contract, it has likewise provided that that provision should not apply to supply contracts. If I may, I will read the terms. They are sections 1 and 2 of the act of June 19, 192, 37 Stat., 137, which apply to construction work, and they read:

That nothing in this act shall apply to contracts for transportation by land or water, or for the transmission of intelligence, or for the purchase of supplies by the Government, whether manufactured to conform to particular specifications or not, or for such materials or articles as may usually be bought in open maiket, except armor and arnior plate, whether made to conform to particular specifications or not, or to the construction or repair of levees or revetments necessary for protection against floods or overflows on the navigable waters of the United States.

That act was amended by one of March 4, 1917 (39 Stat., 1192), which authorizes the President in a national emergency to suspend the provisions of law prohibiting more than 8 hours of labor in any one day by persons engaged upon work covered by contracts of the United States, but it did provide that in event of the use of labor in excess of 8 hours, the labor should be paid for at a rate of not less than time and a half. So, while the departments would be at liberty to include and, of course, are required to include in construction contracts a provision following this statute limiting the work to 8 hours in any one day, it is a question whether they could include such a provision in a supply contract, since Congress itself has expressly excepted that in its statute. Unless the entire facilities of a plant are devoted to Government work, such a requirement might be difficult to carry out or enforce and might result in discouraging competition for Government contracts. These are matters for the Congress to consider.

Mr. HEALEY. And the Comptroller so ruled, that they cannot? Mr. MCGUIRE. I think he did.

Mr. HEALEY. Are there any further questions? If not, the committee thanks you.

Are there any other persons who desire to be heard in opposition to this bill?

Mr. MCGUIRE. Let me add this, that after the hearings are all in, if you should wish any additional data or information based upon the hearings, or any specific questions answered, and will let us know, or send for one of us, we will be glad to give all assistance possible. Mr. HEALEY. Thank you very much. I think the committee may avail itself of that offer.

STATEMENT OF EDWARD J. HARDING, MANAGING DIRECTOR, THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC., PRESENTED BY JAMES D. MARSHALL

Mr. MARSHALL. Mr. Chairman, my name is James D. Marshall. I am a member of the staff of the Associated General Contractors of America, of Washington. I would like to present the statement of Mr. Edward J. Harding, managing director, and to answer any questions that I may have knowledge of.

Mr. HEALY. Mr. Harding is what?

Mr. MARSHALL. He is managing director of the Associated General Contractors of America.

58539-Ser. 12, pt. 2-36-26

His statement is as follows:

We wish to submit the following statement of our opposition to H. R. 11554 as now drawn.

This association represents the general contractors of the United States. Among its membership the association has those contractors who perform the majority of the contracts awarded by the United States Government for the construction of public buildings, Federal highways, and heavy-construction public works.

This association served as the sponsoring organization of the General Contractors' Code of Fair Competition and thereby gained much experience in methods to regulate hours and wages in the construction industry.

The intended purposes of this bill are not new to general contractors. For a number of years the Bacon-Davis Act has regulated the minimum wages of those employed on the site on Federal public-building projects. The amended Bacon-Davis Act now regulates minimum wages for those employees on all Federal construction projects by requiring predetermination of these wages by the Secretary of Labor. For years Federal statute has regulated hours on Federal projects by limiting the working hours of those employed on the site to 8 hours per day.

The emergency public-works projects, financed by funds from title II of the National Recovery Act and the emergency relief appropriations, regulated both hours and wages of those employed on the site of construction. The so-called "kick-back" act and provisions of the amended Bacon-Davis Act now prohibit improper deductions from wages. With this background of experience in actual practice with legislation now existing to accomplish the purpose of this bill, we feel that our opinions and objections are based on knowledge which should be of value to your committee.

This association objects to this bill as drawn and presents herein its principal reasons for its objections.

This association's objections in general are that :

1. The present laws now accomplish in construction operations the principal purposes of this bill and further duplicating laws will complicate and prevent effective enforcement.

2. It will be found wholly impractical to attempt to impose on the complicated construction industry regulations which must be sufficiently broad in terms to regulate all purchases and contracts of the Government.

3. The bill as now drawn would subject the general contractor to penalties and hardships because of the acts of others whom he cannot definitely identify and therefore cannot control.

4. The bill as drawn does not require the agencies of the Government to comply with the requirements it would impose on contractors, when the Government is performing construction operations by force account in competition with private contractors.

One effect of this bill on the operations of general contractors would be to duplicate existing laws, thereby causing confusion without accomplishing any additional practical purposes.

The present Bacon-Davis Act, as amended, now requires the Secretary of Labor to fix the minimum-wage rate to be paid all me

chanics and laborers employed directly upon the site of the work on all public building and public works of the Federal Government excepting the emergency-relief projects, and now prohibits improper deduction from such wage. The sole intent and purpose of this bill insofar as construction is concerned appears to be to provide a means to require the payment of minimum wages, protect these wages from refunds, and to establish maximum hours for employees engaged in the construction of public buildings or public works. We have shown herein that the present Bacon-Davis Act now provides a minimum wage and protects this wage from refunds with reference to employees employed at the site of the work. Insofar as these employees are concerned, this bill accomplishes no more.

If it is the purpose of this bill to extend the minimum-wage standards and wage-deduction regulations to apply beyond those employed at the site of the work by the contractor or subcontractor, then serious complications will result, which would probably call for so many interpretations and exemptions that no one could determine how to comply. This would destroy the entire beneficial effects of the bill. We would have legislation by executive regulations and discretion which could seriously impair the true competitive value of bids and increase the financial hazard of bidding.

Maximum hours for laborers and mechanics employed by the Government on river and harbor public work and employed by contractors or subcontractors on any Federal public-works contract are now observed as fixed by laws enacted in 1892, 1912, and 1913, frequently referred to as the 8-hour-day laws.

Unless it is the intention to shorten the workday to less than 8 hours, the present laws fulfill the purpose of this bill for employees of the contractor and subcontractor. If it is the purpose to shorten the workday it would seem advisable to do so by specific legislation and not by regulations issued by the executive departments of the Government which are subject to exceptions, exemptions, and change without hearings or notice.

If it be the intention in this bill to fix maximum hours for others than those employed by the contractor or subcontractor, then impossible conditions of compliance or enforcement will result to destroy the value of the legislation and create confusion and hardship for those undertaking public work or employed thereon.

Apparently the attempt to make this one bill apply to conditions existing in all industries under contracts with the Government has resulted in language which cannot be clearly understood as applied to construction; and if passed in the present form, the contractors will be unable to determine how and where their responsibilities begin or end.

It is our assumption that it was intended in sections 2 and 3 to require the general contractor to notify his immediate subcontractors that the provisions of this bill apply to their operations if he will avoid the responsibility for their compliance and the payment of their penalties for violation. It is also apparently intended that the general contractor may be forced to cancel subcontracts when so directed by the contracting officer, because the subcontractor has not complied with the requirement of this act.

If the general contractor is required to assume such responsibility or is to be required to suffer loss because of the act of another, it is absolutely necessary for him to know exactly to whom this act applies, as well as what is required of him in connection with the acts of others.

Section 2 of the bill now reads as follows:

Every purchase or subcontract by the principal contractor or by the person engaged in the performance or the productive operations under the principal contract. for construction, articles, materials, supplies, equipment, or services (except professional services) with respect to the subject matter of the principal purchase or contract shall be deemed to contain the representations or agreements incorporated therein, and any breach or violation thereof shall be deemed a breach or violation by the employer directly responsible therefor, and shall not subject the principal contractor to any of the provisions of section 3 (1) or section 3 (2), provided he has given actual notice of such representations or agreements to such employer.

Attention is called to the wording:

or by the person engaged in the performance or the productive operations under the principal contract for

Who it this person?

*

In the case of a construction job, the general contractor may subcontract the heating portion of the project to a heating contractor. In this transaction the general contractor is probably the "principal contractor" referred to. This subcontract to the heating contractor is then deemed to contain the wage and hour requirements of the general contractor; the general contractor must notify the heating contractor to that effect or submit to penalties, and this subcontract can be ordered canceled by the contracting officer for cause.

So far as the status of the heating contractor is fixed as a subcontractor, but is this same heating contractor in the same transaction also this "other person engaged in the performance or the productive operations under the principal contract" as stated in section 2? If the heating contractor is this "other person", which he might appear to be, then his subcontracts or purchases for pipe, fixtures, boilers, and so forth, are deemed to contain the wage and hour requirements. If this be the condition, then is the general contractor obligated to notify all these subcontractors of the subcontractor and can the contracting officer order the general contractor to order the heating contractor to cancel the subcontract for the boiler because the boiler manufacturer has violated the wage and hour provisions? This is a most important matter and would involve the contractor in all manner of contract litigation and damages and force him to establish proof of violation.

Carry the example on to the manufacturer who furnished the boilerman with steel. The boilerman was engaged in a productive operation; then is his purchase contract with the steel man deemed to contain these wage and hour provisions?

How far back this clause will carry the wage and hour provisions and the general contractor's liability we do not know and he cannot know. Will it go back to the producer of the ore which made the steel used in the boiler used in the heating system included in the principal contract?

Such a condition as this is, of course, absurd and impossible to administer or comply with.

In order to prevent such a condition we suggest the following amendment of section 2:

Every purchase or subcontract by the principal contractor or by the person directly responsible to the agency of the United States for the performance or the productive operations under the principal contract for construction, articles, materials, supplies, equipment, or services (except professional services) with respect to the subject matter of the principal purchase or contract shall be deemed to contain the representations or agreements incorporated therein, and any breach or violation thereof shall be deemed a breach or violation by the employer directly responsible therefor, and shall not subject the principal contractor to any of the provisions of section 3 (1) or section 3 (2), provided he has given actual notice of such representations or agreements to such employer.

Unless some such amendment can be made the administrative unit of the Department of Labor directed to administer this act will be required to study each industry and make rulings, regulations, exemptions, and issue orders which will approach the volume of such material which was issued by N. R. A., and specific application of the act would be indefinitely delayed and in the meantime, industry dealing with the Government would be in chaos.

Paragraph (3) of section 3 authorizes the cancelation of contract for a breach or violation thereof. This paragraph, however, does not specifically state that such cancelation may be made only upon conclusive findings being made in the case pursuant to the provisions of the act.

We object to the present wording of paragraph 3 of section (3) on these grounds, and suggest an amendment thereto so that it may read as follows:

That any breach or violation thereof found and adjudicated pursuant to the provisions of this act shall entitle the other contracting party to cancel the contract with respect to which the representation or agreement is made, and to make open-market purchases or have the work completed, charging any additional cost to the party responsible for the breach or violation.

Paragraph (4) of section 3 would require the principal contractor to cancel any subcontract for a breach by the subcontractor of these provisions deemed to be contained in his subcontract under this act if so directed by the contracting officer upon the recommendation of the Secretary of Labor.

If the principal contractor should take such action without having in his possession conclusive proof that the subcontractor had breached his contract, the principal contractor would then make himself liable for damages resulting from his action. The cancelation of a subcontract by the principal contractor after the subcontractor had commenced operations will usually result in a delay in the progress of the work, and subsequent additional costs to the contractor caused by such delay. Inasmuch as the present form of Government contract might not grant authority to the contracting officer to allow an extension of time of completion, it is essential that this paragraph contain such authorization, since the contractor should not be penalized with liquidated damages for delay caused by an action on the part of the Government which it is within the