ficates of compliance from the subcontractors with whom he expects to deal and they in turn will know definitely that they are subject to the labor provisions of the act in fulfilling their contract. The other point made by the Acting Comptroller General that there is an inconsistency between sections 1 and 2 of the bill in regard to the statement of the jurisdiction to contracts in excess of $2,000, is well taken and has already been taken care of in the redrafted suggestions filed with the Secretary's letter making comments on the bill. I should be very glad to make any further comments on points which occur to you or other members of the committee. Very truly yours, L. METCALFE WALLING, Administrator. AMERICAN FEDERATION OF LABOR, Hon. DAVID I. WALSH, Senate Office Building, Washington, D. C. DEAR SENATOR WALSH: Because of your deep interest in the proper carrying out of the Government Contracts Act I wish to inform you of a practice that is growing up in which contracts are let to notorious unfair contractors. Contracts are awarded to corporations who violate both the spirit and letter of Government statutes which provide for collective bargaining and the exercise of the right of workers to organize in bona fide trade-unions. We have been endeavoring to find a way in which we could meet such a situation. It has been suggested that the Walsh-Healey Act be amended so as to supply a remedy. I am, therefore, enclosing an amendment to section 3 which is submitted to you for your consideration. Sincerely yours, WILLIAM GREEN, President, American Federation of Labor. [Enclosure] (To be inserted as an amendment to S. 1032, the Walsh bill to amend the WalshHealey Act.) On page 5 after line 5 insert the following: Section 3 is amended by striking out the period, inserting a colon in lieu thereof, and by the addition of the following: "Provided further, That such list shall contain the names of persons who shall have been (who shall hereafter be) found by a court of competent jurisdiction in a final adjudication to have violated a State or Federal law protecting employees in the exercise of the right of collective bargaining or self-organization. Such name shall remain on such list for a period not to exceed 3 years unless previously removed therefrom by order of the Secretary of Labor whenever in his judgment and upon a proper showing by the person listed, he finds that such removal is in the public interest." Senator WALSH. The committee will now stand in recess until next Thursday morning, at 10 o'clock. (Whereupon, at 12 o'clock, noon, the committee recessed until May 18, 1939, at 10 a. m.) PURCHASE OF SUPPLIES AND THE MAKING OF CONTRACTS BY THE UNITED STATES THURSDAY, MAY 18, 1939 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The subcommittee met, pursuant to adjournment, at 10 a. m., in Room 412, Senate Office Building, Senator David I. Walsh (chairman) presiding. Present: Senators Walsh (chairman) and Taft. Senator WALSH. The committee will come to order, please. Senator Miller, the committee will be pleased to hear your views. with respect to this bill. STATEMENT OF HON. JOHN E. MILLER, SENATOR FROM THE STATE OF ARKANSAS Senator MILLER. Mr. Chairman, I have nothing to offer concerning the terms of the amendment or bill S. 1032 itself, but I do want to propose an amendment to be added to the bill to cure what I think is a clear oversight in the original act, the Walsh-Healey Act, and I appear here at the request of the dairying interests of Arkansas. I refer to the act, section 9 of the bill itself, which reads like this: This Act shall not apply to purchases of such materials, supplies, articles, or equipment as may usually be bought in the open market; nor shall this Act apply to perishables, including dairy, livestock, and nursery products, or to agricultural or farm products, and so forth. Under the ruling of the Secretary of Labor, evaporated milk is nonperishable and thus is subject to the terms of the act, and there is some basis for the ruling because of the context of the law. It was clearly the intention of the Congress when we passed this act to exclude from its operation dairy products, livestock and nursery products and agricultural or farm products, but in drafting the actand the chairman will remember that I was a member of the subcommittee of the House at the time, and we labored on the thing a good while in drafting the act we have just been unfortunate in the phrasing of that language, and I am proposing that that section be rewritten entirely, and merely substitute the words "dairy products" before the word "perishables", and between the word "to" in the third line of the section, before the word "perishables", so as to make that read: * * * nor shall this Act apply to dairy products, or to perishables, including livestock and nursery products * * 59 Senator WALSH. Very well, Senator. That will be given consideration. Senator MILLER. It is just a matter that I am sure the act was intended to cover. Senator WALSH. Have you a copy of your proposed amendment? Senator MILLER. Yes. Senator WALSH. That may be inserted in the record. (The proposed amendment of Senator Miller is as follows:) AMENDMENT PROPOSED BY SENATOR MILLER TO S. 1032 (A NEW SECTION) This Act shall not apply to purchases of such materials, supplies, articles, or equipment as may usually be bought in the open market; nor shall this Act apply to dairy products, or to agricultural or farm products processed for first sale by the original producers; nor to any contracts made by the Secretary of Agriculture for the purchase of agricultural commodities or the products thereof. Nothing in this Act shall be construed to apply to carriage of freight or personnel by vessel, airplane, bus, truck, express. or railway line where published tariff rates are in effect or to common carriers subject to the Communications Act of 1934. Senator MILLER. It is a mere recopying of section 9 of the bill with those changes made, and by that change we will make it conform to the intention of the Congress, and I hope very much that when the bill is reported that it may be inserted as a section of your bill. Senator WALSH. In the same connection, there may be inserted in the record a telegram addressed to Senator Wiley from Oscar Mayer & Co., of Madison, Wis., and a memorandum submitted by Senator Wiley either in his own behalf or in behalf of his constituents. (The telegram and memorandum referred to are as follows:) Hon. ALEXANDER WILEY, Senate Office Building Washington, D. C. MADISON, Wis., May 17, 1939. Re your amendment Walsh bill, S. 1032, urge you also include livestock products in your proposed exemption from the Walsh-Healey law since that law now recognizes livestock products are in the same category as dairy products. Similarly need for special treatment of livestock products as well as daity products also is recognized in wage-hour law. Livestock receipts fluctuate widely throughout year and must be handled promptly. If livestock products not exempt, packers have no recourse other than to pay less for livestock to cover increased labor costs of handling or to refuse to buy in any one day more livestock than can be handled without paying overtime thereby making it necessary for the farmer to pay extra feeding and other costs at numerous periods during the year. While most livestock products are perishable no practical way of segregating operations for nonperishable items. This means that if some livestock products are subject to law and contracts amounting to more than $2,000 also are subject instead of contracts amounting to $10,000 as now provided in the law then it will be difficult to bid on Government business. Will appreciate it greatly if proposed amendment can be changed to provide equitable treatment for livestock. OSCAR MAYER & Co. MEMORANDUM RELATING TO THE EXEMPTION OF CONTRACTS FOr the PurchHASE OF DAIRY PRODUCTS UNDER THE WALSH-HEALEY ACT The Walsh-Healey Act, which was approved on June 30, 1936 in section 9 contains the following provision: "this Act shall not apply to purchases of such materials, supplies, articles, or equipment as may usually be bought in the open market; nor shall this Act apply to perishables, including dairy, livestock, and nursery products, * * Feeling it her duty to construe the exemption relating to dairy products, Secre tary Perkins under date of October 24, 1936 addressed a letter to Capt. H. E. Collins, Assistant Director of Procurement, Treasury Department, Washington, D. C., in which she deemed "it wise to issue a statement to the heads of all departments and establishments for the purpose of clarifying article 2 (b) of Regulations 504 issued under the act of June 30, 1936, Public. No. 846, 74th Congress." The article to which the Secretary referred in her letter to Captain Collins was a portion of regulations relating to the dairy products exemption of section 9. The regulation in its pertinent part reads as follows: (b) where the contract relates to perishables, including dairy, livestock, and nursery products; ('perishables' cover products subject to decay or spoilage and not products canned, salted, smoked or otherwise preserved).' In her letter to Captain Collins the Secretary, for the guidance of contracting officers in the several departments listed a number of items regarded as perishables according to the Provisions Committee of the Federal Specifications Executive Committee. Apparently, this committee had been requested to furnsih the Secretary with a list of items which it regarded as perishable. The test which the Secretary laid down was whether or not the item was "subject to deterioration after delivery unless affirmative steps (e. g., refrigeration, ventilation, etc.) are taken by the Government to preserve it." The dairy products which the Provisions Committee listed as perishable included only the following: "Butter (ration), grade C (Score 90), F. S. C-B 801. "Butter (sales), grade A (Score 94) or B (Score 92), F. S. C-B-801. "Buttermilk, Type A or B, F. S. C-B-816. "Cheese, fresh (ration) Grade B, F. S. C-C-271. "Cheese, (sales) including packages of 3 to 16 ounces (not to exceed 8 kinds). "Cream, fresh, Types 1 and 3, F. S. C-C-671 (for organizations only). "Ice Cream, bulk or brick, F. S. EE-I-116 (for organizations only). * * * "Milk, fresh (ration) F. S. C-M-381 a (for organizations only)." It is apparent to me that the ruling of the Secretary flies in the face of the reason which motivated Congress in according the exemption to contracts for dairy products. The Walsh-Healey Act requires the inclusion of certain labor stipulations including a 40-hour week in contracts for the purchase of certain materials and supplies. Obviously, the application of the maximum hour standard has its impact at the time the articles to be purchased are being processed or manufactured. It was recognized by Congress that manufacturing and processing and handling of dairy products constitute operations involving a perishable product. It was for this reason that Congress accorded the exemption. Why the Secretary applies a test involving the condition of the product "after delivery," in other words, when the product is resting in an Army or other Government warehouse, is more than I can see. Certainly if Congress intended to give recognition to the necessity of handling milk and milk products during manufacture with dispatch, it could not be very helpful to apply the test of "after delivery." It is not known with precision how many dairy products have been excluded from the exemption as a result of Secretary Perkins' ruling; for as I pointed out a moment ago certain types of cheese are regarded as perishable and two classes of butter are listed. It is obvious that the list utilized by the Provisions Committee was originally prepared for some other purpose judging from the descriptive classifications attached to each item, for example, ice cream, bulk or brick, is exempt if it is F. S. EE-I-116 (for organizations only). We do know that it has been sought to apply the provisions of the Walsh-Healey Act to evaporated milk and condensed milk and dry milk. It seems, however, that there is a necessity for Congress to clarify the exemption. At the moment I would like to discuss with the committee the need for the exemption for evaporated in view of the known policy of Congress to exempt perishables. An extremely perishable product is used in manufacturing evaporated milk for a Government contract. When a manufacturer contracts to supply evaporated milk to the Government, he is able to fulfill his contract only by handling and processing a most perishable basic product-milk. this extent, the evaporated-milk industry differs in no respect from the fluid milk, ice cream, cheese, or butter industries, the products of which are recognized by the Secretary of Labor as exempt under the Walsh-Healey Act. Throughout the entire processing of evaporated milk-from the delivery of the raw milk by 148441-39- -5 To |