B-13158, NOVEMBER 5, 1940, 20 COMP. GEN. 245

B-13158: Nov 5, 1940

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IS REQUIRING THAT ITS EMPLOYEES WORK MORE THAN 40 HOURS PER WEEK. PROVIDED HE DETERMINES SUCH MODIFICATION IS NECESSARY IN ORDER TO AVOID STRIKES. 1940: I HAVE YOUR LETTER OF OCTOBER 25. WAS ENTERED INTO BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS OF THE NAVY DEPARTMENT. AS THE CONTRACTOR IS SUBJECT TO THE PROVISIONS OF THE DAVIS-BACON ACT OF AUGUST 30. THE PREVAILING WAGES AS PREDETERMINED BY THE SECRETARY OF LABOR IN CONFORMITY WITH THE ACT WERE INSERTED IN PARAGRAPH 1 -17 OF THE SPECIFICATIONS. THE FOLLOWING: "WHILE THE WAGE RATES SHOWN ARE THE MINIMUM RATES REQUIRED BY THESE SPECIFICATIONS TO BE PAID DURING THE LIFE OF THE CONTRACT. IT IS THE RESPONSIBILITY OF BIDDERS TO INFORM THEMSELVES AS TO THE LOCAL LABOR CONDITIONS AND PROSPECTIVE CHANGES.

B-13158, NOVEMBER 5, 1940, 20 COMP. GEN. 245

CONTRACTS - MODIFICATION - AVOIDANCE OF NATIONAL DEFENSE PROGRAM DELAYS WHERE A CONTRACTOR, WHILE COMPLYING IN ALL RESPECTS WITH THE LABOR CONDITIONS IMPOSED BY ITS FIXED-PRICE NATIONAL DEFENSE PROGRAM CONTRACT WITH THE NAVY DEPARTMENT, IS REQUIRING THAT ITS EMPLOYEES WORK MORE THAN 40 HOURS PER WEEK, WITHOUT PAYING THEM AN INCREASED RATE FOR THE TIME IN EXCESS OF 40 HOURS, THE SECRETARY OF THE NAVY MAY MODIFY THE CONTRACT TO PROVIDE THAT THE CONTRACTOR SHALL PAY TIME AND ONE-HALF FOR HOURS WORKED BY ITS EMPLOYEES IN EXCESS OF 40 HOURS PER WEEK AND BE REIMBURSED BY THE GOVERNMENT FOR THE INCREASE THUS PAID, PROVIDED HE DETERMINES SUCH MODIFICATION IS NECESSARY IN ORDER TO AVOID STRIKES, ETC., WITH RESULTING DELAY OR OTHER SERIOUS INTERFERENCE WITH THE NATIONAL DEFENSE PROGRAM.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, NOVEMBER 5, 1940:

I HAVE YOUR LETTER OF OCTOBER 25, 1940, AS FOLLOWS:

UNDER DATE OF JUNE 18, 1940, A CONTRACT, NOY-4144, WAS ENTERED INTO BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS OF THE NAVY DEPARTMENT, AS CONTRACTING OFFICER OF THE UNITED STATES, WITH BLYTHE BROTHERS COMPANY FOR WATER SYSTEM, SANITARY SEWERS AND STORM SEWERS AT THE NAVAL AIR STATION, JACKSONVILLE, FLORIDA, UNDER SPECIFICATION NO. 9788.

ARTICLE 1 OF THE CONTRACT REQUIRED THE WORK TO BE COMMENCED WITHIN 10 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED AND TO BE COMPLETED WITHIN 210 CALENDAR DAYS FROM THE DATE OF SUCH NOTICE.

AS THE CONTRACTOR IS SUBJECT TO THE PROVISIONS OF THE DAVIS-BACON ACT OF AUGUST 30, 1935 (49 STAT. 1011) U.S.C. SECS. 27A AND 27A-1, ARTICLE 17 OF THE CONTRACT ( STANDARD CONSTRUCTION FORM US NO. 23 REVISED SEPTEMBER 17, 1938) APPLIES. THEREFORE, THE PREVAILING WAGES AS PREDETERMINED BY THE SECRETARY OF LABOR IN CONFORMITY WITH THE ACT WERE INSERTED IN PARAGRAPH 1 -17 OF THE SPECIFICATIONS.

THE PARAGRAPH LAST CITED CONTAINED AMONG OTHER STIPULATIONS, THE FOLLOWING:

"WHILE THE WAGE RATES SHOWN ARE THE MINIMUM RATES REQUIRED BY THESE SPECIFICATIONS TO BE PAID DURING THE LIFE OF THE CONTRACT, IT IS THE RESPONSIBILITY OF BIDDERS TO INFORM THEMSELVES AS TO THE LOCAL LABOR CONDITIONS AND PROSPECTIVE CHANGES, INCLUDING ANY EXISTING OR PENDING COLLECTIVE BARGAINING AGREEMENTS WHICH MAY PROVIDE FOR RATES IN EXCESS OF THOSE PREDETERMINED BY THE SECRETARY OF LABOR.'

THE DAVIS-BACON ACT DOES NOT LIMIT THE NUMBER OF HOURS ON WHICH EMPLOYEES OF CONTRACTORS MAY BE ENGAGED. ARTICLE 11 OF THE CONTRACT LIMITED THE NUMBER OF HOURS TO 8 PER DAY SUBJECT TO THE EXCEPTIONS PROVIDED FOR IN SECTIONS 321, 325, AND 326 OF TITLE 40 U.S.C. SUBSEQUENTLY TO THE EXECUTION OF THE CONTRACT, SECTION 5 (B) OF PUBLIC ACT NO. 671, 76TH CONGRESS, APPROVED JUNE 29, 1940, SUSPENDED THE 8 HOUR LAW WITH RESPECT TO " PERSONS ENGAGED UPON WORK COVERED BY ARMY, NAVY, AND COAST GUARD CONTRACTS.'

SECTION 303 OF THE SECOND SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1941, APPROVED SEPTEMBER 9, 1940 ( PUBLIC, NO. 781, 76TH CONGRESS) PROVIDES THAT:

" NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE WAGES OF EVERY LABORER AND MECHANIC EMPLOYED BY ANY CONTRACTOR OR SUBCONTRACTOR ENGAGED IN THE PERFORMANCE OF ANY CONTRACT OF THE CHARACTER SPECIFIED IN THE ACT OF JUNE 19, 1912 (37 STAT. 138; U.S.C. TITLE 40, SECS. 324, 325), SHALL BE COMPUTED ON A BASIC DAY RATE OF EIGHT HOURS PER DAY AND WORK IN EXCESS OF EIGHT HOURS PER DAY SHALL BE PERMITTED UPON COMPENSATION FOR ALL HOURS WORKED IN EXCESS OF EIGHT HOURS PER DAY AT NOT LESS THAN ONE AND ONE-HALF TIMES THE BASIC RATE OF PAY.'

THE TWO ACTS LAST MENTIONED RELATE TO THE NUMBER OF HOURS PER DAY OF THE EMPLOYEES THEREIN MENTIONED AND HAVE NO APPLICATION TO THE NUMBER OF HOURS PER WEEK ON WHICH THEY MIGHT BE EMPLOYED.

UNDER CONTRACT COVERED BY NOY-4144, THE CONTRACTORS HAVE BEEN OPERATING A LARGE PART OF THE TIME ON A 56-HOUR PER WEEK BASIS BECAUSE OF THE URGENT NEED FOR SEWERS AND WATER SUPPLY.

A RECENT REPORT SHOWS THAT THE WORK IS NOW APPROXIMATELY 50 PERCENT COMPLETED AND THE LABOR PAY ROLL FOR THE BALANCE OF THE JOB IS ESTIMATED AT ABOUT $50,000.

A COMPLAINT HAS BEEN RECEIVED BY THE ADVISORY COMMISSION TO THE COUNCIL OF NATIONAL DEFENSE AS TO THE LABOR SITUATION AT THE SITE OF THE NAVAL AIR STATION, AT JACKSONVILLE, FLORIDA. SPECIFICALLY, MR. HILLMAN, THE LABOR REPRESENTATIVE ON SAID COMMISSION, REPORTS THAT:

"CERTAIN CONTRACTORS ENGAGED IN CONSTRUCTION AT THE JACKSONVILLE AIRPORT HAVE BEEN COMPELLING THEIR WORKERS TO WORK FIFTY-SIX HOURS A WEEK. MEN ARE REQUIRED TO WORK AN EIGHT-HOUR DAY, SEVEN DAYS A WEEK. NO OVERTIME IS PAID FOR HOURS IN EXCESS OF FORTY.

"AN INVESTIGATION BY THIS OFFICE REVEALS THE FACT THAT MEN WHO REFUSE TO APPEAR FOR WORK ON EITHER SATURDAYS OR SUNDAYS ARE DISMISSED.

"IT WILL BE IMPOSSIBLE TO CONTINUE TO PERSUADE WORKERS TO ACCEPT EXISTING CONDITIONS ON THIS PROJECT. THE TIME IS FAST APPROACHING WHEN THE MEN WILL STRIKE. THEY RIGHTFULLY DEMAND THAT IN VIEW OF THE POLICY OF THE CONGRESS RELATIVE TO HOURS OF EMPLOYMENT IN SHIPYARDS AND ARSENALS THEY HAVE THE RIGHT TO EXPECT THAT THEY RECEIVE OVERTIME PAY AND EXTRA COMPENSATION IF THEY ARE COMPELLED TO WORK ON SUNDAYS. THUS FAR THIS OFFICE HAS BEEN ABLE TO MAINTAIN THESE WORKERS ON THE JOB BUT IT IS DOUBTFUL AS TO WHETHER WE CAN BE SUCCESSFUL TOWARD THIS END MUCH LONGER.'

MR. HILLMAN ALSO REPORTS THAT CERTAIN UNION CONTRACTORS ON THE SITE ARE PAYING TIME AND ONE-HALF FOR OVERTIME WORK IN EXCESS OF FORTY HOURS PER WEEK.

ATTENTION IS INVITED TO THE ENCLOSED COPY OF MEMORANDUM OF SEPTEMBER 30, 1940, FROM THE CHIEF OF THE BUREAU OF YARDS AND DOCKS TO MR. ISADOR LUBIN OF THE DEFENSE COMMISSION, SETTING FORTH GENERALLY THE CONDITIONS SURROUNDING THE AWARDING OF CONTRACTS AND THE LABOR SITUATION AT THE JACKSONVILLE AIR STATION. IT WILL BE NOTED THEREFROM THAT IN MANY CASES A VERY SHORT TIME HAS BEEN SPECIFIED IN THE CONTRACTS FOR PERFORMANCE OF THE WORK DUE TO THE URGENT NEED THEREOF AND THAT THE RESPONSIBILITY IS ON THE CONTRACTORS TO DETERMINE THE NUMBER OF HOURS PER WEEK THAT THEY WILL PAY EMPLOYEES AND NUMBER OF MEN TO BE EMPLOYED. THERE WAS NO STATUTORY LIMITATION ON THE NUMBER OF HOURS PER WEEK EMPLOYEES MAY BE ENGAGED ON CONTRACTS OF THIS NATURE.

IT IS UNDERSTOOD THAT THE COMMON PRACTICE IS TO WORK FROM 40 TO 48 HOURS PER WEEK AT STRAIGHT TIME AND UNDOUBTEDLY SOME OF THE CONTRACTORS UNDER FIXED PRICE CONTRACTS, BASED THEIR BIDS ON WORKING MORE THAN 40 HOURS PER WEEK. ACCORDINGLY, SHOULD THE NAVY REQUIRE THESE CONTRACTORS TO PAY TIME AND ONE-HALF FOR WORK IN EXCESS OF FORTY HOURS, THEIR COSTS WILL UNQUESTIONABLY BE INCREASED.

IN THE CASE OF CONTRACT NOY-4144, THE OFFICER IN CHARGE OF THE WORK REPORTS THAT FOR THE BALANCE OF THE UNCOMPLETED CONTRACT THE ADDITIONAL COST OF PAYING ONE AND ONE-HALF TIMES THE BASIC RATE FOR ALL WORK IN EXCESS OF 40 HOURS PER WEEK WILL AMOUNT TO AN ESTIMATED SUM OF $7,000 ON THE ASSUMPTION THAT THE EFFICIENCY OF LABOR WOULD NOT BE DECREASED ON ACCOUNT OF SUCH RATES. A CHECK OF THE CONTRACTOR'S PAY ROLLS FOR THE WEEK ENDING OCTOBER 12, 1940, SHOWS THAT THE EXTRA COST TO THE CONTRACTOR IF TIME AND ONE-HALF WERE PAID FOR WORK OVER 40 HOURS PER WEEK WOULD BE $500.

BY CIRCULAR LETTER OF OCTOBER 4, 1940, A COPY OF WHICH IS ENCLOSED, THE SECRETARY OF THE NAVY, TRANSMITTED TO ALL NAVY ACTIVITIES A COPY OF HOUSE DOCUMENT NO. 950, COMPRISING COMMUNICATION FROM THE PRESIDENT SETTING FORTH THE PRINCIPLES ADOPTED BY THE NATIONAL DEFENSE ADVISORY COMMISSION GOVERNING THE LETTING OF NATIONAL DEFENSE CONTRACTS AND ALSO A STATEMENT OF THE LABOR POLICY ADOPTED BY SAID COMMISSION.

PARAGRAPH 5 OF THE CIRCULAR LETTER OF THE SECRETARY OF THE NAVY, WHICH IS PERTINENT TO THE MATTER UNDER CONSIDERATION, IS QUOTED BELOW:

"UNLESS THE PREVAILING LOCAL CONDITIONS AT THE SITE OF ANY NAVAL CONTRACT WORK BE DEFINITELY TO THE CONTRARY, IT IS THEREFORE GENERALLY EXPECTED THAT THE NORMAL WORKING HOURS OF THE EMPLOYEES OF NAVAL CONTRACTORS WILL BE EIGHT HOURS A DAY OR FORTY HOURS A WEEK STRAIGHT TIME, AND THAT OVERTIME IN EXCESS OF FORTY HOURS A WEEK WILL BE PAYABLE UNDER THE CONTRACT. IN THE TERM "LOCAL CONDITIONS" ARE INCLUDED ANY APPLICABLE STATE OR FEDERAL LAWS; THE EXISTENCE OF A VALID UNION CONTRACT BETWEEN THE CONTRACTORS AND HIS EMPLOYEES; AND THE PREVAILING CUSTOM IN THE VICINITY. IT IS NOT INTENDED THAT ANY NAVAL CONTRACT SHALL BE USED AS A VEHICLE FOR CHANGING THE EXISTING STATUS QUO IN THE LOCALITY WHERE THE WORK IS TO BE PERFORMED OR TO CHANGE THE RELATIONS EXISTING BETWEEN A CONTRACTOR AND HIS EMPLOYEES OR THEIR UNIONS. ALL NAVAL CONTRACTS SHALL BE ADMINISTERED, AS FAR AS PRACTICABLE, TO CONFORM TO THE EXISTING LOCAL CONDITIONS.'

IN VIEW OF THE FOREGOING, A DECISION IS REQUESTED AS TO WHETHER NAVAL APPROPRIATIONS ARE AVAILABLE IN THE CASE OF CONTRACT NOY-4144 AND OTHER CONTRACTS OF A LIKE NATURE FOR REIMBURSING CONTRACTORS FOR AMOUNTS PAID TO THEIR EMPLOYEES FOR OVERTIME AT RATES NOT LESS THAN TIME AND ONE-HALF FOR WORK IN EXCESS OF 40 HOURS PER WEEK WHEN SUCH OVERTIME RATE IS DIRECTED TO BE PAID BY THE GOVERNMENT AND NO OTHER CHANGE IN THE CONTRACT IS INVOLVED.

IN THE MEMORANDUM OF SEPTEMBER 30, 1940, FROM THE CHIEF OF THE BUREAU OF YARDS AND DOCKS TO MR. ISADOR LUBIN OF THE DEFENSE COMMISSION, REFERRED TO IN YOUR LETTER, THE QUESTION WITH REFERENCE TO CONTRACT NOY-4144 IS SUMMARIZED AS FOLLOWS:

* * * A CONTRACTOR HAS AGREED TO DO A CERTAIN PIECE OF WORK IN A CERTAIN TIME FOR A CERTAIN AMOUNT OF MONEY. THE GOVERNMENT HAS AGREED TO PAY THE CONTRACTOR THAT SUM OF MONEY WHEN THE WORK IS DONE WITHIN THE TIME LIMIT SPECIFIED. CAN THE GOVERNMENT LEGALLY PAY THE CONTRACTOR MORE MONEY FOR DOING THE SAME PIECE OF WORK IN THE SAME TIME MERELY BECAUSE THE CONTRACTOR, AT THE GOVERNMENT'S REQUEST, HAS INCREASED WAGES THROUGH THE MEDIUM OF PAYING TIME AND A HALF FOR ALL WORK IN EXCESS OF FORTY HOURS?

AS STATED IN YOUR LETTER, THE CONTRACTOR, BLYTHE BROTHERS CO., AGREED AMONG OTHER THINGS TO PERFORM THE WORK REQUIRED WITHIN 210 CALENDAR DAYS FROM THE DATE OF NOTICE TO PROCEED AND TO PAY TO LABORERS AND MECHANICS, PURSUANT TO THE REQUIREMENTS OF THE DAVIS-BACON ACT, 49 STAT. 1011, PREVAILING WAGE RATES AS FOUND BY THE SECRETARY OF LABOR AND AS INCLUDED IN THE CONTRACT, FOR FIXED UNIT PRICES SPECIFIED THEREIN. THE CONDITIONS INCLUDED IN THE CONTRACT PURSUANT TO THE DAVIS BACON ACT, SUPRA, DO NOT REQUIRE THE CONTRACTOR TO PAY TIME AND ONE HALF FOR HOURS WORKED BY EMPLOYEES IN EXCESS OF 40 PER WEEK, NOR DO SUCH CONDITIONS CONTAIN ANY REFERENCE TO THE HOURS PER WEEK WHICH EMPLOYEES MAY LABOR ON THE WORK. HOWEVER, ARTICLE 11 OF THE CONTRACT LIMITS THE EMPLOYMENT OF LABORERS AND MECHANICS TO 8 HOURS IN ANY ONE CALENDAR DAY PURSUANT TO THE 8-HOUR LAW OF 1912, 37 STAT. 137. AS YOU POINT OUT, SECTION 5 (B) OF PUBLIC NO. 671, APPROVED JUNE 28, 1940 (SUBSEQUENT TO THE DATE OF THE CONTRACT HERE UNDER CONSIDERATION), SUSPENDED THE 8-HOUR LAW WITH RESPECT TO ,PERSONS ENGAGED UPON WORK COVERED BY ARMY, NAVY, AND COAST GUARD CONTRACTS" AND SECTION 303 OF THE SECOND SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1941, APPROVED SEPTEMBER 9, 1940, PERMITS LABORERS AND MECHANICS TO WORK MORE THAN 8 HOURS PER DAY ON CONDITION THAT TIME AND ONE-HALF BE PAID FOR ALL WORK IN EXCESS OF 8 HOURS PER DAY. IT IS OBVIOUS, HOWEVER, THAT NEITHER THE DAVIS-BACON ACT, THE 8-HOUR LAW OF 1912, SECTION 5 (B) OF PUBLIC, NO. 671, SUPRA, NOR SECTION 303 OF THE SECOND SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1941, IS CONTROLLING WITH RESPECT TO THE QUESTION PRESENTED BECAUSE THE CONDITIONS OF THE DAVIS-BACON ACT, INCLUDED IN THE CONTRACT, DO NOT REQUIRE THE PAYMENT OF TIME AND ONE-HALF FOR WORK IN EXCESS OF 40 HOURS PER WEEK AND THE CONTRACTOR APPARENTLY IS NOT WORKING ITS EMPLOYEES IN EXCESS OF 8 HOURS PER DAY.

THE SITUATION WITH RESPECT TO CONTRACT NOY-4144 APPEARS TO BE THAT THE CONTRACTOR IS COMPLYING IN ALL RESPECTS WITH THE LABOR CONDITIONS IMPOSED BY THE CONTRACT AND IT DOES NOT APPEAR THAT THERE WOULD BE ANY AUTHORITY IN THE GOVERNMENT TO REQUIRE THE CONTRACTOR TO PAY TIME AND ONE-HALF TO ITS EMPLOYEES FOR TIME WORKED IN EXCESS OF 40 HOURS PER WEEK WITHOUT REIMBURSING THE CONTRACTOR FOR SUCH EXTRA EXPENSE. UNDER ORDINARY CIRCUMSTANCES SUCH REIMBURSEMENT COULD NOT BE MADE TO A CONTRACTOR BECAUSE OF THE FAMILIAR RULE THAT AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO GIVE AWAY THE MONEY OR PROPERTY OF THE UNITED STATES, TO WAIVE CONTRACTUAL RIGHTS WHICH HAVE ACCRUED TO THE UNITED STATES, OR TO MODIFY EXISTING CONTRACTS WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. UNITED STATES V. AMERICAN SALES COMPANY, 27 F. (2D) 389, AFFIRMED 32 F. (2D) 141, CERTIORARI DENIED 280 U.S. 574; PACIFIC HARDWARE CO. V. UNITED STATES, 49 CT.1CLS. 327; AND BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 CT.1CLS. 584.

HOWEVER, SECTION 9 OF PUBLIC, NO. 671, SEVENTY-SIXTH CONGRESS, THIRD SESSION, APPROVED JUNE 28, 1940, ENTITLED "AN ACT TO EXPEDITE NATIONAL DEFENSE, AND FOR OTHER PURPOSES," PROVIDES:

THE SECRETARY OF THE NAVY AND THE SECRETARY OF THE TREASURY ARE HEREBY AUTHORIZED TO MODIFY EXISTING CONTRACTS, INCLUDING COAST GUARD CONTRACTS, AS THE SECRETARY CONCERNED MAY DEEM NECESSARY TO EXPEDITE MILITARY AND NAVAL DEFENSE, AND TO OTHERWISE EFFECTUATE THE PURPOSE OF THIS ACT.

AS STATED ABOVE, CONTRACT NOY-4144 PROVIDES THAT IT SHALL BE COMPLETED WITHIN 210 CALENDAR DAYS AFTER DAY OF NOTICE TO PROCEED AND AN ARRANGEMENT WHEREBY THE CONTRACTOR WOULD PAY TIME AND ONE-HALF TO ITS EMPLOYEES FOR WORK IN EXCESS OF 40 HOURS PER WEEK SUBJECT TO REIMBURSEMENT BY THE GOVERNMENT, WOULD NOT REDUCE THE SPECIFIED TIME OF PERFORMANCE. HOWEVER, THE CONTRACT FURTHER PROVIDES THAT THE GOVERNMENT SHALL NOT TERMINATE THE CONTRACTOR'S RIGHT TO PROCEED OR CHARGE THE CONTRACTOR LIQUIDATED DAMAGES, IN THE EVENT OF DELAYS IN COMPLETION DUE TO "STRIKES.' IT IS APPARENT, THEREFORE, THAT IN THE EVENT OF A STRIKE BY THE CONTRACTOR'S EMPLOYEES DUE TO FAILURE OF THE CONTRACTOR TO PAY GENERALLY RECOGNIZED OVERTIME WAGE RATES, CONSIDERABLE DELAY IN COMPLETION OF THE CONTRACT, THEREBY SERIOUSLY INTERFERING WITH THE NATIONAL DEFENSE PROGRAM, MIGHT RESULT. IN THE EVENT OF AN IMPENDING--- AS DISTINGUISHED FROM A POSSIBLE--- STRIKE WHICH COULD BE AVERTED BY PAYMENT TO THE EMPLOYEES OF TIME AND ONE-HALF FOR HOURS WORKED IN EXCESS OF 40 HOURS PER WEEK, THERE WOULD APPEAR TO BE NO DOUBT AS TO YOUR AUTHORITY UNDER SECTION 9 OF PUBLIC, NO. 671, SUPRA, TO MODIFY THE CONTRACT--- IF YOU DEEM IT "NECESSARY TO EXPEDITE MILITARY AND NAVAL DEFENSE" --- TO PROVIDE THAT THE CONTRACTOR SHALL PAY TIME AND ONE-HALF FOR HOURS WORKED BY ITS EMPLOYEES IN EXCESS OF 40 HOURS PER WEEK AND BE REIMBURSED BY THE GOVERNMENT TO THE EXTENT OF SUCH INCREASE IN WAGE PAYMENTS. FURTHERMORE, ASIDE FROM THAT SPECIFIC STATUTORY AUTHORITY WITH RESPECT TO THE MODIFICATION OF "EXISTING CONTRACTS," THE CONGRESS CLEARLY HAS ESTABLISHED THE POLICY, GENERALLY, THAT EMPLOYMENT IN EXCESS OF 40 HOURS PER WEEK SHOULD BE COMPENSATED AT OVERTIME RATES OF TIME AND ONE- HALF. THIS POLICY IS EVIDENCED BY THE WALSH-HEALEY ACT, 49 STAT. 2036, REQUIRING PAYMENT OF OVERTIME WAGES AT THE RATE OF TIME AND ONE-HALF FOR WORK IN EXCESS OF 8 HOURS PER DAY OR 40 HOURS PER WEEK UNDER GOVERNMENT CONTRACTS, EXCEEDING $10,000, IN AMOUNT, FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ARTICLES, AND EQUIPMENT; BY THE FAIR LABOR STANDARDS ACT OF 1938, 52 STAT. 1060, WHICH REQUIRES THE PAYMENT OF WAGES AT THE RATE OF TIME AND ONE-HALF FOR WORK IN EXCESS OF 40 HOURS PER WEEK BY EMPLOYEES ENGAGED IN INTERSTATE COMMERCE; BY SECTION 2 OF PUBLIC, NO. 671, SUPRA, AUTHORIZING THE NEGOTIATION OF NATIONAL DEFENSE CONTRACTS, WITHOUT ADVERTISING, WHICH WOULD INCLUDE THE AUTHORITY TO BASE SUCH CONTRACTS ON THE PAYMENT OF OVERTIME RATES BY THE CONTRACTOR; BY SECTION 5 (A) OF PUBLIC, NO. 671, WHICH REQUIRES THAT OVERTIME RATES OF TIME AND ONE HALF BE PAID, DURING THE PERIOD OF THE NATIONAL EMERGENCY, TO EMPLOYEES OF THE NAVY DEPARTMENT AND THE COAST GUARD AND THEIR FIELD SERVICES FOR WORK IN EXCESS OF 8 HOURS PER DAY OR 40 HOURS PER WEEK; AND BY PUBLIC NO. 703, APPROVED JULY 2, 1940, ENTITLED "AN ACT TO EXPEDITE THE STRENGTHENING OF THE NATIONAL DEFENSE" WHICH CONFERS AUTHORITY AND IMPOSES RESTRICTIONS UPON THE WAR DEPARTMENT SIMILAR TO THOSE CONTAINED IN PUBLIC, NO. 671, RELATING TO THE NAVY AND TREASURY DEPARTMENTS. THAT THE EXECUTIVE OFFICERS OF THE GOVERNMENT HAVE TAKEN STEPS TO FURTHER THAT POLICY IS EVIDENCED BY YOUR CIRCULAR LETTER OF OCTOBER 4, 1940, AND HOUSE DOCUMENT NO. 950, SETTING FORTH THE PRINCIPLES ADOPTED BY THE NATIONAL DEFENSE ADVISORY COMMISSION GOVERNING THE LETTING OF NATIONAL DEFENSE CONTRACTS AND A STATEMENT OF THE LABOR POLICY ADOPTED BY SAID COMMISSION.

IT IS OF THE UTMOST IMPORTANCE, OF COURSE, DURING THE PRESENT EMERGENCY, THAT THE NATIONAL DEFENSE PROGRAM BE PROSECUTED WITH A MINIMUM OF DELAY AND INTERFERENCE. AND IT IS NOT UNREASONABLE TO ASSUME THAT AN ACUTE SITUATION MIGHT RESULT, WITH CONSEQUENT DELAY AND INTERFERENCE TO SUCH PROGRAM, FROM THE MAINTENANCE OF ONE STANDARD WITH RESPECT TO OVERTIME WORK BY EMPLOYEES UNDER CONTRACTS RESULTING FROM ADVERTISING FOR COMPETITIVE BIDS, AND ANOTHER STANDARD FOR WORK PERFORMED UNDER NEGOTIATED CONTRACTS OR IN GOVERNMENT PLANTS. THEREFORE, AND IN VIEW OF THE ABNORMAL CONDITIONS RESULTING FROM THE PRESENT EMERGENCY AND THE EXPRESSED POLICY OF CONGRESS, I HAVE TO ADVISE THAT IF IT BECOMES NECESSARY IN YOUR OPINION --- UNDER CONDITIONS SIMILAR TO THOSE OBTAINING WITH RESPECT TO CONTRACT NOY-4144 AND IN ORDER TO AVOID DELAY OR OTHER SERIOUS INTERFERENCE WITH THE NATIONAL DEFENSE PROGRAM--- TO MODIFY ANY EXISTING CONTRACT TO PROVIDE THAT THE CONTRACTOR SHALL PAY TIME AND ONE-HALF FOR HOURS WORKED BY ITS EMPLOYEES IN EXCESS OF 40 PER WEEK AND BE REIMBURSED FOR THE INCREASE IN WAGES THUS PAID, THIS OFFICE WILL NOT OBJECT TO OTHERWISE PROPER PAYMENTS UNDER THE CONTRACT AS SO MODIFIED. UNDER ANALOGOUS CIRCUMSTANCES EXISTING DURING THE PERIOD 1917-18 SIMILAR MODIFICATIONS OF CONTRACTS WERE HELD TO BE VALID. SEE BLISS CO. V. UNITED STATES, 275 U.S. 509, WHEREIN THE COURT STATED---

THIS COURT IS OF OPINION THAT THE SECRETARY OF THE NAVY HAD AUTHORITY TO MAKE FURTHER CONTRACTS TO PAY THE PETITIONER THE INCREASED COST RESULTING FROM THE WAGE INCREASES PUT INTO EFFECT AT THE SECRETARY'S INSTANCE, IN THE COURSE OF THE PETITIONER'S PERFORMANCE OF THE ORIGINAL CONTRACTS, AND THAT THE FINDINGS OF THE COURT OF CLAIMS SHOW THAT SUCH FURTHER CONTRACTS WERE MADE AND WERE BASED UPON AN ADEQUATE CONSIDERATION, CONSISTING OF BOTH ADVANTAGE TO THE GOVERNMENT AND DETRIMENT TO THE PETITIONER. * * * ALSO, SEE ELECTRIC BOAT CO. V. THE UNITED STATES, 66 CT.1CLS. 333. ..END