B-18981, SEPTEMBER 5, 1941, 21 COMP. GEN. 197

B-18981: Sep 5, 1941

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THE DEPARTMENT OF LABOR IS CONDUCTING A SURVEY OF THE OFFICIAL ACTION TAKEN UNDER THESE TWO ACTS BY VARIOUS GOVERNMENTAL DEPARTMENTS WITH A VIEW TO COORDINATING THE EFFORTS OF SUCH DEPARTMENTS TOWARD A FULLER REALIZATION OF THE PURPOSES OF THIS LEGISLATION. MAJOR FUNCTIONS IN THIS LEGISLATIVE SCHEME ARE CONFERRED UPON THE COMPTROLLER GENERAL. IT IS THE PURPOSE OF THIS LETTER (1) TO BRING TO YOUR ATTENTION CERTAIN DECISIONS OF THE COMPTROLLER GENERAL DISCLOSED BY OUR SURVEY. (2) TO SUGGEST CERTAIN CHANGES IN FUTURE PRACTICE IF THEY ARE AGREEABLE TO YOU. CERTAIN CONTRACTING AGENCIES HAVE RECOMMENDED THE WITHHOLDING OF FUNDS FROM CONTRACTORS TO REQUIRE PAYMENT TO THE CONTRACTORS' EMPLOYEES OF THE WAGES STIPULATED IN THEIR CONTRACT PURSUANT TO THE DAVIS-BACON ACT.

B-18981, SEPTEMBER 5, 1941, 21 COMP. GEN. 197

CONTRACTS - PAYMENTS - WITHHOLDING - NONPAYMENT OF WAGES THE DAVIS-BACON ACT, AS AMENDED, REQUIRING THAT CERTAIN GOVERNMENT CONTRACTS CONTAIN A STIPULATION THAT THERE MAY BE WITHHELD FROM THE CONTRACTOR SUMS SUFFICIENT TO PAY LABORERS, ETC., ,THE DIFFERENCE BETWEEN THE RATES OF WAGES REQUIRED BY THE CONTRACT TO BE PAID * * * AND THE RATES OF WAGES RECEIVED * * * AND NOT REFUNDED TO THE CONTRACTOR * * *," DOES NOT AUTHORIZE THE WITHHOLDING OF PAYMENTS TO CONTRACTORS BY THE CONTRACTING OFFICER AND THE PAYMENT OF CLAIMS OF LABORERS, ETC., BY THE COMPTROLLER GENERAL THEREFROM WHERE THE CONTRACTOR HAS FAILED TO PAY ANY AMOUNT TO SUCH LABORERS, ETC., AS DISTINGUISHED FROM A CASE WHERE PAYMENT HAS BEEN MADE BUT AT A RATE LESS THAN THAT REQUIRED BY THE CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF LABOR, SEPTEMBER 5, 1941:

THERE HAS BEEN CONSIDERED A LETTER OF JULY 18, 1941, FROM THE SOLICITOR, DEPARTMENT OF LABOR, AS FOLLOWS:

IN THE INTEREST OF DISCHARGING ITS DUTIES UNDER THE DAVIS-BACON ACT AND THE COPELAND ( KICK-BACK) ACT, THE DEPARTMENT OF LABOR IS CONDUCTING A SURVEY OF THE OFFICIAL ACTION TAKEN UNDER THESE TWO ACTS BY VARIOUS GOVERNMENTAL DEPARTMENTS WITH A VIEW TO COORDINATING THE EFFORTS OF SUCH DEPARTMENTS TOWARD A FULLER REALIZATION OF THE PURPOSES OF THIS LEGISLATION. IN GENERAL, THE LEGISLATION PROVIDES CRIMINAL PENALTIES AND ADMINISTRATIVE SANCTIONS THROUGH WITHHOLDING OF FUNDS AND BLACKLISTING WHERE CONTRACTORS ON FEDERAL PUBLIC WORKS FAIL TO PAY WORKERS THE COMPLETE WAGE BASED ON RATES PREDETERMINED BY THE SECRETARY OF LABOR. MAJOR FUNCTIONS IN THIS LEGISLATIVE SCHEME ARE CONFERRED UPON THE COMPTROLLER GENERAL, AND IT IS THE PURPOSE OF THIS LETTER (1) TO BRING TO YOUR ATTENTION CERTAIN DECISIONS OF THE COMPTROLLER GENERAL DISCLOSED BY OUR SURVEY, WHICH WE DO NOT BELIEVE TO BE CONSONANT WITH THE LETTER OR INTENT OF THE TWO ACTS MENTIONED; (2) TO SUGGEST CERTAIN CHANGES IN FUTURE PRACTICE IF THEY ARE AGREEABLE TO YOU; AND (3) TO INDICATE BRIEFLY THE REASONS WHY WE BELIEVE THESE CHANGES SHOULD BE ADOPTED.

CERTAIN CONTRACTING AGENCIES HAVE RECOMMENDED THE WITHHOLDING OF FUNDS FROM CONTRACTORS TO REQUIRE PAYMENT TO THE CONTRACTORS' EMPLOYEES OF THE WAGES STIPULATED IN THEIR CONTRACT PURSUANT TO THE DAVIS-BACON ACT. DUE COURSE, THE COMPTROLLER GENERAL HAS CONSIDERED EACH CASE AND ALLOWED OR DENIED THE CLAIMS, ACCOMPANYING EACH DECISION WITH A WRITTEN OPINION. CERTAIN OF THESE DECISIONS WHICH HAVE COME TO OUR ATTENTION SEEM TO ADOPT A STRAINED CONSTRUCTION OF THE ACTS INVOLVED.

IN SEVERAL CLAIMS AGAINST THE THOMAS L. DAWSON CO. AND THE MUTUAL CONSTRUCTION COMPANY, WHERE THE PUBLIC BUILDINGS ADMINISTRATION HAD RECOMMENDED THE WITHHOLDING OF FUNDS, SEVERAL CLAIMANTS ADMITTEDLY HAD RECEIVED NO PAYMENT FROM THE CONTRACTOR. IN THESE CASES INVOLVING CLAIMS MADE BY EMPLOYEES, THE GENERAL ACCOUNTING OFFICE RULED:

"HOWEVER, INASMUCH AS THE RECORD CLEARLY INDICATES THAT YOU FAILED TO RECEIVE PAYMENT OF ANY PORTION OF THE WAGES EARNED DURING THE PERIOD COVERED BY YOUR CLAIM, AND SINCE IT IS APPARENT, THEREFORE, THAT THE AMOUNT WITHHELD FOR YOUR BENEFIT DOES NOT REPRESENT THE DIFFERENCE BETWEEN THE RATE OF WAGES REQUIRED BY THE CONTRACT TO BE PAID AND THE RATE OF WAGES ACTUALLY RECEIVED BY YOU, IT NECESSARILY FOLLOWS THAT THERE IS NOT FOR APPLICATION TO THE INSTANT CASE THE CONTRACT STIPULATION, PURSUANT TO THE STATUTE, AUTHORIZING THE WITHHOLDING FROM THE CONTRACTOR OF AMOUNTS SUFFICIENT TO PAY EMPLOYEES THE "DIFFERENCE" BETWEEN THE "RATES OF WAGES" REQUIRED BY THE CONTRACT TO BE PAID AND THE "RATES OF WAGES RECEIVED" BY SUCH EMPLOYEES.

"IN VIEW OF THE FOREGOING, THE WITHHOLDING BY THE CONTRACTING OFFICER OF THE CONTRACTOR'S MONEY TO COVER YOUR CLAIM WAS NOT AUTHORIZED BY THE DAVIS -BACON ACT, AND CONSEQUENTLY, UNDER THE PROVISIONS OF SECTION 3 OF SUCH ACT, THIS OFFICE IS WITHOUT AUTHORITY TO APPROVE PAYMENT OF ANY PORTION OF THE SUM SO IMPROPERLY WITHHELD.

"ACCORDINGLY, YOUR CLAIM MUST BE, AND IS, DISALLOWED.'

THE CLAIMANT WAS THEN REFERRED TO HIS RIGHT TO BRING DIRECT ACTION AGAINST THE EMPLOYER AND SURETY UNDER THE MILLER ACT. SINCE THE REASONING OF THIS DECISION HAS BEEN USED VERBATIM IN AT LEAST NINE OTHER CASES, IT SEEMS APPROPRIATE TO STATE OUR REASONS FOR BELIEVING THAT THE BASIS OF THE DECISION DOES NOT FULLY REFLECT THE POLICY OR LETTER OF THE LEGISLATION.

IT APPEARS TO US PROPER, IN CONSTRUING THE PROVISIONS OF THE DAVIS BACON ACT, TO CONSIDER THE SEVERAL PROVISIONS AS A WHOLE. AFTER STATING THAT ADVERTISED SPECIFICATIONS SHALL CONTAIN A SCHEDULE OF MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF MECHANICS AS PREDETERMINED BY THE SECRETARY OF LABOR, THE ACT REQUIRES THAT EVERY CONTRACT BASED UPON THESE SPECIFICATIONS SHALL CONTAIN A STIPULATION

"1. THAT THE CONTRACTOR * * * SHALL PAY ALL MECHANICS AND LABORERS * * * UNCONDITIONALLY AND NOT LESS OFTEN THAN ONCE A WEEK, THE FULL AMOUNTS ACCRUED AT TIME OF PAYMENT COMPUTED AT WAGE RATES NOT LESS THAN THOSE STATED IN THE ADVERTISED SPECIFICATIONS, REGARDLESS OF ANY CONTRACTUAL RELATIONSHIP WHICH MAY BE ALLEGED TO EXIST BETWEEN THE CONTRACTOR * * SUCH LABORERS AND MECHANICS * * *;

"2. 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, SUBCONTRACTOR, OR THEIR AGENTS.'

SECTION 3 (A) OF THE ACT THEN STATES:

"THE COMPTROLLER GENERAL OF THE UNITED STATES IS HEREBY 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 LABORERS AND MECHANICS PURSUANT TO THIS ACT. * * *"

THE PROVISION FOR WITHHOLDING FUNDS "CONSIDERED NECESSARY BY THE CONTRACTING OFFICER, IS THUS SEEN TO OFFER MERELY THE BASIS UPON WHICH THE COMPTROLLER GENERAL IS DIRECTED TO PAY DIRECTLY TO LABORERS AND MECHANICS "ANY WAGES FOUND TO BE DUE" THEM IN PURSUANCE OF THE CONTRACTOR'S OBLIGATION TO PAY "THE FULL AMOUNTS ACCRUED AT TIME OF PAYMENT.' IT, THEREFORE, SEEMS CLEAR THAT THIS LEGISLATION WAS INTENDED TO PROTECT NOT ONLY THE LABORER OR MECHANIC WHO HAD RECEIVED PART OF THE COMPENSATION TO WHICH HE WAS ENTITLED, BUT ALSO THE WORKER WHOSE POSITION WAS EVEN WORSE BECAUSE HE HAD RECEIVED NONE OF THE WAGES DUE HIM.

THIS CONSTRUCTION IS FURTHER SUPPORTED BY A CONSIDERATION OF THE ARITHMETICAL FORMULA FOR DETERMINING THE AMOUNTS TO BE WITHHELD AND PAID DIRECTLY TO THE EMPLOYEES. IT IS FIRST WORTH NOTING THAT EVEN BY THE ARITHMETICAL FORMULA, A SUM MINUS NOTHING WILL PRODUCE A REMAINDER, THUS TECHNICALLY REPRESENTING A "DIFFERENCE.' BUT IT IS NOT WELL TO ASSUME THAT THE LEGISLATURE WAS CONCERNED WITH SUCH TECHNICALITIES IN SEEKING TO STAMP OUT THE "KICK-BACK RACKET.' THAT THIS WAS THE EVIL CONGRESS SOUGHT TO ELIMINATE IS EVIDENCED NOT ONLY BY THE EXTENSIVE COMMITTEE HEARINGS BUT ALSO BY THE COMMITTEE'S CHANGE OF THE FIRST DRAFT FROM "THE DIFFERENCE BETWEEN THE RATES OF WAGES REQUIRED TO BE PAID * * * AND THE RATES OF WAGES ACTUALLY PAID" TO "THE DIFFERENCE BETWEEN THE RATES OF WAGES REQUIRED BY THE CONTRACT TO BE PAID * * * AND THE RATES OF WAGES RECEIVED * * * AND NOT REFUNDED TO THE CONTRACTOR * * *.'

TO SUM UP, THREE SIMPLE ILLUSTRATIONS WOULD SEEM TO SUPPORT THE REASONING WE HAVE USED:

STATUTORY AMOUNT AMOUNT CLAIM TO

MINIMUM RECEIVED REFUNDED BE ALLOWED CASE 1 ---------- $40 $40 $15 $15 CASE 2 ---------- $40 25

10 15 CASE 3 ---------- $40 10 10 40

IN CASE NUMBER 1, THE LABORER IS CLEARLY ENTITLED TO A CLAIM OF $15. CASE NUMBER 2, HE IS ALSO ENTITLED TO $15 EVEN THOUGH ONE FIGURE IN THE FORMULA IS A ZERO; AND THE COMPTROLLER GENERAL HAS SO RULED. IN CASE NUMBER 3, THE EVIL PERPETRATED BY THE EMPLOYER IS EVEN WORSE; AND CONGRESS CLEARLY HAD THIS CASE IN MIND. EVEN BY THE ARITHMETICAL FORMULA, $40 MINUS 10 PLUS 10 EQUALS $40 AND THERE WOULD, THEREFORE, SEEM TO BE NO BASIS UPON WHICH THE CLAIM SHOULD BE DISALLOWED.

THE PROVISIONS FOR DIRECT ADMINISTRATIVE RELIEF SHOULD BE LIBERALLY CONSTRUED SINCE INDIVIDUAL WORKMEN ARE SELDOM PREPARED OR WILLING TO RESORT TO FORMAL LITIGATION. IN FACT, IT WAS BROUGHT OUT IN THE SENATE HEARINGS THAT ATTORNEYS ADVISED EXPLOITED WORKMEN THAT THEY "STAY OUT OF URT.' DENYING ADMINISTRATIVE RELIEF TO THESE CLAIMANTS AND REFERENCE TO THEIR RIGHTS UNDER THE MILLER ACT WOULD THUS RUN CONTRARY TO THE VERY PURPOSE OF THE DAVIS-BACON ACT. A COMPLETE EXPLANATION OF THE REASON WHY CONGRESS REQUIRED DIRECT PAYMENT BY THE COMPTROLLER GENERAL TO THE CLAIMANT IS THE EXPERIENCE UNDER THE FORMER DAVIS-BACON ACT. UNDER THAT ACT, THE BOARD OF LABOR REVIEW OF THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS ORDERED A CONTRACTOR TO PAY THE WORKERS THE DIFFERENCE BETWEEN THE $0.80 PAID FOR "APPRENTICE" AND THE $1.10 RATE REQUIRED UNDER THE "CARPENTER" CLASSIFICATION. THE CONTRACTOR OFFERED SAID SUMS TO THE WORKMEN; BUT ON THIS THREAT TO BLACKBALL EVERY MAN WHO ACCEPTED IT, NONE TOOK THE MONEY.

IT HAS BEEN ASSERTED THAT FROM AN ADMINISTRATIVE STANDPOINT THE PAYMENT OF SOME AMOUNT OF WAGES IS NECESSARY TO A CONCLUSIVE DETERMINATION THAT THE CLAIMANT IS IN FACT AN EMPLOYEE, BUT IT WOULD SEEM THAT THE EXPERT INVESTIGATORS OF THE CONTRACTING AGENCY COULD SUPPLY RELIABLE EVIDENCE ON THIS POINT. AND IN THE ACTUAL CASES, THE CLAIMANTS WERE ADMITTED BY ALL PARTIES TO HAVE BEEN EMPLOYED AS LABORERS OR MECHANICS BY THE CONTRACTOR.

FOR THE REASON THAT LABORERS AND MECHANICS ARE HARDLY ABLE TO DO MORE THAN PRESENT THE FACTS OF THEIR CASES AND SINCE THE DECISIONS OF THE COMPTROLLER GENERAL ARE SO IMPORTANT IN SETTING THE STANDARDS OF ENFORCEMENT FOR CONTRACTORS, WORKERS, AND THE NUMEROUS AGENCIES ASSOCIATED IN THIS EFFORT, IT IS URGED THAT THE GENERAL ACCOUNTING OFFICE REEXAMINE THE BASIS OF THESE DECISIONS. A MEMBER OF THIS OFFICE WILL BE VERY GLAD TO DISCUSS THIS QUESTION WITH YOU IN GREATER DETAIL, IF YOU BELIEVE THAT WOULD BE HELPFUL.

SO FAR AS HERE PERTINENT THE DAVIS-BACON ACT, AS AMENDED AUGUST 30, 1935, 49 STAT. 1011, PROVIDES AS FOLLOWS:

THAT THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2,000, TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY, FOR CONSTRUCTION, ALTERATION, AND/OR REPAIR, INCLUDING PAINTING AND DECORATING, OF PUBLIC BUILDINGS OR PUBLIC WORKS OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA WITHIN THE GEOGRAPHICAL LIMITS OF THE STATES OF THE UNION OR THE DISTRICT OF COLUMBIA, AND WHICH REQUIRES OR INVOLVES THE EMPLOYMENT OF MECHANICS AND/OR LABORERS SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS EMPLOYED ON PROJECTS OF A CHARACTER SIMILAR TO THE CONTRACT WORK IN THE CITY, TOWN, VILLAGE, OR OTHER CIVIL SUBDIVISION OF THE STATE IN WHICH THE WORK IS TO BE PERFORMED, OR IN THE DISTRICT OF COLUMBIA IF THE WORK IS TO BE PERFORMED THERE; AND EVERY CONTRACT BASED UPON THESE SPECIFICATIONS CONTAIN A STIPULATION THAT THE CONTRACTOR OR HIS SUBCONTRACTOR SHALL PAY ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK, UNCONDITIONALLY AND NOT LESS OFTEN THAN ONCE A WEEK, AND WITHOUT SUBSEQUENT DEDUCTION OR REBATE ON ANY ACCOUNT, THE FULL AMOUNTS ACCRUED AT TIME OF PAYMENT, COMPUTED AT WAGE RATES NOT LESS THAN THOSE STATED IN THE ADVERTISED SPECIFICATIONS, REGARDLESS OF ANY CONTRACTUAL RELATIONSHIP WHICH MAY BE ALLEGED TO EXIST BETWEEN THE CONTRACTOR OR SUBCONTRACTOR AND SUCH LABORERS AND MECHANICS, AND THAT THE SCALE OF WAGES TO BE PAID SHALL BE POSTED BY THE CONTRACTOR IN A PROMINENT AND EASILY ACCESSIBLE PLACE AT THE SITE OF THE WORK; AND THE FURTHER STIPULATION 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.

SEC. 2. EVERY CONTRACT WITHIN THE SCOPE OF THIS ACT SHALL CONTAIN THE FURTHER PROVISION THAT IN THE EVENT IT IS FOUND BY THE CONTRACTING OFFICER THAT ANY LABORER OR MECHANIC EMPLOYED BY THE CONTRACTOR OR ANY SUBCONTRACTOR DIRECTLY ON THE SITE OF THE WORK COVERED BY THE CONTRACT HAS BEEN OR IS BEING PAID A RATE OF WAGES LESS THAN THE RATE OF WAGES REQUIRED BY THE CONTRACT TO BE PAID, AS AFORESAID, THE GOVERNMENT MAY, BY WRITTEN NOTICE TO THE CONTRACTOR, TERMINATE HIS RIGHT TO PROCEED WITH THE WORK OR SUCH PART OF THE WORK AS TO WHICH THERE HAS BEEN A FAILURE TO PAY SAID REQUIRED WAGES AND TO PROSECUTE THE WORK TO COMPLETION BY CONTRACT OR OTHERWISE, AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS OCCASIONED THE GOVERNMENT THEREBY.

SEC. 3. (A) THE COMPTROLLER GENERAL OF THE UNITED STATES IS HEREBY 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 LABORERS AND MECHANICS PURSUANT TO THIS ACT; AND THE COMPTROLLER GENERAL OF THE UNITED STATES IS FURTHER AUTHORIZED AND IS DIRECTED TO DISTRIBUTE A LIST TO ALL DEPARTMENTS OF THE GOVERNMENT GIVING THE NAMES OF PERSONS OR FIRMS WHOM HE HAS FOUND TO HAVE DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES AND SUBCONTRACTORS. NO CONTRACT SHALL BE AWARDED TO THE PERSONS OR FIRMS APPEARING ON THIS LIST OR TO ANY FIRM, CORPORATION, PARTNERSHIP, OR ASSOCIATION IN WHICH SUCH PERSONS OR FIRMS HAVE AN INTEREST UNTIL THREE YEARS HAVE ELAPSED FROM THE DATE OF PUBLICATION OF THE LIST CONTAINING THE NAMES OF SUCH PERSONS OR FIRMS. (B) IF THE ACCRUED PAYMENTS WITHHELD UNDER THE TERMS OF THE CONTRACT, AS AFORESAID, ARE INSUFFICIENT TO REIMBURSE ALL THE LABORERS AND MECHANICS WITH RESPECT TO WHOM THERE HAS BEEN A FAILURE TO PAY THE WAGES REQUIRED PURSUANT TO THIS ACT, SUCH LABORERS AND MECHANICS SHALL HAVE THE RIGHT OF ACTION AND/OR OF INTERVENTION AGAINST THE CONTRACTOR AND HIS SURETIES CONFERRED BY LAW UPON PERSONS FURNISHING LABOR OR MATERIALS, AND IN SUCH PROCEEDINGS IT SHALL BE NO DEFENSE THAT SUCH LABORERS AND MECHANICS ACCEPTED OR AGREED TO ACCEPT LESS THAN THE REQUIRED RATE OF WAGES OR VOLUNTARILY MADE REFUNDS. ( ITALICS SUPPLIED.)

IN THE APPLICATION OF SAID ACT TO PARTICULAR CASES THIS OFFICE HAS DISALLOWED CLAIMS OF LABORERS AND MECHANICS FOR PAYMENT, FROM FUNDS WITHHELD BY THE CONTRACTING OFFICER, OF WAGES APPARENTLY OWED BY THE CONTRACTOR, WHEN IT APPEARED NO WAGES HAD BEEN PAID TO SUCH PERSONS BY THE CONTRACTOR DURING THE PERIOD INVOLVED, AS DISTINGUISHED FROM CASES WHEREIN THE CONTRACTOR HAD MADE PAYMENTS TO LABORERS AND MECHANICS BUT AT WAGE RATES LESS THAN THOSE REQUIRED BY THE CONTRACT TO BE PAID, OR CASES WHEREIN PROPER WAGE RATES HAD BEEN PAID BUT REFUND OF A PORTION THEREOF HAD BEEN REQUIRED BY THE CONTRACTOR, ETC. THE VIEW OF THE SOLICITOR OF THE DEPARTMENT OF LABOR APPEARS TO BE THAT THE CASES ARE INDISTINGUISHABLE, WITHIN THE MEANING OF THE DAVIS-BACON ACT, AS AMENDED, AND THAT THIS OFFICE SHOULD MAKE DIRECT PAYMENT, FROM FUNDS WITHHELD, TO LABORERS AND MECHANICS WHO HAD RECEIVED NO AMOUNTS FROM CONTRACTORS AS WELL AS TO THOSE WHO HAD RECEIVED PAYMENTS AT LOWER RATES OF WAGES THAN THOSE REQUIRED BY THE CONTRACT TO BE PAID OR WHO HAD RECEIVED PROPER RATES BUT HAD BEEN REQUIRED TO REFUND A PORTION THEREOF.

THAT THE PROVISIONS OF THE DAVIS-BACON ACT, AS AMENDED, ARE NOT FREE FROM AMBIGUITY IS CONCEDED, BUT THIS MATTER WAS CAREFULLY CONSIDERED AT THE TIME THE SETTLEMENTS IN QUESTION ISSUED AND IT WAS CONCLUDED, IN THE LIGHT OF THE LANGUAGE EMPLOYED IN THE ACT AND WHAT APPEARED TO BE THE INTENTION OF THE CONGRESS, THAT THIS OFFICE WAS NOT AUTHORIZED TO MAKE PAYMENTS DIRECT TO LABORERS AND MECHANICS IN THOSE CASES WHERE THE ALLEGED DERELICTION OF THE CONTRACTOR HAD BEEN NOT THE PAYMENT OF A WAGE RATE LESS THAN THAT REQUIRED BY THE CONTRACT BUT A FAILURE TO PAY ANY AMOUNT TO SUCH LABORERS AND MECHANICS.

IT WILL BE OBSERVED THAT THE PAYMENTS WHICH THE ACT AUTHORIZES THIS OFFICE TO MAKE MUST BE MADE ,FROM ANY ACCRUED PAYMENTS WITHHELD UNDER THE TERMS OF THE CONTRACT.' CONTRACTS SUBJECT TO AND INCORPORATING THE PROVISIONS OF THE DAVIS-BACON ACT, AS AMENDED, AUTHORIZE THE WITHHOLDING FROM ACCRUED PAYMENTS OF ONLY "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.'

WHILE IT MAY BE, AS URGED BY THE SOLICITOR, THAT THE FAILURE OF A CONTRACTOR TO PAY ANY AMOUNT OF WAGES "TECHNICALLY" REPRESENTS A "DIFFERENCE," IT WOULD NOT APPEAR TO REPRESENT A "DIFFERENCE" WITHIN THE MEANING OF THE ACT, AS SUCH A CONSTRUCTION WOULD NOT BE CONSONANT WITH THE WORDS "RATES OF WAGES RECEIVED," WHICH CLEARLY INDICATE THAT SOME RATE OF WAGE MUST HAVE BEEN RECEIVED.

THERE WAS CONSIDERED THE LEGISLATIVE BACKGROUND OF THE DAVIS-BACON ACT, AS AMENDED, IN ORDER CLEARLY TO ASCERTAIN THE INTENT OF THE CONGRESS, BUT NOTHING WAS FOUND INDICATING AN INTENTION OF THE CONGRESS TO PROTECT LABORERS AGAINST THE REFUSAL OR FAILURE OF CONTRACTORS TO PAY THEM ANY WAGES FOR LABOR PERFORMED, EXCEPT TO THE EXTENT OF THEIR REMEDY AGAINST THE CONTRACTOR'S BOND. SEE THE ACT OF AUGUST 24, 1935, 49 STAT. 793. AND, OF COURSE, UNPAID LABORERS AND MECHANICS MAY ENFORCE THEIR VALID CLAIMS AGAINST CONTRACTORS IN LOCAL COURTS. THE ENTIRE LEGISLATIVE HISTORY OF THE SAID ACT INDICATES THAT THE CONGRESS WAS CONCERNED PRIMARILY WITH THE MAINTENANCE OF WAGE RATES AND THAT IT WAS THE INTENTION OF THE CONGRESS TO REQUIRE THE PAYMENT OF PREVAILING WAGE RATES AND TO PROTECT LABORERS AND MECHANICS AGAINST AN UNSCRUPULOUS CONTRACTOR WHO MIGHT, BY REASON OF THEIR ECONOMIC NECESSITY, REQUIRE THEM TO AGREE TO WORK FOR A LESSER RATE OR TO REFUND A PORTION OF THE AMOUNT PAID THEM AT PROPER RATES, UNDER SUCH CIRCUMSTANCES THAT THEY MIGHT NOT OTHERWISE BE ABLE LEGALLY TO ENFORCE THEIR CLAIMS FOR THE BALANCE DUE COMPUTED AT THE PREVAILING RATES.

FURTHERMORE, THERE SHOULD NOT BE OVERLOOKED THE FACT THAT IT IS THE NATURAL RIGHT OF A CONTRACTOR TO SELECT ITS EMPLOYEES, TO NEGOTIATE WITH THEM AS TO THE CONDITIONS OF EMPLOYMENT AND THE COMPENSATION TO BE PAID THEREFOR, TO INSIST UPON A JUDICIAL DETERMINATION OF CLAIMS OF EMPLOYEES AND TO PRESENT, IN COURT, ANY LEGAL DEFENSE THERETO THAT IT MAY HAVE. WHILE THIS RIGHT IS SUBJECT TO THE SUPREME POWER OF THE SOVEREIGN, IN THE EXERCISE OF ITS CONSTITUTIONAL AUTHORITY, TO LEGISLATE WITH RESPECT TO SUCH MATTERS OR TO PRESCRIBE, BY VIRTUE OF A STATUTE CARRIED INTO A CONTRACT AND THEREBY MADE A MATTER OF AGREEMENT BETWEEN A CONTRACTOR AND THE GOVERNMENT, THE CONDITIONS UPON WHICH IT WILL PERMIT WORK TO BE DONE ON ITS BEHALF, ATKIN V. KANSAS, 191 U.S. 207, IT IS A SETTLED PRINCIPLE OF LAW THAT STATUTES IN DEROGATION OF NATURAL RIGHTS ARE TO BE STRICTLY CONSTRUED AND ARE NOT TO BE EXTENDED BY CONSTRUCTION TO MATTERS NOT CLEARLY AND EXPRESSLY INCLUDED THEREIN, PARTICULARLY WHERE SUCH STATUTES ARE PENAL IN NATURE. SUCH PRINCIPLE WOULD APPEAR TO BE EQUALLY APPLICABLE IN THE CASE OF A CONTRACT UNDER WHICH A CONTRACTOR, IN EFFECT, RELINQUISHES SUCH NATURAL RIGHTS. ALSO, IT IS TO BE NOTED THAT THE LANGUAGE USED IN THESE CONTRACTS INCORPORATING THE PROVISIONS OF THE DAVIS -BACON ACT, AS AMENDED, IS THAT OF THE GOVERNMENT AND NOT THE CONTRACTOR. IT IS WELL SETTLED THAT WHERE A CONTRACT IS AMBIGUOUS IT WILL BE CONSTRUED MOST STRONGLY AGAINST THE PARTY EMPLOYING THE WORDS CONCERNING WHICH DOUBT ARISES. BIJUR MOTOR LIGHTING CO. V. ECLIPSE MACHINE CO., 237 FED. 89. BUT, ASIDE FROM THESE CONSIDERATIONS AND NOTWITHSTANDING ANY JUSTIFICATION THERE MAY BE FROM AN ADMINISTRATIVE STANDPOINT FOR GIVING A LIBERAL CONSTRUCTION TO THE ACT HERE INVOLVED, THIS OFFICE CANNOT, IN PERFORMING ITS DUTIES UNDER THE SAID ACT, DISREGARD THE LEGAL RIGHTS OF A CONTRACTOR AND THEREBY JEOPARDIZE THE INTERESTS OF THE UNITED STATES. IT MUST BE APPARENT THAT WERE THIS OFFICE TO ADJUDICATE CLAIMS OF LABORERS AND MECHANICS TO WHOM NO WAGES HAD BEEN PAID AND USE FUNDS OTHERWISE DUE THE CONTRACTOR TO MAKE PAYMENTS BASED UPON SUCH ADJUDICATIONS--- A PROCEDURE NOT CLEARLY AUTHORIZED BY THE ACT--- IT WELL MIGHT 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 THE LABORERS.

UNDER THE CIRCUMSTANCES, I DO NOT FEEL WARRANTED IN ADOPTING THE CONSTRUCTION OF THE ACT URGED BY YOUR SOLICITOR.