Subsection (b) makes it a violation of the act to falsify or destroy records which are pertinent to the contract. The Department of Labor reports that records have been even burned in some cases in order to prevent detection of violations and this practice would be prevented. It also protects employees who testify in hearings and who at present are afraid to testify in many cases because of possible discrimination against them by their employer or loss of their jobs. There are no further changes in the act except under the provisions of section 8 of the bill which defines the exception of "open market" contracts in accordance with the ruling of the Comptroller General to the effect that "open market" contracts include those where the contracting officer is authorized by statute or otherwise to purchase in the open market without advertising for proposals. The section also adds to the list of excepted contracts those for the carriage of mail. Section 11 provides that the act shall apply to contracts entered into pursuant to invitations for bids issued on or after 60 days from the effective date. The committee has received reports from the Department of Labor the National Labor Relations Board, the Treasury Department, the Interior Department, and the War Department. All of these reports are favorable, making suggested amendments, except the report of the War Department. The War Department reported on this proposed legislation on May 13, 1937, in which report the Department requested that it be given an opportunity to make a more thorough study and report. This request was granted by the committee and the Department was asked for a more detailed report on May 19, 1937. To date the committee has not yet received this detailed report. The five reports received by the committee are as follows: Hon. ELBERT D. THOMAS, DEPARTMENT OF LABOR, Chairman, Committee on Education and Labor, United States Senate, Washington, D. C. DEAR SENATOR THOMAS: I beg to submit the following views of this Department on S. 2165, a bill to amend the act entitled "An Act to provide conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes' The bill would amend section 1 of the present law, which sets out the stipulations required of persons supplying the Government under contracts exceeding $10,000, by: (1) Extending the act to contracts in the amount of $2,500 or more; (2) Extending the act to contracts for services as well as for supplies; (3) Requiring the payment of a "minimum fair wage" instead of the "prevailing minimum wage"; (4) Making certain clarifying amendments in the language of the section for the purpose of simplification. The section would also be amended by adding in subsection (d) a stipulation against the performance of industrial home work by employees of the contractor. Section 2 of the present bill would amend the second section of the existing act so as to require contractors who are regular dealers to submit with their bids a certificate executed by the producer of the goods containing the same representations and stipulations required of manufacturers contracting directly with the Government. The present penalties for breach or violation of the stipulations are made applicable to any failure to comply with the terms of the certificate. The bill would also amplify section 3 of the Public Contracts Act by expressly authorizing the inclusion upon the blacklist of firms found by the Secretary of Labor to have violated any of the provisions of the act or persons failing to comply with directions or orders of the National Labor Relations Board issued under sections 9 and 10 of the National Labor Relations Act. A typographical error in section 5 of the present law would be corrected by making it clear that it is the Secretary of Labor who is to "make findings of fact after notice and hearing, which findings shall be conclusive upon all agencies of the United States * * * "" Section 6 would limit the obligations of contractors for the payment of overtime wages to the aggregate number of hours of overtime work in any one week, where employees subject to the act have been permitted to work both more than 8 hours in any one day and more than 40 hours in any one week. Section 7 of the bill sets out a number of definitions designed to simplify the law and to resolve certain ambiguities in it. By limiting the word "employed" to manual activity in connection with the manufacture or preparation for shipment of supplies required under contracts subject to the act, the bill would explicitly confine the act to those employees only who participate in the actual production of the goods under the contract. The minimum wage to be determined by the Secretary of Labor for each industry is defined to be the prevailing rate of wages paid to the majority of employees in the industry at the minimum classification, or in the absence of a majority, the average wage so paid; and the Secretary is authorized to find special rates for learners, apprentices, and handicapped workers where such a finding is consistent with the practice in the industry and is in the public interest. Other paragraphs in this section of the bill incorporate definitions appearing in the existing regulations for the administration of the act (Department of Labor Regulations No. 504, series A, September 14, 1936) and also explain the words "industrial home work." The construction of that part of section 9 of the Public Contracts Act exempting open-market purchases, which was adopted by this Department and recently sustained by the Comptroller General, would be substituted for the existing language by section 7 of the bill. This section also simplifies and clarifies other language in this part of the act in accordance with the Department's regulations. A new section would also be added to the present law authorizing the President, on a finding that a national emergency exists, to suspend the application of the act to such contracts as he deems necessary. The bill would affect contracts entered into pursuant to invitations for bids issued not less than 30 days after its effective date. Of perhaps outstanding importance is that section which would require dealers to furnish certificates executed by the producers of the supplies containing the same representations and stipulations required of manufacturers contracting directly with the Government. This provision would effectively close one of the most troublesome loopholes in the present law. Under the original act, which divides Government suppliers into the two broad classes of contractors and regular dealers, the former are put at a great disadvantage by virtue of the fact that the regulable operations of dealers are so much briefer and more limited in scope than those of producers. At the present time, moreover, there is nothing in the law which requires a dealer to purchase his supplies from manufacturers who conform to the standards established by the act. A good deal has been done by administrative regulations to correct this defect, but legislative amendment is necessary for its complete removal. The importance of the prohibition of industrial home work needs no emphasis. A similar provision was contained in early drafts of the original bill but it was removed. The Government has on many occasions and in many ways voiced its disapproval of this abuse, and it is hoped that legislative notice of this attitude can be taken at the earliest possible time. The proposal to amend section 3 of the present act by permitting disqualification of firms violating orders of the National Labor Relations Board carries its own justification. The importance of this legislation and of the significant accomplishments possible through the effective maintenance of reasonable labor standards in the performance of Government contracts is now widely recognized. At the time of the adoption of the Walsh-Healey Act, its sponsors were aware of certain of its weaknesses and anticipated that subsequent experiences would make apparent the necessary amendments. The proposed bill was drafted after the act had been in effect for several months and incorporated the changes then suggested by those who had observed the act in operation. I would be pleased to have the Senate Committee on Education and Labor avail itself of the technical services of the Solicitor of Labor in considering any further amendments to the act. The Bureau of the Budget has advised this Department that it has no objection to the presentation of this report. Sincerely yours, FRANCES PERKINS. NATIONAL LABOR RELATIONS BOARD, Re Senate bill 2165. Hon. HUGO L. BLACK, Chairman, Senate Committee on Education and Labor, Washington, D. C. DEAR SENATOR BLACK: The Board is grateful to you for this opportunity to comment on Senate bill 2165, introduced by Senator Walsh and referred to your committee. This comment will concern itself only with the proposed amendment, 148441-39-2 to section 3 of the original Walsh-Healey Act, which is the only provision immediately related to the work of the Board. This proposed amendment, which we heartily approve in principle, seeks to carry over into the Walsh-Healey Act the requirement of compliance with the terms of the National Labor Relations Act. We believe, however, that this intention has not been effectuated fully by the amendment as now drafted. The amendment, by reference to sections 9 and 10 of the National Labor Relations Act, and to the directions and orders of the Board issued pursuant to those sections, necessarily carries with it the constitutional limitations on the action of the Board under the commerce clause of the Constitution. This would mean, for example, that a contractor who is not engaged in interstate commerce within the meaning of the Supreme Court decisions recently rendered, could with impunity violate our law and still be eligible for Government contracts. Moreover, such limitation is not consistent with the general framework of the Walsh-Healey Act, which applies to any contractor with the Government and rests upon a constitutional basis far broader than the commerce power. If the present proposed language is retained, we may point out finally that employers will, by subcontracting, reincorporation, etc., be able to avoid the jurisdiction of this Board and thus secure Government contracts. Our suggestion is, therefore, that compliance with the unfair labor practices listed in Section 8 of the National Labor Relations Act be one of the express conditions in section 1 of the Walsh-Healey Act; that the Board's authority to hold hearings and make findings in cases arising under this provision, apparently contemplated by the suggested amendment, be made express; and that such authority be separate from and in addition to the Board's jurisdiction under the National Labor Relations Act proper. A suggested draft of amendments along these lines is attached. In this way the purpose of Senator Walsh's amendment will be more fully effectuated and the possibilities of evasion removed. We are taking the liberty of sending a copy of this letter to Senator Walsh. Very truly yours, J. WARREN Madden. Amend section 1 by adding a new subsection as follows: "(f) That the contractor will not engage in any unfair labor practice as defined in section 8 of the National Labor Relations Act, approved July 5, 1935 (Public, No. 198, 49 Stat. 449), with respect to any persons employed by him in the manufacture or furnishing of the materials, supplies, articles, or equipment in performance of the contract." Amend section 3 to read as follows: "The Comptroller General is authorized and directed to distribute to all agencies of the United States a list containing the names of persons or firms found by the Secretary of Labor or the National Labor Relations Board, as the case may be, pursuant to this Act, to have breached any of the agreements or representations required by this Act, and a list containing the names of persons or firms found by the National Labor Relations Board to have violated any order or certification issued by the Board pursuant to the National Labor Relations Act. Unless the Secretary of Labor or the National Labor Relations Board, as the case may be, otherwise recommends, no contracts shall be awarded to such persons or firms or to any firm, corporation, partnership, or association in which such persons or firms have a controlling interest until three years have elapsed from the date the Secretary of Labor, or the National Labor Relations Board, as the case may be, determines such breach or violation to have occurred." Amend section 4 by adding, after the words "the Secretary of Labor is hereby authorized * * * of this Act," the following: "(other than those provisions to be administered hereunder by the National Labor Relations Board)". Amend section 5 by adding the following proviso: "Provided, That whenever there is charged a breach or violation of the representation or stipulation under section 1 (f), all the powers and duties conferred upon the Secretary of Labor under this section shall be vested in and exercised by the National Labor Relations Board, which shall thereupon proceed pursuant to the rules and regulations made and published by the National Labor Relations Board for cases arising under the National Labor Relations Act, so far as applicable. For the purposes of this Act, the findings of fact, conclusions of law, orders, directions of election, and certifications of representatives made and issued by the Board, either upon charge filed hereunder, or upon charge or petition filed pursuant to sections 10 (b) and 9 (c), respectively, of the National Labor Relations Act, shall be final. The jurisdiction and authority herein conferred upon the Board shall be deemed in addition to any and all authority and jurisdiction vested in it under the terms of the National Labor Relations Act." Amend section 8 by changing the period at the end to a comma, and adding: "nor shall the provisions of this Act be construed to modify or amend the National Labor Relations Act, approved July 5, 1935." Hon. ELBERT D. THOMAS, TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Chairman, Committee on Education and Labor, United States Senate. DEAR MR. CHAIRMAN: Further reference is made to letter dated May 19, 1937, from Hon. Hugo L. Black, former chairman of your committee, requesting an expression of the views of the Treasury Department with regard to S. 2165, a bill to amend the act entitled, "An act to provide conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes," popularly known as the Walsh-Healey Act (49 Stat. 2036). This bill clarifies a number of the provisions of the original act concerning which questions have arisen in its administration, and it likewise proposes to extend the application of the act in three important particulars: (1) That the act is to apply to contracts as low as $2,500 in amount, and also to contracts for services as well as for supplies; (2) that a regular dealer is to be required to submit manufacturers' certificates of compliance with the act with each bid; and (3) that the list of persons debarred from bidding under section 3 of the act is to contain the names of persons who are refusing to comply with directions or orders of the National Labor Relations Board issued pursuant to sections 9 and 10 of the National Labor Relations Act. The proposed amendments are entirely satisfactory to the Department, except that in certain respects it is believed the provisions of the bill and of the original act may be further clarified. These details of phraseology will be considered later. At the outset the Department desires to draw attention to certain difficulties arising in the application of the present act and to recommend in view thereof, as a further amendment, that contractors for supplies and services be required to agree to the observance of the labor standards of the act in all of their business operations during the life of a Government contract. Under the present act contractors for supplies must agree to certain representations and stipulations with regard to minimum wages, maximum hours, child labor, convict labor, and safety and health, only with respect to employees engaged in the performance of Government contracts; and the bill does not propose to extend the scope of this agreement. For a number of reasons the Department feels that such an extension is definitely desirable. So far as this Department is aware, under existing conditions a manufacturer can rarely raise wages, lower hours, and comply with other labor standards only with respect to those employees who may be engaged in the performance of a particular contract, for such time as they may continue to be so engaged, whether the contract is with the United States or not. The risk of labor strife would seem too great in most cases. Faithful compliance with the act in its present form thus appears to necessitate, in any practical sense, that most employers observe the labor standards of the act with respect to all business operations during the life of their Government contracts. For this reason it is believed that the extension of the act here recommended would render its provisions more nearly opposite to the actual industrial conditions with which it deals and would, for the most part, constitute a change in the form rather than in the substance of the act. Under the present act, on the other hand, the practical consequences of compliance clearly constitute an inducement to some employers to violate the act in order to avoid a general observance of its provisions. Competitive inequalities necessarily result as between employers endeavoring in good faith to comply with the act and others having varying degrees of regard for its provisions. These inequalities are accentated, moreover, by the practical difficulties inherent in any attempt to determine whether particular employees are or are not engaged in the performance of a Government contract. These difficulties render the present act susceptible of widely differing interpretations by bidders who do not intend to observe the labor standards of the act generally, even if they do intend to comply so far as manufacture of goods for the Government is concerned. Any contractor who does not observe these labor standards generally in its business is faced with the same difficulties in classifying employees, and is thereby placed in a favorable position for attempts to excuse violations of the act on the ground that such violations were unintentional. Moreover, employees frequently have no means of knowing whether they are engaged in the performance of a Government contract or not, and their lack of any basis for complaint gives this type of employer an opportunity to avoid the detection of violations. Enforcement of the provision for liquidated damages for violations of the act would seem difficult or impossible in many cases by reason of these conditions. The Department is unaware of any attempt yet made to apply the liquidated damage provision, and this in itself is evidence of the unworkability of the act in its present form. It is believed that the enforcement problem alone would constitute a sufficient reason for recommending the proposed extension of the act, even if the other considerations here mentioned were not present. Finally, the Congress by its enactment of the present act has evidenced its disapproval of the labor practices which the act seeks to correct in the manufacture of supplies for the Government. It would seem equally proper for the Congress to provide that supply and service contracts shall be awarded only to those employers who will agree to eliminate the condemned practices altogether, while in a contractual relationship with the Government; for, to the extent that the Government does business with employers who adhere to these practices in their dealings with others, the continuation of such practices is encouraged. For this additional reason the proposed extension of the present act is believed desirable in order to promote its policy in an effective manner. The possibility of a substantial increase in the cost to the Government for supplies and services has not been overlooked. In view, however, of the practical consequences of compliance by employers with the present act, as above pointed out, it is believed that the proposed extension would involve only an insignificant increase in the cost which the Government would be called upon to bear under the present act, if the requirements of the act were faithfully observed. In view of the foregoing the Department recommends that section 1 of the bill be amended to provide substantially as follows in the portion following the enacting clause, deletions being in black brackets and additions being indicated by italics: "That the Act of June 30, 1936 (49 Stat. 2036), entitled "An Act to provide conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes," is hereby amended by striking out all of section 1 after the enacting clause [as far as subsection (d)] and inserting the following in lieu thereof: "That in any contract (except contracts for amounts less than $2,500) made and entered into by any executive departments, independent establishments, or other agency or instrumentality of the United States, or by the District of Columbia, or by any corporation all the stock of which is beneficially owned by the United States (all the foregoing being hereinafter designated as agencies of the United States), for supplies or services, there shall be included the following representations and stipulations: "(a) That the contractor is the manufacturer of the supplies, or a regular dealer in the supplies or services required under the contract; "(b) That all persons employed by the contractor [in the performance of the contract] during the period of the contract will be paid, without subsequent deduction or rebate on any account, not less than such minimum fair wage as may have been determined in the manner hereinafter defined; "(c) That no person employed by the contractor [in the performance of the contract] shall be permitted to work during the period of the contract in excess of eight hours in any one day or in excess of forty hours in any one week; "(d) That no person under sixteen years of age will be employed by the contractor during the period of the contract, and that during such period no person will be permitted to perform industrial home work for the contractor; "(e) That no convict labor will be employed in the manufacture of the supplies or the furnishing of the services required by the contract; "(f) That the contractor maintains or operates no plant, factory, or building, which in itself or its surroundings is unsanitary or hazardous or dangerous to the health and safety of his employees or where such employees are subjected to unsanitary, hazardous, or dangerous working conditions; and that safe and sanitary working conditions for all employees will be continued during the period of the contract. Compliance with the safety, sanitary, and factory inspection laws of the State in which any plant, factory, or building is maintained or operated by the contractor shall be prima-facie evidence of compliance with this subsection." |