B-205605.OM, MAR 16, 1982

B-205605.OM: Mar 16, 1982

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IS SUFFICIENT TO ESTABLISH THAT WORKERS WERE UNDERPAID. DEBARMENT OF SUBCONTRACTOR IS NOT WARRANTED. SINCE FAILURE TO PAY EMPLOYEES WAS DUE TO SUBCONTRACTOR'S FINANCIAL CONDITION. THE 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 AND 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. WAS AWARDED TO WATERWAYS CONSTRUCTION COMPANY (WATERWAYS) OF CORINTH.

B-205605.OM, MAR 16, 1982

DIGEST: 1. WHILE EVIDENCE OF RECORD, COUPLED WITH CONTRACTOR'S ACQUIESCENCE CONCERNING AMOUNT DETERMINED TO BE DUE UNDERPAID WORKERS, IS SUFFICIENT TO ESTABLISH THAT WORKERS WERE UNDERPAID, THE RECORD DOES NOT INDICATE THAT CONTRACTOR WILLFULLY PARTICIPATED IN OR CONTRIBUTED TO UNDERPAYMENTS WITHIN INTENT OF DAVIS-BACON ACT SO AS TO WARRANT IMPOSITION OF DEBARMENT SANCTIONS. 2. DEBARMENT OF SUBCONTRACTOR IS NOT WARRANTED, SINCE FAILURE TO PAY EMPLOYEES WAS DUE TO SUBCONTRACTOR'S FINANCIAL CONDITION.

THE 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 WILKINSON BROTHERS CONSTRUCTION CO., SUB-CONTRACTOR TO AMERICAN FIDELITY FIRE INSURANCE CO., WHICH PERFORMED WORK UNDER DEPARTMENT OF THE ARMY, U. S. ARMY CORPS OF ENGINEERS CONTRACT NO. DACW38-76-C-0075 AT THE MISSISSIPPI RIVER LEVEE BELOW ST. JOSEPH, LOUISIANA.

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 $3,402.63 ON DEPOSIT HERE TO THE THREE AGGRIEVED WORKERS IN ACCORDANCE WITH ESTABLISHED PROCEDURES. OUR PROPOSAL AND 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 KEN SCHUTT ON EXTENSION 53218.

INDORSEMENT

ASSOCIATE DIRECTOR, AFMD-CLAIMS GROUP

RETURNED. CONTRACT NO. DACW-38-76-C-0075, FOR BERM REPAIR WORK ON A MISSISSIPPI RIVER LEVEE BELOW ST. JOSEPH, LOUISIANA, WAS AWARDED TO WATERWAYS CONSTRUCTION COMPANY (WATERWAYS) OF CORINTH, MISSISSIPPI, WHICH WAS TERMINATED FOR DEFAULT FOR FAILURE TO COMPLETE THE CONTRACT ON SCHEDULE. SUBSEQUENTLY, WATERWAYS' SURETY, AMERICAN FIDELITY FIRE INSURANCE COMPANY (AMERICAN FIDELITY), EXECUTED A TAKEOVER AGREEMENT WITH THE DEPARTMENT OF THE ARMY AND ENTERED INTO A SUBCONTRACT AGREEMENT WITH WILKINSON BROTHERS CONSTRUCTION COMPANY (WILKINSON) TO COMPLETE THE WORK. WILKINSON UNDERPAID THREE WORKERS IN VIOLATION OF THE DAVIS-BACON ACT, 40 U.S.C. SEC. 276A (1976), AND THE CONTRACT WORK HOURS AND SAFETY STANDARDS ACT, 40 U.S.C. SEC. 327, ET SEQ. (1976).

AMERICAN FIDELITY DID NOT DISPUTE THE AMOUNTS DETERMINED TO BE DUE THE THREE WORKERS AND AUTHORIZED DIRECT PAYMENT TO THE WORKERS FROM MONEY WITHHELD UNDER THE CONTRACT. THIS, COUPLED WITH THE EVIDENCE OF RECORD, IS SUFFICIENT TO ESTABLISH THAT THE WORKERS WERE, IN FACT, UNDERPAID. SEE B-197804-O.M., JUNE 12, 1981. THE RECORD DOES NOT INDICATE, HOWEVER, THAT AMERICAN FIDELITY WILLFULLY PARTICIPATED IN OR CONTRIBUTED TO THE UNDERPAYMENTS WITHIN THE INTENT OF THE DAVIS-BACON ACT SO AS TO PROVIDE GROUNDS FOR THE IMPOSITION OF DEBARMENT SANCTIONS AGAINST AMERICAN FIDELITY. SEE B-192683-O.M., OCTOBER 13, 1978.

WHILE IT APPEARS FROM THE RECORD THAT THE WILKINSON UNDERPAYMENT WAS THE FAILURE TO PAY THREE EMPLOYEES FOR A PERIOD OF TIME, THE CONTRACTING OFFICER HAS STATED THAT THE FAILURE WAS DUE TO THE COMPANY'S FINANCIAL CONDITION. THEREFORE, THE FAILURE IS NOT VIEWED AS A DELIBERATE BAD FAITH VIOLATION REQUIRING DEBARMENT. B-191975-O.M., AUGUST 2, 1978. ACCORDINGLY, WE CONCUR WITH THE DEPARTMENT OF LABOR THAT DEBARMENT SANCTIONS SHOULD NOT BE IMPOSED.

THE FUNDS ON DEPOSIT WITH YOUR OFFICE SHOULD BE DISBURSED TO THE AGGRIEVED WORKERS IN ACCORDANCE WITH THE AGREEMENT OF AMERICAN FIDELITY.