(a) The costs to a contractor or subcontractor which may be
reasonably anticipated in providing benefits of the types described in
the act pursuant to an enforceable commitment to carry out a financially
responsible plan or program, are considered fringe benefits within the
meaning of the act (see 1(b)(2)(B) of the act). The legislative history
suggests that these provisions were intended to permit the consideration
of fringe benefits meeting, among others, these requirements and which
are provided from the general assets of a contractor or subcontractor.
(Report of the House Committee on Education and Labor, H. Rep. No. 308,
88th Cong., 1st Sess., p. 4.)
(b) No type of fringe benefit is eligible for consideration as a so-
called unfunded plan unless:
(1) It could be reasonably anticipated to provide benefits described
in the act;
(2) It represents a commitment that can be legally enforced;
(3) It is carried out under a financially responsible plan or
program; and
(4) The plan or program providing the benefits has been communicated
in writing to the laborers and mechanics affected. (See S. Rep. No. 963,
p. 6.)
(c) It is in this manner that the act provides for the consideration
of unfunded plans or programs in finding prevailing wages and in
ascertaining compliance with the Act. At the same time, however, there
is protection against the use of this provision as a means of avoiding
the act's requirements. The words ``reasonably anticipated'' are
intended to require that any unfunded plan or program be able to
withstand a test which can perhaps be best described as one of actuarial
soundness. Moreover, as in the case of other fringe benefits payable
under the act, an unfunded plan or program must be ``bona fide'' and not
a mere simulation or sham for avoiding compliance with the act. (See S.
Rep. No. 963, p. 6.) The legislative history suggests that in order to
insure against the possibility that these provisions might be used to
avoid compliance with the act, the committee contemplates that the
Secretary of Labor in carrying out his responsibilities under
Reorganization Plan No. 14 of 1950, may direct a contractor or
subcontractor to set aside in an account assets which, under sound
actuarial principles, will be sufficient to meet the future obligation
under the plan. The preservation of this account for the purpose
intended would, of course, also be essential. (S. Rep. No. 963, p. 6.)
This is implemented by the contractual provisions required by
Sec. 5.5(a)(1)(iv).
