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that there are significant shortcomings in the management information system. We believe there is a need for much more complete and reliable data on JOBS program operations, particularly data concerning the eligibility of participants, and follow-up data concerning persons who had dropped out or who have completed training.

For example, although NAB reported that 380,140 individuals had been hired under the JOBS program as of January 31, 1970, employers had submitted hire cards for only 158,904, or 41.8 percent of these persons. The hire card is the form employers are asked to use to report pertinent demographic and other data on persons enrolled in the program. The information gap caused by the lack of hire cards for 58.2 percent of JOBS enrollees results from the fact that NAB has not been sufficiently persuasive to require companies to submit the hire cards; rather NAB has chosen to report the accomplishments of the JOBS program on the basis of periodic telephone contacts with participating employers under a so-called "tally count" system. This "tally count" system by-passes the reporting system under which hire cards are used and, of course, provides much less information.

Information obtained through the "tally count" is limited to the number of persons hired, persons terminated, and persons on-board. No information is obtained on the characteristics of persons in the program or on reasons for terminations. Such information is essential, we believe, to the effective administration and evaluation of the JOBS program. PROGRAM IMPLEMENTATION

We would now like to present our observations concerning the implementation of the JOBS program. First, we wish to note that the JOBS program is relatively new as Government programs go, and we are not surprised that it is experiencing the problems and growing pains that typically go with a new program. The Department of Labor has made numerous changes and

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improvements in the JOBS program since its inception in 1968 and is continuing to do so. We hope that through our review efforts, and reporting, the program may be further improved and strengthened.

1. We have found that a number of persons have been enrolled in the JOBS program who did not appear to be eligible for its benefits under established eligibility criteria.

As noted previously, we are experiencing considerable difficulty in reviewing eligibility on a program-wide basis. However, we have ascertained that a significant number of persons have been hired under the JOBS program who were not eligible based on their acknowledged family income.

The enrollment of individuals who are not from the intended target population tends to inflate reports of program achievements, while at the same time it impedes progress towards attaining program objectives.

In the San Francisco/Oakland area for example, hire cards were submitted by employers for only 4,044 of 10,398 persons hired under the JOBS program as of September 30, 1969. Only 1,810 or about 17 percent of the hire cards contained information on family income. From this limited information, however, our analysis showed that 441 persons, or about one-fourth of those reporting income data, had annual family incomes which exceeded that permissible for inclusion in the "disadvantaged" category by amounts ranging from $100 to $7,700.

2.

The legislative history of the JOBS program indicates that it was not intended that the JOBS program would provide jobs which historically pay low wages, involve high-turnover occupations, and which traditionally use unskilled or low-skilled persons as a source of labor.

We have found that under both the contract and non-contract components of the JOBS program, many of the commitments by businesses to hire persons involve low-wage jobs which offer little chance for advancement. Termination rates for businesses offering such jobs have been high.

Certain officials of the Concentrated Employment Program and the

State employment services have complained to us that many of the job orders they receive are for "dead-end" jobs.

In San Francisco, for example, we reviewed NAB's files on a number of non-contract employers to determine the nature of the jobs being pledged. We reviewed the files of 158 companies that pledged jobs in 1968 and 324 that pledged jobs in 1969, and found that 26 (16.4 percent) and 33 (10.2 percent), respectively, were offering jobs which appeared to be in highturnover occupations involving minimum skills and low wages. These included employment as janitors, messengers, maids, porters, dishwashers, busboys, potwashers, copy boys, and bar assistants, many of which were at wage rates of less than $2.00 an hour.

3. In our overall report of March 18, 1969, on the Economic Opportunity Program, we reported that there was a need for sponsors under the Concentrated Employment Program to coordinate their job development efforts with the JOBS program, and we recommended that CEP operations be so coordinated.

During our current review, we have found that the need for better coordination and cooperation still exists. Department of Labor directives provide that CEP participants are to be given preference in filling jobs offered by JOBS employers. However, this has not generally occurred. For example, although over 11,700 JOBS trainees had been hired in the San Francisco Bay area through January 31, 1970, the Oakland CEP reported that only 102 CEP participants out of a cumulative enrollment of about 1,100 had been placed under the JOBS program since November 1968, and the San Francisco CЕР reported that only 47 CEP participants out of a cumulative enrollment of about 3,700 were placed since November 1968. Prior to November 1968, data on the number of CEP participants going to the JOBS program was not available.

We believe that this illustrates the need for closer coordination between the JOBS program and the CEP.

The Concentrated Employment Program was established in target areas

of various cities throughout the Nation to help those most in need of employment assistance and employment preparation. An important element in the

success of the Concentrated Employment Program is its coordination with job opportunity programs such as the JOBS program.

4.

Our review to date has revealed the need for improved procedures for evaluating contractor proposals, and negotiating JOBS contracts.

The intent under the contract component of the JOBS program is to reimburse the contractor for extraordinary costs incurred as a result of hiring the disadvantaged. The purpose of this approach is to avoid subsidizing an employer's normal costs of hiring and training employees. Employers are asked to define their extraordinary costs in their proposals to the Department.

The Department of Labor has accepted some contract proposals which appeared to us to contain unreasonably high costs for certain program components, primarily involving compensating employers for providing on-the-job training. The Department's actions have resulted primarily from the use of fixed unit costs established under its "market cost" concept for negotiating JOBS contracts. In other instances, the acceptance of unreasonable costs resulted from the incorrect application of the negotiation guidelines prepared by the Department for contract evaluators and negotiators, or from a failure to properly analyze each component of the cost proposal.

For the five cities in which we made our review, the training Costs for an enrollee in the JOBS program ranged from $671 to $6,833.

National averages as of February 28, 1970, for the MA-3, 4, and 5 phases of the JOBS program, based on data reported by the Department, were $2,935, $2,980, and $2,554, respectively.

"Market cost" is defined by the Department as the dollars an employer would be willing to accept for conducting a JOBS training project that meets Government requirements. Generally, two factors enter into the determination of the allowable range of "market costs" for a particular occupation the skill level for which the employee is being trained and the wage rate of the employee upon being hired.

Department guidelines instruct negotiators to take a "hands off" attitude with contractors, and not press them for too much detail. The guidelines state that time spent in face-to-face cost negotiation beyond an average of half-an-hour ordinarily will not be an effective use of the negotiator's time. To further speed up negotiations, the guidelines contain a fixed unit cost chart which sets minimum and maximum amounts of "market costs" based upon the hourly wage rate and the skill level of the job.

We believe that the use of the "market cost" concept together with the limited time allowed for negotiations have resulted in accepting excessive on-the-job training costs and supportive service costs in some proposals. Also, because individual cost elements were not adequately analyzed, some costs were accepted which did not appear to be extraordinary training costs.

In one instance, for example, a grocery chain which operated some of its stores in the San Francisco Bay area has a national MA-3 contract amounting to $1,228,218 to train 258 grocery journeymen. A grocery journeyman prepares warehouse orders, receives, and stocks goods on shelves, prices

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