Appendix — District Lodge No. 166, International Ass'n of Machinists & Aerospace Workers v. TWA Services, Inc.

Office - Supreme Court, U.S.

84-713. FILED

No. NOV 2 1094

i. C.\NDEIR LSTEVAS

; CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS, AFL-CIO,

Petitioner

V.

TWA SERVICES, INC. ;

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ;

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Respondents

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

MOZART G. RATNER

MOZART G. RATNER, P.C.

1900 M Street, N.W.

Washington, D.C. 20036

JOSEPH P. MANNERS

IAMAW

1300 Connecticut Ave., N.W.

Washington, D.C. 20036

GEORGE H. TUCKER

MANNERS, TUCKER, CARRILLO

& DAMOORGIAN, P.A.

123 Northwest 12th Avenue

Miami, Florida 33128

Attorneys for Petitioner

- 789-0096 - WASHINGTON, D.C. 20001

WILSON - EPES PRINTING Co., INC.

4;

@ GS 00

INDEX

Page

Opinion, 11th Circuit, May &, 1966 ................................. la

Judgment, 11th Circuit, May 3, 1984 ...............200000... 15a

Order, 11th Circuit, Denying Petition for Rehearing

and Suggestion for Rehearing En Banc, July 5,

eSATA Le VS Oa a oN Re ee A ae UR BS oA eRe EES 16a

Memorandum Opinion (Judge Young), November 17,

ee ae eae 18a

Order Denying Motions for Summary Judgment, No-

i ial 27a

Order Denying Motion for Reconsideration of Declina-

tion to Pass On Legality of DOL Regulation 29 CFR

§ 4,133(b), July 19, 1982 (Judge Kovachevich) _....... 28a

Memorandum Opinion (Judge Kovachevich), Septem-

gg Ri ie Er eee ee 29a

Judgment, Bepbember FA, LGSS 22.5.2. cnn nnsenincnnccnesscascncee 38a

Notice of Appeal, November 10, 1982 0... 40a

Order and Notice of Hearing on Counsel Fees, Decem-

ak eRe a eet sada) Eertletcat Waa te rod en cece 42a

Order Denying Counsel Fees, February 3, 1983 _........... 44a

Service Contract Labor Standards, Public Law 89-286,

Oct. 22, 1965, 79 Stat. 1034, as amended, Sept. 19,

1972, Title 41 USC, §§ 351 to 358 _........... 46a-56a, 112a-113a

aoe acc eniabenngetioacediemateaien 56a

aR aa ee pmiegiauupabaae can iene 56a

Sa ae sr ieeumasapeatete 56a

a his iecnioass 56a

House Report No. 92-1251, 92nd Cong. Ist Sess. _........... 58a

Comparison Service Contract Act of 1965 with SCA as

amended in 1972, part of H.R. No. 92-1251 _............ 67a

Senate Report No. 92-1131, 92nd Cong. ist Sess. .......... 76a

ii

INDEX—Continued

Service Contract Act Amendments, House, August 7,

1972, 118 Cong. Rec. 27186-27142 ..................

Service Contract Act Amendment of 1972, Senate, Sept.

19, 1972, 118 Cong. Rec. 31281-31282 _..........

DOL Regulations, 32 Federal Register, July 8, 1967......

DOL Regulations, 44 Federal Register, December 28,

ROP ID :dcccscsnvcinteonns-eicnidendoteecetcmessiacsneitatec tee ie arm renet Tn anaes

aE I Se ererin eer N iit 0 =). FR Ry

BN ic nna: sschecratnis candace ne.

SIME. 1s;isnsvdnncniennmoninbiasenihocessmcpecminemmaatnm aes

BOO a vinscsisscntsccdcecncsnsieisinnsgulndesiaesaiaieaaaiaal diate ieee

DOL Regulations, 48 Federal Register 49761-49762,

29 C.F.R. Part 4, effective date, January 27, 1984 _....

Report of House Special Subcommittee on Labor, The

Plight of Service Workers Under Government Con-

wacts, fume, O02. 5. ccc ee

Report of Subcommittee on Labor-Management Rela-

tions, 97th Cong., 2d Sess., July 1, 1982...

Letter, Ratner to Administrator, Wage & Hour Divi-

sion, DOL, September 28, 1984 0.000.

Letter, Administrator, Wage & Hour, DOL, to Ratner,

GCeier 16, 2006 |...

Supplemental and Second Amended Complaint (Reme-

Gen MINONORD | oon

List of Docket Entries Supplied By Clerk of District

Court To COO uo. ee

Page

85a

112a

118a

119a

134a

139a

150a

154a

156a

162a

183a

192a

193a

194a

la

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

No. 82-3159

DistRIcT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WoRKERS, AFL-CIO,

Plaintiffs-A ppellants,

V.

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants-A ppeliees.

May 3, 1984

Mozart G. Ratner, P.C., Washington, D.C., Joseph P.

Manners, Gen. Counsel, IAMAW, Washington, D.C.,

George H. Tucker, Miami, Fla., for plaintiffs-appellants.

Douglas Hendriksen, Kennedy Space Center, Fla., for

NASA.

James M. Blue, Tampa, Fla., June Wagoner Edwards,

U.S. Dept. of Justice, Washington, D.C., for TWA Serv-

ices, Inc.

Appeal from the United States District Court

for the Middle District of Florida

Before RONEY and HENDERSON, Circuit Judges,

and DYER, Senior Circuit Judge.

DYER, Senior Circuit Judge:

This appeal involves the application of the Service Con-

tract Act of 1965, (SCA) as amended, 41 U.S.C. §§ 351

2a

to 353 (1976), to the Concession Agreement entered into

between TWA Services, Inc. (TWAS), and the National

Aeronautics and Space Administration (NASA), for the

Visitors Information Center (VIC) at the Kennedy Space

Center.

The district court found that the SCA covers the VIC

Concession Agreement, but that the plaintiff is not en-

titled to recover from TWAS retroactive wage and fringe

benefits between the date of the succession of TWAS

under the Concession Agreement and the date of judicial

declaration of coverage. The district court also found

that mandamus does not lie to compel the Secretary of

Labor to issue a retroactive wage determination for the

period in question, or to compel NASA to amend the Con-

cession Agreement to reflect this retroactive wage de-

termination. Plaintiff asserts that these determinations

are erroneous as a matter of law. We disagree and

affirm.

TWAS has operated the VIC at the Kennedy Space

Center since 1968 under a Concession Agreement with

NASA, under the terms of which TWAS provides bus

tours to visitors to the VIC, sells souvenirs, and main-

tains a cafeteria which caters to VIC visitors. In No-

vember 1978 the Concession Agreement was modified

(Modification 9 to NAS 10-5755) by which TWAS agreed

beginning November 8, 1978, to perform the landscaping

function at the VIC which had previously been performed

by Expedient Services, Inc. (ESI) pursuant to a base-

wide contract under which ESI performed all the roads

and ground maintenance work at the Center. ESI was a

non-union company, its employees were not covered by a

collective bargaining agreement. Likewise, TWAS as-

sumed responsibility for facility maintenance at the VIC

on January 1, 1979, which, prior to Modification 9, had

been performed by Boeing Services International (BSI)

whese contract with NASA required it to perform main-

tenance at all other center facilities. The employees of

3a

BSI who performed these functions were represented by

the plaintiff union and were covered by a collective bar-

gaining agreement. The contracts hetween BSI and ESI

and NASA were treated as covered by the Service Con-

-tract Act.

At the time of the transfer of the work to TWAS,

there were no employees transferred from either BSI or

ESI, nor were the BSI or ESI forces reduced, and both

companies continued to perform the facilities and land-

scape maintenance functions throughout the center, ex-

cept at the VIC. The additional work transferred to

TWAS by Modification 9 was performed by new hires of

TWAS. As a result, no individual was ever paid less

money than he was being paid under any prior con-

tractual arrangement.

From the time that TWAS was first awarded the VIC

concession in 1968, NASA took the position that the con-

cessionaire agreement was exempt from the SCA by

virtue of the statute and 29 C.F.R. § 4.133, a Depart-

ment of Labor regulation exempting from the coverage

of the Act concessionaire agreements at national parks.’

The conclusion reached by NASA was also in reliance

upon a 1973 amendment to the National Aeronautics and

Space Act of 1958? which granted to the NASA Ad-

1 Section 4.133 (b) provides:

It is not considered that the Act was intended to cover

every contract, however, which is entered into with the gov-

ernment by a contractor to furnish services, no matter how

indirect or remote a benefit the government may derive there-

from. If, for example, a contract with the government grants

the contractor the privilege of operating as a concessionaire

in a government park for the purpose of furnishing services to

the public generally rather than to the government or to per-

sonnel engaged in its business, the contract is not considered

subject to the Act....

29 C.F.R. § 4.133 (1983).

2 Act of July 23, 1973, Pub.L. No. 93-74, $6, 87 Stat. 171, 174

(amending National Aeronautics and Space Act of 1958 § 203(b),

4a

ministrator discretionary authority to enter into Conces-

sionaire Agreements to provide facilities for visitors to

NASA centers. 42 U.S.C. § 2473(c) (11) (1976). This

amendment was intended to grant NASA authority simi-

lar to the authority granted the U.S. Parks Service to

provide visitor services at national parks by Concession-

aire Agreements.®

Beginning in 1973 there was an exchange of letters be-

tween the Department of Labor and NASA, the former

asserting that the Concessionaire Agreement was subject

to the SCA, and the latter responding that it was exempt

from SCA. At the time of Modification 9, when the scope

of the work was modified to include landscaping and

facility maintenance at the VIC, the coverage issue was

raised again but the Department of Labor took no step to

compel NASA to require compliance by TWAS with

§ 353 (c) .4

42 U.S.C. 2473(b)) (current version at 42 U.S.C. § 2473(c) (11)

(1976) ).

3$.Rep. No. 179, 98d Cong., lst Sess. 106 (1973) ; HousE CommM.

ON SCIENCE AND AERONAUTICS, H.R.Doc. No. 171, 93d Cong., 1st

Sess. 178, 179 (1978).

* (c) Predecessor contracts; employees wages and fringe benefits

No contractor or subcontractor under a contract, which

succeeds a contract subject to this chapter and under which

substantially the same services are furnished, shall pay any

service employee under such contract less than the wages and

fringe benefits, including accrued wages and fringe benefits,

and any prospective increases in wages and fringe benefits pro-

vided for in a collective bargaining agreement as a result of

arm’s-length negotiations, to which service employees would

have been entitled if they were employed under the predecessor

contract: Provided, That in any of the foregoing circumstances

such obligations shall not apply if the Secretary finds after a

hearing in accordance with regulations adopted by the Secre-

tary that such wages and fringe benefits are substantially at

variance with those which prevail for services of a character

similar in the locality.

41 U.S.C. § 353(c) (1976).

5a

Suit was instituted on August 20, 1979 by plaintiff.

On November 17, 1981, the district court ruled that the

SCA applied to the VIC Concession Agreement entered

into between TWAS and NASA and further found that

the 29 C.F.R. § 4.133 exemption did not apply to the VIC

Concession.*

On August 13, 1982 the Department of Labor issued a

wage determination applicable to the VIC Concession

Agreement effective as of November 17, 1981, the date

of the district court’s coverage ruling.

After a non-jury trial the district court entered a final

judgment denying the relief sought by plaintiff.

The remedy plaintiff seeks is to recover the difference

in wages and fringe benefits actually paid from those

that would have been paid if the 1978 wage determina-

tions had been made part of the VIC Concession Agree-

ment. Further, it seeks the difference in wage and

fringe benefits actually paid and those that would have

been paid had subsequent wage determinations been

issued for the new VIC Concession Agreement entered

into between NASA and TWAS in 1979.

5 The district court found inter alia:

Assuming, without specifically ruling on the issue, that 29

C.F.R. § 4.133 constitutes a grant of exemption from the cov-

erage of the SCA pursuant to the Secretary's authority under

§ 353(b), there is no indication that the exemption so granted

applies to the VIC concession contract. There is no mention of

the VIC contract in the regulation. Nor is there any evidence

that the Secretary has satisfied the procedural and substantive

safeguards required by the Act prior to reaching a deter-

mination that the VIC contract should be exempted from the

coverage of the Act. In the absence of such evidence, the Court

finds that 29 U.S.C. § 4.133 has no application to the question

presented by the facts herein. In reaching this determination

the Court finds it unnecessary to consider further plaintiff’s

request to declare 29 C.F.R. § 4.133 null, void, and of no force

and effect. (Emphasis added)

6a

Essentially, plaintiff asserts two causes of action.

Against NASA we are asked by mandamus to compel

NASA to request an appropriate wage determination, to

compel the Department of Labor to issue them, and to

compel the agencies to enforce the wage determinations

retroactively against TWAS. Against TWAS, plaintiff

seeks to recover directly for the differences.

Taking the contentions in inverse order, we hold that

the plaintiff cannot maintain a private right of action

against TWAS under the SCA.

Plaintiff lays great stress upon the undisputed fact

that the 1972 amendment‘ adding subsection (c) of

§ 353 was prompted by Congress’ dissatisfaction with the

Secretary’s inconsistent administration of the Act in

granting exemptions from coverage. Building upon this

premise, plaintiff contends that while it may be argu-

able that it did not have standing prior to 1972, the

amendments created a privaie right of action thereafter.

Plaintiff suggests that § 353(c) imposes a mandatory

obligation directly upon private parties, i.e., successor

government service contractors. Moreover, it argues that

the prohibitory language creates a correlative right in

the employees of successor contractors that include plain-

tiff in this case.

Plaintiff submits that there is nothing in the legisla-

tive history of SCA that indicates that Congress meant

to exclude private actions for enforcement of § 353(c).

Finally it argues that there is a private right of action

under § 353(¢c) that must be distinguished from the ad-

ministrative remedies available to the Secretary in § 352.

® The district court assumed without deciding that the plaintiff

could maintain a private right of action against TWAS, but held

that it would nonetheless deny plaintiff relief.

7 Act of Oct. 9, 1972, Pub.L. No. 92-473, $3, 86 Stat. 789, 789

(amending Service Contract Act of 1965 §4, 41 U.S.C. § 353

(1970) ).

>

ee

Ta

For these reasons, plaintiff urges us to disavow the hold-

ing of the Ninth Circuit in Miscellaneous Service Work-

ers, Local 427 v. Philco-Ford Corp., 661 F.2d 776 (9th

Cir. 1981). We are unpersuaded.

In Philco-Ford, the court properly pointed out that

the “question of whether a private right of action is

conferred by a federal statute is essentially one of in-

terpreting congressional intent,” and then looked to the

test announced in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080,

45 L.Ed.2d 26 (1975), as follows:

(1) Is the plaintiff “one of a class for whose especial

benefit the statute was created?” (2) Is there any

indication of a legislative intent to fashion such a

remedy? (3) Is it consistent with the underlying

legislative scheme to imply such a remedy? (4) Is

the cause of action one traditionally relegated to

state law, so that a federal cause of action would be

inappropriate?

661 F.2d at 780 (citing Cort v. Ash, 422 U.S. 66, 78, 95

S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975).

In applying the test, the court found that the first

question must be answered affirmatively, because the

legislative history of the 1972 amendments make clear

that they were enacted for the benefit of employees pro-

viding service work under government contracts. Id.

Concerning the legislative history, the court found that

“it is apparent that nothing supports the inference of a

legislative intent to create private remedies under the

act.” Jd. Rather, the focus was upon a “ ‘more efficient

administration’ of the SCA by narrowing the Secretary’s

discretion in deciding whether to issue a wage determina-

tion for all government service contracts.” *® Moreover,

the court continued, “it would be flatly inconsistent with

8661 F.2d 776 (citing S.Rep. No. 1131, 92d Cong., 2d Sess.

5 (1982); reprinted in 1972 U.S. CoDE Conc. & AD.NEWS 3534,

3535).

8a

the express provision of a limited governmental cause of

action to imply a wide-ranging private right of action as

an alternative to a government suit.” 661 F.2d at 780.

Finally, the court noted that other courts that have

considered the question have concluded that there is no

implied private right of action under the SCA. Id. at

781 (citing International Ass’n of Mach. & Aero. Wkrs.

v. Hodgson, 515 F.2d 373 (D.C. Cir. 1975) ; Service Em-

ployees International, Local No. 36 v. General Services

Administration, 443 F.Supp. 575, 580 (E.D. Pa. 1977) ;

Dodd v. Blackstone Cleaners, 61 Labor Cases (CCH)

9 32,281 (N.D. Tex. 1969) ).

The Ninth Circuit’s in-depth analysis of the SCA, and

its correct application of the Cort test, fully supports its

conclusion that both before and after the 1972 amend-

ments, Congress did not intend to authorize private suits

to enforce the Act. We agree.

The lack of a private right of action under the SCA

is also discussed in Hodgson, 515 F.2d 373, where as

here, a service contract was awarded without a wage

determination by the Secretary of Labor and thereafter

such a determination was made prospectively. The union

sued to recover the higher wages that would have been

due in the interim period. The court denied relief,

saying:

Under Section 3(a) the party responsible for the

violation of a wage determination is liable for the

amount of underpayment. In this case, however,

there simply was no wage determination for the

Boeing Company to violate, and the lack-of such a

wage determination should not be ascribed to Boeing.

This is particularly true where as here, the Union

ascribes the omission of a wage determination to the

Secretary ... While the injury to the Union mem-

bers may be the same as it would be where a wage

determination is violated, the causatiun is not. The

9a

lack of a wage determination provision in the con-

tract is not attributable to any action by Boeing. It

is attributable only to the Secretary of Labor.

The enforcement of Section 3(a) is by statute the

province either of the head of the contracting agency

or the Secretary of Labor. When the Secretary

issued the wage determination effective February 1,

1972, Boeing complied. Boeing has not violated that

wage determination or any other which is applicable

here.

The Union further argues as between the innocent

employees who received reduced wages and the

Boeing Company that Boeing should stand the loss

because Boeing is not entitled to rely upon a con-

tract illegally made. Yet it is the Secretary of Labor

who allegedly acted wrongfully in omitting the wage

determination. Boeing was entitled to bid on the

specifications as it found them... .

[T]he Act does not provide any remedy against

employers for the alleged omission of the Secretary

of Labor. ...

.... The demand cannot succeed not only because

the Act does not provide such a remedy, but also

because the Boeing Company has not violated the

Act.

515 F.2d at 379.

We recognize that the court’s holding in Hodgson

applied to the 1965 Act prior to the 1972 amendments

and that the purpose of the Amendments was to restrict

the Secretary of Labor’s discretion not to issue a wage

determination. (Emphasis added). We, however, do not

share the view of plaintiff that the Amendments created

a private right of action, rather, we endorse, as did the

10a

court in Philco-Ford, supra, the Hodgson court’s observa-

tion that “[T]he 1972 Amendments do not create new

remedies against contractors.” 515 F.2d at 379, n.9.

We hold that plaintiff cannot maintain a private right

of action under the SCA against TWAS.

Plaintiff’s alternative argument is that if there is no

private right of action under the SCA, it may maintain

this suit under § 301 of the Labor Management Rela-

tions Act (LMRA), 29 U.S.C. $185 (1982). Plaintiff

does not take issue with the district court’s finding that

there was no agreement between the parties to incorpo-

rate the wage and fringe benefits paid by TWAS’ prede-

cessors nunc pro tunc if Modification 9 and its successors

were held to be covered, but argues that the wages and

fringe benefits were incorporated in the contract by op-

eration of law. We disagree. We have found no case

and plaintiff has cited none that would authorize a suit

under § 185 where the contract is silent on the issue the

Union attempts to enforce against the employer. TWAS

followed the contract as written and was required to do

no more. Barrentine v. Arkansas-Best Freight System,

450 U.S. 728, 101 S.Ct 1437, 67 L.Ed.2d 641 (1981) and

Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct.

1011, 39 L.Ed.2d 147 (1974) relied upon by plaintiff are

inapposite. Barrentine was a suit brought by employees

under the Fair Labor Standards Act, 29 U.S.C. § 201-

219 (1976) for compensable time denied them. Alex-

ander was a suit brought under Title VII of the Civil

Rights Act of 1964 for discriminatory discharge. Both

cases held that an arbitration decision against the em-

ployees under a collective bargaining argeement could

not foreclose claims of the employees based upon rights

arising out of statutes designed to provide minimum

substantive guarantees to individual workers, since both

statutory schemes provided broad access to the courts.

In these cases the courts did not incorporate in the con-

tracts by operation of law the provisions of statutory

biisteseeenitiee

lla

law it invokea as plaintiffs would have us do here. In-

stead, as the court said in Barrentine, citing Alexander,

“The court found that in enacting Title VII Congress

had granted individual employees a non-avoidable public

right to equal opportunities that was separate and dis-

tinct from the rights created through the ‘majoritarian

process’ of collective bargaining.” Jd. 101 S.Ct. at 1443

(citing Alexander, 415 U.S. 36, 94 §.Ct. 1011, 39 L.Ed.2d

147). The rights created by the collective bargaiging

agreement and the rights created by statute are separate

and distinct with the right of the employee under Title

VII and the FSLA to bring suit spelled out in the stat-

utes. We are not persuaded by these non-analagous deci-

sions under Title VII and the FSLA that plaintiff may

proceed against TWAS under LMRA’s § 301.°

We now turn to the plaintiff’s asserted cause of action

against the federal defendants in which it seeks a writ

of mandamus ordering the Secretary of Labor to issue a

wage determination embodying BSI and ESI wage rates

retroactively to Modification 9 of the completed Conces-

sion Agreement NAS 10-755, computation by the Secre-

tary of the amount of unpaid compensation allegedly due

to employees performing work under the completed VIC

contracts, withholding from NASA of amounts due

TWAS and depositing them in a special fund, and an

order by the Secretary to NASA to pay all sums with-

held directly to the TWAS employees in question. We

hold that the Secretary has no clear and undisputed duty

to compel TWAS to pay for his mistake, and, further,

hold that the equities do not dictate the relief sought by

the plaintiff.

® Plaintiff’s argument that § 353(c) is self-executing and there-

fore TWAS was bound to pay no less wages and benefits than its

predecessors ESI and BSI give us little pause. We agree with the

district court that it would “be an absurd proposition to charge

one with knowledge of SCA coverage by operation of law, when

those whose job it is to enforce the law have stated otherwise.”

12a

Plaintiff takes issue with the district court’s charac-

terization as “legally erroneous” NASA’s and the Secre-

tary’s treatment of the VIC concession contracts as not

covered. Plaintiff insists that the non-issuance of a wage

determination was “ultra vires”, and that the back wage

payments, retroactive to the effective date of the Secre-

tary’s misinterpretation, must be made to employees who

would have been covered had the Secretary interpreted

the Act correctly in the first place. See Addison v. Holly

Hill Fruit Products, 322 U.S. 607, 64 S.Ct. 1215, 88

L.Ed. 1488 (1944). In this way the injured parties will

be placed in the situation they would have occupied if

the wrong had not been done. See Albermarle Paper Co.

v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280

(1975). Pointing out that § 358 in terms applies to “all

contracts subject to this chapter” and that “[o]bligatory

Congressional enactments are held to govern federal con-

tracts,” G.L. Christian & Associates v. United States, 320

F.2d 345, 351, 160 Ct.Cl. 58 (1963), plaintiff argues that

the contract must be construed to be covered as a matter

of law and neither the contracting agency nor the Secre-

tary is authorized to treat it as not covered. Ergo, an

action based upon an ultra vires non-coverage determina-

tion is a breach of a mandatory legal duty. But it is not

that simple.

It is hornbook law that mandamus is an extraor-

dinary remedy which should be utilized only in the

clearest and most compelling cases. Though it is a

legal remedy, it is largely controlled by equitable

principles and its assurance is a matter of judicial

discretion. Generally speaking, before the writ of

mandamus may properly issue, three elements must

coexist: (1) a clear right in the plaintiff to the

relief sought; (2) a clear duty on the part of the

defendant to do the act in question; and (3) no

other adequate remedy available.

13a

Carter v. Seamans, 411 F.2d 767, 773 (5th Cir. 1969),

cert. denied, 397 U.S. 941, 90 S.Ct. 953, 25 L.Ed.2d 121

(1970) (footnotes omitted); See Whitehouse v. Illinois

Central Railroad Company, 349 U.S. 366, 75 S.Ct. 845,

99 L.Ed. 1155 (1955).

We are not persuaded that there is a clear right in the

plaintiff to the relief sought. As we have previously

explicated, the SCA does not confer on the plaintiff a

private right of action for its enforcement. It is obvious

that plaintiff seeks relief by way of mandamus from the

federal defendants solely as a means of obtaining back

wages from TWAS. Lacking such a right directly under

the statute, it urges the court to compel the defendants to

undertake actions which would indirectly result in the

same back wages from TWAS that it is precluded from

seeking directly. We refuse to blind ourselves to the in-

equity of granting plaintiff relief which is not an end in

itself but is merely a means to an end which plaintiff

could not obtain except by this end run. We will not put

our imprimatur on such an artful misuse of the extraor-

dinary remedy of mandamus.

Moreover, we find no “clear, ministerial and non-

discriminatory” duty, Kirkland Masonry, Inc. v. Com-

missioner, 614 F.2d 532, 533-34 (5th Cir. 1980) on the

part of NASA to the plaintiff to retroactively modify

the fully completed Concession Agreements. We find no

statutory or regulatory (emphasis added) language which

supports plaintiff's demand for such unilateral retroac-

tive relief.

Finally, we share the district court’s findings that

upon equitable considerations a mandatory injunction

should not issue compelling retroactive wage determina-

tions. The wage determinations were not made because

of NASA’s view that the contract was not subject to the

Act. In this litigation the Secretary took the same posi-

tion. TWAS was not at fault for any failure to comply

with the SCA, yet granting the relief sought by plaintiff

14a

will result in no harm to the federal defendants but

would directly penalize TWAS. In fact, TWAS, has

simply not violated the SCA.

We are not moved by plaintiff’s argument that TWAS

is not entitled to equitable consideration because it was

aware of and assumed the risk that the coverage ques-

tion might ultimately be decided against it. It is un-

disputed that TWAS and plaintiff made a joint trip to

Washington during the recompetition period preceding

the awarding of the current Concession Agreement and

sought to have the Department of Labor issue an SCA

wage determination. This attempt was unavailing. Al-

though the plaintiff had been in dispute with NASA

since 1966 concerning coverage of the SCA to Conces-

sion Agreements, it sought no judicial intervention to

test SCA coverage until 1979, after TWAS had been

selected, based on a bid which did not include SCA mini-

mums. In view of these circumstances it would be mani-

festly inequitable for the plaintiff, at this late date, to

shift the blame to TWAS and penalize it for plaintiff’s

lethargy in pursuing the coverage issue.

The district court exercised sound discretion in refus-

ing to issue the writ of mandamus.”°

AFFIRMED.

10 Plaintiff challenges the validity of 29 C.F.R. § 4.133(b) and

seeks declaratory and injunctive relief under 5 U.S.C. § 704 (1982),

the Administrative Procedure Act. Judge Young found that the

regulation was not applicable to the VIC concession contracts and,

on that ground, declined to pass upon whether the regulation was

forbidden by § 353(b). For the purposes of this case, that removed

the regulation from further consideration. Now, plaintiff invites

us to revisit the -*sue because on some other day, in some other

court, the Secretary's proposed amendment to the regulation (which

so far as we know was not before the district court) and which has

not and may never be adopted, might be an issue. This we decline

to do.

15a

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 82-3159

D.C. Docket No. 79-00405

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS, AFL-CIO,

Plaintiffs-Appellants,

versus

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants-A ppellees.

Appeal from the United States District Court

for the Middle District of Florida

Before RONEY and HENDERSON, Circuit Judges, and

DYER, Senior Circuit Judge.

JUDGMENT

This case came on to be heard on the transcript of the

record from the United States District Court for the

Middle District of Florida, and was argued by counsel;

ON CONSIDERATION WHEREOF, it is now here or-

dered and adjudged by this Court that the judgment of

the said District Court in this cause be and the same is

hereby, AFFIRMED;

It is further ordered that plaintiffs-appellants pay to

defendants-appellees, the costs on appeal to be taxed by

the Clerk of this Court.

Entered: May 3, 1984

For the Court: SPENCER D. MERCER, Clerk

By: /s/ [Illegible]

Deputy Clerk

Issued as Mandate: July 20, 1984

16a

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 82-3159

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS, AFL-CIO,

Plaintiff-Appellants,

versus

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants-A ppellees.

[Filed July 5, 1984]

Appeal from the United States District Court

for the Middle District of Florida

ON PETITION FOR REHEARING AND

SUGGESTION FOR REHEARING EN BANC

(Opinion May 3, 1984, 11 Cir., 198—, —— F.2d ——)

(July 5, 1984)

Before RONEY and HENDERSON, Circuit Judges, and

DYER, Senior Circuit Judge.

17a

PER CURIAM:

(“) The Petition for Rehearing is DENIED and no

member of this panel nor other Judge in regular active

service on the Court having requested that the Court be

polled on rehearing en banc (Rule 35, Federal Rules of

Appellate Procedure; Eleventh Circuit Rule 26), the Sug-

gestion for Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

/s/ Paul H. Roney

United States Circuit Judge

18a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-Y

DIsTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

— Plaintiff,

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

and RAYMOND J. DONOVAN, SECRETARY OF LABOR.

Defendants.

[Filed Nov. 17, 1981]

MEMORANDUM OPINION

This cause came before the Court for hearing on the

various pending motions for summary judgment. Oral

argument was presented on the principal issue raised in

the pleadings, whether the requirements of the Service

Contract Act of 1965 (SCA), as amended, 41 U.S.C.

§§ 351, et seq. are applicable to the concession agreement

entered into between TWA Services, Inc. and the Na-

tional Aeronautics and Space Administration (NASA)

for the Visitor Information Center (VIC) at Kennedy

Space Center. For the reasons stated more fully below,

the Court finds that the Act does apply to the VIC con-

cession agreement.

TWA. Services, Inc. has operated the VIC at Kennedy

Space Center since 1968 pursuant to a concession agree-

ment with NASA. As part of its initial responsibilities

under the agreement, TWA Services provided bus tours

to visitors to the VIC, sold souvenirs, and maintained a

cafeteria catering to VIC guests. Pursuant to a modifi-

cation to the concession agreement in 1978, TWA Serv-

ices agreed to perform and be responsible for the mainte-

nance and operation of the VIC facilities and house

trailers and the furnishing of all labor, material, equip-

a ee Ne es ena oe Ate

19a

ment, tools, and supervision for landscape maintenance of

the area immediately around the VIC.’ Prior to the

modification, the facility maintenance was performed by

Boeing Services International (BSI) and landscape main-

tenance was performed by Expedient Services, Inc. (ESI)

pursuant to contracts between these two companies and

NASA to maintain the entire Kennedy Space Center.

The contracts between BSI and ESI and NASA pursuant

to which these services were rendered were treated as

covered by the SCA.

When. TWA Services assumed responsibility for the

facility and landscape maintenance there were no em-

ployees transferred from either BSI or ESI to TWA to

perform these services, nor were employees who pre-

viously performed these jobs laid off from either BSI or

ESI. The additional work was manned by new employees

hired by TWA Services. Plaintiff is the collective bar-

gaining representative of those job classifications includ-

ing but not limited to groundskeepers, gardeners, and

general plant maintenance technicians.

In the amended complaint filed May 28, 1981, plaintiff

seeks declaratory and injunctive relief against an alleged

invalid regulation of the United States Department of

Labor; an order compelling defendants Secretary of

Labor, NASA, and TWA Services, Ine. to comply with

the SCA; and ‘damages against TWA Services for alleged

underpayment of wages in violation of that Act. De

fendants have each filed motions for summary judgment

in which they contend that the SCA does not apply to the

VIC concession agreement. In support thereof, defend-

- ants argue that the work in question is a concession con-

tract which is for the purpose of furnishing services to

the public generally rather than to the government and

that such concession contracts are not covered by the

SCA. In addition, defendants urge that even if concession

1TWA Services has not, at any time relevant to these proceed-

ings, assumed responsibility for facility or landscape maintenance

for any part of the Kennedy Space Center other than the VIC.

20a

contracts are covered by the SCA, the Secretary of Labor,

acting pursuant to his discretionary authority under sec-

tion 4(b), 41 U.S.C. § 353(b), has exempted concession

contracts which provide services of “indirect or remote”

benefit to the Government frei the Act’s coverage pro-

visions.

The SCA was originally enacted to provide labor

standards for the protection of employees of contractors

and subcontractors furnishing services to or performing

maintenance service for governmental agencies of the

United States. S.Rep. No. 798, 89th Cong., ist Sess.,

reprinted in [1965] U.S. Code Cong. & Ad. News 3787,

3737. Like the Fair Labor Standards Act, the SCA is

remedial? labor legislation and thus its provisions must

be liberally construed to effectuate the Act’s humanitar-

ian purposes of providing minimum wage and fringe

benefit protection to individuals performing contracts

with the federal government. Midwest Maintenance &

Const. Co. v. Vela, 621 F.2d 1046, 1050 (10th Cir. 1980) ;

Brink’s, Inc. v. Board of Governors etc., 466 F. Supp.

116, 120 (D.D.C. 1979).

Section 351(a) of the SCA provides in pertinent part:

“Every contract (and any bid specification there-

for) entered into by the United States or the District

of Columbia in excess of $2,500.00 except as pro-

vided in section 356 of this title, whether negotiated

or advertised, the principal purpose of which is to

229 C.F.R. § 4.123(b) (1) further expresses the remedial purpose

of the Act to “protect prevailing labor standards and to avoid the

undercutting of such standards which could result from the award

of Government work to contractors who will not observe such

standards, and whose saving in labor cost therefrom enables them

to offer a lower price to the Government than can be offered by

the fair employers who maintain the prevailing standards.” See

also Int’l Ass’n of Mach. & Aerospace Workers v. Hodgson, 515

F.2d 373, 375 (D.C. Cir. 1975) (purpose of SCA is to insure that

service employees working on government contracts are not paid

wages below the prevailing wages being paid in the locality by

non-government contractors).

21a

furnish services in the United States through the use

of service employees shall contain the following: [pro-

visions specifying minimum wages and fringe benefits

as determined by the Secretary of Labor, in accord-

ance with the prevailing rates and benefits for such

employees in the locality or pursuant to a collective

bargaining agreement. ]”

In support of their contention that the SCA does not

apply to concession contracts such as the one at issue

here, defendants cite to comments made in 19606 by one

of the sponsor’s of the Act while discussing amendments

to the Fair Labor Standards Act (FLSA). In response

to a question by Congressman Udall inquiring whether

certain provisions of the FLSA were intended to apply

only to those contracts that primarily benefit the govern-

ment and not the public, Congressman O’Hara of Michi-

gan stated:

“The coverage of Section 305 is based upon the

coverage of the Service Contract Act of 1965. It

applies to employees of an employer who has con-

tracts subject to that act. Therefore, the question is

whether or not a particular employer is subject to

the Service Contract Act of 1965.

At that point, the question is whether the particu-

lar contract is a service contract with the government

or a concession contract in which the service is not

performed primarily on behalf of the government or

its employees?

I would simply have to say to the gentleman that

if the contract is a true concession and the service is

provided to government employees and others, but

the service to government employees is only inci-

dental to the major purpose of the concessiou, cer-

tainly it wvuuld not be covered under the Service

Contract Act or by Section 305 of this bill.”

112 Cong. Rec. H11366 (daily ed. May 25, 1966).

The Court is not persuaded by the Udall-O’Hara post

enactment colloquy. The SCA does not explicity, or im-

22a

plicitly, exclude concession contracts from its coverage.

It states that “[e]very contract ... entered into by the

United States . . . the principal purpose of which is to

furnish services .. . through the use of service employees”

shall be subject to its provisions. 41 U.S.C. § 351(a).

“Service employees” are further defined in §357(b) as

persons “engaged in the performance of a contract en-

tered into by the United States and not exempted under

section 356 of this title* . . . the principal purpose of

which is to furnish services in the United States.”

In United States v. Rutherford, 442 U.S. 544 (1979),

the Supreme Court held:

“Tf a legislative purpose is explained in ‘plain and

unambiguous language, ... the... duty of the

courts is to give it effect according to its terms.’

Exceptions to clearly delineated statues will be im-

plied only where essential to prevent ‘absurd results’

or consequences obviously at variance with the policy

of enactment as a whole.

Under our constitutional framework, federal courts

do not sit as councils of revision, empowered to re-

write legislation in accord with their own concep-

tions of prudent public policy. Only when a literal

construction of a statute yields results so manifestly

unreasonable that they could not fairly be attribut-

able to congressional design will an exception to

statutory language be judicially implied.”

442 U.S. at 551-52, 555 (citations omitted).

The language of § 351(a) is clear and unambiguous.

Congressman O’Hara’s isolated comment cannot change

the effect of the plain language of the statute itself.

See Los Angeles Dept. of Water & Power v. Manhart,

435 U.S. 702, 714 (1978). In the absence of any con-

temporaneous or pre-enactment legislative history to the

* All parties agree that none of the exemptions set forth in

section 356 are applicable to this action.

23a

contrary, and pursuant to the duty of federal courts tc

liberally corstrue provisions of remedial legislation such

as the SCA, the Court finds that concession contracts

such as the VIC contract are covered by the SCA.

As noted previously, defendants contend that even if

concession contracts are covered by the SCA, the Secre-

tary of Labor, acting pursuant to his discretionary au-

thority under section 4(b), 41 U.S.C. § 353(b), has

exempted concession contracts which provide services of

“indirect or remote” benefit to the government from the

Act’s converage provisions. Section 353(b), as amended

in 1972, provides:

“The Secretary may provide such reasonable lim-

itations and may make such rules and regulations

allowing reasonable variations tolerances, and ex-

emptions to and from any or all provisions of this

chapter (other than section 358 of this title), but

only in special circumstances where he determines

that such limitation, variation, tolerance, or exemp-

tion is necessary and proper in the public interest or

to avoid the serious impairment of government busi-

ness, and is in accord with the remedial purpose of

this chapter to protect prevailing labor standards.”

Soon after the implementation of the SCA, the Secretary

promulgated 29 C.F.R. § 4.133, which provides:

“Government as beneficiary of contract services.

(a) In general. The Act does not say to whom

the services under a covered contract must be fur-

nished; so far as its language is concerned, it is

enough if the contract is ‘entered into’ by and with

the Government and if its principal purpose is ‘to

furnish services in the United States through the

use of service employees.’ The legislative history in-

dicates an intention to cover at least contracts for

services of direct benefit to the Government, its prop-

erty, or its civilian or military personnel for whose

244

needs it is necessary or desirable for the Government

to make provision for such services. Such contracts

as those for furnishing food service and laundry and

dry cleaning service for personnel at military in- |

stallations, for example, were specifically referred to.

Where the principal purpose of the Government con-

tract is to provide these or other services to the ,

Government or its personnel through the use of

service employees, the contract is within the general

coverage of the Act regardless of the source of the

funds from which the contractor is paid for the serv-

ice and irrespective of whether he performs the work

in his own establishment, on a Government installa-

tion, or elsewhere. The fact that the contract permits

him to provide the services directly to individual

personnel as a concessionaire, rather than through

the contracting agency, does not require a different

conclusion.

(b) Special situations. It is not considered that

the Act was intended to cover every contract, how-

ever, which is entered into with the Government by

a contractor to furnish services, no matter how in-

direct or remote a benefit the Government may

derive therefrom. If, for example, a contract with

the Government grants the contractor the privilege

of operating as a concessionaire in a Government

park for the purpose of furnishing services to the

public generally rather than to the Government or to

personnel engaged in its business, the contract is not

considered subject to the Act. Since the statute itself

provides no clear line of demarcation, questions of

‘contract coverage where doubt arises because of re-

moteness of benefit to the Government from the serv-

ices to be furnished should be referred to the Office

of Government Contract Wage Standards for resolu-

tion.”

Defendants contend that this regulation immunizes from

the Act’s requirements the VIC concession contract.

25a

The Secretary’s authority to grant exemptions from

the coverage of the SCA is conditioned on certain pro-

cedural and substantive safeguards. Section 353(a) pro-

vides that sections 38* and 39° of Title 41, United States

Code, govern the Secretary’s authority to “make rules,

regulations, issue orders, hold hearings, and make deci-

sions based upon findings of fact... .” In addition, the

amendments to section 353(b) require not only that the

Secretary determine that the exemption is necessary and

proper in the public interest, but also require that the

Secretary determine that the exemption is in accord with

the remedial purpose of the SCA to protect prevailing

labor standards.

Assuming, without specifically ruling on the issue, that

29 C.F.R. § 4.133 constitutes a grant of exemption from

the coverage of the SCA pursuant to the Secretary’s au-

thority under § 353(b), there is no indication that the

exemption so granted applies to the VIC concession con-

#41 U.S.C. § 38 provides, in pertinent part:

“The Secretary of Labor or his authorized representatives shall

have power to make investigations and findings as provided in

... this title .... The Secretary of Labor shall have authority

from time to time to make, amend, and rescind such rules and

regulations as may be necessary to carry out the provisions

... of this title.”

541 U.S.C. § 39, provides, in pertinent part:

“Upon his own motion or on application of any person affected

by any ruling of any agency of the United States in relation

to any proposal or contract involving any of the provisions

. . of this title, . . . the Secretary of Labor ... shall have

the power to hold hearings. ...[A]nd [the Secretary of Labor]

shall make findings of fact after notice and hearing, which find-

ings shall be conclusive upon all agencies of the United States,

and if supported by the preponderance of the evidence, shall

be conclusive in any court of the United States; and the Secre-

tray of Labor or authorized representatives shall have the

power, and is authorized, to make such decisions, based upon

findings of fact, as are deemed to be necessary to enforce the

provisions .. . of this title.”

26a

tract. There is no mention of the VIC contract in the

regulation. Nor is there any evidence that the Secretary

has satisfied the procedural and substantive safeguards

required by the Act prior to reaching a determination

that the VIC contract should be exempted from the cover-

age of the Act. In the absence of such evidence, the

Court finds that 29 C.F.R. § 4.133 has no application to

the question presented by the facts herein. In reaching

this determination the Court finds it unnecessary to con-

sider further plaintiff’s request to declare 29 C.F.R.

§ 4.133 null, void, and of no force and effect.

DATED this 17th day of November, 1981.

/s/ George C. Young

Senior United States District Judge

27a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-Y

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

Vs.

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

[Filed Nov. 17, 1981]

ORDER

In accordance with the Memorandum Opinion filed

simultaneously herewith, it is

ORDERED that the motions for summary judgment

filed by defendants be and are hereby denied. The parties

shall have thirty (30) days from date hereof within

which to advise the Court of issues remaining to be liti-

gated in this proceeding.

SO ORDERED in Chambers at Orlando, Florida, this

17th day of November, 1981.

/s/ George C. Young

Senior United States District Judge

Copies to:

All counsel of record.

28a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

No. 79-405-Arl-Civ-EK

DIsTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

vs.

TWA SERVICES, INC. ;

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ;

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

[Filed Jul. 19, 1982]

ORDER

This cause is before the Court on plaintiff’s motion

for reconsideration of declination to pass on the legality

of DOL Regulation, 29 C.F.R. § 4.133(b); upon consid-

eration, it is,

ORDERED that the motion be and is hereby denied.

DONE and ORDERED in Chambers at Orlando, Flor-

ida, this 19th day of July, 1982.

/s/ Elizabeth A. Kovachevich

ELIZABETH A. KOVACHEVICH

United States District Judge

Copies mailed to

all counsel of record.

29a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-Y

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

vs.

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

[Filed Sep. 24, 1982]

MEMORANDUM OPINION

This case involves the application of the Service Con-

tract Act of 1965 (SCA), as amended, 41 U.S.C. § 351,

et seq., to the Concession Agreement entered into between

TWA Services, Inc. (TWAS), and the National Aero-

nautics & Space Administration (NASA) for the Visitor

Information Center (VIC) at Kennedy Space Center.

The facts involved in this matter are largely undis-

puted. All of the evidence received by the Court at the

Final Hearing in this matter was in the form of docu-

ments and depositions. The evidence reveals that TWAS

has operated the VIC at Kennedy Space Center since

1968 pursuant to a Concession Agreement with NASA.

Pursuant to this Agreement, TWAS provided bus tours

to visitors at the VIC, sold souvenirs to visitors, and

30a

maintained a cafeteria catering to VIC visitors. In

November, 1978, the Concession Agreement was modified,

at which time TWAS assumed the additiona! responsi-

bility of landscape maintenance at the VIC (Modification

9). Pursuant to the same modification, in January of

1979 TWAS assumed responsibility at the VIC for main-

tenance of the facility. Prior to the modification of the

Concession Agreement, landscaping services were per-

formed by Expedient Services, Inc. (ESI) and mainte-

nance services were performed by Boeing Services In-

ternational (BSI) pursuant to contracts betwen these

two companies and NASA to maintain the entire Kennedy

Space Center. The contracts between these companies and

NASA for providing the services were treated as covered

by the SCA.

When TWAS assumed responsibility for the facility

and landscape maintenance, there were no employees

transferred from either BSI or ESI to TWAS to perform

these services nor were enfployees who previously per-

formed these jobs laid off from either BSI or ESI. BSI

and ESI continued with the remaining portions of their

contracts for work at the Kennedy Space Center with the

exception of the VIC. The additional work to be per-

formed at the VIC by TWAS was performed by new

employees hired by TWAS.

Plaintiff, District Lodge # 166, International Associa-

tion of Machinists and Aerospace Workers, is the collec-

tive bargaining representative of those job classifications

including but not limited to groundskeepers, gardeners

and general plant maintenance technicians who are em-

ployed by TWAS and perform the additional work which

became TWAS’ responsibility pursuant to the Modifica-

tion to the Concession Agreement. Plaintiff’s action

basically asks this Court to first determine that the VIC

Concession Agreement is subject to the SCA and, second,

to grant Plaintiff certain relief in accordance with such

determination.

3la

I. APPLICABILITY OF SERVICE CONTRACT ACT

It is undisputed that the Secretary of Labor and NASA

have always maintained that the SCA did not apply to

the Concession Agreement. Additionally, it has been

argued that even if a Concession Agreement was covered

by the SCA, the Secretary of Labor, acting pursuant to

his discretionary authority under § 4(b), 41 U.S.C. § 353

(b), has exempted concession contracts which provide

services of indirect or remote benefit to the government

from the SCA’s coverage provisions. This exemption is

found at 29 C.F.R. § 4.133.

In a Memorandum Opinion filed in this case on Novem-

ber 17, 1981, Senior Judge George C. Young found that

the VIC Concession Agreement is covered by the SCA

and that the exemption found in 19 C.F.R. § 4.133 had

no application to the question presented by the facts in

this case.

Subsequent to Judge Young’s finding that the SCA was

applicable, NASA applied for a wage determination from

the Department of Labor (DOL) for the VIC Concession

Agreement. In response, the DOL issued a wage de-

termination effective from the date of the Memorandum

Opinion.

II. RETROACTIVE RELIEF

A contract subject to the SCA must contain certain

provisions. Among the provisions are those found in Sec-

tions 351(a)(1) and (2), calling for minimum wages

and fringe benefits. This Court having determined that

the VIC Concession Agreement is subject to the SCA,

Plaintiff asks that the parties be compelled to retro-

actively satisfy the requirements of the SCA.

Had NASA and the Secretary of Labor initially treated

the VIC Concession Agreement as being subject to the

SCA, then the employees of TWAS, who were hired to

perform the services at the VIC formerly performed by

32a

ESI and BSI employees, would have received from

TWAS? at least those wages and fringe benefits con-

tained in wage determinations issued in 1978 for those

ESI and BSI employees.? It is undisputed that TWAS

paid their employees less than the wage determinations.

Plaintiff seeks to recover the difference in wages and

fringe benefits actually paid from those that would have

been paid if the 1978 wage determinations had been

made part of the VIC Concession Agreement. Plaintiff

further seeks the difference in wage and fringe benefits

actually paid and those that would have been paid had

subsequent wage determinations been issued for the new

VIC Concession Agreement entered into between NASA

and TWAS in 1979.

In order to recover these differences, Plaintiff essen-

tially asks the Court to compel NASA to request the

appropriate wage determination, to compel the DOL to

issue them, and to compel the agencies to enforce the

wage determinations retroactively against TWAS. Al-

ternatively, Plaintiff seeks to maintain a right of action

directly against TWAS for che differences.

Addressing first the Plaintiff’s right to maintain a

private right of action against TWAS under the SCA,

1For purposes of this Memorandum, the Court assumes that

TWAS would have been treated as a successor contractor.

2In the process of awarding TWAS the Contract (Modification

9), NASA would have been required by 29 C.F.R. § 4.4 to submit

the Contract to the DOL for a wage determination. Because TWAS

would be a successor contractor, the provisions of Section 353(c)

would come into operation. The parties disagree as to the applica-

bility of that section to a contract succeeding one which was not

subject to a collective bargaining agreement (such as ESI’s contract

with NASA). Because of the Court’s disposition of this case, that

issue need not be addressed. In any event, Section 353(c) would

clearly require that the BSI wage determination be utilized and,

assuming that the prevailing rates and fringe benefits for ESI’s

employees had not declined, the ESI wage determiration at the

minimum would have been utilized in any new wage determination

for the award of the contract.

atthe lla tae ntatinatl

ah iat iii Nie ebinmipeh aint

33a

the Court notes that such a remedy has been found not

to exist by several courts. Miscellaneous Service Work-

ers, etc. v. Philco Ford Corp., 661 F.2d. 776 (9th Cir.

1981) ; Machinists v. Hodgson, 515 F.2d 373 (D.C. Cir.

1975); Nichols v. Mower’s News Service, 492 F.Supp.

258 (D.C. Vt. 1980); Foster v. Parker Transfer Co.,

528 F.Supp. 907 (D.C. W.D. Pa. 1981). The Fifth Cir-

cuit has recognized the issue, but has never addressed it.

Clark v. Unified Services, 659 F.2d 49 (5th Cir. 1981).

Assuming, without deciding, that Plaintiff may main-

tain a private right of action against TWAS, the Court

would none the less deny Plaintiff relief. TWAS was

awarded the Contract (Modification 9) without a wage

determination. The situation is strikingly similar to that

in Machinists v. Hodgson, supra., where the court noted,

“Under Section 3(a) (41 U.S.C. § 352[a]) the party

responsible for the violation of a wage determination

is liable for the amount of underpayment. In this

case, however, there simply was no wage determina-

tion for the Boeing Company to violate, and the lack

of such a wage determination should not be ascribed

to Boeing.” ...

“While the injury to the Union members may be the

same as it would be where a wage determination is

violated, tne causation is not. The lack of a wage

determination provision in the contract is not at-

tributable to any action by Boeing. It is attributable

only to the Secretary of Labor.” Jd. at 378.

Here, also, Plaintiff’s injury flowed from the lack of

a wage determination because of the Secretary of Labor’s

decision of the SCA’s non-applicability. Whether a pri-

vate right of action exists under the SCA or not, TWAS

has simply not violated the SCA.°

3The Court rejects Plaintiff’s argument that TWAS was in

violation of the SCA in spite of the lack of wage determination,

because the successor provisions of Section 353(c) are self-

34a

Remaining for determination is whether the Court can,

or should, order the parties to retroactively comply with

the SCA. Plaintiff urges that such action is necessary to

make the TWAS employees whole for the injury suffered

from their wrongful exclusion for the SCA’s coverage.

Plaintiff correctly points out that in 1972 Congress re-

moved from the Secretary of Labor any discretion in

issuing wage determinations for contracts subject to the

SCA. (Emphasis added) 41 U.S.C. § 358. The problem

in this case is that the Secretary of Labor determined

that the VIC Contract was not subject to the SCA. This

Court, as noted, has ruled that the Secretary of Labor’s

decision was in error.

Since the Court has determined that the VIC Conces-

sion Agreement is subject to the SCA, Plaintiff argues

that the Secretary of Labor and NASA have failed to

comply with their mandatory duties, and mandamus lies

to compel their performance.

Mandamus relief is provided for at 28 U.S.C. § 1361,

as follows:

The district courts shall have original jurisdiction

of any action in the nature of mandamus to compel

an officer or employee of the United States or any

agency thereof to perform a duty owed to the Plain-

tiff.

The remedy is an extraordinary one, which should be

used in only the clearest and most compelling of cases.

Carter v. Seamans, 411 F.2d 767 (5th Cir. 1969), cert.

denied, 397 U.S. 941 (1970). The right to mandamus

executing. Absent an indication that the VIC Concession Agree-

ment was considered by the DOL to be covered by the SCA in

the first instance, it is asking too much for TWAS to comply with

Section 353(c), whether or not it is self-executing in a situation

of a clearly covered contract.

See also this Court’s discussion on the equities involved in this

case, infra.

35a

must be shown to be clear and undisputable. Kerr v.

United States District Court, 426 U.S. 394 (1975).

Plaintiff must show that he had a clear right to the relief

sought, that the duty on Defendants’ part is clear, and

that Plaintiff lacks another available remedy. Carter v.

Seamans, supra.

In the present case, subsequent to this Court’s holding

that the SCA covers the VIC Concession Agreement, a

decision not to issue prospective wage determinations

would most likely entitle Plaintiff to mandamus relief.

The Court cannot say the same is true for the issuance

of retroactive wage determinations. It cannot be said

that the Secretary of Labor, having been informed of his

erroneous legal conclusion on the SCA’s coverage, has a

clear and undisputed duty to compel TWAS to pay for

his mistake.

Plaintiff also seeks the same relief, retroactive com-

pliance with the SCA, under the Administrative Proce-

dures Act (APA), 5 U.S.C. § 701, et seq. Specifically,

under Section 706(1) of that Act, Plaintiff asks the

Court to compel agency action unlawfully withheld or

unreasonably delayed. Assuming that the decision of

non-coverage of the SCA resulted in agency action being

“unlawfully” withheld, Plaintiff would have the Court

issue a mandatory injunction, compelling the issuance of

the retrospective wage determinations.

Issuance of injunctive relief rests upon equitable con-

siderations. This Court is also of the view that it should

act on equitable principals in fashioning its relief under

the APA. The Court is not of the opinion that the

equities in this case favor issuance of a mandatory in-

junction compelling issuance of retroactive wage deter-

minations.

Issuance of retroactive wage determinations will result

in no harm to the Secretary of Labor, but wiil greatly

affect TWAS. As previously indicated, TWAS had every

86a

right to rely upon the Contract (Modification 9) as pre

sented, that is, without a wage determination. TWAS

also had the right to rely upon the decision of NASA and

the Secretary of Labor that the SCA did not cover the

VIC Concession Agreement. It is undisputed that when

TWAS took over the facility and landscape maintenance,

there were no employees laid off from ESI and BSI.

TWAS hired new employees to perform the additional

services. Although Congress in fact intended that new

employees such as these receive the benefit of prior wage

determinations,* this case does not present the situation

most disturbing to Congress; that is where the same em-

ployees, performing the same work, at the same place,

are suddenly receiving lower wages and benefits under

the new contract. In short, the equities do not dictate

the relief sought by the Plaintiff.

In addit‘on to the relief sought under the SCA, Plain-

tiff has stated a right of action against TWAS under

Section 301 of the Labor Management Relations Act

(LMRA), 29 U.S.C. § 185, for alleged violations of cer-

tain collective bargaining agreements. Plaintiff main-

tains that TWAS agreed that if this Court found the

SCA applicable to the VIC Agreements, then TWAS

would adjust the wage rates retroactively. TWAS denied

the existance of such an agreement. Upon hearing and

review of the evidence, the Court finds that Plaintiff has

failed to prove that such an agreement existed.

Finally, Plaintiff argues that whether or not NASA

and the Secretary of Labor had treated the VIC Agree-

ment as covered by the SCA, TWAS was charged with

knowledge of such coverage as a matter of law. There-

fore, Plaintiff argues, TWAS was bound by 41 U.S.C.

*By mandating that even new employees are covered by the

previous wage determination, Congress eliminated the situation

where former employees would not be rehired in order to circum-

vent the SCA. That is not the case here; the former ESI and BSI

employees retained their positions.

.

87a

§ 353(c) to pay no less wages and fringe benefits than

its predecessors, ESI and BSI, because that section is

self-executing. As previously indicated, in footnote 3,

regardless of whether that section is in fact self-execut-

ing, TWAS could only be required to satisfy that sec-

tion’s requirements if it had knowledge that the SCA

was applicable. It seems to this Court to be an absurd

proposition to charge one with knowledge of SCA cover-

age by operation of law, when those whose job it is to

enforce the law have stated otherwise. Such is the case

here and the Court refuses to hold TWAS to such a

magnanimous position. Again, Plaintiff’s injury stems

from the acts of the Secretary of Labor, not from TWAS.

Based on the foregoing, judgment shall be entered in

favor of Plaintiff to the extent that the Court declares

the SCA covers the VIC Concession Agreement, and

against Plaintiff and in favor of Defendants for the addi-

tional substantive relief sought by Plaintiff. The Court

will reserve ruling on tine issue of attorneys’ fees and

costs.

DONE and ORDERED in Chambers at Orlando,

Florida, this 24th day of September, 1982.

/s/ Elizabeth A. Kovachevich

ELIZABETH A. KOVACHEVICH

United States District Judge

38a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-Y

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

Vs.

TWA SERVICES, INC.,

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

[Filed Sep. 24, 1982]

JUDGMENT

In accordance with the Memorandum Opinion filed this

date in the cause, it is

ORDERED and ADJUDGED that judgment is hereby

entered in favor of Plaintiff and against Defendants to

the extent that the Court declares the Service Contract

of 1965, as amended, 41 U.S.C. § 351, et. seq., to cover

the Visitor Information Center Concession Agreenent at

Kennedy Space Center; it is further

ORDERED and ADJUDGED that judgment be and

is hereby entered in favor of Defendants and against

Plaintiff for the additional substantive relief sought by

Plaintiff; it is further

39a

ORDERED and ADJUDGED that the Court retain

jurisdiction of this cause for ruling on the issue of at-

torneys’ fees and costs.

DONE and ORDERED in Chambers at Orlando, Flor-

ida, this 24th day of September, 1982.

/s/ Elizabeth A. Kovachevich

ELIZABETH A. KOVACHEVICH

United States District Judge

40a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-ORL-CV-EK

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION

OF MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

V.

TWA SERVICES, INC. ;

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ;

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

NOTICE OF APPEAL

Notice is hereby given that. District Lodge No. 166,

International Association of Machinists and Aerospace

Workers, AFL-CIO, plaintiff above named, hereby ap-

peals to the United States Court of Appeals for the

Eleventh Circuit from the final judgment entered in this

action on the 24th day of September, 1982, by Judge

Kovachevich in the District Court for the Middle Dis-

trict of Florida, Orlando Division.

/s/ Mozart G. Ratner

MOZART G. RATNER

MOZART G. RATNER, P.C.

1900 M Street, N.W.

Washington, D.C. 20036

(202) 223-9472

| 4la

/s/ Joseph P. Manners

JOSEPH P. MANNERS

General Counsel

IAMAW

1300 Connecticut Ave., NW

Washington, D.C. 20036

/s/ George H. Tucker

GEORGE H. TUCKER

MANNERS, AMCON, WHATLEY

& TUCKER

Airport Branch Office

4349 Northwest 36th St.

Suite 106

Miami, Florida 33166

Counsel for Plaintiff

Dated Nov. 10, 1982

42a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-EK

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

VS.

TWA SERVICES, INC. ;

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ;

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

[Filed Dec. 1, 1982]

ORDER AND NOTICE OF HEARING

This cause is before the Court on the plaintiff’s motion

for leave to defer application for fees and other expenses

pending appeal, and on the similar motion filed by de-

fendant, TWA Services, Inc. As the parties are aware,

the undersigned judge is scheduled to be transferred to

another division of this Court and desires to rule on the

subject of attorneys’ fees and costs prior to such trans-

fer. Accordingly, it is

ORDERED that the motions are hereby denied; it is

further

ORDERED that all parties to this action desiring to

move for an award of attorneys’ fees and costs shall file

such motions, along with supporting memorandums and

affidavits, no later than December 31, 1982; all parties

opposing such motions shall file their responses no later

than January 14, 1983; it is further

43a

ORDERED that a hearing on the motions shall be

set for 2:00 p.m. in Courtroom #1, on January 31,

1983, before the Honorable Elizabeth A. Kovachevich,

United States District Judge, Federal Building, 80

North Hughey Avenue, Orlando, Florida.

DONE and ORDERED in Chambers at Orlando, Flor-

ida this lst day of December, 1982.

/s/ Elizabeth A. Kovachevich

ELIZABETH A. KOVACHEVICH

United States District Judge

44a

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

Case No. 79-405-Orl-Civ-EK

DISTRICT LODGE No. 166, INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS,

Plaintiff,

vs.

TWA SERVICES, INC.;

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ;

and RAYMOND J. DONOVAN, SECRETARY OF LABOR,

Defendants.

ORDER

By this Court’s Order dated and filed December 1,

1982, and furnished to all counsel of record, it was

Ordered “that all parties to this action desiring to move

for an award of attorneys’ fees and costs shall file such

motions along with supporting memorandum and affi-

davits, no later than December 31, 1982; all parties op-

posing such motions shall file their responses no later

than January 14, 1983.” The aforesaid Order further

scheduled a hearing on the Motion for 2:00 p.m., Janu-

ary 31, 1983, Federal Building, 80 North Hughey Ave-

nue, Orlando, Florida.

On Monday, January 31, 1983, this Court convened

pursuant to its prior Order, the only attorney appearing

was Government counsel. This Court attempted to sched-

ule a hearing convenient to the parties so that the issue

of attorney fees could be resolved. The disregard, by

Mozart G. Ratner, counsel for the plaintiff and James

M. Blue, counsel for defendant TWA Services Inc., to

45a

comply with the previous order of this Court, dated De-

cember 1, 1982, is considered by this Court to be a

waiver of their respective claims for attorney fees and

as such does not preserve their claim for attorneys’ fees

post appeal in this cause.

It is hereby ORDERED and ADJUDGED:

(1) That any claim by, for or in behalf of Mozart

G. Ratner for attorney fees is denied.

(2) That any claim by, for or in behalf of James

M. Blue for attorney fees is denied.

DONE and ORDERED this 8rd day of February,

1983 at Orlando, Florida.

/s/ Elizabeth A. Kovachevich

ELIZABETH A. KOVACHEVICH

United States District Judge

46a

SERVICE CONTRACT LABOR STANDARDS

Pub.L. 89-286, Oct. 22, 1965, 79 Stat. 1034, as amended

Title 41, U.S.C.A., §$§ 351 to 358

Sec.

351. Required contract provisions; minimum wages.

352. Violations.

(a) Liability of responsible party; withholding

payments due on contract; payment of un- |

derpaid employees from withheld payments. lf

(b) Enforcement of section.

|

;

(ec) Cancellation of contract; contracts for com- )

pletion of original contract; liability of |

original contractor for additional cost. )

353. Law governing Secretary’s authority; limitations li

and regulations allowing variations, tolerances and

exemptions; predecessor contracts, applicability;

duration of contracts. |

:

354. List of violators; prohibition of contract award to

firms appearing on list; actions to recover under-

payments; payment of sums recovered.

355. Exclusion of fringe benefit payments in determin-

ing overtime pay.

356. Exemptions.

357. Definitions.

358. Wage and fringe benefit determinations of Secre-

tary.

§ 351. Required contract provisions; minimum wages

(a) Every contract (and any bid specification there-

for) entered into by the United States or the District of

Columbia in excess of $2,500, except as provided in sec-

tion 356 of this title, whether negotiated or advertised,

the principal purpose of which is to furnish services in

the United States through the use of service employees

shall contain the following:

47a

(1) A provision specifying the minimum mone-

tary wages to be paid the various classes of service

employees in the performance of the contract or any

subcontract thereunder, as determined by the Secre-

tary, or his authorized representative, in accordance

with prevailing rates for such employees in the lo-

cality, or, where a collective-bargaining agreement

covers any such service employees, in accordance

with the rates for such employees provided for in

such agreement, including prospective wage increases

provided for in such agreement as a result of arm’s-

length negotiations. In no case shall such wages be

lower than the minimum specified in subsection (b)

of this section.

(2) A provision specifying the fringe benefits to

be furnished the various classes of service employees,

engaged in the performance of the contract or any

subcontract thereunder, as determined by the Secre-

tary or his authorized representative to be prevail-

ing for such employees in the locality, or, where a

collective bargaining agreement covers any such serv-

ice employees, to be provide! for in such agreement,

including prospective fringe benefit increases pro-

vided for in such agreement as a result of arm’s-

length negotiations. Such fringe benefits shall in-

clude medical or hospital care, pensions on retire-

ment or death, compensation for injuries or illness

resulting from occupationai activity, or insurance to

provide any of the foregoing, unemployment benefits,

life insurance, disability and sickness insurance, ac-

cident insurance, vacation and holiday pay, costs of

apprenticeship or other similar programs and other

bona fide fringe benefits not otherwise required by

Federal, State, or local law to be provided by the

contractor or subcontractor. The obligation under

this subparagraph may be discharged by furnishing

any equivalent combinations of fringe benefits or by

48a

making equivalent or differential payments in cash

under rules and regulations established by the Sec-

retary.

(3) A provision that no part of the services

covered by this chapter will be performed in build-

ings or surroundings or under working conditions,

provided by or under the control or supervisiin of

the contractor or any subcontractor, which are un-

sanitary or hazardous or dangerous to the health or

safety of service employees engaged to furnish the

services.

(4) A provision that on the date a service em-

ployee commences work on a contract to which this

chapter applies, the contractor or subcontractor will

deliver to the employee a notice of the compensation

required under paragraphs (1) and (2) of this sub-

section, on a form prepared by the Federal agency,

or will post a notice of the required compensation in

a prominent place at the worksite.

(5) A statement of the rates that would be paid

by the Federal agency to the various classes of serv-

ice employees if section 5341 or section 5332 of Title

5 were applicable to them. The Secretary shall give

due consideration to such rates in making the wage

and fringe benefit determinations specified in this

section.

(b) (1) No contractor whe enters into any contract with

the Federal Government the principal purpose of which is

to furnish services through the use of service employees

and no subcontractor thereunder shall pay any of his

employees engaged in performing work on such contracts

less than the minimum wage specified under section 206

(a) (1) of Title 29.

(2) The provisions of sections 352 to 354 of this title

shall be applicable to violations of this subsection.

49a

§ 352. Violations

Liability of responsible party; withholding payments due

on contract; payment of underpaid employees from

withheld payments

(a) Any violation of any of the contract stipulations

required by section 351(a) (1) or (2) or of section 351

(b) of this title shal! render the party responsible there-

for liable for a sum equal to the amount of any deduc-

tions, rebates, refunds, or underpayment of compensa-

tion due to any employee engaged in the performance of

such contract. So much of the accrued payment due on

the contract or any other contract between the same con-

tractor and the Federal Government may be withheld as

is necessary to pay such employees. Such withheld sums

shall be held'in a deposit fund. On order of the Secre-

tary, any compensation which the head of the Federal

agency or the Secretary has found to be due pursuant to

this chapter shall be paid directly to the underpaid em-

ployees from any accrued payments withheld under this

chapter.

Enforcement of section

(b) In accordance with regulations prescribed pur-

suant to section 353 of this title, the Federal agency head

or the Secretary is hereby authorized to carry out the

provisions of this section.

Cancellation of contract; contracts for completion of

original contract; liability of original contractor

for additional cost

(c) in addition, when a violation is found of any con-

tract stipulation, the contract is subject upon written

notice to cancellation by the contracting agency. Where-

upon, the United States may enter into other contracts cr

arrangements for the completion of the original contract,

charging any additional cost to the original contractor.

50a

§ 353. Law governing Secretary’s authority; limitations

and regulations allowing variations, tolerances

and exemptions; predecessor contracts, appli-

cability; duration of contracts.

(a) Sections 38 and 39 of this title shall govern the

Secretary’s authority to enforce this chapter, make rules,

regulations, issue orders, hold hearings, and make deci-

sions based upon findings of fact, and take other appropi-

ate action hereunder.

(b) The Secretary may provide such reasonable limita-

tions and may make such rules and regulations allowing

reasonable variations, tolerances, and exemptions to and

from any or all provisions of this chapter (other than

section 358 of this title), but only in special circum-

stances where he determines that such limitation, varia-

tion, tolerance, or exemption is necessary and proper in

the public interest or to avoid the serious impairment of

government business, and is in accord with the remedial

purpose of this chapter to protect prevailing labor

standards.

(ce) No contractor or subcontractor under a contract,

which succeeds a contract subject to this chapter and

under which substantially the same services are fur-

nished, shall pay any service employee under such con-

tract less than the wages and fringe benefits, including

accrued wages and fringe benefits, and any prospective

increases in wages and fringe benefits provided for in a

collective bargaining agreement as a result of arm’s-

length negotiations, to which such service employees would

have been entitled if they were employed under the prede-

cessor contract: Provided, That in any of the foregoing

circumstances such obligations shall not apply if the Sec-

retary finds after a hearing in accordance with regula-

tions adopted by the Secretary that such wages and fringe

benefits are substantially at variance with those which

prevail for services of a character similar in the locality.

|

|

|

5la

(d) Subject to limitations in annual appropriation Acts

but notwithstanding any other provision of law, contracts

to which this chapter applies may, if authorized by the

Secretary, be for any term of years not exceeding five, if

each such contract provides for the periodic adjustment

of wages and fringe benefits pursuant to future determi-

nations, issued in the manner prescribed in section 351

of this title no less often than once every two years

during the term of the contract, covering the various

classes of service employees.

§ 354. List of violators; prohibition of contract award

to firms appearing on list; actions to recover

underpayments; payment of sums recovered

(a) The Comptroller General is directed to distribute

a list to ail agencies of the Government giving the names

of persons or firms that the Federal agencies or the Sec-

retary have found to have violated this chapter. Unless

the Secretary otherwise recommends because of unusual

circumstances, no contract of the United States shall be

awarded to the persons or firms appearing on this list or

to any firm, corporation, partnership, or association in

which such persons or firms have a substantial interest

until three years have elapsed from the date of publica-

tion of the list containing the name of such persons or

firms. Where the Secretary does not otherwise recom-

mend because of unusual circumstances, he shall, not later

than ninety days after a hearing examiner has made a

finding of a violation of this chapter, forward to the

Comptroller General the name of the individual or firm

found to have violated the provisions of this chapter.

(b) If the accrued payments withheld under the terms

of the contract are insufficient to reimburse all service

employees with respect to whom there has been a failure

to pay the compensation required pursuant to this chap-

ter, the United States may bring action against the

contractor, subcontractor, or any sureties in any court

52a

of competent jurisdiction to recover the remaining amount

of underpayments. Any sums thus recoved by the United

States shall be held in the deposit fund and shall be paid,

on order of the Secretary, directly to the underpaid em-

ployee or employees. Any sum not paid to an employee

because of inability to do so within three years shall be

covered into the Treasury of the United States as miscel-

laneous receipts.

§ 355. Exclusion of fringe benefit payments in deter-

mining overtime pay

In determining any overtime pay to which such service

employees are entitled under any Federal law, the regular

or basic hourly rate of pay of such an employee shall not

include any fringe benefit payments computed hereunder

which are excluded from the regular rate under the Fair

Labor Standards Act? by provisions of section 207(d) of

Title 29.

§ 356. Exemptions

This chapter shall not apply to—

(1) any contract of the United States or District

of Columbia for construction, alteration and/or re-

pair, including painting and decorating of public

buildings or public works; |

(2) any work required to be done in accordance

with the provisions of the Walsh-Healey Public Con-

tracts Act};

(3) any contract for the carriage of freight or

personnel by vessel, airplane, bus, truck, express,

railway line or oil or gas pipeline where published

tariff rates are in effect;

1 See 29 U.S.C.A. § 201 et seq.

1 See 41 U.S.C.A. §§ 35 to 45. «

53a

(4) any contract for the furnishing of services by

radio, telephone, telegraph, or cable companies, sub-

ject to the Communications Act of 1934?;

(5) any contract for public utility services, includ-

ing electric light and power, water, steam, and gas;

(6) any employment contract providing for direct

services to a Federal agency by an individual or in-

dividuals; and

(7) any contract with the United States Postal

Service, the principal purpose of which is the opera-

tion of postal contract stations.

§ 357. Definitions

For the purposes of this chapter—

(a) “Secretary” means Secretary of Labor.

(b) The term “service employee” means any person

engaged in the performance of a contract entered into by

the United States and not exempted under section 356 of

this title, whether negotiated or advertised, the principal

purpose of which is to furnish services in the United

States (other than any person employed in a bona fide

executive, administrative, or professional capacity, as

those terms are defined in part 541 of title 29, Code of

Federal Regulations, as of July 30, 1976, and any subse-

quent revision of those regulations) ; and shall include all

such persons regardless of any contractual relationship

that may be alleged to exist between a contractor cr sub-

tractor and such persons.

(c) The term “compensation” means any of the pay-

ments or fringe benefits described in section 351 of this

title.

2 See 47 U.S.C.A. § 151 et seq.

54a

(d) The term “United States” when used in a geo-

graphical sense shall include any State of the United

States, the District of Columbia, Puerto Rico, the Virgin

Islands, Outer Continental Shelf lands as defined in the

Outer Continental Shelf Lands Act,1 American Samoa,

Guam, Wake Island, Eniwetok Atoll, Kwajaleim Atoll,

Johnston Island, and Canton Island, but shall not include

any other territory under the jurisdiction of the United

States or any United States base or possession within a

foreign country.

§ 358. Wage and fringe benefit determinations of Sec-

retary

It is the intent of the Congress that determinations of

minimum monetary wages and fringe benefits for the

various classes of service employees under the provisions

of paragraphs (1) and (2) of section 351 of this title?

should be made with respect to all contracts subject to

this chapter, as soon as it is administratively feasible to

do so. In any event, the Secretary shall make such de-

terminations with respect to at least the following con-

tracts subject to this chapter which are entered into

during the applicable fiscal year:

(1) For the fiscal year ending June 30, 1973, all

contracts under which more than tweny-five service

employees are to be employed.

(2) For the fiscal year ending June 30, 1974, all

contracts under which more than twenty service em-

ployees are to be employed.

(3) For the fiscal year ending June 30, 1975, all

contracts under which more than fifteen service em-

ployees are to be employed.

1 See 43 U.S.C.A. § 1331 et seq.

1 So in original. Probably should be “paragraphs (1) and (2)

of subsection (a) of section 351 of this title’.

55a

(4) For the fiscal year ending June 30, 1976, all

contracts under which more than ten service em-

ployees are to be employed.

(5) On or after July 1, 1976, all contracts under

which more than five service employees are to be

employed.

56a

29 U.S.C. § 185

$185. Suits by and against labor organizations

Venue, amount, and citizenship

(a) Suits for violation of contracts between an em-

ployer and a labor organization representing employees

in an industry affecting commerce as defined in this

chapter, or between any such labor organizations, may be

brought in any district court of the United States having

jurisdiction of the parties, without respect to the amount

in controversy or without regard to the citizenship of the

parties.

28 U.S.C. § 1331

§ 1331 Federal question

The district courts shall have original jurisdiction of

all civil actions arising under the Constitution, laws, or

treaties of the United States.

28 U.S.C. § 1361

§ 1361 Action to compel an officer of the United States

to perform his duty

The district courts shall have original jurisdiction of

any action in the nature of mandamus to compel an

officer or employee of the United States or any agency

thereof to perform a duty owed to the plaintiff.

5 U.S.C. § 706

§ 706 Scope of review

To the extent necessary to decision and when pre-

sented, the reviewing court shall decide all relevant. ques-

tions of law, interpret constitutional and statutory provi-

sions, and determine the meaning or applicability of the

terms of an agency action. The reviewing court shall—

57a

(1) compel agency action unlawfully withheld or

unreasonably delayed; and

(2) hold unlawful and set aside agency action,

findings, and conclusions found to be—

(A) arbitrary, capricious, an abuse of dis-

cretion, or otherwise not in accordance with

law;

* * * &

(C) in excess of statutory jurisdiction, au-

thority, or limitations, or short of statutory

right;

* * a *

58a

HOUSE OF REPRESENTATIVES

92D CONGRESS REPORT

2d Session No. 92-1251

AMENDMENTS TO THE SERVICE CONTRACT

ACT OF 1965

JULY 27, 1972.—Committed to the Committee of the

Whole House on the State of the Union and

ordered to be printed

Mr. PERKINS, from the Committee on Education and

Labor, submitted the following

REPORT

[To accompany H.R. 15376]

The Committee on Education and Labor, to whom was

referred the bill (H.R. 15376) to amend the Service Con-

tract Act of 1965 to revise the method of computing wage

rates under such act, and for other purposes, having con-

sidered the same, report favorably thereon with an

amendment and recommend that the bill as amended do

pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in

lieu thereof the following:

That (a) section 2(a) (1) of the Service Contract Act of

1965 is amended by striking out all after “locality,” and

inserting in lieu thereof the following: “or, where a

collective-bargaining agreement covers any such service

employees, in accordance with the rates for such em-

ployees provided for in such agreement, including, if the

Secretary so elects, prospective wage increases provided

for in such agreement as a result of arm’s-length negoti-

59a

ations. In no case shall such wages be lower than the

minimum specified in subsection (b)”.

(b) Section 2(a) (2) of such Act is amended by strik-

ing out the period after “locality” and inserting in lieu

thereof the following: “, or, where a ccllective-bargaining

agreement covers any such service employees, to be pro-

vided for in such agreement, including, if the Secretary

so elects, prospective fringe benefit increases provided for

in such agreement as a result of arm’s-length negotia-

tions.”

SEc. 2. Section 2(a) of such Act is amended by adding

at the end thereof the following new paragraph:

“(5) A statement of the rates that would be paid

by the Federal agency to the various classes of serv-

ice employees if section 5341 of title 5, United States

Code, were applicable to them. The Secretary shal!

give due consideration to such rates in making the

wage and fringe benefit determinations specified in

this section.”

SEc. 3. (a) Section 4(b) of such Act is amended by

striking out all after “Act” and inserting in lieu thereof

the following: (“other than section 10), but only in spe-

cial circumstances where he determines that such limita-

tion, variation, tolerance, or exemption is necessary and

proper in the public interest or to avoid the serious im-

pairment of government business, and is in accord with

the remedial purpose of this Act to protect prevailing

labor standards.”

(b) Section 4 of such Act is amended by adding at the

end thereof the following new subsections:

“(e) No contractor or subcontractor under a contract,

which succeeds a contract subject to this Act and under

which substantially the same services are furnished, shall

pay any service employee under such contract less than

60a

the wages and fringe benefits, including accrued wages

and fringe benefits, and, if the Secretary so elects, any

prospective increases in wages and fringe benefits pro-

vided for in a collective-bargaining agreement as a result

of arm’s-length negotiations, to which such service em-

ployee would have been entitled if he were employed under

the precedessor contract.

“(d) Subject to limitations in annual appropriation

Acts but notwithstanding any other provision of law, con-

tracts to which this Act applies may, if authorized by the

Secretary, be for any term of years not exceeding five, if

each such contract provides for the periodic adjustment of

wages and fringe benefits pursuant to future determina-

tions, issued in the manner prescribed in section 2 of this

Act no less often than once every two years during the

term of the contract, covering the various classes of serv-

ice employees.”

Sec. 4. Section 5(a) of such Act is amended by insert-

ing before the first comma of the second sentence the

words “because of unusual circumstances” and by adding

at the end of such section 5(a) the following: “Where the

Secretary does not otherwise recommend because of un-

usual circumstances, he shall, not later than thirty days

after a hearing examiner has made a finding of a viola-

tion of this Act, forward to the Comptroller General the

name of the individual or firm found to have violated the

provisions of this Act.”

Sec. 5. Such Act is amended by adding at the end

thereof the following new section:

“SEc. 10. It is the intent of the Congress that determi-

nations of minimum monetary wages and fringe benefits

for the various classes of service employees under the pro-

visions of paragraphs (1) and (2) of section 2 should be

made with respect to all contracts subject to this Act, as

soon as it is administratively feasible to do so. In any

event, the Secretary shall make such determinations with

6la

respect to at least the following contracts subject to this

Act which are entered into during the applicable fiscal

year:

“(1) For the fiscal year ending June 30, 1973, all con-

tracts under which more than tweny-five service em-

ployees are to be employed.

“(2) For the fiscal year ending June 30, 1974, all con-

tracts under which more than twenty service employees

are to be employed.

“(3) For the fiscal year ending June 30, 1975, all con-

tracts under which more than fifteen service employees

are to be employed.

“(4) For the fiscal year ending June 30, 1976, all con-

tracts under which more than ten service employees are

to be employed.

“(5) For the fiscal year ending June 80, 1977, all con-

tracts under which more than five service employees are

to be employed.

“(6) For the fiscal year ending June 30, 1978, and for

each fiscal year thereafter, all contracts subject to this

Act.”

PURPOSE OF H.R. 15376 AS AMENDED

H.R. 15376 as amended makes a number of changes in

the Service Contract Act which are designed to bring

about more equitable and more efficient administration of

the act and to provide for wage and fringe benefit de-

terminations for all contracts subject to the act in stages

over a period of 6 years.

The bill is the result of 9 days of oversight hearings

by the Special Subcommittee on Labor into the adminis-

tration of the act, during which the subcommittee made

an extensive review of every aspect of Government serv-

ice contracting and the degree to which the wage stand-

62a

ards of service employees under those contracts were

being protected by the Service Contract Act.

The committee discovered a number of serious prob-

lems during the course of the hearings, and believes that

these amendments will help to strengthen the Department

of Labor’s ability to administer this act as the sponsors

of the Service Contract Act originally intended.

LEGISLATIVE HISTORY OF H.R. 15376 AS AMENDED

The Special Subcommittee on Labor, Chaired by Repre-

sentative Frank Thompson, Jr., conducted oversight hear-

ings on the administration of the Service Contract Act of

1965 in Washington, D.C., on March 30, April 1, 2, and

6, May 5, October 12, 18, and 14, 1971, and on June 1,

1972.

As a result of these oversight hearings, H.R. 15376

was introduced by Representative Thompson on June 7,

1972.

H.R. 15376 was favorably reported by the subcommit-

tee to the Committee on Education and Labor on June 29,

1972.

H.R. 15376 was considered at a session of the Com-

mittee on Education and Labor on July 18 and unani-

mously ordered reported.

BACKGROUND AND NEED FOR LEGISLATION

The Service Contract Act was enacted in 1965 to pro-

vide wage and safety protections for employees working

under Government service contracts. The act provides

that employees must be paid at least the prevailing wages

and fringe benefits for the same work in their locality,

and protected from unsafe working conditions.

Under the impetus of the Legislative Reorganization

Act of 1970, which emphasized the responsibility of com-

mittees to conduct legislative oversight, the Special. Sub-

pew ae terattemaiban tim

63a

committee on Labor conducted 9 days of oversight hear-

ings on the administration of the act during the 92d

Congress.

The subcommittee discovered a number of serious prob-

lems, which are detailed in the hearing record and in a

committee print entitled “The Plight of Service Workers

Under Government Contracts.” Among them were these:

(1) The Department has failed to make wage and

fringe benefit determinations for almost two-thirds

of the contracts subject to the act;

(2) A substantial disparity in wages and fringe

benefits has developed between Federal wage board

employees and their counterparts employed by serv-

ice contractors;

(3) A great deal of labor-management instability

has arisen because of a failure to take the existence

of collective bargining agreements into account in

the wage and fringe benefit determination process;

(4) A section of the act giving the Secretary of

Labor discretion in administering the act has been

stretched far beyond what the Congress had intended;

(5) The practice of rebidding contracts yearly

either without wage and fringe determinations or

with unrealistically low determinations is creating

chaos for reputable contracts and great hardships

for employees.

The Committee has addressed each of the problems in

H.R. 15376 as amended.

Section-by-Section Analysis

Section 1

Subsection (a) of this section amends the first para-

graph of section 2(a) (pertaining to required contract

64a

provisions) of the Service Contract Act of 1965 by pro-

viding that, in cases where a collective bargaining agree-

ment covers the service employees, the minimum mone-

tary wages to be paid the various classes of such em-

ployees shall be in accordance with the rates provided for

in the collective bargaining agreement, and that the mini-

mum monetary wages may include prospective wage in-

creases provided for in the collective bargaining agree-

ment if the Secretary of Labor elects and if they were

the result of arm’s-length negotiations. The amendment

made by this subsection does not change the existing

standard (prevailing rates in the locality) for minimum

monetary wages in cases where the service employees are

not covered by a collective bargaining agreement, and it

continues the existing requirement that in no case shall

the minimum monetary wages be lower than the Federal

minimum wage.

Subsection (b) of this section amends the second para-

graph of section 2(a) of the Service Contract Act by pro-

viding that, in cases where a collective bargaining agree-

ment covers the service employees, the fringe benefits to

be furnished the various classes of such employees shall

be those provided for in the collective bargaining agree-

ment, and that the fringe benefits may include prospective

fringe benefit increases provided for in the collective bar-

gaining agreement if the Secretary elects and if they

were the result of arm’s-length negotiations. The amend-

ment made by this subsection does not change the exist-

ing standard (prevailing fringe benefits in the locality)

for fringe benefits in cases where the service employees

are not covered by a collective bargaining agreement.

Other provisions of existing law, pertaining to which cate-

gories of benefits may be considered to be fringe benefits,

and to the furnishing of equivalent combinations of fringe

benefits and the making of payments in cash, remain un-

changed by the amendment made by this subsection.

65a

Section 2

This section adds to the required contract provisions

specified in section 2(a) of the Service Contract Act a

requirement that the contract contain a statement of the

rates which would be paid to the various classes of serv-

ice employees under section 5341 (which fixes the rates

of pay of Federal agency employees in the trades and

crafts) of title 5, United States Code, if such section

were applicable to them. This section also directs the

Secretary to give due consideration to such rates of pay

in determining minimum monetary wages and fringe

benefits.

Section 3

Subsection (a) of this section amends section 4(b) of

the Service Contract Act. It limits the Secretary’s discre-

tion under the authority given to him under section 4(b)

to allow reasonable limitations, variations, tolerances, and

exemptions to and from the provisions of the Service

Contract Act, by providing that such authority is to be

exercised only in special circumstances. In addition to

the limitation of existing law that the Secretary may ex-

ercise such authority where it is necessary and proper in

the public interest or to avoid the impairment of govern-

ment business, this subsection requires that the Secretary

also determine that the limitation, variation, tolerance, or

exemption is in accord with the remedial purpose of the

Service Contract Act.

Subsection (b) of this section adds two new subsections

at the end of section 4 of the Service Contract Act.

New subsection (c) deals with contracts, under which

substantially the same services are furnishe:!, which suc-

ceed contracts subject to the Service Contract Act. Con-

tractors or subcontractors under such contracts must pay

service employees at least the wages and fringe benefits

(including accrued wages and fringe benefits) to which

66a

the service employees would have been entitled had they

been employed under the predecessor contract, as well as

any prospective wage and fringe benefit increases pro-

vided for in a collective bargaining agreement to which

they would have been entitled had they been so employed,

if the Secretary elects, and if such prospective increases

were the result of arm’s-length negotiations.

New subsection (d) permits the Secretary to authorize

service contracts for terms of up to 5 years (subject to

limitations in annual appropriation acts) if such con-

tract provides for an adjustment of the minimum mone-

tary wages and fringe benefits, in the manner prescribed

in section 2 of the Service Contract Act, at least every

two years.

Section 4

This section amends section 5(a) (pertaining to the

list containing the names of violators of the Service Con-

tract Act to be distributed among all the agencies of the

Federal Government) of the Service Contract Act. The

amendment made by this section limits the Secretary’s

discretion to relieve violators of the Service Contract Act

from the debarment provisions of section 5(a) to cases

where unusual circumstances exist. It imposes upon the

Secretary the duty, where he does not otherwise recom-

mend because of unusual circumstances, to forward to the

Comptroller General the name of the individual or firm

found to have violated the provisions of the act, within

30 days after a hearing examiner has made a finding of

violation.

Section 5

This section adds a new section at the end of the Serv-

ice Contract Act, covering determinations by the Secre-

tary of minimum monetary wages and fringe benefits

with respect to contracts subject to such act. This new

67a

section 10 expresses the intent of Congress that such de-

terminations be made with respect to all such service

contracts as soon as is administratively feasible, and di-

rects the Secretary to make such determinations with

respect to all such contracts under which certain specified

numbers of service employees are employed during the

next 5 fiscal years, and with respect to all contracts sub-

ject to such act during the fiscal year ending June 30,

1978, and during each fiscal year thereafter.

Cost ESTIMATE

In compliance with clause 7(a) of rule XIII of the

House of Representatives, the committee estimates that

the cost of administering the Service Contract Act of

1965, as amended, will increase gradually during this

and the next 5 succeeding fiscal years as the Department

achieves full coverage of contracts subject to the act.

The committee is unable to arrive at a specific dollar fig-

ure for these additional administrative costs because of

uncertainties over the best techniques for making wage

and fringe benefit determinations. The committee has

provided for a 6-year period in which to achieve full

coverage in order to avoid overburdening the Department

initially, and urges the Department to experiment with

more efficient techniques in making wage and fringe

benefit determinations.

Changes in Existing Law Made by the Bill,

As Reported

In compliance with clause 3 of rule XIII of the Rules

of the House of Representatives, changes in existing law

made by the bill, as reported, are shown as follows (ex-

isting law proposed to be omitted is enclosed in black

brackets, new matter is printed in italics, existing law

in which no change is proposed is shown in roman):

68a

SERVICE CONTRACT ACT OF 1965

AN ACT To provide labor standards for certain persons

employed by Federal contractors to furnish services to

Federal agencies, and for other purposes.

Be it enacted by the Senate and House of Representa-

tives of the United States of America in Congress as-

sembled, That this Act may be cited as the “Service

Contract Act of 1965”.

SEc. 2. (a) Every contract (and any bid specification

therefor) entered into by the United States or the Dis-

trict -.i Columbia in excess of $2,500, except as provided

in section 7 of this Act, whether negotiated or advertised,

the principal purpose of which is to furnish services in

the United States through the use of service employees,

as defined herein, shall contain the following:

(1) A provision specifying the minimum mone-

tary wages to be paid the various classes of service

employees in the performance of the contract or any

subcontract thereunder, as determined by the Sec-

retary, or his authorized representative, in accord-

ance with prevailing rates for such employees in the

locality, [which in no case shall be lower than the

minimum specified in subsection (b)] or, where a

collective bargaining agreement covers any such

service employees, in accordance with the rates for

such employees provided for in such agreement, in-

cluding, if the Secretary so elects, prospective wage

increases provided for in such agreement as a result

of arm’s-length negotiations. In no case shall such

wages be lower than the minimum specified in sub-

section (b).

(2) A provision specifying the fringe benefits to

be furnished the various classes of service employ-

ees, engaged in the performance of the contract or

any subcontract thereunder, as determined by the

Secretary or his authorized representative to be pre-

694

vailing for such employees in the locality or, where

a collective bargaining agreement covers any such

service employees, to be provided for in such agree-

ment, including, if the Secretary so elects, prospec-

tive fringe benefit increases provided for in such

agreement as a result of arm’s-length negotiations.

Such fringe benefits shall include medical or hospital

care, pensions on retirement or death, compensation

for injuries or illness resulting from occupational

activity, or insurance to provide any of the forego-

ing, unemployment benefits, life insurance, disability

and sickness insurance, accident insurance, vacation

and holiday pay, costs of apprenticeship or other

similar programs and other bona fide fringe benefits

not otherwise required by Federal, State, or local

law to be provided by the contractor or subcontrac-

tor. The obligation under this subparagraph may

be discharged by furnishing any equivalent combina-

tions of fringe benefits or by making equivalent or

differential payments in cash under rules and reg-

ulations established by the Secretary.

(3) A provision that no part of the services cov-

ered by this Act will be performed in buildings or

surroundings or under working conditions, provided

by or under the control or supervision of the con-

tractor or any subcontractor, which are unsanitary

or hazardous or dangerous to the health or safety of

service employees engaged to furnish the services.

(4) A provision that on the date a service em-

ployee commences work on a contract to which this

Act applies, the contractor or subcontractor will de-

liver to the employee a notice of the compensation

required under paragraphs (1) and (2) of this sub-

section, on a form prepared by the Federal agency,

or will post a notice of the required compensation in

a prominent place at the worksite.

70a

(5) A statement of the rates that would be paid

by the Federal agency to the various classes of serv-

ice employees if section 5341 of title 5, United States

Code, were applicable to them. The Secretary shall

give due consideration to such rates in making the

wage and fringe benefit determinations specified in

this section.

(b) (1) No contractor who enters into any contract

with the Federal Government the principal purpose of

which is to furnish services through the use of service

employees as defined herein and no subcontractor there-

under shall pay any of his employees engaged in per-

forming work on such contracts less than the minimum

wage specified under section 6(a) (i) of the Fair Labor

Standards Act of 1938, as amended (52 Stat. 1060:29

U.S.C. 201, et seq.).

(2) The provisions of sections 3, 4, and 5 of this Act

shall be applicable to violations of this subsection.

Sec. 3. (a) Any violation of any of the contract stipu-

lations required by section 2(a) (1) or (2) or of section

2(b) of this Act shall render the party responsible there-

for iiable for a sum equal to the amount of any deduc-

tions, rebates, refunds, or underpayment of compensa-

tion due to any employee engaged in the performance of

such contract. So much of the accrued payment due on

the contract or any other contract between the same con-

tractor and the Federal Government may be withheld as

is necessary to pay such employees. Such withheld sums

shall be held in a deposit fund. On order of the Secre-

tary, any compensation which the head of the Federal

agency or the Secretary has found to be due pursuant

to this Act shall be paid directly to the underpaid em-

ployees from any accrued payments withheld under this

Act.

(b) In accordance with regulations prescribed pursu-

ant to section 4 of this Act, the Federal agency head or

Tla

the Secretary is hereby authorized to carry out the pro-

visions of this section.

(c) In addition, when a violation is found of any con-

tract stipulation, the contract is subject upon written

notice to cancellation by the contracting agency. Where-

upon, the United States may enter into other contracts

or arrangement for the completion of the original con-

tract, charging any additional cost to the original con-

tractor.

Sec. 4. (a) Sections 4 and 5 of the Act of June 30,

1936 (49 Stat. 2036), as amended, shall govern the Sec-

retary’s authority to enforce this Act, makes rules, regu-

lations, issue orders, hold hearings, and make decisions

based upon findings of fact, and take other appropriate

action hereunder.

(b) The Secretary may provide such reasonable limi-

tations and may make such rules and regulations allow-

ing reasonable variations, tolerances, and exemptions to

and from any or all provisions of this Act [as he may

find necessary and proper in the public interest or to

avoid serious impairment of the conduct of Government

business] (other than section 10), but only in special cir-

cumstances where he determines that such limitation,

variation, tolerance, or exemption is necessary and proper

in the public interest or to avoid the serious impairment

of government business, and is in accord with the re-

medial purpose of this Act to protect prevailing labor

standards.

(c) No contractor or subcontractor under a contract,

which succeeds a contract subject to this Act and under

which substantially the same services are furnished, shall

pay any service employee under such contract less than

the wages and fringe benejits, including accrued wages

and fringe benefits, and, if the Secretary so elects, any

prospective increases in wages and fringe benefits pro-

vided for in a collective bargaining agreement as a re-

[2a

sult of arm’s-length negotiations, to which such service

employee would have been entitled if he were employed

under the predecessor contract.

(d) Subject to limitations in annual appropriation

Acts, but notwithstanding any other provision of law,

contracts to which this Act applies may, if authorized by

the Secretary, be for any term of years not exceeding

five, if each such contract provides for the periodic ad-

justment of wages and fringe benefits pursuant to future

determinations, issued in the manner prescribed in sec-

tion 2 of this Act no less often than once every two years

during the term of the contract, covering the various

classes of service employees.

SEc. 5. (a) The Comptroller General is directed to dis-

tribute a list to all agencies of the Government giving

the names of persons or firms that the Federal agencies

or the Secretary have found to have violated this Act.

Unless the Secretary otherwise recommends because of

unusual circumstances, no contract of the United States

shall be awarded to the persons or firms appearing on

this list or to any firm, corporation partnership, or as-

sociation in which such persons or firms have a substan-

tial interest until three years have elapsed from the date

of publication of the list containing the name of such per-

sons or firms. Where the Secretary does not otherwise

recommend because of unusual circumstances, he shall,

not later than thirty days after a hearing examiner has

made a finding of a violation of this Act, forward to the

Comptroller General the name of the individual or firm

found to have violated the provisions of this Act.

(b) If the accrued payments withheld under the terms

of the contract are insufficient to reimburse all service

employees with respect to whom there has been a failure

to pay the compensation required pursuant to this Act,

the United States may bring action against the contrac-

tor, subcontractor, or any sureties in any court of com-

petent jurisdiction to recover the remaining amount of

7a

underpayments. Any sums thus recovered by the United

States shall be held in the deposit fund and shall be paid,

on order of the Secretary, directly to the underpaid em-

ployee or employees. Any sum not paid to an employee

because of inability to do so within three years shall be

covered into the Treasury of the United States as mis-

cellaneous receipts.

Sec. 6. In determining any overtime pay to which

such service employees are entitled under any Federal

law, the regular or basic hourly rate of pay of such an

employee shall not include any fringe benefit payments

computed hereunder which are excluded from the regu-

lar rate under the Fair Labor Standards Act by pro-

visions of section 7(d) thereof.

SEc. 7. This Act shall not apply to—

(1) any contract of the United States or District

of Columbia for construction, alteration and/or re-

pair, including painting and decorating of public

buildings or public works;

(2) any work required to be done in accordance

with the provisions of the Walsh-Healey Public Con-

tracts Act (49 Stat. 2036) ;

(3) any contract for the carriage of freight or

personnel by vessel, airplane, bus, truck, express,

railway line or oil or gas pipeline where published

tariff rates are in effect;

(4) any contract for the furnishing of services by

radio, telephone, telegraph, or cable companies, sub-

ject to the Communications Act of 1934;

(5) any contract for public utility services, in-

cluding electric light and power, water, steam, and

gas;

(6) any employment contract providing for direct

services to a Federal agency by an individual or in-

dividuals; and

T4a

(7) any contract with the Post Office Department,

the principal purpose of which is the operation of

postal contract stations.

SEc. 8. For the purpose of this Act—

(a) “Secretary” means Secretary of Labor.

(b) The term “service employee” means guards, watch-

men, and any person engaged in a recognized trade or

craft, or other skilled mechanical craft, or in unskilled,

semiskilled, or skilled manual labor occupations; and any

other employee including a foreman or supervisor in a

position having trade, craft, or laboring experience as

the paramount requirement; and shall include all such

persons regardless of any contractual relationship that

may be alleged to exist between a contractor or subcon-

tractor and such persons.

(ce) The term “compensation” means any of the pay-

ments or fringe benefits described in section 2 of this

Act.

(d) The term “United States” when used in a geo-

graphical sense shall include any State of the United

States, the District of Columbia, Puerto Rico, the Virgin

Islands, Outer Continental Shelf lands as defined in the

Outer Continental Shelf Lands Act, American Samoa,

Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll,

Johnston Island, but shall not include any other territory

under the jurisdiction of the United States or any United

States base or possession within a foreign country.

Sec. 9. This Act shall apply to all contracts entered

into pursuant to negotiations concluded or invitations for

bids issued on or after ninety days from the date of en-

actment of this Act.

Sec. 10. It is the intent of the Congress that determi-

nations of minimum monetary wages and fringe benejits

for the various classes of service employees under the

75a

provisions of paragraphs (1) and (2) of section 2 should

be made with respect to all contracts subject to this Act,

as soon as it is administratively feasible to do so. In any

event, the Secretary shall make such determinations with

respect to at least the following contracts subject to this

Act which are entered into during the applicable fisal

year:

(1) For the fiscal year ending June 30, 1973, all con-

tracts under which more than twenty-five service employ-

ees are to be employed.

(2) For the fiscal year ending June 30, 1974, all con-

tracts under which more than twenty service employees

are to be employed.

(3) For the fiscal year ending June 30, 1975, all con-

tracts under which more than fifteen service employees

are to be employed.

(4) For the fiscal year ending June 30, 1976, all con-

tracts under which more than ten service employees are

to be employed.

(5) For the fiscal year ending June 30, 1977, all con-

tracts under which more than five service employees are

to be employed.

(6) For the fiscal year ending June 30, 1978, and for

each fiscal year thereafter, all contracts subject to this

Act.

76a

LEGISLATIVE HISTORY

P.L. 82-473

SERVICE CONTRACT ACT—AMENDMENT

P.L. 92-473, see page 916

House Report (Education and Labor Committee)

No. 92-1251, July 27, 1972 [To accompany H.R. 15376]

Senate Report (Labor and Public Welfare Committee)

No. 92-1131, Sept. 15, 1972 [To accompany H.R. 15376]

Cong. Record Vol. 118 (1972)

DATES ON CONSIDERATION AND PASSAGE

House August 7, September 27, 1972

Senate September 19, 1972

The Senate Report is set out.

SENATE REPORT NO. 92-1131

THE Committee on Labor and Public Welfare, to which

was referred the bill (H.R. 15376) to amend the Service

Contract Act of 1965 to revise the method of computing

wage rates under such Act, and for other purposes, hav-

ing considered the seme, reports favorably thereon with

amendments and recommends that the bill as amended

do pass.

SUMMARY

The Service Contract Act was enacted to provide wage

and safety protection for employees working under Gov-

ernment service contracts. It makes the Department of

Labor responsible for assuring that service employees are

paid at least the prevailing wages and fringe benefits

for the same work in their locality as others are paid, so

that this is simply a wage standards protection statute.

77a

The purpose of this bill is to bring about more equi-

table and more efficient administration of the Service

Contract Act of 1965.

The bill:

1. Provides assurance that employees working for

Service contractors under a collective bargaining

agreement will have wages and fringe benefits under

a new service contract no lower than those under

their current agreement;

2. Requires the Secretary of Labor to take into

account in determining the prevailing rate, wage

and fringe benefit increases provided for by prospec-

tive increases in collective bargaining agreements;

3. Requires the Secretary of Labor to consider

wage board rates in determining the rates for serv-

ice contract employees ;

4. Ordinarily requires successor contractors to

pay service employees wages and fringe benefits that

are no lower than their wages and fringe benefits

under the current contract;

5. Mandates that the Secretary of Labor issue

wage determinations for all government service con-

tracts under which more than five employees are em-

ployed; and

6. Strengthens the procedures for the debarment

of contractors who have been found to have violated

the act.

COMMITTEE CONSIDERATION OF LEGISLATION

The House passed H.R. 15376 on August 7, 1972. On

July 21, 1972, Senator Edward J. Gurney with the co-

sponsorship of Senator Harrison A. Williams, Jr., intro-

duced an identical bill (S. 3827) in the Senate. The

Subcommittee on Labor held two days of hearings on

August 16, 1972 and September 6, 1972, receiving testi-

78a

mony from Senator Gurney, representatives of labor,

management and government.

On September 8, 1972 the Subcommittee on Labor re-

ported the bill to the Full Committee which after two

days of deliberation, unanimously ordered the bill re-

ported favorably to the Senate, on September 15, 1972.

Section-by-Section Analysis

Section 1

Subsection (a) of this section amends the first para-

graph of section 2(a) (pertaining to required contract

provisions) of the Service Contract Act of 1965 by pro-

viding that, in cases where a collective bargaining agree-

ment covers the service employees, the minimum mone-

tary wages to be paid the various classes of such em-

ployees shall be in accordance with the rates provided for

in the collective bargaining agreement, and that the

minimum monetary wages include prospective wage in-

creases provided for in the collective bargaining agree-

ment if they were the result of arm’s-length negotiations.

The amendment made by this subsection does not change

the existing standard (prevailing rates in the locality)

for minimum monetary wages in cases where the service

employees are not covered by a collective bargaining

agreement, and it continues the existing requirement that

in no ease shall the minimum monetary wages be lower

than the Federal minimum wage.

Subsection (b) of this section amends the second para-

graph of section 2(a) of the Service Contract Act by

providing that, in cases where a collective bargaining

agreement covers the service employees, the fringe bene-

fits to be furnished the various classes of such employees

shall be those provided for in the collective bargaining

agreement, and that the fringe benefits include prospec-

tive fringe benefit increases provided for in the collective

bargaining agreement if they were the result of arm’s-

79a

length negotiations. The amendment made by this sub-

section does not change the existing standard (prevail-

ing fringe benefits in the locality) for fringe benefits in

cases where the service employees are not covered by a

collective bargaining agreement. Other provisions of

existing law, pertaining to which categories of benefits

may be considered to be fringe benefits, and to the fur-

nishing of equivalent combinations of fringe benefits and

the making of payments in cash, remain unchanged by

the amendment made by this subsection.

Section 2

This section adds to the required contract provisions

specified in section 2(a) of the Service Contract Act a

requirement that the contract contain a statement of the

rates which would be paid to the various classes of service

employees under section 5341 (which fixes the rates of

pay of Federal agency employees in the trades and crafts)

of title 5, United States Code, if such section were ap-

plicable to them. This section also directs the Secretary

to give due consideration to such rates of pay in de-

termining minimum monetary wages and fringe benefits.

Section 3

Subsection (a) of this section amends section 4(b) of

the Service Contract Act. It limits the Secretary’s discre-

tion under the authority given to him under section 4(b)

to allow reasonable limitations, variations, tolerances, and

exemptions to and from the provisions of the Services

Contract Act, by providing that such authority is to be

exercised only in special circumstances. In addition to the

limitation of existing law that the Secretary may exercise

such authority where it is necessary and proper in the

public interest or to avoid the impairment of government

business, this subsection requires that the Secretary also

determine that the limitation, variation, tolerance, or

exemption is in accord with the remedial purpose of the

Service Contract Act.

80a

Subsection (b) of this section adds two new subsec-

tions at the end of section 4 of the Service Contract Act.

New subsection (c) deals with contracts, under which

substantially the same services are furnished, which suc-

ceed contracts subject to the Service Contract Act. Con-

tractors or subcontractors under such contracts must pay

service employees at least the wages and fringe benefits

(including accrued wages and fringe benefits) to which

the service employees would have been entitled had they

been employed under the predecessor contract, as well as

any prospective wage and fringe benefit increases pro-

vided for in a collective bargaining agreement to which

they would have been entitled had they been so employed

if such prospective increases were the result of arm’s-

length negotiations.

In addition, subsection (c) contains a proviso that the

provisions of this subsection and sections 2(a)(1) and

2(a)(2) will not apply if the Secretary finds after a

hearing that such wages and fringe benefits are substan-

tially at variance with those which prevail for services of

a character similar in the locality.

New subsection (d) permits the Secretary to authorize

service contracts for terms of up to 5 years (subject to

limitations in annual appropriation acts) if each such

contract provides for an adjustment of the minimum

monetary wages and fringe benefits, in the manner pre-

scribed in section 2 of the Service Contract Act, at least

every 2 yearr.

Section 4

This section amends section 5(a) (pertaining to the

list containing the names of violators of the Service Con-

tract Act to be distributed among all the agencies of the

Federal Government) of the Service Contract Act. The

amendment made by this section limits the Secretary’s

discretion to relieve violators of the Service Contract Act

8la

from the debarment provisions of section 5(a) to cases

where unusual circumstances exist. It imposes upon the

Secretary the duty, where he does not otherwise recom-

mend because of unusual circumstances, to forward to the

Comptroller General the name of the individual or firm

found to have violated the provisions of the act, within

90 days after a hearing examiner has made a finding of

violation.

Section 5

This section adds a new section at the end of the

Service Contract Act, covering determinations by the Sec-

retary of minimum monetary wages and fringe benefits

with respect to contracts subject to such act. This new

section 10 expresses the intent of Congress that such

determinations be made with respect to all such service

contracts as soon as is administratively feasible, and di-

rects the Secretary to make determinations in accordance

with the statutorily prescribed schedule.

Section 2(a)(1) and 2(a)(2) of the act have been

amended, and a new subsection (c) has been added to

section (4) to explicate the degree of recognition to be

accorded collective bargaining agreements covering serv-

ice employees, in the predetermination of prevailing wage

and fringe benefits for future such contracts for services

at the same location. (Emphasis added except for “serv-

ices’ and “same,” emphasized in original).

Section 2(a)(1), 2(a)(2), and 4(c) must be read in

harmony to reflect the statutory scheme. It is the inten-

tion of the committee that sections 2(a)(1) and 2(a) (2)

and 4(c) be so construed that the proviso in section 4(c)

applies equally to all the above provisions. The commit-

tee appreciates the importance of decasualizing the serv-

ice contract industry—a labor intensive and otherwise

casual and transient industry. The bill seeks to provide a

measure of stability and dignity to service contract em-

ployees, while at the same time building unnecessary safe-

82a

guards to protect the public interest against any possible

abuse.

Ordinarily, where service employees are covered by a

collective bargaining agreement, a successor contractor

furnishing substantially the same services at the same

location, will be obligated to pay to such service employees

no less than wages and fringe benefits required by such

agreement. This requirement would likewise apply to

prospective wages and fringe benefits.

The term “accrued ... fringe benefits” is interpreted

to mean those benefits, such as accrued vacation pay or

sick leave, to which an employee has become entitled by

virtue of employment on predecessor contracts.

This provision should not be construed to confer wind-

fall benefits.

However, the committee was concerned about safe-

guarding against any possible abuse. There are certain

unusual circumstances where predetermination of wages

and fringe benefits contained in such a collective agree-

ment might not be in the best interest of the worker or

the public.

Thus, service employees should be protected against

instances where the parties may not negotiate at arms

length. For example, a union and an employer may

enter into a contract, calling for wages and fringe bene-

fits substantially lower than the rates presently prevail-

ing for similar services in the locality. Likewise, a union

and employer may reach an agreement providing for

future increases substantially in excess of any justifiable

increases in the industry. Finally, it is possible that over

a long period of time, predetermined contractual rates

might become substantially at variance with those actually

prevailing for services of a character similar in the

locality.

The committee concluded that the dual objectives of

protecting the service worker and safeguarding other

83a

legitimate interests of the federal government could be

best achieved by requiring the Secretary to predetermine

the wages and fringe benefits contained in the collective

agreement, except in the instance where he finds, after

notice to interested parties, and a hearing, that the record

discloses by a clear showing that such contractual wages

and fringe benefits are substantially at variance with

those prevailing for services of a character similar in the

locality.

It is the sense of the committee that the Secretary

should draft regulations providing for expeditious hear-

ings and decisions. Clearly, contractual wages and fringe

benefits shall continue to be honored in the foregoing cir-

cumstances, unless and until the Secretary finds, after

hearing, that such wages and fringe benefits are substan-

tially at variance with those prevailing in the locality

for like services.

It is the intent of the committee that no contractor be

foreclosed as a result of these procedures from submitting

a contract proposal.

Cost ESTIMATE

The committee estimates that the cost of administering

the Service Contract Act of 1965, as amended, will in-

crease gradually during this and the next 5 succeeding

fiscal years as the Department approves full coverage of

contracts subject to the act. The committee is unable to

arrive at a specific dollar figure for these additional ad-

ministrative costs because of uncertainties over the best

techniques for making wage and fringe benefit determina-

tions. The committee urges the Department to experiment

with more efficient techniques in making wage and fringe

benefit determinations.

TABULATION OF VOTES IN COMMITTEE

Pursuant to section 113(b of the Legislative Reorgani-

zation Act of 1946 as amended by the tabulation of the

84a

votes in the Committee of Labor and Public Welfare is as

follows:

1. Senator Taft’s motion to substitute section 1 of the

bill to give the Secretary at his election, explicit statutory

authority to include prospectively bargained wage and

fringe benefit increases in Service Contract Act determi-

nations (defeated 3 to 9).

YEAS NAYS

Mr. Dominick Mr. Randolph

Mr. Packwood Mr. Pell

Mr. Taft Mr. Nelson

Mr. Mondale

Mr. Stevenson

Mr. Javits

Mr. Schweiker

Mr. Stafford

Mr. Williams

Senator Taft’s motion to amend section 3(b) to estab-

lish a presumption that the successor contractor must pay

at least as much as the predecessor, provided that such

compensation is not substantially higher than prevailing

in the locality for similar work (defeated 3 to 10).

YEAS NAYS

Mr. Dominick Mr. Randolph

Mr. Packwood Mr. Pell

Mr. Taft Mr. Nelson

Mr. Mondale

Mr. Eagleton

Mr. Hughes

Mr. Stevenson

Mr. Javits

Mr. Schweiker

Mr. Williams

*

ee ee eae ee oe

85a

SERVICE CONTRACT ACT AMENDMENTS,

118 Cong. Rec. 27136-27142 (Aug. 7, 1972)

Mr. THOMPSON of New Jersey. Mr. Speaker, I move

to suspend the rules and pass the bill (H.R. 15376) to

amend the Service Contract Act of 1965 to revise the

method of computing wage rates under such act, and for

other purposes, as amended.

The Clerk read as follows:

H.R. 15376

Be it enacted by the Senate and House of Representa-

tives of the United States of America in Congress as-

sembled, That (a) section 2(a) (1) of the Service Con-

tract Act of 1965 is amended by striking out all after

“locality,” and inserting in lieu thereof the following: “or,

where a collective-bargaining agreement covers any such

service employees, in accordance with the rates of such

employees provided for in such agreement, including, if

the Secretary so elects, prospective wage increases pro-

vided for in such agreement as a result of arm’s-length

negotiations. In no case shall such wages be lower than

the minimum specified in subsection (b)”.

(b) Section 2(a) (2) of such Act is amended by strik-

ing out the period after “locality” and inserting in lieu

thereof the following: “, or, where a collective-bargaining

agreement covers any such service employees, to be pro-

vided for in such agreement, including, if the Secretary

so elects, prospective fringe benefit increases provided

for in such agreement as a result of arm’s-length nego-

tiations.”

Sec. 2. Section 2(a) of such Act is amended by add-

ing at the end thereof the following new paragraph:

“(5) A statement of the rates that would be paid by

the Federal agency to the various classes of service em-

ployees of section 5341 of title 5, United States Code,

were applicable to them. The Secretary shall give due

86a

consideration to such rates in making the wage and

fringe benefit determinations specified in this section.”

Sec. 3. (a) Section 4(b) of such Act is amended by

striking out all after “Act” and inserting in lieu thereof

the following: “(other than section 10), but only in spe-

cial circumstances where he determines that such limita-

tion, variation, tolerance, or exemption is necessary and

proper in the public interest or to avoid the serious im-

pairment of government business, and is in accord with

the remedial purpose of this Act to protect prevailing

labor standards.”

(b) Section 4 of such Act is amended by adding at the

end thereof the following new subsections:

“(¢) No contractor or subcontractor under a contract,

which succeeds a contract subject to this Act and under

which substantially the same services are furnished, shall

pay any service employee under such contract less than

the wages and fringe benefits, including accrued wages

and fringe benefits, and, if the Secretary so elects, any

prospective increases in wages and fringe benefits pro-

vided for in a collective-bargaining agreement as a re-

sult of arm’s-length negotiations, to which such service

employee would have been entitled if he were employed

under the predecessor contract.

“(d) Subject to limitations in annual appropriation

Acts but notwithstanding any other provision of law, con-

tracts to which this Act applies may, if authorized by the

Secretary, be for any term of years and exceeding five,

if each such contract provides for the periodic adjust-

ment of wages and fringe benefits pursuant to future de-

terminations, issued in the manner prescribed in section

2 of this Act no less often than once every two years dur-

ing the term of the contract, covering the various classes

of service employees.”

SEC. 4. Section 5(a) of such Act is amended by insert-

ing before the first comma of the second sentence the

87a

words “because of unusual circumstances” and by adding

at the end of such section 5(a) the following: “Where

the Secretary does not otherwise recommend because of

unusual circumstances, he shall, not later than thirty

days after a hearing examiner has made a finding of a

violation of this Act, forward to the Comptroller General

the name of the individual or firm found to have violated

the provisions of this Act.”

Sec. 5. Such Act is amended by adding at the end

thereof the following new section:

“Sec. 10. It is the intent of the Congress that de-

terminations of minimum monetary wages and fringe

benefits for the various classes of service employees under

the provisions of paragraphs (1) and (2) of section 2

should be made with respect to all contracts subject to

this Act, as soon as it is administratively feasible to do

so. In any event, the Secretary shall make such deter-

minations with respect to at least the following contracts

subject to this Act which are entered into during the

applicable fiscal year:

“(1) For the fiscal year ending June 30, 1973, all con-

tracts under which more than twenty-five employees are

to be employed.

“(2) For the fiscal year ending June 30, 1974, all con-

tracts under which more than twenty service employees

are to be employed.

“(3) For the fiscal year ending June 30, 1975, all con-

tracts under which more than fifteen service employees

are to be employed.

“(4) For the fiscal year ending June 30, 1976, all con-

tracts under which more than ten service employees are

to be employed.

“(5) For the fiscal year ending June 30, 1977, all con-

tracts under which more than five service employees are

to be employed.

88a

“(6) For the fiscal year ending June 80, 1978, and for

each fiscal year thereafter, all contracts subject to this

Act.”

The SPEAKER. Is a second demanded?

Mr. ASHBROOK. Mr. Speaker, I demand a second.

The SPEAKER. Without objection, a second will be

considered as ordered.

There was no objection.

Mr. THOMPSON of New Jersey. Mr. Speaker, I yield

myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 15376, a bill to

amend the Service Contract Act of 1965. This bill was

reported out unanimously by the Committee on Education

and Labor and is a product of intensive bipartisan study

and investigation. (Emphasis added throughout)

The Special Subcommittee on Labor, which I have the

privilege to chair, conducted 9 days of legislative over-

sight hearings during this Congress on the administra-

tion of the Service Contract Act. We heard testimony

from administration officials, representatives of organized

labor, representatives of the service industry, and some

service workers themselves. We undertook these hearings

under the impetus of the Legislative Reorganization Act

of 1970, which called upon legislative committees to in-

tensify their oversight activities.

The Service Contract Act was enacted to provide wage

and safety protections for employees working under Gov-

ernment service contracts. It makes the Department of

Labor responsible for assuring that service employees are

paid at least the prevailing wages and fringe benefits for

the same work in their locality as others are paid, so that

this is simply a wage standards protection statute.

The hearings and our subsequent markup sessions were

conducted in a completely bipartisan fashion. Each mem-

ber of the subcommittee and the full committee was intent

on finding out whether there were any problems in the

89a

administration of this act and what we in the Congress

could do to correct any deficiencies we discovered. There

were five serious problems which became apparent during

the course of the hearings.

First. The Department has failed to make wage and

fringe benefit determinations for almost two-thirds of the

contracts subject to the act;

Second. A substantial disparity in wages and fringe

benefits has developed between Federal wage board em-

ployees and their counterparts employed by service con-

tractors;

Third. A great deal of labor-management instability

has arisen because of a failure to take the existence of

collective-bargaining agreements into account in the wage

and fringe benefit determination process;

Fourth. A section of the act giving the Secretary of

Labor discretion in administering the act has been

stretched far beyond what the Congress had intended;

Fifth. The practice of rebidding contracts yearly either

without wage and fringe determinations or with unreal-

istically low determinatons s creatng chaos for repu-

table contractors and great hardships for employees.

We have addressed each one of these problems in H.R.

15376. In effect, what we have done is to strengthen the

hand of the Secretary of Labor in assuring that full

coverage of all contracts subject to this act is eventually

achieved. We have given the Secretary 6 years to gradu-

ally acheve full coverage, beginning by mandating full

coverage during fiscal year 1963 of all contracts subject

to the act which propose to employ more than 25 em-

ployees, and achieving full [27187] coverage of all con-

tracts subject to the act by fiscal year 1978. We believe

that this is a fair and equitable mechanism for allowing

the Department to gradually evolve the best technique for

making wage and fringe benefit determinations at the

lowest possible cost to the taxpayer. There are a number

of other technical and clarifying amendments to the act

90a

which are explained at some length in the report accom-

panying H.R. 15376.

I think this is an excellent bill, and I want to especially

commend the ranking Republican on the subcommittee,

Mr. ASHROOK, of Ohio, for his complete cooperation dur-

ing our investigation. I also wish to commend the rank-

ing member of the Full Committee on Education and

Labor. Mr. QUIE, of Minnesota, for his cooperation and

support in our efforts to fashion a legislative vehicle to

remedy the problems we found in the operation of the act.

I also wish to commend my colleague, Mr. O’HARA of

Michigan, a member of the subcommittee and the author

of the Service Contract Act of 1965 in the House, for

the diligent manner in which he has pursued the problems

that have arisen under the act since it was first passed.

I think we have an excellent bill here, and it is a bi-

partisan bill which will not only protect service employees,

but give reputable service contractors a fairer set of

ground rules under which to operate. I urge my col-

leagues to support this bill.

Mr. ASHBROOK. Mr. Speaker, I yield myself such

time as I may consume.

Mr. Speaker, I was present at ail of the hearings on

this bill. I could echo many of the things that the gentle-

man from New Jersey just said. But I would like to call

your attention to the statement in part II of the hearings

on page 24 by our former colleague and now senior Sen-

ator from Florida.

The thing that is most unfortunate about the way the

law is carried out and interpreted by the Department of

Labor at present is that employees continually in bases

throughout the country, particularly military bases, find

themselves pawns in a contract struggle.

I will read to you what Mr. GURNEY indicated happened

in Florida, as an example, and I quote him directly:

As you will notice, I represented the Cape Kennedy

area as a Congressman, and it is now part of my con-

stituency as a Senator.

9la

I hope everybody will listen to this very closely because

this is the very heart of the bill.

To continue:

Last year we had a rebidding of a NASA service con-

tract. The only material thing bid was wages; and able,

loyal workers found themselves earning, a day after the

contract was awarded, one-quarter, one-third, even as

high as 50-percent less than before, doing precisely the

same job the day before.

Now we have another service contract out for bid at

Patrick Air Force Base. This is the service contract now

held by Pan American and RCA, and exactly the same

thing will happen in this case. Only wages will be bid,

and the worker’s pay and his ability to feed and clothe

and house his family is now out on the auction block. I

firmly believe that an average wage should be determined

by the Labor Department, after a thorough wage study

today in these service contract cases, a wage below which

a bidder may not go, and I have requested the Labor

Department to do this.

In fact, I have requested it twice. The request was

denied the first time, and I have not heard from the

second request as yet. I certainly hope that your com-

mittee will help in drafting legislation to accomplish this

goal in this service contract area.

This is precisely what we are talking about. It makes

no sense in equity and it certainly is bad policy to allow

contract bidders to come into these areas to underbid and

then give a take-it-or-leave-it basis to the employee who

is doing vital work for our country.

I support this on the basis of equity. I support it be-

cause I do not believe the Department of Labor has issued

the determinations that they should, and has not deter-

mined, as Mr. Gurney pointed out, wages below which a

bidder may not go.

This, supposedly, should be the law. But bidders can

come in and they can as we saw in our hearings, if you

92a

study our hearings, particularly through the Southwest,

go from one base to another and have a contract 1 year—

and then go in and underbid—and possibly make some

money. Maybe that is free enterprise, but the result is

to squeeze the employee and pay him less for the same

thing that he was doing in the previous year—and then

go to another base next year. I think it is completely

wrong.

Supposedly, the Department of Labor should protect

these employees. But I would say to the Members of this

House, the Department of Labor is not doing this. So I

support this bill wholeheartedly on the basis of equity.

This bill merely requires that a successful bidder can-

not pay less to employees than they were receiving from

their former employer pursuant to a contract with re-

spect to wage and fringe benefits. That certainly does not

seem to be radical to me.

It has been indicated that prospective wage increases

will be included in wage determinations. The committee

saw this as a possible pitfall. Every member of our com-

mittee recognizes you can have a situation where Lids of

contracts going into the future would be very high and

there would be no way of bringing them under control.

That is why the bill specifically gives the Secretary of

Labor—and, if you will look at pages 5 and 6, we have

added this language—‘* * * if the Secretary so elects”

the Secretary of Labor may choose to include any prospec-

tive wage increases in his determination.

Certainly, I cannot foresee on the basis of their han-

dling up to now, that they would agree to any exhorbitant

increase.

I happen to feel, in all equity, that this bill is long

past due. Many employees have been taken advantage of.

The other thrust of the bill is to require the Secretary

of Labor to increase the number of wage determinations

yearly until at the end of a 6-year period, wage determi-

nations must be made where any Government contract is

98a

awarded subject to the Service Contract Act. That is all

we are doing, these two major items, making sure that

an employee cannot be reduced—you cannot have bidding

which would reduce their wages and make the Secretary

of Labor by statute increase the number of wage de-

terminations until all wage determinations are issued

where contracts are subject to the Service Contract Act.

I do not think you can quibble with those two parts of

the bill and I wholeheartedly support it.

Mr. THOMPSON of New Jersey. Mr. Speaker, will

the gentleman yield?

Mr. ASHBROOK. I yield to the chairman of the sub-

committee.

Mr. THOMPSON of New Jersey. Mr. Speaker, the

gentleman is precisely right. The bill in essence is ex-

tremely simple, and you have very carefully made clear

its two essential ingredients. It might be said in passing

that when we had the Department back a second time

they thought that the requirement that they make de-

terminations within a year or two would be unreasonable

in terms of administrative cost. The fact is that they

have a maximum of five people working on this act now

after 7 years of its operation, so in order to accommodate

them, we stretched it out another 6 years.

Mr. ASHBROOK. I would add to what the gentleman

said we are not asking them to do anything that they do

not already do under the Davis-Bacon Act.

Mr. THOMPSON of New Jersey. You are exactly cor-

rect—or under the Walsh-Healey Act.

Mr. ASHBROOK. Or under the Walsh-Healey Act.

I cannot possibly convey to the Members of this House

how personally repugnant I found the activities of many

contractors dealing with what frankly must be the low,

marginal employees on most of these bases; and for the

Government to sanction a policy putting these people in

a squeeze, I found personally repugnant.

I think most of you know I do not exactly get a whole

lot of union support. The only union that ever supported

94a

me was the WCTU, so I am certainly not motivated by

any pressures that might come from unions. I am talk-

ing merely in terms of what is the best interests of these

employees and how the Government can possibly hold up

its head when it is in effect the employer.

Mr. HUNT. Mr. Speaker, will the gentleman yield?

Mr. ASHBROOK. I will be happy to yield.

Mr. HUNT. I take the opportunity to commend the

committee, the chairman of the subcommittee, and you

(Mr. ASHBROOK) for bringing this bill, H.R. 15376, to

the floor and speaking out as you have.

Several years ago I had a situation with a corporation

in my district who had a bid situation up in Alaska.

They had had this bid for a number of years, and their

employees were there with all of their equipment. They

were underbid by another contractor. It resulted in a

loss of wages and in certain places a little less money,

but the fellows stayed there because they were located

up there in the vast barren stretches and did not want

to come home. The only thing they [27138] did was to

take over the equipment, as it were, for less money, and

still maintain the job.

Fortunately, this year when the bids came out, the

company which had the bids originally regained them

and put the wage scale back where it had been in the

first place. So it is about time this manipulation of un-

derbidding by contractors for their own personal cor-

porate gain came to an end.

I wish to commend you and your committee for bring-

ing this to the attention of Congress.

Mr. ASHBROOK. I thank the gentleman for his con-

tribution. We will later hear from the gentleman from

Florida (Mr. FREY) who has had similar experience and

who will speak for this bill. I think those who have seen

the operations of this contract process certainly must

question the Government’s role, which, of course, would

be part of our role, in sanctioning this type of squeezing.

95a

It is incredible, if you could read the testimony, if you

could hear the testimony, how people had their wages

reduced, wages which already by most scales are not

high. As indicated, they are probably at the lower eco-

nomic level, mostly custodial employese, those who work

in dispensaries, those who work in cafeterias and to have

these real low wages undercut as a part of the supposed

fair and free bidding process in something which should

not be sanctioned.

I certainly voice my very strong approval of this bill

as a means of rectifying the situation.

Mr. GROSS. Mr. Speaker, will the gentleman yield?

Mr. ASHBROOK. Yes, I yield to the gentleman from

Iowa.

Mr. GROSS. I thank the gentleman for yielding.

This is the second bill in succession from the Com-

mittee on Labor and Education that carries no depart-

mental report, no report of any kind. Can the gentleman

advise me as to why there is nothing from the Depart-

ment of Labor, or any other agency in Government?

Mr. ASHBROOK. First of all, I can say to the gentle-

man is not it a wonderful day late in the session which

we can get bills out of the Committee on Labor and

Education that do not have to be totally rewritten on the

floor of the House?

I will say in all candor the administration favored the

previous bill, but the administration does not favor this

bill. I would say that if you study the hearings, Mr.

Silberman, the Under Secre‘ary of Labor who testified

for the Department of Labor, indicated to the committee

that, because the members of our committee were so

unanimous on this bill and were so unanimous in our

realization that there was an inequity, he would investi-

gate them further, but a year and a half has gone by.

I would say to the gentleman from Iowa they have not

done anything. They did not keep their word. Their

position is simply they want no change in the law.

96a

I do not accept that as a valid position. That is why

the committee in this case, and I think every member on

the minority side except the gentleman from Illinois (Mr.

CARLSON), agreed to this proposal, because we thought

something needed to be done.

Mr. GROSS. I see no Department position in the

report and I do like to know what position the Depart-

ment is taking.

Mr. ASHBROOK. The Department of Labor is op-

posed to this biil. They want no change in the act as it

now stands, and I think most of the Members after hear-

ing the testimony do not agree with that position in all

candor.

Mr. ANDERSON of Illinois. Mr. Speaker, will the

gentleman yield for a question?

Mr. ASHBROOK. I yield to the gentleman from

Illinois.

Mr. ANDERSON of Illinois. Mr. Speaker, will the

gentleman respond to this argument, that it is adminis-

tratively infeasible and filled with all kinds of ambigui-

ties because it would require the Department of Labor

to see whether any of these employees were covered by

collective-bargaining agreements, and if they were, the

employees could not be paid at lower than the rates in

that agreement. How is the Secretary to know before the

contract has been awarded or before particular specifica-

tions have actually been issued which employees are ulti-

mately going to be employed by the successful contractor?

He does not even know who will be successful, which

contractor it is going to be, and therefore how would he

know the employees, and therefore how would he comply

with the requirements, and how could he come up with

a contract containing terms and conditions that are not

contrary to a collective-bargaining agreement covering

the employees? I am simply desirous of getting informa-

tion, because even though it is difficult to change people’s

minds on a bill under a suspension of rules with only 20

minutes on either side, still if the gentleman could re-

97a

lieve my mind on that point it would satisfy some fears

we have.

Mr. ASHBROOK. I think if they do nothing else than

require that they did at least include the wage level for

the previous one, we would have accomplished a great

deal.

Mr. ANDERSON of Illinois. Does the gentleman

mean they have to consider the wage level that was used

in a preceding contract?

Mr. ASHBROOK. If they have a successor contractor,

they would have to consider the wage of the predecesor

contractor.

Mr. ANDERSON of Illinois. If the gentleman will

yield further, is there not a Supreme Court decision

somewhere that says something on this point?

Mr. ASHBROOK. The Burns decision?

Mr. ANDERSON of Illinois. Js there not a decision

that it is not required that a successor contractor be

bound by the terms and conditions of a labor contract

entered into by his predecessor? I do not have the cita-

tion handy, but it seems to me there is a decision to that

effect and therefore this would rewrite existing law as

interpreted by the U.S. Supreme Court. I think it was

a National Labor Relations Board against Burns Security

Services case.

Mr. ASHBROOK. I would say to the gentleman from

Illinois, who is learned in this area, as I unders

This text is long and has been trimmed here. Open the source document for the complete record.