B-162034, OCT. 4, 1967

B-162034: Oct 4, 1967

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ALTHOUGH CLAIM FOR SALARY UNDERPAYMENTS TO EMPLOYEES OF SUBCONTRACTOR WAS NOT MADE AGAINST PRIME CONTRACTOR UNTIL NINE MONTHS AFTER COMPLETION OF CONTRACT. CONTRACTOR AND SURETY ARE LIABLE TO WORKERS AND PRIME CONTRACTOR HAS ADEQUATE LEGAL REMEDIES AGAINST SUBCONTRACTOR. TO MAGNA BUILDING CORPORATION: REFERENCE IS MADE TO YOUR LETTER DATED JULY 11. COMPLAINING OF THE PROCEDURE FOLLOWED BY THE CONTRACTING OFFICER IN CONNECTION WITH CERTAIN LABOR STANDARDS VIOLATIONS ALLEGED TO HAVE BEEN COMMITTED BY A SUBCONTRACTOR OF YOURS AT THE MACDILL AIR FORCE BASE. IT IS YOUR STATED FEELING THAT THIS REQUEST WAS IMPROPER IN THAT YOU WERE NOT NOTIFIED OF ANY POTENTIAL VIOLATION OR POTENTIAL CLAIM BY THE GOVERNMENT UNTIL APPROXIMATELY NINE MONTHS AFTER FINAL COMPLETION OF ALL WORK.

B-162034, OCT. 4, 1967

CONTRACTS - LABOR STANDARDS VIOLATIONS DECISION TO MAGNA BUILDING CORP. CONCERNING CLAIM FOR RESTITUTION TO EMPLOYEES OF SUBCONTRACTOR, DA SYLVA SALES AND SERVICES, INC., FOR LABOR STANDARDS VIOLATION AFTER COMPLETION OF CONTRACT FOR CONSTRUCTION OF FAMILY HOUSING AT MACDILL AIR FORCE BASE. ALTHOUGH CLAIM FOR SALARY UNDERPAYMENTS TO EMPLOYEES OF SUBCONTRACTOR WAS NOT MADE AGAINST PRIME CONTRACTOR UNTIL NINE MONTHS AFTER COMPLETION OF CONTRACT, CONTRACTOR AND SURETY ARE LIABLE TO WORKERS AND PRIME CONTRACTOR HAS ADEQUATE LEGAL REMEDIES AGAINST SUBCONTRACTOR. ANY QUESTION AS TO EXISTENCE OR AMOUNT OF UNDERPAYMENTS SHOULD BE PRESENTED INITIALLY TO CONTRACTING AGENCY.

TO MAGNA BUILDING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 11, 1967, AND ENCLOSURES, COMPLAINING OF THE PROCEDURE FOLLOWED BY THE CONTRACTING OFFICER IN CONNECTION WITH CERTAIN LABOR STANDARDS VIOLATIONS ALLEGED TO HAVE BEEN COMMITTED BY A SUBCONTRACTOR OF YOURS AT THE MACDILL AIR FORCE BASE, FLORIDA, UNDER CONTRACT NO. AF 08/602/-3508.

YOU SAY THAT YOU HAD BEEN REQUESTED BY THE CONTRACTING OFFICER ON THE ABOVE REFERENCED CONTRACT TO REMIT A CHECK IN THE AMOUNT OF$876.02 AS YOUR PORTION OF RESTITUTION TO EMPLOYEES AND LIQUIDATED DAMAGES TO THE GOVERNMENT FOR LABOR STANDARDS VIOLATIONS BY DA SYLVA SALES AND SERVICES, INC. IT IS YOUR STATED FEELING THAT THIS REQUEST WAS IMPROPER IN THAT YOU WERE NOT NOTIFIED OF ANY POTENTIAL VIOLATION OR POTENTIAL CLAIM BY THE GOVERNMENT UNTIL APPROXIMATELY NINE MONTHS AFTER FINAL COMPLETION OF ALL WORK, AND THAT, THEREFORE, YOU HAD NO OPPORTUNITY TO WITHHOLD FUNDS UNTIL A DETERMINATION OF THE VIOLATION WAS FINALIZED; THAT BY THE GOVERNMENT'S OWN STATEMENT IT INVESTIGATED AND ATTEMPTED COLLECTION FROM THE SUBCONTRACTOR DIRECTLY FOR AT LEAST SIX MONTHS AND AT NO TIME ADVISED YOU OF ANY OF THESE PROCEEDINGS; AND THAT WHEN THE GOVERNMENT WAS UNABLE TO COLLECT FROM THE SUBCONTRACTOR, IT THEN NOTIFIED YOU TO PAY. IN THIS CONNECTION THE RECORD SHOWS THAT ON JULY 8, 1967, THE DEPARTMENT OF THE AIR FORCE WITHHELD FROM MONIES OTHERWISE DUE YOU THE SUM OF $876.02 ON ACCOUNT OF LABOR STANDARDS VIOLATIONS BY YOUR SUBCONTRACTOR. OF THIS AMOUNT $554.26 REPRESENTS UNDERPAYMENTS DUE EMPLOYEES UNDER THE DAVIS- BACON ACT, 40 U.S.C. 276A; $161.76 REPRESENTS UNDERPAYMENTS DUE EMPLOYEES UNDER THE CONTRACT WORK HOURS STANDARDS ACT, 40 U.S.C. 327; AND $160 REPRESENTS PENALTIES IMPOSED UNDER THE LATTER ACT.

YOUR CONTRACT FOR THE CONSTRUCTION OF 20 UNITS OF FAMILY HOUSING AT THE MACDILL AIR FORCE BASE, FLORIDA, IS SUBJECT TO AND CONTAINS THE MINIMUM WAGE PROVISIONS REQUIRED BY THE DAVIS-BACON ACT AND THE OVERTIME PAY PROVISIONS OF THE CONTRACT WORK HOURS STANDARDS ACT. UNDER THOSE CONTRACT PROVISIONS YOU AS THE PRIME CONTRACTOR, AND THE ONLY PARTY IN PRIVITY WITH THE GOVERNMENT, HAVE THE DIRECT AND PRIMARY RESPONSIBILITY TO SEE TO IT THAT ALL LABORERS AND MECHANICS EMPLOYED AT THE SITE OF THE CONTRACT WORK, WHETHER BY YOU OR A SUBCONTRACTOR, ARE PAID IN ACCORDANCE WITH THE CONTRACT STIPULATIONS. UNDER THE EXPRESS PROVISIONS OF BOTH THE CITED ACTS THE CONTRACTING AGENCY IS AUTHORIZED TO WITHHOLD FROM AMOUNTS OTHERWISE DUE THE PRIME CONTRACTORS ANY SUMS DUE TO UNDERPAID WORKERS, AND IN THE CASE OF THE WORK HOURS STANDARDS ACT, AS LIQUIDATED DAMAGES IMPOSED IN ACCORDANCE WITH THAT ACT. EVEN IF NO WITHHOLDINGS WERE MADE YOU AND YOUR SURETY WOULD,UNDER BOTH THE STATUTES INVOLVED, BE DIRECTLY LIABLE TO THE WORKERS FOR ANY AMOUNTS DUE THEM. SEE 40 U.S.C. 276A-2 (B) AND 328 (B) (2). YOU, AS PRIME CONTRACTOR, PRESUMABLY HAVE ADEQUATE LEGAL REMEDIES FOR REIMBURSEMENT FROM YOUR SUBCONTRACTOR, BUT YOUR DIRECT LIABILITY IS NOT DEPENDENT UPON OR AFFECTED BY THE EXISTENCE OR ENFORCEABILITY OF SUCH REMEDIES, AND THE FACT THAT YOU WERE NOT INFORMED BY THE GOVERNMENT THAT THE VIOLATIONS HAD OCCURRED UNTIL AFTER COMPLETION OF THE WORK UNDER THE CONTRACT DOES NOT RELIEVE YOU OF YOUR OBLIGATIONS THEREUNDER.

IN THE CIRCUMSTANCES WE ARE UNABLE TO FIND ANY LEGAL BASIS FOR OBJECTING TO THE ADMINISTRATIVE WITHHOLDING OF SUCH AMOUNTS AS APPEAR TO BE REQUIRED TO COVER PAYMENTS DUE TO MECHANICS AND LABORERS EMPLOYED ON YOUR CONTRACT WORK AND LIQUIDATED DAMAGES ASSESSABLE THEREFOR. ANY QUESTIONS AS TO THE EXISTENCE OR AMOUNT OF UNDERPAYMENTS SHOULD BE PRESENTED INITIALLY TO THE CONTRACTING AGENCY FOR RESOLUTION IN ACCORDANCE WITH THE PROVISIONS OF YOUR CONTRACT.