B-155232, OCT. 12, 1964

B-155232: Oct 12, 1964

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DEPARTMENT OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 9. CONTRACT NO. 14-11-0008-1616 WAS AWARDED TO MANAGEMENT SERVICES. THE CONTRACT AMOUNT WAS $1. IN VIEW OF THE TYPE OF CONTRACT AND AMOUNT INVOLVED IT WAS ADMINISTRATIVELY DETERMINED THAT NEITHER THE MILLER ACT. 40 U.S.C. 276A WERE FOR APPLICATION AND CONSEQUENTLY NO PERFORMANCE OR PAYMENT BONDS WERE REQUIRED AND NO WAGE RATES WERE INCLUDED. 40 U.S.C. 327-332 WERE INCLUDED IN THE CONTRACT. THEY ALSO ARE NOT FOR APPLICATION HERE BECAUSE OF THE AMOUNT INVOLVED. 29 CFR 3.3 (C) PROVIDES THAT THE ANTI-KICKBACK REGULATIONS DO NOT APPLY TO CONTRACTS OF $2. PERFORMANCE WAS NOT ENTIRELY SATISFACTORY AND THE AMOUNT PAYABLE UNDER THE TERMS OF THE CONTRACT WAS REDUCED IN ACCORDANCE WITH ITS TERMS TO $1.

B-155232, OCT. 12, 1964

TO MR. VERBON D. WALKER, BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 9, 1964 (FILE 1370 (3.21) ( TRANSMITTING COPY OF VOUCHER NO. 25-02-697 IN THE AMOUNT OF $1,420.80 IN FAVOR OF MANAGEMENT SERVICES, INC., OF PENSACOLA, FLORIDA, FOR FINAL PAYMENT UNDER CONTRACT NO. 14-11-0008-1616 AND REQUESTING OUR DECISION AS TO THE PROPRIETY OF PAYMENT THEREOF.

CONTRACT NO. 14-11-0008-1616 WAS AWARDED TO MANAGEMENT SERVICES, INC., ON APRIL 28, 1964, FOR PLANTING SEEDLING TREES IN THE CYCLONE AREA IN LAWRENCE COUNTY, SOUTH DAKOTA. THE CONTRACT AMOUNT WAS $1,920. THE GOVERNMENT PROVIDED THE SEEDLINGS FOR PLANTING. IN VIEW OF THE TYPE OF CONTRACT AND AMOUNT INVOLVED IT WAS ADMINISTRATIVELY DETERMINED THAT NEITHER THE MILLER ACT, 40 U.S.C. 270A - 270D, NOR THE DAVIS-BACON ACT, 40 U.S.C. 276A WERE FOR APPLICATION AND CONSEQUENTLY NO PERFORMANCE OR PAYMENT BONDS WERE REQUIRED AND NO WAGE RATES WERE INCLUDED. ALSO WHILE LABOR STANDARDS PROVISIONS RELATING TO THE ANTI KICKBACK ACT REGULATIONS OF THE SECRETARY OF LABOR ISSUED PURSUANT TO 40 U.S.C. 276 (C) AND 18 U.S.C. 874 AND PROVISIONS RELATING TO THE WORK HOURS ACT OF 1962, 40 U.S.C. 327-332 WERE INCLUDED IN THE CONTRACT, THEY ALSO ARE NOT FOR APPLICATION HERE BECAUSE OF THE AMOUNT INVOLVED. 29 CFR 3.3 (C) PROVIDES THAT THE ANTI-KICKBACK REGULATIONS DO NOT APPLY TO CONTRACTS OF $2,000 OR LESS; 29 CFR 5.14 (3) ISSUED PURSUANT TO 40 U.S.C. 331 LIKEWISE EXEMPTS FROM THE WORK HOURS ACT OF 1962 CONTRACTS OF $2,000 OR LESS.

FOLLOWING AWARD OF THE CONTRACT, THE CONTRACTOR COMMENCED WORK ABOUT MAY 14, 1964, AND COMPLETED WORK JUNE 10, 1964. PERFORMANCE WAS NOT ENTIRELY SATISFACTORY AND THE AMOUNT PAYABLE UNDER THE TERMS OF THE CONTRACT WAS REDUCED IN ACCORDANCE WITH ITS TERMS TO $1,420.80. ON JULY 6, 1964, THE CONTRACTING OFFICER WAS ADVISED BY HIS FIELD REPRESENTATIVES THAT HE HAD BEEN CONTACTED BY SEVERAL OF THE CONTRACTOR'S EMPLOYEES OR THEIR REPRESENTATIVES WHO ALLEGED THAT THEY HAD NOT BEEN PAID FOR THEIR WORK. THE CONTRACTOR WAS ADVISED OF THIS FACT BY TELEGRAM OF JULY 7, 1964, AND REQUESTED TO FORWARD COPIES OF PAYROLLS TO THE CONTRACTING OFFICER SHOWING PAYMENT TO THE LABORERS AND THAT NO PAYMENT WOULD BE MADE UNDER THE CONTRACT UNTIL SUCH EVIDENCE OF PAYMENT WAS RECEIVED. THE CONTRACTOR REPLIED BY TELEGRAM OF JULY 8, 1964, THAT THE LABOR STANDARDS PROVISIONS OF THE CONTRACT WERE NOT APPLICABLE TO THIS CONTRACT AND REQUESTED IMMEDIATE PAYMENT OF HIS INVOICE.

ON JULY 13, 1964, THE CONTRACTOR WAS ADVISED BY REGISTERED LETTER THAT SATISFACTORY EVIDENCE MUST BE PROVIDED BY THE CONTRACTOR THAT HIS EMPLOYEES HAVE BEEN PAID OR NO PAYMENT WOULD BE MADE AND THE PROCEEDS OF THE CONTRACT WOULD BE DEPOSITED WITH THE GENERAL ACCOUNTING OFFICE FOR DISBURSEMENT TO THE AGGRIEVED EMPLOYEES. NO REPLY HAS BEEN RECEIVED TO THAT COMMUNICATION. THE PROJECT MANAGER, BELLE FOURCHE, SOUTH DAKOTA, ADVISED THE CONTRACTING OFFICER THAT 24 PERSONS HAD NOT BEEN PAID AND INDICATED THE APPROXIMATE AMOUNTS DUE TO MOST OF THEM. WITHOUT ACCURATE PAYROLLS, IT IS IMPOSSIBLE TO DETERMINE THE AMOUNTS DUE THE EMPLOYEES OR TO COME TO ANY CONCLUSION THAT OVERTIME HAS BEEN PROPERLY COMPUTED OR WHETHER ANY UNAUTHORIZED DEDUCTIONS WERE RETAINED BY THE CONTRACTOR. APPEARS THAT SEVERAL FEDERAL AND STATE OFFICIALS HAVE EXPRESSED AN INTEREST IN THE SUBJECT MATTER OF THE CLAIMS OF THE EMPLOYEES, MOST OF WHOM SEEM TO HAVE BEEN TEEN-AGE BOYS.

UNDER THE CIRCUMSTANCES, YOU SAY THAT YOU ARE QUITE RELUCTANT TO MAKE FINAL PAYMENT TO THE CONTRACTOR WITHOUT RECEIVING SOME EVIDENCE SHOWING THAT THE CONTRACTOR HAS PAID HIS EMPLOYEES AND THAT UNLESS SOME EVIDENCE OF PAYMENT OF WAGES IS OBTAINED, THERE WOULD BE NOTHING TO STOP THE CONTRACTOR FROM FORGETTING TO PAY HIS EMPLOYEES AND POCKETING THE PROCEEDS. IT IS STATED THAT A PARTICULAR DIFFICULTY IN THIS CASE IS THE FACT THAT THE CONTRACTOR IS FAR REMOVED FROM THE EMPLOYEES AND PROBABLY NOT SUBJECT TO SUIT IN SOUTH DAKOTA AT PRESENT. YOU ARE ADVISED BY THE CONTRACTING OFFICER THAT HE IS BRINGING THE MATTER TO THE ATTENTION OF THE DEPARTMENT OF THE INTERIOR WITH THE REQUEST THAT DEPARTMENTAL DEBARMENT PROCEEDINGS BE COMMENCED AGAINST THE CONTRACTOR.

YOUR DOUBT IN THE MATTER ARISES BECAUSE YOU ARE NOT AWARE OF ANY VALID AND LEGAL GROUND TO WITHHOLD PAYMENT FROM THE CONTRACTOR, BECAUSE EVEN IF PAYMENT WERE WITHHELD, YOU ARE NOT AWARE OF ANY PROCEDURE BY WHICH ALL OR PART OF THE FUNDS IN HAND COULD BE DISBURSED TO THE LABORERS IN QUESTION, AND THUS A MERE WITHHOLDING WOULD NOT APPEAR TO ACCOMPLISH THE OBJECTIVE SOUGHT, NAMELY PAYMENT OF THE WAGES THAT ARE DUE. YOU POINT OUT, ON THE OTHER HAND, THAT PAYMENT OF THE MONEY DUE TO THE CONTRACTOR MIGHT HAVE THE EFFECT OF ALLOWING THE CONTRACTOR TO GET AWAY WITH A POSSIBLE FRAUD AGAINST THE EMPLOYEES.

WE AGREE THAT THERE IS NO AUTHORITY UNDER THE LAW AND THE CONTRACTUAL PROVISIONS FOR THE GOVERNMENT TO WITHHOLD AMOUNTS OTHERWISE PAYABLE UNDER THE CONTRACT AND TO MAKE PAYMENTS DIRECTLY TO UNPAID WORKERS WHO PERFORMED SERVICES THEREUNDER. B-145068, AUGUST 18, 1961; 10 COMP. GEN. 433. WHILE NO MATTER HOW HIGH OUR MOTIVES OR COMPELLING THE CIRCUMSTANCES, ANY ATTEMPT TO MAKE SUCH WITHHOLDING FOR DIRECT PAYMENT TO THE WORKERS WOULD BE AN ATTEMPT TO ACCOMPLISH BY ARBITRARY MEANS THAT WHICH IS UNAUTHORIZED, AND AS SUCH, WOULD BE OPEN TO CENSURE. THIS OFFICE CANNOT IN PERFORMING ITS STATUTORY DUTIES DISREGARD THE LEGAL RIGHTS OF A CONTRACTOR. IT MUST BE APPARENT THAT IF IN THE ABSENCE OF AUTHORITY, FUNDS OTHERWISE DUE THE CONTRACTOR WERE USED TO MAKE PAYMENTS TO WORKERS WITH WHOM THE GOVERNMENT HAS NO PRIVITY, IT MIGHT WELL RESULT IN A DIRECT LOSS TO THE GOVERNMENT BY REASON OF EVENTUALLY HAVING TO PAY THE AMOUNTS INVOLVED TO THE CONTRACTOR, NOTWITHSTANDING THE PREVIOUS PAYMENTS MADE BY THE GOVERNMENT TO SUCH WORKERS.

ACCORDINGLY, THE VOUCHER IN QUESTION MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.