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Mr. GOODELL. I think the basis of the Bacon-Davis Act is to permit fair employers to compete with, what we might use as an oversimplified term, "unfair employers in bidding." Apparently in the administration of the act it frequently develops that fair employers trying to compete are forced to pay wage rates that are considerably in excess of the wage rates in the city, town, village, or other civil subdivision, which is the language of the Davis-Bacon Act. We have had some rather extreme examples.

For example, fair employers presumably, local contractors bidding in Quantico, Va., find that they are required under the Davis-Bacon Act to pay Washington, D.C., rates rather than Quantico rates. Do you think this is a fair application of the language of the present Davis-Bacon Act?

Mr. HAGGERTY. I think the Davis-Bacon division has to take into consideration the labor supply area in a case of this sort, in determining rates of pay. It is also the class of construction which it seems to me they have to take into consideration whether it is single home dwelling construction or large class A construction and so forth. There they have to see the field in which they operate and the type of work they perform, and the labor supply area I think should be considered by that division in determining rates of pay. Otherwise you are not going to get the help you require to build the buildings in the time specified.

Mr. GOODELL. I would agree in substance, but I think maybe they leaned over pretty far in some instances in setting higher rates than were justified, and it cost the taxpayers money in so doing. In other instances it cost nonprofit institutions money.

Now this is my final question. The language of the Davis-Bacon Act does specifically set the wage rates for those employed directly upon the site of the work, and yet we find that through administrative determination in the Labor Department, it is my understanding, they are now setting the rates in certain pits and quarries far away from the actual site of the work. Do you agree that that is a stretching of the law, if it is done?

Mr. HAGGERTY. I have never heard of a case. Mr. Connerton knows of such a case.

Mr. CONNERTON. I am not too familiar with the exact interpretation of the Department of Labor, but you will find, for example, that when an employer like Morrisson-Knudson, whom Lee Knack represents, has a large dam some place in the West, they have to get their own rock supply. What they do is go out and perhaps a mile away from the jobsite they establish a quarry where they blast rock out. This is the pit. It is for use only on this particular job. They send the craftsmen who have been doing the drilling and blasting on the jobsite, going into the foundations, out to the pit to drill and blast rock which in turn they put on a conveyor ordinarily and ferry about a mile to the damsite.

I believe in cases such as that, and they are extremely limited cases, and where the pit has been operated by the contractor who is doing the work, himself, rather than obtaining his supplies from a regular supplier, that in those extremely limited cases the Department of Labor has held that the prevailing rates of pay should apply to the same people who are doing the work on the damsite as were doing

the work on the quarry in connection with the dam, and I think it is very equitable and very just.

Mr. HAGGERTY. Could I give you another illustration? Recently down in New Mexico a steel erecting contractor, which work had always been done at the site, decided to pick up an adjacent empty steel plant, adjacent to the site but not on the site, and prefabricate the steel at the off-the-job site, at this nonworking plant. It was available and equipment was there.

In that case again the Department rules that that was site operations and the site rate applied in that particular function. I think that was justified.

Mr. GOODELL. Thank you very much. You have been very helpful. Mr. ROOSEVELT. Mr. Haggerty, one last question.

I think you have answered Mr. Goodell's questions. But assuming for a minute that there was a situation in which the determinations had been made that were questionable, were too far off, or assuming the situation that was suggested yesterday, that in setting the prevailing rate for like work they had gone beyond what seemed to be a reasonable definition of like work and had picked up something that was way out of line, would it seem reasonable that the committee might consider, and I only suggest this to you because we will be asking you undoubtedly to come back when we look into this matter further, that some kind of machinery be set up such as an advisory committee which would meet on a regular basis and review the complaints that had been made about procedures? The advisory board would have to be made up, as these boards are made up, of the interested parties and perhaps somebody representing the public interest. This board would then at least once a year make a report to the department, which would point out to the department that it was going too far into this direction or that direction. There would be at least, which is not true today, a reviewing agency for the administration of the Bacon-Davis Act outside of the Secretary, himself, in view of the fact that in so many of these other agencies we set up we follow this pattern today. The only alternative would be a Government Operations Committee or a subcommittee of this committee that would practically live on this type of review steadily, which I do not think is feasible.

Would not something along this line perhaps be worth considering? I do not ask you to pass on it now, but simply to take it under consideration for possible discussion at a later date.

Mr. HAGGERTY. If anything is done about it, Congressman Roosevelt, I think I would request that the time factor be one of the prime considerations and, secondly, if such a thing as that is done, I would like to see people in the industry, themselves, who are affected by it and work with it, be the, whatever you call it, advisory or reviewing committee and so forth.

Mr. ROOSEVELT. All right, sir. I want to thank you and Mr. Connerton for your helpful testimony before the committee, and to say that we shall of course proceed to have further hearings. We are not going to railroad them through, but we will try to as expeditiously as possible reach a conclusion and make recommendations to the full committee.

Mr. CONNERTON. Mr. Chairman, could I make a final remark?
Mr. ROOSEVELT. Yes.

Mr. CONNERTON. I was listening to the testimony yesterday and to the testimony today and to some of the problems that appear to be bothering the members of the committee. I recognize that they are very much concerned with the matters of costs. I think perhaps one or two comments in that direction might help.

At the time that the highway bill was before the Congress in 1955 and 1956 when we were making an attempt to apply the Davis-Bacon provisions to the Federal Interstate System, at that time the question of cost was raised in quite some detail, and the allegations were made it was going to increase the cost of the program 25 percent, 30 percent, 40 percent, 50 percent, and all sorts of things like that. I suggest that the committee inquire into the expense under the Federal HighAct. It has not increased the cost of the program in any way. way This is the largest construction program in the history of mankind. It has not increased costs. What is has done, it has increased the competition. There are more contractors bidding for road jobs these days than have ever bid for road jobs in the past, and the unit costs are down rather than being up. I suggest the reason for that is because it placed everybody on the same competitive level where they could bid in terms of efficiency and know-how rather than in terms of who could cut the wage rates the best.

Mr. HAGGERTY. Thank you.

Mr. ROOSEVELT. Thank you.

The committee stands adjourned until 1:30, at which time we will hear our colleague, Mr. Martin.

(Whereupon, at 12:15 p.m., the subcommittee recessed until 1:30

p.m.)

AFTERNOON SESSION (1:35 P.M.)

Mr. ROOSEVELT. The committee will come to order, please.

The committee is happy this afternoon to have the opportunity of getting the advice and having an opportunity of talking with Mr. Fred W. Heldenfels, Jr., chairman of the legislative committee of the Associated General Contractors.

Would you come forward, sir? We are happy to have you with us. I understand you have a plane you would like to make, and I don't blame you, looking out the window, for wanting to be sure you get there a little ahead of time. If it is agreeable with you, we will hear you immediately.

I might say that my colleagues will be here as soon as they can, but I thought in an effort to get started we might perhaps start with you right now, if that is all right with you.

STATEMENT OF FRED W. HELDENFELS, JR., ON BEHALF OF ASSOCIATED GENERAL CONTRACTORS OF AMERICA; ACCOMPANIED BY WILLIAM E. DUNN, EXECUTIVE DIRECTOR, AND ARTHUR F. HINTZE OF THE NATIONAL STAFF

Mr. HELDENFELS. Mr. Chairman, I would like to present Mr. William E. Dunn, the executive director, and Mr. Hintze from the national staff.

Mr. ROOSEVELT. Very nice to have you, too. I believe you have a prepared statement; do you not?

Mr. HELDENFELS. I do, sir.

Mr. ROOSEVELT. I would suggest that you proceed, sir.

Mr. HELDENFELS. My name is Fred W. Heldenfels, Jr. I am a partner in the firm of Heldenfels Brothers, construction contractors located in Corpus Christi, Tex. Our firm has been engaged in highway and engineering construction for over 50 years.

I appear before you today in behalf of the Associated General Contractors of America, a trade association made up of over 7,300 general contractors who are engaged in the construction business in all of the 50 States. There are 127 chapters in the AGC and our membership is made up of contractors doing building construction, highway construction, heavy and engineering construction. In 1958 it was my privilege to serve as president of the AGC, and for the past 2 years I have been chairman of the AGC Legislative Committee. First, I would like to refer to policies of the Associated General Contractors (AGC) with respect to the issues before your subcommittee.

In its annual convention held in Los Angeles last week, the AGC passed a resolution affirming its

opposition to the expansion of the Davis-Bacon Act in any manner, and particularly opposes the inclusion of health and welfare, and pension payments in Davis-Bacon predeterminations, as is proposed in certain pending legislation. The AGC has similar policy on the 8-hour laws issue, expressed in its 1958 annual convention to the effect that it

opposes legislation which would extend the application of the Davis-Bacon Act to all Federal-aid highway construction and otherwise expand its coverage to include fringe benefits, and further opposes legislation which would extend the Federal 8-hour law to Federal-aid highway construction work.

In another resolution of the 43d annual convention, the AGC stated its opposition to shorter workdays and work weeks below the 8 hours and 40 hours respectively, as a disguise for wage increases.

At this point I would also like to mention a related AGC policy about which the organization feels very strongly, as expressed in its 1958 annual convention to the effect that it

Recommends passage of legislation which would grant court review of actions of the Secretary of Labor in the administration of the Davis-Bacon Act and related prevailing wage laws.

The purpose of my appearance before your subcommittee, of course, is to support these policies of the Associated General Contractors of America, to mention some of the underlying reasons for them, and to give all information available to us which you may think necessary to the task before this subcommittee.

In considering the AGC's approach to these problems, I think it would be helpful to you to note that the AGC has a long and consistent record of cooperation with the administrators of the DavisBacon laws, for the purpose of assisting wherever requested to promote accuracy and propriety in the wage predetermination processes. Because of this record of cooperation, the information we are offering to your subcommittee comes from comprehensive experience with the Davis-Bacon administration and from a constructive, rather than any kind of a negative, attitude.

INCLUDING FRINGE BENEFITS IN DAVIS-BACON DECISIONS

As noted, the AGC opposes any expansion of the Davis-Bacon Act to include health and welfare, and pension payments and similar fringe benefit payments in Davis-Bacon predeterminations. Here are some reasons for this position:

(1) The Federal Government should not get involved in the enforcement of local labor agreements involving welfare funds.

(2) The inclusion of payments for fringe benefits is contrary to the true purpose of the Davis-Bacon Act.

(3) It would result in inequities among contractors.

(4) It would be impossible to administer accurately and fairly. (5) It would unnecessarily increase the cost of Federal and Federalaid construction.

(6) It would be little more than a top-heavy superstructure upon the unsound foundation of the old Davis-Bacon Act.

May we respectfully suggest that instead of adding more authority to the Labor Department under the Davis-Bacon Act, you could render a valuable service by providing for judicial review of the administrative decisions under the act.

1. Further Federal intervention opposed: First, we are opposed to further intervention by the Federal Government in matters which the parties can best handle themselves, at the local level. If it is the desire of employers and their workmen to establish health and welfare funds through collective bargaining, they should be permitted to do so provided all the safeguards required by law are met. But the Federal Government should not interfere with the administration of welfare plans to the point of becoming an enforcement agent to police the payment of employer contributions into such welfare funds.

Enforcement of employer obligations under the terms of labor agreements should be left to the parties themselves. If an employer has agreed to pay such money into a welfare fund and fails to do so, the unions have a right to see that he keeps his side of the agreement, but the Federal Government should say out of this sort of thing. It is a good rule that what the parties can do best themselves at the local level, the Federal Government should not attempt to do for them.

This bill would further interfere in collective bargaining by requiring employers to continue to pay into welfare funds after agreements on the subject had terminated, or after the parties had agreed to change or reduce the rate of employer contribution to the fund.

2. H.R. 9656 is contrary to the purposes of the Davis-Bacon Act: The proposal to include the predetermination of health and welfare and other fringes along with wage rates is not consistent with the purposes of the Davis-Bacon Act which are, as the U.S. Supreme Court said in the Binghamton Construction case of 1954 (25 Labor Cases 68205):

To protect employees [on Government construction] from substandard earnings.

The basis for our observation is the fact that the construction workers are among the highest paid wage earners in the United States, if not the highest as far as certain classifications are concerned when compared with other industries. See attached comparison with other industries.

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