B-14720, FEBRUARY 13, 1941, 20 COMP. GEN. 448

B-14720: Feb 13, 1941

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CONTRACTS - MODIFICATION - INCREASED LABOR COSTS THERE IS NO AUTHORITY FOR A SUPPLEMENTAL AGREEMENT WITH A NATIONAL DEFENSE PROGRAM CONTRACTOR TO PROVIDE FOR PAYING HIM THE INCREASED COST RESULTING FROM HIS PAYING CARPENTERS AND PAINTERS AT RATES HIGHER THAN THE MINIMUM WAGE RATES SPECIFIED IN HIS CONTRACT. EVEN THOUGH THE HIGHER RATES WERE PAID TO CONFORM WITH AN AMENDED SCHEDULE OF PREVAILING WAGES. 1941: I HAVE YOUR LETTER OF JANUARY 27. INCLUDED IN THE SPECIFICATIONS FORMING A PART OF THIS CONTRACT WAS A SCHEDULE OF PREVAILING WAGE RATES PROMULGATED UNDER DATE OF JUNE 5. THE CONTRACTOR WAS THUS OBLIGED TO EITHER PAY THE HIGHER WAGE SCALE OR DELAY COMPLETION OF THIS WORK. G. BARTHOLOMEW WAS AN ESSENTIAL PART OF THE CONSTRUCTION PROGRAM UNDERTAKEN BY THE GOVERNMENT IN CONNECTION WITH THE NATIONAL DEFENSE PROGRAM AND NO DELAY IN THE COMPLETION THEREOF COULD BE PERMITTED.

B-14720, FEBRUARY 13, 1941, 20 COMP. GEN. 448

CONTRACTS - MODIFICATION - INCREASED LABOR COSTS THERE IS NO AUTHORITY FOR A SUPPLEMENTAL AGREEMENT WITH A NATIONAL DEFENSE PROGRAM CONTRACTOR TO PROVIDE FOR PAYING HIM THE INCREASED COST RESULTING FROM HIS PAYING CARPENTERS AND PAINTERS AT RATES HIGHER THAN THE MINIMUM WAGE RATES SPECIFIED IN HIS CONTRACT, EVEN THOUGH THE HIGHER RATES WERE PAID TO CONFORM WITH AN AMENDED SCHEDULE OF PREVAILING WAGES--- ISSUED BY THE SECRETARY OF LABOR AFTER THE DATE OF THE CONTRACT--- AND THUS INSURE AN ADEQUATE SUPPLY OF LABOR TO AVOID DELAY IN COMPLETION OF THE CONTRACT.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, FEBRUARY 13, 1941:

I HAVE YOUR LETTER OF JANUARY 27, 1941, AS FOLLOWS:

ON JUNE 25, 1940, THE GOVERNMENT ENTERED INTO CONTRACT NO. W 6406 QM-163 WITH J. G. BARTHOLOMEW OF DALLAS, TEXAS, FOR THE CONSTRUCTION OF A SEWAGE TREATMENT PLANT AT FORT BENNING, GEORGIA. INCLUDED IN THE SPECIFICATIONS FORMING A PART OF THIS CONTRACT WAS A SCHEDULE OF PREVAILING WAGE RATES PROMULGATED UNDER DATE OF JUNE 5, 1940, BY THE SECRETARY OF LABOR, IN ACCORDANCE WITH THE PROVISIONS OF THE BACON DAVIS ACT, AS AMENDED, ( ACT OF AUGUST 30, 1935, 49 STAT. 1011 U.S.C. TI. 40, SECTION 276 (A) ). THIS SCHEDULE INCLUDED THE FOLLOWING PREVAILING WAGE RATES:

PER HOUR

CARPENTERS, JOURNEYMEN -----------------------------$0.75

PAINTERS ------------------------------------------- .75

ON JUNE 27, 1940, TWO DAYS AFTER THE DATE OF THE CONTRACT WITH J. G. BARTHOLOMEW, THE SECRETARY OF LABOR DIRECTED THE FOLLOWING CHANGES IN THE SCHEDULE ISSUED UNDER DATE OF JUNE 5, 1940:

PER HOUR

CARPENTERS, JOURNEYMEN -----------------------------$1.00

PAINTERS ------------------------------------------- 1.00

AS THE RESULT OF THIS REVISION IN THE SCHEDULE OF PREVAILING WAGES, CARPENTERS, AND PAINTERS WORKING ON OTHER PUBLIC WORKS IN THE LOCALITY OF FORT BENNING, GEORGIA, RECEIVED HIGHER WAGES THAN THOSE WORKING FOR J. G. BARTHOLOMEW. BECAUSE OF THE HIGHER WAGE RATES AT OTHER PROJECTS, CARPENTERS AND PAINTERS LEFT THE J. G. BARTHOLOMEW JOB, WITH THE RESULT THAT THE CONTRACTOR FACED A SHORTAGE OF LABOR. THE CONTRACTOR WAS THUS OBLIGED TO EITHER PAY THE HIGHER WAGE SCALE OR DELAY COMPLETION OF THIS WORK.

WORK BEING PERFORMED BY J. G. BARTHOLOMEW WAS AN ESSENTIAL PART OF THE CONSTRUCTION PROGRAM UNDERTAKEN BY THE GOVERNMENT IN CONNECTION WITH THE NATIONAL DEFENSE PROGRAM AND NO DELAY IN THE COMPLETION THEREOF COULD BE PERMITTED. THEREFORE, TO AVOID DELAY IN COMPLETION THE CONTRACTOR PAID THE WAGE RATES SET FORTH IN THE SECRETARY OF LABOR'S REVISED PREVAILING WAGE SCALE.

AN ACCURATE ACCOUNT WAS KEPT OF THE ADDITIONAL COSTS INCURRED BY THE CONTRACTOR, AS A RESULT OF HIS MEETING THE HIGHER WAGE SCALE AND IT HAS BEEN DETERMINED THAT HE PAID $280.80 MORE FOR THE SERVICES OF CARPENTERS AND PAINTERS THAN HE WOULD HAVE BEEN REQUIRED TO PAY HAD HE BEEN ABLE TO OBTAIN CARPENTERS AND PAINTERS AT THE WAGE RATE ESTABLISHED BY THE SECRETARY OF LABOR ON JUNE 5, 1940.

THIS OFFICE IS AWARE OF THE FACT THAT THE SECRETARY OF LABOR HAD NO AUTHORITY TO MAKE THE REVISED WAGE SCALES EFFECTIVE AS TO THE CONTRACT WHICH HAD ALREADY BEEN ENTERED INTO PRIOR TO THE TIME OF THE REVISION. HOWEVER, BY RAISING THE SCALE FOR ALL NEW WORK IN THE FORT BENNING AREA, THE SECRETARY OF LABOR INDIRECTLY OBLIGED THE CONTRACTOR TO PAY THE HIGHER SCALE AND THE RESULT TO THE CONTRACTOR WAS THE SAME AS IF THE REVISED SCALE HAD BEEN MADE APPLICABLE TO HIS CONTRACT.

IN VIEW OF THE FACT THAT THE CONTRACTOR COOPERATED WITH THE GOVERNMENT SO FULLY IN AVOIDING ANY DELAY IN THIS VITAL CONSTRUCTION WORK, IT IS DESIRED TO ENTER INTO A SUPPLEMENTAL AGREEMENT WITH THE CONTRACTOR INCREASING THE CONTRACT PRICE IN THE AMOUNT OF $280.80, THE ACTUAL ADDITIONAL COST INCURRED BY THE CONTRACTOR. A COPY OF THE PROPOSED SUPPLEMENTAL AGREEMENT IS ATTACHED, AND YOUR OPINION IS REQUESTED AS TO WHETHER SUCH AN AGREEMENT CAN BE PROPERLY ENTERED INTO BY THE CONTRACTING OFFICER.

UNDER THE TERMS OF THE CONTRACT J. G. BARTHOLOMEW AGREED TO FURNISH ALL NECESSARY MATERIAL, LABOR AND EQUIPMENT, AND COMPLETELY CONSTRUCT A SEWAGE TREATMENT PLANT AT FORT BENNING, GA., WITHIN 120 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED, FOR THE CONSIDERATION STATED THEREIN. WAS AGREED, ALSO, IN THE EVENT OF DELAYS IN COMPLETION NOT DUE TO "UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR" THAT THE CONTRACTOR WOULD PAY THE GOVERNMENT THE SUM OF $25 FOR EACH CALENDAR DAY OF DELAY.

PURSUANT TO THE DAVIS-BACON ACT OF AUGUST 30, 1935, 49 STAT. 1011, THERE WERE INCLUDED IN THE ADVERTISED SPECIFICATIONS THE MINIMUM WAGE RATES DETERMINED BY THE SECRETARY OF LABOR TO BE THOSE PREVAILING FOR THE CLASSIFICATIONS OF LABOR PROPOSED TO BE EMPLOYED UPON THE WORK, INCLUDING THOSE SET FORTH IN YOUR LETTER, AND THE CONTRACT REQUIRED THE CONTRACTOR TO PAY NOT LESS THAN THOSE RATES. WHILE IT IS STATED IN YOUR ABOVE LETTER THAT SUCH RATES WERE PROMULGATED BY THE SECRETARY OF LABOR UNDER DATE OF JUNE 5, 1940, IT IS NOTED THE ADVERTISED SPECIFICATIONS STATE THE DETERMINATIONS OF RATES WAS MADE BY THE SECRETARY OF LABOR ON MARCH 21, 1940. HOWEVER, THE INVITATIONS TO BID WERE ISSUED UNDER DATE OF JUNE 5, 1940, AND THE MENTION IN YOUR LETTER OF SUCH DATE APPARENTLY SHOULD HAVE REFERENCE TO THE DATE OF ISSUANCE OF INVITATIONS TO BID RATHER THAN THE DATE OF DETERMINATION OF MINIMUM WAGE RATES APPLICABLE TO THE WORK.

IT APPEARS, FROM THE FACTS STATED IN YOUR LETTER, THAT WITHIN A FEW DAYS AFTER THE DATE OF THE CONTRACT THE SECRETARY OF LABOR ADVISED THAT THE MINIMUM PREVAILING WAGE RATE FOR CARPENTERS AND PAINTERS WAS $1 PER HOUR RATHER THAN $0.75 PER HOUR AS STATED IN THE CONTRACT; THAT SUCH RATE WAS PAID CARPENTERS AND PAINTERS ON OTHER PROJECTS IN THE VICINITY; THAT IT WAS NECESSARY FOR J. G. BARTHOLOMEW TO PAY SUCH RATE TO CARPENTERS AND PAINTERS UNDER HIS CONTRACT, IN ORDER TO RETAIN THE EMPLOYEES ON THE JOB AND AVOID DELAY IN COMPLETION OF THE WORK; AND THAT SUCH PAYMENTS INCREASED HIS PERFORMANCE COSTS $280.80 IN EXCESS OF WHAT THEY WOULD HAVE BEEN HAD CARPENTERS AND PAINTERS BEEN PAID THE MINIMUM RATE OF $0.75 PER HOUR SPECIFIED IN THE CONTRACT. THE QUESTION, THEREFORE, IS AS TO WHETHER A SUPPLEMENT MAY BE MADE TO THE CONTRACT AUTHORIZING PAYMENT TO THE CONTRACTOR OF THE ADDITIONAL COST OF $280.80 THUS INCURRED.

IT IS A LONG ESTABLISHED 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 UNITED STATES. UNITED STATES V. AMERICAN SALES COMPANY, 27 F. (2) 389, AFFIRMED 32 F. (2D) 141; CERTIORARI DENIED 280 U.S. 574; PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 CT.1CLS. 327; AND BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.1CLS. 584. SUCH RULE APPEARS PROPERLY FOR APPLICATION HERE.

WHEN THE CONTRACT WAS AWARDED THE UNITED STATES ACQUIRED A RIGHT TO HAVE PERFORMANCE OF THE CONTRACT IN ACCORDANCE AGREED UPON. COEXTENSIVE WITH THE RIGHTS ACQUIRED BY THE UNITED STATES WERE THE LIABILITIES ASSUMED BY THE CONTRACTOR--- THE RESPONSIBILITY FOR COMPLETING THE CONTRACT IN ACCORDANCE WITH ITS TERMS AND WITHIN THE STIPULATED TIME, FOR THE AGREED COMPENSATION. IT IS NOT UNDERSTOOD THAT THE GOVERNMENT HAS RECEIVED MORE THAN IT CONTRACTED FOR AND, LIKEWISE, IT IS NOT APPARENT THAT THE CONTRACTOR DID MORE THAN IT AGREED TO DO. CONSEQUENTLY, THE EXECUTION OF A SUPPLEMENTAL CONTRACT AS PROPOSED BY YOU WOULD BE, IN EFFECT, AN ATTEMPT TO MODIFY THE CONTRACT WITHOUT A COMPENSATING BENEFIT TO THE UNITED STATES, TO WAIVE CONTRACTUAL RIGHTS WHICH HAD ACCRUED TO THE UNITED STATES, AND TO INCREASE THE LIABILITY OF THE UNITED STATES WITH A PROPORTIONATE REDUCTION IN THE OBLIGATION OF THE CONTRACTOR.

THE PRESENT SITUATION MAY HAVE ARISEN MAINLY FROM THE FACT THE CURRENT MINIMUM PREVAILING WAGE RATES WERE NOT OBTAINED FROM THE SECRETARY OF LABOR AT THE TIME INVITATIONS TO BID WERE ISSUED--- I ASSUME THE DETERMINATION WAS MADE ON MARCH 21, 1940, AND NOT ON JUNE 5, 1940--- BUT THAT IS NOT SUFFICIENT REASON TO AUTHORIZE REIMBURSING THE CONTRACTOR AS CONTEMPLATED, PARTICULARLY SINCE THE SPECIFICATIONS CLEARLY INDICATED TO THE CONTRACTOR THAT THE WAGE RATE DETERMINATION HAD BEEN MADE SOME TIME PREVIOUS TO THE DATE OF ISSUANCE OF INVITATIONS TO BID. THE DAVIS-BACON ACT, SUPRA, WAS NOT INTENDED TO GUARANTEE TO CONTRACTORS THAT WAGES REQUIRED TO BE PAID WOULD NOT EXCEED CERTAIN RATES NOR DID THE GOVERNMENT UNDERTAKE IN THE CONTRACT TO GIVE SUCH ASSURANCE. IT WAS THE CONTRACTOR'S RESPONSIBILITY TO EMPLOY AND PAY FOR THE NECESSARY LABOR, AT SUCH RATES AS MIGHT BE NECESSARY TO THAT END, THE GOVERNMENT'S INTEREST IN THAT RESPECT BEING TO REQUIRE ONLY THAT NOT LESS THAN CERTAIN SPECIFIED RATES BE PAID. IN THIS CONNECTION SEE THE DECISION OF JANUARY 29, 1941, B-14424, TO YOU, WHEREIN IT WAS STATED:

THE RESPONSIBILITY FOR COMPLETING THE CONTRACT WITHIN THE SPECIFIED TIME IS, OF COURSE, THAT OF THE CONTRACTOR AND IT SHOULD BE REQUIRED TO ADOPT ALL REASONABLE MEANS TO THAT END. THE CONTRACTOR WAS GIVEN NO ASSURANCE THAT THE RATES OF WAGES PREVAILING AT THE TIME THE CONTRACT WAS AWARDED MIGHT NOT LATER BE LESS THAN THE RATES OF WAGES PREVAILING AT SOME SUBSEQUENT TIME BEFORE COMPLETION OF THE WORK, AND THE RATES SPECIFIED IN THE CONTRACT WERE CLEARLY STATED TO BE THE MINIMUM WHICH THE CONTRACTOR SHOULD PAY. IT WAS AND IS THE RESPONSIBILITY OF THE CONTRACTOR TO EMPLOY SUFFICIENT LABOR ON THE WORK TO INSURE ITS COMPLETION WITHIN THE TIME SPECIFIED AND NO RECOURSE AGAINST THE GOVERNMENT IS PROVIDED IN THE EVENT PREVAILING RATES INCREASE AFTER THE AWARD OF A CONTRACT. * * *

UNDER THE CIRCUMSTANCES THE EXECUTION OF THE PROPOSED, SUPPLEMENTAL AGREEMENT IS UNAUTHORIZED.