Mr. HELDENFELS. I do not think we say we do not want any improvements in the act but we do not think that under the original concept of the Davis-Bacon Act these fringe benefits could be considered as part of the hourly wage. Mr. PUCINSKI. You are an employer and you have people working for you. You say you pay certain fringe benefits. Do you not consider those fringe benefits that you pay your workers part and parcel of the wage structure, the per hourly earnings of that worker, or do you consider this as a separate entity and handle it as an entirely different fund? Mr. HELDENFELS. I consider it as a separate entity. Mr. PUCINSKI. Is it not reflected in the total cost of the job you are bidding on? Mr. HELDENFELS. It is part of our general overhead cost. Mr. PUCINSKI. You certainly do not give these benefits as gratuitous donations to the worker? They have to come from some place. Mr. HELDENFELS. That is correct. Mr. PUCINSKI. I am further puzzled by your statement that you in your own industry, your own company, consider fringe benefits as part of the salary. Why are you now saying we should not include the principle in the Davis-Bacon Act when we establish wage standards? Mr. HELDENFELS. We say we do not think it is a matter that should be policed and enforced by the Federal Government. It should be left to the local people in the local communities. Mr. PUCINSKI. We are not telling anybody in this act or amendment what fringe benefits any union or any employer or any community should establish. There is nothing in this act or in the proposed amendment that would in any way police, encourage, discourage, or set the standards for fringe benefits. What we are saying is that once a community has established these fringe benefits as part of the remuneration of that worker, that they then shall be included in establishing the wage standards for that community in bidding on contracts. Now, do you find anything wrong with this? Mr. HELDENFELS. Well, I think there is a wide variation in fringe benefits even in one community. I think it would be very difficult to determine a proper Mr. PUCINSKI. Then it comes within the spirit of this act or the Labor Department to determine what is the prevailing structure. You are right, certainly they do not have the same fringe benefits. I do not think they have even the same wage standards, but the Department under the Davis-Bacon Act tries to establish what is the prevailing overall wage structure so that you as a bidder may have something to shoot against. I do not see how these people, especially out of Texas, and there have been a lot of construction companies coming out of Texas, that have been bidding on contracts all over the country and have been protected in their bids by the Davis-Bacon Act, can now come before Congress and say we do not want this when they are the ones who have profited most from it. Mr. HELDENFELS. What I am telling you today is the policy of the Associated General Contractors, but not as an individual contractor. Mr. PUCINSKI. Perhaps the Congress ought to save these contractors from themselves. Thank you very much. Mr. ROOSEVELT. Mr. Griffin. Mr. GRIFFIN. One thing your testimony points out which, in the time I have been able to be present at the hearings has not been emphasized before, is the effect this bill would have upon a contractor who actually provides by private contract some of these fringe benefits. At the present time, the Davis-Bacon Act refers to hourly rates of pay. This bill would add to that rates of payment by a contractor or subcontractor to a fund established by a bona fide collective bargaining agreement jointly administered in the manner provided by section 302 (c) (5) of the Labor-Management Relations Act of 1947 for the purpose of providing medical or hospital care, pensions, and so forth. I think our colleagues should know what this means. Up until that point the bill refers to fringe benefits jointly administered which must be set up by a bona fide collective agreement. Is there any exception to that? The bill further reads: Provided, That the obligation of the contractor and subcontractor to make payment in accordance with the prevailing wage shall be discharged with respect to the determination by making such payments required by this paragraph to a fund or funds established in the manner. I do not think that changes it at all—“established in the manner". the manner is by paying into a fund established by collective bargaining agreement and jointly administered, or by paying the difference in cash directly to the laborers or mechanics. In other words, if the employer has a Blue Cross program for which he pays, but which is not jointly administered, he would get no credit for that. Mr. PUCINSKI. That is not true at all. Mr. GRIFFIN. How do you read the language? Mr. PUCINSKI. I do not think it is true at all, simply because the first part of this thing quite properly provides the rate of payment by a contractor or subcontractor to a fund established. Frequently the fringe benefits do not go to the worker himself. But they are all part of the wage structure. Mr. GRIFFIN. How about the example I gave you, where the employer has a Blue Cross plan or pays the premium on Blue Cross? Mr. PUCINSKI. This is part of the fringe benefit provided that worker? Mr. GRIFFIN. Yes. Mr. PUCINSKI. This would be calculated in the prevailing wage structure. Mr. GRIFFIN. I do not think the bill permits that at all. Unless it were set up jointly by a collective bargaining agreement he would get no credit for it. The only way he could discharge his obligation woud be to, in effect, pay twice; he would have to pay the equivalent thereof in cash to the worker. Mr. PUCINSKI. Let us back up. Here is worker A, his salary has been established by the collective bargaining agreement, certain funds are paid into this fund established by collective bargaining agreement. The Secretary then, the Department then computes these figures in establishing the prevailing rate in that industry. This is what we are talking about. He establishes the rate in that community for that worker. Now, along comes the witness. He does not have a bona fide collective bargaining agreement but he is paying through Blue Cross, or whatever other methods he may have, certain benefits to his workers so that the salary of those workers comes within the standard established as a prevailing wage in that community by the Department. This does not mean that before he could qualify in bidding for this contract he has to change his whole operation. We are talking about the establishment of basic wage standards in a locality. Whatever means he uses to meet that standard he would qualify, whether he goes the Blue Cross route, whether he goes direct payment to the worker, whether he says this is X number of dollars a week to go ahead and buy yourself these benefits, as long as his hourly wage standards Mr. GRIFFIN. I am glad to have your interpretation. I know we have to move on. Mr. ROOSEVELT. May I just say that I think in this particular instance a previous witness, Mr. Biemiller, also pointed out some problems with that particular language. I am sure that the committee will have to take a careful look at not only what the witness brought up but that some of these plans will be jointly administered and, therefore, this language will definitely have to be reviewed. Mr. HIESTAND. Mr. Chairman, there were just a couple of things that I thought should be clarified. One of the earlier questions you answered was that this was a renewed resolution of the AGC. There had been a previous one, had there? Mr. HELDENFELS. Yes, sir. We have an attachment to our testimony. It goes back to 1952. Mr. HIESTAND. Have you had ensuing resolutions ever since then? Mr. HIESTAND. Are they, in general substance, about the same? Mr. HIESTAND. When this resolution was adopted, you said there were only 2 dissenting votes but that there were about 700 people present. Mr. HELDENFELS. I said several hundred. Mr. ROOSEVELT. It is enough to be quite a margin. Mr. HIESTAND. Yes. I would not argue about that. But it is a divided opinion. Is it your opinion that the Davis-Bacon law, as it is presently on the books, should be reviewed and studied? Mr. HELDENFELS. Yes, I sincerely think so. Mr. HIESTAND. Do you think it needs some pretty much added revision such as judicial review and other things which you mentioned? Mr. HELDENFELS. I think that there are many areas that need clarification by judicial review or in some manner or form. Mr. HIESTAND. Would it need a general overhaul? Mr. HELDENFELS. I presume that is what you would call it. I do not know what you refer to in terms of "general overhaul." I think it needs a further study and clarification of all these points that have caused controversy. Mr. HIESTAND. Do you think the public interest would be benefited if we had no Davis-Bacon law? Mr. HELDENFELS. Well, as I said earlier, I, as a contractor, think that as a matter of principle and policy that the prevailing wage Mr. HIESTAND. I understand you comply with the law and you operate under the law and that is as it should be. But I was wondering what your opinion of the law is. Mr. HELDENFELS. It is my personal opinion that the prevailing wage should be established for any governmental contract. Mr. HIESTAND. And should be established by a Federal officer? Mr. HELDENFELS. Not necessarily a Federal officer. I think there should be a study as to how it could best be administered and determined. Mr. HIESTAND. Do you believe it has increased the cost to the Government of governmental projects? Mr. HELDENFELS. I think in many instances it has. Mr. HIESTAND. That is all, Mr. Chairman. I have a lot of other things but I realize there is a matter of time. Mr. ROOSEVELT. I want to thank you very sincerely for coming and being with us. I think your testimony, which we will study carefully, has really given us a good deal of food for thought. We are grateful to you and we are grateful to our colleague for bringing you up here today. Mr. HELDENFELS. Thank you, Mr. Chairman, and also gentlemen of the committee, for your courtesy. I also want to thank Congressman Martin for his kindness in allowing me to go on before him. Mr. ROOSEVELT. The next witness before the committee is our very dear colleague and member of our own committee, Congressman Martin from Nebraska. We know that he has a great interest in this legislation and we are very happy to have him come and testify at this time. STATEMENT OF HON. DAVID T. MARTIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA Mr. MARTIN. Thank you, Mr. Chairman. Mr. ROOSEVELT. Incidentally, I want to thank you for putting off your appearance a number of times to accommodate other witnesses. Mr. MARTIN. That is quite all right. I was most happy to do that. I would like to request permission to insert in the record at this point the report of the Missile Sites Public Contracts Advisory Committee to the Secretary of Labor, the statement of the missile manufacturers, their associate contractors and subcontractors, a joint submission of the International Association of Machinists and United Automobile Workers, AFL-CIO, and a joint statement of Aerospace Industries Association. Mr. ROOSEVELT. Without objection, that is so ordered. (The statements referred to follow :) REPORT OF THE MISSILE SITE PUBLIC CONTRACTS ADVISORY COMMITTEE TO THE SECRETARY OF LABOR I. PURPOSE AND SCOPE OF STUDY On April 25, 1961, you established the Missile Site Public Contracts Advisory Committee and appointed us to membership. In your Instruction No. 70 you stated the Committee was created "for the purpose of recommending to the Secretary of Labor fair and impartial standards and criteria for determining which work on missile sites and missile test sites performed under contracts by the armed services of the Department of Defense, is construction, alteration, or repair within the meaning of the Davis-Bacon Act ***” Your instruction authorized and directed the Committee to make investigations, hold hearings, take testimony, interrogate witnesses, and make a record to serve as the basis for such finding and recommendations as may be necessary to carry out the purpose for which the Committee was established. Further direction was given that all interested parties should be allowed a reasonable opportunity to be heard and that the Committee should establish its own procedures. The Committee decided at the outset that the most practical and expeditious method of becoming familiar with the assignment was to proceed informally. Since we began operations on May 1, 1961, we have sought and received information, opinions, and advice from many people and we believe that we have carried out your instructions with respect to hearing all interested parties. Conferences have included officials of the Department of Defense as such, the Air Force, the Department of Labor, the Atomic Energy Commission, and representatives of construction contractors, building trades unions, industrial unions, and manufacturers in the missile, electronic, and associated fields. Although formal hearings have not been held, groups of representatives of the principal private interests in the missile site program have met separately with us at our invitation: missile manufacturers and associated contractors on June 22; building trades unions the morning of June 23 and industrial unions in the afternoon; and representatives of the construction contractors on the morning of June 29. In addition to the conferences, the Committee has derived much information and opinion from the considerable body of documentary material relating to the subject of our inquiry. The legislative history of the act has been studied, as well as the administrative rulings of the Solicitor of Labor insofar as they pertain to coverage of work at missile sites. The Davis-Bacon staff has been very helpful and, among other material, has given us access to the files relating to our subject. Included in these files was the commentary on the "tentative criteria" which had been prepared by the Air Force and the Department of Labor in the spring of 1960. The comments received by the Department from a wide range of interested parties have helped the Committee appraise the type of approach which was employed. An additional source of documentary material was the written briefs and reply briefs given us at the time of our conferences mentioned above. Each group supplied us with written statements and these were circulated to give those who wished to do so an opportunity to reply. Another means of securing information as to the work being done at the missile sites was through visits to some of the sites by members of the Committee. Mr. Holland was at the Schilling site June 1, 2, 3, and at Wichita June 5. Mr. Bailer and Mr. Seits were an Vandenberg June 14, 15, and 16. The whole Committee met at Lowry June 18, 19, and Mr. Bailer and Mr. Holland remained there through June 20. At each of the sites the Committee members visited missile launching complexes and noted the various kinds of work in progress. Also, conferences were held at these sites with local union and contractor groups and with officials of the Air Force. We are glad to be able to report that government officials, military personnel, and union and contractor representatives have all cooperated fully with us to further this study. Without exception we have received all the information and advice we have requested and in many instances people have gone out of their way to be of service. 82281-62-9 |