B-144382, MAR. 21, 1961

B-144382: Mar 21, 1961

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WAS REPORTED TO HAVE VIOLATED THE ACT WHEN. IT USED UNREGISTERED APPRENTICES WHO WERE PAID WAGES AGGREGATING $1. STATED THAT "* * * WE DO NOT FIND THE VIOLATIONS TO HAVE BEEN OF A NATURE WARRANTING OUR RECOMMENDATION FOR THE IMPOSITION OF SANCTIONS AS PROVIDED BY SECTION 3 (A) OF THE DAVIS-BACON ACT.'. A PRELIMINARY REVIEW OF THE MATTER INDICATED THAT OBLIGATIONS TO EMPLOYEES UNDER THE DAVIS-BACON ACT WERE NOT DISREGARDED AND THAT THE FUNDS COLLECTED UNDER THE SECOND CONTRACT WERE NOT DUE EMPLOYEES BUT SHOULD BE RETURNED TO THE PRIME CONTRACTOR. THESE TENTATIVE CONCLUSIONS WERE COMMUNICATED TO THE OFFICE OF THE SOLICITOR OF LABOR INFORMALLY AS A COOPERATIVE MEASURE ON OUR PART TO AID THE ENFORCEMENT PROGRAM.

B-144382, MAR. 21, 1961

TO THE SECRETARY OF LABOR:

THERE HAS BEEN RECEIVED FROM ACTING SOLICITOR OF LABOR HAROLD C. NYSTROM A LETTER DATED JANUARY 27, 1961, URGING THAT A BALANCE OF $1,894.59 WITHHELD FROM HILL AIR CONDITIONING, INCORPORATED, UNDER CONTRACT GS-06B- 5323, BE USED, PURSUANT TO PROVISIONS OF THE DAVIS BACON ACT, 40 U.S.C. 276A, TO ADJUST THE WAGES OF CERTAIN EMPLOYEES OF ITS SUBCONTRACTOR, THE BEERY-ENNIS PLUMBING AND HEATING COMPANY, INCORPORATED, UNDER CONTRACT GS- 06B-4639.

THE BEERY-ENNIS PLUMBING AND HEATING COMPANY, INCORPORATED, WAS REPORTED TO HAVE VIOLATED THE ACT WHEN, IN PERFORMING WORK UNDER CONTRACT GS-06B- 4639, IT USED UNREGISTERED APPRENTICES WHO WERE PAID WAGES AGGREGATING $1,894.59 LESS THAN THOSE PRESCRIBED FOR JOURNEYMAN. THE ACTING SOLICITOR, FORWARDING THE CASE BY HIS LETTER OF JUNE 22, 1960, STATED THAT "* * * WE DO NOT FIND THE VIOLATIONS TO HAVE BEEN OF A NATURE WARRANTING OUR RECOMMENDATION FOR THE IMPOSITION OF SANCTIONS AS PROVIDED BY SECTION 3 (A) OF THE DAVIS-BACON ACT.'

A PRELIMINARY REVIEW OF THE MATTER INDICATED THAT OBLIGATIONS TO EMPLOYEES UNDER THE DAVIS-BACON ACT WERE NOT DISREGARDED AND THAT THE FUNDS COLLECTED UNDER THE SECOND CONTRACT WERE NOT DUE EMPLOYEES BUT SHOULD BE RETURNED TO THE PRIME CONTRACTOR. THESE TENTATIVE CONCLUSIONS WERE COMMUNICATED TO THE OFFICE OF THE SOLICITOR OF LABOR INFORMALLY AS A COOPERATIVE MEASURE ON OUR PART TO AID THE ENFORCEMENT PROGRAM. THE ACTING SOLICITOR OF LABOR'S LETTER, WHICH FOLLOWED FURTHER INFORMAL DISCUSSION, STATED IN PART THAT---

"* * * I AM ENCLOSING COPIES OF LETTERS ADDRESSED BY THE CHIEF OF PUBLIC BUILDINGS SERVICE CONSTRUCTION BRANCH ON APRIL 4 AND APRIL 7, 1958, TO HILL AIR CONDITIONING, INCORPORATED, THE PRIME CONTRACTOR ON THE ABOVE PROJECT. ALTHOUGH THESE ARE FORM LETTERS, THERE CAN BE NO QUESTION THAT IN THE LIGHT OF THE PUBLISHED REGULATIONS (29 CFR, SUBTITLE A, PART 5, SECTION 5.2 (C) AND 5.5 (A) (4) ( AND THE CONTRACT TERMS, THEY WERE FULLY ADEQUATE TO PUT THE CONTRACTOR ON NOTICE THAT THE INDIVIDUALS NAMED WERE IMPROPERLY EMPLOYED. A REASONABLY PRUDENT CONTRACTOR SHOULD HAVE MADE APPROPRIATE INQUIRY AND, AS HE WAS OBLIGED TO DO UNDER HIS CONTRACT, TAKEN WHATEVER STEPS WERE NECESSARY TO CORRECT THE SITUATION. NO FAILURE BY THE CONTRACTING AGENCY TO REPLY TO THE EARLIER LETTER FROM THE SUBCONTRACTOR, AS TO WHOM IT HAD NO CONTRACTUAL RELATIONS OR OBLIGATION BEYOND ONE MERELY OF COURTESY, OR TO FOLLOW UP WITH CONCURRENT ENFORCEMENT ACTION CAN OPERATE TO EXCUSE THE HILL COMPANY FROM ITS CONTRACTUAL OBLIGATIONS OR TO JUSTIFY PREJUDICING THE RIGHTS OF THE AFFECTED EMPLOYEES, WHO ARE ENTIRELY BLAMELESS IN THE MATTER, TO RECEIVE THE FULL PREDETERMINED RATES TO WHICH THEY ARE ENTITLED UNDER THE LAW AND THE REGULATIONS.

"QUITE FRANKLY, IF THE WITHHELD FUNDS WERE TO BE RETURNED TO THE CONTRACTOR IN THIS CASE, IT WOULD IN MY OPINION CONSTITUTE A REVISION OF THE CONTRACT WITHOUT THE CONSENT OF THE CONTRACTING AGENCY, A REVERSAL OF THE AGENCY'S FINDINGS OF FACT AND NEGATION OF THE SECRETARY OF LABOR'S REGULATIONS. YOU HAVE RECOGNIZED THAT SUCH REGULATIONS HAVE THE FORCE AND EFFECT OF LAW (SEE DECISION B-106987, MAY 8, 1953, AND COURT DECISIONS THEREIN CITED). IT IS MY POSITION THAT ONLY THE COURTS CAN HOLD THESE REGULATIONS TO BE INVALID AND, AS STATED DURING OUR CONFERENCE, I AM PERFECTLY WILLING TO DEFEND THEM IN COURT IN THIS CASE.

"IT IS RESPECTFULLY REQUESTED THEREFOR, THAT THE FUNDS CURRENTLY WITHHELD IN THE SUM OF $1,894.59 NOT BE RELEASED TO THE CONTRACTOR AND THAT IF AFTER A REASONABLE PERIOD THE CONTRACTOR DOES NOT BRING SUIT FOR THEIR RECOVERY, THEY BE DISTRIBUTED TO THE EMPLOYEES ACCORDING TO THE FINDINGS OF THE CONTRACTING AGENCY.'

OUR STUDY OF THE EVIDENCE SUBMITTED DISCLOSES THAT AN UNUSUAL SITUATION EXISTED IN WHICH THERE WAS ABSENT ANY EVIDENCE THAT THE WORKMEN WERE QUALIFIED JOURNEYMEN, THAT THEY ACTUALLY PERFORMED JOURNEYMAN SERVICES, OR THAT THE APPRENTICE CLASSIFICATION WAS USED AS A DEVICE TO EVADE PAYMENT OF JOURNEYMAN WAGES. THE SUBCONTRACTOR WAS FULLY AWARE OF THE REGISTRATION REQUIREMENT AND APPARENTLY MADE A VERY REASONABLE EFFORT TO COMPLY. IN A LETTER DATED MARCH 26, 1958, IT INFORMED THE CONTRACTING AGENCY THAT NO PROGRAM FOR EITHER UNION OR NON-UNION SHOPS EXISTED OR WAS EXPECTED TO EXIST IN THE AREA BEFORE FALL AND REQUESTED ADVISE. ALTHOUGH THE FORM LETTERS MENTIONED HAD BEEN SENT TO THE PRIME CONTRACTOR ON APRIL 4 AND APRIL 7, 1958, ADVISING THAT REGISTRATION CERTIFICATIONS MUST BE FURNISHED, NO REPLY WAS MADE TO THE SUBCONTRACTOR'S LETTER AND IT WAS FILED WITH A NOTATION BY THE CONTRACTING OFFICER ON APRIL 10, 1958,"ACCEPTABLE FOR SCALE FOR THESE EMPLOYEES.'

THE GOVERNING CONTRACT CONDITION (APPARENTLY SECTION 22 OF STANDARD FORM 23A) PROVIDED, CONFORMING TO THE DIRECTIONS OF SECTIONS 5.2 (C) AND 5.5 (A) (4) OF REGULATIONS, 29 CFR, SUBTITLE A, PART 5, THAT "APPRENTICES WILL BE PERMITTED TO WORK ONLY UNDER A BONA FIDE APPRENTICESHIP PROGRAM REGISTERED WITH * * *.' WHILE THE RECORD IS NOT ENTIRELY CLEAR AS TO WHY IT DID SO, THE CONTRACTING AGENCY, NONETHELESS, APPEARS TO HAVE PERMITTED THE USE OF APPRENTICES. IT MAY BE THAT THE SUBCONTRACTOR COULD HAVE APPLIED FOR A FEDERALLY APPROVED PROGRAM, BUT IT IS UNCERTAIN THAT THIS COURSE WOULD HAVE OFFERED A TIMELY OR PRACTICAL SOLUTION TO THE PROBLEM OF REGISTRATION. IN ANY EVENT, NEITHER THE SUBCONTRACTOR NOR THE CONTRACTOR WAS ADVISED FURTHER IN THE MATTER AT THE TIME. THAT THE EMPLOYMENT OF APPRENTICES WAS PERMITTED AND THE WAGE CLASSIFICATION FOR APPRENTICES IN THE SITUATION ENCOUNTERED WAS ACCEPTED, THE REGISTRATION REQUIREMENT BEING TREATED AS INCIDENTAL, IS CLEARLY SHOWN BY THE FACT THAT THE CONTRACTING AGENCY PAID THE CONTRACT PRICE IN FULL WITHOUT RETAINING FUNDS FOR WAGE ADJUSTMENTS. THE FACT THAT AT A LATER DATE IT TOOK STEPS TO SEIZE FUNDS UNDER ANOTHER CONTRACT AND TO REQUIRE WAGE ADJUSTMENT CAN, AT THE MOST, BE REGARDED ONLY AS AN AFTERTHOUGHT.

IN THE CIRCUMSTANCES, THERE IS PERCEIVED NO REASONABLE BASIS ON WHICH TO QUESTION THE GOOD FAITH OF EITHER THE SUBCONTRACTOR OR THE CONTRACTING AGENCY. REGISTRATION WAS IMPRACTICABLE, IF NOT IMPOSSIBLE, AND, EVEN THOUGH THE CLASSIFICATION WAS TECHNICALLY ERRONEOUS AS A RESULT, TO NOW REQUIRE THAT THE WORKERS BE GIVEN JOURNEYMAN RATES WOULD GIVE THEM A WINDFALL NOT COMMENSURATE WITH THEIR WORK CAPABILITIES OR ACTUAL PERFORMANCE, WOULD PENALIZE THE SUBCONTRACTOR OR CONTRACTOR BY IMPOSING AN UNCONTEMPLATED EXPENSE, AND, MOST IMPORTANTLY, WOULD DISREGARD AN UNDERSTANDING APPARENTLY ADOPTED AND OBSERVED BY BOTH PARTIES TO THE CONTRACT DURING ITS PERFORMANCE.

IN SPECIFIC REPLY TO THE ACTING SOLICITOR OF LABOR'S LETTER, IT MAY BE ADDED THAT OUR EVALUATION OF THE EVIDENCE OF RECORD, AS INDICATED, HAS LED US TO CONCLUDE THAT NEITHER THE REGULATORY NOR THE CONTRACT PROVISIONS WERE DISREGARDED OR REVISED WITHOUT THE CONSENT OF THE CONTRACTING AGENCY. OBVIOUSLY, NEITHER STIPULATES THAT WORKERS EMPLOYED IN APPRENTICESHIP CLASSIFICATIONS WITHOUT BEING REGISTERED SHALL BE PAID JOURNEYMAN WAGES. WHILE THE OBJECTIVE SOUGHT IN BOTH UNDOUBTEDLY IS ONE OF ESTABLISHING REGISTRATION AS AN ESSENTIAL CONDITION TO THE USE OF WORKERS AT APPRENTICESHIP WAGES, THE REGULATION OPERATES UPON CONTRACTING AGENCIES AND THE CONTRACT PROVISIONS DO NOT EXPRESSLY PROHIBIT OR PROVIDE DAMAGES FOR NONREGISTRATION. WE KNOW OF NO RIGHT ACQUIRED BY THE UNREGISTERED APPRENTICES TO JOURNEYMAN WAGES, AND IT IS ASSUMED THAT THE DEPARTMENT IS NOT URGING THE EXISTENCE OF SUCH A RIGHT MERELY AS A PENALTY UPON THE CONTRACTOR FOR NONREGISTRATION.

ALTHOUGH ON THE RECORD BEFORE US WE FEEL COMPELLED TO TAKE THE POSITION THAT NO ADDITIONAL WAGES ARE DUE THE WORKERS EMPLOYED AS APPRENTICES AND THAT, CONSEQUENTLY, IT WOULD BE IMPROPER TO CONTINUE WITHHOLDING MONEYS DUE THE PRIME CONTRACTOR, WE APPRECIATE THE INTEREST AND CONCERN OF THE DEPARTMENT OF LABOR IN THE SETTLEMENT BY THIS OFFICE OF WAGE ADJUSTMENT DISPUTES. AT THE SAME TIME, JUST AS DIVERGENT CONCLUSIONS SOMETIMES ARE DRAWN FROM THE SAME EVIDENCE BY DIFFERENT PARTIES, COMPLETE AGREEMENT CANNOT BE EXPECTED IN ALL CASES UPON WAGE ADJUSTMENTS THE PROPRIETY OF WHICH IT IS OUR RESPONSIBILITY TO DETERMINE UNDER SECTION 3 (A) OF THE DAVIS-BACON ACT. PLEASE BE ASSURED THAT WE HAVE A COMMON DESIRE TO MAKE ENFORCEMENT AS EFFECTIVE AS POSSIBLE UNDER THE LAW.