A-62602, OCTOBER 10, 1935, 15 COMP. GEN. 290

A-62602, OCTOBER 10, 1935, 15 COMP. GEN. 290

CONTRACTS - PREVAILING WAGE RATE STIPULATIONS - INCREASED COSTS WHERE A CONTRACT FOR FURNISHING LABOR AND MATERIAL, AND FOR PERFORMANCE OF ALL WORK FOR COMPLETION OF A GOVERNMENT BUILDING, REQUIRES PAYMENT OF STIPULATED MINIMUM RATES OF PAY FOR SKILLED LABOR WITH A PROVISION THAT IN THE EVENT THE PREVAILING HOURLY RATES PRESCRIBED UNDER COLLECTIVE AGREEMENTS OR UNDERSTANDINGS BETWEEN ORGANIZED LABOR AND EMPLOYEES SHALL BE ABOVE SUCH STIPULATED MINIMUM RATES SUCH HIGHER AGREED WAGE RATES WILL APPLY, AND NO PROVISION IS MADE IN THE CONTRACT FOR ASSUMPTION BY THE UNITED STATES OF ALL OR ANY PART OF THE INCREASED COST OCCASIONED THEREBY, ANY INCREASED COSTS DUE TO THE PAYMENT OF SUCH HIGHER RATES ARE THE RESPONSIBILITY OF THE CONTRACTOR, AND THE RIGHTS AND OBLIGATIONS SO CONTRACTUALLY FIXED MAY NOT BE ALTERED TO THE DISADVANTAGE OF THE GOVERNMENT.

COMPTROLLER GENERAL MCCARL TO THE ARCHITECT OF THE CAPITOL, OCTOBER 10, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF SEPTEMBER 19, 1935, WITH INCLOSURES, AS FOLLOWS:

UNDER CONTRACT NUMBER ACCONG-139 DATED JUNE 12, 1935, THE CONSOLIDATED ENGINEERING COMPANY, OF BALTIMORE, MARYLAND, AGREED TO FURNISH ALL LABOR AND MATERIALS AND PERFORM ALL WORK FOR THE COMPLETION OF AN ANNEX BUILDING TO THE LIBRARY OF CONGRESS, WASHINGTON, D.C., IN STRICT ACCORDANCE WITH SPECIFICATIONS AND DRAWINGS DATED JANUARY 31, 1935, AND ADDENDA TO THE SPECIFICATIONS NUMBERED 1 TO 14, INCLUSIVE. ARTICLE 19 OF THE GENERAL CONDITIONS OF THE SPECIFICATIONS, AS AMENDED BY ITEM 5 OF ADDENDUM NO. 2, PROVIDES THAT THE CONTRACTOR AND ALL SUBCONTRACTORS SHALL PAY A MINIMUM HOURLY WAGE FOR SKILLED LABOR OF $1.10, PROVIDED THAT, IN THE EVENT THAT THE PREVAILING HOURLY RATES PRESCRIBED UNDER COLLECTIVE AGREEMENTS OR UNDERSTANDINGS BETWEEN ORGANIZED LABOR AND EMPLOYERS ON DECEMBER 15, 1934, SHALL BE ABOVE THE MINIMUM RATE SPECIFIED ABOVE, SUCH AGREED WAGE RATES SHALL APPLY AND BE EFFECTIVE FOR THE PERIOD OF THE CONTRACT BUT NOT TO EXCEED TWELVE MONTHS FROM THE DATE OF THE CONTRACT AND, FURTHER, THAT WHERE THESE AGREEMENTS OR UNDERSTANDINGS CALL FOR INCREASES IN WAGES TO START DURING THIS TWELVE-MONTH PERIOD, THEN SUCH INCREASED WAGES SHALL BECOME THE MINIMUM WAGES FROM THE AGREED EFFECTIVE DATES FOR THE BALANCE OF THIS TWELVE-MONTH PERIOD.

ITEM 4 OF ADDENDUM NO. 2 INCLUDES A SCHEDULE SHOWING THE RATES OF WAGES PER HOUR FOR VARIOUS TRADES PREVAILING IN WASHINGTON, D.C., ON DECEMBER 15, 1934. THIS ADDENDUM STIPULATES A RATE OF $1.25 PER HOUR FOR CARPENTERS.

THE ABOVE PROVISIONS WITH RESPECT TO THE PAYMENT OF LABOR WERE INSERTED IN THE SPECIFICATIONS PURSUANT TO AN AGREEMENT BETWEEN THE GOVERNMENT AND ORGANIZED LABOR DATED AUGUST 14, 1933. THE SIGNATURE OF MR. HENRY W. BLUMENBERG TO SAID AGREEMENT SIGNIFIES ASSENT ON THE PART OF THE INTERNATIONAL CARPENTERS' LABOR UNION.

ON AUGUST 30, 1935, THE CARPENTERS' LOCAL UNION INSTITUTED A STRIKE ON THIS BUILDING FOR THE PURPOSE OF OBTAINING AN INCREASE IN WAGES FROM $1.25 PER HOUR TO $1.37 1/2 PER HOUR, WHICH STRIKE IS STILL IN FORCE. THE INCREASED RATE WAS PURSUANT TO AN AGREEMENT BETWEEN THE MASTER BUILDERS' ASSOCIATION AND THE CARPENTERS' DISTRICT COUNCIL DATED MAY 17, 1935, SUBSEQUENT TO THE RECEIPT OF BIDS ON THE LIBRARY ANNEX ON MAY 15, AND WAS MADE EFFECTIVE FROM MAY 1, 1935.

UNDER DATE OF AUGUST 30, 1935, THE CONTRACTOR ADDRESSED A LETTER TO THIS OFFICE ADVISING IT OF THE OCCURRENCE OF THE STRIKE AND STATING HIS VIEWS THAT, IF THE CARPENTERS SHOULD PREVAIL IN THEIR DEMANDS, THE CONTRACTOR SHOULD BE REIMBURSED BY THE GOVERNMENT FOR THE TOTAL COST ARISING FROM THE DIFFERENCE IN RATE BETWEEN $1.25 AND $1.37 1/2 PER HOUR.

ATTENTION IS INVITED TO THE FACT THAT PARAGRAPH C OF ARTICLE 19 OF THE CONTRACT GENERAL CONDITIONS REFERS TO THE PREVAILING HOURLY RATES ON DECEMBER 15, 1934, WHEREAS THE AGREEMENT OF AUGUST 14, 1933, BETWEEN ORGANIZED LABOR AND THE ADMINISTRATOR OF PUBLIC WORKS IS BASED UPON RATES PREVAILING ON APRIL 30, 1933. THIS CHANGE WAS MADE AT THE REQUEST OF THE WASHINGTON BUILDING TRADES COUNCIL, OF WHICH THE LOCAL CARPENTERS' UNION IS A MEMBER, AND PURSUANT TO A LETTER OF NOVEMBER 2, 1934, TO MR. JOHN LOCHER, SECRETARY OF THE COUNCIL, FROM MR. PHILLIP B. FLEMING, ACTING DEPUTY ADMINISTRATOR OF THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS.

THE FOLLOWING PAPERS REFERRED TO ABOVE ARE ENCLOSED HEREWITH:

ORIGINAL LETTER FROM THE CONSOLIDATED ENGINEERING COMPANY, DATED AUGUST 30, 1935.

COPY OF AGREEMENT DATED AUGUST 14, 1933, BETWEEN THE GOVERNMENT AND ORGANIZED LABOR.

COPY OF LETTER TO MR. JOHN LOCHER DATED NOVEMBER 2, 1934, FROM THE DEPUTY ADMINISTRATOR OF PUBLIC WORKS.

IN ORDER TO AVOID DELAY IN THE PROGRESS OF THE WORK, IT IS DESIRED THAT THE CONTROVERSY BE SETTLED AT THE EARLIEST DATE POSSIBLE. YOUR VIEWS WOULD BE APPRECIATED AS TO WHETHER, UNDER THE TERMS OF THE CONTRACT, THE CONTRACTOR IS PROTECTED WITH RESPECT TO THE WAGE RATES STIPULATED IN ADDENDUM NO. 2, AND WHETHER, IF THE CLAIMS OF THE CARPENTERS ARE ACCEDED TO, THE GOVERNMENT WOULD BE LIABLE FOR THE EXCESS COST OCCASIONED, AND WHETHER THIS OFFICE, WITH THE APPROVAL OF THE JOINT COMMISSION TO ACQUIRE A SITE AND ADDITIONAL BUILDINGS FOR THE LIBRARY OF CONGRESS, MIGHT PROPERLY INCREASE THE CONTRACT PRICE ACCORDINGLY.

THE CONGRESS HAS AUTHORIZED THE APPROPRIATION OF A TOTAL OF $9,366,340 FOR THE CONSTRUCTION AND EQUIPMENT OF THE ANNEX TO THE LIBRARY OF CONGRESS, AND AUTHORIZED THE ARCHITECT OF THE CAPITOL TO ENTER INTO CONTRACTS TO THAT AMOUNT. BY SECTION 203 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933 (48 STAT. 202), THE PRESIDENT WAS AUTHORIZED THROUGH THE FEDERAL EMERGENCY ADMINISTRATOR OF PUBLIC WORKS, OR THROUGH SUCH OTHER AGENCIES AS HE MIGHT CREATE,"* * * TO ADVANCE UPON REQUEST OF THE COMMISSION HAVING JURISDICTION OF THE PROJECT THE UNAPPROPRIATED BALANCE OF THE SUM AUTHORIZED FOR CARRYING OUT THE PROVISIONS OF THE ACT ENTITLED "AN ACT TO PROVIDE FOR THE CONSTRUCTION AND EQUIPMENT OF AN ANNEX TO THE LIBRARY OF CONGRESS," APPROVED JUNE 13, 1930 (46 STAT. 583); SUCH ADVANCE TO BE EXPENDED UNDER THE DIRECTION OF SUCH COMMISSION AND IN ACCORDANCE WITH SUCH ACT.' IT IS UNDERSTOOD THAT, PURSUANT TO THE ABOVE PROVISION, THE FEDERAL EMERGENCY ADMINISTRATOR OF PUBLIC WORKS TURNED OVER TO THE COMMISSION THE SUM OF $2,800,000 AND, WHILE THE PRESENT CONTRACT, IN THE AMOUNT OF $6,269,400, MAY BE PAYABLE IN PART FROM THE $2,800,000 SO TURNED OVER TO THE COMMISSION, AND IN PART FROM FUNDS AUTHORIZED TO BE APPROPRIATED BY THE CONGRESS, THE PLAIN INTENT OF THE CONGRESS WAS THAT THE FUNDS TURNED OVER TO THE COMMISSION PURSUANT TO THE PROVISION CITED SHOULD BE DIVESTED OF IDENTITY AS PUBLIC WORKS ADMINISTRATION FUNDS, SEPARATED FROM CONTROL OR SUPERVISION OF THE FEDERAL EMERGENCY ADMINISTRATOR OF PUBLIC WORKS, AND PLACED AT THE DISPOSAL OF THE COMMISSION, TO BE EXPENDED IN ACCORDANCE WITH THE ACT OF JUNE 13, 1930, SUPRA. THUS, THE FUNDS SO TURNED OVER TO THE COMMISSION IN CONFORMITY WITH THE DIRECTION OF THE STATUTE WERE NOT "APPROPRIATED BY THE ADMINISTRATOR OF PUBLIC WORKS" WITHIN THE MEANING OF THE AGREEMENT OF AUGUST 14, 1933, BETWEEN THAT OFFICIAL AND ORGANIZED LABOR, AND THE PROVISIONS OF SAID AGREEMENT DO NOT BEAR UPON THE QUESTION HERE PRESENTED.

PERTINENT PROVISIONS OF THE SPECIFICATIONS AS CARRIED INTO THE CONTRACT, RELATIVE TO WAGES, ARE AS FOLLOWS:

19. WAGES.--- (A) ALL EMPLOYEES DIRECTLY EMPLOYED ON THIS WORK SHALL BE PAID JUST AND REASONABLE WAGES, WHICH SHALL BE COMPENSATION SUFFICIENT TO PROVIDE, FOR THE HOURS OF LABOR AS LIMITED, A STANDARD OF LIVING IN DECENCY AND COMFORT. THE CONTRACTOR AND ALL SUBCONTRACTORS SHALL PAY NOT LESS THAN THE MINIMUM HOURLY WAGE RATES FOR SKILLED AND UNSKILLED LABOR AS FOLLOWS:

SKILLED LABOR, $1.10 (CHANGED TO $1.25 FOR CARPENTERS).

(C) IN THE EVENT THAT THE PREVAILING HOURLY RATES PRESCRIBED UNDER COLLECTIVE AGREEMENTS OR UNDERSTANDINGS BETWEEN ORGANIZED LABOR AND EMPLOYERS ON DECEMBER 15, 1934 (CHANGED TO APRIL 10, 1935), SHALL BE ABOVE THE MINIMUM RATES SPECIFIED ABOVE, SUCH AGREED WAGE RATES SHALL APPLY: PROVIDED, THAT SUCH AGREED WAGE RATES SHALL BE EFFECTIVE FOR THE PERIOD OF THIS CONTRACT, BUT NOT TO EXCEED 12 MONTHS FROM THE DATE OF THE CONTRACT, AND FURTHER, WHERE THESE AGREEMENTS OR UNDERSTANDINGS CALL FOR INCREASES IN WAGES TO START DURING THIS TWELVE-MONTH PERIOD, THEN SUCH INCREASED WAGES SHALL BECOME THE MINIMUM WAGES FROM THE AGREED EFFECTIVE DATES.

THE REQUIREMENT THAT CONTRACTOR PAY EMPLOYEES THE PREVAILING RATE OF WAGES IS IN CONFORMITY WITH THE ACT OF MARCH 3, 1931, 46 STAT. 1494, AND RELATED STATUTES, AND THERE WAS STIPULATED IN THE SPECIFICATIONS BID UPON AND IN THE CONTRACT A MINIMUM RATE OF $1.25 PER HOUR FOR SKILLED LABOR, INCLUDING, OF COURSE, CARPENTERS. BUT IN SUCH CONNECTION IT WAS FURTHER STIPULATED (19 (C) SUPRA) THAT IN THE EVENT THE PREVAILING HOURLY RATES PRESCRIBED UNDER COLLECTIVE AGREEMENTS OR UNDERSTANDINGS BETWEEN ORGANIZED LABOR AND EMPLOYERS ON DECEMBER 15, 1934 (CHANGED TO APR. 10, 1935), SHALL BE ABOVE SUCH STIPULATED MINIMUM RATE OF $1.25 PER HOUR, SUCH AGREED WAGE RATES SHALL APPLY. AND---

PROVIDED, THAT SUCH AGREED WAGE RATES SHALL BE EFFECTIVE FOR THE PERIOD OF THIS CONTRACT, BUT NOT TO EXCEED 12 MONTHS FROM THE DATE OF THE CONTRACT, AND FURTHER, WHERE THESE AGREEMENTS OR UNDERSTANDINGS CALL FOR INCREASES IN WAGES TO START DURING THIS TWELVE-MONTH PERIOD, THEN SUCH INCREASED WAGES SHALL BECOME THE MINIMUM WAGES FROM THE AGREED EFFECTIVE DATES.

WHETHER THERE EXISTED AN AGREEMENT OR UNDERSTANDING BETWEEN ORGANIZED LABOR AND EMPLOYERS ON APRIL 10, 1935, FIXING AN HOURLY WAGE RATE FOR SKILLED LABOR IN EXCESS OF THE MINIMUM RATE STIPULATED FOR IN THE CONTRACT, DOES NOT APPEAR, BUT EVEN IF SUCH AN AGREEMENT OR UNDERSTANDING EXISTED AND BY REASON THEREOF A HIGHER RATE IS PAYABLE, IT IS A RESPONSIBILITY OF THE CONTRACTOR AS UNDER THE PROVISIONS OF (C) SUPRA, CONTRACTOR ASSUMED SUCH RISK AND SPECIFICALLY AGREED THAT SUCH WAGE RATES WOULD BE PAYABLE DURING THE PERIOD OF THE CONTRACT BUT NOT NECESSARILY BEYOND 12 MONTHS FROM THE EFFECTIVE DATE. THERE APPEARS NOTHING IN THE CONTRACT EVEN SUGGESTING THAT THE UNITED STATES WOULD SHARE ANY PORTION OF INCREASED LABOR COSTS DURING SUCH 12-MONTH PERIOD AND WHICH PERIOD CANNOT EXPIRE BEFORE JUNE 12, 1936, AND THE RIGHTS AND OBLIGATIONS SO CONTRACTUALLY FIXED MAY NOT BE ALTERED TO THE DISADVANTAGE OF THE GOVERNMENT.

WHAT MAY HAVE BEEN INTENDED BY THE PROVISIONS (E) AND (F) OF PARAGRAPH 19 OF THE SPECIFICATIONS IS NOT CLEAR, BUT EVEN IF THEREBY IT WAS INTENDED TO RESERVE AUTHORITY TO FURTHER OBLIGATE THE APPROPRIATION, WHICH SEEMS DOUBTFUL, SUCH PROVISIONS CAN HAVE NO EFFECT WITH RESPECT TO THE 12-MONTH PERIOD CONTRACTUALLY FIXED AS AFORESAID.