Prevailing Wages to Be Paid Again On Gulf Coast

Rule Was Waived for Post-Katrina Work

By Griff Witte
Washington Post Staff Writer
Thursday, October 27, 2005; A01



The White House yesterday reversed course and reinstated a key wage protection for workers involved in Hurricane Katrina reconstruction, bowing to pressure from moderate House Republicans who argued that Gulf Coast residents were being left out of the recovery and that the region was becoming a magnet for illegal immigrants.

The Bush administration decided in the days after the hurricane to waive a provision of the Davis-Bacon Act that guarantees construction workers the prevailing local wage when they are paid with federal money. The administration said the waiver on hurricane-related work would save the government money and speed recovery efforts.

The decision immediately was criticized by Democrats and labor unions. It also exposed fault lines in the president's party. Conservatives strongly backed the waiver. But a group of moderate Republican members of Congress -- many from districts in industrial areas populated by blue-collar workers -- lobbied the White House and the congressional leadership for the prevailing-wage provision to be reinstated. In recent weeks, the lawmakers wrote to President Bush, met with Deputy White House Chief of Staff Karl Rove and Republican National Committee Chairman Ken Mehlman, and persuaded House Speaker J. Dennis Hastert to arrange a meeting with Andrew Card, the White House chief of staff.

Yesterday morning, leaders of that group were summoned to the White House, where Card told them that the administration had changed its mind. The prevailing-wage rule is to go back into effect Nov. 8, two months after the suspension. It will not apply retroactively.

"When the crisis of the moment is over, we should return to the regular order. Part of that order is Davis-Bacon," said Rep. Steven C. LaTourette (R-Ohio). He said the law is needed to ensure that skilled, local workers find jobs and to keep the area from being inundated with illegal immigrants willing to work for low wages.

The decision was a rare victory for organized labor during George W. Bush's presidency. It was a defeat for traditional Bush allies, including the construction industry and conservatives in Congress. Yesterday, both groups said the president's reversal would inflate the cost of reconstruction.

"It's the kind of thing that shows they're turning their backs on the things that Ronald Reagan and those who built this party care deeply about," said Rep. Tom Feeney (R-Fla.).

"Certain special interests and their allies in Congress are more concerned about reinstating this wasteful and outdated act than they are with fairly and expeditiously reconstructing the devastated areas," M. Kirk Pickerel, chief executive of Associated Builders and Contractors, said in a written statement.

White House spokesman Trent Duffy said yesterday that the waiver was always considered temporary and that it had outlived its usefulness.

Gulf Coast workers and businesses have complained that they are being left out of the recovery. While the federal government spends more than $60 billion on recovery, they say that out-of-state companies receive most of the contracts and that many of those firms pay workers less than the prevailing wage -- which is often the union wage.

For example, 75 unionized electricians said they lost their $22-an-hour jobs rebuilding the Belle Chasse Naval Air Station near New Orleans because a Halliburton Co. subcontractor found workers to do the job for less.

The company, Alabama-based BE&K, said yesterday that U.S. Immigration and Customs Enforcement investigators found two undocumented workers on the company's payroll. The company said the two had provided false paperwork. Last week, Navy officials said they found 13 illegal immigrants working at Belle Chasse for another contractor, Texas-based BMS Catastrophe Inc.

New Orleans resident Sam Smith, 55, was among those who lost jobs. He expressed satisfaction yesterday with the reinstatement of the prevailing-wage rule, but blamed the administration for his dismissal at a time when he was trying to put his life, and his city, back together. "This is the way it should have been from the beginning," he said.

Rep. Frank LoBiondo (R-N.J.) said the reinstatement would help federal money flow to people like Smith, who lost his 9th Ward house in the storm. "People who live in the area will have the opportunity to do the rebuilding," LoBiondo said.

Many of the 37 House Republicans who pushed for the reinstatement are from swing states or Democratic-leaning states where labor unions are relatively strong. The congressmen said ending the exemption could save money because it reduces the potential for fraud. The waiver exempted some contractors from reporting wage data to the government.

Since Hurricane Katrina, the Bush administration has reversed several decisions made as it tried to get the recovery on track after a slow start.

For example, it rescinded a ruling that lifted the purchase limit on government credit cards from $15,000 to $250,000. Later, the acting director of the Federal Emergency Management Agency, R. David Paulison, said the agency would put out for bid four big housing contracts that it had awarded without competition.

© 2005 The Washington Post Company

HoustonChronicle.com - U.S. settles some Halliburton disputes

By TOM FOWLER
Copyright 2005 Houston Chronicle

The Army Corps of Engineers has settled payment disputes for six out of 10 task orders under its Restore Iraqi Oil contract with Houston-based Halliburton.


Those task orders primarily dealt with fuel that the company's subsidiary, KBR, provided as part of a project to restart Iraqi oil field production after the 2003 U.S. invasion of the country.

The 10 task orders covered jobs costing about $1.4 billion. Auditors concluded the military had been overcharged by about $108.4 million for fuel brought into Iraq from Kuwait under the orders.

In a conference call this week, Halliburton officials said the six task orders had been settled in their favor.

"We have resolved the majority of that, over $1 billion of the $1.4 billion" in contracts, Chief Financial Officer Christopher Gaut said during the call. "So that's largely behind us, and we're just negotiating the few remaining task orders that were separate and had some other activities with them."

A Corps of Engineers spokesman confirmed the settlements but said he didn't know the terms.

Halliburton booked $24 million in third-quarter earnings related primarily to the partial settlement of the fuel dispute.

The company's billings have been under scrutiny by the Pentagon and members of Congress in the past. Democrats claim the company has been able to run up excessive charges largely because of "deficient Defense Department oversight and an unquestioning reliance on Halliburton's assurances."

The company says those claims have been exaggerated.

Halliburton's Iraq-related work in the third quarter accounted for $1.2 billion in revenue and $44 million in income.