B-145009, APRIL 3, 1961, 40 COMP. GEN. 557

B-145009, APRIL 3, 1961, 40 COMP. GEN. 557

CONTRACTS - LABOR STIPULATIONS - DAVIS-BACON ACT - CORRECTION OF WAGE SCHEDULES LETTERS OF INADVERTENCE ISSUED PURSUANT TO THE DAVIS-BACON ACT, 40 U.S.C 276A, ESTABLISHING DIFFERENT CLASSIFICATIONS AND NEW MINIMUM WAGE SCHEDULES FOR WORK UNDER A RESERVOIR AREA CLEARING CONTRACT, WHICH HAD BEEN AWARDED ON THE BASIS OF COMPLIANCE WITH ADVERTISED SPECIFICATIONS CONTAINING MINIMUM WAGE SCHEDULES BASED ON A DETERMINATION BY THE SECRETARY OF LABOR OF PREVAILING WAGES FOR CORRESPONDING WORK ON SIMILAR PROJECTS IN THE AREA, ARE TO BE DISTINGUISHED FROM LETTERS OF INADVERTENCE WHICH WERE CONSIDERED IN 37 COMP. GEN. 326 TO AFFORD A BASIS FOR CONTRACT MODIFICATION IN ACCORDANCE WITH THE TERMS OF THE CONTRACT; THEREFORE, WHERE THE ORIGINAL PREVAILING RATE CERTIFICATIONS FOR A PARTICULAR CONTRACT APPEAR TO HAVE CORRECTLY STATED THE DETERMINATIONS ACTUALLY MADE, THERE IS NO BASIS FOR CONTRACT MODIFICATION TO INCORPORATE NEW WAGE RATES.

TO THE SECRETARY OF THE ARMY, APRIL 3, 1961:

BY LETTER DATED FEBRUARY 6, 1961, THE DEPUTY ASSISTANT SECRETARY (1LOGISTICS) REQUESTED DECISIONS AS TO (1) WHETHER OR NOT IT IS MANDATORY UPON THE CONTRACTING OFFICER TO MODIFY CONTRACT NO. DA-03-050 CIVENG-61- 235 TO INCORPORATE THEREIN NEW MINIMUM WAGE RATES SET OUT IN "LETTERS OF INADVERTENCE" ISSUED BY THE DEPARTMENT OF LABOR AFTER AWARD OF THE CONTRACT; AND (2) IF THE CONTRACT MUST BE SO MODIFIED, WHETHER THE GOVERNMENT MUST PAY THE CONTRACTOR ANY INCREASED COSTS RESULTING THEREFROM.

THE FILE TRANSMITTED WITH THE SUBMISSION SHOWS THAT THE CONTRACT COVERS THE WORK OF CLEARING THE RESERVOIR AREA ABOVE GREERS FERRY DAM, ARKANSAS. THE CONTRACT WAS AWARDED ON AUGUST 29, 1960, UNDER SPECIFICATIONS WHICH CONTAINED A MINIMUM WAGE SCHEDULE, AS REQUIRED BY THE DAVIS-BACON ACT, 40 U.S.C. 276A, BASED UPON PREVAILING WAGE DETERMINATIONS OF THE SECRETARY OF LABOR DATED JULY 19, 1960. UNDER DATE OF OCTOBER 25, 1960, THE OFFICE OF THE SECRETARY OF LABOR ADVISED THE OFFICE OF THE CHIEF OF ENGINEERS THAT " DUE TO AN INADVERTENCE" RATES FOR ELEVEN ADDITIONAL CLASSIFICATIONS SHOULD HAVE BEEN SPECIFIED; THREE CLASSIFICATIONS OF TRUCK DRIVERS SHOULD HAVE BEEN OMITTED; AND FIVE OTHER CLASSIFICATIONS OF TRACK DRIVERS SHOULD HAVE BEEN ADDED. THE CLASSIFICATIONS AND RATES WHICH SHOULD HAVE BEEN OMITTED, BUT WHICH HAD IN FACT BEEN INCLUDED IN THE ORIGINAL WAGE DETERMINATIONS AND IN THE ADVERTISED SPECIFICATIONS FOR THE CONTRACT UPON WHICH AWARD HAD BEEN MADE, WERE STATED TO BE:

CHART

PER HOUR TRUCK DRIVERS, 1 1/2 TONS OR LESS ---------------------------- $1.25 TRUCK DRIVERS, OVER 1 1/2 TONS -------------------------------1.35 TRUCK DRIVERS, LOWBOYS --------------------------------------- 1.50

THE CLASSIFICATIONS WHICH SHOULD HAVE BEEN ADDED, AND THE RATES THEREFOR, WERE LISTED AS OLLOWS:

CHART

TRUCK DRIVERS: ONE TEAM ------------------------------------------- ----- ----- $2.11 FLAT BED DRIVERS ----------------------------------- --------- - 2.11 PICK UP TRUCKS ------------------------------------- ---------- 2.11 TWO TEAMS ------------------------------------------ ---------- 2.22 DUMP TRUCKS (EXCAVATING) --------------------------- ---------- 2.11

INCLUDED IN THE ELEVEN ADDITIONAL CLASSIFICATIONS SPECIFIED IN THE LETTER OF OCTOBER 25 WERE ,1TRACTORS, OVER 50 H.P. $2.675" AND "1TRACTORS, 50 H.P. OR LESS $2.125.' THE ORIGINAL DETERMINATIONS AND CONTRACT SPECIFICATIONS INCLUDED CLASSIFICATIONS OF "1TRACTORS, FARM TYPE," AND ,1TRACTORS, CRAWLERS," AT HOURLY RATES OF $1.50 AND $1.75, RESPECTIVELY. THE LETTER OF OCTOBER 25 DID NOT MENTION LATTER CLASSIFICATIONS, BUT IN LETTERS DATED DECEMBER 14, 1960, THE ACTING SOLICITOR OF LABOR ADVISED THAT "1DUE TO AN INADVERTENCE" SUCH CLASSIFICATIONS SHOULD HAVE BEEN OMITTED.

IT IS STATED THAT YOUR DEPARTMENT IS UNCERTAIN AS TO THE APPLICATION OF OUR DECISIONS REPORTED IN 36 COMP. GEN. 341 AND 37 COMP. GEN. 326. BOTH OF THOSE DECISIONS, AS WELL AS AN INTERVENING UNPUBLISHED DECISION, B- 129205, SEPTEMBER 5, 1957, RESULTED FROM A SUBMISSION BY THE SECRETARY OF THE INTERIOR OF QUESTIONS ARISING FROM A CLAIM BY A CONTRACTOR FOR INCREASED COSTS ALLEGED TO HAVE BEEN INCURRED AS THE RESULT OF HIS HAVING BEEN REQUIRED TO PAY WAGE RATES SET FORTH IN A LETTER OF INADVERTENCE FROM THE SECRETARY OF LABOR WHICH WERE HIGHER THAN THOSE INCLUDED IN THE ORIGINAL DETERMINATION AND SET FORTH IN THE SPECIFICATIONS UPON WHICH THE CONTRACT HAD BEEN ADVERTISED AND AWARDED.

IN THE FIRST DECISION, 36 COMP. GEN. 341, THE SECRETARY WAS ADVISED THAT "A SUBSEQUENT CORRECTION BY THE SECRETARY OF LABOR OF A WAGE SCHEDULE (WHICH, INSOFAR AS ALL PARTIES KNEW OR COULD HAVE ASCERTAINED AT THE TIME OF EXECUTION OF THE CONTRACT, WAS PROPER FOR INCLUSION IN THE CONTRACT SPECIFICATIONS) DOES NOT IN OUR OPINION, PER SE, EFFECTUATE A CHANGE IN THE TERMS OF THE CONTRACT NOR AFFECT THAT THE VALIDITY OF THE EXISTING CONTRACT.' HOWEVER, IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER HAD IN FACT REQUIRED THE CONTRACTOR TO PAY THE HIGHER RATE, WE STATED THAT WE WOULD NOT OBJECT TO THE ISSUANCE OF A CHANGE ORDER TO COMPENSATE THE CONTRACTOR FOR ANY INCREASE IN HIS CONTEMPLATED COSTS.

THEREAFTER THE SECRETARY OF THE INTERIOR REQUESTED A CLARIFICATION OF THE QUESTION WHETHER CONTRACTING OFFICERS "MAY CONTINUE TO REQUIRE CONTRACTORS TO PAY INCREASED MINIMUM WAGES ON THE BASIS OF LETTERS OF INADVERTENCE, AND TO COMPENSATE SUCH CONTRACTORS FOR ANY INCREASED COSTS RESULTING THEREFROM.' IT WAS POINTED OUT THAT THE SECRETARY OF LABOR HAD ISSUED NO REGULATIONS REGARDING INADVERTENCES, BUT IN TRANSMITTING NOTICES OF INADVERTENCE WOULD REQUEST THE CONTRACTING AGENCIES TO TAKE "APPROPRIATE ACTION.'

IN REPLY TO THAT REQUEST WE STATED IN THE DECISION OF SEPTEMBER 5, 1957, AS FOLLOWS:

IN THAT CASE YOU HAD ADVISED US THAT THE CONTRACTING OFFICER HAD REQUIRED THE CONTRACTOR TO INCREASE THE MINIMUM WAGES PAID TO CARPENTERS, BOTH PROSPECTIVELY AND RETROSPECTIVELY, UNDER THE ASSUMPTION THAT SUCH ACTION WAS NECESSARY BECAUSE OF THE LETTER OF INADVERTENCE FROM THE DEPARTMENT OF LABOR. WHILE WE WERE OF THE OPINION THAT SUCH ACTION BY THE CONTRACTING OFFICER WAS NOT REQUIRED, AND WOULD NORMALLY HAVE DISALLOWED THE CLAIM ON THE GROUND THAT THE CONTRACTING OFFICER'S ACTION WAS UNAUTHORIZED, WE DID NOT INTERPOSE ANY OBJECTION TO A CHANGE IN THE CONTRACT PRICE TO COMPENSATE THE CONTRACTOR IN THAT INSTANCE BECAUSE OF THE ABSENCE OF A PRIOR DECISION IN THE MATTER CLEARLY PRECLUDING THE CONTRACTING OFFICER'S CONCLUSION THAT THE "APPROPRIATE ACTION" REQUESTED BY THE SECRETARY OF LABOR NECESSITATED THE INCREASED COSTS TO THE CONTRACTOR WHICH RESULTED. ALSO, SEE A. J. PARETTA CONTRACTING COMPANY, INC. V. UNITED STATES, 109 CT.1CL. 324, 351. WE DID NOT, HOWEVER, INTEND TO INDICATE ANY INTENTION TO ACQUIESCE IN SUCH CORRECTIONS IN FUTURE INSTANCES.

FOLLOWING THAT DECISION THE DEPARTMENT OF LABOR PRESENTED STRONG REPRESENTATIONS OF ITS VIEWS AS TO THE PROPRIETY OF CONTRACT MODIFICATIONS TO INCORPORATE CORRECTED WAGE RATES IN ACCORDANCE WITH NOTICES OF INADVERTENCE ISSUED BY THAT DEPARTMENT. AS A RESULT, THE DECISION OF NOVEMBER 15, 1957, 37 COMP. GEN. 326, WAS ADDRESSED TO THE SECRETARY OF LABOR. IN THAT DECISION IT WAS STATED THAT THE DECISION OF SEPTEMBER 5, 1957, WAS INTENDED TO SET FORTH OUR VIEW THAT THE ISSUANCE OF LETTERS OF INADVERTENCE BY THE DEPARTMENT OF LABOR DID NOT AUTOMATICALLY AUTHORIZE A CHANGE IN THE CONTRACT PRICE, BUT WAS NOT INTENDED TO INDICATE THAT THE INADVERTENT ERROR COULD NOT OR SHOULD NOT BE CORRECTED BY USE OF THE NORMAL CONTRACTING PROCEDURES OF CHANGE ORDERS AND AMENDMENTS. IT WAS POINTED OUT ALSO THAT, SINCE THE MINIMUM WAGE SCHEDULE DID NOT CONSTITUTE A REPRESENTATION THAT LABOR COULD BE OBTAINED AT THE RATES SPECIFIED, AN INCREASE OF RATE INCORPORATED INTO A CONTRACT BY CHANGE ORDER RESULTING FROM AN INADVERTENCE WOULD NOT NECESSARILY ESTABLISH THE CONTRACTOR'S RIGHT TO ADDITIONAL COMPENSATION, BUT THAT ADJUSTMENTS IN PRICE SHOULD BE DETERMINED IN ACCORDANCE WITH THE EQUITABLE ADJUSTMENT PROVISIONS OF THE CONTRACT.

AS CLEARLY INDICATED IN THE SECOND PARAGRAPH OF THE LAST-MENTIONED DECISION, THE INADVERTENCES TO WHICH THE DECISION WAS ADDRESSED WERE THOSE OF THE GENERAL NATURE MENTIONED IN THE LETTER THEREIN REFERRED TO -- NAMELY, THOSE NECESSITATED BY ERRORS DUE TO TRANSPOSITION OF RATES, CLASSIFICATIONS, OR FIGURES, AND OTHER CLERICAL MISTAKES IN PROCESSING THE SCHEDULES. THE SITUATION WHICH GIVES RISE TO YOUR DEPARTMENT'S INQUIRY, HOWEVER, DOES NOT APPEAR TO COME WITHIN THAT CATEGORY. THERE IS IN THE FILE A COPY OF AN UNDATED LETTER FROM THE ASSISTANT SOLICITOR OF LABOR TO MR. WILLIAM J. SMITH OF LITTLE ROCK, ARKANSAS, IN REPLY TO A PROTEST MADE ON BEHALF OF THE ARKANSAS CHAPTER, ASSOCIATED GENERAL CONTRACTORS OF AMERICA AGAINST THE FIRST LETTER OF INADVERTENCE ISSUED IN CONNECTION WITH THE SUBJECT CONTRACT. THAT LETTER CONTAINS THE FOLLOWING STATEMENT:

THE REASON BOTH DECISIONS HAVE BEEN CHANGED IS TO REFLECT THE PREVAILING WAGE RATES FOR DAM CONSTRUCTION IN THIS AREA. THIS WAS DONE BECAUSE THE CLEARING OF THE RESERVOIR IS CONSIDERED TO BE AN INTEGRAL PART OF THE DAM CONSTRUCTION PROJECT. AS SUCH, THE SAME RATES ARE APPLICABLE TO THIS WORK AS TO THE REST OF THE PROJECT.

IT IS ALSO STATED IN THE LETTER THAT "IT IS WITHIN THE DISCRETION OF THE CONTRACTING COMPANY AS TO WHETHER OR NOT THE CONTRACTOR WILL BE REQUIRED TO PAY HIS EMPLOYEES THESE INCREASED WAGE RATES.'

IT IS REPORTED BY THE DISTRICT ENGINEER THAT THE CONTRACTOR HAS APPARENTLY EXPERIENCED NO DIFFICULTY IN OBTAINING ADEQUATE LABOR FOR THE WORK AT THE RATES SPECIFIED IN THE CONTRACT, AND THAT THE COST OF THE CONTRACT WILL BE INCREASED BY MORE THAN $100,000 IF THE INCREASED RATES ARE REQUIRED TO BE PAID. IT FURTHER APPEARS THAT IT IS THE VIEW OF BOTH THE DISTRICT ENGINEER AND THE DIVISION ENGINEER THAT THE NATURE OF THE OPERATIONS UNDER THE CONTRACT IS MUCH MORE NEARLY SIMILAR IN CHARACTER TO HIGHWAY WORK ON WHICH THE RATES AND CLASSIFICATIONS ORIGINALLY CERTIFIED WERE BASED, THAN TO DAM CONSTRUCTION, RATES AND CLASSIFICATIONS FOR WHICH WERE ADOPTED IN THE INADVERTENCE LETTERS.

FROM THIS RECORD IT SEEMS CLEAR THAT THE SO-CALLED "INADVERTENCES" HERE INVOLVED WERE NOT MERE CLERICAL ERRORS, OR EVEN MISTAKES AS TO RATES OF WAGES ACTUALLY PREVAILING FOR THE CLASSIFICATIONS INCLUDED IN THE ORIGINAL DETERMINATION; THEY REPRESENT RATHER A CHANGE OF JUDGMENT AS TO WHAT TYPES OF CLASSIFICATIONS OF WORK WERE APPLICABLE TO THE CONTRACT.

NOTHING THAT WAS SAID IN 37 COMP. GEN. 326 WAS INTENDED TO BE APPLICABLE TO SUCH AN ATTEMPTED MODIFICATION. AS INDICATED IN 36 COMP. GEN. 341, IT IS OUR VIEW THAT THE PERTINENT REQUIREMENT OF THE STATUTE IS FULLY COMPLIED WITH WHEN A CONTRACT IS AWARDED ON THE BASIS OF ADVERTISED SPECIFICATIONS WHICH CONTAIN A MINIMUM WAGE SCHEDULE BASED UPON A DETERMINATION BY THE SECRETARY OF LABOR OF PREVAILING WAGES FOR CORRESPONDING WORK ON SIMILAR PROJECTS IN THE AREA. THE SUPREME COURT HAS POINTED OUT THAT THE LANGUAGE OF THE ACT AND ITS LEGISLATIVE HISTORY PLAINLY SHOW THAT IT WAS ENACTED TO PROTECT EMPLOYEES FROM SUBSTANDARD EARNINGS BY FIXING A FLOOR UNDER WAGES ON GOVERNMENT PROJECTS. UNITED STATES V. BINGHAMTON CONSTRUCTION CO; 347 U.S. 171, 177, AND AUTHORITIES THERE CITED. ONCE A CONTRACT HAS BEEN AWARDED, THE FLOOR IS AS MUCH A FIXED AND BINDING CONDITION OF THE CONTRACT AS ANY OTHER PROVISION, AND IS SUBJECT TO CHANGE ONLY BY THE SAME METHODS AND ON THE SAME TERMS AND CONDITIONS--- THAT IS, BY AMENDMENT BY MUTUAL CONSENT AND UPON VALID CONSIDERATION OR BY CHANGE ORDERS ISSUED IN ACCORDANCE WITH THE CONTRACT PROVISIONS, INCLUDING EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE. THE STATUTE NEITHER DIRECTS NOR AUTHORIZES ADJUSTMENT OF THE WAGE FLOOR DURING PERFORMANCE OF THE CONTRACT TO CONFORM TO CHANGES IN PREVAILING RATES; NO MATTER HOW LOW WAGES PAID BY OTHER EMPLOYERS IN THE AREA MAY GO, THE CONTRACTOR IS BOUND TO PAY ACCORDING TO THE CONTRACT; NO MATTER HOW MUCH HE MAY HAVE TO PAY IN EXCESS OF THE CONTRACTUAL MINIMUM, HE HAS NO RIGHT TO INCREASE COMPENSATION BY VIRTUE OF THE MINIMUM WAGE PROVISIONS. SO FAR AS THE FIXING OF THE WAGE FLOORS INCLUDED IN THE SPECIFICATIONS IS CONCERNED, THE STATUTORY FUNCTION OF THE SECRETARY OF LABOR IS EXHAUSTED ONCE HE HAS FURNISHED A PREVAILING WAGE DETERMINATION AND A CONTRACT HAS BEEN AWARDED CONTAINING A MINIMUM WAGE SCHEDULE BASED THEREON. OUR AGREEMENT WITH THE SECRETARY OF LABOR, AS SET FORTH IN 37 COMP. GEN. 326, THAT CORRECTION OF INADVERTENT ERRORS IN WAGE DETERMINATIONS WOULD BE CONSONANT WITH A PROPER OBSERVANCE OF THE STATUTORY DIRECTIONS OF THE DAVIS-BACON ACT, WAS NOT INTENDED TO INDICATE IN ANY WAY A MODIFICATION OF THE VIEWS STATED IN OUR EARLIER DECISIONS IN THE SAME CASE, EXCEPT TO THE EXTENT THAT CORRECTION OF A CONTRACT MIGHT BE NECESSARY TO INCORPORATE THEREIN THE RATES ACTUALLY ASCERTAINED BY THE SECRETARY OF LABOR BUT MISSTATED IN HIS CERTIFICATION AS THE RESULT OF ERRORS IN TRANSCRIPTION.

SINCE IN THE CASE HERE PRESENTED THE ORIGINAL CERTIFICATIONS OF THE PREVAILING WAGE RATES FOR THE PARTICULAR CONTRACT APPEAR TO HAVE CORRECTLY STATED THE DETERMINATIONS ACTUALLY MADE AT THAT TIME, WE DO NOT CONSIDER THE CASE TO BE ONE IN WHICH MODIFICATION OF THE CONTRACT WOULD BE REQUIRED BY OUR DECISION IN 37 COMP. GEN. 326. THE ANSWER TO THE FIRST QUESTION PROPOUNDED BY THE DEPUTY ASSISTANT SECRETARY (1LOGISTICS), IS THEREFORE IN THE NEGATIVE, AND THE SECOND QUESTION DOES NOT ARISE.