The right to equal employment opportunity is vital to the continued health of our social and economic system. The Federal government cannot contribute to the denial of this right through blind acceptance of customs and traditions which limit the contributions and talents of groups of people. The Federal government has the authority and the duty to insure fair play for all of its citizens in the expenditure of public tax monies.

No one plan will ever be completely effective in achieving the goal of equal employment opportunity. The Revised Philadelphia Plan is a significant step in the right direction. Both the public and private sectors and all of the parties concerned will need cooperatively to pursue the implementation of the Plan in the various localities.

We believe that employment opportunities must be enlarged for all Americans, and that what is at stake here is something more than equal employment opportunity in a specific industry or craft.

We recognize that in the long run the economic rights of minorities cannot be fully realized apart from an expanding economy which affords full employment opportunities for all Americans.

We believe that the present efforts thus far taken by unions, contractors, and community leaders at bringing minority group workers into the construction crafts will be strengthened and accelerated by the Revised Philadelphia Plan. We have faith in the ability of all the parties involved to devise the solutions needed to make the Plan effective in communities across the country. And we are convinced that the outcome will work to the ultimate benefit of both communities and of our nation.

We respectfully request the enclosure of our remarks and the attached memorandum in the transcript of the hearings held before the Senate Judiciary Subcommittee on the Separation of Powers of October 27 and 28, 1969. Sincerely,

JOHN W. GARDENER,

Chairman.

NICHOLAS DE B. KATZENBACH, Chairman, Law and Government Task Force.

MEMORANDUM IN SUPPORT OF LEGALITY OF PHILADELPHIA PLAN This Memorandum is submitted in support of the legality of the Department of Labor's order of June 27, 1969, entitled "Revised Philadelphia Plan for Compliance with Equal Employment Opportunity Requirements of Executive Order 11246 for Federally Involved Construction" as further implemented by an order of the Department of Labor dated September 23, 1969, which orders have been issued to implement Executive Order 11246 of September 24, 1965, as amended (hereinafter referred to as the "Philadelphia Plan.")

The Attorney General of the United States and the Solicitor of the Department of Labor have both given opinions that the Philadelphia Plan is legal. The Comptroller General has concluded that the Plan is in conflict with the Civil Rights Act of 1964.

I. DESCRIPTION OF PLAN

The Philadelphia Plan, issued in implementation of the provisions of Executive Order 11246 and regulations thereunder, is applicable to 6 counties in the Philadelphia area. Under the Plan, no contract shall be awarded for Federal or Federally-assisted construction projects where the cost exceeds $500,000, unless the bidder submits an acceptable affirmative action program which includes specific goals of minority manpower utilization in the six trades specified in the Plan, which program meets the standards set forth in the invitation for bids.

The Plan provides for including in the invitation for bids specific standards setting forth a range of minority manpower utilization for the designated trades to be used in the performance of the contract. In determining the range of minority manpower utilization that should result from an effective affirmative action program, the Department of Labor has given weight to the following:

1. The current extent of minority group participation in the trade.

2. The availability of minority group persons for employment in such trade. 3. The need for training programs in the area and/or the need to assure demand for those in or from existing training programs.

4. The impact of the program upon the existing labor force.

The range so determined is then included in the invitation for bids. A contractor must include in his bid a goal as to minority utilization which is at least within the range. If he fails to submit a goal, or the goal submitted is short of the range, his bid will be rejected as nonresponsive.

The Department of Labor found that this type of affirmative action program is necessary in the affected Philadelphia area due to two critical considerations: (1) Contractors must hire a new employee complement for each construction job. After the job is over the contractor's complement of employees dissolves, so that even if he had hired a number of minority group employees, those employees would not carry over to the next job. It is therefore necessary to achieve equal employment opportunity on each construction job separately.

(2) Because of the nature of the construction industry, contractors rely on the construction craft unions as their prime or sole sources of labor. Collective bargaining agreements frequently provide for exclusive hiring halls. Even where the collective bargaining agreement contains no such hiring hall provisions, as a practical matter, most people working on the construction jobs are referred to the jobs by the unions.

The Department of Labor further found that the labor organizations in the six specified trades have traditionally engaged in practices, including discrimination in admission to membership and apprenticeship and discrimination in referral, which have resulted in there being only a small number of Negroes in these trades, and that such discriminatory practices are now being continued. The Department of Labor also found that present minority participation in the designated trades is far below that which would have reasonably resulted had there been participation in the past; that a significant number of minority group persons is presently available for employment as journeymen, apprentices or other trainees; that there is a need for training programs for minority persons; and that "a contractor could commit himself to hiring minority group persons up to the annual rate of job vacancies for each trade without adverse impact upon the existing labor forces in the designated trades." Even where current practices are no longer explicitly discriminatory, other "neutral" practices, such as the granting of referral priorities to persons who have work experience under union contracts, necessarily result in few Negroes being referred for employment and perpetuate the results of prior discrimination. Section 8.a. of the Plan provides that a contractor will be presumed to be in compliance if he meets his goals. However, a failure of the contractor to meet his goals is not a per se violation, since employment of the number or percentage of personnel listed in the range set forth in the invitation for bids is a goal not an absolute requirement. Thus a contractor who has not met his goal is given an opportunity to show that he has made good faith efforts to do so. It he can show he has made such efforts measured by criteria specified in the September 23, 1969 order, no consequences flow from such failure.

II. APART FROM THE CIVIL RIGHTS ACT, THE PHILADELPHIA PLAN IS
UNQUESTIONABLY LEGAL

Executive Order 11246 is the successor to a number of Executive Orders forbidding firms that contract with the United States to discriminate in their employment practices, the earliest being Executive Order 8802 (6 Fed. Reg. 3109, (1941)). That order required a clause to be inserted in all defense contracts, barring employment discrimination by the contractor on the basis of race, creed, color or national origin. Subsequent executive orders have expanded both the substance of the nondiscrimination obligation and the number of contractors subject to it. Executive Order No. 10925 (26 Fed. Reg. 1977, (1961)) required both a nondiscrimination clause and a further provision obligating contractors to undertake “affirmative action" to ensure equal job opportunity. In terms of coverage, the executive order has been expanded from defense contracts to include federal contracts generally, subcontracts of federal contractors, and federally-assisted construction contracts.

Under Executive Order 11246, every government contractor and subcontractor must give assurance that he "will not discriminate because of race" and that he "will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race. Such action shall include ... employment, upgrading, demotion or transfer.

The Executive Order has been implemented primarily by the inclusion in all government contracts of general guarantees of nondiscrimination, and by

the requirement of such guarantees in all related subcontracts (Section 202). In addition, the Office of Federal Contract Compliance of the Department of Labor (OFCC), the agency charged with overseeing implementation of the order, has with increasing frequency negotiated supplementary agreements which deal specifically with the contractor's obligation of nondiscrimination. See e.e., Crown Zellerbach Corp. v. Wirtz, 281 F. Supp. 337 (D.D.C., 1968). If a company fails to comply with its obligations, its government contracts can be cancelled and it can be barred from further government contracts.

The validity of such executive orders has often been sustained by opinions of the Attorney General (42 Op. Atty Gen., No. 21 (1961)), and the Comptroller General (40 Comp. Gen. 592 (1961)); (42 Comp. Gen. 692 (1963)) as well as decisions of several courts. Thus in Farkas v. Texas Instrument, Inc., 375 F. 2d 629 (5th Cir), 1967 the court held that Executive Order No. 10925 (the predecessor of Executive Order No. 11246) was "to be accorded the force and effect given to a statute enacted by Congress." (Accord, Farmer v. Philadelphia Elec. Co., 329 F. 2d 3 (3rd Cir., 1964). In addition, very soon after the first executive order on nondiscrimination was issued, the Comptroller General assumed the validity of the requirement and stated that the executive order had the same effect as a statute. (23 Decs. Comp. Gen. 262 (1943))

It is also clear that the Philadelphia Plan is authorized by Executive Order 11246 and regulations promulgated thereunder. Section 202 of the Executive Order requires the contractor to "take affirmative action to ensure that applicants are employed and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin." Neither Executive Order 10925, which introduced the phrase "affirmative action," nor Executive Order 11246, its successor, elaborate on the term. However, the preambles of Executive Orders 10557 (19 Fed. Reg. 5655) 10925 (26 Fed. Reg. 1977, 1961) and 11246 (3 C.F.R. 611, 42 U.S.A. 2000c (Supp. III, 1965) make it clear that the requirement of affirmative action was not only to ensure present nondiscrimination but also to correct the results of past discrimination and to develop programs which broaden minority group participation in the contractor's operations.

The foregoing history establishes that, leaving aside for the moment the matter of the Civil Rights Act of 1964, the executive branch of the government has for nearly thirty years imposed on federal contractors the obligation not to discriminate in employment, and since 1961, obligations to take affirmative steps to end such discrimination where it exists. This long standing practice has been acquiesced in by the Comptroller General and approved by the courts. The Philadelphia Plan is clearly within the scope of Executive Order 11246— this does not appear to be challenged by the Comptroller General, as the Attorney General points out. The Plan is based upon findings made following hearings. The findings are on matters that are clearly within the province of the Department of Labor, and are directed at specific conditions in six trades in a specified and limited geographic area in and near Philadelphia. No serious claim can be made that the standards to be met are vague or not readily ascertainable, in the light of the September 23, 1969 order of the Department of Labor, and the standards arrived at are reasonable. The enforcement procedure is fair in view of the specific criteria which provide an opportunity for the contractor to show good faith efforts to comply.

The executive branch has a particular obligation to see to it that in the spending of public money through government contracts, constitutional standards are met. While not necessary for present purposes, a serious argument exists that the executive branch would be remiss in its duties if it failed to provide requirements for affirmative action by federal contractors to end discrimination, where, as in the six trades covered by the Philadelphia Plan, undisputed findings show prior discriminatory practices to have been extreme to the point of exclusion.

III. THE PHILADELPHIA PLAN IS NOT PROHIBITED BY THE CIVIL RIGHTS ACT

The principal argument against the legality of the Philadelphia Plan is based upon the Civil Rights Act of 1964. Surprising as it may seem, this argument assumes that the Congress, through legislation designed to arrest discriminatory practices throughout the nation, would consciously or by accident curtail the power of the President to deal with similar discriminatory employment practices of federal contractors.

This argument rests mainly on two provisions of the Civil Rights Act:section 703 (a) and section 703 (j) of Title VII of the Act.

Section 703 (a) of the Civil Rights Act makes it an unlawful employment practice for an employer:

"(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or

"(2) to limit, segregate or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin."

The argument runs that the goals to be met under the Philadelphia Plan to employ a specified numerical range of minority group tradesmen run afoul of section 703 (a), because contractors commit themselves to making race or national origin a factor for consideration in obtaining their employees, and that it is a practical impossibility to meet the goals without discriminating against a qualified applicant or employee.

This argument must fall. The Philadelphia Plan requires only a good faith effort to meet the prescribed goals, and this effort can be made through a broadening of the base from which employees in the particular trades are recruited. Given the expansion in the construction industry in the affected area, and the consequent need for a larger number of qualified tradesmen in the six affected categories, there is no inconsistency, in theory or in practice, between good faith effort to meet the goals and the requirement specified in the Civil Rights Act that an employer treat each qualified employee and applicant individually without regard to race.

What the employer is required to do under the criteria is to take steps to ensure that the applicants for employment will be drawn from a base which is more likely to include minority groups. Thus he may ask for the assistance of community organizations, the OFCC Area Coordinator and training programs in the area. That such affirmative action is imperative in the construction industry is clear in view of the findings in the June 27, 1969 Order of the Department of Labor that exclusionary practices on the part of certain construction unions, including a refusal to admit Negroes to membership in unions or in apprenticeship programs, and a preference in work referrals to union members and to those who have worked under union contracts, have resulted in what amounts to the exclusion of Negroes from the six construction trades in the area affected by the Philadelphia Plan.

The requirement of affirmative action to remove the effects of past discrimination has been imposed by courts in cases involving violations of Title VII pursuant to section 706 (g) of Title VII. Where an employer or union has been found to have engaged in unfair employment practices, section 706 (g) empowers the court not only to "enjoin the respondent from engaging in such unlawful practice . . ." but additionally to "order such affirmative action as may be appropriate." (See Quarles v. Philip Morris, Inc., 279 F. Supp. 505 (E.D. Va. 1968); Local 189, United Papermarkers, etc. v. United States, F.2d- -; 60 L.C. F. 9289 (Fifth Cir., 1969); Dobbins v. Electrical Workers Local 212, 292 F. Supp. 413 (S.D. Ohio, 1968); Heat and Frost Insulators v. Vogler, 407 F. 2d 1047 (Fifth Cir., 1969).

It has also been argued that the specific manpower commitments violate section 703 (j) of Title VII. That section provides:

"703 (j) Nothing contained in this title shall be interpreted to require any employer, employment agency, labor organization, or joint labor-management commitee subject to this title to grant preferential treatment to any individual or to any group because of the race, color, religion, sex, or national origin of such individual or group on account of an imbalance which may exist with respect to the total number or percentage of persons of any race, color, religion, sex, or national origin employed by any employer, referred or classified for employment by any employment agency or labor organization, admitted to membership or classified by any labor organization, or admitted to, or employed in, any apprenticeship or other training program, in comparison with the total number or percentage of persons of such race, color, religion, sex, or national origin in any community, State, section or other area, or in the available work force in any community, State, section, or other area." (Emphasis added.)

That the provisions of section 703(g) do not limit the affirmative action under Executive Order 11246, is supoprted by the legislative history of the Civil Rights Act and the language 703 (j) itself. First, as pointed out in Cooper and Sobol, Seniority and Testing Under Fair Employment Laws: A General Approach to Objective Criteria of Hiring and Promotion, 82 Harv. L. Rev. 1598, 1631 (1969), since executive orders prohibiting discrimination existed without challenge for 23 years before the enactment of Title VII, it is clear that executive power in this field was to be independent of congressional action, in the absence of explicit disapproval. The Comptroller General has quoted Senator Joseph Clark as suggesting that 703 (j) would prohibit enforcement of affirmative action requirements. Professors Cooper and Sobol pointed out :

"Whatever weight Senator Clark's memoranda have in the interpretation of Title VII, they have no relevance under the executive order, particularly because the present executive order is substantially the same as its predecessors, which were issued before the Clark memoranda. The order, unlike Title VII, requires 'affirmative action to insure that employees are treated . . . without regard to their race,' which makes it clear that a neutral posture or inaction by an employer is not sufficient. The continuation of systems or practices which racially discriminate would seem to violate this requirement of affirmative action even if such practices are not viewed as discrimination under Title VII."

It is also important to emphasize the language of 703 (j) that, "Nothing contained in this title shall be interpreted to require." There are a number of possible areas of affirmative action, which, while exceeding the nondiscrimination requirements of Title VII, are clearly consonant with the general thrust of the Act-requiring an employer to broaden his recruitment base being but one example.

An interpretation of section 703 (j) that does not prohibit an employer from taking affirmative steps to obviate the discriminatory effect of past practices is consistent with the other provisions of section 703 (j). These provisions, cited by opponents of the Philadelphia Plan, merely underscore the inapplicability of the Act to certain employment practices which are not motivated by discrimination on the basis of race, religion, or national origin. These provisions prevent an interpretation (see esp. 703 (e)) which would make it per se unlawful to deny a minority applicant a job pursuant to these practices.

The specific reservations contained in Title VII do not indicate a conscious withholding of congressional approval of executive action in certain areas. To the contrary, the contract compliance program under the Executive Orders has received legislative recognition in section 709 (d) of the Civil Rights Act of 1964.

Section 709 (d) provides in part that where an employer "is required by Executive Order 10925 . or by any other Executive Order prescribing fair employment practices for Government contractors and subcontractors, or by rules or regulations thereunder, to file reports relating to his employment practices with any Federal agency or committee. . . the Commission shall not require him to file additional reports pursuant to subsection (c) of this section."

The express language of section 703 (j) makes it plain that the Congress intended that the Civil Rights Act should not require the granting of "preferential treatment." Without conceding that the Philadelphia Plan does require any employer to grant such preferential treatment, for we believe that it does not, the reservation of authority under the Civil Rights Act expressed in section 703 (j) cannot operate as a restriction on the power of the executive branch to deal with federal contracts. If the plain wording of section 703 (j) were not sufficient, the express reference elsewhere in the Civil Rights Act to Executive Order 10925, the predecessor of E.O. 11246, is a recognition of its continuing effect, including its requirements for affirmative action to end discrimination in employment.

In a recent decision, the Ohio Supreme Court in Weiner v. Cuyahoga Community College District et al. 249 N.E. 2d 907 (1969), upheld the requirements of the so-called Cleveland Plan of the OFCC which plan required that bidders submit an acceptable affirmative action program to include "manning" tables which would result in assuring that there would be minority group representation in all trades and in all phases of the work on the federally-financed construction project.