[Senate Hearing 108-627]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 108-627
 
         APPALACHIAN COUNCIL AND WORKING FOR AMERICA INSTITUTE

=======================================================================

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                     JULY 22, 2004--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate


                              __________



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                      COMMITTEE ON APPROPRIATIONS

                     TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
                    James W. Morhard, Staff Director
                 Lisa Sutherland, Deputy Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

 Subcommittee on Departments of Labor, Health and Human Services, and 
                    Education, and Related Agencies

                 ARLEN SPECTER, Pennsylvania, Chairman
THAD COCHRAN, Mississippi            TOM HARKIN, Iowa
JUDD GREGG, New Hampshire            ERNEST F. HOLLINGS, South Carolina
LARRY CRAIG, Idaho                   DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          HARRY REID, Nevada
TED STEVENS, Alaska                  HERB KOHL, Wisconsin
MIKE DeWINE, Ohio                    PATTY MURRAY, Washington
RICHARD C. SHELBY, Alabama           MARY L. LANDRIEU, Louisiana
                                     ROBERT C. BYRD, West Virginia (Ex 
                                         officio)
                           Professional Staff
                            Bettilou Taylor
                              Jim Sourwine
                              Mark Laisch
                         Sudip Shrikant Parikh
                             Candice Rogers
                        Ellen Murray (Minority)
                         Erik Fatemi (Minority)
                      Adrienne Hallett (Minority)

                         Administrative Support
                             Carole Geagley






                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening statement of Senator Arlen Specter.......................     1
Statement of Hon. Thomas Dowd, Deputy Assistant Secretary of 
  Labor, Employment and Training Administration, Department of 
  Labor..........................................................     3
    Prepared statement...........................................     6
Statement of Hon. Bobby Baker, mayor, Batesville, MS.............    31
    Prepared statement...........................................    32
Statement of Jim Bowen, president, West Virginia AFL-CIO.........    32
    Prepared statement...........................................    34
Statement of Gary Darlington, executive director, Appalachian 
  Council........................................................    35
    Prepared statement...........................................    37
Statement of William M. George, president, Pennsylvania AFL-CIO..    38
    Prepared statement...........................................    40
Summary statement of Nancy Mills.................................    43
Statement of Herbert Mabry, chairman emeritus, Appalachian 
  Council........................................................    44
    Prepared statement...........................................    46
Summary statement of William Burga...............................    47
Prepared statement of Senator Robert C. Byrd.....................    50
Questions submitted by Senator Robert C. Byrd....................    53


         APPALACHIAN COUNCIL AND WORKING FOR AMERICA INSTITUTE

                              ----------                              


                        THURSDAY, JULY 22, 2004

                           U.S. Senate,    
    Subcommittee on Labor, Health and Human
     Services, and Education, and Related Agencies,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:36 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Arlen Specter (chairman) 
presiding.
    Present: Senator Specter.


               opening statement of senator arlen specter


    Senator Specter. Good morning, ladies and gentlemen. The 
Appropriations Subcommittee on Labor, Health and Human 
Services, and Education will now proceed.
    The hearing this morning is on the Appalachian Council and 
Working for America Institute.
    The AFL-CIO Appalachian Council has, for nearly 40 years, 
contracted with the Department of Labor to provide services for 
Job Corps students. Its current contract expired on April 30th 
of this year. At the time of the termination, the annual budget 
of $3,900,000 was allocated $1,700,000 for vocational training, 
and $2,200,000 for career transitional service support to help 
Job Corps students acquire jobs.
    There is very considerable interest by this subcommittee 
and the Appropriations Committee generally and, for that 
matter, the entire Congress on these Job Corps centers, but 
especially because one Job Corps center is in Pittsburgh, 
another is in Charleston, West Virginia, and I know that 
Senator Byrd, the ranking member of the full committee, is very 
concerned about that. There is another Job Corps center in 
Batesville, Mississippi.
    I would note that Senator Cochran is both a member of this 
subcommittee and with Senator Stevens rotating off on term 
limits from the chairmanship of the committee, Senator Cochran 
is in line to be chairman of the committee next year.
    I know of the work of the Job Corps center in Pittsburgh 
personally, having visited it on many occasions. I recollect 
going there with Senator Heinz in the early 1980's shortly 
after I was elected to the Senate and noting how important that 
work was.
    When you talk about Job Corps, obviously we are talking 
about some of the neediest of individuals who are not in the 
college ranks or the Ph.D. or the professional ranks, but are 
looking for jobs. In a sputtering economy, I think we are on 
the way back, but we still have problems, frankly especially in 
southwestern Pennsylvania in our State. There are some pockets 
where there are major, major problems.
    I would be less than candid if I did not say that I was 
concerned about the activities of the Department of Labor here. 
As soon as I found out about the matter, I wrote to Secretary 
of Labor Chao on March 3. We will have a copy of this letter 
put in the record.
    [The letter follows:]
                                               U.S. Senate,
                                     Washington, DC, March 3, 2004.
Hon. Elaine Chao,
Secretary, U.S. Department of Labor, 200 Constitution Avenue, NW, 
        Washington, DC.
    Dear Madame Secretary: I am writing to you concerning your 
Department's recent decision to not award a new contract to the 
Appalachian Council-AFL/CIO, following the expiration of the current 
contract (E-7056-9-00-82-30).
    The Appalachian Council is a nationally recognized provider of 
education and training services, and has served the employment needs of 
our Nation for nearly 40 years. This outstanding organization provides 
training for youth at three vocational training sites--including the 
Pittsburgh Job Corps Center--as well as enhanced job development and 
other placement services for Job Corps graduates throughout the United 
States.
    I am troubled by the adverse impact discontinuation of this 
contract will have on our ability to effectively train Job Corps 
students, and accordingly, strongly urge you to renew the contract with 
the Appalachian Council.
    Thank you for your personal attention to this matter.
    My best.
            Sincerely,
                                                     Arlen Specter.

    Senator Specter. I put a personal note on it to her noting 
it is a very good program and very important to me. I received 
a reply from Ms. Emily DeRocco, Assistant Secretary of Labor 
for Employment and Training, informing me that the contract 
would expire on April 30, just 2 days later, and would not be 
renewed. I think that this subcommittee and the chairman are 
entitled to a little more consideration than that.
    I wrote to Secretary Chao again on March 31 of this year, 
and I will put a copy of that letter in the record. I will also 
put a copy of the letter from Secretary DeRocco dated April 28 
into the record and a copy of my letter to Secretary Chao dated 
March 31 in support of the application of the AFL-CIO Working 
for America Institute to continue its work for the program year 
July 1, 2004 through June 30, 2005, and I have not yet received 
a reply.
    [The letters follow:]
                                               U.S. Senate,
                                    Washington, DC, March 31, 2004.
Hon. Elaine Chao,
Secretary, U.S. Department of Labor, 200 Constitution Avenue, NW, 
        Washington, DC.
    Dear Madame Secretary: Last spring I wrote to you on behalf of the 
AFL-CIO Working for America Institute. At that time, the Institute was 
awaiting a decision on a grant proposal to continue their work in 
establishing labor-management partnerships in key industry sectors and 
to provide training and technical assistance to labor representatives 
who serve on state and local Workforce Investment Boards (WIBs).
    While I was disappointed that the Institute's sectoral work was not 
funded--especially as it included a manufacturing partnership in 
southwest Pennsylvania--I was appreciative of the Department's decision 
to continue to fund the Institute's program of support for WIB Labor 
Representatives. As you noted in your July 2003 announcement of the 
grant, organized labor is a statutory stakeholder in the public 
workforce investment system and their input is important to the 
effective functioning of the system at the state and local level. I 
know that to be the case in Pennsylvania, and the labor representatives 
of our state value the training and technical assistance provided by 
the Institute.
    I understand that the scope of work for the current grant focused 
heavily on the role of labor representatives and other union workforce 
practitioners in implementing the expected changes in the Workforce 
Investment Act (WIA). Action on that legislation has not been 
completed, as the House-Senate conference has yet to be scheduled. 
Nevertheless, there is a great deal of agreement on many changes to the 
WIA system, and upcoming training sessions scheduled by the Institute 
will go a long way toward preparing labor representatives to play an 
active role in system improvements. I expect a large contingent of 
labor representatives from Pennsylvania will participate in the East 
Coast training session in New York City in May.
    I also understand that the Institute has submitted a proposal to 
continue their work in Program Year 2004. I wanted to let you know of 
my strong support for that proposal and I trust that you share the 
recognition that the job you have entrusted to the Institute requires a 
continuation grant so that they can be active participants in the 
implementation of WIA statutory changes even if the reauthorization 
period extends into the next program year.
    Thank you for your support of the fine work being done by the 
Working for America Institute and your continued support for American 
workers.
            Sincerely,
                                                     Arlen Specter.
                                 ______
                                 
                          U.S. Department of Labor,
           Assistant Secretary for Employment and Training,
                                    Washington, DC, April 28, 2004.
Hon. Arlen Specter,
U.S. Senate, Washington, DC.
    Dear Senator Specter: Thank you for your letter on behalf of the 
Appalachian Council-AFL/CIO, regarding the expiration of the national 
contract effective April 30, 2004.
    The circumstances which make it necessary to refrain from renewal 
of this contract are unfortunate. Despite ongoing remediation efforts 
by the Department of Labor's Employment and Training Administration, 
the delivery of services by the Appalachian Council has increasingly 
failed to meet the standard necessary to address the needs of those 
entrusted to the Job Corps program. An increasing number of youth 
assigned to the Appalachian Council for services have not been 
adequately trained or placed in jobs related to their training at 
sustainable wages.
    Please be assured that measures have been undertaken to prevent 
interruption of services to students. Arrangements are being made for 
the provision of vocational training and job placement services at the 
Job Corps center.
    If you have any questions, please don't hesitate to call me at 
(202) 693-2700.
            Sincerely,
                                              Emily Stover DeRocco.

    Senator Specter. It is, candidly again, a little hard for 
this subcommittee to take the lead on funding the Department of 
Labor when the chairman of the subcommittee writes and does not 
get any response. That is just not the way the committee works 
within our branches of Government.
STATEMENT OF HON. THOMAS DOWD, DEPUTY ASSISTANT 
            SECRETARY OF LABOR, EMPLOYMENT AND TRAINING 
            ADMINISTRATION, DEPARTMENT OF LABOR
ACCOMPANIED BY RICHARD TRIGG, SAN FRANCISCO REGIONAL ADMINISTRATOR, 
            EMPLOYMENT AND TRAINING ADMINISTRATION, DEPARTMENT OF LABOR

    Senator Specter. With that brief introduction, we will turn 
now to our first witness, Deputy Assistant Secretary for 
Employment and Training, Mr. Thomas M. Dowd. Prior to Mr. 
Dowd's obtaining this position, he served as Director of 
Business Relations and Regional Administration for the 
Employment and Training Administration in Philadelphia and had 
previously been a Peace Corps volunteer. He is a graduate of 
the University of New Mexico, and he will be accompanied by Mr. 
Richard Trigg, the ETA Regional Administrator in San Francisco 
and former National Director of Job Corps.
    Welcome, Mr. Dowd. Our committee practice is to have a 5-
minute opening statement. All formal statements will be made a 
part of the record, and that will leave us the maximum time for 
questions and answers. Please proceed.
    Mr. Dowd. Mr. Chairman and members of the subcommittee, I 
have worked with the Department of Labor for 10 years and 
served as the Deputy Assistant Secretary of the Employment and 
Training Administration for the last 18 months.
    I am pleased to have the opportunity to testify regarding 
the Department of Labor's past contract with the Appalachian 
Council to provide vocational training, job placement, and 
career transition services to Job Corps students and graduates. 
I would also like to discuss briefly the Department's past 
grants with the Working for America Institute which I will do 
at the end of my remarks.

                          APPALACHIAN COUNCIL

    The Appalachian Council's contract was one of nine sole-
source national vocational training contracts with unions, 
union-affiliated entities, and a national business 
organization. We refer to them as National Training 
Contractors, or NTCs.
    Senator Specter. Mr. Dowd, Senator Thurmond was renowned 
for one of his comments to witnesses. He would always say, pull 
the machine a little closer. You are out of range of that. You 
have got it turned on all right. Even a little closer yet, Mr. 
Dowd.
    Mr. Dowd. Thank you, sir.
    Sole-source contracts are awarded without competitive 
bidding and are rare, making up approximately 4 percent of the 
Job Corps' operating budget. The overwhelming majority of Job 
Corps contracts are competitively bid through the solicitation 
and procurement process. The NTCs must meet the stringent 
requirements of the Federal Acquisition Regulations, or FAR, 
including the requirements that the services provided are 
available from only one responsible source and that the 
services result in positive outcomes and performance.
    The NTC contracts have always been for 1 year with 4 option 
years. During 2003 and early 2004, as the NTC contractors were 
completing their fourth option year, the Department reviewed 
all NTC contracts to determine whether each contract still met 
the FAR sole-source procurement requirements and determined 
that the Appalachian Council contract no longer met the 
requirements.
    The contract with the Appalachian Council had two distinct 
components: (1) placement and career transition services; and 
(2) training for students in a variety of trades at the three 
Job Corps centers.
    The Workforce Investment Act, WIA, of 1998 and its 
implementing regulations require that continued services, 
including transition support and workplace counseling, be 
provided to all Job Corps students for 12 months following 
their graduation from the program. To meet this much broader 
post-training requirement, the Job Corps began contracting for 
career transition services through the competitive procurement 
process.
    Prior to WIA, the Appalachian Council was the sole provider 
of career transition services to Job Corps graduates. 
Currently, however, Job Corps has 87 contracts for career 
transition services with approximately 150 providers throughout 
the Nation providing those services. Therefore, the Council is 
no longer the only responsible source for career transition 
services and does not meet the FAR standards for sole-source 
procurement. However, the Appalachian Council is encouraged to 
compete, along with the other providers, to offer career 
transition services to Job Corps graduates.
    With respect to the training portion of the Appalachian 
Council's contract, the Council's performance was overall 
unsatisfactory and consequently did not justify renewal. ETA 
closely monitors the performance of each training contractor. 
When performance levels are inadequate, we establish a 1-year 
probationary period during which we require the NTC to develop 
and implement a Program Improvement Plan. If meaningful 
performance improvement does not occur, the program is closed 
or training slots are reduced.
    With regard to Appalachian Council's training programs, 
poor performance became evident in the last contract period, 
which began November 1, 1998. Over the past 4 years, 23 percent 
of the Appalachian Council's 22 vocational training programs 
were closed due to continued poor performance, as compared to 
approximately 10 percent of all other NTC programs.
    By June 30, 2003, the Appalachian Council's last full 
operating year, they reported the lowest performance outcomes 
of all NTCs and center-operated vocational programs for the 
following major performance indicators: vocational program 
completers, placements, initial average hourly wage, and 
average hourly wage when placed in a job that is related to 
training.
    We required the Council to develop a Program Improvement 
Plan to eliminate the identified weaknesses in the program in 
order to make it an effective training provider for Job Corps 
students. We determined that continuation of the poorly 
performing Appalachian Council contract is not in the best 
interest of Job Corps students.
    At the Department of Labor, we believe that effectively 
managed programs result in better performance and that those 
programs that do not work must be strengthened or terminated. 
Even where we have had a long-term contractual relationship 
with service providers, if the activities are not producing 
results needed for the Nation's young people, the Government 
has an obligation to terminate ineffective contracts.

                     WORKING FOR AMERICA INSTITUTE

    With regard to the Working for America Institute, ETA 
awarded a $1 million grant to the organization for program year 
2003 to continue providing training and technical assistance to 
labor representatives on State and local workforce investment 
boards. On March 5, 2004, ETA received an unsolicited proposal 
from the Working for America Institute seeking financial 
support to continue such activities.
    We believe strongly that grants previously awarded to 
community-based organizations, business, and government 
associations, and other organizations such as Working for 
America Institute, that focused on developing organizational 
relationships to promote workforce development are not the best 
use of limited resources at this time.
    To help clarify our funding priorities, we have met with 
numerous representatives from nonprofit organizations and 
associations, including the Working for America Institute 
leaders, seeking grants through sole-source procurement. While 
the capacity-building grants have ended, these organizations 
are welcome to submit proposals that demonstrate employment and 
reemployment of workers as a primary focus. We are looking for 
unique approaches to serving targeted groups such as low income 
individuals or youth offenders or projects that improve the 
skills of workers in high growth industries.

                           PREPARED STATEMENT

    Mr. Chairman, this concludes my opening statement. Again, I 
appreciate this opportunity to appear before you on behalf of 
the Department of Labor's Employment and Training 
Administration. I am prepared to respond to any questions that 
you and your colleagues may have.
    [The statement follows:]
               Prepared Statement of Hon. Thomas M. Dowd
    Mr. Chairman, and members of the Subcommittee, I am pleased to have 
the opportunity to testify regarding the Department of Labor's past 
contract with the Appalachian Council to provide vocational training, 
job placement and career transition services to Job Corps students and 
graduates. I would also like to discuss briefly the Department's past 
grants with the Working for America Institute, which I will do at the 
end of my remarks.
    Job Corps was created in 1964 to provide job training and placement 
services to economically disadvantaged youth ages 16-24. Most of the 
70,000 youth enrolled in the program annually are served in the 118 
residential centers and 2 non-residential programs, the majority of 
which are operated through competitively-procured contracts. The 
typical Job Corps student is a high school dropout who reads just above 
the 7th grade level, belongs to a minority group and has never held a 
full-time job. Job Corps consistently achieves good results for these 
youth and helps them embark on meaningful, sustainable careers.
    The Appalachian Council's contract was one of nine ``sole-source'' 
national vocational training contracts with unions, union-affiliated 
entities, and a national business organization--we refer to them as the 
National Training Contractors (NTCs). ``Sole-source'' contracts are 
awarded without competitive bidding and are rare--making up only a very 
small percentage of Job Corps contracting (approximately four percent 
of the Job Corps operating budget). The overwhelming majority of Job 
Corps contracts are competitively bid through the solicitation 
procurement process. The NTCs must meet the stringent requirements of 
the Federal Acquisition Regulations (FAR), including the requirements 
that the services provided are available from only one responsible 
source, and that the services result in positive outcomes and 
performance. Job Corps declined to renew the Appalachian Council's 
contract both because the Council no longer qualified as a ``sole-
source'' and because its performance was unsatisfactory, particularly 
regarding average hourly wages for graduates. For example, at the close 
of Program Year 2002, the Council's last full operating year, average 
hourly wages for Appalachian Council graduates at initial job placement 
were $7.71, compared to $8.84 for all NTCs (including the Appalachian 
Council).
    The NTC contracts have always been for one year with four option 
years. During 2003 and early 2004, as the NTC contractors were 
completing their fourth option year for the contract period November 
1998 to January 2004, the Department reviewed all NTC contracts to 
determine whether each contract still met the FAR sole-source 
procurement requirements. This review resulted in a determination that 
the Appalachian Council contract no longer met the sole-source contract 
requirements.
    The contract with the Appalachian Council had two distinct 
components: (1) placement and career transition services through its 
Industrial Work Experience Program, and (2) training for students in a 
variety of trades at three Job Corps centers. After careful review, we 
concluded that the Council was no longer the only responsible source 
because the passage of the Workforce Investment Act of 1998 (WIA) 
resulted in expanded career transition services and a concomitant 
increase in the number of contractors able to offer such services.
    With the passage of WIA, the Job Corps changed its approach to 
investments in post-program continued services. This change 
strengthened the program's emphasis on achieving long-term labor market 
attachment and good wages for Job Corp graduates.
    Specifically, section 148(d) of WIA and its implementing 
regulations require that continued services, including transition 
support and workplace counseling, be provided to all Job Corps students 
for 12 months following their graduation from the program. To meet this 
much broader post-training requirement, the Job Corps began contracting 
for career transition services such as these through the competitive 
procurement process.
    Prior to the passage of WIA, the Appalachian Council was the sole 
provider of career transition services to Job Corps graduates through 
its Industrial Work Experience Program. Job Corps' previous contracts 
with the Council, therefore, were appropriately sole-sourced to the 
Council because it was the only responsible source for those services. 
Currently, however, Job Corps has 87 career transition service 
contracts, providing services at over 100 sites.
    The expansion of career transition services in the past 3 years to 
all graduating Job Corps students caused the large increase in the 
number of career transition service contractors. Because of this, the 
Council is no longer the only responsible source for career transition 
services and, therefore, does not meet the FAR standards for sole-
source procurement. However, the Appalachian Council is encouraged to 
compete, along with the other providers, to offer career transition 
services to Job Corps graduates.
    With respect to the training portion of the Appalachian Council's 
contract, the Council's performance was unsatisfactory and, 
consequently, did not justify renewal. The Office of Job Corps closely 
monitors each of the National Training Contractors to ensure that the 
contractor's performance actually results in meaningful employment 
outcomes for our graduates, such as job placement, retention, and 
earnings growth. Of course, not all programs perform at the same level, 
and when performance levels are inadequate, we establish a one-year 
probationary period during which we require the NTC to develop and 
implement a Program Improvement Plan. If meaningful performance 
improvement does not result, the program is closed or training slots 
are reduced until the contract can be terminated. All NTC programs are 
subject to the same rigorous review and corrective action system. With 
regard to the Appalachian Council's training programs, poor performance 
became evident early in the last contract period, which began November 
1, 1998, for the following performance indicators: Average Hourly Wage 
at Initial Placement; Job Training Match (JTM); and JTM Average Hourly 
Wage. As a result of this poor performance, we required the Council to 
develop a Program Improvement Plan to eliminate the identified 
weaknesses in the program in order to make it an effective training 
provider for Job Corps students.
    Over the past four years, 23 percent of the Appalachian Council's 
22 vocational training programs were closed due to continued poor 
performance, as compared to approximately 10 percent of all other NTC 
programs. This reduced total contract slots by 114 from 542. By June 
30, 2003, the Appalachian Council's last full operating year, they 
reported the lowest performance outcomes of all NTCs and center-
operated vocational programs for the following major performance 
indicators: vocational program completers; placements; initial average 
hourly wage; and average hourly wage when placed in job-related 
training. The Appalachian Council also had the lowest weekly earnings 
at 6 months, $352, and 12 months, $359, following initial placement, as 
compared to $383 and $393, respectively, for all other NTC programs. 
The Appalachian Council did not improve performance after 
implementation of their Program Improvement Plan.
    In the end, we arrived at our decision to not renew the Appalachian 
Council's contract because the Council no longer meets the FAR 
requirements for a sole-source award given the proliferation of 
available career transition service contractors. In addition, we 
determined that the continuation of their poorly performing training 
contract is not in the best interest of the at-risk youth that the Job 
Corps serves.
    At the Department of Labor, we believe that effective program 
strategies and activities should be continued, and those that do not 
work must be strengthened or terminated. Even where we have had long-
term contractual relationships with service providers, if the 
activities are not producing the results needed for the Nation's young 
people, the government has an obligation to terminate ineffective 
training contracts, such as we did in this instance with the 
Appalachian Council.
    With regard to the Working for America Institute, the Employment 
and Training Administration awarded a $1 million sole-source grant to 
the organization for Program Year 2003 to continue providing training 
and technical assistance to labor representatives on state and local 
workforce investment boards. On March 5, 2004, ETA received an 
unsolicited proposal from the Working for America Institute seeking 
financial support to continue its program of training and technical 
assistance for labor representatives on local workforce boards.
    We reviewed the proposal and determined that this type of general 
capacity building no longer coincides with the Department's priorities 
to award discretionary grants that support initiatives focused on 
training workers in the skills necessary to ensure their employment or 
reemployment. This distinction is particularly important now that WIA 
is in its fifth year of implementation.
    We believe strongly that grants previously awarded to community-
based organizations, business and government associations, as well as 
entities such as the Working for America Institute, that focused on 
developing organizational ``relationships'' to promote workforce 
development, are not the best use of limited resources at this time.
    To help clarify our funding priorities, we have met with numerous 
representatives from non-profit organizations and associations, 
including the Working for America Institute leaders, seeking grants 
through sole-source procurement. While the ``relationship'' grants have 
ended, ETA has advised each organization that they are welcome to 
submit proposals that demonstrate employment and reemployment of 
workers as a primary focus. We have also shared that we are looking for 
unique approaches to serving targeted groups (e.g., low income, youth 
offenders, dislocated workers, etc.) or as part of a high growth 
project that improves skills of workers in a high growth industry such 
as health services, construction, and biotechnology. Additionally, we 
want to see measurable outcomes and results included in each proposal 
specifically, and at a minimum, outcomes relating to participants' 
entered employment, job retention and wage gains.
    In a meeting with representatives from the Working for America 
Institute in January 2004, we indicated that future funding would be 
considered in the context of a high growth or targeted group project. 
The Working for America Institute representatives were given 
information and encouraged to both respond to future competitive grant 
opportunities and to submit a concept paper in the high growth area if 
they felt they had a viable project design.
    Mr. Chairman, this concludes my testimony. Again, I appreciate this 
opportunity to appear before you on behalf of the Department of Labor's 
Employment and Training Administration. I am prepared to respond to any 
questions that you may have.

              CORRESPONDENCE WITH THE DEPARTMENT OF LABOR

    Senator Specter. Mr. Dowd, are you in a position to tell 
this subcommittee why I did not receive or the subcommittee, 
acting through me as its chairman, did not receive an answer to 
my letter of March 3 until April 28, just 2 days before the 
contract was to expire?
    Mr. Dowd. No, I am not, but I will absolutely look into it 
as soon as I return to the office.
    Senator Specter. Would you repeat that answer, please?
    Mr. Dowd. No, I am not prepared because I do not know the 
facts, but I will check it immediately upon returning to the 
office to find out what is the status of the response.
    Senator Specter. Well, the facts are that I wrote on March 
3 and received an answer on April 28 and the contract was due 
to expire on April 30. Those are the facts. Why did I not get a 
timely response?
    Mr. Dowd. As I said, Senator, I do not know but I will 
absolutely check to see where the response is in the Department 
to make sure that we get an answer back to you and why we did 
not respond----
    Senator Specter. Well, did you check your file on this 
matter before coming to testify here today?
    Mr. Dowd. I checked to see the letters that did get sent up 
here and I did not find any record on the response that you 
indicated that we did not make to you.
    Senator Specter. Are you in a position to tell me why my 
letter of March 31 to Secretary Chao concerning the AFL-CIO 
Working for America Institute has not yet been answered?
    Mr. Dowd. I will also check on that letter to see what the 
status of that one is as well.
    Senator Specter. Mr. Dowd, how can this subcommittee make 
recommendations for a multi-billion dollar budget when we do 
not have any lines of communication with your Department?
    Mr. Dowd. I agree that we need to better communicate back 
to you and respond to your requests, and I will check and see 
what the status is.

             WAGE RATES AND GEOGRAPHICAL WAGE DIFFERENTIALS

    Senator Specter. In your written statement, you have cited 
that the Appalachian Council's contract was unsatisfactory, 
particularly regarding hourly wages for graduates and you cite 
the Appalachian Council's graduates at initial job placement at 
$7.71 compared to $8.84 for all NTCs. What was the compensation 
level after the initial job placement?
    Mr. Dowd. Richard, do you have that number there?
    Senator Specter. Initial job placement, of course, is a 
snapshot at the start, but what happened later?
    While they are searching for that, Mr. Dowd, perhaps you 
can answer this question. Where were the other Job Corps 
centers located?
    I know Mr. Trigg, according to the information here, is 
from San Francisco where you have a very substantially higher 
compensation level than you do in the Appalachian Regional 
Commission. When you trace the Appalachian Regional Commission 
through the south and into western Pennsylvania, you come to 
very, very tough economic places. So there would be an 
expectation that when you are looking at Mississippi, when you 
are looking at Alabama, looking at Kentucky, looking at 
southwestern Pennsylvania, you would have a lower compensation 
level. Has that been taken into account?
    Mr. Dowd. Yes, I believe that is correct. The actual 
average weekly earnings are averaged out over all of the 
programs operated by the Appalachian Council. I think, Mr. 
Trigg, you have those figures there now.
    Senator Specter. Well, when you say NTCs, what does NTC 
stand for?
    Mr. Dowd. Well, that is all the National Training 
Contractors.
    Senator Specter. National Training Contractors.
    Mr. Dowd. Yes.
    Senator Specter. Some of those are located in San 
Francisco?
    Mr. Trigg. Yes, sir.
    Senator Specter. How does the wage level in San Francisco 
compare to the hill country of West Virginia? Have you been to 
West Virginia, Mr. Trigg?
    Mr. Trigg. Yes, sir, I have.
    Senator Specter. Well, then you are in a position to answer 
the question.
    Mr. Trigg. Senator, the wages----
    Senator Specter. I am going to ask you more questions 
because I can hear you. It is a bad thing to be able to be 
heard. You get more questions, Mr. Trigg. Go ahead.
    Mr. Trigg. The wages that are set aside for all National 
Training Contractors, as well as all of the center-operated 
programs, are developed on a geographically-based model. So 
marketing conditions in various regions are taken into 
consideration when we establish the baseline models.
    The expectation for our National Training Contractors is 
that they perform at a higher level than our center-based 
operators because of their sole-source nature.
    Senator Specter. They perform at a higher level because of 
why?
    Mr. Trigg. Because this is a sole-source contract and they 
have a special niche or special opportunities for placement for 
these youth, the expectation, when we provide a sole-source 
contract, is that they will perform at a higher level than 
everyone else.
    Senator Specter. Well, why is that? What unique 
opportunities do they have for placement? And how can they 
circumvent the critical problem? If you are in a depressed 
area, you have lower compensation than when you are in San 
Francisco. You do not have to be rocket scientist to know how 
much higher prices are in San Francisco and how much more 
people are paid there than they are in the Appalachian Regional 
Commission if you take some of the towns in the South, 
extending up through western Pennsylvania. So is that not a 
factor that has not really been taken into consideration here?
    Mr. Trigg. Well, Senator, I believe that the factor has 
been taken into consideration. What we compare is not only the 
Appalachian Council's performance, but we compare the 
performance of all other NTC operations in those same 
geographic areas, as well as the performance of center-based 
programs in those geographic areas.
    Senator Specter. Well, but your statistics here are the 
Council at $7.71 compared to $8.84. That is not an enormous 
differential to start with, but the other National Training 
Contractors are obviously in areas which have higher wages. Is 
that not true?
    Mr. Trigg. That is true, sir.
    Senator Specter. Well, I do not consider that to be a solid 
reason for drawing a conclusion that the Appalachian Council is 
no longer qualified because its performance was unsatisfactory, 
particularly regarding average hourly wage for graduates in 
light of the major, major discrepancies in the areas covered.
    Farther on in your statement, Mr. Dowd, you talk about the 
Appalachian Council had the lowest weekly earnings at 6 months, 
$352, and 12 months. $352 compared to $383 again is not a major 
discrepancy in my opinion. Do you think it is, Mr. Dowd?
    Mr. Dowd. If I could, Mr. Chairman----
    Senator Specter. Let me supplement the question. Do you 
think it is especially in light of the difference in economic 
levels of the Appalachian Commission compared to other more 
lucrative areas?
    Mr. Dowd. If I could, Mr. Chairman. We have vocational 
training programs offered to the Job Corps students all across 
the country and they are offered by the center operators who 
competitively bid to run the Job Corps centers at the 118 
centers. Those center operators offer vocational training 
programs. Now, that is the center operators.
    On the other side, we had nine, we now have eight National 
Training Contractors. The national training contractors have 
been given their contracts on a sole-source basis. They did not 
have to competitively bid them. There is a distinction to be 
made there.
    Second, I want to share with you that of all of the NTC 
contractors we have had, the Appalachian Council has 
consistently been the lowest performing contractor of all nine. 
It has consistently been----

                   APPALACHIAN COUNCIL PLACEMENT RATE

    Senator Specter. Well, be specific, Mr. Dowd. In what 
respect? Are you aware of the fact that the Appalachian Council 
placed 87 percent of its graduates, according to the Labor 
Department's own data, which is above the 85 percent 
performance goal established by the Department?
    Mr. Dowd. Yes. I will be specific. But on that particular 
statistic, I would want to make sure that that is speaking to 
placement in any job versus placement in actual jobs they were 
trained for.
    Senator Specter. Well, my question to you is were you aware 
of that fact.
    Mr. Dowd. Yes. We do have those facts.
    Senator Specter. My question to you is were you aware of 
that fact, not that you do have those facts. Were you aware of 
that fact?
    Mr. Dowd. Yes.
    Senator Specter. Why was it not in your statement? Why not 
give a full picture to the subcommittee of the achievements of 
the Appalachian Council so we can evaluate it, as well as the 
statistics which you think are derogatory?
    Mr. Dowd. Well, if I might, sir. On that particular fact, 
many of the contractors who provide vocational training--there 
are two factors that are important to put forward. At the very 
minimum, we would expect that National Training Contractors 
would be able to place students who graduate in a job. But 
obviously, that is not good enough. We do not want just any 
job, even if it is 87 percent. We want a job that is 
specifically related to the training they receive.
    Senator Specter. Do you have facts at your disposal which 
undercut the fact that the Appalachian Council exceeded the 
goal? Do you have facts at your disposal that those jobs were 
inferior jobs?
    Mr. Dowd. We have facts that would show that their 
placements for initial average wages are at least $1 less than 
all other contractors who place students. That includes the 
National Training Contractors as well----
    Senator Specter. We have already dealt with the conclusion 
that it is not comparable if you deal with, say, San Francisco 
compared to West Virginia. Would you not agree that if you are 
comparing San Francisco's starting salaries with West Virginia, 
they are not even apples and oranges? They are acorns and 
watermelons. Would you not agree with that?
    Mr. Dowd. Well, I would agree that if we tried to compare 
wages from West Virginia to California, there is a discrepancy, 
but I do not believe that is what we do. What we do is take the 
average of all the wages of all the operators that are placing 
people across the country to try to regularize----
    Senator Specter. Well, do you have any region which is in 
as tough a financial shape as the Appalachian Regional 
Commission?
    Mr. Dowd. Well, I can think of a few Indian reservations 
where we have got a couple of Job Corps centers, but it is one 
of the toughest economic----
    Senator Specter. You would agree that the Appalachian 
Commission is one of the toughest. May the record show Mr. 
Trigg is nodding in the affirmative. Right, Mr. Trigg?
    Mr. Trigg. Yes. The Appalachian area is a very difficult 
area.

                      PITTSBURGH JOB CORPS CENTER

    Senator Specter. Well, gentlemen, I do not find your case 
very strong condemning what the Appalachian Council has done.
    What is happening to the Job Corps center in Pittsburgh 
since April 30 with this contract not being let?
    Mr. Dowd. The services at the Pittsburgh center are 
continuing to be provided in the vocational programs that were 
previously operated by the Appalachian Council. I want to be 
clear that----
    Senator Specter. Who is doing that?
    Mr. Dowd. The center operator. And that kind of goes back 
to my point a moment ago that----
    Senator Specter. Are there other facets of what they are 
doing besides what you just enumerated? What did you say is 
continuing to be provided?
    Mr. Dowd. The same training program that was previously 
provided by the Appalachian Council is being managed and 
operated by the center operator in Pittsburgh, so that the 
program itself has not stopped. Students are continuing to be 
trained.
    Senator Specter. Were those folks operating it for the 
Appalachian Council?
    Mr. Dowd. No. The center operator is the contractor who is 
running the center.
    Senator Specter. So there was a change made on May 1?
    Mr. Dowd. No.
    Senator Specter. What happened after April 30 when you 
terminated the contract of the Appalachian Council?
    Mr. Dowd. All the centers are operated by center operators 
that are not National Training Contractors. The National 
Training Contractors also provide vocational programs at a 
number of Job Corps centers. I want to draw the distinction 
here. All of the center operators operate vocational training 
programs.
    Senator Specter. Well, what was the Appalachian Council 
doing with respect to Pittsburgh prior to April 30?
    Mr. Dowd. They were offering a variety of programs: food 
service, health occupation, carpentry.
    Senator Specter. And what has happened to those programs 
after May 1?
    Mr. Dowd. Right. The center operator, the contractor who 
runs the Job Corps center, that runs the dormitory, runs the 
food service, operates the entire center, and operates some of 
their own vocational training programs, picked up these 
programs and are continuing to offer them to the students.
    Senator Specter. Are they doing a better job than the 
Appalachian Council did? Have they increased initial job 
placement?
    Mr. Dowd. We believe that the center-operated programs in 
Pittsburgh have certainly been comparable and better than the 
programs that were offered by the National Training Contractor, 
Appalachian Council.
    Senator Specter. Well, aside from what you believe, which 
is conclusory, have they gotten initial job placement at a 
higher figure than the Appalachian Council?
    Mr. Dowd. I believe that is correct for the programs that 
they have operated. It is a little early to say with regard to 
the programs they just picked up.
    Senator Specter. You believe it is correct? I pause when I 
hear comments about ``I believe.'' What I am interested in is 
what you know based on facts. Do you know based on facts?
    Mr. Dowd. The other vocational programs at the Pittsburgh 
center are better in their performance than the Appalachian 
Council in the Pittsburgh center. The difference is about $8.69 
versus $8.16 per placement.
    Senator Specter. And what period of time is that for?
    Mr. Dowd. The past program year, which would have been July 
2003 to June of this year.
    Senator Specter. And what is that figure again?
    Mr. Dowd. $8.69 versus $8.16.
    Senator Specter. $8.69?
    Mr. Dowd. Yes.
    Senator Specter. Compared to $8.68?
    Mr. Dowd. $8.16.
    Senator Specter. $8.16? Is that a sufficient differential 
to oust a long-term contractor?
    Mr. Dowd. Well, I would say that there are circumstances 
where the Appalachian Council's performance with some programs 
was average. It was not any better or worse than most 
contractors for those particular programs. But in totality 
their overall performance as a contractor for all their 
programs, as I indicated before, was the lowest-performing 
contractor in the Nation for all National Training 
Contractors----
    Senator Specter. Would you provide this subcommittee with 
backup statistics on that, specifying what the contractors were 
other places, contrasted here?
    Mr. Dowd. Yes.
    [The information follows:]
         Appalachian Council and Working for America Institute
                               background
    Job Corps' contract with the Appalachian Council was one of nine 
sole-source contracts administered through the national office of Job 
Corps. Typically, contracts for center operations are procured through 
Job Corps regional offices; the regional offices have primary oversight 
over the centers. Most vocational training is provided by the center 
operator as a part of the overall operation of the center. The National 
Training Contractors (NTCs) are an exception to this rule. NTCs 
typically have an expertise and network in one particular occupation 
such as painting, carpentry, or masonry, and provide specialized 
training in that field at as many as 30 or 40 different Job Corps 
centers.
                      appalachian council contract
    The contract with the Appalachian Council consisted of two tasks: 
(1) provision of career transition services, and (2) provision of 
vocational training. The following performance statistics relate solely 
to the vocational training programs. The vocational training programs 
provided by the Appalachian Council were not focused on one area of 
expertise, as is the case for all other NTCs. The Appalachian Council 
provided training in nine different occupations, and the training was 
provided at only three Job Corps centers: Pittsburgh, PA; Batesville, 
MS and Charleston, WV.
                              performance
    In the last few program years, Appalachian Council's performance 
was so poor that many of the vocational training programs were closed. 
In fact, all programs at the Pittsburgh Job Corps Center were scheduled 
to be closed.
    The following charts reflect the Appalachian Council's most 
significant performance deficiencies in the past six program years. The 
Program Year (PY) begins on July 1 and ends on June 30 of the following 
calendar year.
    The following information indicates the Appalachian Council's 
sustained poor performance in the areas of initial and long-term 
earnings at the centers where they had vocational training programs 
compared to other NTCs programs and center-operated programs at the 
same three centers. Performance results were particularly disappointing 
when compared to all other NTCs and center-operated programs 
nationally.
    Note: All the ``a'' charts are based on the national, overall 
performance data for each program year listed, comparing the 
Appalachian Council to all other NTCs and center-operated programs. 
These are comparisons of national performance for all NTCs that include 
both high and low wage areas.
    All the ``b'' charts are based on the performance data for Calendar 
Year (CY) 2003 comparing the Appalachian Council performance to the 
NTCs and center-operated programs at the same three centers. CY 2003 
data was used as it best reflects the Appalachian Council programs' 
performance in its last full 12-month cycle before the contract ended 
in February 2004.
                     1. initial average hourly wage
Definition
    The sum of the hourly wage of vocational completers initially 
placed in jobs or the military All vocational completers initially 
placed in jobs or the military
Performance Trend



    Chart 1a shows the Appalachian Council's deficiency, nationally, in 
attaining initial average hourly wages as compared to all other NTCs 
and Center-Operated Programs from PY 1998 through PY 2003. When 
comparing Appalachian Council's initial average hourly wages with the 
NTCs, the result is a difference well over $200 a month. In addition, 
when comparing the Appalachian Council's initial average hourly wage to 
the center-operated programs, the results were consistently below, 
except in PY 1999 when the two are equal. For Job Corps graduates who 
typically earn between $350 and $400 a week, this can be the difference 
in a graduate's ability to pay for adequate housing or transportation.



    Chart 1b, based on CY 2003 data, shows a similar pattern for the 
initial placement average hourly wage measure. The Appalachian 
Council's initial placement average hourly wage was below the other 
NTCs and the center-operated programs at both Charleston and 
Pittsburgh. The only exception is at Batesville where the Appalachian 
Council's completers out-earned those from the center-operated 
programs. Please note that the Appalachian Council is the only NTC at 
Batesville.
       2. job-training-match (jtm) average hourly wage (initial)
Definition
    The sum of the hourly wage of vocational completers in training-
related employment or the military. All vocational completers who were 
initially placed in jobs or the military.
Performance Trend



    Chart 2a shows that the Appalachian Council's Job-Training-Match 
(JTM) wage was outperformed by all NTCs in every program year from 
1998-2003. In addition, the Appalachian Council's performance trailed 
the center-operated programs for most of the past six program years.
    The differences between the Appalachian Council and all other NTCs 
in this outcome measure ranges from $1.78 to $2.47 per hour. These 
hourly differences translate into $71 and $99 in a 40-hour work week, 
respectively. These differences represent a significant reduction in 
earnings for Job Corps graduates who earn between $350 and $400 a week. 




    Chart 2b illustrates a similar picture of the Appalachian Council's 
JTM average hourly wage in CY 2003. While the wage difference between 
the Appalachian Council and the NTCs at the Charleston center is less 
than a dollar, the differential at the Pittsburgh center is 
significant. The wage difference between the Appalachian Council and 
the NTCs at the Pittsburgh center is $4.52 per hour which represents a 
$181 per week difference in total wages for Job Corps graduates.
             3. 6-month average weekly earnings (long-term)
Definition
    The sum of weekly earnings of vocational completers who report 
working at 6 months following placement in a job that meets the Job 
Corps definition of placements. All vocational completers initially 
placed who complete the 6-month follow-up survey and report that they 
are working in a job/military that meets the Job Corps definition of 
placement
Performance Trend



    Chart 3a shows the Appalachian Council trailing all other NTCs in 
the 6-month average weekly earnings outcome measure from PY 2001 to PY 
2003. Earnings fluctuated between $352 and $354, representing a 
deficiency of $44 per week to $59 per week when compared to all other 
NTCs. 


    Chart 3b demonstrates that the Appalachian Council's performance 
outcomes for 6-month average weekly earnings measure trailed the other 
NTCs by $56 per week at Charleston and by $297 per week at Pittsburgh.
            4. 12-month average weekly earnings (long-term)
Definition
    The sum of weekly earnings of vocational completers who report 
working at 12 months following placement in a job that meets the Job 
Corps definition of placement. All vocational completers initially 
placed who complete the 12-month follow-up survey and report they are 
working in a job or the military that meets Job Corps definition of 
placement.
Performance Trend



    Chart 4a shows that, nationally, the Appalachian Council 
consistently trailed all other NTCs in the 12-month average weekly 
earnings measure from PY 2001-PY 2003. Differences ranged from $44 per 
week to $79 per week. The Appalachian Council's performance in this 
measure was even lower than that of the center-operated programs in PY 
2001, though the earnings increased slightly in PY 2002 and PY 2003. 



    Chart 4b provides a comparison of the 12-month average weekly 
earnings by center. Although the performance results show that the 
Appalachian Council outperformed the NTCs and center-operated programs 
at the Charleston and Batesville centers, the data shows a significant 
difference of $295 per week between the Appalachian Council and the 
other NTCs at the Pittsburgh center.
                     5. vocational completion rate
Definition
    Number of terminees who complete a vocational training program 
before separating from Job Corps. All students assigned to a vocational 
program.
Performance Trend



    Chart 5a shows that the Appalachian Council's overall vocational 
completion rate nationally topped all other NTCs and center-operated 
programs from PY 1998-PY 2000. However, beginning in PY 2001, the 
Appalachian Council's vocational completion rate had a consecutive 
three-year decline, while all other NTCs and center-operated programs 
improved their overall completion rates. 



    Chart 5b shows that the Appalachian Council's completion rates in 
CY 2003 were significantly below the other NTCs and the center-operated 
programs at the Charleston and Pittsburgh center. It is important to 
note that the Construction Technology and Health Occupations programs 
at Pittsburgh had such low completion rates in PY 2001 and PY 2002 that 
both programs were reduced in size as a result (not reflected in the 
chart). At the Batesville center, where there are no other NTC 
programs, the Appalachian Council's completion rate was slightly higher 
than that of the center-operated programs.
                       6. initial placement rate
Definition
    The number of vocational completers who are initially placed in a 
job, an education program, the military, or a job/school combination, 
or who transfer to an approved Advanced Training program at another 
center. All vocational completers whose initial placement records are 
due or received or who transfer to an approved Advanced Training 
program at another center.
Performance Trend



    Chart 6a indicates that the Appalachian Council's initial placement 
rate nationally was sporadic when compared with all other NTCs and 
center-operated programs during the six-year period of PY 1998-PY 2003. 
Even though the Appalachian Council had a unique advantage of having 
its own career transition services provider, the IWEP, the initial 
placement rates were below all other NTCs and center-operated programs 
in PY 1998, PY 1999, PY 2002 and CY 2003. 



    Chart 6b shows that in CY 2003, the Appalachian Council's initial 
placement rate was much lower than that of the other NTC programs as 
well as the center-operated programs at both Charleston and Pittsburgh. 
At Batesville, the Appalachian Council's initial placement rate is 
almost the same as that of the center-operated programs.
               7. job-training-match (jtm) placement rate
Definition
    The number of vocational completers initially placed in training-
related jobs or the military. All vocational completers who were 
initially placed in jobs or the military.
Performance Trend



    Chart 7a shows that the Appalachian Council's Job Training Match 
placement rate was satisfactory in PY 1998 at 78 percent. The rate 
declined in subsequent years to a low of 60 percent in both PY 2001 and 
PY 2002. The rate slightly increased to 68 percent in PY 2003. Despite 
the increase in PY 2003, the Appalachian Council trailed all other NTCs 
in every program year except PY 2000 for this measurement. 



    Chart 7b shows a breakdown of the Appalachian Council's improved 
Job Training Match placement rate in CY 2003 at the three centers. 
Although the Appalachian Council's performance was satisfactory at the 
Charleston and Pittsburgh centers, they trailed the center-operated 
programs at the Batesville center in CY 2003.
                       8. 6-month placement rate
Definition
    The number of vocational completers who are in a job/military or 
school that meet the Job Corps definition of placement at 6 months 
after initial placement. All vocational completers initially placed who 
complete the 6-month follow-up survey.
Performance Trend



    Chart 8a shows that, nationally, the Appalachian Council's 6-month 
placement rate fluctuated from PY 2001 to PY 2003. Although the 
Appalachian Council's 6-month placement rate trailed that of all other 
NTCs and center-operated programs in PY 2001 and PY 2002, their 
performance for this measure topped both in PY 2003. 



    Chart 8b shows that the Appalachian Council surpassed the NTCs and 
center-operated programs at the Charleston center; outpaced the NTC at 
the Pittsburgh center but trailed the center-operated programs in both 
Pittsburgh and Batesville.
                       9. 12-month placement rate
Definition
    The number of vocational completers who are in a job/military or 
school that meets the Job Corps definition of placement at 12 months 
after initial placement. All vocational completers initially placed who 
complete the 12-month follow-up survey.
Performance Trend



    Chart 9a shows that the Appalachian Council's 12-month placement 
rate was below the NTCs and center-operated programs in both PY 2001 
and PY 2002. The rate increased slightly surpassed the NTCs and center-
operated programs in PY 2003. 



    Chart 9b shows the Appalachian Council's uneven achievement in this 
measurement at the three centers in CY 2003. Although Appalachian 
Council performed well at the Charleston center (with only one trade), 
it performed unsatisfactorily at the Pittsburgh center when compared to 
the NTCs and center-operated programs. Appalachian Council's 
performance at the Batesville center was just slightly better than the 
center-operated programs.
   10. appalachian council's vocational training program performance
    Chart 10 lists the number of Appalachian Council programs 
performing below or above Job Corps' national or regional standards in 
each program year.


                             chart synopsis
  --The majority of the Appalachian Council's vocational training 
        programs performed below standard in all five past program 
        years (PY 1998-PY 2002).
  --The Appalachian Council operated with the vast majority of its 
        programs performing well below the JTM average wage standards, 
        nationwide, from PY 2000-PY 2002.
  --From PY 2001-PY 2003, the Appalachian Council had approximately 50 
        percent of its programs performing below the 6-month average 
        weekly earnings standard each program year.
  --The Appalachian Council had at least 44 percent of its programs 
        performing below the 12-month average weekly earnings standard 
        in each program year from PY 2001-PY 2003.
  --From PY 1998-PY 2002, the Appalachian Council had an increasing 
        percentage of programs that performed below the national 
        standards for vocational completion in each program year.
  --The chart portrays a similar pattern in terms of the number of 
        Appalachian Council programs performing below each program 
        year's standards for initial placement. In PY 1998, it had 11 
        programs below standard. It ended in PY 2002 with 10 below 
        standard.
  --The Appalachian Council consistently had the vast majority of its 
        programs performing below standard in the Job-Training-Match 
        measure from PY 1998 through PY 2002.
  --The Appalachian Council had the vast majority of its programs 
        performing below the 6-month placement standards in PY 2001 and 
        PY 2002.
  --In PY 2001 and PY 2002 the Appalachian Council had most of its 
        programs performing under the 12-month placement standards 
        nationwide.

    Senator Specter. Well, to repeat, I think on the basis of 
what your written statement has, you certainly have not made 
that case out, Mr. Dowd, Mr. Trigg.
    I would appreciate it if you would respond to the questions 
about communications with this Department and see if you can 
get that to us before the end of the day, signed by the 
Secretary, please. Thank you very much, gentlemen.
    [The information follows:]

      U.S. Department of Labor, Assistant Secretary
           for Congressional and Intergovernmental Affairs,
                                     Washington, DC, July 22, 2004.
Hon. Arlen Specter,
Chairman, Subcommittee on Labor, HHS-Education, Appropriations, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter to Secretary Elaine L. 
Chao expressing support for the AFL-CIO's unsolicited proposal 
submitted by the Working for America Institute to the Department of 
Labor's Employment & Training Administration (ETA). In order to meet 
the deadline you established during this morning's hearing, I am 
responding on the Secretary's behalf. I apologize for the delay in 
responding to your concerns.
    As you know, upon the passage of the Workforce Investment Act in 
1998, ETA funded several ``relationship grants'' to national 
organizations for the purpose of helping their state and local members 
gear up to participate in the new workforce system. Organizations that 
received such grants included the National Council of La Raza, National 
Puerto Rican Forum, National Urban League, OIC of America, SER Jobs for 
Progress, Inc., National Governor's Association, National Association 
of Counties, National Conference of State Legislatures, US Council of 
Mayors, National Conference of Black Mayors, a joint project of the 
U.S. Chamber of Commerce and National Association of Manufacturers, and 
the National Alliance of Business.
    ETA stopped funding these ``relationship grants'' at the end of 
Program Year 2002, except for the AFL-CIO's Working for America 
Institute, which was awarded $1 million for an additional year, Program 
Year 2003, which ended on June 30, 2004.
    However, now that the Workforce Investment Act is in its fifth year 
of implementation, we strongly believe that it is more important to 
complete the transition from capacity building to actual training 
programs. We believe we should focus limited financial resources on 
programs that deliver actual training services to workers rather than 
to pour additional funds into organizational infrastructure. After four 
years, the AFL-CIO should have developed sufficient ability to 
participate effectively in the WIA system.
    On January 5 of this year, the senior leadership of the Employment 
and Training Administration met with representatives of the AFL-CIO to 
advise them that the ``relationship grant'' would be ending and to 
explore other possible funding opportunities. ETA indicated that any 
proposal focused on providing actual training opportunities for workers 
would be considered for funding. In fact, there were a number of phone 
calls and e-mails following up on this meeting. Moreover, as a result, 
we assume, of our invitation to submit training proposals, the Working 
for America Institute submitted a concept paper for a project on 
limited English proficiency services that remains under consideration. 
As a matter of fact, the Department of Labor has funded a number of 
training programs proposed by labor unions. These include AFL-CIO 
affiliates such as the Service Employees International Union, Hotel 
Employees and Restaurant Employees International Union, International 
Association of Machinists, Fraternal Order of Police, United Auto 
Workers, and the International Brotherhood of Electrical Workers, to 
name just a few.
    Nevertheless, on March 5, 2004, ETA received an unsolicited 
proposal from the Working for America Institute seeking financial 
support to continue its program of training and technical assistance 
for labor representatives on local workforce boards.
    The Department has rejected this proposal. It is difficult to make 
the case that the AFL-CIO should receive yet a fifth year of funding 
for organizational purposes when the other national organizations were 
able to achieve their goals in three. Additionally, given that there 
are so many workers seeking training or retraining opportunities, we 
believe ETA's emphasis is rightly placed on promoting employment or 
reemployment projects having measurable outcomes.
    We appreciate your interest, and, again, I regret the delay in 
responding.
            Sincerely,
                                               Kristine A. Iverson.

    Senator Specter. We turn now to panel two, Mayor Bobby 
Baker, Mr. Jim Bowen, Mr. Gary Darlington, Mr. William M. 
George, accompanied by Ms. Nancy Mills; Mr. Herbert M. Mabry, 
accompanied by Mr. William A. Burga. We have you listed here in 
alphabetical order because of the prominence of the various 
witnesses.
    We turn now to Mayor Baker, Mayor of Batesville, 
Mississippi, since 1976, a member of the Board of Directors and 
Executive Committee of the Mississippi Municipal Association. 
He attended Northwest Junior College and the University of 
Mississippi. Welcome, Mayor Baker, and we look forward to your 
testimony.
STATEMENT OF HON. BOBBY BAKER, MAYOR, BATESVILLE, MS
    Mr. Baker. Thank you, Mr. Chairman. I appreciate the 
opportunity of speaking before the subcommittee. Thank you, 
Senator Specter.
    I would like to speak on behalf of the Appalachian Council 
and its contract with the Department of Labor. My name is Bobby 
Baker and I have been the Mayor since 1976. I was the Mayor 
when Job Corps came to our city and when the Appalachian 
Council and the contractor came to our city in 1981.
    I will limit my remarks today to my personal knowledge of 
the Appalachian Council as it relates to the Council's 
operations in Batesville.
    I am aware that the Council's training programs have in the 
past 5 years been responsible for any positive recognition that 
the Batesville Job Corps has received. In a publication titled 
Trends in Job Corps Program Outcomes PY98-PY02, dated October 
2003, and released by Richard Trigg, National Director of Job 
Corps in November 2003, the Batesville Job Corps was recognized 
as a consistently high performing center in the following three 
areas: graduate placement, 1 out of 5 cited on the national; 
placement rate of vocational completers only, 1 out of 6 cited 
nationally; and former enrollee placement, 1 out of 9. The 
Council was responsible for training and placing approximately 
70 percent of all the students from the Batesville center.
    The Appalachian Council was a good partner not only in 
Batesville but in the surrounding communities as well. The 
Council viewed community service projects as an important tool 
in preparing their students for the workplace--100 hours of 
community service was an expectation of all students. Students 
were involved in worthwhile projects such as Habitat for 
Humanity, Grenada Elderly Apartments, Quitman and Panola County 
Rehab Housing Project, and the local food bank. The involvement 
provided students the opportunity to interact with the local 
community in a positive manner.
    Other types of community activities included job shadowing, 
adopt-a-highway, and career day. The Council has always 
recognized that students' involvement in community activities 
is an integral part of preparing for the workplace.
    The Batesville Boys and Girls Club benefitted from the 
efforts of the Council-trained students as the hardhat trades 
work on projects to improve and enhance the club.
    I am also aware that the Council students have written 
hundreds of letters to our troops and have sent care packages 
to them.

                           PREPARED STATEMENT

    It seems to me that the continuation of the Council's 
involvement in Job Corps in general and at the Batesville, 
Mississippi Job Corps Center in particular makes good sense 
both from the view of the government and also the students that 
the Council serves.
    Again, Mr. Chairman, thank you for allowing me to be here, 
and I will accept any questions that I may be able to answer.
    [The statement follows:]
                   Prepared Statement of Bobby Baker
    Chairman Specter, Senator Harkin, Senator Byrd and members of the 
Subcommittee, thank you for this opportunity to testify on behalf of 
the Appalachian Council and its contract with the Department of Labor. 
My name is Bobby Baker and I am and have been the the mayor of the city 
of Batesville, Mississippi for the past three decades.
    Mr. Chairman, I will limit my remarks today to my personal 
knowledge of the Appalachian Council as it relates to the Councils' 
operations in Batesville.
    I am aware that Councils vocational training programs have in the 
last five years been responsible for any positive recognition that the 
Batesville Job Corps Center (BJCC) has received. In a publication 
titled Trends in Job Corps Program Outcomes PY98-PY02 dated October 
2003 and released by Richard Trigg, National Director of the Job Corps 
in November of 2003, the BJCC was recognized as a ``Consistently High 
Performing Center'' in the following three important measurements: 
Graduate Placement Rate (1 of 5 cited nationally), Placement Rate of 
Vocational Completers Only (1 0f 6 cited nationally) and Former 
Enrollee Placement Rate (1 of 9 cited nationally). The Council was 
responsible for training and placing approximately 70 percent of all 
Batesville students.
  --The Appalachian Council was a good partner, not only in Batesville 
        but in the surrounding communities as well.
    The Council viewed community service projects as an important tool 
in preparing their students for the workplace. One hundred hours of 
community service was an expectation for all students. Students were 
involved in worthwhile projects such as Habitat for Humanity, Grenada 
Elderly Apartments, Quitman and Panola County Rehab Housing Project, 
and the local Food Bank. This involvement provided students the 
opportunity to interact with the local community in a positive manner.
    Other types of community activities included Job Shadowing, Adopt-
a-Highway and Career Day. The Council has always realized that student 
involvement in community activities is an integral part of preparing 
for the workplace.
    The Batesville Boy's and Girl's Club benefited from the efforts of 
Council trained students as the hardhat trades work on projects to 
improve and enhance the Club.
    I am also aware the Council students have written hundreds of 
letters to U.S. troops in the Middle East, and have also forwarded 
``care packages'' of items that the troops (e.g., razors, stationary, 
hard candy, and music cassettes).
    It seems to me that the continuation of the Council's involvement 
in Job Corps in general and at the Batesville Job Corps Center makes 
good sense, both from the view of government but for the students the 
Council serves as well.
    I thank you, again, Mr. Chairman, for the opportunity to testify, 
and I look forward to answering your questions.
STATEMENT OF JIM BOWEN, PRESIDENT, WEST VIRGINIA AFL-
            CIO
    Senator Specter. Well, thank you very much, Mayor Baker.
    We turn now to Mr. Jim Bowen, president of the West 
Virginia AFL-CIO and a member of the Board of Directors of the 
Wheeling Pittsburgh Steel Corporation. Mr. Bowen has been with 
the West Virginia AFL-CIO since 1965 and was inducted into the 
West Virginia Labor Hall of Fame in 1993.
    Thank you for joining us, Mr. Bowen, and we look forward to 
your testimony.
    Mr. Bowen. Thank you, Chairman Specter, and I want to thank 
you for this opportunity to testify on behalf of the 
Appalachian Council and its sole-source contract with the 
Department of Labor.
    The AFL-CIO Appalachian Council, Incorporated is a 
nonprofit organization pledged to aid disadvantaged persons and 
to encourage the realization of their full economic and 
cultural potential through a wide range of human resource 
development programs.
    The Council began as an outgrowth of a meeting of the 
Appalachian Trade Union Conference held in Charleston, West 
Virginia in October of 1964. The 12 chief officers of the State 
AFL-CIO organizations in the area of greater Appalachia, 
including Alabama, Georgia, Kentucky, Maryland-DC, Mississippi, 
North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, 
Virginia, and West Virginia, joined together to form a 
nonprofit corporation to work toward unearthing and 
understanding the employment and training of the region, to 
develop plans for their solutions, and to stimulate and 
undertake specific projects or action programs for their 
resolve and/or elimination. Our mission then and today was to 
help people become productive and self-sufficient members of 
our society.
    The Appalachian Council's national programs have been in 
continuous operation since 1974 through a series of sole-
source, cost reimbursement contracts with the Department of 
Labor's Employment and Training Administration and the National 
Office of Job Corps. The programs are evolving continuously in 
response to the various needs of the entities within the Job 
Corps community and those changes mandated by the United States 
Congress, the administration, and the Job Corps Federal 
managers.
    The Appalachian Council has to question whether our sole-
source contract has been unfairly targeted, given the fact that 
this Labor Department, which seems to have a problem with labor 
unions, also revoked its national contract with the AFL-CIO 
Working for America Institute.
    The Working for America Institute is a nonprofit 
organization founded by the AFL-CIO to help unions and labor-
management partnerships connect to the pubic workforce system.
    For the past 5 years, the National Office of Job Corps, as 
well as Region II, Philadelphia, officials, has been proactive 
in their efforts to make it difficult for our staff to do their 
jobs. They often ignored our pleas for help, and they were very 
quick to judge and offer only criticism, thus fostering low 
morale and dissension. As we review the events that have 
occurred, we see a pattern of behavior from the National Office 
of Job Corps that substantiates our belief that there was, 
since the beginning of this current contract, November 1998, a 
plan in place to intentionally impede the Council's capability 
to be successful.
    The programs are now being taken over by big corporations 
and they then subcontract out, with very little accountability 
on performance and placements.
    As an example of our actions in West Virginia, I wish to 
cite the Charleston automotive repair program located in 
Charleston, West Virginia at the Charleston Job Corps Center 
that has been operating since November of 2000. The program had 
performed up to all center expectations. During PY 2001 and PY 
2002, the center's vocational manager rated it as the best 
program on center. One of the strengths of the program was the 
large number of students that entered the military service of 
our country, and as a result of the efforts of our instructors, 
those students that enlisted in the military were encouraged to 
pursue military occupations related to their trade. From its 
first day of operation, this program exceeded all of Job Corps' 
accountability measures.
    I will conclude my testimony by offering the following five 
points, sir.
    Number one, the Council has a long and successful history 
of dedicated and committed service to Job Corps. We have 
managed our contractual responsibilities and have interfaced 
with Government representatives in a straightforward and honest 
way.
    Number two, the National Office of Job Corps did everything 
in its power to make it difficult for us to fulfill our 
contractual obligations and to maintain our uniqueness.
    Number three, we have never been provided an explanation of 
the decision not to renew our contract although the Council 
requested such explanation.
    Number four, we have never been informed by the NOJC that 
our sole-source status has been changed.

                           PREPARED STATEMENT

    And finally, number five, the actual performance for our 
training programs based on Job Corps established criteria 
during the most recent program year, PY 2003, compares 
favorably with other national training contractors for the same 
period and in most categories exceeds the national average. 
And, Mr. Chairman, I would refer you to the record. There is a 
chart in that record that will show you that on seven 
categories, we are either equal to or exceed the other 
providers.
    Again, let me thank you, Mr. Chairman, for the opportunity 
to testify here today.
    [The statement follows:]
                    Prepared Statement of Jim Bowen
    Chairman Specter, Senator Byrd and members of the Subcommittee, 
thank you for this opportunity to testify on behalf of the Appalachian 
Council and its sole-source contract with the Department of Labor.
    The AFL-CIO Appalachian Council, Inc. is a nonprofit organization 
pledged to aid disadvantaged persons and to encourage the realization 
of their full economic and cultural potential through a wide range of 
human resource development programs.
    The Council began as an outgrowth of a meeting of the Appalachian 
Trade Union Conference held in Charleston, West Virginia in October 
1964. The twelve chief executive officers of the State AFL-CIO 
organizations in the area of greater Appalachia (Alabama, Georgia, 
Kentucky, Maryland-DC, Mississippi, North Carolina, Ohio, Pennsylvania, 
South Carolina, Tennessee, Virginia and West Virginia) joined together 
to form a nonprofit corporation to work toward unearthing and 
understanding the employment and training of the region, develop plans 
for their solution, and to stimulate or undertake specific projects or 
action programs for their resolve and/or elimination. Our mission is to 
help people become productive and self-sufficient members of society.
    The Appalachian Council's National Programs has been in continuous 
operation since 1974 through a series of sole-source, cost 
reimbursement contracts with the Department of Labor's Employment and 
Training Administration and the National Office of Job Corps. The 
programs are evolving continuously in response to the various needs of 
the entities within the Job Corps community and those changes mandated 
by the U.S. Congress, the Administration, and Job Corps Federal 
Managers.
    The Appalachian Council has to question whether our sole-source 
contract has been unfairly targeted, given the fact that this Labor 
Department, which seems to have a problem with labor unions, also 
revoked its national contract with the AFL-CIO Working for America 
Institute.
    The Working for America Institute is a non-profit organization 
founded by the AFL-CIO to help unions and labor-management partnerships 
connect to the public workforce system.
    For the past five years, the National Office of Job Corps as well 
as Region II (Philadelphia) officials has been proactive in their 
efforts to make it difficult for our staff to do their jobs. They often 
ignored our pleas for help, were quick to judgment and offered only 
criticism, thus fostering low morale and dissension. As we review the 
events that have occurred, we see a pattern of behavior from the 
National Office of Job Corps that substantiates our belief that there 
was, since the beginning of this contract (Nov 98), a plan in place to 
intentionally impede the Council's capability to be successful.
    The programs are being taken over by big corporations and then 
subcontracted out with very little accountability on performance and 
placements.
    As an example of our actions in West Virginia, I wish to cite the 
Charleston Automobile Repair program located in Charleston, West 
Virginia at the Charleston Job Corps Center that has been operating 
since November of 2000. The program had performed up to all Center 
expectations. During PY 2001 and PY 2002 the Center's Vocational 
Manager rated it as the best program on Center. One of the strengths of 
the program was the large numbers of students that entered military 
service. As a result of the efforts of our instructor, those students 
that enlisted into the military were encouraged to pursue military 
occupations related to their trade. From its first day of operation 
this program exceeded all of Job Corps' accountability measures.
    I will conclude my testimony by offering the following five (5) 
points:
    1. The Council has a long and successful history of dedicated and 
committed service to Jobs Corps. We have managed our contractual 
responsibilities and have interfaced with government representatives in 
a straightforward and honest way.
    2. The National office of Job Corps did everything in its power to 
make it difficult for us to fulfill our contractual obligations and to 
maintain our uniqueness.
    3. We have never been provided an explanation of the decision not 
to renew our contract although the Council requested such an 
explanation.
    4. We have never been informed by the NOJC that our sole-source 
status had been changed.
    5. The actual performance for our training programs based on Job 
Corps established criteria during the most recent Program Year (PY 
2003) compares favorably with other National Training Contractors for 
the same period and in most categories exceeds the National Average.
    I thank you again, Mr. Chairman, Senator Byrd and the members of 
the Sub-Committee for the opportunity to testify today.
STATEMENT OF GARY DARLINGTON, EXECUTIVE DIRECTOR, 
            APPALACHIAN COUNCIL
    Senator Specter. Thank you very much, Mr. Bowen.
    We now turn to Mr. Gary Darlington, executive director of 
AFL-CIO Appalachian Council. Prior to his current position, he 
was a public school administrator and the Regional Director of 
the Pennsylvania Higher Education Assistance Agency. Mr. 
Darlington holds a bachelor's degree from Slippery Rock and a 
Master's Degree from Westminster College.
    Thank you for joining us, Mr. Darlington, and the floor is 
yours.
    Mr. Darlington. Thank you, Chairman Specter and members of 
the subcommittee. Thank you for this opportunity to testify on 
behalf of the Appalachian Council and its sole-source contract 
with the Department of Labor.
    Given that our contract with the Labor Department was 
canceled with only 60 days' notice and our organization, after 
35-plus years of service to Job Corps, was never provided an 
opportunity to defend our record of performance, we are 
especially grateful to you, Mr. Chairman, for this opportunity 
to respond to the Deputy Assistant Secretary regarding this 
matter.
    With your permission, Mr. Chairman, I hope to submit a more 
extensive statement for the record and focus my remarks today 
on three points.
    The Appalachian Council has a strong record of success. 
Despite being forced to operate without adequate resources and 
equipment, as well as the upheaval of the national Job Corps 
program caused by the implementation of the Workforce 
Investment Act in 2000, the Appalachian Council can still point 
to a strong performance record.
    Not only can our job training programs boast generally of 
placement rates that exceed the national averages, it can be 
said that several of our training programs individually were 
recognized as the best in their specific location. Furthermore, 
the transitional services we provided Job Corps students 
through our industrial work experience program, IWEP, have 
garnered the praise of every other national training contractor 
that has a sole-source contract with Job Corps, as well as 
Government-operated centers, Department of Agriculture. Both 
the NTC's and the U.S. Department of Agriculture Forest Service 
have written to the national Job Corps directors to say that 
the loss of our program would have a negative impact on the 
entire Job Corps community.
    The Labor Department has treated the Appalachian Council in 
a disparate and unfair way. The ETA waited many months before 
notifying the Appalachian Council that our contract would not 
be renewed, thus providing our organization no opportunity to 
defend itself or to make changes to our programs to accommodate 
the Labor Department's concerns. Further, by waiting until late 
February 2004, February 26, to notify our organization, just 60 
days before our contract expired, the Labor Department made it 
difficult, if not impossible, for our organization to seek the 
assistance of the Congress in reviewing the fairness of the 
Labor Department's decision.
    Point number three, the complexity of the competitive 
bidding process makes it difficult for a nonprofit organization 
like the Appalachian Council to compete on a level playing 
field. While the department asserts that we can compete in the 
future for this work, we cannot do so on a level playing field. 
Our greatest asset, our knowledge of Appalachia, our 35-plus 
years of commitment to these programs, and the maturity and 
experience of our staff are not given significant consideration 
in the current competitive procurement process, and because of 
our size, we are absent the resources to contend with the 
unlimited finances of the mega for-profit corporations. 
Further, not knowing when in the future a contract will be let, 
we cannot say if our organization will survive long enough to 
compete.

                           PREPARED STATEMENT

    Mr. Chairman, the Appalachian Council was created to serve 
the unique needs of the Appalachian region. We understand 
Appalachia. We understand the needs of workers. With over 30 
years of broad experience and with established long-term 
relationships with unions and employers in the Appalachian 
region and other regions of the Nation, we can offer services 
that no other contractor can provide. Historically our 
organization has operated successfully as a one-of-a-kind 
labor-related entity within the Job Corps system. It is 
imperative that the subcommittee understands that while another 
contractor may be able to offer cheaper services, they cannot 
compare to our unique ability to both understand and to service 
the special needs of Job Corps.
    I thank you again, Mr. Chairman, for the opportunity to 
testify, and I look forward to answering your questions.
    [The statement follows:]
                 Prepared Statement of Gary Darlington
    Chairman Specter, Senator Harkin, Senator Byrd and members of the 
Subcommittee, thank you for this opportunity to testify on behalf of 
the Appalachian Council and its sole-source contract with the 
Department of Labor.
    Given that our contract with the Labor Department was cancelled 
with only sixty days notice, and our organization after thirty-five 
plus years of service to Job Corps, was never provided an opportunity 
to defend our record of performance, we are especially grateful to you, 
Mr. Chairman, for this opportunity to respond to the Deputy Assistant 
Secretary regarding this matter.
    With your permission, Mr. Chairman, I hope to submit a more 
extensive statement for the record, and focus my remarks today on three 
points.
  --The Appalachian Council has a strong record of success.
    Despite being forced to operate without adequate resources and 
equipment, as well as the upheaval in the national Job Corps program 
caused by the implementation of the Workforce Investment Act in 2000, 
the Appalachian Council can still point to a strong performance record.
    Not only can our job training programs boast generally of placement 
rates that exceed the national averages, it can be said that several of 
our training programs individually were recognized as the best in their 
specific location. Furthermore, the transitional services we provided 
Job Corps students through our Industrial Work Experience Program 
(IWEP) have garnered the praise of every other National Training 
Contractor (NTC) that has a sole-source contract with Job Corps as well 
as government operated centers (Agriculture). Both the NTCs and the 
USDA Forest Service have written to the National Job Corps Directors to 
say that the loss of our program would have a negative impact on the 
entire Job Corps community.
  --The Labor Department has treated the Appalachian Council in a 
        disparate and unfair way.
    We have only recently learned that in April 2003, the Employment 
and Training Administration (ETA) recommended to the Department of 
Labor's Policy Review Board that the Appalachian Council's contract be 
renewed as a sole-source contract. Again in September we were included 
in the ETA intent to renew our contract. Apparently, only after the 
Policy Review Board questioned that request did the ETA decide to 
revoke the sole-source status of our contract. To this day we have not 
been told directly by DOL that this was the case.
    The ETA waited many months before notifying the Appalachian Council 
that our contract would not be renewed, thus providing our organization 
no opportunity to defend itself or to make changes to our programs to 
accommodate the Labor Department's concerns. Further, by waiting until 
late-February 2004 (Feb. 26) to notify our organization, just sixty 
(60) days before our contract expired, the Labor Department made it 
difficult, if not impossible, for our organization to seek the 
assistance of the Congress in reviewing the fairness of the Labor 
Department's decision.
  --The complexity of the competitive bidding process makes it 
        difficult for a non-profit organization like the Appalachian 
        Council to compete on a level playing field.
    While the Labor Department asserts that we can compete in the 
future for this work, we cannot do so on a level playing field. Our 
greatest assets--our knowledge of Appalachia, our thirty-five plus 
years of commitment to these programs, and the maturity and experience 
of our staff are not given significant consideration in the current 
competitive procurement process and because of our size, we are absent 
the resources to contend with the unlimited finances of the mega for 
profit contractors. Further, not knowing when in the future a contract 
will be let, we cannot say if our organization will survive long enough 
to compete.
    Mr. Chairman, the Appalachian Council was created to serve the 
unique needs of the Appalachian region. We understand Appalachia. We 
understand the needs of workers. With over thirty years of broad 
experience and with established long-term relationships with unions and 
employers in the Appalachian region and other regions of the nation, we 
can offer services that no other contractor can provide. Historically, 
our organization has operated successfully as a one of a kind Labor 
related entity within the Job Corps system. It is imperative that the 
Subcommittee understands that while another contractor may be able to 
offer cheaper services, they cannot compare to our unique ability to 
both understand and to service the special needs of Job Corps.
    I thank you, again, Mr. Chairman, for the opportunity to testify, 
and I look forward to answering your questions.
STATEMENT OF WILLIAM M. GEORGE, PRESIDENT, PENNSYLVANIA 
            AFL-CIO
ACCOMPANIED BY NANCY MILLS, EXECUTIVE DIRECTOR, WORKING FOR AMERICA 
            INSTITUTE

    Senator Specter. Thank you very much, Mr. Darlington.
    Our next witness is Mr. William M. George, president of the 
Pennsylvania AFL-CIO and chairman of the AFL-CIO Appalachian 
Council. Prior to his current position, he was the secretary-
treasurer of the United Steel Workers Legislative Council of 
Pennsylvania. Mr. George attended Penn State and the AFL-CIO 
Institute. For the record, I would comment that I have known 
Mr. George for many years and have found him to be a very, very 
reliable leader of his labor movement and a public-spirited 
citizen.
    He is accompanied by Ms. Nancy Mills, who is the Executive 
Director of the AFL-CIO Working for America Institute. Prior to 
her current position, she served as Assistant Director of the 
AFL-CIO Corporate Affairs Department. She is a graduate of 
Antioch College. She is here to assist in responding to 
questions.
    Thank you for joining us, Mr. George, and we look forward 
to your testimony.
    Mr. George. Thank you, Senator. It is always been a great 
interest to be in the house of the Senator from Pennsylvania 
and to be part of an organization that has this opportunity. We 
all want to thank you and your staff and the cooperation that 
you have given us in these findings that we are trying to 
achieve, as you and I have talked many times about, enhancing 
the quality of life of many Pennsylvanians and those citizens 
that live in the Appalachian Council. I want to thank you again 
on behalf of all of us.
    Given that, absent written justification, our contract with 
the Labor Department was canceled with only a 60-day notice, 
and our organization, after 35-plus years of service to Job 
Corps, was never provided an opportunity to defend our record 
of performance, we are especially grateful to you, Mr. 
Chairman, for this opportunity to respond to the Deputy 
Assistant Secretary regarding this matter.
    Just before I get into some other statement--you all have 
copies of this--I just want to make a quick remark that people 
have to understand the mission objective of the Appalachian 
Council was generated by the U.S. Senate and the House of 
Representatives through the Secretary of Labor during the 
1960's that created this sole term, the famous term, ``war on 
poverty.'' This all came out of the ideas of many, many 
testimonies, how do we correct the war on poverty? And you 
needed an organization and institution that knew Appalachia, 
knew about where people lived and how we can go out and recruit 
those uneducated individuals and do something in States that a 
lot of people were not paying a lot of attention to in a lot of 
counties in western Pennsylvania and a lot of counties in West 
Virginia.
    So I mean, there seems to be in this whole thing, as I look 
into this program, a thing about competition, pennies here, 
pennies there, and nobody really looks at the general mission 
and objective of the war on poverty, enhancing the quality of 
life.
    If in fact, Mr. Chairman, the people that we have dealt 
with with our sites and our institutions and the people we have 
provided over the years--we are proud to sit here today. And I 
want the Department of Labor to understand whether we continue 
or not, you will never take our dignity. You will never take it 
away from us what the AFL-CIO Appalachian Council has done for 
thousands and thousands and thousands of students in enhancing 
their lives and their quality of life. That has to be in the 
back of everybody's mind at this particular hearing today.
    So I just wanted to get that off my chest before I get into 
a couple general statements. And I will try and take a minute 
or 2 off of my general statement.
    For the past several years, the national office of Job 
Corps, as well as Region II officials in Philadelphia, has been 
proactive in their efforts to make it difficult for our staff 
in that region to do their jobs. They often ignored Council 
staff pleas for help, were quick to judgment and offered only 
criticism, thus fostering low morale and dissension. As we 
review the events that have occurred, we see a pattern of 
behavior from the national office of Job Corps that 
substantiates our belief that there was, since the beginning of 
this contract, which is November 1998, a plan in place to 
intentionally impede the Council's capability to be successful.
    Council-operated training programs in Pittsburgh functioned 
without needed equipment for the full 5 years of the contract 
purportedly due to the lack of funds. While we begged for new 
equipment for our programs, the region had no difficulty in 
finding equipment monies for the Pittsburgh Job Corps Center. 
It is kind of funny how this takes place. They kick us out. Now 
suddenly the money appears, et cetera.
    In February 2002, a strong performing program, 
transportation, was cut in half for alleged poor performance, 
although it had recently at that time received an award from 
the center for outstanding performance, and immediately the 
material handling component of the program was coopted by the 
center operator. The center not only maintained the program 
with regional office approval, as was earlier testified by the 
Department of Labor. The success of it was because they hired 
our people. They hired our instructors once they eliminated 
them, and then they went and found the funds to buy a full 
complement of new equipment.
    Can somebody tell me? Does this sound like there is a 
little bit of conspiracy here or something?
    Late in February 2003, we were instructed to terminate our 
entire center-based management and administrative staff in both 
Pittsburgh, as well as Batesville, as you have heard from the 
previous testimony of the Mayor, by March 31, 2003. These cuts 
effectively eliminated our occupational exploration program and 
our ability to provide enhanced job development and post-
placement follow-up with our students.
    Immediately following the program cuts, discussions took 
place with the national office regarding the future of the 
programs in light of the cuts. These discussions were positive. 
We were offered assurance that we did have a future and that 
there would be other opportunities for the Council within Job 
Corps.
    At the end of that very same day, we were informed that we 
were to close out our transportation program at Pittsburgh and 
that the instructor should wrap up his business by the end of 
March 2003. No reason for the closure was provided. Talk about 
a morale-buster. You got it. Through this particular incident 
and others like it, the students the real victims. It was not 
so many of us. The real victims were the students as, more 
often than not, decisions were not made for their benefit.
    Not only can our job training programs boast generally of 
placement rates that exceed the national average--and by the 
way, they mentioned some numbers. In our general statement to 
you this morning, Mr. Chairman, there is quite a number of 
pages with our facts and figures that came from the Department 
of Labor over the years about performance, about graduations, 
about awards that the Appalachian Council has received over the 
years.
    Furthermore, the transitional services we provided Job 
Corps students through our industrial work experience program, 
which is called the workforce investment boards, have garnered 
the praise of every national training contractor that has a 
sole-source contract with Job Corps, as well as Government-
operated centers. Both the NTC's and the USDA Forest Service 
have written to the national Job Corps directors to say that 
the loss of our program would have a negative impact on the 
entire Job Corps community.
    Mr. Chairman, I would also question whether our sole-source 
contract has been unfairly targeted, given the fact that this 
Labor Department, which seems to have a serious problem with 
labor unions, also revoked the national contract with the AFL-
CIO Working for America Institute after 35 years of service, 
which many of those programs, this Senator from Pennsylvania 
was very proud to be supportive of.
    As it was with the Appalachian Council, I can only wonder 
whether there is some concerted effort at the Department of 
Labor to terminate all partnerships with labor unions and the 
organizations established to connect labor unions and the 
Department of Labor.

                           PREPARED STATEMENT

    It is from this point on where we would like to make some 
comments in reference to the national AFL-CIO program, and Mr. 
Senator, we would ask that Nancy Mills be given a minute or 2 
either at this time or at the conclusion of the testimony here, 
to just kind of form what has happened with the national AFL-
CIO's Working for America Institute.
    [The statement follows:]
                Prepared Statement of William M. George
    Chairman Specter, Senator Harkin, Senator Byrd and members of the 
Subcommittee, thank you for this opportunity to testify on behalf of 
the Appalachian Council and its contract with the Department of Labor.
    Given that, absent written justification, our contract with the 
Labor Department was cancelled with only sixty days notice, and our 
organization after thirty-five plus years of service to Job Corps, was 
never provided an opportunity to defend our record of performance, we 
are especially grateful to you, Mr. Chairman, for this opportunity to 
respond to the Deputy Assistant Secretary regarding this matter.
    For the past several years the National Office of Job Corps as well 
as Region II (Philadelphia) officials have been proactive in their 
efforts to make it difficult for our staff in that Region to do their 
jobs. They often ignored Council staff pleas for help, were quick to 
judgment and offered only criticism, thus fostering low morale and 
dissension. As we review the events that have occurred, we see a 
pattern of behavior from the National Office of Job Corps that 
substantiates our belief that there was, since the beginning of this 
contract (Nov 98), a plan in place to intentionally impede the 
Council's capability to be successful
    Council operated training programs in Pittsburgh functioned without 
needed equipment for the full five years of the contract purportedly 
due to lack of funds. While we begged for new equipment for our 
programs the Region had no difficulty in finding equipment monies for 
the Pittsburgh Job Corp Center (PJCC). In February 2002, a strong 
performing program, Transportation, was cut in half for poor 
performance (although it had recently received an award from the Center 
for outstanding performance) and immediately the Material Handling 
component of the program was co-opted by the Center operator. The 
Center not only maintained the program with Regional Office approval, 
it hired our instructor and found the funds to buy a full compliment of 
new equipment.
    Late in February 2003 we were instructed to terminate our entire 
center based management and administrative staff in both Pittsburgh as 
well as Batesville by March 31, 2003. These cuts effectively eliminated 
our Occupational Exploration Program and our ability to provide 
enhanced job development and post-placement follow-up with our 
students.
    Immediately following the program cuts discussions took place with 
the National Office regarding the future of the programs in light of 
the cuts. Those discussions were positive. We were offered assurances 
that we did have a future and that there would be other opportunities 
for the Council within Job Corps. At the end of that very same day we 
were informed that we were to close our Transportation program at 
Pittsburgh and that the instructor should wrap up his business by the 
end of March 2003. No reasons for the closure were provided. Talk about 
a morale buster. Through this particular incident and others like it, 
the students were the real victims, as more often than not decisions 
were not made for their benefit.
    Not only can our job training programs boast generally of placement 
rates that exceed the national averages, it can be said that several of 
our training programs individually were recognized as the best in the 
respective Center and/or Region. Furthermore, the transitional services 
we provided Job Corps students through our Industrial Work Experience 
Program (IWEP) have garnered the praise of every other National 
Training Contractor (NTC) that has a sole-source contract with Job 
Corps as well as government operated centers (Agriculture). Both the 
NTCs and the USDA Forest Service have written to the National Job Corps 
Directors to say that the loss of our program would have a negative 
impact on the entire Job Corps community.
    Mr. Chairman, I would also question whether our sole-source 
contract has been unfairly targeted, given the fact that this Labor 
Department, which seems to have a serious problem with labor unions, 
also revoked its national contract with the AFL-CIO Working for America 
Institute after some thirty five years of service.
    As it was with the Council, I can only wonder whether there is some 
concerted effort at the Department of Labor to terminate all 
partnerships with labor unions and the organizations established to 
connect labor unions to DOL programs. In another action, one totally at 
the Secretary's discretion, we learned in June that the Department's 
Employment and Training Administration (ETA) had decided not to renew a 
grant given to the AFL-CIO Working for America Institute. This decision 
would terminate over 35 years of continuous support for the Institute--
through Democratic and Republican administrations alike--to assure a 
voice for workers in the public workforce system.
    Senator Specter, I know that you are aware of the work done by the 
Institute, and its predecessor organization (HRDI). You have seen the 
work they do in supporting both joint labor management high road 
training partnerships, in helping programs that serve dislocated 
workers and in training the legislatively called for labor 
representatives who serve on the country's Workforce Investment Boards. 
Pennsylvania was proud to co-host the 2002 Working for America National 
Conference and we were proud that you agreed to serve as a keynote 
speaker at that conference.
    Other federal agencies--the Department of Commerce, the Small 
Business Administration, and others--spend millions of dollars 
providing assistance to the nation's employers in connecting with 
federal government programs. The fact that the Department of Labor is 
choosing not to maintain an investment in connecting labor to the 
programs it is charged with administering is out of line with this 
government practice.
    These cuts have led to even greater investments in the Institute by 
the AFL-CIO itself (the Institute is a non-partisan 501(3) (3) non-
profit organization) and by foundations but some of its historic 
objectives are most appropriately funded through the Department of 
Labor.
    Over the last three years, the Institute has already seen two of 
its programs de-funded. The first of these cuts was to their work 
assisting unions in providing dislocated worker services--a cut made at 
a time of record dislocation in our economy. That cut was followed by 
the termination of their program to help establish labor-management 
partnerships in key industry sectors--a program which had been helping 
unions and employers in the Southwest corner of our state join with 
their counterparts in Ohio and West Virginia to address the needs of 
manufacturing critical to the Ohio River Valley.
    The remaining grant from DOL supported a program of training and 
technical assistance to the network of more than 1,300 labor 
representatives who serve on the nation's state and local Workforce 
Investment Boards (WIBs). It is this work that the Department has know 
decided it will no longer support. Pennsylvania had participated 
vigorously in this program and if the decision is not reversed, the 
labor representatives serving as the voice of workers in the public 
workforce system will no longer have the assistance of the Institute in 
helping them become more effective members of their boards.
    I applaud the work that you have done to support labor as the 
statutory voice of all workers in the public workforce system, and I 
hope that those efforts will result in a reversal of the unprecedented 
decision by the Department to terminate its funding of the Institute.
    We believe that there is substantial evidence Mr. Chairman for 
continuation of both of these valuable programs and we ask for your 
support in ensuring a continued role for both the Working for America 
Institute and the Appalachian Council with the Department of Labor.
    I thank you, again, Mr. Chairman, for the opportunity to testify, 
and I look forward to answering your questions.

    Senator Specter. Mr. George, we would be pleased to hear 
that now.
    Mr. George. It is my pleasure to introduce to you now Nancy 
Mills who is the Director and part of the program that was part 
of the HRDI that was shifted over to this new program which has 
been really, really held by many Governors and their 
departments of labor.
    My relationship is because in our State, Governor, it was 
because of your efforts. If you remember, when they created the 
workforce investment boards, there was a question whether these 
local communities and counties and regions that create these 
boards should have a right to have labor unions or labor 
representatives. It was because of your efforts and others that 
we inserted that the boards should have a makeup of labor 
voices mandated by law. And so this institution was very, very 
generous in providing to us, Working for America Institute, the 
AFL-CIO, and educating our members. I am proud to say, Senator, 
you have in the State of Pennsylvania, because of the AFL-CIO 
program, qualified people sitting on workforce investment 
boards there more than any other State in America.
    So it is my pleasure to introduce to you Nancy Mills.
    Senator Specter. Ms. Mills, thank you for joining us and 
you may proceed.

                    SUMMARY STATEMENT OF NANCY MILLS

    Ms. Mills. Thank you so much, Mr. Chairman, and thank you, 
President George, for your willingness to share the podium here 
this morning.
    As I said, thank you so much for your invitation to testify 
before you this morning about the Department of Labor's 
decision not to renew its grant with the AFL-CIO Working for 
America Institute.
    You have already heard some, and I know you will hear some 
more, about the Department's decision not to renew the grant 
with the Appalachian Council, but in another action, one 
totally at the Secretary's individual discretion, the Institute 
learned in June that the Department's Employment and Training 
Administration had decided not to renew a grant given to the 
AFL-CIO Working for America Institute. This decision would 
terminate over 35 years of continuous support for the 
Institute, through Democratic and Republican administrations 
alike, to assure a voice for workers in the public workforce 
development system.
    Senator Specter, I know that you are aware of the work done 
by the Institute and its predecessor organization, HRDI. You 
have seen the work we do in supporting both joint labor 
management high road training programs like the 1199 health 
care training program in Philadelphia, in helping programs that 
serve dislocated workers, and in training the legislatively 
called-for labor representatives who serve on the country's 
workforce investment boards. The Pennsylvania AFL-CIO and the 
Philadelphia Central Labor Council co-hosted our 2002 national 
conference and we were very pleased that you agreed to serve as 
the keynote speaker at that conference.
    Other Federal agencies, the Department of Commerce, the 
Small Business Administration, and others, spend millions of 
dollars providing assistance to the Nation's employers to 
connect with Federal Government programs. The fact that the 
Department of Labor is choosing not to maintain an investment 
in connecting labor to the programs it is charged with 
administering is simply out of line with this and established 
Government practice.
    These cuts by the Department have led to even greater 
investments in the institute by the AFL-CIO and by foundations. 
The institute, by the way, is a nonpartisan 501(c)(3) nonprofit 
organization, but some of its historic objectives are most 
appropriately funded by the U.S. Department of Labor.
    Over the last 3 years, the Institute has already seen two 
of our DOL supported programs defunded. The first of these cuts 
was to our work assisting unions in providing dislocated worker 
services, a cut made at a time of record dislocation in our 
economy.
    That cut was followed by the termination of our program to 
help establish labor-management partnerships in key industry 
sectors, like the regional skills alliances that you were so 
instrumental in promoting, a program which had been helping 
unions and employers in the southwest corner of Pennsylvania 
join with the counterparts in Ohio and West Virginia to address 
the needs of manufacturing critical to the Ohio River Valley. 
We had to terminate that program as a result of the cut in DOL 
funding.
    The one remaining grant from the Department of Labor 
supported a program of training and technical assistance to the 
network of more than 1,300 labor representatives who serve on 
the Nation's State and local workforce investment boards. It is 
this work that the Department has now decided it will no longer 
support. Pennsylvania and many other States had participated 
vigorously in this program and if the decision is not reversed, 
the labor representatives serving as the voice of workers in 
the public workforce system will no longer have the assistance 
of the Institute in helping them become more effective members 
of their boards.
    I applaud the work that you have done to support labor as 
the statutory voice of all workers in the public workforce 
system, and I hope that those efforts will result in a reversal 
of the unprecedented decision by the Department to terminate 
its funding of the Institute.
    Thank you again for this opportunity to speak.
STATEMENT OF HERBERT MABRY, CHAIRMAN EMERITUS, 
            APPALACHIAN COUNCIL
ACCOMPANIED BY WILLIAM BURGA, PRESIDENT, OHIO AFL-CIO

    Senator Specter. Thank you, Ms. Mills, for your testimony.
    Our next witness is Mr. Herbert Mabry, Chairman Emeritus of 
the Appalachian Council and president emeritus of the Georgia 
AFL-CIO. He began his union career in 1950 as a member of the 
Carpenters Local 225 in Atlanta. Mr. Mabry is accompanied by 
Mr. William Burga, president of the Ohio AFL-CIO. Prior to his 
current position, Mr. Burga was subdistrict director of the 
United Steel Workers of America in Canton.
    Thank you for joining us, gentlemen, and we look forward to 
your testimony, Mr. Mabry.
    Mr. Mabry. Thank you very much. My name is Herb Mabry and I 
am past president of the Georgia AFL-CIO for 30 years and a 
member of the Appalachian Council Board practically from the 
inception of it and have been involved in the programs.
    It was in 1977 that the Council's highly successful 
national program IWEP, the industrial work experience program, 
was developed based on an early assessment of weaknesses in the 
Job Corps program. Recognizing that students could be 
successful through the course of their training program yet 
fail in their first few months on the job became the basis of 
the new program.
    Mr. Chairman, I would like to also inject in there, at that 
time, I was serving on the Board of Directors of the Martin 
Luther King Center for Social Change, and as such, I went to 
them and explained what we were trying to do and enlisted their 
help with our program because back then, it was not very 
popular to see. And my testimony will show you that for a white 
man to be escorting young men and women that were coming into 
Atlanta into certain areas of our city, to try to place them in 
meaningful employment.
    But it was in that year that the concept of the national 
support network for students was first considered and thus 
resulted in a meeting between the Council and representatives 
of the Department of Labor. The meeting took place in Jekyll 
Island, Georgia, and as a board member of the Council, I became 
part of and was integral to those discussions that we had.
    As a result of that meeting, the concept and need of Job 
Corps offering enhanced and individualized, one-on-one support 
to students, particularly with those students trained by other 
national training contractors, became a reality. Over the 
years, home-based, 24/7, hands-on staff developed good-paying, 
sustainable jobs, recruited students to fill those jobs, found 
housing and affordable transportation, and served as mentors 
and/or surrogate parents for the 90-day period. Everyone 
connected with the program, including board members lent a 
helping hand.
    I can recall after going through this. I was talking to Mr. 
Darlington. I can recall on a Saturday morning when the 
students were sent into Atlanta where we could find them 
housing. We had housing for them. And I can recall them coming 
into Atlanta on Saturday morning, and I would get up and take 
my pickup truck and I would go to the Greyhound bus station in 
Atlanta and pick those students up. And we would have cars to 
follow with the students. We would load it down with their 
belongings. Everything those young men and women owned was 
there coming with them. And a little humor: we looked like the 
Clampetts going down the road when we left that bus station 
with all of their baggage put on the truck.
    Mr. Mabry. But we found homes for them and we took them 
there and put them in.
    This service became recognized throughout Job Corps and 
today experienced staffers in Job Corps now refer to this type 
of post center support as the traditional IWEP. Everyone was 
talking about the role that IWEP had played in finding places 
for them and what they were referring to.
    Job Corps is to this day, trying to emulate IWEP's role. 
However, the effort to mirror IWEP's style of transition 
services has proven difficult for them. This is true for 
several reasons. CTS providers, like other entities, are 
limited by their historical paradigms as to what the work 
really is. Additionally, CTS staff folks are heavily burdened 
by issues of accountability and regulations and have little 
time for the direct, hands-on, 24/7 support the IWEP staff 
provided, nor can they establish the depth of relationships 
that IWEP had developed over many years with the unions, 
employers, as well as city and State governments.
    Mr. Chairman, just like every other group of people, those 
young men and women would come into the city and occasionally 
we would have one to get in trouble driving or whatever. It 
might be drinking and driving, whatever. I went to the 
courthouse and represented those people. I am not an attorney 
but I represented them with the judges. I served as chairman of 
the Fulton County Personnel Board. They all knew me, what I did 
for a living. And I would go represent those young men and 
women and get them to where they could go back to work the next 
day. And we were very successful and able to do that.
    Mr. Chairman, I can personally attest to the quality of the 
service that was provided out of the Atlanta region, and I had 
personal relationships with many of those folks over the years. 
And the dedication and commitment to the students they served 
was undeniable.

                           PREPARED STATEMENT

    Furthermore, I am aware that in January 2003, the Atlanta 
Regional Director made a surprise visit to the office in 
Decatur, Georgia at the behest of the national office of Job 
Corps and met with the staff. Later he announced at a regional 
meeting--and this is very, very important, Mr. Chairman. He 
announced at a regional meeting that the Council had the best 
CTS operation he had ever seen, and he praised the staff he met 
with and forwarded a very positive report to the national 
office. This is a strong statement, Mr. Chairman, to continue 
this valuable program and to continue a role for the Council in 
Job Corps.
    Mr. Chairman, I thank you for the opportunity of being here 
today.
    [The statement follows:]
                  Prepared Statement of Herbert Mabry
    Chairman Specter, Senator Harkin, Senator Byrd and members of the 
Subcommittee, thank you for this opportunity to testify on behalf of 
the Appalachian Council and its contract with the Department of Labor.
    It was in 1977 that the Council's highly successful national 
program, IWEP (Industrial Work Experience Program), was developed based 
on early assessments of weaknesses in the Job Corps program. 
Recognizing that students could be successful throughout the course of 
their training program yet fail in their first few months on a job 
became the basis for the new program.
    It was in that year the concept of a national support network for 
students was first considered and thus resulted in a meeting between 
the Council and representatives of the Department of Labor. That 
meeting took place in Jekyll Island, Georgia and, as a Board member of 
the Council, I became part of and was integral to those discussions.
    As a result of that meeting the concept and need of Job Corps 
offering enhanced and individualized one on one transitional support to 
students particularly with those students trained by the other National 
Training Contractors became a reality. Over the years, home based 24/7 
hands-on staff developed good paying sustainable jobs, recruited 
students to fill those jobs, found housing and affordable 
transportation and served as mentors and/or surrogate parents for a 
ninety day period. Everyone connected with the program including 
Council Board members lent a helping hand. I can recall on more than 
one occasion moving students' possessions on a Saturday morning in my 
pick-up truck.
    This service became recognized throughout Job Corps and today 
experienced staffers in Job Corps now refer to this type of post center 
support as the traditional IWEP role.
    Job Corps is, to this day, trying to emulate IWEP's role. However, 
the effort to mirror IWEP's style of transition services is proving 
difficult. This is true for several reasons. CTS providers like other 
entities are limited by their historical paradigms as to what the work 
really is. Additionally, CTS staff folks are heavily burdened by issues 
of accountability and regulation and have little time for the direct, 
hands on, 24/7 support that IWEP staff provided nor can they establish 
the depth of relationships that IWEP had developed over many years with 
unions, employers as well as city and state governments.
    Mr. Chairman, I can personally attest to the quality of the 
services that were provided out of the Atlanta Region. I had personal 
relationships with many of those folks over the years and the 
dedication and commitment to the students they served was undeniable. 
Furthermore I am aware that in January 2003 the Atlanta Regional 
Director made a surprise visit to our office in Decatur at the behest 
of the National Office of Job Corps and met with staff. Later he 
announced at a Regional meeting that the Council had the best CTS 
operation he had ever seen. He praised the staff he met with and 
forwarded a very positive report to the National Office.
    This is a strong testament Mr. Chairman for continuation of this 
valuable program and to the need to continue a role for the Council in 
Job Corps.
    I thank you, again, Mr. Chairman, for the opportunity to testify, 
and I look forward to answering your questions.

    Senator Specter. Thank you very much, Mr. Mabry.
    Mr. Burga, would you care to supplement the comments in any 
way?

                   SUMMARY STATEMENT OF WILLIAM BURGA

    Mr. Burga. Yes, Mr. Chairman, just briefly.
    I was hoping Senator DeWine would be here so I could talk 
with him.
    Mr. Chairman, there is clearly something going on at the 
Department of Labor in their denial of funding of both these 
organizations. We in Ohio are concerned in both respects.
    We also had an opportunity to talk with the Department of 
Labor about another problem as it relates to the AFL-CIO and 
labor unions, and that was the Labor-Management Reporting and 
Disclosure Act where they want to change the LM2 requirements. 
The evidence that you hear today and my sitting in the back of 
the room and listening, I think there is clear evidence that 
this Department of Labor is on a mission as regards the AFL-CIO 
in particular and any relationship that we might have or that 
might be held by other groups with the AFL-CIO.
    So I certainly respect the hearing that you are holding 
today and perhaps you can do your influence of having this 
Department of Labor reconsider these fundings because they are 
very much needed, as the record will show.
    Thank you very much.
    Senator Specter. Well, thank you, Mr. Burga.
    This is an especially busy day in the Senate because we are 
about to embark upon the August recess to give us an 
opportunity to attend the national conventions and also to come 
back to our home States and visit with our constituents. So it 
is a very busy day.
    But I will tell Senator DeWine what you said. I know he 
will be very concerned about it and will follow up.
    Mr. Burga. Thank you.
    Senator Specter. Mr. George, let me begin the questioning 
with you. I would be interested in your amplifying the comment 
you made that funds were unavailable to improve the facilities 
when the Appalachian Council was running, for example, the 
Pittsburgh Job Corps, but when the shift was made, that 
additional funds were available. I would like to know a little 
more about that.
    Mr. George. It is a program that was originated and started 
by Appalachian Council and had been there for a couple of 
years. The specific generics of that I would like to have Gary 
just maybe make a comment how that was shifted and the reason 
given to us when they did it, which I understand was no reason.
    Mr. Darlington. Senator, the transportation training 
program was a dual component program consisting basically of 
training students to have commercial driver's licenses and also 
do material handling, which is warehousing work. The program 
with the Appalachian Council was functioning. It was probably 
the top functioning program in terms of statistics during that 
time. However, it was subsequently cut in half. The material 
handling part of the program was shifted to the center 
operator.
    We had been asking for additional equipment to run that 
program. We could not get it. However, when we were no longer 
part of that material handling program, the equipment was 
available.
    Senator Specter. Thank you very much, Mr. Darlington.
    Mr. George, you made a comment which was pretty much the 
same as what Mr. Burga said, that there appears to be some 
direction by the Department of Labor against AFL-CIO. I would 
be very interested in both of you gentlemen amplifying what you 
have seen there and what you think may be the causes of it.
    Mr. George. Well, I mean, it is obvious--and I think maybe 
Jim Bowen may have a comment too--at least from my State of 
Pennsylvania in the last 3 years--at least for the last 2 
years. It has been 3 years. 2 years since I have felt it 
personally. It is not only the LM3 form reporting, which is a 
burdensome process on local unions, which are 2,600 local 
unions in the State of Pennsylvania. They report by government 
entities on a biannual year on their audits and their stuff 
that takes place to the Department of Labor under the NLRB and 
stuff that is taking place. It got streamlined. That was 
satisfied for many, many years during Republican and Democratic 
administrations with a lot of information that any malfeasance 
was in those reports where by investigation was easily picked 
up.
    The Department has decided to try to invoke--I guess it is 
on hold here or we are going see it--I do not know if it is 
going to go or not. But during the election, it seems it got 
quiet, but up until the spring, you and several other Senators 
was inquiring why was this being done to the point there would 
be 43 pages of reporting from the time that you would walk to 
the bathroom, to have to mention the cost of the toilet paper 
that was put into the men's room, and a number of meaningless, 
meticulous time that would have to be spent. And an accounting 
firm had predicted that every local union with over 100 members 
would be required to have an accountant go over this tremendous 
amount of questioning that would take place that would have to 
be filled out. So that was one occasion that we have seen.
    The second occasion, of course, is what you have heard 
here, the two great institutions that has been here over 35 
years just, at least in our opinion for no justifiable reasons, 
being wiped out.
    The other, Senator, is one that you were caught up in, as 
you and I were aware. Unfortunately, for the State of 
Pennsylvania, we were probably hit as hard as anybody with the 
unbalance of trade and the incoming of trade into the State of 
Pennsylvania. In the last 3 years, we have lost 200,000 jobs. 
Of course, a lot of that was giving training monies, TAA and 
TRA money that came out of the Department of Labor, because of 
the Department of Labor certifying industries that were 
impacted by trade automatically entitled people to be able to 
get those training monies. Unfortunately, because of no reason 
and everybody running around for the first 3 months of 2001, we 
were delayed $20 million. A cost of over 250 participants in 
the TRA and TAA program were immediately denied in any programs 
that could take place. So we had no initiative programs from 
January, February, March, and April of that year that people 
could get into the programs.
    We have never had that since the inception in the 1980's of 
TAA and TRA. It just makes you wonder, when you have those kind 
of things impacting you in your particular State, why was this 
taking place. It did not happen in any other State to my 
understanding. In fact, it is my understanding that four other 
States who had not used their money up in mid-year is when the 
Department of Labor went and took the money out of those States 
and put it into Pennsylvania. At least there is a letter out by 
the U.S. Department of Labor saying that they would allocate 
the money.
    You were very much involved in it because it was a tidal 
wave to all of the members of the general Congress here that 
their constituency were being denied continuing education 
programs.
    So that is some of the reasons why we feel that there seems 
to be a prejudice, an initiative by this Secretary of Labor to 
look at an institution that has been a standing institution in 
this Nation and has been part of the rebuilding of this country 
not only by labor unions, but in the community standing up in 
order to make greater training programs and enhancing the 
quality of life for all Americans.
    By the way, all of our institutions are nonprofit. There is 
no money-makers here. We do not have shareholders. We do not 
have stockholders like a couple of other people that play in 
these programs do.
    Mr. Burga?
    Senator Specter. Mr. Burga, would you care to respond?
    Mr. Burga. I would just like to say a couple of things, Mr. 
Chairman.
    Two big elements that we see showing this problem is a lack 
of communication prior to their decision-making. I think the 
record shows it here and it shows it on the Appalachian Council 
and also the Working for America Institute. You would have to 
check with them, though, as to why they do the things they do. 
I cannot give you any factual reason. But talking with the AFL-
CIO officers, they do not get notice about what the Department 
of Labor intends to do until after the Department of Labor 
decides to do it. Neither did the Appalachian Council. They do 
not even respond to you, Mr. Chairman, when you send them 
letters. I do not know why they are acting this way. But the 
record is clear the way they are acting, and it is not 
conducive for good relationships. It is not conducive for the 
American workers. So other than that, I cannot respond.
    Senator Specter. Thank you.
    Mr. Mabry. Mr. Chairman?
    Senator Specter. Mr. Mabry, let me give you a question and 
then you can make a comment.
    In evaluating these programs in Georgia--and I will come to 
Mayor Baker in Mississippi--the question comes to my mind as to 
whether there is not a very heavy participation by minorities 
looking for the job training, and then the issue of starting 
salary is likely to be lower than might be expected if you are 
not dealing with minorities in depressed areas. I would like 
you, Mr. Mabry, and then you, Mayor Baker, to comment on a 
couple of States in the deep South as to whether that in fact 
is not true.
    Mr. Mabry. Well, thank you, Mr. Chairman. It is true 
because the Appalachian Council is made up, as you well know, 
of North/South Carolina and then Georgia, Alabama, Mississippi, 
Tennessee, and they are right to work States. Then when we go 
in and try to place these young men and women in these places, 
the first reaction from the employer in a lot of cases is that 
we are sending in people to try to organize their employees.
    Senator Specter. So in a right to work State, it makes it 
even more difficult.
    Mr. Mabry. It makes it more difficult.
    Senator Specter. That is a phenomenon of some of the 
States, but not in others where these statistics would be.
    How about it, Mayor Baker? Do you find the same situation?
    Mr. Baker. Senator, I am probably not qualified on that 
point to answer your question, sir. I will tell you, as I 
stated earlier, the Appalachian Council has been involved since 
this center in Batesville, Mississippi opened in 1981. From all 
we have ever been told by the Department of Labor and others 
was the Appalachian Council was doing a great job in training 
and placement.
    Senator Specter. Mr. Bowen, I was impressed by your 
testimony generally, but when you used the language of a plan 
to intentionally impede the Council's capacity to be 
successful, I would like you to expand upon that, if you could.
    Mr. Bowen. Yes, sir. As explained by my good friend, Bill 
George, and Bill Burga, some of the incidents that caused me to 
form that kind of an opinion, I think the testimony heard prior 
to our group providing testimony in respect to the inability 
and the failure to contact our people in respect to areas that 
may be deficient, even though I certainly question because, 
Senator, the chart I referred you to that is in the record is 
from the numbers from the Department of Labor, not our numbers. 
We did not create them.
    The incidents referred to by Brother George in respect to 
the LM3, in respect to our program, in respect to the AFL-CIO 
Institute for America--the workforce investment part is 
fantastic. In our State we are certainly minorities on those 
committees in number, but we are very strong because of the 
education that was provided for the labor members of WIA. And 
we are dramatically having major problems in the TAA arena 
because we do not have the funds for our training.
    And all this causes me to be very suspicious of the actions 
of the Department of Labor in this particular matter, and that 
is why I made that statement, sir.
    Senator Specter. Thank you, Mr. Bowen.
    Senator Byrd could not be here this morning. He sent word 
that his wife is ill, and that he asked that his statement be 
included in the record which will, without objection, be made a 
part of the record.
    [The statement follows:]
              Prepared Statement of Senator Robert C. Byrd
    Thank you, Mr. Chairman, for holding this hearing. I think it's 
important that the Labor Department publicly explain its decision to 
cancel the Appalachian Council's contract, and I doubt such an 
explanation would ever have been made had it not been for your interest 
in the matter.
    The Labor Department notified the Appalachian Council on February 
26, 2004, that its contract would terminate on April 30--giving the 
Appalachian Council only 60 days notice.
    In reading that letter, I am reminded of life in the old coal 
company towns of Southern West Virginia, when the coal company owned 
everything, even the homes in which the miners lived. I remember the 
letters miners would receive terminating their employment. David 
Corbin's book Life, Work, and Rebellion in the Coal Fields cites an 
excellent example of a coal company terminating a miner's job.
    I quote from a letter dated November 26, 1923. It reads: ``This is 
to notify you that we will not be in need of your services any longer 
after this date. You are further notified to surrender the possession 
of the house you now live in on or before January 1, 1924.''
    That's how I read the Labor Department's termination letter to the 
Appalachian Council. After thirty years of service, the Labor 
Department provides sixty days notice that the Appalachian Council's 
services are no longer needed and orders them to vacate the premises.
    In March, I wrote a letter to the Labor Secretary asking her to 
reconsider her decision. I didn't receive a response until April 28--
two days before the Appalachian Council's contract was set to expire, 
and even then it was a response that said nothing.
    Given the manner in which this contract was terminated--the lack of 
notice given to the Appalachian Council, the delay in responding to 
Senators' inquiries until the last possible moment--it's no wonder the 
Appalachian Council feels as though it has been unfairly targeted by 
the Labor Department. At the very least, the manner in which this 
contract was canceled was done in a way to keep the Congress at arms 
length, and that bothers this Senator a great deal.
    Thank you again, Mr. Chairman, for reminding the Labor Department 
that their decisions are not exempt from Congressional oversight.

    Senator Specter. He focuses on the importance of the 
hearing and calls for an explanation of the decision to cancel 
the Appalachian Council's contract. He says, ``I doubt such an 
explanation would ever have been made had it not been for your 
interest in the matter.''
    I want to include also a copy of Senator Byrd's letter to 
Secretary Chao dated March 19, 2004.
    [The letter follows:]
                                       U.S. Senate,
                               Committee on Appropriations,
                                    Washington, DC, March 19, 2004.
Hon. Elaine L. Chao,
Secretary, U.S. Department of Labor, 200 Constitution Avenue, N.W., 
        Washington, DC.
    Dear Secretary Chao: I am concerned about the Labor Department's 
recent decision to not renew or extend its sole source contract with 
the Appalachian Council-AFL/CIO, following the expiration of its 
current contract on April 30, 2004.
    The Appalachian Council's National Programs have been in continuous 
operation since 1974 and can boast of an impressive performance record. 
This unique program has served over 100,000 Job Corps students since 
1974. I am particularly proud of the Appalachian Council's Auto 
Mechanics program at the Charleston Job Corps Center that has been 
recognized as one of the top trades at that Center. Furthermore, the 
Appalachian Council's Industrial Work Experience Program has received 
Job Corps' highest ratings.
    For thirty years, the Labor Department has contracted with the 
Appalachian Council, and, for thirty years, the Appalachian Council has 
had an exemplary performance and accountability record.
    I strongly urge you to reconsider your decision to cancel the 
Appalachian Council's contract, and I thank you in advance for your 
personal attention to this matter.
    With kind regards, I am
            Sincerely yours,
                                                    Robert C. Byrd.

    Senator Specter. Ms. Mills, your testimony about the 
Working for America Institute I think is very important. As you 
noted, I keynoted that event and have attended many events. One 
was especially prominent that I went to with Henry Nicholas in 
Philadelphia on District 1199(C) of the National Union of 
Hospital and Healthy Care Workers of AFSME, a very impressive 
program where 61 major health care employers placing graduates 
in higher skilled jobs in which there is great demand.
    There were a great many nurses there that day. I was 
especially struck by it because I chaired the Veterans Affairs 
Committee and the veterans hospitals, as our hospitals 
generally in America, have a very short supply of nurses, being 
required to work overtime to care for the elderly in very, very 
difficult circumstances.
    I note the headline in today's business section of the Post 
about Chairman Greenspan saying that wages are down because 
people are not skilled. I speak frequently at high schools and 
develop the approach of the importance of developing skills and 
tell the young people there are great opportunities if you are 
skillful and analogize America to Noah Webster's example. The 
world is like a pyramid. There is a lot of room at the top and 
it is very crowded at the bottom. I know, having had a large 
staff in the Philadelphia District Attorney's Office and as a 
U.S. Senator, we are always searching for people with skills.
    So I am very much concerned about what is happening. We are 
going to be pursuing this matter. We are going to be putting 
the questions to the Department of Labor as to what is 
happening here.
    We are starting three votes right now at 11 o'clock. One of 
the difficulties of scheduling matters in the Senate is that 
the votes take precedence over everything else. No matter where 
you are, if you are meeting with the President and the bell 
rings for a vote, that is our principal occupation, is voting.
    But I think this has been a very informative session, and I 
am going to call upon Secretary Chao to review this decision. 
We have yet to fund the Department for next year, and there is 
always a certain amount of persuasion that comes from the purse 
strings on the Appropriations Committee. I chair this 
subcommittee. It is a very important subcommittee on capital 
assets where education and health are major capital assets and 
the workforce is a gigantic capital asset.
    As I noted earlier, Senator Stevens rotates off of this 
committee's chairmanship at the end of this year. There are 
term limits. And Senator Cochran will then become chairman. I 
am going to tell him about your testimony, Mayor Baker. I know 
he would have wanted to have been here. And then I am in line 
to be chairman of the full committee thereafter, and the 
insights that I have had serving as the subcommittee chairman 
are very, very valuable.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Specter. There will be some additional questions 
which will be submitted for your response in the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
             Questions Submitted by Senator Robert C. Byrd
        notice of cancellation of appalachian council's contract
    Question. The Appalachian Council's contract was canceled with only 
60 days notice. How much notice is typically given before canceling a 
sole-source contract?
    Answer. There are no minimum requirements related to advance notice 
in the Federal Acquisition Regulations (FAR). The Appalachian Council 
was provided with written notification of the non-renewal action 64 
days prior to the close of the contract on April 30, 2004.
    The Appalachian Council has had long-standing performance issues, 
and the organization was aware of the Department of Labor's concerns 
with its performance. Under the circumstances, we believe that 
providing 60+ days notice was appropriate.
       date of decision to cancel appalachian council's contract
    Question. The letter alerting the Appalachian Council that its 
contract had been canceled was sent on February 26, 2004. When did the 
Employment and Training Administration make the decision to cancel the 
Appalachian Council's contract?
    Answer. In the Fall of 2003, the Department of Labor extended the 
Appalachian Council contract from November 1 through December 31, while 
a decision regarding contract renewal was being made. The final 
decision was reached in January 2004, and the Council was notified via 
letter the following month.
    notification to appalachian council regarding sole-source status
    Question. According to the time line you provided my office, the 
sole-source status of the contract was being questioned as far back as 
June 2003. Why was the Appalachian Council not notified before February 
26th that its sole-source status was in danger?
    Answer. A final decision was not reached until January 2004. 
However, the Appalachian Council experienced performance problems 
throughout the period of the contract, which began on 11/1/98 and ended 
on 4/30/04. For example, five vocational programs run by the Council 
were closed by the end of Program Year 2002. The closings, as well as 
other sanctions imposed on Council programs, were preceded by extensive 
discussions and/or correspondence between Council officials and 
Department of Labor National and Regional Office staff.

                         CONCLUSION OF HEARING

    Senator Specter. Thank you all very much for being here. 
That concludes our hearing.
    [Whereupon, at 11:02 a.m., Thursday, July 22, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

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