few piecemeal decisions that have come down in the meantime, you have nothing to go on.

Is that a fair appraisal?

Mr. DORMAN. Yes, sir.

Mr. GRIFFIN. You do not know what is going to happen?

Mr. DORMAN. If I may go back a little, I think I can tell you what the Secretary is referring to here.

Mr. GRIFFIN. I see.

Mr. DORMAN. Naturally when this thing first hit everybody was trying to decide what was Davis-Bacon and what was not DavisBacon, and parenthetically I might say that that is the position today.

The administrative contracting officer decides what is Davis-Bacon. I am not sure that there is anywhere in the law that says that an administrative contracting officer can make such a decision.

If we disagree with the decision, is it subject to appeal? Not under the act. There is nothing there that gives us the right.

So that we must now assume something that is not true, that we have a right to appeal. We can then go to the ACO's headquarters and see what we can do there. If that doesn't work, we might be able to go to the area or regional headquarters of the Labor Department such as we did in Kansas City to get a ruling.

If that does not work, we may be able to go to the Department of Labor and then if that ruling is implemented or not implemented, the Comptroller General may turn it around again.

So that we are in a position of not even knowing who to go to or where to get our opinions from or when anything is final.

As far as this criterion that is represented here is concerned, everyone was trying to come up with what is Davis-Bacon and what is not Davis-Bacon at a missile site. This was naturally a very, very knotty problem, a very difficult problem.

At this point the Boeing Minuteman was not in the picture but the Atlas and the Titan were. The Air Force, by polling I guess its administrative contracting officers, putting some of the best brains they had to work, came up and said, "For purposes of consistency, this is the way we will break it into Davis-Bacon and not Davis-Bacon."

Then that is when the Secretary of Labor said, "That cannot be used as a firm criterion because it may or may not represent my judgment in the matter."

Mr. GRIFFIN. I see.

Mr. DORMAN. So that wiped that out and we had nothing to go on. Mr. ROOSEVELT. If my colleague will yield for a moment, under the Department's rulings 5.11 under the paragraph headed Rulings and Interpretations, it specifically states that the rulings and interpretations of the Secretary shall be authoritative and may be relied upon as provided for in section 10 of the act of 1947.

Mr. DORMAN. May I suggest, Mr. Roosevelt, that that is true. It says that, but I think that is not clear as to whether that applies to a ruling on wages or whether it applies to a ruling on what is or is not Davis-Bacon.

Mr. ROOSEVELT. It says that all questions arising in any agency relating to the application and interpretation of the regulation contained in this part of the Davis-Bacon Act.

Mr. DORMAN. Does not that part refer to rates?

Mr. ROOSEVELT. Primarily to rates, that is correct.

Mr. DORMAN. That is true. I cannot get into that discussion because the Comptroller General also has a function in here and some of these have even gone to courts and that is why I say, Mr. Chairman, that I think this act needs a little overhauling so that we could find out where to go just to get an opinion that will be final and binding.

Mr. GRIFFIN. While this may be true insofar as wage rates in a particular project, it provides no guidance at all in looking at what may or may not be construction in another project, a different kind of operation.

Mr. DORMAN. That is correct, Mr. Griffin.

Mr. GRIFFIN. I was interested in one statement that you made that some of this work is of such a nature that, whether or not the Department of Labor determines that it is Davis-Bacon, you feel that you have to have your men do that work.

Mr. DORMAN. Yes, sir.

Mr. GRIFFIN. So that if they determine it to be Davis-Bacon, it only means that these people will be paid more?

Mr. DORMAN. It will simply add to the cost.

Mr. GRIFFIN. Which will add to the cost to the Government and taxpayer, and what does it mean in terms of your operation? I think the answer is quite obvious, but I think it ought to be in the record.

Mr. DORMAN. Well, the answer to our operation would be, for example, if we had an industrial union and we had a contract with that industrial union and they were the bargaining agent for a certain group of people and had been doing this work and it was determined to be Davis-Bacon and we said, "Because it is Davis-Bacon we are going to take it away from you and give it to a contracting firm," I am very certain that we would have a breach of contract on our hands very, very quickly. We could not very well do anything like that. When we started the Titan bases which are these large intercontinental ballistic bases and when we drew the agreement with the various building trades unions, we were very careful to make it very clear that we were doing this only to determine what we would give them for economic reasons, which would be more economic to do that

way.

In other words, here is a job that may take 4 days and may take as many as 100 men. It is much cheaper to the taxpayer to subcontract this work. However, our design has to take into consideration the simplicity necessary in order to have these untrained people do this, and when I say untrained, I don't mean that they are not trained electricians. They are. They are untrained in our program.

Now, we also have previously another project, the Missile Master or Birdie. This is an electronic device which is placed in cities throughout this country. They are all over from the east coast to the west coast. They are part of our defense system.

In handling that project we did it entirely differently than we did Titan. Where we said that we would subcontract the hooking up of certain things to the building trades, we did in the Minuteman and Birdie identical work, but we did it ourselves because what we did was form crews that went from city to city and did this. The time was not concurrent. Everything happens at once on these missile bases. On this it did not and therefore we moved our own people from site

to site at quite a bit less than if we had to subcontract the job, and we didn't have to redesign anything.

Mr. GRIFFIN. I think one of the points which I had in the back of my mind is the fact that in an industrial union situation it is expected that work will be provided on a year-round basis-the obligation to provide work is traditionally looked upon as a different one than what exists in a construction trade union situation where workers move from one employer to another and where, in many parts of the country, at least, construction is a seasonal type work. Construction unions point to these factors all the time as justification, and I think there is basis for it, in claiming that their wages should be higher than industrial wages.

But when that kind of a construction wage pattern is forced upon an industrial situation where you have to use industrial workers in order to fulfill what you consider to be your responsibilities to the Government, this is not only unrealistic, but I imagine that it would be disruptive so far as the other workers are concerned who do not happen to be on that particular job but have the same skills, the same ability and same experience.

What are you going to do: pay all such industrial workers the construction rates or just pay the few that happen to be working on the particular work which is declared covered by Davis-Bacon? I can see where it would have all kinds of difficult ramifications.

Mr. DORMAN. You have placed your finger on the very difficult part of this thing because we would have to pay some one wage and some another and the work would not be different and it makes a very difficult situation. There is no question about it.

Mr. GRIFFIN. By the same token, as I think you have indicated, there are times when, because of the kind of an operation you are involved in, it makes sense from your standpoint and from the taxpayers' standpoint to subcontract work to building trades people even though it may not be Davis-Bacon Act work. Sometimes particular work sort of fits in with their kind of operation, whether or not it is Davis-Bacon Act, and it might be a very sound management decision to pay a higher wage to building construction workers for that kind of work at that particular time. Is that true?

Mr. DORMAN. That is absolutely correct, Mr. Griffin, because if we had to transfer people from the plant across the country or something like that, you can imagine that just the travel alone would more than add up to the wages; so that, therefore, we don't do that where we have a short run and where we have a design that we can put in and they have the capability of doing it.

It is all based on an economic factor, not on a Davis-Bacon factor. Mr. GRIFFIN. I have no further questions.

Mr. ROOSEVELT. Mr. Dorman, we thank you and your associates very much for giving us this additional information and we will look forward to receiving this additional information.

Mr. DORMAN. I will send it to you.

Mr. ROOSEVELT. The committee will next hear from Mr. Frank L. Fleenor, Jr. He is the executive secretary of the Virginia Branch of the Associated General Contractors of America.

Mr. Fleenor, we are happy to have you with us. You may proceed in any manner that you think best.

STATEMENT OF FRANK L. FLEENOR, JR., EXECUTIVE SECRETARY, VIRGINIA BRANCH, ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC.

Mr. FLEENOR. If I may, I would like to read my statement.

Mr. Chairman and members of the committee, I am Frank L. Fleenor, Jr., executive secretary of the Virginia Branch, Associated General Contractors of America, Inc.

The Virginia branch is a trade association in Virginia of general contractors and other firms in the construction industry. At the present time, our membership consists of 98 general contractor members and 134 other firms affiliated with the construction industry.

This hearing is extremely important to the contractors in Virginia and we appreciate the opportunity to present our views to Congress on the administration of the Davis-Bacon Act by the U.S. Department of Labor.

We have Davis-Bacon problems in Virginia; however, our major problems are in the northern part of the State, and I would like to cover, in this statement, our situation in that particular area.

In northern Virginia, we have both nonnegotiated and negotiated rates, the same as we do throughout the entire State; however, the difference between the negotiated and nonnegotiated is much greater in this particular area.

For years, it has been the practice of the Labor Department to predetermine the negotiated rate in the northern Virginia area. This means, to the local contractors, that Federal construction projects carry rates much higher per hour than is paid by the local contractors on private, State, or local government projects where Federal funds are not involved.

Some local contractors find it difficult, if not impossible, to bid the Federal or Federal-aid projects in their county and still compete on private, State, and local government projects. You, therefore, find that these contractors do not bid the Federal work.

Not only are the local contractors and their employees concerned with these high-wage decisions, but also the officials of local rural communities.

A good example is again the situation in Prince William County. This is a rural Virginia county; however, the U.S. Department of Labor, for years, has predetermined the negotiated rate out of Washington, D.C., on Federal or Federal-aid projects in that county.

Just recently, the town of Manassas was interested in new sewerage improvements for their community. This project has a total value of $701,000, but Federal aid was requested on only part of the overall improvement.

This is a lot of money to a community the size of Manassas. They applied for Federal aid and will receive $87,680 in Federal money on the treatment plant, which is estimated at $405,000.

Since Federal funds are involved, the Labor Department issued the wage rates that would apply to that particular project. I understand it has been estimated that the higher wage scale will use up approximately $60,000 of the $87,680 grant leaving the community with only approximately $27,000 to apply to the cost of the improvement.

SS711--62- pt. 2- 13

To the town of Manassas, this is a serious problem because this community is obtaining aid from the Federal Government; yet, most of that aid will be used simply to pay high wage rates, which, in my opinion, are not the prevailing rates in the county of Prince William. They have officially protested to the Labor Department through Senator Harry F. Byrd and Congressman Howard W. Smith. In fact, I accompanied the town manager, members of the town council, and other officials from Manassas to see Senator Byrd and Congressman Smith.

This is not the first instance that this has happened, but it is the most recent, where a local community has shown deep concern over the higher construction costs that result from unrealistic wage predeterminations.

In September of 1961, a hearing was held to determine the prevailing wages rates on all types of industrial and commercial work at the Marine Corps schools, Quantico, Va. The Quantico reservation is located partially in each of three counties-Prince William, Stafford, and Fauquier. The question to be resolved was whether the higher wage rates negotiated in Washington, D.C., prevailed at Quantico, or whether the nonnegotiated wage rates paid on private construction in the above area prevailed.

In the hearing examiner's decision, dated April 6, 1962, he stated, and I quote:

It is an undisputed fact that the lower nonnegotiated wage rates prevail on private commercial construction in the three counties of Virginia in which the Marine Corps schools are located.

Yet the hearing examiner went on to hold that the negotiated rates should continue to be determined as the prevailing wage rates. His reasoning was that basically all the private construction was not similar and should not be considered because of the difference in quality of work, nature of specifications, and rigidity of inspection required on Federal construction projects.

This distinction between Federal and private construction is not recognized by the construction industry in Virginia. The decision is unreasonable because you have on private construction, professional architects and engineers who are registered by the State of Virginia for the protection of the general public and who, as agents of the owner, exercise the same degree of skill in design, as well as inspection, in order to serve the same purpose for the private, State, or local governmental owner as the contracting agency performs for the Federal Government.

On May 24, 1962, the Solicitor of Labor issued his decision on the Quantico matter. He agreed with the hearing examiner that the negotiated rate from Washington, D.C., should prevail; however, to justify his decision, he used a completely new set of reasons separate from the hearing examiner's which were not developed at the hearing or in the hearing examiner's decision.

This raises a question in my mind as to whether the present Labor Department procedure in using hearing examiners is of any value. The Solicitor of Labor stated that the reservation is a separate wage community in itself and that there were sufficient construction projects at the Marine Corps schools to justify the continued use of the negotiated rates from Washington, D.C.