B-205761.OM, MAR 1, 1982

B-205761.OM, MAR 1, 1982

DIGEST: 1. SINCE SUBCONTRACT DID NOT PHYSICALLY CONTAIN LABOR STANDARDS PROVISIONS OF PRIME CONTRACT AND SUBCONTRACTOR DID NOT EXPRESSLY AGREE TO BE BOUND BY THESE PROVISIONS, SUBCONTRACTOR CANNOT BE FOUND TO HAVE WILLFULLY DISREGARDED ITS OBLIGATIONS TO EMPLOYEES UNDER DAVIS-BACON ACT. ALSO, RECORD INDICATES THAT VIOLATIONS OCCURRED AS RESULT OF IGNORANCE OF LABOR STANDARDS PROVISIONS, RATHER THAN WILLFUL INTENT TO UNDERPAY WORKERS. THEREFORE, DEBARMENT OF SUBCONTRACTOR IS UNWARRANTED. 2. DEBARMENT OF CONTRACTOR IS UNWARRANTED SINCE, ALTHOUGH FINANCIALLY LIABLE UNDER CONTRACT FOR UNDERPAYMENT OF SUBCONTRACTOR'S EMPLOYEES, CONTRACTOR DID NOT PARTICIPATE IN OR CONTRIBUTE TO SUCH UNDERPAYMENTS. MOREOVER, DEBARMENT OF CONTRACTOR IS UNWARRANTED ON BASIS THAT IT HAS BEEN ALMOST 5 YEARS SINCE VIOLATIONS OCCURRED, AND IF WE WERE TO INITIATE DEBARMENT PROCEEDINGS, CONTRACTOR WOULD HAVE TO BE ACCORDED DUE PROCESS WHICH WOULD ENTAIL NOTICE AND HEARINGS WHICH WOULD FURTHER DELAY PAYMENT OF WORKERS.

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 UNIQUE CARPET SALES AND SERVICE WHICH PERFORMED WORK UNDER DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS CONTRACT NO. DACA05-75-C-0130 AT FORT HUNTER LIGGETT, CALIFORNIA.

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 $4,617.90 ON DEPOSIT HERE TO THE FOURTEEN 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 ALAN SOON ON EXTENSION 53218.

CONGRESSMAN LEON E. PANETTA IS INTERESTED IN THIS MATTER.

INDORSEMENT

ASSOCIATE DIRECTOR, AFMD-CLAIMS GROUP

RETURNED. UNIQUE CARPET SALES AND SERVICE (UNIQUE), AN INEXPERIENCED MINORITY OPERATED FIRM, ENTERED INTO A SUBCONTRACT WITH FRED A. ARNOLD, INC. (ARNOLD), WHICH WAS THE PRIME CONTRACTOR ON CONTRACT NO. DACA05-75-C- 0130, ISSUED BY THE DEPARTMENT OF THE ARMY FOR BARRACK CONSTRUCTION AT FORT HUNTER, LIGGETT, CALIFORNIA. THE SUBCONTRACT WAS FOR A FINAL CLEANUP AFTER COMPLETION OF THE ABOVE CONTRACT AND INVOLVED MOSTLY JANITORIAL-TYPE WORKERS. UNIQUE PAID THESE WORKERS LESS THAN THE PRESCRIBED "LABORER" RATE REQUIRED BY THE DAVIS-BACON ACT, 40 U.S.C. SEC. 276A (1976).

THE EVIDENCE OF RECORD IS SUFFICIENT TO ESTABLISH THAT THE WORKERS IN QUESTION WERE UNDERPAID; HOWEVER, WE NOTE THAT THE SUBCONTRACT DOES NOT CONTAIN THE LABOR STANDARDS PROVISIONS OF THE PRIME CONTRACT, NOR WAS DD FORM 1566, WHICH INCORPORATES THESE LABOR STANDARDS PROVISIONS INTO THE SUBCONTRACT, EXECUTED. THIS BEING THE CASE, THERE IS NOTHING TO ESTABLISH THAT THE SUBCONTRACTOR, UNIQUE, EXPRESSLY OR IMPLIEDLY AGREED TO THE LABOR STANDARDS PROVISIONS OF THE PRIME CONTRACT. OBLIGATIONS UNDER THE DAVIS- BACON ACT COME INTO BEING ONLY BY VIRTUE OF CONTRACTUAL PROVISIONS AND ARE NOT DIRECTLY IMPOSED BY OPERATION OF STATUTE. SEE B-193621-O.M., MARCH 7, 1979; 40 COMP.GEN. 565 (1961). IN THE ABSENCE OF EVIDENCE THAT THERE WERE LABOR STANDARDS PROVISIONS IN THE SUBCONTRACT, WE MUST CONCLUDE THAT THE SUBCONTRACTOR HAD NO BINDING OBLIGATION TO EMPLOYEES UNDER THE DAVIS-BACON ACT, AND THERE APPEARS TO BE NO PROPER BASIS FOR DEBARMENT OF UNIQUE. SEE B-202854 O.M., AUGUST 18, 1981, AND CASES CITED THEREIN. ALSO, THE RECORD INDICATES THAT THE VIOLATIONS RESULTED FROM IGNORANCE OF THE LABOR STANDARDS PROVISIONS, RATHER THAN A WILLFUL INTENT TO UNDERPAY THE WORKERS. SEE B-160409-O.M., JANUARY 4, 1967.

ALSO, THERE IS NO PROPER BASIS FOR DEBARMENT OF THE PRIME CONTRACTOR, ARNOLD, SINCE ALTHOUGH FINANCIALLY LIABLE UNDER THE CONTRACT FOR THE UNDERPAYMENT OF UNIQUE'S EMPLOYEES, ARNOLD APPARENTLY DID NOT PARTICIPATE IN OR CONTRIBUTE TO SUCH UNDERPAYMENTS. SEE B-189539, SEPTEMBER 23, 1977. ADDITIONALLY, DEBARMENT OF ARNOLD IS NOT WARRANTED ON THE BASIS THAT IT HAS BEEN ALMOST 5 YEARS SINCE THE VIOLATIONS OCCURRED, AND IF WE WERE TO INITIATE DEBARMENT PROCEEDINGS AT THIS TIME, ARNOLD WOULD HAVE TO BE ACCORDED DUE PROCESS WHICH WOULD ENTAIL, AT THE MINIMUM, NOTICE AND SOME TYPE OF HEARING WHICH WOULD FURTHER DELAY PAYMENT OF THE WORKERS. SEE B-201509-O.M., MAY 5, 1981. NEITHER THE DEPARTMENT OF THE ARMY NOR THE DEPARTMENT OF LABOR RECOMMENDED DEBARMENT OF EITHER PARTY.

THE FUNDS ON DEPOSIT WITH YOUR OFFICE MAY BE DISBURSED TO THE AGGRIEVED WORKERS IN ACCORDANCE WITH ESTABLISHED PROCEDURES.