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Answers to Senator Cranston's Supplemental Questions

The answers follow in the order in which the questions were asked.
Question: How many of the 131 Metro Offices have community
Advisory Boards? What actions has the Department
taken to implement...community leaders as part of
the pre-awards survey? What action is contemplated?

Answer:

With respect to the number of Community Advisory
Boards operative in the 131 Metro Offices, I can
report that there are currently 82 operative and
three in the startup stage. NAB is working to develop
boards in the remaining metros as well as in new metro
offices when they are established. We are currently
studying the best means to involve community groups
or leaders in the promotion and pre-award aspects of
the JOBS program.

Question: Under what conditions are JOBS contracts terminated?

Answer:

This question deals with contract terminations and the continued reimbursement by the Government where a contractor is apparently not performing in accordance with the terms of the contract.

As the Secretary noted in his testimony, the matter of monitoring contracts to insure compliance is of great concern to the Department. Toward this goal the following procedures are followed:

Monitoring visits are made on a scheduled basis to check on the performance of a contractor to determine compliance with provisions of the contract. If instances of non-performance are discovered, and it appears that it is feasible to correct these deficiencies, assistance is provided. This may include contract modification. If it appears, however, that continuation of the contract is not to the best interest of the purposes of the program, then termination or cancellation procedures would be instituted.

Reasons for initiating cancellation could be any
instance of substantial non-performance. This may
include a failure to hire according to contracted
criteria, failure to fill slots, failure to provide
supportive services, failure to pay agreed upon wages,
etc. Each case is decided on the basis of its indi-
vidual merits. An extraordinarily high turnover and
termination rate would normally be caused by some type
of failure to perform under the contract. This failure
to perform would be handled as described above.

The monitoring by Federal staff is supplemented by
State Employment Service Contract Service Representa-
tive visits. Any irregularity discovered by such a
visit would be reported to the Federal staff for
action.

In the case of questionable activities, such as
irregular invoicing or misuse of funds, the Special
Review Staff would be notified. If findings of the
Special Review Staff indicated fraud or other illegal
activity, the case would be handed over to the
Justice Department.

Question: Per Diem Reimbursement under JOBS contracts is often seen by employers as a wage subsidy. Does the Department of Labor make inquiry of JOBS contractors as to whether supportive services have been provided? Are such answers on file for companies in the Manpower Training Consortium?

Answer : The statement and questions concerns (1) employers

using the JOBS program as a wage subsidy, (2) provision
of supportive services, and (3) the availability of rec-
ords of documentation for the provision of services
per the terms of the contract.

As noted in the transcript, (page 429 beginning on
line 14) I responded to the question of wage subsidy
by pointing out that we had taken steps to preclude
contractors from making extreme profits in the JOBS
program by establishing dollar guidelines for supportive
services. This is also true for other components of a
contract such as Job Related Education (JRE) etc.

With respect to whether we make inquiry of contractors
regarding the provision of supportive services, in
my answer to question two (above) I pointed out that
we make periodic scheduled monitoring visits to check
on the performance of a contractor to determine com-
pliance with provisions of the contract. Contractors
with total obligations of $100,000 or more are visited
at least every 30 days; contracts with total obliga-
tions of $50,000 to $100,000 at least every 60 days; and
contractors with total obligations up to $50,000 at
least every 90 days.

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educational companies that may not be providing relevant
JRE. As I have stated previously herein that time
alloted for JRE plus the dollar constraints for this
contract component are not great enough for a sub-
contractor to make huge "windfall" profits from
supportive services of any kind. In fact, a recent
draft final evaluation report on the JOBS program
dated April 28, 1970, indicates that the use of sub-
contractors to provide supportive services may be an
extremely positive factor in the retention of JOBS
employees. Moreover, the same reports states that
because of tooling up time, revamping of curriculum
materials to meet the special needs of JOBS employees,
and high dropout rate, "some consultant firms encoun-
tered serious financial losses and subsequently were
unable to deliver at a satisfactory level the services
for which they had contracted."

Question: To what do you attribute the rapid rate of turnover?

Answer : The fifth question relates to retention and turnover. The Secretary spoke at length on this subject (see pages 10-11 of prepared statement) and if I may reiterate, most of the turnover occurs in the early days of employment. This is not unlike what happens in the regular work force.

Question: In light of this (NAB and GAO statements that the JOBS program does not create jobs) and in light of the current almost 5 percent unemployment rate, how can this program be the "cornerstone" of our Manpower Programs?

Answer : The final question concerns the viability of the JOBS program in a period of rising unemployment. Again, a reading of the Secretary's remarks on pages 16 and 17 on The Changing Economy will show that the Manpower Administration has recognized that the downturn in the economy is affecting the JOBS program. We have already taken steps to make the necessary adjustments through reprogramming a significant proportion of the Fiscal 1970 JOBS funds to other new programs in the Public Sector which are mentioned several places in

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the transcript. These new programs combined with some already in existence (six or seven) constitute about 70 percent of our total Manpower Programs effort and would not be affected significantly by the downturn in the economy. Thus, the JOBS program could continue to be a "Cornerstone" of our Manpower programs.