B-153992, JUN. 25, 1964

B-153992: Jun 25, 1964

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO A LETTER DATED APRIL 10. IT IS STATED THAT THE PURPOSE OF THE NEW SUBPART 1-12.4 IS TO PROVIDE FEDERAL PROCUREMENT REGULATION COVERAGE OF LABOR STANDARDS IN CONSTRUCTION CONTRACTS AND TO REFLECT THE REVISED REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR. IT IS ALSO STATED THAT THE PROPOSED SUBPART IS GENERALLY CONSISTENT WITH PORTIONS OF SECTION 12. SIMILAR FACILITIES IF THEY ARE SET UP FOR AND SERVE EXCLUSIVELY THE PARTICULAR CONSTRUCTION OPERATION AND ARE REASONABLY NEAR THE CONSTRUCTION SITE. * * *" IN B-148076. SERVES THE PURPOSE OF DEFINING ACCURATELY THE EXTENT TO WHICH OBSERVANCE OF CONTRACT WAGE CONDITIONS IS REQUIRED. WE OBSERVED THAT THE MEANING OF "SITE OF THE WORK" IS NOT LEFT OPEN TO CONSTRUCTION BUT IS RESTRICTIVELY QUALIFIED BY THE TERM "DIRECTLY UPON.

B-153992, JUN. 25, 1964

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED APRIL 10, 1964, FROM THE ASSISTANT GENERAL COUNSEL, REGULATIONS AND GENERAL LAW DIVISION, REQUESTING OUR COMMENTS ON A PROPOSED NEW ADDITION TO THE FEDERAL PROCUREMENT REGULATIONS (SUBPART 1-12.4, LABOR STANDARDS IN CONSTRUCTION CONTRACTS). IT IS STATED THAT THE PURPOSE OF THE NEW SUBPART 1-12.4 IS TO PROVIDE FEDERAL PROCUREMENT REGULATION COVERAGE OF LABOR STANDARDS IN CONSTRUCTION CONTRACTS AND TO REFLECT THE REVISED REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR, 29 CFR, PARTS 3 AND 5 (29 F.R. 97-104, JANUARY 4, 1964). IT IS ALSO STATED THAT THE PROPOSED SUBPART IS GENERALLY CONSISTENT WITH PORTIONS OF SECTION 12, PART 4 OF THE ARMED SERVICES PROCUREMENT REGULATIONS, ADJUSTED TO MADE IT SUITABLE ON A GOVERNMENT-WIDE BASIS.

SECTION 1-12.402-1 (B) (2) OF THE PROPOSED REGULATIONS PROVIDES, IN CONNECTION WITH THE APPLICABILITY OF THE DAVIS-BACON ACT, THAT:

"/B) THE SITE OF THE WORK MAY INCLUDE THE SITES OF JOB HEADQUARTERS, STORAGE YARDS, PREFABRICATION OR ASSEMBLY YARDS, QUARRIES OR BORROW PITS, BATCH PLANTS, AND SIMILAR FACILITIES IF THEY ARE SET UP FOR AND SERVE EXCLUSIVELY THE PARTICULAR CONSTRUCTION OPERATION AND ARE REASONABLY NEAR THE CONSTRUCTION SITE. * * *"

IN B-148076, JULY 26, 1963, COPY ENCLOSED, WE HELD THAT THE EXPRESS DESIGNATION OF "ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK," IN THE LANGUAGE OF SECTION 1 OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, SERVES THE PURPOSE OF DEFINING ACCURATELY THE EXTENT TO WHICH OBSERVANCE OF CONTRACT WAGE CONDITIONS IS REQUIRED. WE OBSERVED THAT 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 AND EXACT LOCATION OR PLACE. WE NOTED, ALSO, THAT THE LEGISLATIVE HISTORY OF THE ACT INDICATES CLEARLY 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 BEING THIS PORTION OF THE CONTRACT WORK UNDER THE COVERAGE PROVIDED. IN VIEW OF THESE CONSIDERATIONS, WE SUGGEST THAT THE ABOVE QUOTED PORTION OF THE PROPOSED REGULATION BE REVISED TO CONFORM TO THE EXPRESS PROVISIONS OF THE DAVIS-BACON ACT.

IT IS NOTED THAT THE WITHHOLDING OF FUNDS CLAUSE IN PARAGRAPH (B) AND SECTION 1-12.404-9 OF THE PROPOSED REGULATIONS PROVIDE, IN EFFECT THAT THE CONTRACTING OFFICER MAY, IN THE EVENT THAT THE CONTRACTOR FAILS TO PAY ANY LABORER OR MECHANIC ALL OR PART OF THE WAGES REQUIRED BY THE CONTRACT, SUSPEND ALL FUTURE CONTRACT PAYMENTS TO THE CONTRACTOR UNTIL SUCH VIOLATIONS HAVE CEASED. THE EXERCISE OF SUCH POWER BY THE CONTRACTING OFFICER APPEARS TO BE UNAUTHORIZED BY THE PROVISIONS OF THE DAVIS-BACON ACT OR THE CONTRACT WORK HOURS STANDARDS ACT. THE DAVIS-BACON ACT (40 U.S.C. 276A) PROVIDES IN PERTINENT PART:

"* * * THAT THERE MAY BE WITHHELD FROM THE CONTRACTOR SO MUCH OF ACCRUED PAYMENTS AS MAY BE CONSIDERED NECESSARY BY THE CONTRACTING OFFICER TO PAY TO LABORERS AND MECHANICS EMPLOYED BY THE CONTRACTOR OR ANY SUBCONTRACTOR ON THE WORK THE DIFFERENCE BETWEEN THE RATES OF WAGES REQUIRED BY THE CONTRACT TO BE PAID LABORERS AND MECHANICS ON THE WORK AND THE RATES OF WAGES RECEIVED BY SUCH LABORERS AND MECHANICS AND NOT REFUNDED TO THE CONTRACTOR, SUBCONTRACTORS, OR THEIR AGENTS.'

SEE, ALSO 40 U.S.C. 328 (B) (2), SUPP. IV (CONTRACT WORK HOURS STANDARDS ACT) WHICH STATES, IN PERTINENT PART, THAT:

"* * * THE GOVERNMENTAL AGENCY FOR WHICH THE CONTRACT WORK IS DONE * * * MAY WITHHOLD, OR CAUSE TO BE WITHHELD * * * FROM ANY MONEYS PAYABLE ON ACCOUNT OF WORK PERFORMED BY A CONTRACTOR OR SUBCONTRACTOR, SUCH SUMS AS MAY ADMINISTRATIVELY BE DETERMINED TO BE NECESSARY TO SATISFY ANY LIABILITIES OF SUCH CONTRACTOR OR SUBCONTRACTOR FOR UNPAID WAGES AND LIQUIDATED DAMAGES AS HEREIN PROVIDED.'

IN VIEW OF THE ABOVE STATUTORY PROVISIONS RELATING TO THE SPECIFIC CONTRACT PAYMENTS FROM WHICH WITHHOLDINGS MAY BE MADE, AND TO THE QUANTUM OF SUCH WITHHOLDINGS, IT IS SUGGESTED THAT THE WITHHOLDING OF FUNDS CLAUSE AND SECTION 1-12.404-9 BE REVISED TO CONFORM TO THE STATUTORY DIRECTIONS.

SECTION 1-12.404-1 OF THE PROPOSED REGULATIONS STATES (ON PAGE 15) THAT DETAILED INSTRUCTIONS FOR REQUESTING WAGE DETERMINATIONS FOR SPECIFIC CONTRACTS AND FOR REQUESTING GENERAL WAGE DETERMINATIONS ARE CONTAINED IN 29 CFR 5.6 (29 F.R. 100). THIS CITATION APPEARS TO BE INCORRECT AND SHOULD READ 29 CFR 5.3.

SECTION 1-12.404-2 (E) FAILS TO PROVIDE A PROCEDURE FOR AMENDING THE INVITATION FOR BIDS IF THE WAGE MODIFICATION IS RECEIVED BY THE CONTRACTING AGENCY 10 DAYS BEFORE BID OPENING. IN THAT CONNECTION SEE 40 COMP. GEN. 48, WHERE WE HELD THAT IT WOULD BE IMPROPER TO INCLUDE IN SPECIFICATIONS A REQUIREMENT THAT CONTRACTORS SHALL PAY MINIMUM WAGE RATES, AS DETERMINED BY THE SECRETARY OF LABOR, REGARDLESS OF WHETHER THE WAGE RATE DETERMINATIONS ARE RECEIVED BY THEM BEFORE OR AFTER BID OPENING. SEE ALSO, PARAGRAPH 12-404, 2 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH PROVIDES, INTER ALIA, THAT WAGE RATE MODIFICATIONS RECEIVED BY THE CONTRACTING OFFICER 5 DAYS BEFORE BID OPENING ARE TO BE INCLUDED IN THE INVITATION BY AN AMENDMENT THERETO WITH AN EXTENSION OF THE BID OPENING DATE IF NECESSARY. WE THINK IT WOULD BE DESIRABLE THAT YOUR PROPOSED REGULATION BE REVISED TO INCLUDE PROVISIONS TO COVER THIS TYPE OF SITUATION.

SECTION 1-12.404-9 PROVIDES, AMONG OTHER THINGS, THAT IF RESTITUTION OF WAGES DUE WORKERS IS NOT MADE DIRECTLY BY THE CONTRACTOR OR SUBCONTRACTOR WITHIN A REASONABLE TIME OR PRIOR TO FINAL PAYMENT UNDER THE CONTRACT, THE CONTRACTING OFFICER SHALL SUBMIT WITH THE CONTRACTOR'S PAYMENT VOUCHER OR VOUCHERS A "SCHEDULE OF DEDUCTIONS FORM PAYMENTS TO CONTRACTORS" ON STANDARD FORM 1093 AND A STATEMENT OF THE AMOUNT TO BE WITHHELD AS LIQUIDATED DAMAGES. THE SECTION FURTHER PROVIDES THAT "THESE" AMOUNTS SHALL BE DEDUCTED FROM THE PAYMENTS MADE TO THE CONTRACTOR AND SHALL BE DEPOSITED IN THE TREASURY IN ACCORDANCE WITH AGENCY PROCEDURES.

IN ACCORDANCE WITH THE DIRECTIVE IN THE DAVIS-BACON ACT, 40 U.S.C. 276A-2 (A), THAT THE COMPTROLLER GENERAL IS AUTHORIZED AND DIRECTED TO PAY DIRECTLY TO LABORERS AND MECHANICS FROM ANY ACCRUED PAYMENTS WITHHELD UNDER THE TERMS OF THE CONTRACT ANY WAGES FOUND TO BE DUE SUCH LABORERS AND MECHANICS, THERE HAS BEEN ESTABLISHED IN THE GENERAL ACCOUNTING OFFICE THE TRUST FUND ACCOUNT ,05X6022" INTO WHICH COLLECTIONS FOR WAGE UNDERPAYMENTS SHOULD BE DEPOSITED. SEE B-3368, MARCH 19, 1957, COPY ENCLOSED. SEE, ALSO 40 U.S.C. 330 (A), SUPP. IV, WHICH DIRECTS THE COMPTROLLER GENERAL TO PAY DIRECTLY TO LABORERS AND MECHANICS WAGE UNDERPAYMENTS ADMINISTRATIVELY FOUND TO BE DUE UNDER THE CONTRACT WORK HOURS STANDARDS ACT. IN VIEW OF THESE STATUTORY PROVISIONS MONEYS WITHHELD TO COVER WAGE UNDERPAYMENTS UNDER THESE ACTS SHOULD, IN ACCORDANCE WITH APPLICABLE PROCEDURES, BE FORWARDED TO THE GENERAL ACCOUNTING OFFICE FOR DISBURSEMENT TO LABORERS AND MECHANICS RATHER THAN DEPOSITED IN THE TREASURY. IT IS SUGGESTED THAT SECTION 1-12.404-9 BE REVISED TO RECOGNIZE THE FUNCTIONS PLACE WITH THE COMPTROLLER GENERAL BY LAW.

WITH RESPECT TO SECTION 112.404-10, FINAL AUTHORITY TO MAKE ADJUSTMENTS FOR WAGE UNDERPAYMENTS UNDER THE DAVIS-BACON ACT IS PLACED BY THE ACT IN THE GENERAL ACCOUNTING OFFICE. SEE 40 U.S.C. 276A-2 (A). SINCE THERE IS NO AUTHORITY FOR OTHER AGENCIES TO ORDER RESTITUTION OF AMOUNTS DUE WORKERS IN DAVIS-BACON ACT CASES WE ARE OPPOSED TO THE ISSUANCE OF A REGULATION WHICH WOULD IMPLY THAT AUTHORITY DOES EXIST ON THE PART OF CONTRACTING AGENCIES TO ORDER RESTITUTION. WE THEREFORE RECOMMEND DELETION OF THAT PORTION OF SECTION 1-12.404-10 WHICH REFERS TO SUCH ORDERS.

OUR COMMENTS, OR FAILURE TO COMMENT, ON SPECIFIC PROVISIONS OF THE PROPOSED REGULATIONS SHOULD NOT BE CONSIDERED AS ENDORSEMENT OR APPROVAL OF THE REGULATIONS OR ANY PART THEREOF, OR AS RECOGNIZING YOUR AUTHORITY TO PRESCRIBE REGULATIONS CONCERNING THE ENFORCEMENT OF THE DAVIS-BACON ACT, AND IT SHOULD BE UNDERSTOOD THAT WE EXPRESSLY RESERVE THE CONTINUING RIGHT TO REVIEW ANY ACTION TAKEN BY ANY AGENCY THEREUNDER IN THE LIGHT OF THE STATUTORY DUTIES AND RESPONSIBILITIES OF THIS OFFICE.