B-168713, MAY 6, 1970

B-168713: May 6, 1970

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ETC.- PAYMENT BY SURETY SUBCONTRACTOR'S EMPLOYEES ON CONSTRUCTION CONTRACT WERE UNDERPAID WAGES UNDER PROVISIONS OF DAVIS-BACON ACT AND CONTRACT WORK HOURS STANDARDS ACT AND AMOUNT WAS WITHHELD FROM FINAL SETTLEMENT WITH SURETY UNDER PERFORMANCE BOND AND TRANSMITTED TO GAO WHO MADE FINAL DISPOSITION. CLAIM OF SURETY FOR REFUND OF AMOUNT DEDUCTED FROM CONTRACT BALANCE IS AUTHORIZED SINCE SECOND PAYMENT COULD HAVE BEEN PREVENTED BY PROPER AND PROMPT AGENCY ACTION. KUNZIG: REFERENCE IS MADE TO THE LETTER OF NOVEMBER 17. GS-03- B-14060 WHICH WAS AWARDED TO THE BLAKE CONSTRUCTION COMPANY. WERE UNDERPAID STRAIGHT TIME AND OVERTIME WAGES UNDER THE PROVISIONS OF THE DAVIS-BACON ACT. IT WAS DETERMINED THAT ONE OF THE WORKERS.

B-168713, MAY 6, 1970

CONTRACTS--LABOR STIPULATIONS--WITHHOLDING UNPAID WAGES, OVERTIME, ETC.- PAYMENT BY SURETY SUBCONTRACTOR'S EMPLOYEES ON CONSTRUCTION CONTRACT WERE UNDERPAID WAGES UNDER PROVISIONS OF DAVIS-BACON ACT AND CONTRACT WORK HOURS STANDARDS ACT AND AMOUNT WAS WITHHELD FROM FINAL SETTLEMENT WITH SURETY UNDER PERFORMANCE BOND AND TRANSMITTED TO GAO WHO MADE FINAL DISPOSITION. PRIME CONTRACTOR NOTIFIED PROCURING AGENCY THAT ADJUSTMENT OF WAGES HAD BEEN ACCOMPLISHED BUT AGENCY FAILED TO TIMELY NOTIFY GAO WHICH RESULTED IN DUPLICATE PAYMENT, THEREFORE, CLAIM OF SURETY FOR REFUND OF AMOUNT DEDUCTED FROM CONTRACT BALANCE IS AUTHORIZED SINCE SECOND PAYMENT COULD HAVE BEEN PREVENTED BY PROPER AND PROMPT AGENCY ACTION.

TO MR. KUNZIG:

REFERENCE IS MADE TO THE LETTER OF NOVEMBER 17, 1966 (REFERENCE 3BCRPG), FROM THE ASSISTANT CHIEF, ACCOUNTS PAYABLE BRANCH, REGION 3, TRANSMITTING U. S. TREASURY CHECK NO. 83,852,293, DATED NOVEMBER 15, 1966, IN THE AMOUNT OF $417.47, TOGETHER WITH SUPPORTING PAPERS RELATING TO THE WITHHOLDING OF MONEYS OTHERWISE DUE UNDER CONSTRUCTION CONTRACT NO. GS-03- B-14060 WHICH WAS AWARDED TO THE BLAKE CONSTRUCTION COMPANY, INC; BY THE GENERAL SERVICES ADMINISTRATION (GSA), ON JANUARY 25, 1964.

AN INVESTIGATION CONDUCTED BY GSA ESTABLISHED THAT CERTAIN EMPLOYEES OF THE ARROW WRECKING COMPANY AND THE BOSLEY WRECKING COMPANY, A JOINT VENTURE, SUBCONTRACTOR TO THE BLAKE CONSTRUCTION COMPANY, INC; WERE UNDERPAID STRAIGHT TIME AND OVERTIME WAGES UNDER THE PROVISIONS OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, AND THE CONTRACT WORK HOURS STANDARDS ACT, 40 U.S.C. 327, ET SEQ.

IT WAS DETERMINED THAT ONE OF THE WORKERS, MR. J. D. DAVIS, WAS UNDERPAID $417.47 UNDER THE DAVIS-BACON ACT AND $232.25 UNDER THE CONTRACT WORK HOURS STANDARDS ACT. THE FIREMAN'S FUND AMERICAN INSURANCE COMPANIES, WHICH PROVIDED PAYMENT AND PERFORMANCE BONDS ON THE SUBCONTRACT BETWEEN THE PRIME CONTRACTOR, BLAKE CONSTRUCTION COMPANY, INC; AND ARROW WRECKING COMPANY AND BOSLEY WRECKING COMPANY, WAS CALLED UPON UNDER ITS PAYMENT BOND TO PAY CLAIMS OF UNPAID LABORERS, INCLUDING WAGE DEFICIENCIES UNDER THE DAVIS-BACON ACT PAYABLE TO MR. DAVIS, AND EMPLOYEE OF THE JOINT VENTURE.

ON NOVEMBER 8, 1965, MR. DAVIS ACKNOWLEDGED THE RECEIPT OF $232.25 FROM FIREMAN'S FUND, WHICH REPRESENTED THE AMOUNT DUE HIM FOR OVERTIME PAY ADJUSTMENTS. SINCE NO EVIDENCE WAS PRESENTED TO SHOW THAT THE DAVIS-BACON UNDERPAYMENT OF $417.47 HAD BEEN ADJUSTED, THE PRIME CONTRACTOR'S ATTENTION WAS CALLED TO THAT FACT BY THE CONTRACTING OFFICER ON FEBRUARY 9, 1966. SEVERAL FURTHER INQUIRIES BROUGHT FORTH ONLY THE INFORMATION THAT THE FIREMAN'S FUND AMERICAN INSURANCE COMPANIES HAD BEEN UNSUCCESSFUL IN ESTABLISHING CONTACT WITH MR. DAVIS. ON OCTOBER 7, 1966, THE CONTRACTING OFFICER ADVISED THE PRIME CONTRACTOR THAT UNLESS EVIDENCE WAS RECEIVED THAT MR. DAVIS HAD BEEN PAID $417.47, THAT AMOUNT WOULD BE WITHHELD FROM CONTRACT EARNINGS AND FORWARDED TO THIS OFFICE FOR FINAL DISPOSITION. SINCE THE EVIDENCE WAS NOT RECEIVED, $417.47 WAS TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE ON NOVEMBER 17, 1966.

A CLAIM FOR THE WAGE ADJUSTMENT DUE MR. DAVIS WAS SOLICITED BY THIS OFFICE AND A CERTIFICATE OF SETTLEMENT AUTHORIZING PAYMENT OF $417.47, LESS TAXES, WAS TRANSMITTED FOR PAYMENT ON APRIL 11, 1967.

ON AUGUST 8, 1967, BLAKE CONSTRUCTION COMPANY, INC; SUBMITTED A CLAIM FOR THE $417.47 ON THE BASIS THAT MR. DAVIS HAD BEEN PAID THAT AMOUNT BY FIREMAN'S FUND. PRESENTED WITH THE CLAIM WAS A COPY OF A SIGNED ACKNOWLEDGMENT BY MR. DAVIS OF THE RECEIPT OF THAT AMOUNT ON NOVEMBER 30, 1966, A COPY OF THE PRIME CONTRACTOR'S LETTER DATED JANUARY 9, 1967, ADVISING THE GSA CONTRACTING OFFICER OF THE PAYMENT, AND A COPY OF THE CONTRACTING OFFICER'S REPLY, DATED JANUARY 20, 1967, STATING THAT CLAIM FOR REFUND SHOULD BE FILED WITH THIS OFFICE. IN VIEW OF THE DISCLOSURE OF DUPLICATE ADJUSTMENT, A DEMAND FOR REFUND WAS SENT TO MR. DAVIS ON OCTOBER 19, 1967. HOWEVER, HE DID NOT RESPOND.

ON OCTOBER 6, 1969, THOMPSON, MCGRAIL & O'DONNELL, UNION TRUST BUILDING, WASHINGTON, D. C; REPRESENTING THE SURETY, FIREMAN'S FUND AMERICAN INSURANCE COMPANIES, SUBMITTED A CLAIM FOR REFUND OF THE $417.47. OUR REPLY, DATED NOVEMBER 4, 1969, WAS TO THE EFFECT THAT THE FUNDS IN QUESTION HAD BEEN SENT HERE IN TRUST FOR THE UNDERPAID EMPLOYEE AND HAD BEEN DISPOSED OF PRIOR TO OUR KNOWLEDGE OF THE PAYMENT BY FIREMAN'S FUND AND NO FUNDS REMAINED FOR DISTRIBUTION. THE ATTORNEYS FOR THE SURETY HAVE NOW REITERATED THE CLAIM ON THE BASIS THAT THE UNITED STATES HAD PROPER NOTICE OF THE SURETY'S PAYMENT TO THE WORKER AND THE FIREMAN'S FUND AMERICAN INSURANCE COMPANIES WAS ENTITLED TO REFUND WHETHER OR NOT THE UNITED STATES HAD RETAINED FUNDS STILL DUE THE CONTRACTOR UNDER THE CONTRACT IN QUESTION.

THE PRIME CONTRACTOR'S LETTER OF JANUARY 9, 1967, NOTIFIED GSA THAT THE ADJUSTMENT OF WAGES DUE MR. DAVIS HAD BEEN ACCOMPLISHED. ALTHOUGH THE GSA DID NOT COMMUNICATE THIS INFORMATION TO OUR OFFICE, IT DID ADVISE THE PRIME CONTRACTOR TO DIRECT THE CLAIM FOR REFUND HERE, BY LETTER DATED JANUARY 20, 1967. THE PRIME CONTRACTOR DID NOT DO SO UNTIL AUGUST 8, 1967, ALMOST SEVEN MONTHS LATER. HAD TIMELY EFFECT BEEN GIVEN TO THE ADMINISTRATIVE AGENCY'S ADVICE, THE ISSUANCE OF DUPLICATE ADJUSTMENT WOULD HAVE BEEN PRECLUDED, BUT WE FEEL THAT IT WAS THE DUTY OF YOUR AGENCY TO ADVISE THIS OFFICE PROMPTLY OF THE FACTS AND NOT LEAVE IT TO A CLAIMANT.

THERE CAN BE NO QUESTION BUT THAT WHEN THE SURETY PAID THE $417.47 TO MR. DAVIS, IT WAS SUBROGATED TO THE PRIME CONTRACTOR'S RIGHT TO REFUND OF THE EQUAL AMOUNT WITHHELD FROM THE CONTRACT BALANCE. INASMUCH AS THE SECOND PAYMENT COULD HAVE BEEN PREVENTED BY PROPER ACTION BY YOUR AGENCY, THERE APPEARS TO BE NO VALID DEFENSE TO THE CLAIM OF THE SURETY, AND WE ARE TODAY DIRECTING OUR CLAIMS DIVISION TO ISSUE A SETTLEMENT IN FAVOR OF THE SURETY IN THE AMOUNT OF $417.47. WE RECOMMEND THAT ACTION BE TAKEN TO AVOID RECURRENCE OF SUCH ERRORS.