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There seems at first glance to be a conflict between the Comptroller General's decision in 10 Comp. Gen. 294 (Minimum Wages-Preference to Ex-Servicemen and to Citizens and to Aliens with First Papers) and the decisions permitting the insertion, in a government contract, of requirements relating to workmen's compensation and employer's liability insurance, code compliance, and compliance with marketing agreements. So far as I know, the Comptroller has neither dis. tinguished nor expressly overruled the minimum-wage decision in the later cases. The cases, however, can be reconciled and the following principles deduced therefrom:

1. Conditions inserted in specifications in government contracts must be germane to the subject matter of the contract.

2. Unless the public exigencies demand it, a contractor may not be required, by stipulation in the specifications and contract, to comply with certain requirements not already imposed by law, such as requirements as to minimum wages, maximum hours, and so forth, especially where the Congress had entered the field by exacting sneh requirements as to particular classes of government contracts.

3. Where a law or regulations thereunder, without referring to government contracts, impose certain obligations in relation to the work, service, or goods which are the subject matter of the contract, or in relation to the conditions of such goods as are purchased, produced, handled, or sold, the administrative agency letting the contract may in the specifications and contract insert a stipulation binding the contractor to comply, and to require the subcontractor to comply, with such law or regulations even though there is no statute or regulation specifically authorizing the insertion of such a stipulation in government contracts.

If these deductions are correct, it must follow that a governmental agenes leiting a contract may lawfully require, in the specifications and contract, that the contractor comply with the provisions of the National Labor Relations Act [29 U. S. C. A., Sec. 151 et seq.) if applicable to him since (a) the clanse would be germane to the subject matter of the contract--the production, etc., of goods or the rendition of services, and (b) an existing Federal law imposes the obligations on the contractor in common with others.


The insertion of a clause requiring compliance with the National Labor Relativis Act, especially in contracts in which the element of time is important, may be justified on still another ground. As pointed out above, Section 3709 of Revised Staintes has been construed to require that the contract be awarded to the lowest responsible bidder. It is, therefore, uot sufficient that the bid below, but the bidder must be "responsible.” In determining whether or not a bidder is responsible, some discretion, indeed a wide discretion, must necessarily be vested in the arlmin. istrative officer. It would seem to be proper to include in the advertised specifications reasonable minimum criteria of responsibility. In fact this is preferable since it would lessen the possibility of favoritism in the awarding of contracts.

The meaning of the term “responsible" is not confined to the pecuniary ability of the bidder. It includes, as well, judgment, skill, integrity, and such other matters as might touch upon and influence the bidder to perform. (O Bricn v. Carney, 6 Fed. Supp. 761 ; Willis v. Hathaway, 117 S. 89, 94, 95 Fla. 608; Hudson v. Board of Education of Wheelersburg Rural School District, 179 N. E. 701, 703, 41 Ohio App. 402; Oaburn. v. Jitten, (Ariz.) 6 Pac. 2nd 902, 906; Ellington v. Cherry Lake School District, 212 N. W. 773, 775. 55 N. D. 41; Williams v. City of Topeka, 118 Pac. 864, 866, 85 Kan. 857; Hole v. Kinlaid, 16 Nev. 217, 220].

March 6, 1937). nor could the Government be obligated to pay the increased cost occasioned by compliance with future marketing agreements [15 Comp. Gen. 335 ; 15 Comp. Gen. 344; 15. Comp. Gen. 400], because to require such an undertaking would be to render indefinite and uncertain the consideration stipulated in Government contracts.

6 The Workmen's Compensation decision [4-83163 rendered February 9, 1937] does not run counter to this principle. The government-contract clause, insofar as it requires that the contractor carry workinen's compensation insurance for the benefit of employees covered by workmen's compensation laws, merely demands compliance with such laws as require insurance to be carried and assures, in the case of other workmen's compensation laws, if any, that compensation will be paid as required by such laws. Insofar as such a' clause l'equires that the contractor carry general employers' liability insurance, it merely assures payment of damages to injured workmen wliere the employer is under the law liable for such injuries.

* See also Bright v. Ball. 103 So. 236. 237. 138 Miss. 508; Board of Commissioners of Wyandotte County v. Davis, 141 Pac. 555, 556, 92 Kan. 672 ; state ex rel. v. Board of Commissioners of state Institutions. 181 N. W. 530, 131, 105 Nebr. 570 ; Sanderlin v. Lurken, 68 S. E. 225, 227, 152 N. C. 738 ; Kelling v. Edwards, 134 N. W. 221, 223, 116 Minn. 484.

The fact that the low bidder for a public contract required to be let to the lowest and best, or the lowest responsible, bidder tenders a faithful performance bond does not require the letting of the contract to him, but it is still the duty of the government authorities to consider matters bearing on the likelihood that the contract will be promptly and efficiently performed (Wilnott v. State Purchasing Commission, 246 Ky. 115, 54 S. W. 2nd 634; People ex rel. Assyrian Asphalt v. Kent, 160 III. 655; 43 N. E. 760; State ex rel. Eures v. Richards, 16 Mont. 145, 40 Pac. 210; People er rel. Morton v. Dorscheimer, 55 Howard Practice Reports (N. Y.) 118; Hibbs V. Arensberg, 276 Penn. 24, 119 At. 727 ; St. Landry Lumber Co. v. Bunkie, 115 La. 892, 99 S. 687).

Damages, whether liquidated or not, are often, as in the case of the present contract, an inadequate remedy for delay or nonperformance, especially so where time of performance is of the essence and the subject matter of the contract is of great importance. Damages for breach of contract would be small comfort under such circumstances; hence, the importance of determining the responsibility of the bidder in all relevant respects.

There is a further consideration in determining the concrete question before us. It is customary in government contracts to include a clause that the contractor shall not be charged with liquidated damages or excess costs when delay in delivery is due to unforeseeable causes beyond the control and without the fault and negligence of the contractor, including strikes. In practice this probably means that a contractor will not be charged with delay caused by a strike for it will generally be difficult to establish fault. Thus, where delay is caused by a strike, a performance bond is not likely to aid the government. Other safeguards must be devised. In this day of nationwide strikes, one of which has recently paralyzed a very substantial part of a great and vital industry, the importance of considering the likelihood of a strike as bearing on the bidder's "responsibility” is very evident.

The Congress has found in Sec. 1 of the National Labor Relations Act (29 U. S. C. A., Sec. 151] that "the denial by einployers of the right of employees to organize and the refusal by employers to accept the procedure of collective bargaining lead to strikes and other forms of industrial strife and unrest, which have the intent or necessary effect of burdening or obstructing (interstate) commerce." This legislative finding should be considered as binding on the General Accounting Office, which is a legislative agency. At any rate, the facts so found are a matter of conimon knowledge and have become the subject of judicial notice. National Labor Relations Board v. Jones & Laughlin Steel Corporation, U. S. Sup. Ct. No. 419, Oct. Term 1936, decided April 12, 1937. In the same section the national legislature states that "Experience has proved that protection by the law of the right of employees to organize and bargain collectively safeguards (interstate) commerce from injury, impairment or interruption, and promotes the flow of commerce by removing certain recognized sources of strikes and unrest by encouraging practices fundamental to the free adjustment of industrial disputes arising out of differences as to wages, hours, or other working conditions, and by restoring equality of bargaining power between employers and employees." Hence, Congress enacted the National Labor Relations Act to effectuate “the declared policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce, and to mitigate and eliminate those obstructions when they have occurred, by encouraging the practice and procedure of collectire bargaining and by protecting the exercise by workers of freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment and other mutual aid or protection.” While the Act does not take away the right to strike [Sec. 5 (29 U. S. C. A., Sec. 163)], there can be little doubt that the Act will substantially diminish the number and extent of strikes hy removing their causes. The success of the Railway Labor Act (Act May 20, 1926, Ch. 347, 44 Stat. 577, as amended, 45 U. S. C. A., Sec. 151 et seq.), which is based on the same theory as the National Labor Relations Act, in bringing about peace and order in the railroad industry, is well known. Virginian Railuay v. System Federation, U. S. Sup. Ct., decided March 20, 1937.

consideration of these facts compels the conclusion that a bidder's compliance with the National Labor Relations Act may properly be considered as an essential element of responsibility since it renders ulikely the occurrence of one of the principal causes of inability to perform, or delay in performance-the strike. If this is sound reasoning, it follows that a certificate of present compliance, coupled with a promise of future compliance, may be exacted from the bidder.



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Another consideration which may be advanced in support of the compliance clause is that it tends to carry out a progressively developing policy of the Congress to provide for the security and protection of workmen in the execution of government contracts or public works. This policy has found expression in a series of enactments.

In 1890 the Attorney General by way of dictum said that “* a public officer who should let a contract for a larger sum than would otherwise be necessary by reason of a condition that a contractor's employees should work only eight hours a day would directly violate the law." (19 Op. Atty. Gen. 635). Not long thereafter Congress passed the Eight Hour Law of August 1, 1892, ch. 352, 27 Stat. 340 (See 40 U. S. C. A. Sec. 321 et seq.), which established an eight-hour day for all laborers and mechanics employed by the government of the United States or of the District of Columbia, or by any contractor or suhcontractor upon a public work of the United States or of the District of Columbia, etc. By the Act of June 19, 1912, ch. 174, 37 Stat. 137 (40 U. S. C. A. Secs. 324, 525) it was required that every contract by or on behalf of the United States which might require or involve the employment of laborers or mechanics should provide for the eight-hour day except contracts for articles usually bought in the open market, etc. In the Bacon-Davis (or Davis-Bacon) Act of March 3, 1931, ch. 411, 46 Stat. 494, as amended by the act of August 30, 1935, ch. 825, 49 Stat. 711 (10 U. S. C. A. 276 et seq.) Congress took another forward step by requiring that the specifications for contracts in excess of $2,000 and such contracts, for the construction, alteration, or repair of public buildings or public works of the United States or the District of Columbia, which require or involve the employment of laborers or mechanics, must contain a minimum wage clause.

The act of June 13, 1934, ch. 482, 48 Stat. 948 (40 U. S. C. A. 276, 276c), sometimes referred to as the Kick-back Racket Act, makes it a crime to induce any person employed in the construction, prosecution or completion of any public building, public work, or building or work fiananced in whole or in part by loans or grants from the United States, to give up any part of the compensation to which he is entitled, by force, intimidation, threat of dismissal, or any other


Section 3 of the Tennessee Valley Authority Act of 1933 (Act May 18, 1933, ch. 32, 48 Stat. 58, 59, 16 U. S. C. A. Sec. 831b) requires that all contracts to which the Authority is a party and which provides for the employment of laborers and mechanics in the construction, operation, maintenance, or repair of buildings or other projects, shall contain a provision for payment of the prevailing rate of wages to laborers or mechanics.

Section 204 of Title II of the National Industrial Recovery Act (Act June 16, 1933, 48 Stat. 203, 40 U. S. C. A. Sec. 404c) provides that all contracts involving the expenditure of grants for emergency construction of public highways and related projects under Title II shall contain provisions establishing minimum rates of wages and such minimum rates shall be stated in the invi. tation for bids and be included in the proposals for bids. Section 206 of Title II (40 U. S. C. A. Sec. 406) provides that all contracts let for construction projects and/or loans and grants pursuant to the Title shall contain provisions to assure: (1) the exclusion of convict labor; (2) a thirty-hour week so far as practicable and feasible; (3) just and reasonable wages sufficient to provide a standard of living in decency and comfort; (4) preference to (a) ex-servicemen with dependents and (b) citizens and aliens with first papers; and (5) the use of the maximum of human labor in lieu of machinery wherever practicable and consistent with soud economy and public advantage.

Section 7 of the Emergency Relief Appropriation Act of 1935 (Joint Resolution April 8, 1937, ch. 148, 49 Stat., 15 U. S. C. A. Sec. 728, note), popularly known as the Work Relief Resolution, provides that the President shall require to be paid such rates of pay for all persons engaged upon any project financel in whole or in part, through loans or otherwise, by funds appropriated by the Joint Resolution as would accomplish the purposes of the Joint Resolution and not affect adversely the going rates of wages paid for work of a similar nature. (Under this Resolution the President directed the payment of “security wages" rather than prevailing wages since the projects were undertaken as an alternative for direct relief to the needy unemployed.)

The Emergency Relief Appropriation Act of 1936 (Act June 22, 1936, ch. 689. Title II, 49 Stat. 1608, 15 U. S. C. A. Sec. 728 note) provides that the rates of pay for persons engaged upon projects under the Appropriation shall not be less than the prevailing rates for work of a similar nature as determined by the Works Progress Administrator with the approval of the President.

The Walsh-Healey Act (Act June 30, 1936, ch. 881, 49 Stat, 2036, 41 U. S. C. A. Sec. 35 et seq.) sets up for supply contracts exceeding $10,000 certain minimum wage and other labor standards,

The (Guffey-Snyder) Bituminous Coal Conservation Act of 1935 (August 30, 1935, ch. 824, 49 Stat. 991, 15 U. S. C. A., Sec. 891 et seq.), by Section 14 (15 V. S. C. A. 818), requires that no bituminous coal should be purchased by the United States, or any department or agency thereof, produced at any mine where the producer has not complied with the provisions of the bituminous coal code, and that each contract made by the United States, or any department or agency thereof, with a contractor for any public work or service shall contain a provision that the contractor will buy no bituminous coal to use in the carrying out of such contract from any producer not a member of the code. The code members are required by Section 4 (15 U. S. C. A., SEC. 808) to accept code provisions declaring and protecting the employees' right of self-organization and collective bargaining, and maximum hours and minimum wages agreed upon by certain majorities of the producers and employees. The Bituminous Coal Labor Board is set up with powers similar in certain respects to the National Labor Relations Act."

Finally, the Bituminous Coal Act of 1937 (April 26, 1937, c. 127, 50 Stat. —), 15 U. S. C. A. Sec. 828 et seq., May 1937, Supplement), by Section 9 (15 U. S. C. A. Sec. 839), provides that no coal (except coal with respect to which no competitive bidding is required) shall be purchased by the United States, or by any department or agency thereof, produced at any mine where the producer failed at the time of production to accord his employees the rights of self-organization and collective bargaining set forth in such section.

This array of statutes spanning close to half a century shows conclusively, a policy on the part of Congress to protect the health and economic security and the rights of persons in the employ of government contractors by using its proprietary powers to insert labor stipulations in such contracts even in fields where Congress has no general law-making power.

In the Bituminous Coal Acts, this policy was extended to the protection of collective bargaining and self-organization of workers employed in the bituminous coal industry, through use of the power to include conditions in government contracts. From this it is but a step to the insertion of provisions in government contracts requiring compliance on the part of contractors and subcontractors with the provisions of the National Labor Relations Act. It is true that Congress has not as yet expressly provided for the insertion of such a clause but it seems to me that where the policy of the Congress is so clearly expressed, a special enacment is hardly necessary to give the required power to the administrative officer awarding the contract. The statutes cited make it fairly certain that, notwithstanding the provisions of Section 3709 of the Revised Statutes, Congress does not desire to reduce the cost of government contracts at the expense of the worker.

The Comptroller General has held (10 Comp. Gen. 294) that where Congress has made the insertion of a certain type of labor stipulations in government contracts the subject of legislation by enacting specitic provisions therefor in rertain instances, “It is not open to administrative consideration to exact that preference where Congress has not seen fit to do so.” On the basis of this rule, it may be contended that since Congress has provided for the protection of collective bargaining in the Bituminous Coal Acts in a limited class of cases, it is to be inferred that Congress did not desire that the principle be exteniled to other classes of cases. Such an inference, however, would not be reasonable. Since the Bituminous Coal Acts dealt only with a particular industry and set up Special provisions and machinery for the protection of collective bargaining it would have been anomalous for the government contract section thereof to provide for compliance with a general law rather than this special law.. IV. Conclusion.

The conclusion is that on the several grounds stated above, it would be permissible for the Social Security Board to exact compliance with the National Labor Relations Act from contractors and subcontractors where these are subject

? The Act was held inconstitutional in Carter v. Carter Coal Company (298 U. S. 23S), but the validity of the provisions relating to the government contract was not involved

to the Act. A penalty should be provided for in the event of noncompliance. (10 Comp. Gen. 294; 13 Comp. Gen. 65; 13 Comp. Gen. 76).

The clause should also provide for compliance with orders of the National Labor Relations Board and the decrees for the enforcement of such orders.

THOMAS H. ELIOT, General Counsel.

Exhibit No. 1095


Washington, D. C., April 2h, 1940. Hon. HOWARD W. SMITH,

Chairman, Special Committee to Investigate the National Labor Relations

Board, House Office Building, Washington, D. C. MY DEAR CONGRESSMAN SMITH: Under date of February 12, in response to a request from you, I wrote you a letter giving the number of cases pending before the Board and its regonal offices on January 1, 1940, in which I stated in part as follows:

"Of the 849 'R' cases pending, 212 were pending for one year or more." There was a footnote to this sentence reading as follows:

"A large number of these cases are in the various stages of formal proceedings before the Board." My said letter of February 12 was placed in evidence by you on February 21, and appears in the record as Committee Exhibit 1011, at page III–146. The statement that 212 representation cases had been pending for one year or more was based on information furnished to me by one of our staff who aids the Board in compiling its statistics on the status of Board proceedings. Since the tigure 212 was not broken down, and impressed me as needing amplification, I have had the information rechecked and am now able to give you the benefit of the information thus obtained.

I find that as of February 12, 1940, there were 273 instead of 212 representation cases pending before the Board, including all the regional offices. The 273 cases fall into the following categories : Under investigation -

136 Investigation ordered but awaiting issuance of notice of hearing- 2 Notice of hearing issued but awaiting hearing

5 Hearing in progress.

5 Hearing closed but awaiting Board decision.

65 Election ordered but awaiting holding of election.



273 Seventy-nine of the 136 cases under investigation involved one group of cases affecting certain motion-picture companies in the Los Angeles region. This whole group of 79 cases was closed on February 27 and 28, 1910, leaving as of the latter date only 57 cases under investigation which had been pending more than a year. We have not attempted to analyze the reasons why these 57 cases have been delayed, but we know that many or most of them have been held up pending action upon unfair labor practice cases involving the same employer. Of the total of 65 cases in which hearings had been closed and which were awaiting Board decision, 50 were consolidated with unfair labor practice cases and 10 additional were consolidated with other representation cases. Of the 60 cases in which elections have been ordered but not held, 32 were consolidated with unfair labor practice cases and 10 additional were consolidated with other representation cases. Of the 5 cases in which notice of hearing was issued, but hearing not held, 3 were consolidated with unfair labor practice cases and 1 additional was consolidated with another representation case.

It should be noted that representation cases which are consolidated with unfair labor practice cases, and which must therefore await the outcome of the unfair labor practice case, naturally take considerably longer to dispose of. It should be noted also that the 60 cases in which an election has been ordered but not held are clearly not being delayed through any fault of the Board, since the Board's facilities permit the holding of elections within a very short time after the election is ordered. In other words, the delay in the dis

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