y/ Approved Code No. 244 — Supplement No. 1 Registry No. 1616—2—31 NATIONAL RECOVERY ADMINISTRATION SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE GENERAL CONTRACTORS INDUSTRY (A Division of the \ Con struction Industry) AS APPROVED ON FEBRUARY 17, 1934 BY PRESIDENT ROOSEVELT WE DO OUR PART UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1934 For sale by the Superintendent of Documents, Washington, D.C. Price 5 cents This publication is for sale by the Superintendent of Documents, Government Printing Office, Washington, D.C., and by district offices of the Bureau of Foreign and Domestic Commerce. DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE Atlanta, Ga.: 504 Post Office Building. Birmingham, Ala.: 257 Federal Building. Boston, Mass.: 1801 Customhouse. Buffalo, N.Y.: Chamber of Commerce Building. Charleston, S.C.: Chamber of Commerce Building. Chicago, 111.: Suite 1706, 201 North Wells Street. Cleveland, Ohio: Chamber of Commerce. Dallas, Tex.: Chamber of Commerce Building. 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Supplement No. 1 CODE OF FAIR COMPETITION FOR THE GENERAL CONTRACTORS INDUSTRY As approved on February 17, 1934 BY PRESIDENT ROOSEVELT EXECUTIVE ORDER Supplementary Code of Fair Competition for the General Contractors Industry a division of the construction industry An application having been duly made, pursuant to and in full compliance with the provisions of Title I of the National Industrial Recovery Act, approved June 16, 1933, and pursuant to and in full compliance with the provisions of Section 5 of Article VIII of Chapter I of the Code of Fair Competition for the Construction Industry, approved January 31, 1934, for approval of Chapter II of said Code, which Chapter II is applicable to the General Contractors Division of the Construction Industry, and hearings having been held thereon, and the Administrator having rendered his report containing an analysis of said Chapter II and of said Code of Fair Competition as modified by the addition thereto of said Chapter II, together with his recommendations and findings with respect thereto, and the Ad- ministrator having found that the said Chapter II and the said Code of Fair Competition, as modified by the addition thereto of said Chapter II, comply in all respects with the pertinent provisions of Title I of said Act, and that the requirements of Clauses (1) and (2) of Subsec- tion (a) of Section 3 of the said Act have been met: NOW, THEREFORE, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by Title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise, do adopt and approve the report, recommendations and findings of the Administrator and do order that the said Chapter II be and it is hereby approved, and that the previous approval of said Code of Fair Competition for the Construction Industry is hereby modified to include an approval of said Code in its entirety as modified by the addition thereto of said Chapter II. FRANKLIN D. ROOSEVELT. Approval recommended: Hugh S. Johnson, Administrator. The White House, February 17, 193 '4. 41082° 376-99 34 (1) LETTER OF TRANSMITTAL The President, The White House. Sir: This is a report on Chapter II of the Code of Fair Competition for the Construction Industry, which Chapter is a revision, after public hearings conducted in Washington on September 6,- 1933, and on November 20, 1933, of a Code of Fair Competition for General Contractors. This Chapter, applicable specifically to the General Contractors Division of the Construction Industry, supplements the basic Code of Fair Competition for the Construction Industry, described as Chapter I of such Code, which was approved by you on January 31, 1934. The hearings were conducted in accordance with the provisions of the National Industrial Recovery Act. THE INDUSTRY The General Contractors are of major importance in the Construc- tion Industry. They organize and correlate the activities of various operations and sub-contractors as divisions of the Construction Indus- try who furnish the products of skilled trades. General Contractors are usually divided into several sub-groupings such as building, high- way, heavy construction and engineering contractors. Provision is made in the code for inclusion of specific provisions for such sub- divisions of this division of the Construction Industry and for their self government. PROVISIONS FOR HOURS AND WAGES The provisions for hours and wages are set out in Chapter I of the Construction Code, which was approved by you on January 31, 1934, and the same provisions are applicable, under this Chapter, to the General Contractors division. ECONOMIC EFFECT OF THE CODE Due to the magnitude of the General Contractors' Industry, and the mass of statistics relating to it, it is difficult to make an epitomi- zation as to the economic effect of the Code. Construction volume approached $11,500,000,000 in 1928 and direct employment in 1929 ranged from 3,200,000 to 3,400,000. It is safe to say,' that with the prohibition of unfair trade practices, and the establishment of uniform rates of pay and hours of work, that more wholesome conditions will prevail in this industry and that employers, employees and the public will all be benefited. In the South the established minimum rate will vastly increase purchasing power and greatly benefit the worker. (2) FINDINGS The Deputy Administrator in his final report to me on said Chapter II Code of Fair Competition for the Construction Industry, as modi- fied by the addition thereto of said Chapter II, having found as herein set forth and on the basis of all the proceedings in this matter: I find that: (a) Said Chapter II and said Code of Fair Competition for the Construction Industry, as modified by the addition thereto of said Chapter II, is well designed to promote the policies and purposes of Title I of the National Industrial Recovery Act, including removal of obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof and will provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among the trade groups, by inducing and maintain- ing united action of labor and management under adequate govern- mental sanctions and supervision, by eliminating unfair competitive practices, by promoting the fullest possible utilization of the present productive capacity of industries, by avoiding undue restriction of production (except as may be temporarily required), by increasing the consumption of industrial and agricultural products through increasing purchasing power, by reducing and relieving unemploy- ment, by improving standards of labor, and by otherwise rehabili- tating industry. (bj Said Chapter II and the Code of Fair Competition for the Construction Industry, as modified by the addition thereto of said Chapter II, as approved, complies in all respects with the pertinent provisions of said Title of said Act, including without limitation sub- section (a) of Section 3, Sub-section (a) of Section 7, and sub-section (b) of Section 10 thereof; and that the applicant association is an industrial association truly representative of the aforesaid Industry; and that said association imposes no inequitable restrictions on ad- mission to membership therein. (c) Said Chapter II and the Code of Fair Competition for the Con- struction Industry, as modified by the addition thereto of said Chap- ter II, is not designed to and will not permit monopolies or monopo- listic practices. (d) Said Chapter II and the Code of Fair Competition for the Construction Industry, as modified by the addition thereto of said Chapter II, is not designed to and will not eliminate or oppress small enterprises and will not operate to discriminate against them. (e) Those engaged in other steps of the economic process have not been deprived of the right to be heard prior to approval of said Chapter II and of said Code, as modified by the addition thereto of this Chapter II thereof. For these reasons, therefore, I recommend approval of said Chapter II and said Code, as modified by the addition thereto of said Chapter II thereof. Respectfully, Hugh S. Johnson, Administrator. February 16, 1934. Chapter II GENERAL CONTRACTORS' DIVISION OF THE CONSTRUC- TION INDUSTRY Article I— Definitions Section 1. A General Contractor. — The term "general contractor" is hereby denned to mean without limitation any individual, partner- ship, association, trust, trustee, trustee in bankruptcy, receiver, cor- poration or agency which undertakes, whether by formal contract or otherwise, to direct, superintend, coordinate and execute either directly or through others, the work of constructing, substantially in its entirety, any fixed structural or physical improvement, or a modi- fication thereof, or an addition or repair thereto, excluding any such operation aggregating in its entirety less than the sum of $1,000.00. It is recognized that the function of the architect or professional engineer is to design or plan construction projects and acting in his professional capacity to supervise the execution thereof on behalf of the owner. Such architects or professional engineers in the perform- ance of their normal and customary functions shall not be deemed to be included in the foregoing definition of a general contractor. Section 2. The term "Subdivision of the General Contractors Division of the Industry," or "Subdivision" shall mean a defined section of this division, established for administration purposes. Without limitation upon any additional subdivisions, the subdivisions which shall be established and defined in Sub-Chapters II A, II B and II C hereto are: Chapter II A- -Building Contractors Subdivision, II B_ -Heavy Construction and Railroad Con- tractors Subdivision, II C_ -Highway Contractors Subdivision. The subdivisions under this chapter may in their respective sub- chapters amplify and expand the provisions of this Code, and the same, when approved by the Administrator, shall apply to the respective subdivisions so proposing the same, with the same force and effect as any other provisions of this Code. Section 3. The term "Association" as used herein shall mean The Associated General Contractors of America. Section 4. The term "sub-contractor"" as used herein shall mean anyone other than an employee who enters into a contract for the performance of an act with the general contractor who has already contracted or otherwise arranged for its performance. Article II — Administration To further effectuate the policies of the Act and to administer this Code within the General Contractors Division and its subdivisions there shall be established a Divisional Code Authority for General Contractors as provided herein. (4) A. DIVISIONAL CODE AUTHORITY Section 1. — The Divisional Code Authority for General Contrac- tors intended to be referred to as "The Divisional Code Authority", shall be composed of seventeen (17) members, twelve (12) of whom shall be appointed annually by the Executive Committee of the Association from its Board of Governors and/or its Advisory Board, and each member so appointed shall serve until the new annual Executive Committee of the Association shall reappoint him or appoint his successor. The twelve (12) members so appointed shall appoint to the Divisional Code Authority five (5) additional persons, to be approved by the Administrator, engaged in the business of general contracting who are not at the time of selection representa- tive of or responsible to members of the Association and each of the five (5) members so appointed shall serve until he is so reappointed or his successor selected, or until he or his successor shall be selected by the non-members of the Association pursuant to a method of selection satisfactory to and approved b} 7 the Administrator. Section 2. The Divisional Code Authority shall have, in addition to the powers and duties conferred upon it by Chapter 1 thereof, the following powers and duties applicable to the General Contractors Division. (a) Its members or its authorized representatives may upon request attend meetings of any administrative agency established for any sub-division. (b) It is authorized under the supervision of and in cooperation with the Construction Code Authority in the exercise of the power conferred upon it in Section 2 (d) of Article IV A of Chapter 1 to require the registration in such manner as it may deem appropriate of all construction work undertaken by general contractors as herein defined exceeding two thousand dollars ($2,000.00) in value, and, in order to defray the expenses of such registration, of the collection of the reports and the data herein required and of the administration of this code, to charge and collect as a registration fee not to exceed one tenth of one percent of the value of the work. From the funds so collected, The Divisional Code Authority shall defray its expenses, and the general contractors' proportionate share of the expenses of the Construction Code Authority, in administering this Code, and make an equitable apportionment between the Divisional Code Authority and the subdivisional committees or agencies as shall cooperate in procuring the registration of such work or services. B. SUB-DIVISIONAL ADMINISTRATIVE COMMITTEES OR AGENCIES Section 1. There shall be established for each sub-division of the General Contractors Division an Administrative Committee or Agency which shall, within the limitations provided herein, administer within such sub-division the provisions of this Code applicable specif- ically to such subdivision. The procedure for establishing each such administrative committee or agency shall be defined in the sub- chapter pertaining to that sub-division of the General Contractors Division. Section 2. Each such subdi visional administrative committee or agency shall have in addition to such duties and powers as the Divi- sional Code Authority may delegate, the following powers and duties: (a) It may establish rules and regulations for the conduct of its affairs and may appoint such committees, agencies and representatives and delegate to them such of its powers and duties as it may deem necessary for the proper discharge of its functions hereunder. (b) It shall cooperate with the Divisional Code Authority in making investigations as to the functioning and observance of this Code within its subdivision at its own instance or on complaint of any person affected, and shall collect from members of the subdivision and com- pile and furnish to the Divisional Code Authority, any reports and other information required under the Act. (c) It shall study the trade practice provisions applicable to its own sub-division, and the operation thereof, and may make such recommendations to the Divisional Code Authority as it deems desirable for modification or addition thereto. Such recommenda- tions, upon approval of the Administrator after such notice and hearing as he may prescribe, shall become a part of this Code and have full force and effect as provisions hereof. (d) It shall receive and so far as possible adjust all complaints as to trade practices between members of its sub-division in the opera- tion of the provisions of this Code applicable to that sub-division. (e) It may prescribe bidding rules, requiring the inclusion in each bid of all direct and indirect costs properly defined, and methods for administering such rules, and such rules and methods, when approved by the Administrator, shall apply to the members of its sub-division. Article III — Appeals Section 1. Controversies or complaints within any sub-division shall be fully determined and adjusted locally so far as practicable, otherwise by the administrative committee or agency established for such subdivision. Section 2. Any party directly affected shall have the right of appeal to the Divisional Code Authority and of a prompt hearing and decision, under such rules of procedure and proper charges to cover costs of investigation and hearing as it may prescribe, in respect of any decision, rule, regulation, order or finding made by any subdivisional administrative committee or agency. Section 3. The Divisional Code Authority shall have original juris- diction of all controversies affecting more than one subdivision of General Contractors. Article IV — Practices as to Submitting Bids Section 1. In order that whenever contracts are to be let by com- petitive bidding the terms of the competition shall be such as to insure fair competition, a general contractor, in submitting bids for the con- struction or improvement of either private or public works, shall be governed by the following provisions: (a) All bids shall be in writing, signed by an authorized representa- tive of the bidder. Alternate proposals may be submitted with the original bid, providing the same privilege is extended to all bidders. (b) A general contractor shall not take advantage in his bid of any special privilege, favor or understanding had with him by persons in control of the award. This, however, shall not prevent an} 7 such com- petitor, even though not the lowest bidder, from taking such contract, providing the award is made at his original competitive price, nor shall it prevent any contractor from accepting the award of such contract at any price where no competitive bids are taken. (c) A general contractor shall not revise his bid after bids have been opened in order to improve his position with the owner. Bona fide mistakes discovered after the opening of bids shall be grounds for withdrawal only. Where supplemental bids are requested because of substantial changes in the plans and/or specifications, such bids shall reflect only the true value of the changes. A general contractor shall not bid upon a private construction proj- ect upon which bids have been opened, or at any time within 90 days next thereafter, except there be substantial changes in the plans and specifications. (d) Standards of accounting, cost keeping and estimating may be prescribed by sub-divisions for the purpose of determining a fair price for services or products and systems for the interchange of such infor- mation subsequent to the award of specific work may be established. Such standards shall be subject to the approval of the Divisional Code Authorit\ T and of the Administrator. Article V — General Trade Practices Section 1. A general contractor bidding upon or undertaking to execute construction contracts shall be properl}^ qualified by capital, organization and experience. He shall own or have available suffi- cient and proper equipment to execute the work bid upon or furnish evidence of his ability to acquire same. Section 2. Credit Injormation. — A general contractor shall make available upon request to those responsible for the award of construc- tion contracts, pertinent information as to his current financial posi- tion, using the Standard questionnaire forms developed and approved by and available through the Joint Conference on Construction Prac- tices, Washington, D.C., or other forms approved or prescribed by the Administrator, and may request equivalent information from the owner. Section 3. Records and Accounts. — A general contractor shall maintain and employ an adequate system of records and accounts, which system shall clearly show the allocation as to each specific project of all funds received or disbursed on account thereof. Section 4. Contractual Agreements. — The following bases of con- tractual agreements are recognized as fair trade practices; guaranteed price, cost of the work plus a fee, unit price, lump sum, and other contractual methods not inimical to the public interest, providing that the regulations contained in this Code of Fair Competition are met. Section 5. Prohibited Agreements. — A general contractor shall not enter into any agreement or understanding prior to the award of a contract where such award is made as a result of competitive bidding by which agreement or understanding he agrees to accept a lesser amount for his services than the amount stated in his bid. Section 6. Disputes. — A general contractor shall be ready and willing to settle disputed matters promptly. Where arbitration as 8 a method of settling; disputed matters is agreed upon, the rules of procedure as established by the American Arbitration Association shall govern, except as otherwise required by law or contract. Pay- ment, exceeding that sufficient to cover the amount in dispute, shall not be withheld from the parties affected. Section 7. Payments by General Contractor. — Funds received by a general contractor for construction work performed or to be per- formed by him shall be accepted and applied first for the purpose of paying amounts due from him to others in respect of any portion of such work including amounts due to employees, material men, sub- contractors and others. These provisions shall not be construed to require a general contractor to keep in separate bank accounts or deposits the funds received under separate contracts, provided that he shall maintain books of accounts which shall clearly show the al- location to each and every contract of the funds deposited in his general or special bank account or accounts, and he shall devote the final pajnnents to him from the owner, within ten da3 r s after the re- ceipt thereof, to the payment of the balances due from him to such employees, material men, sub-contractors and others, provided satis- factory evidence is furnished showing that all outstanding claims against said parties, for which the general contractor would otherwise be liable, have been fully satisfied or provided for. Earlier payments and/or greater amounts may be mutually agreed upon. Nothing in this section shall supersede any Federal, State or local laws imposing more stringent requirements with respect to matters referred to herein. Section 8. Rebates. — A general contractor shall not give or accept rebates, refunds, allowances, unearned discounts or special services to or from sub-contractors, material vendors or others which are not extended under like terms and conditions to or by other sub-contrac- tors, material vendors and others of equal credit rating. Section 9. Financing . — A general contractor shall not permit or require sub-contractors or material vendors to finance his accounts unless such arrangement is expressly provided for in the original contract between the parties. Section 10. Waiver of Legal Rights. — A general contractor shall promptly inform sub-contractors with whom he is contracting of any waiver of lien rights executed by the general contractor. Section 11. In competitive bidding a general contractor shall not offer or agree to assume the responsibility for deficiencies in or omis- sions from the plans and/or specifications, which he has not prepared or caused to be prepared by others, and upon which the contract is based, for the purpose or with the effect of securing an unfair competitive advantage. Section 12. Labor ]Yelfare. — A general contractor shall provide for the welfare and safety of his workmen, complying with all applic- able laws governing such matters. Except where such laws otherwise require, he shall comply with the provisions of the safety manual here- tofore adopted by the Associated General Contractors of America, Section 13. No Prison Labor. — A general contractor shall not employ prison labor in the execution of the work. Section 14. Payment of Wages. — A general contractor shall as promptly as possible make payment of all wages due, in lawful cur- rency of the United States, or by a negotiable check at par therefor 9 payable on demand. A general contractor or his agents shall accept no rebates directly or indirectly on such wages, nor give anything of value or extend favors to any person for the purpose of influencing rates of wages or the working conditions of his employees. Article VI — Reference to Provisions of Chapter I The mandatory provisions required by the Act, and all other of the provisions contained in Chapter I of this Code (approved January 31, 1934) except as otherwise provided in this Chapter II, apply with like force and effect within this division of the Construction Industry, as if incorporated herein. Article VII — Modification Subject to the provisions of Section 2, (c) of Article IV, B, of Chap- ter I of this Code, the provisions of this chapter, except as to provisions required by the Act, may be modified on the basis of experience or changes in circumstances, such modifications to be based upon applica- tion to the Administrator and such notice and hearing as he shall specify, and to become effective on his approval. Article VIII — Effective Date This chapter shall become effective on the thirtieth (30th) day after its approval by the President. Approved Code No. 244 Supplement No. 1. Registry No. 1616-2-31. O UNIVERSITY OF FLORIDA 3 1262 08583 1005