B-201220.OM, APR 23, 1981

B-201220.OM: Apr 23, 1981

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PRECIS-UNAVAILABLE COMPTROLLER GENERAL: WE ARE FORWARDING THE FILE PERTAINING TO THE APPARENT VIOLATIONS OF THE DAVIS-BACON ACT. DETAILS OF THE VIOLATIONS AND ADMINISTRATIVE RECOMMENDATIONS CONCERNING DEBARMENT ARE CONTAINED IN THE ATTACHED INVESTIGATIVE REPORT AND DEPARTMENT OF LABOR TRANSMITTAL LETTER. OUR PROPOSAL THE MATTER OF WHETHER THE CONTRACTOR'S NAME SHOULD BE PLACED ON THE DEBARRED BIDDERS LIST FOR VIOLATIONS UNDER THE DAVIS-BACON ACT ARE FORWARDED FOR YOUR CONSIDERATION AND INSTRUCTIONS. WHERE EVIDENCE OF RECORD FAILS TO SHOW THAT REQUIRED LABOR STANDARDS PROVISIONS WERE INCLUDED IN SUBCONTRACT OR THAT SUBCONTRACTOR EXPRESSLY AGREED TO ABIDE BY LABOR STANDARDS PROVISIONS OF THE PRIME CONTRACT.

B-201220.OM, APR 23, 1981

PRECIS-UNAVAILABLE

COMPTROLLER GENERAL:

WE ARE FORWARDING THE FILE PERTAINING TO THE APPARENT VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, AND THE CONTRACT WORK HOURS AND SAFETY STANDARDS ACT, 40 U.S.C. 327 ET SEQ., BY FMC-BUTLER PAINTING, INC. WHICH PERFORMED WORK UNDER GENERAL SERVICES ADMINISTRATION, CONTRACT NOS. GS-02B-17232, GS-02B-17242, AND GS-02B-17152 AT U. S. COURTHOUSE, FOLEY SQUARE, NEW YORK, NEW YORK.

DETAILS OF THE VIOLATIONS AND ADMINISTRATIVE RECOMMENDATIONS CONCERNING DEBARMENT ARE CONTAINED IN THE ATTACHED INVESTIGATIVE REPORT AND DEPARTMENT OF LABOR TRANSMITTAL LETTER.

WE PROPOSE, WITH YOUR APPROVAL, TO DISBURSE THE $961.23 ON DEPOSIT HERE TO THE 13 AGGRIEVED WORKERS IN ACCORDANCE WITH ESTABLISHED PROCEDURES. OUR PROPOSAL THE MATTER OF WHETHER THE CONTRACTOR'S NAME SHOULD BE PLACED ON THE DEBARRED BIDDERS LIST FOR VIOLATIONS UNDER THE DAVIS-BACON ACT ARE FORWARDED FOR YOUR CONSIDERATION AND INSTRUCTIONS.

FOR FURTHER INFORMATION, PLEASE CONTACT MS. MARCIA BROWN ON EXTENSION 53218.

DIGEST

1. WHERE EVIDENCE OF RECORD FAILS TO SHOW THAT REQUIRED LABOR STANDARDS PROVISIONS WERE INCLUDED IN SUBCONTRACT OR THAT SUBCONTRACTOR EXPRESSLY AGREED TO ABIDE BY LABOR STANDARDS PROVISIONS OF THE PRIME CONTRACT, SUBCONTRACTOR CANNOT BE FOUND TO HAVE WILLFULLY DISREGARDED OBLIGATIONS UNDER DAVIS-BACON ACT SO AS TO WARRANT DEBARMENT SINCE OBLIGATIONS OF DAVIS-BACON ACT COME INTO BEING BY VIRTUE OF CONTRACTUAL PROVISIONS AND ARE NOT IMPOSED BY OPERATION OF STATUTE.

2. WHERE WORKERS WERE UNDERPAID UNDER TWO CONTRACTS AND FUNDS WERE WITHHELD FROM MONIES OWED PRIME CONTRACTORS UNDER TWO CONTRACTS, AMOUNT WITHHELD UNDER ONE CONTRACT WHICH IS IN EXCESS OF WHAT IS OWED WORKERS UNDERPAID UNDER THAT CONTRACT CANNOT BE USED TO REIMBURSE WORKERS UNDERPAID UNDER ANOTHER CONTRACT SINCE WHITNEY BROTHERS PLUMBING AND HEATING, INC. V. UNITED STATES, 224 F. SUPP. 860 (1963), HELD THAT DAVIS- BACON ACT DOES NOT AUTHORIZE PAYMENT OF UNDERPAID WORKERS FROM FUNDS WITHHELD FROM CONTRACTS OTHER THAN THOSE UNDER WHICH THE UNDERPAYMENTS WERE FOUND.

INDORSEMENT

ASSOCIATE DIRECTOR-AFMD, CLAIMS GROUP

RETURNED. THE EVIDENCE DOES ESTABLISH THAT THE SECOND-TIER SUBCONTRACTOR, BUTLER PAINTING INC. (BUTLER), WILLIFULLY UNDERPAID CERTAIN OF ITS EMPLOYEES. HOWEVER, THERE IS NO EVIDENCE THAT THE SUBCONTRACT AWARDED BUTLER BY FMC PAINTING (FMC), THE FIRST-TIER SUBCONTRACTOR, CONTAINED THE LABOR STANDARDS PROVISIONS AS REQUIRED BY 29 C.F.R. SEC. 5.5(A)(6), AND THE EVIDENCE DOES NOT ESTABLISH THAT BUTLER EXPRESSLY AGREED TO THE LABOR STANDARDS PROVISIONS OF THE PRIME CONTRACT. OBLIGATIONS UNDER THE DAVIS- BACON ACT 40 U.S.C. SEC. 276A (1976), COME INTO BEING ONLY BY VIRTUE OF CONTRACTUAL PROVISIONS AND ARE NOT DIRECTLY IMPOSED BY STATUTE. 40 COMP. GEN. 565 (1961). IN THE ABSENCE OF EVIDENCE THAT THERE WERE LABOR STANDARDS PROVISIONS IN THE SUBCONTRACT, WE MUST CONCLUDE THAT BUTLER HAD NO BINDING OBLIGATION TO EMPLOYEES UNDER THE DAVIS-BACON ACT. SEE B-195240-O.M., SEPTEMBER 7, 1979. THIS BEING THE CASE, BUTLER CANNOT BE FOUND TO HAVE WILLFULLY DISREGARDED ITS OBLIGATIONS UNDER THE ACT.

ALTHOUGH BOTH WEISS AND WOOLRICH CONTRACTING CORPORATION, INC., THE PRIME CONTRACTOR FOR CONTRACT GS-02B-17,232, AND PLUTO CONSTRUCTION CORPORATION, THE PRIME CONTRACTOR FOR CONTRACT GS-02B-17,152, ARE FINANCIALLY RESPONSIBLE FOR UNDERPAYMENTS TO EMPLOYEES OF THEIR RESPECTIVE SUBCONTRACTORS, THE EVIDENCE DOES NOT INDICATE THAT EITHER PRIME CONTRACTOR WILLFULLY PARTICIPATED IN OR CONTRIBUTED TO THE DISREGARD OF OBLIGATIONS TO EMPLOYEES WITHIN THE INTENT OF THE DAVIS BACON ACT SO AS TO PROVIDE GROUNDS FOR THE IMPOSITION OF DEBARMENT SANCTIONS AGAINST EITHER PRIME CONTRACTOR. SEE B-200301-O.M., B-200302 O.M., OCTOBER 17, 1980. ALSO, SEE 40 U.S.C. SEC. 276AA), WHICH AUTHORIZES THE GOVERNMENT TO WITHHOLD FROM MONIES DUE THE CONTRACTOR UNDER THE CONTRACT AN AMOUNT SUFFICIENT TO REIMBURSE EMPLOYEES UNDERPAID BY EITHER THE CONTRACTOR OR SUBCONTRACTOR. OF COURSE, THE GOVERNMENT HAS NO WITHHOLDING AUTHORITY IN CONNECTION WITH THE SUBCONTRACTOR SINCE THERE IS NO PRIVITY BETWEEN THE GOVERNMENT AND SUBCONTRACTOR. REGARDING FMC, THE FIRST-TIER SUBCONTRACTOR, THERE IS NO EVIDENCE THAT THE UNDERPAYMENTS RESULTED FROM ANY WILLFUL VIOLATION OF THE DAVIS-BACON ACT BY FMC. THE DEPARTMENT OF LABOR DID NOT RECOMMEND DEBARMENT OF ANY OF THE PARTIES.

ACCORDING TO STANDARD FORM 1093 (SCHEDULE OF WITHHOLDINGS UNDER THE DAVIS -BACON ACT), USED BY THE GENERAL SERVICES ADMINISTRATION (GSA) IN ITS TRANSMITTAL OF THE $961.23 TO YOUR OFFICE, THESE FUNDS WERE, PURSUANT TO 40 U.S.C. SEC. 276AA), WITHHELD FROM MONIES OWED THE PRIME CONTRACTORS UNDER CONTRACTS NOS. 02B17232 AND 02B17152. GSA'S INVESTIGATION REPORT STATES THAT $250 WAS WITHHELD FROM AMOUNTS OWED UNDER CONTRACT NO. 02B17152. WE ASSUME THE BALANCE OF $711.23 WAS WITHHELD FROM MONIES OWED UNDER CONTRACT NO. 02B17232. THE RECORD INDICATES THAT THREE WORKERS WERE UNDERPAID A TOTAL OF $223.80 UNDER CONTRACT NO. 02B17152. THESE THREE WORKERS SHOULD BE REIMBURSED IN FULL FROM THE $250 WITHHELD FROM AMOUNTS OWED UNDER CONTRACT NO. 02B17152 AND THE BALANCE OF $26.20 RETURNED TO THE CONTRACTOR. THE $711.23 SHOULD BE DISBURSED ON A PRO RATA BASIS TO THE EMPLOYEES UNDERPAID UNDER CONTRACT NO. 02B17232. THE REASON THAT WE DID NOT INSTRUCT YOU TO EITHER ADD THE $26.20 TO THE $711.23 FOR DISBURSAL TO THE WORKERS UNDERPAID UNDER CONTRACT NO. 02B17232 OR, IN THE ALTERNATIVE, TO DISBURSE THE WHOLE $961.23 ON A PRO RATA BASIS TO THE WORKERS UNDERPAID UNDER BOTH CONTRACTS IS THAT THE COURT STATED IN WHITNEY BROTHERS PLUMBING AND HEATING, INC. V. UNITED STATES, 224 F. SUPP. 860 (1963), THAT THE DAVIS-BACON ACT DOES NOT AUTHORIZE THE PAYMENT OF UNDERPAID WORKERS FROM FUNDS WITHHELD FROM CONTRACTS OTHER THAN THOSE UNDER WHICH THE UNDERPAYMENTS WERE FOUND. SEE B-187761 O.M., APRIL 15, 1977, AND CASES CITED THEREIN.