navy, through their procurement officers or anybody else in the Navy, state to you that they were faced with propositions:

Throughout the procurement the Navy had been aware of the turmoil existing in the labor picture?

Did they tell you there was turmoil there?

A. They didn't tell me that.

Q. Did they tell Mr. Tybursky, as far as you know?

A. No, sir.

Q. There is nothing in his memorandum

A. No.

Q. He didn't tell you anything

A. No. These are just notes he made.

Q. Did he tell you that the Navy had said, and as they said before the General Accounting Office:

The labor negotiations, elections, and certifications occurring within the Pacific Missile Range instrumentation facilities, coupled with the uncertainties of the ultimate refinement of the 'successor-employer' doctrine under the recent NLRB decision in re. Burns, which made it incumbent upon NRPOLA to weigh very carefully the available methods of evaluation of proposals in order to ensure that the interests of the Government be protected and that the competitive procurement system be not subverted....

Did they tell you anything about turmoil on the island?

A. They didn't tell me anything.

Q. About elections and certifications?

A. No.

On April 6, 1971, the Honorable Laurence H. Silberman, Under Secretary of Labor, accompanied by Robert D. Moran, Work Place Standards Administrator, testified before this Committee. He said, on page 160 of the transcript of testimony, as follows:

The 'locality' within which a particular determination applies is therefore defined in each determination on the basis of all the facts and circumstances

pertaining to that determination. Each determination applies only to contracts for the locality which it includes.

The recent changes in the methods of determining the appropriate geographical area of interest to this subcommittee relate to what may be called 'enclave rates' or 'facility rates.' These terms require explanation.

Early in the administration of the Service Contract Act, it was found necessary to limit the 'locality' for purposes of wage data information and the application of the resulting wage determination to the geographic confines of some, but not all, Government facilities and installations.

In day-to-day operations certain inconsistencies and problems developed. For example, in some instances where an 'enclave' had been carved out of a larger metropolitan area, employees within the 'enclave' had a higher predetermined wage rate than employees performing the same work at a nearby installation outside the 'enclave'.

It became evident that a general review of these procedures was necessary. This was done in 1969. As a result it was decided that 'enclave rates' and 'facility rates' should be continued. Written guidelines were subsequently issued and are set out in Section 303 of the Manual of Policies and Procedures for Administration of the Service Contract Act. This manual is included in the appendix of my testimony.

(The document referred to appears in the appendix.)

Boiled down, here is what happened:

No change at all was made in cases where the Government facility or installation is situated in an isolated locality and the only available wage rate and fringe benefit data is that actually being paid by the contractor, either in accordance with a collective bargaining agreement or company policy, to the employees involved.

In such cases we have continued as in the past to issue wage determinations based on the wage rates and fringe benefits actually being paid at the time the determination is issued.

Now as I read that testimony, Mr. Silberman submitted the Manual of Policies and Procedures for Administration of the Service Contract Act to this Committee and indicated that these were the written guidelines under which the Service Contract Act was administered. But listen to the excerpts of certain testimony of the representative of the Department of Labor whose deposition was taken, who as stated before was, in fact, speaking for the Secretary:

Q. Is it possible to issue a determination covering this facility only, what they call an enclave or facility?

A. The Department frowns on that. Our instructions are not to do that, except in highly unusual situations. My instructions are not to do it.

Wherever we want to do that, we take it up with the Administrator, and he makes a decision. The last decisions have been negative.

I am acting under instructions in that regard.

Q. I know about your instructions. But how about your manual? Do you follow your manual in making these wage determinations?

A. As much as we can.

Q. Sometimes you don't follow the manual?

A. Precisely, no. It depends on how you interpret some of the wording of the manual, of course.

*

Q. Did you seek any information about the very incumbent contractor here, or any other incumbent contractors on this isolated Federal installation?

A. No, sir.

Q. Why not?

A. For the very reason that I gave. We would have to make a wage survey.

*

Q. But (b) states:

"A locality may be geographically limited to a particular Federal installation of facility."

A. That is the so-called "enclave."

Q. That enclave business is the thing that your people don't care too much about?

A. No sir.

Q. That is right.

But your policy set forth here says:

'If a facility or installation is situated in an isolated locality and the only available information pertaining to prevailing wage rates and fringe benefits is that actually being paid by a contractor, either in accordance with the collectivebargaining agreement or company policy, to workers performing on that contract . . .

There were workers performing for Kentron on that contract, were there not? A. Yes. Kentron had employees.

Q. Wouldn't that definition of a locality in respect to a facility or installation permitted you to make a wage determination based on Kentron's rates being paid to their employees? Isn't that what that says?

A. I was operating here under Mr. Moran's instructions.

Q. I asked you

A. I am going to answer it.

Q. You can say anything after you answer the question, unless your counsel wants to say, don't answer it.

I am asking you if this isn't what permits you to make a wage determination based on the incumbent contractor's rates payable to its employees.

A. If these were the only instructions I had, yes, sir.

Q. Mr. Hall, I am not asking about your instructions. I am asking

A. I answered your question. I said, yes, sir.

Q. I am asking about what is contained in your

A. That is what it says. You read it accurately.

Q. So you could have taken the incumbent contractor's rates for these very employees-just a minute. Let me finish the question-and applied a wage determination taking the definition of 'locality' as contained in (b) (1)?

I have instructions from Mr. Moran, who was the then Administrator, that we frowned on the use of enclave determinations. And he did not want us issuing an enclave determination.

To the extent that my answer awhile ago encompassed this, I said if these were the only instructions I had, that would be true.

I think previously I said this is not all of the instructions under which we operate. This is simply a little manual that we got up for ourselves.

By Mr. DUNN.

Q. That is the little manual that you got up for yourselves?

A. It does need amendment.

Q. Can I finish my question?

A. Yes.

Q. That little manual is given to labor organizations that represent employees? A. I am not sure who has it. I think Mr. Silberman gave it to the Congress. Q. He did.

A. You say so.

Q. That is very interesting about what Mr. Landis told you to do.

A. I said 'Mr. Moran.'

Q. Moran, whoever it was.

Is it under the very section that I read you that you could have made a determination based on the incumbent contractor's rates in accordance with your policy and manual written here and available to all of us?

Q. I am asking you, not about Mr. Moran's or Mr. Landis's-the stuff that you have in that book there, whatever it is. I haven't seen that. It is not made available to me or to my clients.

I am asking-and this is the third time, Mr. Hall—that you could have applied 303(b) (1) and made a determination based on the incumbent contractors' rates, to wit, Kentron, that were being paid to the workers of Kentron who are identical to the workers now being employed by Dynalectron? You could have done that under that section?

A. Under that section.

But I had additional instructions not encompassed by that.

Q. Did somebody tell you, 'Don't pay any attention to this one here'?

A. Mr. Moran is the boss.

Q. All right. He is the boss.

He told you to do this, never mind the manual?

A. He didn't say anything about the not minding the manual.

Q. Does Mr. Moran read the manual?

A. Of course, he knows what is in the manual.

Q. You don't mean Mr. Silberman tried to mislead Congress as to how you people operate down there by sending this in to them and Mr. Moran is telling you to operate differently?

Q. I understand what it says.

What I am saying is that even if this installation was located in or near a metropolitan area, where, for instance, a technician's rate in a survey for the metropolitan area may be $2.50 an hour, if in the installation itself it was $3.00 an hour, you were given the right or the obligation to take a choice of making a determination of $3.00 an hour. Isn't that correct?

A. Absent Mr. Moran's instructions not to apply this enclave thing.

Q. Let me ask you a question.

Is Mr. Moran making the rules and regulations and the policies in respect to the administration of the Service Contract Act? Or are they contained in what I am reading from, the policy in the manual?

A. He thought he was making them. He was the Administrator.

Q. What is your feeling about it? Does the manual take precedence over Mr. Moran's opinions and his decisions?

A. No, sir.

Q. What are we supposed to rely on? Are we supposed to rely on Mr. Moran's— A. I am telling you what I rely on.

As you may see, there seems to be abundant inconsistencies as to what Mr. Silberman told this Committee and what the Secretary of Labor says in this deposition as to how the Service Contract Act of 1965 is administered.

It would take more time than this Committee can spare to listen to the many other inconsistencies shown in the deposition of the Department of Labor, but I suggest if the members of this Committee have the time, a quick reading of that deposition will indicate that the Service Contract Act could have been applied easily and without complication under the circumstances of this case. I say that both the Navy and the Department of Labor throughout the history of this procurement engaged in acts of misfeasance and nonfeasance and that the decision of the Comptroller General is entitled to no weight whatsoever because it is based upon inaccuracies relied upon by him in order to reach a wrongful decision.

Mr. Chairman, I have burdened this committee with all this to show the selfcontradictory policies and practices of the Department of Labor and procuring agencies of the Federal Government in administering the Service Contract Act— for here in the case of the Air Force Eastern Test Range, Kennedy Space Center, Florida, the Department of Labor had in its possession all of the necessary wage data and could have made a wage determination but failed to do so. Their reason for the decision not to make a wage determination in this case was not that wage data was unavailable but was because:

1. The Brevard area is now living on an inflated economy caused in part by highly inflated salaries which were paid during the Cape heyday. To make wage determination would be to continue the artificial conditions which now exist at the Cape.

2. To make a wage determination at this time would be inconsistent with current wage-price-rent freeze.

The attorneys for our International and other International Unions are looking into the legal authority for this directive of the Secretary and there would seem to be no such authority enabling him to do so. Even so, we believe the Secretary's action was arbitrary and capricious because the collective bargaining history of our IBEW Bargaining Unit shows that the negotiated improvements in wages in every agreement beginning with the initial agreement in 1961 were well within the guidelines established by the Federal Government at the time. The current agreement, which was negotiated in 1969 and will expire in March of 1972, shows that in each year of the agreement there was a 4.3% increase. Moreover, wages now paid the electronic technicians and others in our bargaining unit at the Kennedy Space plant are considerably below the average wages paid by other government and non-government related agencies for equivalent skills in the area. How, in good conscience, anyone can call the Cape Kennedy area economy inflationary in light of the high unemployment and recent cut in wages suffered by those employees working for NASA contractors is beyond our comprehension.