[Congressional Record Volume 142, Number 77 (Thursday, May 30, 1996)]
[House]
[Pages H5741-H5743]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
REQUEST OF PRESIDENT TO USE STATUTORY AUTHORITY TO SUSPEND DAVIS-BACON
ACT FOR REBUILDING EFFORT IN OKLAHOMA CITY
The SPEAKER pro tempore. Under a previous order of the House, the
gentleman from Oklahoma [Mr. Lucas] is recognized for 5 minutes.
Mr. LUCAS of Oklahoma. Mr. Speaker, I yield to my friend from Georgia
a few seconds.
Mr. KINGSTON. Mr. Speaker, I thank the gentleman from Oklahoma for
yielding.
Had the gentleman from Texas yielded, what I wanted to point out is
that the Republican Party, acting in a spirit of bipartisanship, is
taking the President of the United States at his word on the Wisconsin
waiver and we are going to have that bill on the floor of the House.
I am surprised, as I listen to these Democrats, that they are against
it because it was President Clinton's idea. I wanted to make sure that
folks know we are doing exactly what President Clinton called for and
that no Democrats have expressed any outrage until suddenly tonight.
I thank the gentleman.
Mr. LUCAS Mr. Speaker, I think the gentleman's point is well taken.
Mr. Speaker, on July 27, 1995, President Clinton signed Public Law
104-19 which appropriated $39 million in Community Development Block
Grants [CDBG] to assist citizens of Oklahoma City with meeting the
financial hardships created by the bombing of the Alfred P. Murrah
Federal building. This truly was the proper Federal response to a
presidentially-mandated national emergency. Never before had Congress
passed, and the President signed, legislation utilizing CDBG funds in
this manner. An act of terror of this magnitude forces all of us to
reflect on the standard operating procedures under which we, as a
government, react to national emergencies. At this time, I am asking
the President and the rest of the Federal Government to diligently
reflect on how best we can restore Oklahoma City to where it was before
9:02 a.m. of that fateful day.
Mr. Speaker, as millions of people around the Nation joined the city
of Oklahoma City on April 19 to remember those killed and injured in
the bombing of the Alfred P. Murrah Federal building, they may have
noticed the number of buildings that remain as damaged today as they
were immediately following this tragic event.
On April 17 of this year, I sent a letter to President Clinton
pointing out that there are major obstacles to fully utilizing the CDBG
funds in the rebuilding effort and asking for his assistance in freeing
up these funds to rebuild Oklahoma City. Specifically, I asked that he
use his statutory authority to suspend the Davis-Bacon Act for these
funds. It is my belief that in a unique situation such as what occurred
in Oklahoma City, this authority
[[Page H5742]]
should be used. In fact, FEMA appropriations are not subject to Davis-
Bacon to ensure that relief efforts can be accomplished in an
expeditious manner so that the focus can be on rebuilding the
communities affected. The funds appropriated to Oklahoma City should be
seen in this light, which would warrant the suspension of Davis-Bacon.
To date I have received no response from the White House; by not
responding to this request, President Clinton has ignored the request
of Oklahoma City which has appealed to me for assistance in this
matter. Last week, armed with specific case examples from Oklahoma
City, I sent a second letter which again asked the President to
exercise his authority to suspend this act. One example stated Davis-
Bacon raised the costs of the project by 75 percent, and the city
estimates that all project costs rise by an average of 25 to 40
percent. These are dollars that do not go toward disaster relief, but
which are badly needed by the people of Oklahoma City.
According to title 40, section 276a-5 of the U.S. Code, ``In the
event of a national emergency, the President is authorized to suspend
the provisions of the Davis-Bacon Act.'' On the day of the bombing, the
President issued a release stating that the bombing was a national
emergency. I agreed with him and welcomed his pronouncement.
Mr. President, I ask you to take the next step and suspend the Davis-
Bacon Act today. The sooner this is done, the sooner Oklahoma City will
be able to fully utilize the money appropriated them last year.
I understand that Davis-Bacon is a politically charged issue and that
this is a campaign year, but I maintain to the President that my motive
for this request is not to repeal the Davis-Bacon Act, but to utilize
the act to its fullest.
My point is that, in disaster situations, like what happened in
Oklahoma City, the primary role of the Federal Government is to ensure
that the fewest number of restrictions are placed on relief workers and
small businesses. Had Oklahoma City received money from FEMA instead of
from HUD, as disaster relief funds normally are, Davis-Bacon
requirements would not have applied. Therefore, I feel this is a
reasonable and nonpartisan request. I stand here today, as a
representative of the people from Oklahoma City, who simply want to use
the Federal relief funds in the matter that relief funds have
historically been used.
Presidents Roosevelt, Nixon, and Bush, used this section of the law
to suspend Davis-Bacon. Though there clearly is a precedent for
suspending Davis-Bacon, there is no precedent for what occurred in
Oklahoma City.
My question is simple: Mr. President, what will it be, yes or no?
Mr. Speaker, the letters of the President referred to earlier are
included for the Record.
House of Representatives,
Washington, DC, April 17, 1996.
Hon. William J. Clinton,
President of the United States,
Washington, DC.
Dear President Clinton: As we approach the one year
anniversary of the tragic bombing of the Alfred P. Murrah
Federal Building in Oklahoma City, I want to take the
opportunity to relate to you certain problems that have
slowed down the utilization of the $39 million in Community
Development Block Grant (CDBG) funds by businesses and
individuals. A similar letter has also been sent to Secretary
Reich and Secretary Cisneros.
First, I want to emphasize that the people of Oklahoma,
myself included, will forever be indebted for the federal
response to this unprecedented act of terrorism. In fact, it
is because of this rapid response that I feel that this issue
must be addressed. As you know, Oklahoma City received $39
million in CDBG funds through the Department of Housing and
Urban Development. Secretary Cisneros worked closely with
myself and others to find offsets in this section of the
budget and worked very hard to assure that the City would
have flexibility in its use of this money.
At present, this money is subject to The Davis-Bacon Act,
which requires small businesses to comply with Davis-Bacon
reporting requirements and pay local prevailing wages for
work associated with cleaning up and rebuilding the
devastated area. The City of Oklahoma City has estimated that
Davis-Bacon increases the cost of these projects by 25-40
percent and produces long delays. Even employees who want to
help rebuild their workplace have to be certified under
conditions of the Davis-Bacon Act and be paid as though they
were general contractors. Like you, I want maximum
utilization of the CDGB funds to rebuilt the City. Under
these conditions, I fear that the $39 million will not be
sufficient to rejuvenate Oklahoma City.
In Title 40, Section 276A-5, United States Code, the
President has the authority to suspend the Davis-Bacon Act in
times of national emergency. As you are aware, the Oklahoma
City bombing was declared a national emergency on April 19,
1995. I am requesting that this authority be used. I am not
advocating any statutory changes to be made to this Act, nor
do I want this request to be seen as a testament to Davis-
Bacon; however, in times of national emergency, appropriated
funds should solely be directed for relief efforts. I'm
afraid that currently that is not the case.
If this action is not desirable to the administration, I
would recommend substantially increasing the threshold for
Davis-Bacon projects so that small contractors can bid on
this work. This would also allow small businesses to use
their own employees to clean up and rebuild their stores.
Again, this would only apply to the CDBG funds in Oklahoma
City.
If this is done, I believe we owe it to the businesses and
the community to set up an on-site verification process to
immediately certify workers so that these relief projects can
be expedited. This would not address the higher costs for
these projects, but would allow them to commence work.
I believe that a solution to this problem can be achieved.
The aftermath of the Oklahoma City bombing is a tremendous
illustration of how federal, state, and local officials can
work together and work with the community to address a
disaster. I hope that this cooperation continues, and I thank
you for your consideration of my requests.
Sincerely,
Frank D. Lucas,
Member of Congress.
____
Congress of the United States,
House of Representatives,
Washington, DC, May 23, 1996.
Hon. William J. Clinton,
President of the United States,
Washington, DC.
Dear Mr. President: On April 17, 1996, a request was made
for your further assistance in rebuilding Oklahoma City after
the bombing of the Alfred P. Murrah Federal Building. As a
unique and tragic event, the bombing has no parallel or
precedent, which requires vigilance among citizens and public
officials to continue our efforts to heal our broken
community.
To date, I have not received a response from you regarding
the City of Oklahoma City's request for a suspension of the
Davis-Bacon Act (the Act) requirements as it relates to the
CDBG funding for bombing relief. Title 40, Sec. 276a-5
(U.S.C.), provides the President authority to suspend the
Act's requirements in times of a national emergency. On April
19, 1995, you declared a national emergency for Oklahoma
City. Based on your tour of Oklahoma City on April 5 of this
year, you know firsthand the extent of the damage that still
exists one year later. Thus, quick action to our request will
accelerate the recovery effort.
Recently, I received an interim response from Assistant
Secretary DeCell of the Department of Housing and Urban
Development, which was lacking in relevance and understanding
of our problem. Hopefully, HUD's cursory examination will not
weigh too heavily on your decision to grant our suspension
request.
During staff discussions with HUD, it was mentioned that no
precedent exists for such a suspension. In fact, President
Roosevelt, Nixon and Bush have granted it on three occasions.
Additionally, I trust you will agree that no precedent exists
for what occurred in Oklahoma City and any reliance on past
situations are not analogous or relevant.
The following are a sampling of real life examples of how
the Act is constricting the rebuilding efforts. The increased
costs are undeniable. The city of Oklahoma City has submitted
a request for an additional $26 million in bombing relief.
This subsequent request underscores the urgency in maximizing
the relief funds already available to Oklahoma.
1. The use of a single ``prime contractor'' increases the
cost of the project because the prime contractor will add
overhead costs for subcontracting, administrative expenses to
complete the Davis-Bacon compliances and profit.
2. Most Davis-Bacon wages in Oklahoma City exceed the wage
that is usually paid in the open market.
3. Because Davis-Bacon sets specific wages for specific
trades, the general laborer, employed by a small business,
may perform several tasks during his daily shift. In a given
day, the employee may use a backhoe, a shovel and frame walls
in a building. Each trade classification has a different wage
rate which must be documented with the number of hours worked
in each classification. This means that in an eight hour day,
the employee could use a shovel for 1.5 hours @$7.37 per
hour, use a backhoe for 45 minutes @14.06 plus $3.49 in
fringes/ per hour and frame a building for 5.45 hours @$11.90
per hour.
4. City staff have been told that if an employee is working
at a higher wage classification, the employee must be paid at
the highest wage rate regardless of the work being performed
(See Asbestos removal).
5. Davis-Bacon does not take into account merit and
longevity of employees and their corresponding wages. All
employees are paid the same minimum wage regardless of
experience. An employer could pay more than the
[[Page H5743]]
minimum wage to more senior employees, but that is unlikely
given that the minimum wage is usually more than the most
senior employee makes on projects not subject to Davis-Bacon
wages.
6. According to the Department of Housing and Urban
Development, repairs to bomb-damaged buildings completed
before October 30, 1995, are not subject to Davis-Bacon
wages. Any project after that date is subject to Davis-Bacon.
If the work has been completed by the property owner and the
contractor has been paid and his employees have been paid:
(a) What incentive does a contractor have to recalculate
all of his employee hours at the Federal Wage rate?
(b) If a contractor does not want to re-figure his wages,
what recourse does an owner have to get reimbursed? (The
contractor has been paid, why spend the time to re-figure?)
(c) When the contractor does comply, he will add overhead
and profit to his costs making the job even more costly.
7. The $2,000 threshold for Davis-Bacon projects is too
low. If you have two items to replace such as a window and an
overhead door, the total cost may only be over $2,000. Each
contractor will spend an hour or less on the job to install
the products. Most of the bid is for the product, not the
labor. A small independent contractor or small business owner
will spend three days filling out paperwork for an hour-long
job (See 1 NW 12th Example).
examples
311 N. Harvey--original bids:
Ward Construction..............................................$2,900
Southwestern Roofing...........................................21,398
__________
Total........................................................24,298
Revised Davis-Bacon bids (11% increase)........................27,000
==========
_______________________________________________________________________
520 N. Hudson--original bids:
Brat Paint......................................................5,434
Mike Harper.......................................................675
King Electric...................................................3,045
Mid-American Roofing...........................................32,134
__________
Total........................................................41,288
Revised Davis-Bacon bids (One Prime Contractor) (44% increase).59,398
==========
_______________________________________________________________________
225 NW 6th--original bids:
Overhead Door...................................................1,600
Mid-American Roofing...........................................37,578
__________
Total........................................................39,178
Revised Davis-Bacon Bids (One Prime Contractor) (25% increase).48,920
==========
_______________________________________________________________________
408 NW 6th--original bids:
Central Glass...................................................7,209
Bob Growan (exterior paint).....................................2,305
Ed Orr (replace ceiling).......................................11,900
__________
Total........................................................21,459
Revised Davis-Bacon Bids (75% increase)........................37,720
==========
_______________________________________________________________________
In this case at 408 NW 6th, the property owner obtained the
low bids above from individual contractors. The owner had
also completed some minor reimbursable repairs prior to this
bidding. The owner was told that he would have to rebid the
project with the required wage rates and that he could only
sue one ``prime contractor'' on projects where Davis-Bacon
wage rates are in effect. The results of bidding the same
work with general contractors and Davis-Bacon wage rates, is
provided. This is an increase of $16,261 or 75% for the same
work.
Although this may be an extreme case, history with our
program shows most increases due to wage rate requirements in
the range of 8-50%, it is indicative of the possible cost
increase that can result from a combination of wage rate
requirements and the use of general contractors on small
jobs. The property owner was not surprised that the price
increased significantly, but was baffled that we required him
to do this. His question was why? To be honest, I don't know,
other than ``that is the federal requirement.''
1 NW 12th Street: Taylor's Downtown Glass gave a bid of
$433.23 to replace a window in a downtown building. It will
take less than 30 minutes to perform the task. Tull Overhead
Door gave a bid of $3,597.00 to replace an overhead door. The
contractor will spend less than an hour installing the
product. Taylor's Downtown Glass spent three days filling out
the paperwork and has to keep track of the entire week of
payroll for a job that takes less than 30 minutes. Tull
Overhead Door spent costly time attending a pre-work
conference that was required even though he had done Davis-
Bacon work before.
Asbestos Removal: The federal wage rate for Asbestos
Workers is $18.00 per hour plus $5.13 in fringes. The problem
is that local asbestos abatement companies only pay that rate
to employees when working in full containment garments
(``moon suits'' with respirators). Otherwise they pay them at
a regular common laborer rate or a wage rate that corresponds
to their other job.
However, according to Davis-Bacon Rules, the abatement
workers must be paid as such when they are driving a truck,
unloading lumber and building containment areas, load out
areas, etc. This will increase the asbestos abatement cost
significantly and our project designers are amazed that this
rule must be followed.
conclusion
The point of the examples provided in this letter is that
there is a substantial cost factor involved in implementing
this program with Davis-Bacon prevailing wages, and I feel
the money would be better spent providing additional
assistance to those who were damaged. In addition, the fact
that we must pay these wage rates with the accompanying
reporting paperwork for businesses and additional City staff
costs, frequently adds to the frustration of those who we are
trying to help. Business and property owners often state that
this is just another example of the government doing
everything slower and at an increased cost. Unfortunately, I
must agree with them.
I realize that there may be a reluctance to suspend Davis-
Bacon wage rates for these funds. Although, I do find it
interesting that if Oklahoma City had obtained funding
through the Federal Emergency Management Agency (FEMA), as is
typical in a disaster area, federal Davis-Bacon wage rates
would not apply. However, because Congress designated
Community Development Block Grant Funds (CDBG) for this
unique disaster, HUD requires all construction projects with
a total project cost of $2,000 or more to pay Davis-Bacon
wages. In general, if the intent of the FEMA policy is not to
burden those affected by a disaster or emergency with Davis-
Bacon requirements, then I feel that the same policy should
apply to the unique situation in Oklahoma City.
Your attention to this matter is truly appreciated. I look
forward to our continued cooperation in assisting those
damaged and providing for the revitalization of the areas
affected by the bombing.
Sincerely,
Frank D. Lucas.
____________________