B-148076, JUL. 26, 1963, 43 COMP. GEN. 84

B-148076: Jul 26, 1963

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IS NOT WORK . WORK PERFORMED BY EMPLOYEES OF A MATERIAL SUPPLIER 3 MILES FROM THE CONSTRUCTION AREA IS NOT WORK SUBJECT TO THE MINIMUM WAGE PROVISIONS OF THE DAVIS-BACON ACT. 1963: REFERENCE IS MADE TO REPORT DATED FEBRUARY 20. THAT IT IMPROPERLY WAS REQUIRED TO PAY MINIMUM WAGES IN ACCORDANCE WITH THE DAVIS-BACON ACT. IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER WAS AUTHORIZED BY SECTION 2 OF THE ACT. 000 WERE COMPLETED IN ACCORDANCE THEREWITH. THE OFFICE OF THE CHIEF OF ENGINEERS ADVISED THAT ITS DECISION WAS PREMISED UPON A RULING OBTAINED FROM THE DEPARTMENT OF LABOR UNDER DATE OF OCTOBER 13. THE RULINGS AND INTERPRETATIONS OF THE SECRETARY SHALL BE AUTHORITATIVE * * * THE SECRETARY'S REGULATORY FUNCTION IS AUTHORIZED BY THE PROVISIONS OF REORGANIZATION PLAN NO. 14 OF 1950.

B-148076, JUL. 26, 1963, 43 COMP. GEN. 84

CONTRACTS - LABOR STIPULATIONS - DAVIS-BACON ACT - OFF-SITE WORK WORK PERFORMED BY MECHANICS AND LABORERS OF CONTRACTORS, SUBCONTRACTORS OR MATERIALMEN OFF THE SITE OF A FEDERAL CONSTRUCTION PROJECT SUBJECT TO THE DAVIS-BACON ACT, 40 U.S.C. 276A, IS NOT WORK ,DIRECTLY UPON THE SITE" WITHIN THE MEANING OF THE PHRASE IN THE ACT WHICH PHRASE MUST BE CONSTRUED AS WORK WITHIN THE EXACT CONFINES OF THE PLACE OF PERFORMANCE OF THE CONSTRUCTION OR THE PRECISE LOCATION OF THE WORK AND, THEREFORE, WORK PERFORMED BY EMPLOYEES OF A MATERIAL SUPPLIER 3 MILES FROM THE CONSTRUCTION AREA IS NOT WORK SUBJECT TO THE MINIMUM WAGE PROVISIONS OF THE DAVIS-BACON ACT.

TO THE SECRETARY OF THE ARMY, JULY 26, 1963:

REFERENCE IS MADE TO REPORT DATED FEBRUARY 20, 1962, FROM THE OFFICE OF THE CHIEF OF ENGINEERS, REFERENCE ENGGC-L, CONCERNING THE PROTEST FILED BY HYDE CONSTRUCTION COMPANY, INC., UNDER DA-34-066-CIVENG-60 864, FOR CONSTRUCTION OF A SPILLWAY AT KEYSTONE DAM, OKLAHOMA, THAT IT IMPROPERLY WAS REQUIRED TO PAY MINIMUM WAGES IN ACCORDANCE WITH THE DAVIS-BACON ACT, 40 U.S.C. 276A, TO EMPLOYEES OF A MATERIAL SUPPLIER, TRAXLER MATERIALS, INC.

IT APPEARS FROM A MEMORANDUM OF THE DISTRICT ENGINEER DATED JULY 13, 1961, ATTACHED TO THE REPORT, THAT DURING APRIL 1960, HYDE ARRANGED WITH TRAXLER FOR THE PURCHASE OF APPROXIMATELY 355,284 TONS OF CONCRETE SAND STOCKPILED AT THE SITE OF THE WORK. FOR A SHORT TIME TRAXLER, AN ESTABLISHED SUPPLIER OF FINE AGGREGATE MATERIALS, ATTEMPTED TO PRODUCE SAND OF A SUITABLE QUALITY FROM A LOCATION ON THE SITE AND WHILE DOING SO COMPLIED WITH WAGE REQUIREMENTS OF THE PRIME CONTRACT. SUBSEQUENTLY, IN JULY 1960, TRAXLER MOVED ITS OPERATION FROM THE GOVERNMENT SITE TO A PRIVATELY OWNED LOCATION ABOUT 3 MILES FROM THE CONSTRUCTION AREA AND ADVISED THAT, BECAUSE SAND THEREAFTER WOULD BE PRODUCED AND PROCESSED OFF THE SITE, IT CONSIDERED COMPLIANCE WITH THE MINIMUM WAGE STIPULATIONS OF THE PRIME CONTRACT NO LONGER TO BE NECESSARY.

THE DISTRICT ENGINEER NEVERTHELESS DIRECTED "COMPLIANCE WITH THE CONTRACT LABOR PROVISIONS.' HE STATED THAT TRAXLER OBJECTED, FORMALLY ADVISING THROUGH THE PRIME CONTRACTOR THAT ANY INCREASED LABOR COSTS ATTRIBUTABLE TO ENFORCED COMPLIANCE WITH THE CONTRACT LABOR LAWS WOULD BE BASIS FOR A CLAIM AGAINST THE GOVERNMENT, AND THAT THE CONTRACTOR "TIMELY APPEALED" THE ADMINISTRATIVE DECISION. IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER WAS AUTHORIZED BY SECTION 2 OF THE ACT, 40 U.S.C. 276A-1, TO CANCEL THE CONTRACT UPON FINDING A FAILURE TO PAY WAGES AS REQUIRED, HYDE HAD NO REASONABLE ALTERNATIVE FOLLOWING REJECTION OF THE APPEAL BUT TO COMPLY UNDER PROTEST WITH THE DIRECTIVE REQUIRING PAYMENT OF MINIMUM WAGES TO TRAXLER'S EMPLOYEES; AND WE UNDERSTAND THAT WAGE ADJUSTMENTS AGGREGATING IN EXCESS OF $40,000 WERE COMPLETED IN ACCORDANCE THEREWITH.

THE OFFICE OF THE CHIEF OF ENGINEERS ADVISED THAT ITS DECISION WAS PREMISED UPON A RULING OBTAINED FROM THE DEPARTMENT OF LABOR UNDER DATE OF OCTOBER 13, 1961,"TO BE RELIED UPON AS PROVIDED FOR IN SECTION 5.11" OF THE SECRETARY OF LABOR'S REGULATIONS, 29 CFR, SUBTITLE A. THE PROVISIONS OF THAT SECTION STATE THAT:

ALL QUESTIONS ARISING IN ANY AGENCY RELATING TO THE APPLICATION AND INTERPRETATION OF THE REGULATIONS CONTAINED IN THIS PART AND OF THE DAVIS- BACON ACT, AS AMENDED * * * SHALL BE REFERRED TO THE SECRETARY OF LABOR FOR APPROPRIATE RULING OR INTERPRETATION. THE RULINGS AND INTERPRETATIONS OF THE SECRETARY SHALL BE AUTHORITATIVE * * *

THE SECRETARY'S REGULATORY FUNCTION IS AUTHORIZED BY THE PROVISIONS OF REORGANIZATION PLAN NO. 14 OF 1950, 5 U.S.C. 133Z-15, WHICH EMPOWER HIM TO PRESCRIBE "APPROPRIATE STANDARDS, REGULATIONS AND PROCEDURES" TO BE OBSERVED BY THE CONTRACTING AGENCIES "RESPONSIBLE FOR THE ADMINISTRATION F" THE MINIMUM WAGE LAWS APPLICABLE TO CONSTRUCTION CONTRACTS. LIMITATIONS ACCOMPANYING SUCH AUTHORITY WITH RESPECT TO THE PERFORMANCE OF ENFORCEMENT DUTIES ARE PLAINLY ESTABLISHED IN THE PRESIDENTIAL MESSAGE ADOPTING THE PLAN, WHICH STATES THAT "THE ACTUAL PERFORMANCE OF ENFORCEMENT ACTIVITIES * * * WILL REMAIN THE DUTY OF THE RESPECTIVE AGENCIES AWARDING THE CONTRACTS OR PROVIDING THE FEDERAL ASSISTANCE," AND IN THE REPORT OF THE SENATE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS (SENATE REPORT NO. 1546, 81ST CONG.), WHICH STATES,"THE ENFORCEMENT AND ADMINISTRATION OF LABOR STANDARDS ARE NOT TRANSFERRED BY THE PLAN BUT REMAIN VESTED IN THE INDIVIDUAL AGENCIES AND DEPARTMENTS OF THE GOVERNMENT.'

THESE LIMITATIONS HAVE BEEN DISCUSSED HERETOFORE (40 COMP. GEN. 565, 570, AND B-147602, DATED JANUARY 23, 1963) AND IT HAS BEEN POINTED OUT THAT AUTHORITY TO PRESCRIBE UNIFORM AND CONSISTENT STANDARDS FOR OBSERVANCE BY CONTRACTING AGENCIES IN THE POLICING OF CONTRACTORS' OBLIGATIONS DOES NOT INCLUDE POWER TO MAKE INDIVIDUAL ENFORCEMENT DETERMINATIONS INVOLVING THE SETTLEMENT OF CONTRACT CONDITIONS THROUGH WHICH WAGE STANDARDS OF THE DAVIS-BACON ACT ARE MADE EFFECTIVE. NEITHER THE DAVIS-BACON ACT NOR THE PLAN EVIDENCES ANY LEGISLATIVE INTENTION TO MODIFY OR RESTRICT THE ESTABLISHED CONTRACT SETTLEMENT PROCEDURES OF FEDERAL AGENCIES, OR TO EMPOWER THE SECRETARY OF LABOR TO DO SO. INSOFAR AS THE PROVISIONS OF SECTION 5.11 CONTEMPLATE THE MAKING OF AUTHORITATIVE DETERMINATIONS IN SUCH AREAS, THEY OBVIOUSLY OVERREACH THE BOUNDS OF AUTHORIZED REGULATION AND ARE NOT CONTROLLING. ANY OTHER VIEW WOULD IMPLY, CONTRARY TO THE FACT, A TRANSFER OF ADMINISTRATIVE ENFORCEMENT RESPONSIBILITIES FROM THE CONTRACTING AGENCIES.

MOREOVER, THE AUTHORITIES PLACED IN OUR OFFICE BY SECTION 3 OF THE DAVIS- BACON ACT, 40 U.S.C. 276A-2, TO DETERMINE VIOLATORS, IMPOSE DEBARMENT, AND MAKE WAGE ADJUSTMENTS, WERE NOT DISTURBED BY THE PLAN. EVEN IF THE RULING IN THE PRESENT CASE COULD BE REGARDED AS NO MORE THAN THE PRESCRIPTION OF A GENERAL STANDARD, WE WOULD BE UNABLE IN THE DISCHARGE OF OUR RESPONSIBILITIES TO OVERLOOK THE QUESTION RAISED BY THE PROTESTANT AS TO THE PROPRIETY OF THE STATUTORY INTERPRETATION RELIED UPON. ACCORDINGLY, WE HAVE REVIEWED THE CONCLUSION REACHED BY THE DEPARTMENT OF LABOR, CAREFULLY EXAMINING THE EXPLANATIONS CONTAINED IN THE SOLICITOR OF LABOR'S STATEMENT TO THE SPECIAL SUBCOMMITTEE ON LABOR (HEARINGS ON ADMINISTRATION OF THE DAVIS-BACON ACT, 87TH CONG., PAGES 830-831), THE RULING OF OCTOBER 13, 1961, AND ADDITIONAL COMMENT FURNISHED TO US IN A REPORT DATED JANUARY 17, 1963.

THE STATEMENT TO THE SPECIAL SUBCOMMITTEE ON LABOR REASONS THAT BY THE TERMS OF THE ACT SUBCONTRACTORS ARE MADE RESPONSIBLE FOR THE PAYMENT OF MINIMUM WAGES AND ARE IDENTIFIED IN THE SAME MANNER AS SUBCONTRACTORS UNDER THE MILLER ACT, 40 U.S.C. 270A, THAT IS, BY THE TECHNICAL DISTINCTION RECOGNIZED IN THE BUILDING TRADES. THE TERM "SUBCONTRACTOR" APPEARS IN THE MILLER ACT IN A PROVISO THAT MAKES RECOURSE AGAINST THE PAYMENT BONDS FURNISHED THEREUNDER DEPENDENT, IF NO CONTRACTUAL RELATIONSHIP EXPRESS OR IMPLIED EXISTS BETWEEN CLAIMANTS AND CONTRACTORS, UPON ,DIRECT CONTRACTUAL RELATIONSHIP WITH A SUBCONTRACTOR.' IN MACEVOY V. UNITED STATES, 322 U.S. 102, 108, CITED BY THE SOLICITOR AS CONTROLLING, IT WAS STATED:

THE MILLER ACT ITSELF MAKES NO ATTEMPT TO DEFINE THE WORD "SUBCONTRACTOR.' * * * WHETHER THE WORD INCLUDES LABORERS AND MATERIALMEN IS NOT SUBJECT TO EASY SOLUTION, FOR THE WORD HAS NO SINGLE EXACT MEANING. IN A BROAD, GENERIC SENSE A SUBCONTRACTOR INCLUDES ANYONE WHO HAS A CONTRACT TO FURNISH LABOR OR MATERIAL TO THE PRIME CONTRACTOR. * * * BUT UNDER THE MORE TECHNICAL MEANING, AS ESTABLISHED BY USAGE IN THE BUILDING TRADES, A SUBCONTRACTOR IS ONE WHO PERFORMS FOR AND TAKES FROM THE PRIME CONTRACTOR A SPECIFIC PART OF THE LABOR OR MATERIAL REQUIREMENTS OF THE ORIGINAL CONTRACT, THUS EXCLUDING ORDINARY LABORERS AND MATERIALMEN.

THE COURT DECIDED THAT SUBCONTRACTORS WERE SO CONSISTENTLY DISTINGUISHED FROM MATERIALMEN AND LABORERS IN THE COURSE OF THE FORMATION OF THE ACT THAT THE WORD "SUBCONTRACTOR" WAS USED IN THE PROVISO IN ITS TECHNICAL SENSE SO AS TO EXCLUDE MATERIALMEN AND LABORERS. IT HELD THAT A FIRM WHICH SOLD "CERTAIN BUILDING MATERIALS FOR USE IN THE PROSECUTION OF THE WORK" WAS NOT A ,SUBCONTRACTOR" IN THE OTHER FEDERAL CASE SITED BY THE SOLICITOR, BASICH BROTHERS CONSTRUCTION COMPANY V. UNITED STATES,159 F.2D 182, A FIRM FURNISHING ROCK, SAND AND GRAVEL, TO THE PRIME CONTRACTOR WAS HELD TO BE A "SUBCONTRACTOR" UNDER THE MILLER ACT, NOT BECAUSE OF THE LOCATION OF ITS PLANT NEAR THE SITE OF CONSTRUCTION, THE MATERIALS INVOLVED, OR ANY SPECIAL PROCESSING NEEDED, BUT BECAUSE IT HAD AGREED TO TAKE FROM THE PRIME CONTRACTOR AND PERFORM A SPECIFIC PORTION OF THE REQUIREMENTS OF THE ORIGINAL CONTRACT.

WE ARE NOT AWARE OF ANY PRECEDENT SUPPORTING A VIEW THAT A SUPPLIER OF MATERIAL, WHETHER A MANUFACTURER, WHOLESALER OR RETAILER, IS A "SUBCONTRACTOR" WITHIN THE MEANING OF THE MILLER ACT, UNLESS HE HAS UNDERTAKEN TO PERFORM A PORTION OF THE CONSTRUCTION WORK CALLED FOR IN THE STEAD OF THE PRIME CONTRACTOR AND TO THE SATISFACTION OF THE PRINCIPAL. AS A MATTER OF FACT, IF THE DEFINITION OF THE TERM "SUBCONTRACTOR" ADOPTED FOR MILLER ACT PURPOSES WERE TO GOVERN COVERAGE UNDER THE DAVIS-BACON ACT, IT SEEMS CLEAR THAT TRAXLER, AS ONE OF THE LARGEST SUPPLIERS OF AGGREGATES IN THE SOUTH, WOULD NOT BE COVERED REGARDLESS OF WHETHER IT PERFORMED IMMEDIATELY UPON OR OFF THE SITE.

IN THE REPORT DATED JANUARY 17, 1963, WE WERE ADVISED THAT:

IN APPLYING THE LIMITATION AS A WHOLE, THE DEPARTMENT USES BOTH GEOGRAPHICAL AND FUNCTIONAL TESTS. IN ORDER TO BE COVERED BY THE ACT, LABORERS AND MECHANICS MUST BE ENGAGED AT THE SITE OF OPERATIONS CARRIED OUT IN THE GENERAL AREA OF THE PUBLIC BUILDING OR WORK WHICH IS THE SUBJECT OF CONSTRUCTION, ALTERATION, OR REPAIR, AND THOSE OPERATIONS MUST BE DEVOTED EXCLUSIVELY, OR VIRTUALLY SO, TO THE EXECUTION OF THE CONTRACT. THESE TESTS OVERLAP TO SOME EXTENT WITH THOSE USED TO DETERMINE THE EXISTENCE OF A "SUBCONTRACTOR" RELATIONSHIP. * * *

THE SOLICITOR TOOK THE POSITION THAT THE PHRASE "UPON THE SITE OF THE WORK" DOES NOT REFER TO THE EXACT LOCATION OF THE PUBLIC BUILDING OR PUBLIC WORK WHICH IS THE SUBJECT OF THE CONTRACT, BUT TO THE LOCATION OF THE WORK COVERED BY THE CONTRACT IN A BROADER SENSE, EXCLUDING ONLY VERY INDIRECT OR REMOTE OPERATIONS.

OUR STUDY OF THE MATTER INDICATES THAT APPLICABILITY OF THE DAVIS BACON ACT IS GOVERNED BY THE DIRECTION IN SECTION 1 THAT "THE CONTRACTOR OR HIS SUBCONTRACTOR SHALL PAY ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK" NOT LESS THAN THE MINIMUM WAGES SPECIFIED IN THE CONTRACT. HOWEVER, THERE IS NO EXPRESS DEFINITION OF THE TERM "SUBCONTRACTOR," WHICH, AS OBSERVED IN THE MACEVOY CASE, BY ITSELF IS SUSCEPTIBLE OF A BROAD DEFINITION INCLUDING MATERIALMEN AS WELL AS TO A TECHNICAL DEFINITION EXCLUDING MATERIALMEN. SIMILARLY TO THE SITUATION IN THE MILLER ACT, ANY DEFINITION NEEDED MUST BE DERIVED FROM THE LANGUAGE AND LEGISLATIVE HISTORY OF THE DIRECTION THAT MINIMUM WAGES ARE TO BE PAID TO "ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK.'

DURING CONSIDERATION BY THE HOUSE OF REPRESENTATIVES IN 1932 OF LANGUAGE LEADING TO THE AMENDMENTS ADOPTED IN 1935, WHICH CONTAINED THE PHRASE "DIRECTLY UPON THE SITE OF SUCH WORK" (S. 3847, 72D CONG.), CONGRESSMAN LA GUARDIA COMPLAINED THAT THE BILL WAS "NOT SUFFICIENTLY BROAD TO REACH OUT AND COMPEL THE PREVAILING RATE OF WAGES IN THE PARTICULAR MATERIAL BUILT FOR THAT BUILDING.' HE POINTED OUT THAT "THERE IS A DIFFERENCE BETWEEN MATERIAL LIKE BRICK AND CEMENT WHICH MAY BE USED ANYWHERE AND THE STEEL STRUCTURE THAT IS MADE FOR THAT BUILDING.' CONGRESSMAN CONNERY, SPEAKING FOR THE COMMITTEE IN CHARGE, REPLIED THAT, ALTHOUGH HE SYMPATHIZED WITH THE VIEW EXPRESSED,"IF WE STARTED IN TO TAKE MATERIALS IN CONNECTION WITH THIS, WE WOULD COVER MANY, MANY INDUSTRIES IN THE UNITED STATES. * * * THE COMMITTEE THOUGHT THAT IT WAS A LITTLE TOO FAR TO GO AT THIS TIME.' 75 CONG. REC. 12366 (1932).

CONTEMPORANEOUSLY WITH ADOPTION OF THE 1935 AMENDMENTS, DURING CONSIDERATION IN THE SENATE OF PROVISIONS WHICH BECAME THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, 49 STAT. 115, THE PHRASE ,EXPENDITURES FOR DIRECT WORK" WAS EXPLAINED AS INCLUDING BOTH DIRECT AND INDIRECT LABOR BASED UPON THE RESPECTIVE DISTINCTIONS ORDINARILY MADE BETWEEN LABOR UTILIZED "UPON THE SITE OF THE PROJECT" AND "LABOR UPON THE MATERIAL WHICH IS SUPPLIED FOR THE PROJECT.' 79 CONG. REC. 4739-44 (1935).

ALSO OF INTEREST IS A RELATED DISCUSSION WHICH OCCURRED IN THE SENATE DURING CONSIDERATION OF THE FEDERAL-AID HIGHWAY ACT OF 1956, 23 U.S.C. 151 NOTE (1952 ED., SUPP. V), WHEN A QUESTION WAS RAISED AS TO THE APPLICATION OF DAVIS-BACON ACT DETERMINED MINIMUM WAGES TO "LABORERS AND MECHANICS EMPLOYED BY CONTRACTORS OR SUBCONTRACTORS ON THE INITIAL CONSTRUCTION WORK.' SENATOR CHAVEZ, RESPONDING FOR THE COMMITTEE IN CHARGE, ADVISED THAT THE APPLICATION WAS "AT THE INITIAL CONSTRUCTION PLACE ONLY" AND AGREED THAT THE REQUIREMENT APPLIED "TO THE CONSTRUCTION, NOT TO THE MATERIALS.' 102 CONG. REC. 10967 (1956).

EVEN WITHOUT THIS LEGISLATIVE BACKGROUND, IT SEEMS CLEAR THAT THE EXPRESS DESIGNATION OF "ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK," IN THE LANGUAGE PROVIDING THAT "THE CONTRACTOR OR HIS SUBCONTRACTOR SHALL PAY ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK," SERVES THE PURPOSE OF DEFINING ACCURATELY THE EXTENT TO WHICH OBSERVANCE OF CONTRACT WAGE CONDITIONS IS REQUIRED, WHETHER BY CONTRACTORS, SUBCONTRACTORS OR MATERIALMEN. IN CHOOSING SUCH TERMS TO PRECLUDE APPLICABILITY TO WORKERS ENGAGED ONLY INDIRECTLY OR REMOTELY, NO LINE OF DIFFERENTIATION WAS DRAWN BETWEEN SUBCONTRACTORS AND MATERIALMEN. WITH OBVIOUS AFORETHOUGHT THE LEGISLATORS UTILIZED A PHYSICAL DISTINCTION BASED UPON THE PRECISE LOCATION WHERE THE WORK WAS BEING PERFORMED TO SHUT OFF BOTH RESPONSIBILITY FOR THE PAYMENT OF, AND PROTECTION AFFORDED THROUGH, MINIMUM WAGE CONDITIONS OF PERFORMANCE. SEE CHAMBERS V. W. L. FLORENCE CONSTRUCTION CO., 36 S.E.2D 69. IN THE LIGHT OF THIS DISTINCTION, WHETHER OR NOT TRAXLER PERFORMED AS "SUBCONTRACTOR" IS NOT MATERIAL TO ASCERTAINMENT OF THE STATUS OF ITS EMPLOYEES FOR COVERAGE PURPOSES. WE NOTE THE SOLICITOR'S SUGGESTION THAT, UNLESS THE WORD "SITE" IS GIVEN AN EXPANDED MEANING, PROTECTION WILL BE AFFORDED ONLY TO "THOSE ACTUALLY ENGAGED IN CONTRACT PERFORMANCE.' THE STATUTORY INTENT WAS, OF COURSE, TO PROTECT THE LABOR STANDARDS OF LOCAL MECHANICS AND LABORERS WHOSE WAGES MIGHT BE DEPRESSED BY AN INFLUX OF LOWER PAID WORKERS TO PERFORM FEDERAL CONSTRUCTION, AND FROM THIS VIEWPOINT WE CAN AGREE THAT IT WOULD BE ONLY REASONABLE IF POSSIBLE TO LIBERALLY INTERPRET THE ACT'S PROVISIONS AS APPLYING MINIMUM WAGE STANDARDS TO ALL WORKERS UTILIZED BY A CONTRACTOR, OR ITS SUBCONTRACTORS AND SUPPLIERS, IN THE COMMUNITY.

HOWEVER, THE PROPRIETY OF ADOPTING SUCH AN EXPANDED OR BROADENED MEANING IS NOT DEPENDENT UPON AN APPRAISAL OF THE EXTENT TO WHICH WAGE STANDARDS IN A COMMUNITY THEORETICALLY SHOULD BE OR COULD BE PROTECTED. THE DISTINCTION MADE IN THE ACT BETWEEN COVERED AND NONCOVERED WORK IS SPECIFIC. THE MEANING OF "SITE OF THE WORK" IS NOT LEFT OPEN TO CONSTRUCTION BUT IS RESTRICTIVELY QUALIFIED BY THE TERM "DIRECTLY UPON," WHICH, IN ACCORDANCE WITH THE USUAL MEANING OF THE WORD "DIRECTLY," IDENTIFIES AN EXACT LOCATION OR PLACE. THUS, BROADER DEFINITION OF THE WORD "SITE" THAN AS THE EXACT CONFINES OF THE PLACE OF PERFORMANCE OF THE CONSTRUCTION WORK WOULD VARY THE PLAIN DIRECTION OF THE STATUTE AND WOULD ADD AN INDETERMINATENESS AND INDEFINITENESS WHERE NONE EXISTS. IN THIS CONNECTION, IT APPEARS CLEAR THAT THE CONGRESS WAS WELL AWARE THAT IT WAS COMMON PRACTICE TO PROCESS AND FABRICATE MATERIALS AND STRUCTURAL ELEMENTS OFF THE SITE AND THAT IT DID NOT ATTEMPT TO BRING THIS PORTION OF THE WORK UNDER THE COVERAGE PROVIDED. IT FOLLOWS THAT SUCH PRACTICES, PARTICULARLY WHEN CONDUCTED BY A SUPPLIER, ARE NOT AN EVASION OF MINIMUM WAGE REQUIREMENTS, ALTHOUGH IT IS RECOGNIZED THAT INSTANCES MIGHT BE FOUND IN WHICH "ACROSS THE STREET" CONSTRUCTION ACTIVITIES BY A CONTRACTOR OR SUBCONTRACTOR WOULD BE QUESTIONABLE.

IN OUR CONSIDERED OPINION THE DAVIS-BACON ACT DOES NOT UNDERTAKE TO PROVIDE MINIMUM WAGE COVERAGE FOR WORK OFF THE SITE, WHETHER BY CONTRACTORS, SUBCONTRACTORS, OR MATERIALMEN, EVEN THOUGH PERFORMED IN THE IMMEDIATE COMMUNITY. HOWEVER DESIRABLE AN EXTENSION OF PROTECTION THROUGH COVERAGE OF SUCH ACTIVITIES MIGHT APPEAR TO BE, WE ARE OF THE OPINION THAT AN AMENDMENT OF THE PRESENT PROVISIONS OF THE ACT WOULD BE NECESSARY TO AUTHORIZE ITS PROVISION.

STEPS TO OBTAIN SUCH LEGISLATION APPARENTLY HAVE BEEN FOUND DESIRABLE BY THE GENERAL SUBCOMMITTEE ON LABOR OF THE HOUSE COMMITTEE ON EDUCATION AND LABOR, WHICH, IN ITS RECENTLY ISSUED REPORT ON ADMINISTRATION OF THE DAVIS -BACON ACT (COMMITTEE PRINT, JUNE 1963), RECOMMENDS ADDITION OF LANGUAGE TO THE ACT TO ENSURE AUTHORITY TO REQUIRE COVERAGE OF "SUBCONTRACTORS WHO PERFORM WORK OFF THE SITE OF THE ACTUAL PROJECT BUT WHOSE WORK PRODUCES ITEMS AND MATERIALS SPECIFICALLY AND EXCLUSIVELY FOR THE PROJECT.' H.R. 7075, 88TH CONGRESS, INTRODUCED TO CARRY OUT THE SUBCOMMITTEE'S RECOMMENDATIONS, WOULD DO SO BY AMENDING THE ACT TO PROVIDE THAT "THE CONTRACTOR OR HIS SUBCONTRACTOR SHALL PAY ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE PROJECT (OR AT A TEMPORARY LOCATION IN THE GENERAL AREA OF THE PROJECT, PERFORMING WORK REQUIRED BY THE CONTRACT)" THE PRESCRIBED MINIMUM WAGES.

INASMUCH AS THE CONTRACTOR WAS ERRONEOUSLY REQUIRED TO ADJUST THE WAGES OF TRAXLER'S EMPLOYEES PURSUANT TO THE DIRECTION OF THE DISTRICT ENGINEER, IT APPEARS THAT IT MAY HAVE A VALID CLAIM FOR ADDITIONAL COSTS OF PERFORMANCE. SEE SUNSWICK CORPORATION OF DELAWARE V. UNITED STATES, 109 CT.CL. 772, 75 F.SUPP. 221, CERTIORARI DENIED 334 U.S. 827. HOWEVER, IT SHOULD BE NOTED THAT THE BARE FACT THAT THE CONTRACTOR WAS REQUIRED TO MAKE SUCH WAGE ADJUSTMENTS DOES NOT, IN AND OF ITSELF, SHOW THAT ITS COST OF PERFORMANCE WAS IN FACT INCREASED. FOR EXAMPLE, THERE IS SOME INDICATION IN THE RECORD THAT HYDE ORIGINALLY INTENDED TO PRODUCE ITS OWN SAND ON THE SITE OF THE WORK. SEE TRANSCRIPT OF PREWORK CONFERENCE, DATED JANUARY 7, 1960, AT PAGE 64. IN SUCH CASE, HYDE WOULD HAVE BEEN OBLIGATED TO PAY LABORERS AND MECHANICS ENGAGED IN SAND PRODUCTION MINIMUM WAGES IN ACCORDANCE WITH THE PROVISIONS OF THE DAVIS-BACON ACT. THUS IT MAY BE THAT HYDE'S BID PRICE REFLECTS THE DAVIS-BACON MINIMUM WAGES IT WOULD HAVE BEEN OBLIGATED TO PAY HAD IT PRODUCED ITS OWN SAND ON THE SITE OF THE WORK IN WHICH CASE ADDITIONAL COSTS OF PERFORMANCE WOULD NOT HAVE BEEN INCURRED. ALSO, SO FAR AS APPEARS FROM THE PRESENT RECORD IT MAY BE THAT TRAXLER BASED ITS PRICE TO THE CONTRACTOR IN CONTEMPLATION OF PAYING DAVIS -BACON MINIMUM WAGES, IT BEING NOTED THAT AT THE OUTSET TRAXLER ACTUALLY PERFORMED PART OF ITS CONTRACT WITH HYDE ON THE SITE OF THE WORK AND PAID THE MINIMUM RATES AS REQUIRED. ALTHOUGH THE RECORD DOES NOT REVEAL THE TERMS OF THE CONTRACT BETWEEN HYDE AND TRAXLER, IT IS POSSIBLE THAT HYDE MAY BE ENTITLED UNDER THIS CONTRACT TO REIMBURSEMENT FROM TRAXLER FOR THE ADJUSTMENT MADE TO TRAXLER'S EMPLOYEES. IN EITHER OF THESE SITUATIONS IT APPEARS THAT THERE WOULD BENO LEGAL OBLIGATION ON THE PART OF THE GOVERNMENT TO REIMBURSE THE CONTRACTOR FOR THE WAGE ADJUSTMENTS MADE. DO NOT HAVE SUFFICIENT FACTS BEFORE US, IN THE WAY OF COST ESTIMATES AND THE LIKE, TO RESOLVE THESE QUESTIONS. WE ARE, THEREFORE, REFERRING THE MATTER BACK TO YOUR DEPARTMENT FOR APPROPRIATE ACTION ON THE CONTRACTOR'S CLAIM FOR INCREASED COST OF PERFORMANCE. SUCH ACTION SHOULD BE TAKEN IN ACCORDANCE WITH THE CONSIDERATIONS SET FORTH IN THIS DECISION AND UNDER THE EQUITABLE ADJUSTMENT PROVISIONS OF THE CONTRACT. SEE SUNSWICK CORPORATION OF DELAWARE V. UNITED STATES, SUPRA.

COPIES OF THIS LETTER ARE BEING FURNISHED TO THE CONTRACTOR AND TO THE SECRETARY OF LABOR FOR THEIR INFORMATION.