do to take steps to limit participation in the JOBS program to those actually eligible under the guidelines?

This would seem to be a major problem.

Mr. WEBER. We have asked for certification of poverty status or disadvantaged status by either the State employment service, or the CEP people, or the referring WIN program. Obviously, in some cases mistakes can be made.

We receive a lot of criticism from businessmen on this requirement that, in the first instance, they make sure that trainees are properly certified. We hope that we have enforced this rigorously. We picked up some cases through the activities of our Special Review Staff.

We find that, and again our sample of 160,000 would bear this out, we are reaching people who qualify as disadvantaged.

Senator CRANSTON. What do you think causes so many who are technically not eligible to be participating?

Mr. WEBER. I can't make any intelligent judgment on it, unless I saw the raw data that the GAO had.

Secretary SHULTZ. On the other hand, the overall statistics show that basically the program is reaching the hard core.

Senator CRANSTON. There was an ad in the Washington Evening Star on March 5, which said that in cooperation with the National Alliance of Businessmen, and the U.S. Department of Labor, American Learning Systems can supply you with full-time men and women employees.

There is no mention of disadvantaged in that ad. It goes on to state that there is no charge by American Learning to the employer for any of the services listed below, where there is a valid requirement for additional employees.

I suppose that sort of an ad can be one of the factors that induces that sort of a problem we were just referring to. I wonder if there is anything you feel you can do about such ads, and if you feel they reflect the real purposes of the program.

Mr. WEBER. You have raised the general issue of the whole development of these subcontractors, and you mentioned it in your letter to us, and it is a problem that we are aware of and we are trying to move constructively in dealing with it.

I think that, on balance, it is a desirable thing that a lot of firms, most of them reputable, come forth offering their skills and competence to train disadvantaged workers. Westinghouse Learning and many other large companies are involved. At the same time, there are a lot of other firms which don't have this experience and I might note, in passing, often former employees of the Department of Labor have promoted such programs.

The question is, how can you control this situation and how can you get this information around?

The Department of Labor has just recently developed a debarment proceeding. It should be understood that you can only debar a firm under these regulations, if the firm is guilty of fraud, violation of the antitrust laws, or for similar reasons.

We also, through our Special Review Staff, are sensitive to the firms we think might not perform. We have developed with the

:

National Alliance of Businessmen, U.S. Chamber of Commerce. and the local chambers of commerce, to provide, on a when-requested basis, an evaluation of the adequacy of these firms.

As the Secretary's testimony indicated, we initiated a conflict of interest regulation, which would preclude former employees of GS-14 or above from acting as a representative to the Department for a period of 2 years.

This is a step in the right direction. But we don't want to turn the Department of Labor into policemen. I think it is significant to note that many of these problems were surfaced by the Department itself, because in the last 6 months there have been over 5,800 monitoring visits, an average of more than 2 visits per contract.

Again, some fish are going to slip through the net.

Senator CRANSTON. It sounds like you are taking effective steps in the right direction. Obviously there is need for that, and for perhaps more.

Secretary SHULTZ. I think we have to be careful at the same time that we don't get so concerned that a possible problem might arise that we fail to push the program's objectives.

In some cases, you may have a problem where somebody is afraid he will make a mistake and get hauled up here and asked questions, and decides that the safest thing for him to do is never to let a contract.

We don't want that attitude. Basically, I think the program statistics then show that in 99 percent of the cases we have not been having any problems, and that is the side of the coin to be emphasized, sir.

Senator CRANSTON. Another problem that might bear investigation in terms of establishing some sort of control also came up in connection with American Learning Systems, where it turned out there were interlocking relationships between the contracting and subcontracting elements, where there are potential dangers of conflict of interest.

Have you looked into that thus far, that aspect of the problem? Mr. WEBER. We are in the process of looking into it, and it might be interesting to note that we have identified another similar case of this nature.

But again, I would reaffirm what the Secretary said. These are elements of control, but this program has and will continue to appeal to the broad universe of firms that want to do something constructive in this area.

Senator CRANSTON. We had a number of witnesses testify in regard to evidence that firms did not actually give the job-related education that is called for in the contract.

For example, the witness from the northwest development in Chicago said that a clear statement of the minimum job related education required in the contract was asked for. No written answer was received by them, but it was stated that the amount of training neeessary was to prepare trainees for job performance,

What is your position on the necessity for providing the job related education called for in a contract?

Mr. WEBER. Our position is that if they contract for job related basic education, they should provide it. Otherwise, they should not be reimbursed for that element of cost. That is a matter, again, of monitoring.

In those cases you indicated, there apparently was some initial delay in the delivery of these services.

We have sent staff monitors out and the firms are now in the process of delivering these services. It is one thing to look at those cases, but there are also cases such as Prudential Life, A. O. Smith, and TRW, at Redondo Beach, Calif., where the character of the supportive services is far beyond that which has been required by the con

tract.

It shows up, incidentally, in the retention rates which are running from 60 to 90 percent.

Senator CRANSTON. Mr. Chairman, I have to step out a moment for a call. I have a few more questions.

Senator NELSON. On that question of job related education, we had testimony from witnesses who expressed the view that that kind of training, to be effective, must be at the plant site, at the site of employment, rather than a site away from the employment. Are you in agreement with that?

Mr. WEBER. Not as a generalization, sir. It varies from case to case. Raytheon, I am told, had a special training site and classroom situation. I think it depends very much on such factors as the sort of job involved, and the nature of the company.

I think the general rule is that the basic education should have as strong link as possible to the occupational requirements so that if you are being trained to be a draftsman, then the job-related education would cover subjects such as mathematics, geometry, and the writing of directions on blueprints.

I think that is a general principle but I don't think we would have a firm position concerning the physical site of the education program itself.

Some of the classes that I taught while at the university were, in the spring, under trees, rather than in the classroom, I recognize that learning can take place in many setting.

Senator NELSON. I think that the American Learning System itself, which has had programs that were not at the site, expressed a strong view that that was a mistake, if I remember the testimony correctly, and that it should be at the site and Raytheon said that.

Every witness who commented on the testimony took that position, the importance of having it at the plant site, handy, nearby, in the plant, or what have you.

I was impressed by it, and the idea of shipping people a mile or 5 miles to take on some kind of training and then go back, and all the various problems involved with management, they indicated that it made the disadvantaged-it made it difficult to conduct this kind of training away from the job itself.

Mr. WEBER. I can see that in most cases this would be preferable but if the site were a foundry, which was noisy, dirty, and hot, it might be desirable to take them someplace to a different setting more conducive to learning.

I am sure that, other things being equal, it is best to have them close to the worksite.

!

National Alliance of Businessmen, U.S. Chamber of Commerce, and the local chambers of commerce, to provide, on a when-requested basis, an evaluation of the adequacy of these firms.

As the Secretary's testimony indicated, we initiated a conflict of interest regulation, which would preclude former employees of GS-14 or above from acting as a representative to the Department for a period of 2 years.

This is a step in the right direction. But we don't want to turn the Department of Labor into policemen. I think it is significant to note that many of these problems were surfaced by the Department itself, because in the last 6 months there have been over 5,800 monitoring visits, an average of more than 2 visits per contract.

Again, some fish are going to slip through the net.

Senator CRANSTON. It sounds like you are taking effective steps in the right direction. Obviously there is need for that, and for perhaps more.

Secretary SHULTZ. I think we have to be careful at the same time that we don't get so concerned that a possible problem might arise that we fail to push the program's objectives.

In some cases, you may have a problem where somebody is afraid he will make a mistake and get hauled up here and asked questions, and decides that the safest thing for him to do is never to let a con

tract.

We don't want that attitude. Basically, I think the program statistics then show that in 99 percent of the cases we have not been having any problems, and that is the side of the coin to be emphasized, sir.

Senator CRANSTON. Another problem that might bear investigation in terms of establishing some sort of control also came up in connection with American Learning Systems, where it turned out there were interlocking relationships between the contracting and subcontracting elements, where there are potential dangers of conflict of interest.

Have you looked into that thus far, that aspect of the problem! Mr. WEBER. We are in the process of looking into it, and it might be interesting to note that we have identified another similar case of this nature.

But again, I would reaffirm what the Secretary said. These are elements of control, but this program has and will continue to appeal to the broad universe of firms that want to do something constructive in this area.

Senator CRANSTON, We had a number of witnesses testify in regard to evidence that firms did not actually give the job-related education that is called for in the contract.

For example, the witness from the northwest development in Chieago said that a clear statement of the minimum job related education required in the contract was asked for. No written answer was received by them, but it was stated that the amount of training neeessary was to prepare trainees for job performance,

What is your position on the necessity for providing the job related education called for in

a contract?

Mr. WEBER. Our position is that if they contract for job related basic education, they should provide it. Otherwise, they should not

be reimbursed for that element of cost. That is a matter, again, of monitoring.

In those cases you indicated, there apparently was some initial delay in the delivery of these services.

We have sent staff monitors out and the firms are now in the process of delivering these services. It is one thing to look at those cases, but there are also cases such as Prudential Life, A. O. Smith, and TRW, at Redondo Beach, Calif., where the character of the supportive services is far beyond that which has been required by the con

tract.

It shows up, incidentally, in the retention rates which are running from 60 to 90 percent.

Senator CRANSTON. Mr. Chairman, I have to step out a moment for a call. I have a few more questions.

Senator NELSON. On that question of job related education, we had testimony from witnesses who expressed the view that that kind of training, to be effective, must be at the plant site, at the site of employment, rather than a site away from the employment. Are you in agreement with that?

Mr. WEBER. Not as a generalization, sir. It varies from case to case. Raytheon, I am told, had a special training site and classroom situation. I think it depends very much on such factors as the sort of job involved, and the nature of the company.

I think the general rule is that the basic education should have as strong link as possible to the occupational requirements so that if you are being trained to be a draftsman, then the job-related education would cover subjects such as mathematics, geometry, and the writing of directions on blueprints.

I think that is a general principle but I don't think we would have a firm position concerning the physical site of the education program itself.

Some of the classes that I taught while at the university were, in the spring, under trees, rather than in the classroom, I recognize that learning can take place in many setting.

Senator NELSON. I think that the American Learning System itself, which has had programs that were not at the site, expressed a strong view that that was a mistake, if I remember the testimony correctly, and that it should be at the site and Raytheon said that.

Every witness who commented on the testimony took that position, the importance of having it at the plant site, handy, nearby, in the plant, or what have you.

I was impressed by it, and the idea of shipping people a mile or 5 miles to take on some kind of training and then go back, and all the various problems involved with management, they indicated that it made the disadvantaged-it made it difficult to conduct this kind of training away from the job itself.

Mr. WEBER. I can see that in most cases this would be preferable but if the site were a foundry, which was noisy, dirty, and hot, it might be desirable to take them someplace to a different setting more conducive to learning.

I am sure that, other things being equal, it is best to have them close to the worksite.