Policy Luncheon, September 15, 1992

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Title (Dublin Core)

Policy Luncheon, September 15, 1992

Date (Dublin Core)

1992-09-15

Date Created (Dublin Core)

1992-09-15

Congress (Dublin Core)

102nd (1991-1993)

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Congress

Creator (Dublin Core)

Dole, Robert J., 1923-2021

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brief texts

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http://rightsstatements.org/vocab/CNE/1.0/

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eng

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https://dolearchivecollections.ku.edu/index.php?p=collections/findingaid&id=26&q=

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Collection 007, Box 404, Folder 30

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Robert J. Dole Institute of Politics, University of Kansas, Lawrence, KS

Archival Collection (Dublin Core)

Robert J. Dole Republican Leadership Collection, 1985-1996

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{page 1}
Background and Explanation of Senator Craig's Amendment to Strike Section 301 of HR 5620 (Supplemental Appropriation)
September 15, 1992
What is the offending provision in the Supplemental?
Section 301 (page 15, lines 21-25) reads:
"Notwithstanding any other provision of law, no funds shall be expended hereafter by the Secretary of Labor to implement or administer either the final or proposed regulations referred to in Section 303 of Public Law 102-27, 105 Stat. 130, 151."
PL 102-27, the Dire Emergency (Desert Storm) Supplemental Appropriation Act enacted April 10, 1991 for FY 1991, contained a rider prohibiting the Secretary of Labor from expending any funds to implement or administer two sets of regulations.
In April of this year, in Building and Construction Trades Department, AFL-CIO v. Martin (No. 82-1631, D.C. Cir., Apr. 21, 1992), the U.S. Court of Appeals for the District of Columbia Circuit found that PL 102-27's funding limitation was temporary, and expired at the end of FY 1991.
The DOL regulations blocked by PL 102-27 were:
Final Davis-Bacon Helper Regulations: Would establish rules for determining locally prevailing wage rates for a class of helpers on federal or federally-assisted construction, alteration, or repair projects. First proposed in 1982. After several revisions, final regulations issued in 1989 (which were proposed in 1987) were approved by the Federal District Court for D.C. in September 1990 (following guidelines set out by the D.C. Circuit Court in 1983, which the Supreme Court refused to review in 1984) and were made effective by the Department of Labor in February 1991.
Proposed Bureau of Apprenticeship and Training (BAT) Regulations: Would set some national standards for State Apprenticeship Agencies to follow in approving programs, including increasing (from 2,000 to 4,000) the minimum hours required for training, allowing more flexibility in meeting training requirements, providing for interstate "portability" of a worker's apprenticeship registration, and equal treatment of union and non-union sponsors of apprenticeship programs. Proposed in August 1990, following up on DOL's Apprenticeship 2000 initiative launched in 1987.
Didn't Congress address these issues in 1991? What's different this time?
The funding limitation in HR 5620 is permanent. The rider to the 1991 Supplemental was temporary.
Craig Davis-Bacon Amendment
September 15, 1992
Page 1

{page 2}
Didn't Congress INTEND a PERMANENT ban on the regulations in 1991?
The D.C. Circuit found, "(t)he difficulty with the unions' argument is that we see no evidence of a congressional intent that this rider be made permanent law." (Emphasis added.) The Court cited the GAO publication, Principles of Federal Appropriation Law, noting that the Supplemental lacked "words of futurity."
Moreover, Congressional debate made it clear that opponents of the regulations wanted time to review them and consider appropriate legislation before the regulations went fully into effect.
However, Congress, and especially the Senate, has not reviewed these issues, other than in a House hearing and subcommittee markup of a somewhat related bill to expand Davis-Bacon, HR 1987. In fact, even though there is a Senate companion to HR 1987, S. 1689, introduced by the Chairman of the Labor and Human Resources Committee, no action has been taken at all in the Senate on this bill. Nor has action been taken on S. 2868 (HR 1755), which would repeal Davis-Bacon altogether.
Why is HR 5620 the WRONG VEHICLE for banning the DOL regulations?
(1) Attaching these labor riders amounts to playing politics with human misery. There is bipartisan consensus on speeding relief to victims of Hurricane Andrew. The bill doing so should be kept clean of such controversial, unrelated provisions.
(2) By enacting a permanent funding limitation, Section 301 is inappropriate legislating on an appropriation bill.
(3) The labor provisions are veto bait. The Administration issued a clear veto threat on the House-passed version of HR 5620. (The Senate Appropriations Committee has retained the House version of the DOL regulation ban.)
(4) These important labor issues should be considered separately, in freestanding legislation. The Senate Labor Committee should hold hearings and proceed to markup on S. 1689 or (preferably) S. 2868. These issues should be given full, fair, and adequate debate, not cynically hitched to a totally unrelated legislative vehicle.
(5) Banning the helper regulations adds insult to injury for the victims of Hurricane Andrew, the intended beneficiaries of HR 5620.
From the GAO's 1979 report (urging repeal), to a 1983 University of Oregon study, to the surprising testimony of contractors supporting Davis-Bacon in 1987 and 1992, there is ample evidence that, contrary to its original intent, Davis-Bacon steers federal money to a small, select club of large contractors who specialize in travelling around the country to bid on federally-funded projects.
Davis-Bacon contracts tend to be awarded to non-local contractors more
Craig Davis-Bacon Amendment
September 15, 1992
Page 2

{page 3}
often than private sector contracts. (They especially do not go to local contractors and their employees in rural areas and small towns and cities. )
The first major step toward correcting this bias, and toward better fulfilling the oft-stated intent that Davis-Bacon preserve local jobs for local employers and employees, would be to more accurately reflect locally prevailing practices by letting the DOL helper regulation go forward.
Thus, if the HR 5620 ban on helpers became law, residents of hurricane- devastated Florida and Louisiana, hoping to return home to rebuild their homes, businesses, and communities, would find that "federal assistance" begins by directing money for these jobs to other contractors, from other parts of the country.
In fact, just this past June, this is what a Davis-Bacon contractor told the House Subcommittee on Labor Standards: "(W)hile our offices are located in San Diego and Honolulu, we have done prevailing wage projects throughout the United States. . . . On these projects we typically compete against 6 to 10 other companies, companies coming from California, Utah, Texas, Minnesota, and Washington, D.C." (Emphasis added. )
Don't the Helper Regulations actually undermine the Davis-Bacon Act?
Quite to the contrary: It has always been professed that the Congressional intent behind Davis-Bacon was to reflect local labor practices and wage rate structures on federal contracts.
Throughout ten years of litigation, the courts consistently have found that DOL's helper regulations have been an earnest -- and successful -- attempt to faithfully follow through with this purpose.
(1) The definition of a "helper" is court-tested and consistent with the Congressional intent of the Davis-Bacon Act itself.
The D.C. Circuit, in 1983, upheld the definition in the proposed, 1982 regulations of a "helper" as a "semi-skilled worker (rather than a skilled journeyman mechanic) who works under the direction of and assists a journeyman."
While some overlap in duties is permitted -- indeed, unavoidable if a helper truly is to provide meaningful assistance to a journeyman -- the regulations and the court were clear that a helper could not be inappropriately substituted for a journeyman.
Principally, helpers would prepare equipment and workplaces, clean up, load and unload, lift and hold materials, etc.
(2) Helpers can not be used on Davis-Bacon projects unless the use of
Craig Davis-Bacon Amendment
September 15, 1992
Page 3


{page 4}
helpers already is a " locally prevailing practice" -- another court- tested standard.
In 1990, the D.C. District Court upheld (and in 1992 the circuit court affirmed) this portion of DOL's 1987-89 regulations (which made revisions based on the 1983 circuit court opinion).
In its 1987-89 regulations, DOL deleted its threshold requirement that the use of helpers in a locality be an "identifiable" practice and replaced it with the much more stringent requirement that the use of helpers be a "locally prevailing practice" before helpers are allowed on a Davis-Bacon contract and a separate wage rate determination is made for them.
The "locally prevailing practice" test actually is the same standard stated in prior regulations. The complicated formula in the 1987-89 regulations ensures that a helper classification will not be found to be a "prevailing practice" unless a majority of construction workers in a locality are employed on projects on which helpers are used on a consistent and ongoing basis.
(3) The 1992 circuit court decision AGAIN approved the DOL regulations as consistent with the current Davis-Bacon Act.
With one exception: The court actually said DOL had gone too far in LIMITING the use of helpers. The 1982 and 1987-89 regulations allowed no more than 2 helpers to be used for every 3 journeymen. The court found the 2-3 ratio to be arbitrary and capricious and struck down this cap.
What's the harm in banning the PROPOSED apprenticeship regulations?
(1) It's unfair, premature, and unnecessary, especially given DOL assurances that the regulation would not be issued in final form until much further confrontation with unions and other affected parties.
(2) It amounts to Congressional micro-management. This ban effectively says that the system of approving apprenticeship programs around the country and registering and training new apprentices can not be updated and upgraded until there's a new Act of Congress allowing it.
(3) It's unfair to conscientious employers. In some states, small (usually non-union) contractors who want to offer responsible apprenticeship programs for their own employees can not do so because of old rules, politically difficult to change, that favor large (usually unionized) companies.
Craig Davis-Bacon Amendment
September 15, 1992
Page 4

{page 5}
Summary of Department of Labor Regulations Allowing limited use of helpers on Federal Construction
Background
The Department of Labor has begun the process of implementing regulations that would allow the limited use of helpers on construction projects covered by the Davis-Bacon Act. "Helpers" are defined in the regulations as semi-skilled workers assisting, and under the direction of, skilled journeymen. On September 24, 1990, the federal district court in Washington vacated an injunction on Department of Labor Regulations allowing the use of helpers on federally funded projects provided that:
*The use of helpers has been found to be a prevailing practice in the area.
These regulations were part of the changes in Davis-Bacon proposed in 1982. The AFL-CIO's Building and Construction Trades Department filed suit to stop implementation of the regulations. The courts held that the Davis-Bacon Act gives the secretary of labor broad authority to determine prevailing wages and that the regulations are consistent with the longstanding Congressional intent of the act -- that federal contracts should reflect the local market, and that the Federal government should not use its power to impose a wage structure on local markets A rider in the Dire Emergency Supplemental of 1991 forbid the Department of Labor from implementing regulations during fiscal year 1991. 1
Reason for the regulations
The regulations reflect changes in the construction industry since the passage of the act in 1931. The utilization of helpers was virtually non-existent in 1931, but has become a widespread practice in private construction, but NOT on federal jobs. Today, about 75 percent of the construction industry uses helpers for semi-skilled and unskilled tasks to assist on a variety of skilled tasks on private contracts. Without the regulations, contractors who want to compete for federal contract have outdated workrules imposed on them. For example, the same unskilled worker must be classified as a journeyman carpenter to carry lumber one day and reclassified -- with all the attendant paperwork -- as a journeyman plumber to carry or hold pipe the next day. Thus, labor is allocated inefficiently, costs rise, and semi-skilled workers are denied entry-level jobs. Allowing the use of helpers would open up job opportunities to those most in need of help up the first rungs of the economic ladder: Minority, women, disadvantaged, displaced, and entry- and training-level workers.
In FY93, the regulations are expected to reduce the cost of federal construction by approximately $735 million in budget authority and $162 million in outlays. Over the next five years, construction costs will be reduced by $3.8 billion in BA and $2.6 outlays.

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(see docx transcript for table)

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{description: a black-and-white illustration of the Great Seal of the United States.}
United States of America
Congressional Record
PROCEEDINGS AND DEBATES OF THE 102d CONGRESS, SECOND SESSION
Vol. 138 WASHINGTON, THURSDAY, JUNE 18, 1992 No. 88
Senate
By Mr. CRAIG (for himself and Mr. BROWN):
S. 2868. A bill to repeal the Davis-Bacon Act of 1931 to provide new job opportunities, effect significant cost savings on Federal construction contracts, promote small business participation in Federal contracting, reduce unnecessary paperwork and reporting requirements, and for other purposes;
to the Committee on Labor and Human Resources.
DAVIS-BACON REPEAL ACT
· Mr. CRAIG. Mr. President, Last week, the other body narrowly failed to pass the balanced budget amendment to the Constitution. Opponents repeated the mantra, "All we need is the political will, not a constitutional amendment, to balance the budget."
Today, I am introducing a bill that will challenge our colleagues to put their deficit reduction where their mouth is, to see if they have the political will to support, one at a time, the kinds of policy changes that will be absolutely necessary to take us to a balanced budget.
I am pleased to be introducing a bill to repeal the outdated, obsolete, and counter-productive Davis-Bacon Act of 1931. In doing so, I am introducing the Senate companion to bipartisan legislation introduced by our colleagues in the other body, CHARLIE STENHOLM Of Texas. H.R. 1755 has 78 cosponsors, a number I hope we can match or exceed in this body. When I was a Member in the other body, I consistently co-sponsored and supported efforts to repeal, provide exemptions from, or reform Davis-Bacon, and I look forward to carrying those efforts forward in the Senate.
Mr. President, it is true, as has often been said in this election year, that there is no line-item in the Federal budget titled "Waste, Fraud, and Abuse." In some small measure, that is because there is no line item labelled, "Davis-Bacon costs".
Davis-Bacon wastes more than $1.5 billion a year of taxpayers' money. That's $1.5 billion that could be used to reduce the deficit. Or, under a budget system of spending caps like the current system, that's $1.5 billion that the Budget Committee and the Appropriations Committee could use for more low-income and public housing, homeless shelters, community development projects, renovating historic buildings, and other projects that we could fund, if that $1.5 billion wasn't wasted because of Davis-Bacon.
Davis-Bacon fraudulently has been sold as protecting local contractors and local labor markets from unfair competition from itinerant contractors who would disrupt local economies and local labor standards. In fact, Davis-Bacon reserves the $50 billion market of Federal contracting-and much more once you factor in State, locally, and privately matched funds- for a small club of large, contractors. This small club of privileged contractors has learned how to milk the Federal contracting system by following Davis-Bacon projects all around the country and benefit from a set of rules and a bureaucratic process that shut the local competition out of the bidding process.
Davis-Bacon abuses the Federal Government's procurement process by discouraging small and minority- owned construction firms from bidding on Federal projects. In so doing, Davis- Bacon closes the door of job opportunity on those entry-level workers who

{page 8}
are most in need of help up to the first rung of the economic ladder, by shutting out those employers which, experience shows, are the most likely to bring them into the work force and teach them skills.
The Davis-Bacon Act applies to virtually all construction, alteration, repair, renovation, rehabilitation, and reconstruction that receives any amount-in some cases, even very small matching amounts-of Federal funding. It applies to approximately $50 billion of Federal spending for these purposes, or about a fifth of all construction activity in America. It even applies to tiny contracts for painting and decorating as much as to heavy and highway construction.
In short, this piece of policy pork may be relatively obscure outside of the beltway, but it is one of the most pervasive and pernicious influences in Federal contracting.
Mr. President, repealing Davis-Bacon is a simple issue of economy, efficiency, and competition in Government contracting. It's time to remove this relic of the Great Depression to the legislative museum in which it belongs.
I would ask unanimous consent to include in the RECORD, at this point, a background statement on Davis-Bacon and the text of my bill.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
S. 2868
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Davis-Bacon Repeal Act".
SEC. 2. DAVIS-BACON ACT OF 1931 REPEALED.
The Act of March 3, 1931, entitled "An Act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by contractors and subcontractors, and for. other purposes" (40 U.S.C. 276a-276a-5), commonly referred to as the Davis-Bacon Act, is repealed. SEC. 3. EFFECTIVE DATE.
The provisions of this Act shall take effect 30 days after the date of enactment of this Act but shall not affect any contract in existence on that date or made pursuant to invitations for bids outstanding on that date.
STATEMENT OF THE AUTHORS OF THE DAVIS-BACON REPEAL ACT
The Davis-Bacon Act of 1931 requires that the minimum wage rates paid to each separate classification of worker on federally-financed construction, repair, and alteration contracts be those determined to be locally "prevailing" by the Department of Labor. Often these rates are significantly higher than the actual averages for the locality. The last major amendments to the Act were enacted in 1935.
This was a Depression-era response to reports that unscrupulous, fly-by-night contractors were hauling gangs of "itinerant, cheap, bootleg labor" around the country to under cut local firms on federal public works projects, at a time when there was little other new construction. The Act has come to work counter to its original purpose. Several studies have found that in- stead of preserving jobs for local contractors, the Act actually makes it more likely that non-local firms will work on public projects. In a study for the Wharton School, Armond Thiebolt found that local contractors perform a higher percentage of private contracts than they do Davis-Bacon jobs. The Act predated virtually all of today's basic worker protections, including the minimum wage, right to bargain collectively, and special construction industry rules.
OBSOLETE WORK RULES IMPOSED ON CONTRACTORS BY DAVIS-BACON
DOL rarely has issued wage determinations for a rate lower than that for a skilled journeyman, regardless of the task to be performed. The same unskilled worker must be classified as a journeyman carpenter to carry lumber one day and reclassified-with all the attendant paperwork-as a journeyman plumber to carry or hold pipe the next day. Thus, labor is allocated inefficiently, costs rise, and semi-skilled workers are denied entry-level jobs. Davis-Bacon has been left behind by the evolution of a more flexible workplace over the last half-century. The utilization of helpers was virtually non-existent in 1931, but has become a wide- spread practice in private construction, but NOT on federal jobs. Today, about 75 per- cent of the construction industry uses helpers for semi-skilled and unskilled tasks to assist on a variety of skilled tasks on private contracts.
The helper classification has been upheld in the federal courts as consistent with long-standing Congressional intent that Davis-Bacon reflect, rather than disrupt, locally prevailing practices. "Helpers" would be defined as semi-skilled workers assisting, and under the direction of, skilled journeymen. However, a rider in H.R. 1281, the Dire

{page 9}
Emergency Supplemental of 1991 forbid the Department of Labor from implementing regulations which would have allowed the limited use of helpers on federal and federally-assisted contracts.
Allowing the use of helpers would open up job opportunities to those most in need of help up the first rungs of the economic ladder: Minority, women, disadvantaged, displaced, and entry-and training-level workers.
ANTI-COMPETITIVE EFFECTS OF DAVIS-BACON
The Act discourages many small and minority-owned firms from even bidding on federal work, resulting in a loss of competition that further drives up costs. The anti-small business bias that has developed in the operation of Davis-Bacon becomes especially unconscionable in light of the fact that firms with 9 or fewer people make up about 80% of all construction industry employers.
PAPERWORK REQUIREMENTS
The Copeland Act of 1934 requires that employers on Davis-Bacon contracts submit certified payroll records to the Department of Labor or contracting agency every week. Approximately 11 million payroll reports are submitted annually to contracting agencies, at an estimated cost of 5.5 million hours of industry employee time. An estimated 5.5% of all of DOL's paperwork is generated by Copeland and Davis-Bacon. Copeland requirements for collecting, inspecting, and storing these reports extends to the various contracting agencies. Paperwork costs to contractors, passed on to the taxpayers, have been estimated at $100 million a year by DOL and $50 million by CBO.
The current flood of paperwork discourages small firms, which would have to hire additional clerical personnel and/or invest in new equipment, from bothering to bid even on small subcontracts. The requirement that payroll reports be submitted weekly is especially burdensome to small contractors with a bi-weekly payroll.
BUDGET IMPACT OF DAVIS-BACON
CBO estimates that Davis-Bacon increases total federal construction costs by 3.3% (3.7% prior to regulatory changes proposed in 1982 and approved by the courts in 1985). CBO estimates that the Davis-Bacon Act adds the following "cost premium" to government construction:

(see docx transcript for table)

The Department of Defense has estimated its Davis-Bacon-induced cost premium at 5%. GAO's estimates are similar to CBO's. Most estimates place this cost inflation in the 3%-10% range. While total cost estimates reflect an average premium, the impact on individual projects varies dramatically. The impact on some community development projects has been estimated by local officials as high as 20%-50%. An Oregon State University study found Davis-Bacon to inflate costs in rural areas by 26% to 38%. It should be noted that these figures are increases to total ,construction costs, not just labor costs, Labor costs generally account for well under 50% of total construction costs.
Current budget constraints on all federally financed construction and repair, whether for military construction and family housing, low-income housing, veterans' mortgage guarantees, highways, or community development grants, require that we procure the most and highest quality work for the lowest reasonable cost.
ECONOMIC EFFECT OF DAVIS-BACON
The construction industry has been hit particularly hard by the current recession. Nearly 600,000 jobs have been lost in the construction industry since July, 1990. Davis-Bacon further weakens employment in the construction sector of our economy by increasing costs. A 1980 study by the American Enterprise Institute found that Davis-Bacon "Increases frictional unemployment in the construction trades" by reinforcing artificial wage differentials. CBO's 1983 study agreed that Davis-Bacon reduced employment in federally funded construction projects. The CBO study also suggested that Davis-Bacon may have an inflationary impact because the higher wages on federal projects could spill over to private construction as private contractors raise. wages to maintain their work force to compete with federal construction.

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SCHEDULE FOR THE WEEK OF SEPT. 14, 1992
TODAY, TUESDAY, SEPT. 15
THE SENATE WILL RECONVENE AT 2:15 P.M., AND RESUME CONSIDERATION OF THE SUPPLEMENTAL APPROPRIATIONS BILL. SEVERAL AMENDMENTS COULD BE OFFERED, THEREFORE, ROLL CALL VOTES CAN BE EXPECTED TO OCCUR. FOLLOWING THE DISPOSITION OF THE SUPPLEMENTAL APPROPRIATIONS BILL, THE MAJORITY LEADER WOULD LIKE TO TURN TO THE LABOR/HHS APPROPRIATIONS BILL.
WEDNESDAY, SEPT 16
AT 12 NOON ON WEDNESDAY, MRS. BURDICK WILL BE SWORN-IN AS THE NEW SENATOR FROM NORTH DAKOTA. SENATORS ARE URGED TO BE PRESENT TO WELCOME OUR NEW COLLEAGUE. ALSO, THE SENATE CAN BE EXPECTED TO RESUME AND PRESUMABLY COMPLETE ACTION ON THE PENDING APPROPRIATIONS BILL. THEREFORE, VOTES WILL OCCUR. FOLLOWING THE APPROPRIATIONS BILL, IT IS EXPECTED THAT THE MAJORITY LEADER WILL RESUME CONSIDERATION OF THE DEPT. OF DEFENSE AUTHORIZATION BILL, THEREFORE, VOTES CAN BE EXPECTED TO OCCUR EACH DAY OF SENATE SESSION THIS WEEK.
THURSDAY, SEPT. 17 - FRIDAY, SEPT. 18
RESUME THE D.O.D. AUTHORIZATION BILL. VOTES WILL OCCUR AND LATE SESSIONS CAN BE ANTICIPATED.
{page 1}
Background and Explanation of Senator Craig's Amendment to Strike Section 301 of HR 5620 (Supplemental Appropriation)
September 15, 1992
What is the offending provision in the Supplemental?
Section 301 (page 15, lines 21-25) reads:
"Notwithstanding any other provision of law, no funds shall be expended hereafter by the Secretary of Labor to implement or administer either the final or proposed regulations referred to in Section 303 of Public Law 102-27, 105 Stat. 130, 151."
PL 102-27, the Dire Emergency (Desert Storm) Supplemental Appropriation Act enacted April 10, 1991 for FY 1991, contained a rider prohibiting the Secretary of Labor from expending any funds to implement or administer two sets of regulations.
In April of this year, in Building and Construction Trades Department, AFL-CIO v. Martin (No. 82-1631, D.C. Cir., Apr. 21, 1992), the U.S. Court of Appeals for the District of Columbia Circuit found that PL 102-27's funding limitation was temporary, and expired at the end of FY 1991.
The DOL regulations blocked by PL 102-27 were:
Final Davis-Bacon Helper Regulations: Would establish rules for determining locally prevailing wage rates for a class of helpers on federal or federally-assisted construction, alteration, or repair projects. First proposed in 1982. After several revisions, final regulations issued in 1989 (which were proposed in 1987) were approved by the Federal District Court for D.C. in September 1990 (following guidelines set out by the D.C. Circuit Court in 1983, which the Supreme Court refused to review in 1984) and were made effective by the Department of Labor in February 1991.
Proposed Bureau of Apprenticeship and Training (BAT) Regulations: Would set some national standards for State Apprenticeship Agencies to follow in approving programs, including increasing (from 2,000 to 4,000) the minimum hours required for training, allowing more flexibility in meeting training requirements, providing for interstate "portability" of a worker's apprenticeship registration, and equal treatment of union and non-union sponsors of apprenticeship programs. Proposed in August 1990, following up on DOL's Apprenticeship 2000 initiative launched in 1987.
Didn't Congress address these issues in 1991? What's different this time?
The funding limitation in HR 5620 is permanent. The rider to the 1991 Supplemental was temporary.
Craig Davis-Bacon Amendment
September 15, 1992
Page 1

{page 2}
Didn't Congress INTEND a PERMANENT ban on the regulations in 1991?
The D.C. Circuit found, "(t)he difficulty with the unions' argument is that we see no evidence of a congressional intent that this rider be made permanent law." (Emphasis added.) The Court cited the GAO publication, Principles of Federal Appropriation Law, noting that the Supplemental lacked "words of futurity."
Moreover, Congressional debate made it clear that opponents of the regulations wanted time to review them and consider appropriate legislation before the regulations went fully into effect.
However, Congress, and especially the Senate, has not reviewed these issues, other than in a House hearing and subcommittee markup of a somewhat related bill to expand Davis-Bacon, HR 1987. In fact, even though there is a Senate companion to HR 1987, S. 1689, introduced by the Chairman of the Labor and Human Resources Committee, no action has been taken at all in the Senate on this bill. Nor has action been taken on S. 2868 (HR 1755), which would repeal Davis-Bacon altogether.
Why is HR 5620 the WRONG VEHICLE for banning the DOL regulations?
(1) Attaching these labor riders amounts to playing politics with human misery. There is bipartisan consensus on speeding relief to victims of Hurricane Andrew. The bill doing so should be kept clean of such controversial, unrelated provisions.
(2) By enacting a permanent funding limitation, Section 301 is inappropriate legislating on an appropriation bill.
(3) The labor provisions are veto bait. The Administration issued a clear veto threat on the House-passed version of HR 5620. (The Senate Appropriations Committee has retained the House version of the DOL regulation ban.)
(4) These important labor issues should be considered separately, in freestanding legislation. The Senate Labor Committee should hold hearings and proceed to markup on S. 1689 or (preferably) S. 2868. These issues should be given full, fair, and adequate debate, not cynically hitched to a totally unrelated legislative vehicle.
(5) Banning the helper regulations adds insult to injury for the victims of Hurricane Andrew, the intended beneficiaries of HR 5620.
From the GAO's 1979 report (urging repeal), to a 1983 University of Oregon study, to the surprising testimony of contractors supporting Davis-Bacon in 1987 and 1992, there is ample evidence that, contrary to its original intent, Davis-Bacon steers federal money to a small, select club of large contractors who specialize in travelling around the country to bid on federally-funded projects.
Davis-Bacon contracts tend to be awarded to non-local contractors more
Craig Davis-Bacon Amendment
September 15, 1992
Page 2

{page 3}
often than private sector contracts. (They especially do not go to local contractors and their employees in rural areas and small towns and cities. )
The first major step toward correcting this bias, and toward better fulfilling the oft-stated intent that Davis-Bacon preserve local jobs for local employers and employees, would be to more accurately reflect locally prevailing practices by letting the DOL helper regulation go forward.
Thus, if the HR 5620 ban on helpers became law, residents of hurricane- devastated Florida and Louisiana, hoping to return home to rebuild their homes, businesses, and communities, would find that "federal assistance" begins by directing money for these jobs to other contractors, from other parts of the country.
In fact, just this past June, this is what a Davis-Bacon contractor told the House Subcommittee on Labor Standards: "(W)hile our offices are located in San Diego and Honolulu, we have done prevailing wage projects throughout the United States. . . . On these projects we typically compete against 6 to 10 other companies, companies coming from California, Utah, Texas, Minnesota, and Washington, D.C." (Emphasis added. )
Don't the Helper Regulations actually undermine the Davis-Bacon Act?
Quite to the contrary: It has always been professed that the Congressional intent behind Davis-Bacon was to reflect local labor practices and wage rate structures on federal contracts.
Throughout ten years of litigation, the courts consistently have found that DOL's helper regulations have been an earnest -- and successful -- attempt to faithfully follow through with this purpose.
(1) The definition of a "helper" is court-tested and consistent with the Congressional intent of the Davis-Bacon Act itself.
The D.C. Circuit, in 1983, upheld the definition in the proposed, 1982 regulations of a "helper" as a "semi-skilled worker (rather than a skilled journeyman mechanic) who works under the direction of and assists a journeyman."
While some overlap in duties is permitted -- indeed, unavoidable if a helper truly is to provide meaningful assistance to a journeyman -- the regulations and the court were clear that a helper could not be inappropriately substituted for a journeyman.
Principally, helpers would prepare equipment and workplaces, clean up, load and unload, lift and hold materials, etc.
(2) Helpers can not be used on Davis-Bacon projects unless the use of
Craig Davis-Bacon Amendment
September 15, 1992
Page 3


{page 4}
helpers already is a " locally prevailing practice" -- another court- tested standard.
In 1990, the D.C. District Court upheld (and in 1992 the circuit court affirmed) this portion of DOL's 1987-89 regulations (which made revisions based on the 1983 circuit court opinion).
In its 1987-89 regulations, DOL deleted its threshold requirement that the use of helpers in a locality be an "identifiable" practice and replaced it with the much more stringent requirement that the use of helpers be a "locally prevailing practice" before helpers are allowed on a Davis-Bacon contract and a separate wage rate determination is made for them.
The "locally prevailing practice" test actually is the same standard stated in prior regulations. The complicated formula in the 1987-89 regulations ensures that a helper classification will not be found to be a "prevailing practice" unless a majority of construction workers in a locality are employed on projects on which helpers are used on a consistent and ongoing basis.
(3) The 1992 circuit court decision AGAIN approved the DOL regulations as consistent with the current Davis-Bacon Act.
With one exception: The court actually said DOL had gone too far in LIMITING the use of helpers. The 1982 and 1987-89 regulations allowed no more than 2 helpers to be used for every 3 journeymen. The court found the 2-3 ratio to be arbitrary and capricious and struck down this cap.
What's the harm in banning the PROPOSED apprenticeship regulations?
(1) It's unfair, premature, and unnecessary, especially given DOL assurances that the regulation would not be issued in final form until much further confrontation with unions and other affected parties.
(2) It amounts to Congressional micro-management. This ban effectively says that the system of approving apprenticeship programs around the country and registering and training new apprentices can not be updated and upgraded until there's a new Act of Congress allowing it.
(3) It's unfair to conscientious employers. In some states, small (usually non-union) contractors who want to offer responsible apprenticeship programs for their own employees can not do so because of old rules, politically difficult to change, that favor large (usually unionized) companies.
Craig Davis-Bacon Amendment
September 15, 1992
Page 4

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Summary of Department of Labor Regulations Allowing limited use of helpers on Federal Construction
Background
The Department of Labor has begun the process of implementing regulations that would allow the limited use of helpers on construction projects covered by the Davis-Bacon Act. "Helpers" are defined in the regulations as semi-skilled workers assisting, and under the direction of, skilled journeymen. On September 24, 1990, the federal district court in Washington vacated an injunction on Department of Labor Regulations allowing the use of helpers on federally funded projects provided that:
*The use of helpers has been found to be a prevailing practice in the area.
These regulations were part of the changes in Davis-Bacon proposed in 1982. The AFL-CIO's Building and Construction Trades Department filed suit to stop implementation of the regulations. The courts held that the Davis-Bacon Act gives the secretary of labor broad authority to determine prevailing wages and that the regulations are consistent with the longstanding Congressional intent of the act -- that federal contracts should reflect the local market, and that the Federal government should not use its power to impose a wage structure on local markets A rider in the Dire Emergency Supplemental of 1991 forbid the Department of Labor from implementing regulations during fiscal year 1991. 1
Reason for the regulations
The regulations reflect changes in the construction industry since the passage of the act in 1931. The utilization of helpers was virtually non-existent in 1931, but has become a widespread practice in private construction, but NOT on federal jobs. Today, about 75 percent of the construction industry uses helpers for semi-skilled and unskilled tasks to assist on a variety of skilled tasks on private contracts. Without the regulations, contractors who want to compete for federal contract have outdated workrules imposed on them. For example, the same unskilled worker must be classified as a journeyman carpenter to carry lumber one day and reclassified -- with all the attendant paperwork -- as a journeyman plumber to carry or hold pipe the next day. Thus, labor is allocated inefficiently, costs rise, and semi-skilled workers are denied entry-level jobs. Allowing the use of helpers would open up job opportunities to those most in need of help up the first rungs of the economic ladder: Minority, women, disadvantaged, displaced, and entry- and training-level workers.
In FY93, the regulations are expected to reduce the cost of federal construction by approximately $735 million in budget authority and $162 million in outlays. Over the next five years, construction costs will be reduced by $3.8 billion in BA and $2.6 outlays.

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Savings from Administration Regulations Allowing the use of semi-skilled helpers on Projects subject to the Davis-Bacon Act
Savings from Cumulative CBO Baseline (Savings in $ millions)

1993
1994
1995
1996
1997
5 yrs
Spending authority
735
771
762
773
801
3,842
Outlays
162
449
606
689
752
2,658

Savings represent 1.2% of spending on federal construction.
Source: CBO, February 16, 1992
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{description: a black-and-white illustration of the Great Seal of the United States.}
United States of America
Congressional Record
PROCEEDINGS AND DEBATES OF THE 102d CONGRESS, SECOND SESSION
Vol. 138 WASHINGTON, THURSDAY, JUNE 18, 1992 No. 88
Senate
By Mr. CRAIG (for himself and Mr. BROWN):
S. 2868. A bill to repeal the Davis-Bacon Act of 1931 to provide new job opportunities, effect significant cost savings on Federal construction contracts, promote small business participation in Federal contracting, reduce unnecessary paperwork and reporting requirements, and for other purposes;
to the Committee on Labor and Human Resources.
DAVIS-BACON REPEAL ACT
· Mr. CRAIG. Mr. President, Last week, the other body narrowly failed to pass the balanced budget amendment to the Constitution. Opponents repeated the mantra, "All we need is the political will, not a constitutional amendment, to balance the budget."
Today, I am introducing a bill that will challenge our colleagues to put their deficit reduction where their mouth is, to see if they have the political will to support, one at a time, the kinds of policy changes that will be absolutely necessary to take us to a balanced budget.
I am pleased to be introducing a bill to repeal the outdated, obsolete, and counter-productive Davis-Bacon Act of 1931. In doing so, I am introducing the Senate companion to bipartisan legislation introduced by our colleagues in the other body, CHARLIE STENHOLM Of Texas. H.R. 1755 has 78 cosponsors, a number I hope we can match or exceed in this body. When I was a Member in the other body, I consistently co-sponsored and supported efforts to repeal, provide exemptions from, or reform Davis-Bacon, and I look forward to carrying those efforts forward in the Senate.
Mr. President, it is true, as has often been said in this election year, that there is no line-item in the Federal budget titled "Waste, Fraud, and Abuse." In some small measure, that is because there is no line item labelled, "Davis-Bacon costs".
Davis-Bacon wastes more than $1.5 billion a year of taxpayers' money. That's $1.5 billion that could be used to reduce the deficit. Or, under a budget system of spending caps like the current system, that's $1.5 billion that the Budget Committee and the Appropriations Committee could use for more low-income and public housing, homeless shelters, community development projects, renovating historic buildings, and other projects that we could fund, if that $1.5 billion wasn't wasted because of Davis-Bacon.
Davis-Bacon fraudulently has been sold as protecting local contractors and local labor markets from unfair competition from itinerant contractors who would disrupt local economies and local labor standards. In fact, Davis-Bacon reserves the $50 billion market of Federal contracting-and much more once you factor in State, locally, and privately matched funds- for a small club of large, contractors. This small club of privileged contractors has learned how to milk the Federal contracting system by following Davis-Bacon projects all around the country and benefit from a set of rules and a bureaucratic process that shut the local competition out of the bidding process.
Davis-Bacon abuses the Federal Government's procurement process by discouraging small and minority- owned construction firms from bidding on Federal projects. In so doing, Davis- Bacon closes the door of job opportunity on those entry-level workers who

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are most in need of help up to the first rung of the economic ladder, by shutting out those employers which, experience shows, are the most likely to bring them into the work force and teach them skills.
The Davis-Bacon Act applies to virtually all construction, alteration, repair, renovation, rehabilitation, and reconstruction that receives any amount-in some cases, even very small matching amounts-of Federal funding. It applies to approximately $50 billion of Federal spending for these purposes, or about a fifth of all construction activity in America. It even applies to tiny contracts for painting and decorating as much as to heavy and highway construction.
In short, this piece of policy pork may be relatively obscure outside of the beltway, but it is one of the most pervasive and pernicious influences in Federal contracting.
Mr. President, repealing Davis-Bacon is a simple issue of economy, efficiency, and competition in Government contracting. It's time to remove this relic of the Great Depression to the legislative museum in which it belongs.
I would ask unanimous consent to include in the RECORD, at this point, a background statement on Davis-Bacon and the text of my bill.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
S. 2868
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Davis-Bacon Repeal Act".
SEC. 2. DAVIS-BACON ACT OF 1931 REPEALED.
The Act of March 3, 1931, entitled "An Act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by contractors and subcontractors, and for. other purposes" (40 U.S.C. 276a-276a-5), commonly referred to as the Davis-Bacon Act, is repealed. SEC. 3. EFFECTIVE DATE.
The provisions of this Act shall take effect 30 days after the date of enactment of this Act but shall not affect any contract in existence on that date or made pursuant to invitations for bids outstanding on that date.
STATEMENT OF THE AUTHORS OF THE DAVIS-BACON REPEAL ACT
The Davis-Bacon Act of 1931 requires that the minimum wage rates paid to each separate classification of worker on federally-financed construction, repair, and alteration contracts be those determined to be locally "prevailing" by the Department of Labor. Often these rates are significantly higher than the actual averages for the locality. The last major amendments to the Act were enacted in 1935.
This was a Depression-era response to reports that unscrupulous, fly-by-night contractors were hauling gangs of "itinerant, cheap, bootleg labor" around the country to under cut local firms on federal public works projects, at a time when there was little other new construction. The Act has come to work counter to its original purpose. Several studies have found that in- stead of preserving jobs for local contractors, the Act actually makes it more likely that non-local firms will work on public projects. In a study for the Wharton School, Armond Thiebolt found that local contractors perform a higher percentage of private contracts than they do Davis-Bacon jobs. The Act predated virtually all of today's basic worker protections, including the minimum wage, right to bargain collectively, and special construction industry rules.
OBSOLETE WORK RULES IMPOSED ON CONTRACTORS BY DAVIS-BACON
DOL rarely has issued wage determinations for a rate lower than that for a skilled journeyman, regardless of the task to be performed. The same unskilled worker must be classified as a journeyman carpenter to carry lumber one day and reclassified-with all the attendant paperwork-as a journeyman plumber to carry or hold pipe the next day. Thus, labor is allocated inefficiently, costs rise, and semi-skilled workers are denied entry-level jobs. Davis-Bacon has been left behind by the evolution of a more flexible workplace over the last half-century. The utilization of helpers was virtually non-existent in 1931, but has become a wide- spread practice in private construction, but NOT on federal jobs. Today, about 75 per- cent of the construction industry uses helpers for semi-skilled and unskilled tasks to assist on a variety of skilled tasks on private contracts.
The helper classification has been upheld in the federal courts as consistent with long-standing Congressional intent that Davis-Bacon reflect, rather than disrupt, locally prevailing practices. "Helpers" would be defined as semi-skilled workers assisting, and under the direction of, skilled journeymen. However, a rider in H.R. 1281, the Dire
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Emergency Supplemental of 1991 forbid the Department of Labor from implementing regulations which would have allowed the limited use of helpers on federal and federally-assisted contracts.
Allowing the use of helpers would open up job opportunities to those most in need of help up the first rungs of the economic ladder: Minority, women, disadvantaged, displaced, and entry-and training-level workers.
ANTI-COMPETITIVE EFFECTS OF DAVIS-BACON
The Act discourages many small and minority-owned firms from even bidding on federal work, resulting in a loss of competition that further drives up costs. The anti-small business bias that has developed in the operation of Davis-Bacon becomes especially unconscionable in light of the fact that firms with 9 or fewer people make up about 80% of all construction industry employers.
PAPERWORK REQUIREMENTS
The Copeland Act of 1934 requires that employers on Davis-Bacon contracts submit certified payroll records to the Department of Labor or contracting agency every week. Approximately 11 million payroll reports are submitted annually to contracting agencies, at an estimated cost of 5.5 million hours of industry employee time. An estimated 5.5% of all of DOL's paperwork is generated by Copeland and Davis-Bacon. Copeland requirements for collecting, inspecting, and storing these reports extends to the various contracting agencies. Paperwork costs to contractors, passed on to the taxpayers, have been estimated at $100 million a year by DOL and $50 million by CBO.
The current flood of paperwork discourages small firms, which would have to hire additional clerical personnel and/or invest in new equipment, from bothering to bid even on small subcontracts. The requirement that payroll reports be submitted weekly is especially burdensome to small contractors with a bi-weekly payroll.
BUDGET IMPACT OF DAVIS-BACON
CBO estimates that Davis-Bacon increases total federal construction costs by 3.3% (3.7% prior to regulatory changes proposed in 1982 and approved by the courts in 1985). CBO estimates that the Davis-Bacon Act adds the following "cost premium" to government construction:
SAVINGS FROM CBO BASELINE
[In millions of dollars]

1993
1994
1995
1996
1997
Cumulative 5-yr
Spending authority.

1.746
1.810
1.817
1.872
1,936
9.180
Outlays
377
1,049
1,421
1,612
1,751
6,210

The Department of Defense has estimated its Davis-Bacon-induced cost premium at 5%. GAO's estimates are similar to CBO's. Most estimates place this cost inflation in the 3%-10% range. While total cost estimates reflect an average premium, the impact on individual projects varies dramatically. The impact on some community development projects has been estimated by local officials as high as 20%-50%. An Oregon State University study found Davis-Bacon to inflate costs in rural areas by 26% to 38%. It should be noted that these figures are increases to total ,construction costs, not just labor costs, Labor costs generally account for well under 50% of total construction costs.
Current budget constraints on all federally financed construction and repair, whether for military construction and family housing, low-income housing, veterans' mortgage guarantees, highways, or community development grants, require that we procure the most and highest quality work for the lowest reasonable cost.
ECONOMIC EFFECT OF DAVIS-BACON
The construction industry has been hit particularly hard by the current recession. Nearly 600,000 jobs have been lost in the construction industry since July, 1990. Davis-Bacon further weakens employment in the construction sector of our economy by increasing costs. A 1980 study by the American Enterprise Institute found that Davis-Bacon "Increases frictional unemployment in the construction trades" by reinforcing artificial wage differentials. CBO's 1983 study agreed that Davis-Bacon reduced employment in federally funded construction projects. The CBO study also suggested that Davis-Bacon may have an inflationary impact because the higher wages on federal projects could spill over to private construction as private contractors raise. wages to maintain their work force to compete with federal construction.
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SCHEDULE FOR THE WEEK OF SEPT. 14, 1992
TODAY, TUESDAY, SEPT. 15
THE SENATE WILL RECONVENE AT 2:15 P.M., AND RESUME CONSIDERATION OF THE SUPPLEMENTAL APPROPRIATIONS BILL. SEVERAL AMENDMENTS COULD BE OFFERED, THEREFORE, ROLL CALL VOTES CAN BE EXPECTED TO OCCUR. FOLLOWING THE DISPOSITION OF THE SUPPLEMENTAL APPROPRIATIONS BILL, THE MAJORITY LEADER WOULD LIKE TO TURN TO THE LABOR/HHS APPROPRIATIONS BILL.
WEDNESDAY, SEPT 16
AT 12 NOON ON WEDNESDAY, MRS. BURDICK WILL BE SWORN-IN AS THE NEW SENATOR FROM NORTH DAKOTA. SENATORS ARE URGED TO BE PRESENT TO WELCOME OUR NEW COLLEAGUE. ALSO, THE SENATE CAN BE EXPECTED TO RESUME AND PRESUMABLY COMPLETE ACTION ON THE PENDING APPROPRIATIONS BILL. THEREFORE, VOTES WILL OCCUR. FOLLOWING THE APPROPRIATIONS BILL, IT IS EXPECTED THAT THE MAJORITY LEADER WILL RESUME CONSIDERATION OF THE DEPT. OF DEFENSE AUTHORIZATION BILL, THEREFORE, VOTES CAN BE EXPECTED TO OCCUR EACH DAY OF SENATE SESSION THIS WEEK.
THURSDAY, SEPT. 17 - FRIDAY, SEPT. 18
RESUME THE D.O.D. AUTHORIZATION BILL. VOTES WILL OCCUR AND LATE SESSIONS CAN BE ANTICIPATED.