B-218852, NOV 1, 1985, OFFICE OF GENERAL COUNSEL

B-218852: Nov 1, 1985

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IT WAS TAKING NO FURTHER ACTION (I.E. WE FIND THAT THE UNDERPAYMENTS MAY HAVE RESULTED FROM CARELESS RECORDKEEPING AND A MISUNDERSTANDING OF THE WAGE DECISION'S REQUIREMENTS CONCERNING FRINGE BENEFITS AND CLASSIFICATION OF WORKERS. THE CONTRACTOR WILL NOT BE DEBARRED UNDER THE ACT. THIS CONTRACT WAS SUBJECT TO THE DAVIS-BACON ACT REQUIREMENTS THAT EMPLOYEES BE PAID CERTAIN MINIMUM WAGES. PETROCHEM WAS REQUIRED TO MAINTAIN AND SUBMIT CERTIFIED PAYROLL RECORDS CONTAINING. EVIDENCE THAT THE REQUIRED MINIMUM WAGES WERE PAID TO EMPLOYEES. SUBMITTED WITH THE PAYROLLS STATED THAT FRINGE BENEFITS AS LISTED IN THE WAGE DECISION WERE PAID IN CASH. ITS BOOKKEEPER DID CONTACT THE ARMY IN AN ATTEMPT TO FIND OUT WHAT WAS NEEDED TO TAKE CARE OF THE PROBLEMS.

B-218852, NOV 1, 1985, OFFICE OF GENERAL COUNSEL

BIDDERS - DEBARMENT - LABOR STIPULATION VIOLATIONS - DAVIS-BACON ACT DEBARMENT UNWARRANTED DIGEST: THE DEPARTMENT OF LABOR STATED THAT, IN VIEW OF THE CIRCUMSTANCES, IT WAS TAKING NO FURTHER ACTION (I.E., DEBARMENT) AGAINST A CONTRACTOR FOR VIOLATIONS OF THE DAVIS-BACON ACT. BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THE CONTRACTOR UNDERPAID THE EMPLOYEES, BUT THE RECORD DOES NOT CONTAIN SUFFICIENT EVIDENCE OF WILLFUL VIOLATIONS OF THE LABOR STANDARDS PROVISIONS OF THE ACT TO WARRANT DEBARMENT. RATHER, WE FIND THAT THE UNDERPAYMENTS MAY HAVE RESULTED FROM CARELESS RECORDKEEPING AND A MISUNDERSTANDING OF THE WAGE DECISION'S REQUIREMENTS CONCERNING FRINGE BENEFITS AND CLASSIFICATION OF WORKERS. THEREFORE, THE CONTRACTOR WILL NOT BE DEBARRED UNDER THE ACT.

SYLVESTER L. GREEN, DIRECTOR:

CONTRACT STANDARDS OPERATION

U.S. DEPARTMENT OF LABOR

ROOM S3518

200 CONSTITUTION AVENUE, N.W.

WASHINGTON, D.C. 20210

SUBJECT: PETROCHEM MAINTENANCE, INC., PRIME CONTRACTOR NEW ORLEANS, LOUISIANA CONTRACT NO. DACA63-80-C-0072 YOUR FILE NO. LA-84-479

BY LETTER DATED MARCH 13, 1985, YOU REQUESTED THAT WE DISTRIBUTE TO WAGE CLAIMANTS FUNDS WITHHELD FROM PETROCHEM MAINTENANCE, INC. (PETROCHEM) FOR VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. SECTIONS 276A TO 276A-5 (1982). AS TO WHETHER PETROCHEM SHOULD BE PLACED ON THE INELIGIBLE BIDDERS LIST, YOU STATED THAT THE DEPARTMENT OF LABOR (DOL) RECOMMENDED NO FURTHER ACTION. WE AGREE THAT THE WAGE CLAIMANTS SHOULD BE PAID AND THAT PETROCHEM SHOULD NOT BE DEBARRED.

PETROCHEM BUILT FUEL DISPENSING PUMPS AND STORAGE TANKS FOR THE UNITED STATES ARMY CORPS OF ENGINEERS (ARMY) AT THE MTMC GULF OUTPORT, NEW ORLEANS, LOUISIANA, UNDER CONTRACT NUMBER DACA63-80-C-0072. THIS CONTRACT WAS SUBJECT TO THE DAVIS-BACON ACT REQUIREMENTS THAT EMPLOYEES BE PAID CERTAIN MINIMUM WAGES, COMPOSED OF APPROPRIATE BASIC HOURLY RATES PLUS FRINGE BENEFITS. FURTHER, PURSUANT TO DOL REGULATIONS IMPLEMENTING THE ACT, 29 C.F.R. SECTION 5.59(A)(3) (1984), PETROCHEM WAS REQUIRED TO MAINTAIN AND SUBMIT CERTIFIED PAYROLL RECORDS CONTAINING, AMONG OTHER THINGS, EVIDENCE THAT THE REQUIRED MINIMUM WAGES WERE PAID TO EMPLOYEES.

PAYROLL RECORDS SUBMITTED BY PETROCHEM SHOWED PAYMENT OF THE BASIC HOURLY RATE WITHOUT THE FRINGE BENEFITS. THE STATEMENTS OF COMPLIANCE, DD FORM 879, SUBMITTED WITH THE PAYROLLS STATED THAT FRINGE BENEFITS AS LISTED IN THE WAGE DECISION WERE PAID IN CASH. IN ADDITION, THE PAYROLLS INCLUDED A FEW INSTANCES OF INCOMPLETE AND INACCURATE CLASSIFICATIONS OF WORKERS. THE ARMY REQUESTED THAT PETROCHEM SUBMIT CORRECTED PAYROLLS, INCLUDING EVIDENCE THAT THE EMPLOYEES RECEIVED PAYMENT OF THE FRINGE BENEFITS. PETROCHEM FAILED TO DO SO. HOWEVER, ITS BOOKKEEPER DID CONTACT THE ARMY IN AN ATTEMPT TO FIND OUT WHAT WAS NEEDED TO TAKE CARE OF THE PROBLEMS. AFTER NO FURTHER RESPONSE FROM PETROCHEM, THE ARMY CORRECTED THE CLASSIFICATIONS AND CONCLUDED THAT THE FRINGE BENEFITS WERE NOT PAID, RESULTING IN UNDERPAYMENTS OF $735.23 TO TEN EMPLOYEES. WITH NO EXPLANATION, PETROCHEM SUBSEQUENTLY DELIVERED RECEIPTS FOR FOUR EMPLOYEES VERIFYING CASH PAYMENTS OF $30.18 IN FRINGE BENEFITS. THE ARMY THEN NOTIFIED PETROCHEM THAT THE REMAINING $705.05 IN UNDERPAYMENTS WERE BEING WITHHELD FROM ITS EARNINGS FOR PAYMENT TO THE EMPLOYEES.

ALTHOUGH THE ARMY FOUND THAT PETROCHEM VIOLATED THE DAVIS-BACON ACT, IT RECOMMENDED NO FURTHER ACTION AGAINST THE FIRM, OTHER THAN THE WITHHOLDING OF THE UNDERPAYMENTS. YOU AGREED WITH THE ARMY, CONCLUDING THAT THE UNDERPAYMENTS SHOULD BE DISTRIBUTED TO THE WAGE CLAIMANTS BUT THAT, IN VIEW OF THE CIRCUMSTANCES, NO FURTHER ACTION SHOULD BE TAKEN. FOR THE REASONS THAT FOLLOW, WE CONCUR THAT THE WAGE CLAIMANTS SHOULD BE PAID AND THAT PETROCHEM SHOULD NOT BE DEBARRED.

WE FIND NO EVIDENCE OF RECORD INDICATING THAT PETROCHEM DISPUTED THE REMAINING $705.05 UNDERPAYMENTS DETERMINED TO BE DUE THE TEN EMPLOYEES AND WITHHELD UNDER THE CONTRACT. THIS, COMBINED WITH THE LACK OF PROOF OF PAYMENT, IS SUFFICIENT TO ESTABLISH THAT THE EMPLOYEES WERE UNDERPAID THE AMOUNTS IN QUESTION. THUS, THE FUNDS ON DEPOSIT WITH OUR OFFICE-- $705.05 -- WILL BE DISTRIBUTED TO THE WAGE CLAIMANTS IN ACCORDANCE WITH ESTABLISHED PROCEDURES.

THE DAVIS-BACON ACT PROVIDES THAT THE COMPTROLLER GENERAL IS TO DEBAR PERSONS OR FIRMS WHOM HE HAS FOUND TO HAVE DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES UNDER THE ACT. 40 U.S.C. SECTION 276A-2. IN CIRCULAR LETTER B-3368, MARCH 19, 1957, WE DISTINGUISHED BETWEEN "TECHNICAL VIOLATIONS," NOT REQUIRING DEBARMENT, AND "SUBSTANTIAL VIOLATIONS," REQUIRING DEBARMENT. WE NOTED THAT "TECHNICAL VIOLATIONS"RESULT FROM INADVERTENCE OR LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION WHILE "SUBSTANTIAL VIOLATIONS" RESULT FROM INTENTIONAL ACTIONS EXHIBITING BAD FAITH OR GROSS CARELESSNESS IN OBSERVING THE MINIMUM WAGE OBLIGATIONS TO EMPLOYEES.

BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THE FAILURE TO PAY THE APPLICABLE MINIMUM WAGES WAS NOT SUFFICIENT TO WARRANT DEBARMENT. THE STATEMENTS OF COMPLIANCE WHICH ACCOMPANIED PETROCHEM'S PAYROLLS INDICATED THAT THE EMPLOYEES WERE PAID A CASH EQUIVALENT FOR FRINGE BENEFITS. THE CASH PAYMENTS, THEREFORE, SHOULD HAVE BEEN REFLECTED IN GROSS WAGES ON THE PAYROLLS. HOWEVER, NONE OF THE PAYROLLS REFLECT INCLUSION OF A CASH EQUIVALENT FOR FRINGE BENEFITS, SHOWING ONLY THE BASIC HOURLY RATE OF PAY FOR EACH EMPLOYEE. THE RECORD DOES NOT INDICATE ANY ATTEMPT BY PETROCHEM TO FALSIFY THE PAYROLLS TO CONCEAL ITS FAILURE TO PAY FRINGE BENEFITS AND CORRECTLY CLASSIFY ITS WORKERS. RATHER, THE UNDERPAYMENTS APPEAR TO BE THE RESULT OF INADVERTENCE CAUSED BY CARELESS RECORDKEEPING AND A MISUNDERSTANDING OF THE WAGE DECISION'S REQUIREMENTS CONCERNING FRINGE BENEFITS AND CLASSIFICATION OF WORKERS. THUS, WE FIND THAT THIS RECORD DOES NOT CONTAIN SUFFICIENT EVIDENCE OF WILLFUL VIOLATION OF THE LABOR PROVISIONS OF THE DAVIS-BACON ACT. THEREFORE, WE DECLINE TO DEBAR PETROCHEM.