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[H.R. 6088, 88th Cong., 2d sess.) A BILL To provide wagę standards for persons engaged by Federal contractors or

subcontractors to furnish services or maintenance work to Federal agencies, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Service Contracts Act of 1963".

SEC. 2. Whenever a Federal agency enters into a contract in excess of $2,000, whether negotiated or advertised, which (1) provides for the furnishing of services, including janitorial, custodial or cleaning services, or maintenance work to a Federal agency, and (2) requires or involves the employment of employees of the categories specified in section 202 (7) of the Classification Act of 1949, as amended, the contract and any bid specification therefor shall contain the following representations and stipulations :

(a) That the contractor and any subcontractors shall pay wages to all employees engaged in furnishing services or maintenance work within the United States in the performance of the contract at rates not less than are paid, pursuant to section 202 (7) of the Classification Act of 1949, by the Federal agency to its employees performing work of equivalent difficulty and responsibility : Provided, That the Federal agency shall determine prevailing wages under this subsection in the same manner as such agency determines prevailing wages for its own employees pursuant to section 202(7) of the Classification Act of 1949, as amended ;

(b) That the contractor and any subcontractor shall provide for such employees health, life, and accident insurance and vacation and retirement benefits equivalent in value to those provided by the Federal agency to its employees or, in lieu thereof, shall pay to such employees an amount equal to the cost to the Federal agency (as specified in the contract) of furnishing such insurance and benefits in addition to the wages specified in subsection (a);

(c) That on the date when the employee is first employed, and not less than quarterly thereafter on a regular payday, the contractor or subcontractor shall distribute to each employee engaged to furnish services or maintenance work within the United States in performance of the contract, a notice of the compensation required under subsections (a) and (b) of this section, on a form prepared by and in accordance with regulations of the contracting agency, unless a prominent and easily accessible place is available where the work is performed and a notice of the required compensation is posted at such place;

(d) That no part of the services or maintenance work furnished in the United States pursuant to the contract will be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision of the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health and safety of employees engaged to furnish the services;

(e) That, if the contracting officer finds, after investigation, that employees have been paid compensation less than required by the contract, he may withhold from the contractor so much of accrued payments due on the contract or any other contract between the same contractor and the Federal agency, as he may consider necessary to pay such employees for the period covered by the investigation, the difference between the compensation actually paid by the contractor or subcontractor and the compensation required by the contract;

(f) That the investigation report and findings of the contracting officer shall be submitted to the head of the contracting agency or his authorized representative who shall consider in connection therewith such additional evidence or arguments as the contractor or subcontractor may present pursuant to such procedures as the head of the agency shall establish; and that the decision of the head of the contracting agency as to underpayments or other breaches of the contract stipulations required by this Act shall be conclusive upon all Federal agencies and, if supported by substantial evidence, conclusive in any court of the United States;

(g) That in the event it is found by the head of the contracting agency that any employee has not been or is not being compensated in accordance with the contract or that a breach or violation of any of the other representations and stipulations required to be included in the contract has occurred, the contracting officer may, by written notice to the contractor, terminate his right to proceed with the work or such part of the work as to which the violation has occurred, and prosecute the work to completion by contract or otherwise, and the contractor and any sureties shall be liable to the Govern

ment for any excess costs occasioned the Government thereby. SEC. 3. (a) The Comptroller General of the United States is hereby authorized and directed to pay directly to the employees underpaid, from any accrued payments withheld under the terms of the contract, any compensation which the contracting agency has found to be due pursuant to this Act; and the Comptroller General is further authorized and directed to distribute a list to all agencies of the Government giving the names of persons or firms that the contracting agencies have found to have breached or violated any of the representations or stipulations required to be included in a contract pursuant to this Act. Unless the head of the contracting agency otherwise recommends, no contract of the United States shall be awarded to the persons or firms appearing on this list or to any firm, corporation, partnership, or association in which such persons or firms have a substantial interest until three years have elapsed from the date of publication of the list containing the names of such persons or firms.

(b) If the accrued payments withheld under the terms of the contract are insufficient to reimburse all employees with respect to whom there has been a failure to pay the compensation required pursuant to this Act, the United States may bring an action against the contractor, subcontractor, or any sureties in any court of competent jurisdiction to recover the remaining amount of underpayments. Any sums thus recovered by the United States shall be held in a special deposit account and shall be paid, on order of the Attorney General, directly to the underpaid employee or employees. Any such sum not paid to an employee because of inability to do so within three years shall be covered into the Treasury of the United States as miscellaneous receipts.

SEC. 4. In order to assure coordination of administration and consistency of enforcement of the provisions of this Act, the Secretary of Labor shall prescribe appropriate standards, regulations, and procedures which shall be observed by the Federal agencies, and cause to be made by the Department of Labor such investigations with respect to compliance with and enforcement of the provisions of this Act as he deems desirable. The Secretary of Labor may provide reasonable limitations and may make rules and regulations allowing reasonable variations, tolerances, and exemptions to and from any or all provisions of this Act respecting minimum wages or the extent of the application of this Act to contractors.

SEC. 5. Upon a written finding by the head of the contracting agency that the inclusion in the proposal or contract of the representations or stipulations set forth in section 3 of this Act will seriously impair the conduct of Government business, the Secretary of Labor may make exceptions in specific cases or otherwise when justice or public interest will be served thereby. Upon the joint recommendation of the contracting agency and the contractor, the Secretary of Labor may modify the terms of an existing contract respecting minimum wages as he may find necessary and proper in the public interest or to prevent injustice or undue hardship.

SEC. 6. In the event of a national emergency, the President is authorized to suspend any or all of the representations and stipulations contained in section 3 of this Act. SEC. 7. As used in this Act

(a) The phrase "contract which provides for the furnishing of services, including janitorial, custodial or cleaning services, or maintenance work to a Federal agency" shall include all such contracts except

(1) contracts subject to either the Act of March 3, 1931 (46 Stat. 1494), as amended, or the Act of June 30, 1936 (49 Stat. 2036), as amended;

(2) contracts for the carriage of freight or personnel by vessel, airplane, bus, truck, express, or railway line where published tariff rates are in effect;

(3) contracts for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934;

(4) contracts for public utility services, including electric light and power, water, steam, and gas; and

(5) employment contracts providing for direct services to a Federal agency by an individual or individuals.

(b) “Employee" means any person engaged in a recognized trade or craft, or other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual labor occupation; and in a position, including a supervisory position, having trade, craft, or laboring experience as the paramount requirement; and shall include all such persons regardless of any contractual relationship that may be alleged to exist between the contractor or subcontractor and such persons.

(c) The term “Federal agency" includes (1) the executive departments, (2) the independent establishments and agencies in the executive branch, including corporations wholly owned by the United States, (3) the Administrative Office of the United States Courts, (4) the Library of Congress, (5) the Botanic Garden, (6) the Government Printing Office, (7) the General Accounting Office, (8) the Office of the Architect of the Capitol, and (9) the municipal government of the District of Columbia.

(d) “Compensation" means wages and health, life, and accident insurance and vacation and retirement benefits (or payments equal to the cost to the Federal agency of furnishing such insurance and benefits).

(e) For the purpose of geographical definition, the “United States" shall include any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act (ch. 345, 67 Stat. 462), American Samoa, Guam, Wake Island, and the Canal Zone, but shall not include any other territory under the jurisdiction of the United States or any

United States base or possession within a foreign country. SEC. 8. If any provision of this Act, or the application thereof to any persons or circumstances, is held invalid, the remainder of the Act, and the application of such provisions to other persons or circumstances, shall not be affected thereby.

SEC. 9. This Act shall apply to all contracts entered into pursuant to nego tiations concluded or invitations for bids issued on or after ninety days from the effective date of the Act.

Mr. O'HARA. I would like, before having our first witness, to make a. brief statement in explanation of these proposals. Each of them has the same objective; that is, to provide wage protection to the employees of employers holding Government contracts providing for the performance of services. Under existing law, employees of employers working on federally financed construction contracts receive wage protection from the Davis-Bacon law. Employees of contractors holding Government production contracts receive similar wage protection on an industrywide basis from the Walsh-Healey Act. There is no protection whatsoever afforded to wage standards when a service contract, as opposed to a construction or production contract, is involved.

Briefly, H.R. 1678 would provide such protection to workers on these contracts through a Davis-Bacon type of determination of prevailing wage in the area in which the work is being

done. The difference between H.R. 1678 and H.R. 6088 is that H.R. 6088 would accomplish this objective by imposing a standard upon these contractors that would require that they pay to their employees on such contracts the wage board rates prevailing in that agency for employees of the agency in that area doing the same or similar work.

These are the only differences between the two bills, other than one jurisdictional difference. H.R. 1678 applies to contracts in excess of $10,000. H.R. 6088 applies to contracts in excess of $2,000.

The first witness today is the international president of the United Plant Guard Workers of America, Mr. James McGahey, who is accompanied by Mr. Winston Livingston, counsel of the Plant Guard Workers.

Will you gentlemen please step forward and take your places? I have the privilege of knowing both of these gentlemen since they are

neighbors of mine. As a matter of fact, Mr. Livingston is a constituent, and I know them both to be very fine gentlemen, who are well versed in the matter to which they will refer.

Now, Mr. McGahey, would you please identify yourself and, Mr. Livingston, identify yourself! Then you may proceed in any manner you may wish to proceed. We have your prepared statement. You may read that statement or, if you wish, you may submit the statement for the record and summarize its contents.

STATEMENT OF JAMES C. McGAHEY, INTERNATIONAL PRESIDENT;

ACCOMPANIED BY WINSTON L. LIVINGSTON, GENERAL COUNSEL, UNITED PLANT GUARD WORKERS OF AMERICA (INDEPENDENT), DETROIT, MICH.

Mr. McGAHEY. I am James C. McGahey, international president of the United Plant Guard Workers of America, and I would prefer to read the statement into the record, and I have a few remarks along with my statement as I am going along. Mr. O'HARA. That will be all right. Now, Mr. Livingston, will you identify yourself!

Mr. LIVINGSTON. Yes. I am Winston L. Livingston. I am general counsel for the United Plant Guard Workers of America.

Mr. O'HARA. All right, Mr. McGahey, will you proceed?

Mr. McGAHEY. Mr. Chairman and gentlemen of the committee, my name is James C. McGahey. I have been president of the International Union, United Plant Guard Workers of America since its formation as a labor organization in February 1948, with the exception of a 1-year period during 1954–55. Prior to the formation of our organization, I was active in representing guard employees for a number of years, having held several offices, including that of president of Plant Guard Local No. 114 in Detroit, Mich., when it was affiliated with UAW-CIO. I am proud to state that Í also worked as a plant guard for a number of years.

Our organization, the United Plant Guard Workers of America, is a labor organization within the meaning of the Labor-Management Relations Act of 1947, as amended. Our membership is limited to employees performing guard functions within the meaning of section 9(b) (3) of the act. We are not affiliated with the AFL-CIO or any other labor organization because of the prohibitions contained in the act and interpretive decisions by the National Labor Relations Board.

Our membership extends from the States of Washington to Florida and from New York to California. We also have members in Hawaii and Puerto Rico as well as Canada. Our present membership numbers in excess of 10,000 working in more than 800 plants and facilities. We have collective bargaining units established in every major industrial center in the United States and have contracts with most of the major corporations, such as: General Motors Corp., Chrysler Corp., Ford Motor Co., International Harvester, United States Steel, Boeing Aircraft, North American Aviation, General Electric Co., and many others. Our membership also extends into every major industry.

We are also actively engaged in seeking and maintaining representation rights for guards at vital space projects and defense installations. Our members are employed at such defense centers and atomic projects as Oak Ridge, Tenn., the ballistics laboratory at Rocket Center, West Virginia, the manned spacecraft center at Houston, Tex., and various missile sites around this Nation. We point with especial pride to our members who perform the security functions at Cape Kennedy.

We appreciate the opportunity to appear here today to express our views with respect to the two bills introduced by Congressman O'Hara, H.R. 1678 and H.R. 6088. We wholeheartedly support them. They are long overdue.

I could never really understand why employees performing janitorial, custodial, or maintenance duties should be excluded from the coverage of the Bacon-Davis and Walsh-Healey. Acts. There appears to have been no real valid basis for denying them the same protection of minimum wages under contracts let by Federal agencies as was accorded mechanics and laborers.

Perhaps it was a historical omission or coincidence. Whatever the reason that may have existed in the past, there certainly is now no such valid reason. In fact, there are stronger reasons why service employees should be accorded the protection of the prevailing minimum wage for their respective classifications.

Service employees are normally few in number at any given location as compared with employees engaged in the manufacture of commodities or the construction of public works. They lack the strength in numbers to force, through economic coercion, their employing contractor to raise their wages or provide valuable fringe benefits. For example, a guard force at a missile site may number no more than 10 or 15 employees.

Service employees also normally work in semi-isolation and during odd and irregular hours. The janitor cleans after other employees have gone home; the maintenance employee makes his repairs after normal working hours and on weekends; the guard mans his post and makes his patrols at night and on weekends. It is therefore difficult for these employees to communicate with each other or to band together for their mutual aid and protection. Because of their peculiar employment conditions, they are helpless to assert their collective economic strength to better their working conditions.

They are also subject to pressure exerted by the contractors in order to force them to refrain from their self-organizational activities because of their isolation and irregular working hours. The net result is that unorganized service employees very rarely receive rates much above the minimum wage rates set by the wage and hour law. Thus, service employees normally receive no more than $1.25 to $1.35 per hour without fringe benefits.

Employers, especially in the contract agency field, have been able to keep the wages of the service employees depressed by hiring moonlighters and retirees who are willing to work at substandard wages for supplemental income. Moonlighting is perhaps more prevalent among the service employees than any other occupational group. An employee can work in a factory by day and perform janitorial duties or patrol a plant by night.

The employers seek out retirees who are anxious to supplement their .retirement income. Because of the $1,200 limitation on income under

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