A-98771, OCTOBER 28, 1938, 18 COMP. GEN. 394

A-98771: Oct 28, 1938

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IS DEPENDENT UPON THE ACTUAL CONTRACT PRICE AND NOT UPON ESTIMATES AS TO WHETHER THE CONTRACT WORK IS IN EXCESS OF $2. EVEN THOUGH SAID PROVISIONS WERE INCLUDED IN A CONTRACT WHERE THE PRICE IS LESS. THERE IS NO REQUIREMENT FOR COMPLIANCE THEREWITH. IS FOR APPLICATION IN CONNECTION WITH DISTRICT OF COLUMBIA CONTRACT NO. 13128 DATED APRIL 8. IS QUOTED IN ITS ENTIRETY. 000 TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY. WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR. PROVISION IS MADE FOR THE PAYMENT OF MINIMUM WAGE RATES TO THE VARIOUS TYPES OF LABORERS AND MECHANICS. THAT "THIS SECTION SHALL APPLY IF THE CONTRACT IS IN EXCESS OF $2.

A-98771, OCTOBER 28, 1938, 18 COMP. GEN. 394

CONTRACTS - WAGE, ETC., STIPULATIONS - BACON-DAVIS LAW - APPLICABILITY DEPENDENT UPON ACTUAL CONTRACT PRICE AND NOT ESTIMATES THE CONTRACT APPLICABILITY OF THE WAGE, ETC., PROVISIONS OF THE BACON- DAVIS LAW OF MARCH 3, 1931, AS AMENDED AUGUST 30, 1935, 49 STAT. 1011, IS DEPENDENT UPON THE ACTUAL CONTRACT PRICE AND NOT UPON ESTIMATES AS TO WHETHER THE CONTRACT WORK IS IN EXCESS OF $2,000--- THE STATUTORY MINIMUM- -- AND, EVEN THOUGH SAID PROVISIONS WERE INCLUDED IN A CONTRACT WHERE THE PRICE IS LESS, THERE IS NO REQUIREMENT FOR COMPLIANCE THEREWITH, PUBLIC OFFICERS NOT HAVING LEGAL AUTHORITY TO INCLUDE PROVISIONS CONTRARY TO LAW.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, OCTOBER 28, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 19, 1938, IN PERTINENT PART, AS FOLLOWS:

THE COMMISSIONERS DESIRE TO SUBMIT FOR YOUR EARLY CONSIDERATION AND ADVICE THE QUESTION AS TO WHETHER THE ACT OF MARCH 3, 1931 (46 STAT. 1494), AS AMENDED AUGUST 30, 1935 (49 STAT.1101), COMMONLY KNOWN AS THE BACON-DAVIS LAW, IS FOR APPLICATION IN CONNECTION WITH DISTRICT OF COLUMBIA CONTRACT NO. 13128 DATED APRIL 8, 1938, WITH THE FRED GISCHNER IRON WORKS, INC., FOR INSTALLATION OF A WROUGHT IRON FENCE AT THE POLICE COURT BUILDING IN JUDICIARY SQUARE, FOR THE CONSIDERATION OF $1,553. THIS CONTRACT THE ACT OF AUGUST 30, 1935, IS QUOTED IN ITS ENTIRETY, AND IT PROVIDES AMONG OTHER THINGS,

"* * * THAT THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2,000 TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY, FOR CONSTRUCTION, ALTERATION, AND/OR REPAIRS, INCLUDING PAINTING AND DECORATING OF PUBLIC BUILDINGS OR PUBLIC WORKS OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA, ETC., SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS, WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR, *

IN THE SAME CONTRACT, UNDER SPECIAL STIPULATIONS PERTAINING TO WAGE RATES, PROVISION IS MADE FOR THE PAYMENT OF MINIMUM WAGE RATES TO THE VARIOUS TYPES OF LABORERS AND MECHANICS, TOGETHER WITH THE HOURLY RATE TO BE PAID FOR SUCH SERVICES, SECTION 1 OF WHICH PROVIDES AMONG OTHER THINGS, THAT "THIS SECTION SHALL APPLY IF THE CONTRACT IS IN EXCESS OF $2,000.' THE RECORD INDICATES THAT AT THE TIME THE SPECIFICATIONS, WHICH INCLUDED THE FOREGOING STIPULATION, WERE PREPARED, THE MUNICIPAL ARCHITECT ESTIMATED THE COST AT $2,200. HOWEVER, FOUR BIDS WERE RECEIVED AS FOLLOWS: $1,553, $2,225, $2,759, AND $4,720.

SOME TIME IN MAY, REPRESENTATIVES OF THE DEPARTMENT OF LABOR POINTED OUT THAT INASMUCH AS THE COST OF THE WORK, AS ESTIMATED BY THE DEPARTMENT, EXCEEDED $2,000, AND THE PREDETERMINED WAGE RATES WERE INCORPORATED INTO THE SPECIFICATIONS AS WELL AS IN THE FINAL CONTRACT, THE CONTRACTOR SHOULD BE REQUIRED TO PAY THE MINIMUM WAGES INDICATED THEREIN.

THE ASSISTANT ENGINEER COMMISSIONER, ON MAY 24, 1938, ADVISED THE CONTRACTOR THAT

"THE RATES OF PAY LISTED DO NOT CONFORM WITH THE PREVAILING RATES PREDETERMINED BY THE UNITED STATES DEPARTMENT OF LABOR, WHICH WERE INCLUDED IN THE ADVERTISED SPECIFICATIONS FOR THIS PROJECT, AND ARE THEREFORE REJECTED. YOU WILL BE REQUIRED TO SUBMIT ADDITIONAL SWORN PAYROLL AFFIDAVITS SHOWING THAT ALL WORKMEN HAVE RECEIVED THE PREDETERMINED RATES OF PAY BEFORE FINAL PAYMENT WILL BE MADE.'

THE CONTRACTOR, BY LETTER OF MAY 26, 1938, CLAIMED THAT THERE WAS NOTHING IN THE LAW REQUIRING THIS, NOR DID IT MAKE ANY ALLOWANCE FOR THE PAYMENT OF THESE WAGE RATES.

THE MATTER WAS THEN SUBMITTED TO THE CORPORATION COUNSEL WHO, UNDER DATE OF JUNE 23, 1938, ADVISED THAT INASMUCH AS AWARD HAD BEEN MADE UPON THESE CONDITIONS AND A CONTRACT ENTERED INTO WITH A CONSIDERATION "NOT IN EXCESS OF $2,000," IT WOULD SEEM TO ESTOP THE CONTRACTOR TO DENY ITS AGREEMENT THAT THE WAGE PROVISION SET OUT IN THE CONTRACT WAS APPLICABLE, AND WOULD BE STRICTLY ENFORCED, AND CONCLUDED THAT "IT IS OUR OPINION THAT THE PREDETERMINED WAGE SCALE INCORPORATED IN THE PRESENT CONTRACT IS APPLICABLE TO WORK THEREIN PROVIDED FOR, AND THAT THE CONTRACT CLEARLY SO PROVIDES.' A COPY OF THE CORPORATION COUNSEL'S OPINION IS ENCLOSED.

THE OPINION OF THE CORPORATION COUNSEL WAS APPROVED BY THE COMMISSIONERS JULY 28, 1938, AND THE CONTRACTOR WAS AGAIN ADVISED THAT IT WOULD BE REQUIRED TO PAY THE WAGE SCALES SET OUT IN THE CONTRACT, AND TO SUBMIT EVIDENCE SATISFACTORY TO THE COMMISSIONERS THAT SUCH WAGES HAD BEEN PAID PRIOR TO THE FINAL PAYMENT.

THEREUPON THE CONTRACTOR ADVISED THE COMMISSIONERS THAT IN HIS OPINION THE PREDETERMINED WAGE SCALE APPLIED ONLY TO CONTRACTS WHICH WERE IN EXCESS OF $2,000, AND THAT INASMUCH AS ITS BID WAS ONLY FOR $1,533, IT WAS APPARENT THAT NO ALLOWANCE HAD BEEN MADE FOR THE PAYMENT OF THE PREDETERMINED WAGE, AND THAT HE HAD COMPLETED THE CONTRACT AND WAS ENTITLED TO FINAL PAYMENT. IT WAS THEN SUGGESTED THAT THE MATTER BE REFERRED TO THE DEPARTMENT OF LABOR FOR AN OFFICIAL RULING. THIS WAS DONE AND THE SOLICITOR OF LABOR, GERARD D. REILLY, ON SEPTEMBER 14, 1938, ADVISED THE ENGINEER COMMISSIONER AS FOLLOWS:

"I HAVE YOUR LETTER OF JULY 23, 1938, ADDRESSED TO THE SECRETARY OF LABOR, IN WHICH YOU REQUEST AN OPINION ON THE APPLICABILITY OF THE DAVIS- BACON ACT TO CONTRACTS FOR LESS THAN $2,000, BASED UPON SPECIFICATIONS REQUIRING COMPLIANCE WITH THAT ACT.

"I AM INCLINED TO AGREE WITH THE OPINION RENDERED THE DISTRICT COMMISSIONERS ON JUNE 23, 1938, BY MR. ELWOOD H. SEAL, CORPORATION COUNSEL FOR THE DISTRICT OF COLUMBIA, TO THE EFFECT THAT THE DAVIS BACON ACT REQUIRES THE INSERTION OF MINIMUM WAGE PROVISIONS IN THE ADVERTISED SPECIFICATIONS OF CONTRACTS ESTIMATED TO EXCEED $2,000 AND REQUIRES THE SAME STIPULATIONS IN EVERY CONTRACT BASED UPON THOSE SPECIFICATIONS. HOLD OTHERWISE WOULD BE TO ENCOURAGE IN BORDERLINE CASES THE REDUCTION OF WAGES FOR THE SOLE PURPOSE OF EVADING THE ACT. PARTICULARLY IN VIEW OF THE FACT THAT THE MINIMUM WAGE PROVISIONS APPEARED IN THE CONTRACT UNDER CONSIDERATION (CONTRACT NO. 13128 FOR WROUGHT IRON FENCE AND ORNAMENTAL METAL WORK AT THE DISTRICT POLICE COURT BUILDING) BEFORE THE CONTRACT WAS SIGNED BY THE CONTRACTOR, I AM OF THE BELIEF THAT THE CONTRACTOR IS NOW BOUND BY THOSE TERMS OF THE CONTRACT.'

AS THERE ARE A NUMBER OF CONTRACTS FOR LESS THAN $2,000 WITH THE DISTRICT OF COLUMBIA INVOLVING THE SAME SITUATION WITH RESPECT TO THE PAYMENT OF PREDETERMINED WAGE RATES UNDER THE ACT OF AUGUST 30, 1935, A NUMBER OF THE CONTRACTORS HAVE INDICATED TO THE AUDITOR OF THE DISTRICT OF COLUMBIA THAT THEY HAD GIVEN SIMILAR INTERPRETATION TO THE SPECIFICATIONS IN SUBMITTING BIDS, HAVING IN MIND, OF COURSE, THAT IN SUBMITTING BIDS FOR LESS THAN $2,000 THEY WOULD NOT BE REQUIRED TO PAY THE PREDETERMINED WAGE RATES, AND COULD CONSEQUENTLY GIVE A LOWER PRICE FOR SUCH WORK. THIS CONCLUSION SEEMS TO BE IN LINE WITH THE DECISIONS OF YOUR OFFICE INVOLVING THE REJECTION OF A BID UNDER THE PROVISIONS OF THE WALSH-HEALEY ACT (17 COMP. GEN. 670), WHEREIN YOU HELD:

"THE ACT OF JUNE 30, 1936, 49 STAT. 2036, REQUIRING VARIOUS LABOR,ETC., STIPULATIONS IN GOVERNMENT CONTRACTS FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ETC., SPECIFICALLY EXEMPTS CONTRACTS NOT EXCEEDING $10,000, AND THIS EXEMPTION APPLIED WHETHER THE CONTRACT BE FOR A FIXED OR ESTIMATED QUANTITY, AND WHERE IT IS OBVIOUS THAT DELIVERIES UNDER AN ESTIMATED QUANTITY CONTRACT COULD IN NO EVENT EXCEED THE STATUTORY EXEMPTION, BIDDERS SHOULD NOT BE REQUESTED TO COMPLY WITH THE ACT NOR SHOULD A BID BE REJECTED BECAUSE OF A BIDDER'S REFUSAL OF COMPLIANCE.'

AND IN 16 COMP. GEN. 590, WHERE THE PRINCIPLE INVOLVED IS THE SAME, YOU HELD THAT

"WHEN IT IS ANTICIPATED THAT INVITATIONS FOR BIDS WILL DEVELOP CONTRACTS IN EXCESS OF $10,000 IN AMOUNT, IT IS PROPER THAT THE ADVERTISEMENT GIVE NOTICE TO BIDDERS THAT THE ACT OF JUNE 30, 1936, WILL BE APPLICABLE TO SUCH CONTRACTS. WHEN, HOWEVER, AWARDS ARE MADE WHICH ARE LESS THAN $10,000 IN AMOUNT, THERE IS NO REQUIREMENT THAT THE STATUTORY STIPULATIONS BE INCLUDED IN THE CONTRACT.'

IT FURTHER APPEARS, WITH PARTICULAR REFERENCE TO THE DAVIS-BACON ACT, THAT THE SAME LINE OF REASONING IS BROUGHT OUT IN YOUR DECISION TO THE SECRETARY OF AGRICULTURE UNDER DATE OF SEPTEMBER 30, 1938 (A 96689), WHEREIN YOU COVER CERTAIN QUESTIONS OF ADMINISTRATIVE DISCRETION IN VARIOUS REQUIREMENTS IN PUBLIC CONTRACTS.

IN YOUR LETTER TO THE SECRETARY OF AGRICULTURE IT WAS POINTED OUT THAT IN 17 COMP. GEN. 471 IT WAS HELD THAT A PROPOSED CONTRACT STIPULATION FOR PERIODIC ADJUSTMENT BY THE SECRETARY OF LABOR OF THE MINIMUM RATE OF WAGES STATED IN THE CONTRACT WAS UNAUTHORIZED IN VIEW OF THE PLAIN PROVISION OF THE ACT OF AUGUST 30, 1935 (49 STAT. 1011), REQUIRING THAT THERE BE INCLUDED IN GOVERNMENT CONSTRUCTION CONTRACTS OVER $2,000, A STIPULATION THAT THE CONTRACTOR PAY WAGE RATES NOT LESS THAN THOSE STATED IN THE SPECIFICATIONS, IMPLYING THAT CONTRACTS FOR LESS THAN $2,000 WOULD NOT REQUIRE SUCH PROVISIONS, AND THEREBY SAVE TO THE GOVERNMENT ANY ADDITIONAL COST OCCASIONED THEREBY.

THERE WAS INCLOSED WITH YOUR LETTER A SECOND LETTER, DATED OCTOBER 15, 1938, WHICH YOU REPORT AS HAVING RECEIVED FROM THE SOLICITOR, DEPARTMENT OF LABOR, AFTER THE ABOVE-QUOTED LETTER HAD BEEN PREPARED, IN WHICH IT IS STATED:

SUBSEQUENT TO THE MAILING OF THIS LETTER MY ATTENTION WAS CALLED TO THE LANGUAGE OF THE CONTRACT NO. 13128 BETWEEN THE GOVERNMENT OF THE DISTRICT OF COLUMBIA AND FRED S. GICHNER IRON WORKS, INC. IN SECTION 1 OF THE SPECIAL STIPULATIONS PERTAINING TO WAGE RATES, THE CONTRACT READS: "THIS SECTION SHALL APPLY IF THE CONTRACT IS IN EXCESS OF $2,000 IN AMOUNT" AND THEREAFTER IN THE SAME SECTION THERE ARE LISTED THE MINIMUM WAGE RATES DETERMINED BY THE SECRETARY OF LABOR FOR CERTAIN CLASSES OF MECHANICS AND LABORERS TO BE EMPLOYED IN THE PERFORMANCE OF THE CONTRACT. UPON FURTHER INVESTIGATION, I FIND THAT THE SAME LANGUAGE HAS BEEN USED IN CONTRACTS EXECUTED BY THE PROCUREMENT DIVISION OF THE UNITED STATES TREASURY DEPARTMENT AND BY OTHER AGENCIES OF THE GOVERNMENT AND THAT IN ACCORDANCE THEREWITH THE CONTRACTING OFFICERS FOR SUCH AGENCIES HAVE HELD THAT WHENEVER THE CONTRACT PRICE WAS LESS THAN $2,000 THE SPECIFIED WAGE RATES WERE TO BE IGNORED.

THE APPLICABLE TERMS OF THE CITED DAVIS-BACON ACT OF MARCH 3, 1931, AS AMENDED AUGUST 30, 1935, DO NOT DEPEND UPON "ESTIMATES" AS TO WHETHER THE CONTRACT WORK IS IN EXCESS OF $2,000, BUT THE CONTRACT PRICE ACTUALLY MUST BE IN EXCESS OF $2,000 BEFORE THE TERMS OF SAID ACT COME INTO OPERATION, AND THUS THE PRACTICE AS REPORTED IN THE ABOVE QUOTED EXTRACT FROM THE LETTER DATED OCTOBER 15, 1938, IS IN ACCORDANCE WITH LAW.

ACCORDINGLY, YOU ARE ADVISED THAT SINCE THE CONTRACT PRICE IN THIS CASE WAS $1,553 THE CONTRACTOR IS NOT REQUIRED TO COMPLY WITH THE TERMS OF THE DAVIS-BACON ACT, AS AMENDED, IN THE PERFORMANCE OF SAID CONTRACT--- IT BEING FUNDAMENTAL THAT PUBLIC OFFICERS DO NOT HAVE LEGAL AUTHORITY TO INCLUDE PROVISIONS IN CONTRACTS CONTRARY TO LAW. SEE HOOE V. UNITED STATES, 218 U.S. 322; SUTTON V. UNITED STATES, 256 U.S. 575; AND LEITER V. UNITED STATES, 271 U.S. 204. SEE ALSO FLOYD'S ACCEPTANCES, 7 WALLACE 666.