Primarily for this reason, technological progress has lagged in the production of housing. And as it has lagged, the attitudes and practices that normally operate to resist change and innovation have become more institutionalized and more than normally formidable.

The Congress nearly 3 years ago, in 1969, demonstrated its awareness of the obstacle which restrictive practices present to technological progress in housing. I am referring to section 1010(a) (4) of the Demonstration Cities and Metropolitan Development Act of 1966, as amended. As the Senator indicated earlier, that is his amendinent.

This provision required the Secretary of Housing and Urban Development, to the extent feasible, to take action against restraints impeding the use of new technologies in housing assisted under our research authorities.

The provision was reenacted and reaffirmed in the consolidated research authority with which the Congress provided us in the Housing and Urban Development Act of 1970. It now appears in section 502(a) of that act.

The section 502(a) authority is a mandate to the Secretary to take action, but does not necessarily provide him with a specific means of making that action effective in situations where persuasion and the power to withhold approvals or funds are not enough. It is narrowly confined to housing aided under a particular authority. It provides no remedy directly to those outside of the Department who may be prevented from applying or making use of a new or less costly product, method, or material.

Nevertheless, we have been making substantial progress in some areas in making easier the path of change. A notable recent example is the cooperative effort of our Department, the Department of Commerce, the National Conference of States on Building Codes and Standards, and the four major private model codes organizations in developing a model industrialized housing act.

Since Operation Breakthrough started, 23 States have enacted some form of industrialized housing legislation which facilitates the introduction of new technology which may not conform to local codes.

The new model law should help bring greater and needed uniformity in these existing statutes, and, we hope, lead additional States to adopt this kind of legislation.

Also significant are the performance guide criteria, which were developed by the National Bureau of Standards and which have been used to evaluate Breakthrough housing systems.

These criteria were necessary because we do not have for innovative systems the kind of experience that we have for conventional approaches experience which permits us to prescribe specific requirements for materials usages that we can then rely upon as meeting safety and other needs.

For these new systems it is instead necessary to specify the performance that is expected of buildings and then to evaluate and test the building to assure that such performance is achieved. The criteria are currently being reviewed by industry and by the National Academy of Sciences Building Research Advisory Board under contract with HUD. We hope they will serve as an important initial step toward wider use of the performance criteria based on evaluation methods

that are essential if truly innovative construction techniques are to be brought to general application.

Another accomplishment that deserves mention involves the craft unions. I am referring to the tri-trades agreements signed by Breakthrough's housing systems producers and national unions representing the carpenters, electricians, and plumbers.

The Laborers' International Union also signed landmark agreements with housing manufacturers. In all, over 100 labor agreements of all types have been signed in support of Operation Breakthrough. These agreements cover factory production, establish general guidelines for wages, work rules, and union jurisdiction, and are supplemented by more detailed agreements at the local level.

They contemplate a far more flexible use of the work force in a plant than is possible in the case of onsite construction. They also have the advantage of easing entry for new workers.

Despite the advances I have been describing, the fact remains that, technologically speaking, we are starting from far behind and we have a long way to go. And the pace of progress is too slow.

During the 1960's, housing was near the bottom among industries in annual increases in productivity.

The need for much more rapid progress has become, if anything, more manifest in the last few years. During those years we have achieved record housing production. Yet we are still faced with a situation in which large numbers of American families can no longer afford the new homes being constructed.

Furthermore, we are all becoming increasingly aware of what the long-term implications of this situation are in terms of Federal subsidy costs for decades to come.

However we may modify or adjust our current housing programs, we may still be faced with the prospect of having a large part of our population in need of some form of continuing Federal housing subsidy unless we somehow manage to effect basic changes in our systems and approaches to providing housing.

It was with this in mind that our department at one time suggested to your committee that you give consideration to broadening somewhat the provisions now found in section 502 (a) of the Housing and Urban Development Act of 1970. It was our thought that further progress could be made in testing the practicality of new or improved construction methods, materials, and products if section 502 (a) were extended to cover large-scale experimentation on contiguous or nearly contiguous sites, even though HUD research funds were not directly involved.

HUD would, however, be required to certify that the use of the new or improved methods, materials or products would provide safe working conditions for labor and healthful living conditions for the occupants of the housing.

Our suggestion was designed to strengthen our current efforts to encourage the use of new and improved building technology without imposing either on our department or on the courts administrative burdens that we and they are not prepared to handle.

In reviewing S. 3373 with these same considerations in mind, it appears to us that the bill is defective for the reasons already presented

to your committee in the testimony of Under Secretary of Labor Laurence Silberman.

I would now like to discuss S. 3654 which would repeal sections of the National Housing Act and the United States Housing Act of 1937, which make the prevailing wage requirements of the Davis-Bacon Act applicable to certain FHA and low-rate public housing programs.

The problems which the Department of Housing and Urban Development has had in the past with the Davis-Bacon Act have related to the way in which the act was administered. We have no problem when actually prevailing wages are appropriately applied within similar classes of construction.

All too often in the past, commercial wage rates paid for office building construction were applied to low-rise residential construction. At other times, multifamily high-rise residential housing wage rates were applied to garden apartments or townhouses.

Equally troublesome were cases where wage rates prevailing in new residential construction were applied to housing rehabilitation in which wholly different work conditions were to be found.

Our difficulties with determinations such as these were heightened because they often involved increased costs in connection with residential construction being subsidized by the taxpayer. And the question of cost to the taxpayer becomes even more critical when we recognize that any initial increase in housing costs is likely to double over the life of a mortgage.

Furthermore, errors in wage decisions become self-perpetuating. Contractors cannot legally pay less than the wage rates required by the applicable wage decision, even though such required rates, through the flaws I have already mentioned, may be higher than those actually prevailing.

These erroneous payments then become a matter of record and are included as wage payments evidence in new wage surveys conducted within 12 months of the date of payment. Obviously, the inclusion of such evidence will result in further erroneous survey findings.

I do not want to leave the impression that we are in the position of complaining about Davis-Bacon problems without taking steps to secure improvements. Thus, we have agreed with the Department of Labor that we will undertake the gathering of housing construction wage payment evidence in connection with all of our requests to that department for wage determinations.

This procedure has recently been put into operation and should give the Department of Labor a much broader base on which to make accurate and realistic wage determinations. Early results have been promising.

HUD has also held a series of training sessions for its field labor relations-labor standards personnel in which the Department of Labor was a major participant. These sessions were aimed at providing our staff with a clear understanding of Davis-Bacon working relationships and procedures. This has aided in the speeding of paperwork and it has improved the effectiveness of our problem-solving efforts. The Department has also succeeded in bringing together rehabilitation contractors and the building trades for discussions concerning national standards for residential rehabilitation. Such standards would cover wages, work rules, training, and other vital issues. Resi

dential construction wages and job classifications have been negotiated in several areas of the country.

I do not pretend that these steps have solved all our problems with the Davis-Bacon Act. But I am hopeful that we will be able to achieve considerable impact in our area of greatest concern-the effect on housing costs.

This completes my prepared statement. I will be pleased to answer any questions you may have.

Senator CRANSTON. Thank you very much, Mr. Secretary. I would like to ask you also about that Romex wire situation that has been causing quite a bit of uproar, as you well know, out in California.

Don't you feel there is a problem in requiring local governments to conform to the rulings of unrepresentative boards that don't cover the whole industry and have not been established by any governmental process?

Mr. VAN DUSEN. Senator, as you know, HUD's administration of the workable program does not involve the Department in direct standard-setting with respect to the use of any particular material or method. What we do is to accept the work of what we regard as broadly representative standard-setting organizations, such as the International Conference of Building Officials, the Southern Congress of Building Officials, and the other national code organization of which the National Fire Protection Association is one, which are widely recognized. The National Electrical Code is a product of the National Fire Protection Association, and is widely adopted as a national model code by many local communities.

Senator CRANSTON. Did HUD make an independent determination concerning the safety of Romex, or did you merely rely on the finding of the advisory board?

Mr. VAN DUSEN. We relied, as I said, on the determination by the National Fire Protection Association that the standards of the National Electrical Code will assure safe construction.

Senator CRANSTON. Do you feel even when those standards are challenged by cities, a city as large as Los Angeles, that there should be no subsequent independent review?

Mr. VAN DUSEN. As you know, Senator, we do provide that wherever city seeks a variation from a nationally recognized and accepted code they may request a waiver and may submit supporting engineering data.

The city of Los Angeles did quite recently request a waiver, but in that request they indicated they did not have any supporting engineering data and would need time to develop it.

Senator CRANSTON. They were not given time, were they, in that case?

Mr. VAN DUSEN. Well, it may be unnecessary to consider the question, because it appears that it may be moot. The Los Angeles City Council last week acted to adopt the provisions of the National Electrical Code.

Senator CRANSTON. Of course, that was done under the threat that all their funds were going to be cut off if they did not act, wasn't that the situation?

Mr. VAN DUSEN. Well, I think we had tried to avoid putting the department in a threatening posture in that regard, Senator. So, I would prefer not to so characterize it.

Senator CRANSTON. What word is appropriate? I don't stick to that word necessarily, but the indications were that funds were going to be cut off if they did not go along.

Mr. VAN DUSEN. The situation which the city confronted was that its last grant for neighborhood development programs had expired. Those are annual grants. They were seeking a new grant. The question was whether in seeking that new grant they were going to be in a position to conform to requirements which have been uniformally imposed nationally.

Senator CRANSTON. What steps do you feel the Federal Government should take to eliminate restrictive codes which apply to nonindustrialized housing? Is HUD no longer requiring code changes as a prerequisite to urban renewal grants?

Mr. VAN DUSEN. The workable program requirements are still in force, Senator, I have described this morning a number of steps which we have been taking to try to implement the adoption locally of codes which will provide for technology which has achieved a wide degree of acceptance.

Senator CRANSTON. When special revenue sharing comes in, will this procedure still be followed, or will it be dropped?

Mr. VAN DUSEN. That will depend, Senator, on the form which the bill ultimately takes. The administration has proposed that special revenue sharing for community development purposes be subject to as few Federal conditions as possible. The bill as it passed the Senate and as it is being currently considered in the House does impose some additional conditions in somewhat different form from the present law. Frankly without a very careful study of what ultimately is adopted, I am not quite sure what conditions the Congress expects us to impose.

Senator CRANSTON. Would you like to have HUD retain that power in the future in this legislation?

Mr. VAN DUSEN. I think the administration position, as I have indicated, Senator, is that community development revenue sharing should be subjected to as few Federal conditions as possible.

Senator CRANSTON. Do you think that labor unions should be members of advisory committees which develop codes that HUD uses as a model for requiring local code changes?

Mr. VAN DUSEN. We generally look at the breadth and representative quality of the code-making organization. We certainly would welcome labor union participation.

Of course, some of the national standard-setting organizations are made up of public officials and would not include any industry representation or labor representation. We have not undertaken to dictate the composition of national standard-setting organizations. We do insist that before we recognize their product, their membership be reasonably representative.

Senator CRANSTON. Getting back to that cutoff power, what do you feel would be an appropriate alternative to the exercise of that authority by HUD?

Mr. VAN DUSEN. I am not quite sure I understand the question. Senator CRANSTON. You have had this power to cut off urban renewal if you were not satisfied with code requirements. If that power was no longer to be exercised by HUD, what would be an appropriate alternative to gain the ends that you desire?