President Bush on Sept. 8 suspended the 1931 Davis-Bacon Act in areas of Alabama, Florida, Louisiana and Mississippi damaged by hurricanes Katrina and Rita. The act sets a minimum pay scale and requires federal contractors to pay the prevailing or average rate in an affected region.
The administration "is trying to take advantage of a natural disaster" to avoid paying a prevailing wage in federal contracts, said Sen. Carl Levin, D-Mich., at a Democratic Policy Committee hearing. "If this is allowed to stand, what you will see here are people being transferred under federal government contracts … in order to undermine prevailing wages," he said.
Al Knight, general manager of Knight Enterprises LLC in New Orleans, said he believes his company's contract was terminated because of the Davis-Bacon Act suspension. Knight Enterprises on Sept. 9 won a contract to provide 75 electricians to wire a "tent city" for military personnel at the Naval Air Station in Belle Chase, La.
Knight said that the contract should have lasted for 20 months and that he was complying with the Davis-Bacon Act. But the contract was terminated three weeks in because "the budget wouldn't allow the continued use of local workers earning prevailing hourly wages," Knight said.
"Our workers, who were local, qualified electricians impacted by Katrina and Rita, were removed from a promised 20-month contract in what I can only believe was a direct result of the Davis-Bacon Act waiver," Knight told the committee. "Waiving the Davis-Bacon Act for federal projects in this area opens the floodgates for out-of-state workers. Those out-of-state workers displace local residents who, more than anything, need a good paying job and a living wage."
Sen. Mary Landrieu, D-La., pledged to have Knight's contract reinstated and to have the person responsible for terminating it apologize to the company.
"It is outrageous that the government of the United States would have policies that would take people who have lost their homes, lost their communities, and then as they begin to roll up their sleeves and begin to work to rebuild their communities, [allow them] to basically be kicked off the job," Landrieu said. "This will not stand, Mr. Chairman."
Other committee members said they would join Landrieu.
Contractors have been scrambling to import workers into the affected region for reconstruction jobs, said James Hale, vice president and regional manager of the Laborers' International Union of North America. The union has established mobile training centers to teach hundreds of workers in the affected region jobs ranging from hazardous waste removal to temporary housing installation.
"The removal of Davis-Bacon not only removes a wage floor but it also removes the requirement that contractors report their payrolls to the contracting agencies," Hale said. "Absent a wage floor and reporting, the door is open to fraud of various kinds."
Contracting in the aftermath of the hurricanes has been marked by "waste, corruption and cronyism," committee members said.
"America can and must do better," said Sen. Harry Reid, D-Nev., Senate minority leader. "That's why we will continue to call on the president to support an independent commission to find out what went wrong and to ensure that we're fully prepared to respond to future disasters."
"If this is the kind of leadership that the president is going to give us, we need new leadership," Landrieu said. "And I know that's a strong statement. But I am very serious about this, and so are the American people … I hope that this hearing will show that we need new direction, new leadership, or leadership that will get a new direction."