B-169757, OCT. 9, 1970

B-169757: Oct 9, 1970

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EXCESS WAGE RATES PAID AS RESULT OF ERRONEOUS INTERPRETATION THAT THE HIGHER RATES WERE REQUIRED BECAUSE OF ADVICE FROM THE GOVERNMENT INSPECTOR THAT THE LABOR WAS PERFORMED IN A HIGHER WAGE RATE AREA AND THE CONTRACTOR'S CONTENTION IS SUPPORTED BY AFFIDAVITS OF THREE EMPLOYEES THAT THEY HAD AGREED TO WORK FOR LESSER RATES. THEREFORE REIMBURSEMENT FOR THE HIGHER RATES IS PROPER. HANNEBRINK: REFERENCE IS MADE TO YOUR LETTER DATED MAY 5. WHICH WAS ENTERED INTO WITH WILLIAMS. THE CONTRACTOR CONTENDS THAT EXCESS WAGES WERE PAID AS THE RESULT OF AN ERRONEOUS INTERPRETATION BY THE CONTRACTING OFFICER OF DEPARTMENT OF LABOR DECISION AH-6. THE WAGE RATE AND FRINGE PAYMENT DETERMINATIONS WERE INCLUDED IN THE ADVERTISED SPECIFICATIONS OF THE CONTRACT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1 OF THE DAVIS-BACON ACT.

B-169757, OCT. 9, 1970

CONTRACTS - LABOR STIPULATIONS - EXCESS WAGE PAYMENTS AUTHORIZING CERTIFICATION OF VOUCHER REPRESENTING REIMBURSEMENT OF EXCESS WAGES PAID BY WILLIAMS, INCORPORATED INCIDENT TO CONSTRUCTION OF HATCH POINT ROAD, SAN JUAN COUNTY, UTAH. EXCESS WAGE RATES PAID AS RESULT OF ERRONEOUS INTERPRETATION THAT THE HIGHER RATES WERE REQUIRED BECAUSE OF ADVICE FROM THE GOVERNMENT INSPECTOR THAT THE LABOR WAS PERFORMED IN A HIGHER WAGE RATE AREA AND THE CONTRACTOR'S CONTENTION IS SUPPORTED BY AFFIDAVITS OF THREE EMPLOYEES THAT THEY HAD AGREED TO WORK FOR LESSER RATES. THEREFORE REIMBURSEMENT FOR THE HIGHER RATES IS PROPER.

TO MRS. HANNEBRINK:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 5, 1970, REQUESTING A DECISION AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN THE AMOUNT OF $5,030.59, STATED IN FAVOR OF WILLIAMS, INCORPORATED, NATURITA, COLORADO, COVERING A CLAIMED REIMBURSEMENT FOR EXCESS WAGES PAID IN CONNECTION WITH THE CONSTRUCTION OF THE HATCH POINT ROAD, SEGMENT C, IN SAN JUAN COUNTY, UTAH, UNDER CONTRACT NO. 14-11-0008 3073, DATED APRIL 10, 1968, WHICH WAS ENTERED INTO WITH WILLIAMS, INCORPORATED, BY THE BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR, ON BEHALF OF THE UNITED STATES.

THE CONTRACTOR CONTENDS THAT EXCESS WAGES WERE PAID AS THE RESULT OF AN ERRONEOUS INTERPRETATION BY THE CONTRACTING OFFICER OF DEPARTMENT OF LABOR DECISION AH-6,322, DECEMBER 16, 1967, WHICH, AS AMENDED, SET FORTH DETERMINATIONS OF PREVAILING WAGE RATES AND FRINGE PAYMENTS FOR CERTAIN CLASSES OF LABOR EMPLOYED ON CONSTRUCTION PROJECTS WITHIN THE STATE OF UTAH. THE WAGE RATE AND FRINGE PAYMENT DETERMINATIONS WERE INCLUDED IN THE ADVERTISED SPECIFICATIONS OF THE CONTRACT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1 OF THE DAVIS-BACON ACT, AS AMENDED, 40 U.S.C. 276(A).

THE DEPARTMENT OF LABOR DECISION INCORPORATED TWO SCHEDULES FOR CERTAIN LABOR CLASSIFICATIONS DISTINGUISHABLE GENERALLY UPON THE PROXIMITY OF A PARTICULAR CONSTRUCTION PROJECT TO A LOCAL COMMUNITY. THE RATES OF THE FIRST SCHEDULE, UTAH-1, WERE TO APPLY IF THE PROJECT WAS LOCATED WITHIN A RELATIVELY SHORT DISTANCE FROM ONE OF THE SPECIFIED TOWNS, AND THE HIGHER RATES OF THE SECOND SCHEDULE, UTAH-2, WERE TO APPLY IF THE PROJECT WAS IN AN AREA BEYOND THE LIMITS CONTEMPLATED FOR THE APPLICATION OF THE SCHEDULE UTAH-1 RATES. THE UTAH-2 SCHEDULE CONTAINS THE FOLLOWING DESCRIPTION WITH REFERENCE TO THE APPLICATION OF THE UTAH-2 SCHEDULE RATES:

"AREA INCLUDES DAGGETT CO. & AREAS GREATER THAN 25 MILE RADIUS FROM COURTHOUSES OF TOWNS OF VERNAL, DUCHESNE, PRICE, CASTLE DALE, LOA, KANAB, MONTICELLO, MOAB AND COALVILLE; ***"

THE RECORD SHOWS THAT, BEFORE COMMENCEMENT OF THE WORK REQUIRED UNDER THE CONTRACT, THE CONTRACTOR WAS ADVISED THAT THE SCHEDULE UTAH-2 RATES WOULD BE APPLICABLE BECAUSE THE PROJECT SITE WAS OUTSIDE THE RADIUS OF 25 MILES FROM MONTICELLO, THE COUNTY SEAT OF SAN JUAN COUNTY. THE CONTRACTOR PAID THE SCHEDULE UTAH-2 RATES TO ITS OWN EMPLOYEES AND IT WAS NOT UNTIL A SUBCONTRACTOR, NIELSONS, INCORPORATED, PERFORMED CERTAIN ROAD SURFACING WORK THAT A QUESTION AROSE AS TO THE RATES WHICH WERE APPLICABLE. WHEN THE PAYROLLS OF THE SUBCONTRACTOR WERE RETURNED WITH A REQUEST FOR COMPLIANCE WITH LABOR STANDARDS PROVISIONS AND PAYMENT OF APPROPRIATE WAGE RATES, THE SUBCONTRACTOR RESPONDED BY FURNISHING COPIES OF A MAP AND LETTER WHICH IT HAD RECEIVED FROM THE UTAH CHAPTER OF THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA (AGCA), SHOWING THE UNION-AGCA INTERPRETAION OF THE WAGE RATE SCHEDULES.

ACCORDING TO THE LETTER AND MAP, THE AREAS FOR WHICH THE SCHEDULE UTAH-1 RATES WOULD APPLY INCLUDE AREAS WITHIN A 25-MILE RADIUS OF ANY OF THE SPECIFIED TOWNS, REGARDLESS OF OVERLAPPING OF COUNTY LINES, AND WITHOUT REGARD TO DISTANCES BY ROAD MILES. UNDER SUCH INTERPRETATION OF THE WAGE RATE SCHEDULES, NEITHER THE CONTRACTOR NOR THE SUBCONTRACTOR WOULD HAVE BEEN OBLIGATED TO PAY THE SCHEDULE UTAH-2 RATES BECAUSE THE PROJECT IS LOCATED LESS THAN 25 AIR MILES FROM THE TOWN OF MOAB, THE COUNTY SEAT OF GRAND COUNTY, UTAH, ADJACENT TO SAN JUAN COUNTY.

SINCE THERE IS INVOLVED A DECISION OF THE SECRETARY OF LABOR MAKING DETERMINATIONS OF PREVAILING WAGE RATES AND FRINGE PAYMENTS IN A PARTICULAR LOCALITY, WHICH WERE REQUIRED TO BE INCORPORATED IN THE ADVERTISED SPECIFICATIONS OF THE CONTRACT WITH WILLIAMS, INCORPORATED, WE REQUESTED A REPORT ON THE QUESTION AS TO THE CORRECT INTERPRETATION OF THE WAGE RATE SCHEDULES FROM THE DEPARTMENT OF LABOR. THE REPORT WAS FURNISHED BY LETTER DATED SEPTEMBER 25, 1970, FROM THE OFFICE OF THE SOLICITOR, DEPARTMENT OF LABOR, WHICH IS, IN PERTINENT PART, AS FOLLOWS:

"IT SHOULD BE NOTED THAT THE WAGE SCHEDULES, UTAH-1 AND UTAH-2, WERE DERIVED FROM COLLECTIVELY BARGAINED AGREEMENTS BETWEEN THE UTAH CHAPTER OF THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA AND THE LOCAL LABOR UNIONS. THESE AGREEMENTS BESIDES SETTING FORTH THE WAGE RATES INDICATE THE TERRITORIAL JURISDICTION OF EACH SCHEDULE. THEREFORE, THE PARTIES TO THESE AGREEMENTS SHOULD BE CONSULTED AS TO THE INTENT PLACED UPON THE LANGUAGE CONTAINED THEREIN. BECAUSE OF THE DISPUTE AS TO THIS LANGUAGE WE HAVE REQUESTED THE PARTIES TO SUBMIT THEIR INTERPRETATION OF THE LABOR AGREEMENT.

"BY LETTER OF AUGUST 24, 1970, THE ASSOCIATED GENERAL CONTRACTORS, UTAH CHAPTER, SUBMITTED A JOINT STATEMENT WITH THE BUSINESS REPRESENTATIVE OF OPERATING ENGINEERS LOCAL NO. 3, COPY ENCLOSED. THEY MAKE REFERENCE TO A MAP WHICH WE UNDERSTAND IS ALSO IN YOUR POSSESSION. ALL WORK OUTSIDE THE CIRCLES AROUND THE COMMUNITIES OF MOAB AND MONTICELLO IS CONSIDERED REMOTE OR IN AREA 2 AND THE WORK WITHIN THE CIRCLES OF TWENTY-FIVE MILES IS AREA 1. THE PARTIES INDICATE THAT THE PROJECT, HATCH POINT ROAD, IS WITHIN THE CIRCLES AND, THEREFORE, UNDER THE AREA 1 RATES.

"IN VIEW OF THE INTENT OF THE PARTIES TO THE AGREEMENT, IT IS OUR CONCLUSION THAT THE UTAH-1 WAGE SCHEDULE FOR POWER EQUIPMENT OPERATORS AND TRUCK DRIVERS IS APPLICABLE TO HATCH POINT ROAD, SEGMENT C, PROJECT."

THE FOREGOING OPINION WOULD APPEAR TO BE CONTROLLING ON THE QUESTION INVOLVED AS TO THE APPLICATION OF THE SCHEDULE UTAH-1 AND UTAH-2 WAGE RATES SINCE THE CONCLUSION REACHED APPEARS REASONABLE AND IT HAS BEEN HELD THAT A RULING OF THE SECRETARY OF LABOR CONCERNING WAGE RATES TO BE PAID BY A CONTRACTOR ON A GOVERNMENT CONSTRUCTION PROJECT WAS NOT SUBJECT TO JUDICIAL REVIEW. SEE NELLO L. TEER COMPANY V UNITED STATES, 1965, 348 F. 2D 533, 172 CT. CL. 255, CERTIORARI DENIED, 383 U.S. 934.

THE CONTRACTOR CONTENDS THAT ITS BID FOR THE PERFORMANCE OF THE REQUIRED CONSTRUCTION WORK WAS BASED UPON USING THE SCHEDULE UTAH-1 RATES FOR TRUCK DRIVERS AND POWER EQUIPMENT OPERATORS AND THAT NO ALTERNATIVE WAS LEFT BUT TO PAY THE HIGHER SCHEDULE UTAH-2 RATES WHEN THE GOVERNMENT INSPECTOR ON THE JOB ADVISED SOME OF THE CONTRACTOR'S EMPLOYEES AS TO THE AMOUNT OF HOURLY WAGES THEY SHOULD BE PAID.

THE CONTRACTING OFFICER EXPRESSES THE BELIEF THAT THE CONTRACTOR ACQUIESCED IN HIS INTERPRETATION OF THE CONTRACT WAGE PAYMENT REQUIREMENTS. HOWEVER, ON THE RECORD BEFORE US, WHICH INCLUDES THE AFFIDAVITS OF THREE OF THE CONTRACTOR'S EMPLOYEES TO THE EFFECT THAT THEY HAD AGREED IN THE FIRST INSTANCES TO WORK ON THE BASIS OF RECEIVING HOURLY WAGE RATES LESS THAN THE SCHEDULE UTAH-2 RATES, THERE APPEARS TO BE A REASONABLE BASIS FOR A CONCLUSION THAT THE CONTRACTOR IS ENTITLED TO RECOVER FROM THE GOVERNMENT THE AMOUNT OF THE EXCESS WAGES PAID. SEE BATESON-STOLTE, INC. V UNITED STATES, 1962, 305 F. 2D 386, 388, 158 CT. CL. 455, 459, WHEREIN THE COURT OF CLAIMS STATED:

"LET IT BE REMEMBERED THAT THE PROVISION FOR THE PAYMENT OF A MINIMUM WAGE WAS NOT FOR THE BENEFIT OF THE CONTRACTOR AND THERE WAS NO WARRANTY THAT HE WOULD NOT BE REQUIRED TO PAY A HIGHER WAGE. UNITED STATES V BINGHAMPTON CONSTRUCTION CO., 347 U.S. 171, 74 S. CT. 438, 98 L. ED. 594. BUT IF THE DEFENDANT DIRECTLY REQUIRED THE CONTRACTOR TO PAY A HIGHER WAGE, IT IS LIABLE FOR THE INCREASE. SUNSWICK CORP. V UNITED STATES, 75 F. SUPP. 221, 109 CT. CL. 772. *** "

ACCORDINGLY, THE CORRESPONDENCE AND DOCUMENTS SUBMITTED WITH YOUR LETTER ARE RETURNED HEREWITH, AND YOU ARE ADVISED THAT CERTIFICATION OF THE VOUCHER IN THE AMOUNT OF $5,030.59 FOR PAYMENT IS AUTHORIZED, IF OTHERWISE CORRECT.