We also found errors in billings, both of a nature where contractors billed for more days than trainees were actually working, and where contractors billed for more days than the maximum allowed under the contract. Finally, we believe that there is a need for more adequate monitoring by the Department of Labor, and we come to this conclusion not only from this current review, but also from prior reviews of manpower programs. The Department just doesn't seem to have sufficient staff to review and monitor the contractor operations. The Department is taking some steps in this area, but I think they, too, recognize that more needs to be done. In conclusion, as we point out in the statement, our general impression is that the JOBS program has served to focus the attention of businessmen on the need to hire and train the disadvantaged, and that it has undoubtedly helped some disadvantaged persons obtain gainful employment. We would hope that the results of our review efforts currently underway will serve to further improve the effectiveness and efficiency of the JOBS program. As I mentioned before, we have these questions and responses, and I can proceed to read them into the record, if you wish. The first question says this: The purpose of providing government funds to JOBS contractors is to reimburse them for the extraordinary costs of hiring and training the disadvantaged. Are JOBS contractors, in fact, hiring persons whom they would not otherwise have hired as a result of JOBS reimbursement? Please give some concrete examples. Our answer is as follows: In a number of cases they are, Mr. Chairman. For example, a large manufacturing concern in Seattle which has a JOBS contract to hire and train 350 persons made several significant changes in its hiring procedures. These changes involved the use of the CEP as a source of employees, the elimination of aptitude tests, and the acceptance of many persons with criminal records. As a result, this contractor which normally hired only one individual out of 10 interviewed, hired 359 out of 486 persons interviewed for its MA-3 JOBS program. In Detroit, a chemical company, under its MA-3 contract, hired 12 ADC mothers who were recruited through the WIN program for clerical positions. Because these women did not possess the skills normally required by this company, an untensive training program was provided. This program included-40 hours of orientation, 240 hours jobrelated basic education, which included reading, math, and vocabulary development, 320 hours of classroom skill training, and 320 hours of OJT. In other instances, we noted that some employers are hiring the same type of persons which were hired prior to the JOBS program. For example, in Seattle, a manufacturing company obtained employees from the Seattle OIC prior to the company's participation in the JOBS program. These employees received skill training in electronics assembly at the OIC. The MA-3 contract with the company included provisions for the employer to continue to use the OIC as a source of employees to meet his JOBS contract pledges. This company had hired 10 persons under its MA-3 contract through February 28, 1970. The general manager of a small manufacturing plant in Oakland told us that the firm had not lowered its job requirements as there were in effect no specific requirements for the unskilled jobs for which the trainees were being hired. The jobs offered under the contract were for assemblers, and the company had hired 53 persons and had terminated 25 of those hired through November 30, 1969. The second question is: a On a number of occasions, GAO has recommended that JOBS be more closely coordinated with CEP. Department of Labor guidelines now indicate that CEP is to have 48-hour priority on filling JOBS openings. Yet, this rarely seems to be done. Employers don't seem to want to use CEP. Can you indicate why? Please give concrete instances. We found that there are various reasons why contractors do not choose to use the CEP as a source of employees. These reasons include commitments made by employers that job applicants be provided by subcontractors who were to assist in carrying out the JOBS activities, the desire to use established sources of supply to hire trainees, the desire of companies to select trainees from applicants obtained by their own personnel departments, and dissatisfaction with CEP. The following examples illustrate some of these reasons. A number of contractors which we visited during our review in Detroit made arrangements to obtain trainees from sources other then CEP. The contractors included as part of their agreement with subcontractors that they prepare proposals, provide supportive services, and recruit trainees. In San Francisco, contractors were allowed by the Department of Labor to "preselect" a trainee from whatever source they chose. The individual would then be sent to CEP, along with a job order, for certification. One large consortium contractor said that this procedure was justifiable, because CEP had the option to reject the preselected applicant. However, there was no basis for CEP to reject the preselected applicant, as long as the company-referred applicant was disadvantaged. The contractors believed that they should be allowed to take disadvantaged trainees from community agencies which had provided employees prior to the JOBS program. The assistant metro director of NAB in one city told us that he considers that local CEP to be generally lacking in management ability. He said that CEP did not do an adequate job of providing applicants to employers in response to job orders. The JOBS program director of a large manufacturing firm in Seattle said that CEP was to have provided 2 weeks of preemployment orientation to trainees before they reported to work at the company. Of the first 138 to report, only seven had been provided with such orientation. Although this company uses CEP as a referral source, it believes that the quality of the CEP outreach and screening could be improved. The third question is: The purpose of expending government funds on supportive services is to help the JOBS trainee make the difficult transition to a steady job. Yet, the rate of turnover is high, and your report indicates that those who terminate do so after an average of only 2 months. Do you have answers as to why? Give some examples. The information which we have on terminations from the JOBS program is based on data contained in NAB and Department of Labor reports. A Department of Labor report of January 31, 1970, shows the length of employment for trainees terminated under the contract component of the JOBS program; our computation of an average of 2 months is based on length of employment information provided for about 13,000 terminees. The same report also shows the reasons given by employers as to why persons terminate from the contract phase of the JOBS pro gram. Information available for some 13,000 former enrollees shows that about 24 percent terminate for personal reasons not related to working conditions or employment relationship; about 20 percent are terminated because of absenteeism; and about 12 percent leave for other employment. Some 6 percent are terminated for unsatisfactory job performance; about 5 percent leave for personal reasons related to working conditions or employment relationship; about 7 percent are terminated for disciplinary and other reasons; and about 26 percent terminate for other unexplained reasons. Two examples of cases noted in our review where a lack of supportive services and training seemed to contribute to high termination rates follow: A janitorial service firm in Portland contracted with the Department to provide supportive services, including initial orientation and counseling, job-related basic education, special counseling and coaching, medical and dental examinations, and transportation to enrollees for the first month. In his proposal, the contractor stated that he would hire a qualified teacher to teach reading, writing, arithmetic and communications skills required for job performance, as a part of job-related basic education. We found that the employer's actual program for job-related basic education consisted of explaining the nature of payroll deductions to trainees; no teacher was hired. Trainees were not given special counseling, only brief orientation, and only a few were provided medical or dental exams. Of 35 individuals hired to fill the 16 positions under the contract, 25 terminated; 16 of these, terminated after being on the job 4 weeks or less. A consortium contractor in San Francisco had hired 36 trainees and had terminated 20 trainees between March 1969 and December 31. 1969. The consortium contract provided for a full range of supportive services, and vestibule skill training to be given by a subcontractor, in classroom type situations. We found, however, that these services, with the exception of some counseling and orientation, were not given to the trainees. Under the more recent MA-6 phase of the JOBS program funds may be advanced to a contractor for startup costs. However the MA-3, 4, and 5 phases of the program did not provide for the Department to advance funds for any purpose. The subcontractor, who turned out to be one individual with no staff, did not have the necessary funds to set up the vestibule and supportive services classroom job. The subcontractor functioned almost exclusively as a recruiter, in an effort to hire enough trainees so that reimbursement from the Department would start, and enough money would be accumulated to permit setting up the vestibule and supportive services program. Next: You noted that our statement indicates a 60 percent termination rate in the contract portion of the program but only a 44 percent termination rate in the noncontract portion, which is three times as large. The question is does this indicate that granting Government funds averaging over $2,500 per trainee makes it less likely that he will stay on the job, or does it raise questions about the statistics in the noncontract portion of the program? Mr. Chairman, these termination rates are taken from NAB and Department of Labor reports and are based on information obtained through the NAB management information system and from billings submitted to the Department by contractors. We strongly suspect that a lack of complete reporting of terminations by noncontract employers contributes to the higher retention and lower termination rate reported for the noncontract component. As noted in our statement, the statistics on terminations have not been gathered in a manner which would permit an adequate analysis of how many JOBS enrollees terminated prior to completing their training and how many terminated only after the end of their training period. Not all terminations indicate that the individuals reverted back to their "prior to JOBS" status. Some may have simply terminated to obtain gainful employment elsewhere. Finally, we wish to point out that a lower termination rate per se is not always an indication of a higher degree of program effective ness. A lower rate may result from taking into the program ineligibles or disadvantaged individuals above the lower levels of the hard-core unemployed. Your next question states as follows: Your statement indicates that a full quarter of those participating in the JOBS program in San Francisco-Oakland area for whom adequate data was available turned out to be ineligible for the proWere these ineligibilities relatively minor (a few hundred dollars over the guidelines) or do they typically represent a serious abuse of the program? Please give examples. gram. Of the 441 persons referred to in our statement as not meeting the low-income criterion, 85 persons reported family incomes which exceeded the poverty guidelines by amounts ranging from $100 to $500; 86 persons reported family incomes which exceeded the poverty guidelines by amounts ranging between $500 and $1,000; 133 persons reported family incomes which exceeded the poverty guidelines by amounts ranging between $1,000 and $2,000; 106 reported family incomes which exceeded the poverty guidelines by amounts ranging between $2,000 and $4,000; and 31 reported family incomes which exceeded the poverty guidelines by amounts ranging between $4,000 and $7,700. Question No. 6: The purpose of the JOBS program is to provide permanent employment to the disadvantaged, Did you find contracts being given to employers whose industries are seasonal, so that it was really not possible for them to offer a permanent job? Please give some examples. Mr. Chairman, we did not find up to now any significant instances in the five cities in which we made our review where JOBS employers were offering only seasonal employment to persons hired under the JOBS program. Question 7: You comment on the problem of defining the target population. Can you give even a rough estimate of how many people are included in the target population; are potential JOBS trainees under the current guidelines? The only information we have comes from the "Special Analysis. Budget of the United States-Fiscal Year 1971." This estimate of 10.9 million adults, ages 16 to 64, is described in the special analysis, and I don't know that I have to read this quote here of what the special analysis says, but generally, they are considered to have been the target population in 1968 for manpower programs, one of which is the JOBS program. (The information referred to follows:) EXCERPT FROM "SPECIAL ANALYSIS, BUDGET OF THE UNITED STATES- The 10.9 million adults who were poor in 1968, of whom about half were working but earning less than a poverty wage, is a rough representation of the universe of need for manpower programs. The universe actually may be considerably larger, since many earn little more than the poverty standard and are vulnerable to skill obsolescence and unemployment. However, many poor adults are not candidates for manpower services because of health, age, and conflicting family responsibilities. The focus of most Federal manpower programs on poverty universe reflects the judgment that persons with severe employment handicaps are least likely to be able to improve their employment experience without assistance. For example, all of the manpower programs administered by the Department of Labor emphasize services to poor persons who are not suitably employed and who are either (1) school dropouts, (2) under 22 years of age, (3) 45 years of age or over, (4) handicapped, or (5) subject to special employment obstacles. This focus avoids displacement of private efforts which are generally targeted at different groups. The number of individuals served by manpower programs is a growing proportion of the poverty population. In 1968 manpower programs served about |