B-28185, SEPTEMBER 24, 1942, 22 COMP. GEN. 265

B-28185, SEPTEMBER 24, 1942, 22 COMP. GEN. 265

CONTRACTS - FAIR LABOR STANDARDS ACT COMPLIANCE; CANCELLATION OF CONTRACTS FOR CARRYING MAILS IT IS NOT ONE OF THE FUNCTIONS OF THIS OFFICE TO DETERMINE WHETHER A CONTRACTOR OR SUBCONTRACTOR, SUCH AS ONE HOLDING A CONTRACT FOR CARRYING THE MAILS, IS OR IS NOT SUBJECT TO THE PROVISIONS OF THE FAIR LABOR STANDARD ACT OF 1938, OR IS OR IS NOT REQUIRED TO COMPLY WITH WAGE ORDERS ISSUED PURSUANT THERETO. 19 COMP. GEN. 748, AMPLIFIED. WHEN THERE IS IN EXISTENCE AT THE TIME BIDS ARE SUBMITTED A LAW--- SUCH AS THE FAIR LABOR STANDARDS ACT OF 1938--- WHICH MAY INCREASE THE COST OF PERFORMING THE CONTRACT WORK, IT MUST BE PRESUMED THAT ALL BIDS SUBMITTED WERE PREPARED IN CONTEMPLATION OF AND SUBJECT TO THAT LAW. WHERE THE ORIGINAL CONTRACTOR UNDER A CONTRACT FOR CARRYING THE MAILS IS AUTHORIZED BY THE POST OFFICE DEPARTMENT TO SUBLET THE WORK TO A SUBCONTRACTOR, THE SUBCONTRACTOR MAY NOT BE RELIEVED OF ITS OBLIGATION TO PERFORM BY REASON OF INCREASED COST OF PERFORMANCE UNLESS THE POSTMASTER GENERAL EXERCISE THE AUTHORITY CONFERRED BY SECTION 3951, REVISED STATUTES, AS AMENDED, TO RELEASE THE ORIGINAL CONTRACTOR.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, SEPTEMBER 24, 1942:

I HAVE YOUR LETTER OF AUGUST 15, 1942, AS FOLLOWS:

REFERENCE IS MADE TO THE PRIOR DECISIONS OF YOUR OFFICE RELATING TO THE NECESSITY OF INCLUDING IN CONTRACTS FOR CARRYING THE MAIL PROVISIONS REQUIRING COMPLIANCE WITH THE EIGHT-HOUR LAW OR THE FAIR LABOR STANDARDS ACT. (SEE 17 C.G. 37; 18 ID. 285; 19 ID. 748 AND 20 ID. 24.)

THE WAGE AND HOUR DIVISION OF THE DEPARTMENT OF LABOR HAS INFORMED A SUBCONTRACTOR ON A SCREEN WAGON ROUTE THAT HE MUST COMPLY WITH THE NEW WAGE ORDER ISSUED BY THAT DEPARTMENT, WHICH WAS EFFECTIVE AS OF MARCH 15, 1942. THERE WAS NOTHING IN THE CONTRACT ON THIS ROUTE REQUIRING COMPLIANCE WITH THE FAIR LABOR STANDARDS ACT OR THE EIGHT HOUR LAW. THE ORIGINAL CONTRACTOR REQUESTED TO BE RELIEVED OF HIS CONTRACT BY REASON OF THE INCREASED COST OF SERVICE AND HIS OWN PHYSICAL DISABILITY. HIS REQUEST WAS DENIED, BUT WHEN HE SUBSEQUENTLY APPLIED FOR PERMISSION TO SUBLET SERVICE ON THE ROUTE, SUCH PERMISSION WAS GRANTED, EFFECTIVE MAY 1, 1942. THE FIRST INFORMATION HAD BY THE SUBCONTRACTOR FROM THE DEPARTMENT OF LABOR WAS RECEIVED IN JUNE, 1942.

IN THE CIRCUMSTANCES IT IS REQUESTED THAT YOU ADVISE:

(1) WHETHER THE SUBCONTRACTOR ON THIS ROUTE MUST COMPLY WITH THE WAGE ORDER OF THE DEPARTMENT OF LABOR;

(2) IF SO, WHETHER THE DEPARTMENT MAY RELIEVE THE SUBCONTRACTOR BY CANCELLING HIS CONTRACT AND READVERTISING FOR NEW BIDS;

(3) WHAT EFFECT, IF ANY, THE PROVISIONS OF SECTION 1820, PARAGRAPH 2 OF THE POSTAL LAWS AND REGULATIONS (REQUIRING THAT CONTRACTS BE FOR THE REMAINDER OF THE ORIGINAL CONTRACT TERM OR FOR A PERIOD NOT LESS THAN ONE YEAR) WOULD HAVE IF YOUR REPLY TO THE 2D QUESTION IS IN THE AFFIRMATIVE.

A PROMPT DECISION WILL BE APPRECIATED.

THE WAGE ORDER REFERRED TO IN YOUR LETTER ABOVE QUOTED APPARENTLY IS THAT ENTITLED "IN THE MATTER OF THE RECOMMENDATION OF INDUSTRY COMMITTEE NO. 34 FOR A MINIMUM WAGE RATE IN THE PROPERTY MOTOR CARRIER INDUSTRY * * WAGE ORDER," ISSUED BY THE WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR, TO BE EFFECTIVE ON MARCH 16, 1942, 7 F.R. 994. THIS ORDER RECITES THAT IT WAS ISSUED UNDER AUTHORITY CONTAINED IN SECTION 8 OF THE FAIR LABOR STANDARDS ACT, 52 STAT. 1064.

YOUR LETTER REFERS TO PAST DECISIONS OF THIS OFFICE RELATING TO THE PROPRIETY OF INCLUDING IN GOVERNMENT CONTRACTS PROVISIONS REQUIRING COMPLIANCE WITH VARIOUS STATUTORY ENACTMENTS. IN CONSIDERING THE EFFECT OF SUCH STATUTES ON GOVERNMENT CONTRACTS, AND MORE ESPECIALLY THE EFFECT WHICH THE OMISSION OF ANY REFERENCE TO A PARTICULAR STATUTE IN THE CONTRACT MAY HAVE ON THE RIGHTS AND LIABILITIES OF THE CONTRACTOR, THERE MUST NOT BE OVERLOOKED THE FACT THAT SOME SUCH STATUTES MAY BE FOR APPLICATION AND ENFORCEMENT ON A DIFFERENT BASIS THAN OTHERS.

THERE ARE STATUTES SUCH AS THE EIGHT-HOUR LAW OF 1912, 37 STAT. 137, THE WALSH-HEALEY ACT, 49 STAT. 2036, AND THE BACON-DAVIS ACT, 49 STAT. 1011, CONTAINING PROVISIONS WHICH IT IS CONTEMPLATED WILL BE INCLUDED IN CERTAIN TYPES OF GOVERNMENT CONTRACTS AND, BY VIRTUE OF THE CONTRACTUAL OBLIGATIONS THUS CREATED, EFFECT ENFORCEMENT OF THE ACT AND THE CARRYING OUT OF THE PURPOSES THEREOF. THUS, AS TO THE EIGHT-HOUR LAW OF 1912, SUPRA, IT WAS STATED IN 20 COMP. GEN. 890, 893---

* * * THE REQUIREMENT THAT THE PROVISION AND STIPULATION BE MADE A PART OF THE CONTRACT NO DOUBT WAS FOR THE PURPOSE OF OBTAINING THE CONTRACTOR'S ASSENT THERETO AND THUS ENABLE THE GOVERNMENT TO ENFORCE THE PROVISIONS MORE READILY AND, IN THE EVENT OF VIOLATION THEREOF, TO ENABLE THE GOVERNMENT SUMMARILY TO WITHHOLD THE AMOUNT OF THE PENALTY FROM THE CONTRACT PRICE, AS A MATTER OF CONTRACTUAL RIGHT, WITHOUT A VIOLATION OF THE DUE PROCESS CLAUSE OF THE FEDERAL CONSTITUTION AND WITHOUT THE NECESSITY FOR JUDICIAL PROCEEDINGS. * * *

ON THE OTHER HAND, OTHER STATUTES ENACTED FOR A SOMEWHAT SIMILAR PURPOSE- -- THE ADVANCEMENT OF THE SOCIAL AND ECONOMIC WELFARE OF THE COUNTRY THROUGH THE ESTABLISHMENT OF BETTER WORKING CONDITIONS--- COMPREHEND GOVERNMENT CONTRACTS WITHIN THEIR SPHERE OF OPERATION BUT ENCOMPASS THE MUCH LARGER SPHERE OF ALL INTERSTATE COMMERCE. IN THIS LATTER CATEGORY ARE THE NATIONAL LABOR RELATIONS ACT, 49 STAT. 449, AND THE FAIR LABOR STANDARDS ACTS, SUPRA. THESE STATUTES DEPEND FOR THE BACKBONE OF THE EFFECTIVENESS UPON THE REGULAR LEGAL PROCESSES OF THE COURTS RATHER THAN UPON CONTRACTUAL RIGHTS AND OBLIGATIONS.

IT WAS HELD IN 19 COMP. GEN. 748, THAT CONTRACTS FOR CARRYING THE MAILS PROPERLY MAY NOT REQUIRE COMPLIANCE BY CONTRACTORS WITH THE FAIR LABOR STANDARDS ACT. HOWEVER, THIS WAS NOT INTENDED, NOR MAY IT REASONABLY BE CONSTRUED, AS CONSTITUTING A HOLDING THAT THE ACT DOES NOT APPLY TO THE SERVICES RENDERED UNDER THAT TYPE OF CONTRACT. AS OF IMPORTANCE IN THE CONSIDERATION OF THE FIRST QUESTION IN YOUR LETTER, ATTENTION IS INVITED TO THE DECISION 20 COMP. GEN. 24, 26, WHICH DISCUSSED THE INCLUSION OF PROVISIONS REQUIRING COMPLIANCE WITH THE SAID ACT IN GOVERNMENT CONTRACTS GENERALLY. IN THE COURSE OF SAID DECISION IT WAS SAID:

* * * SECTION 15 OF THE ACT PRESCRIBES AND DESIGNATES AS "UNLAWFUL" CERTAIN ACTS OR UNDERTAKINGS AS ENUMERATED IN SAID SECTION. SECTION 16 (A) PROVIDES THE PENALTIES ATTENDANT UPON CONVICTION FOR WILLFUL VIOLATION OF ANY OF THE PROVISIONS OF SECTION 15 AND SECTION 16 (B) RELATES TO THE CIVIL LIABILITY OF AN EMPLOYER TO EMPLOYEES AFFECTED BY A VIOLATION OF SECTIONS 6 OR 7 OF THE ACT. OTHER SECTIONS OF THE STATUTE PROVIDE THE MACHINERY FOR THE ADMINISTRATION OF ITS PROVISIONS.

THUS, THE STATUTE SPECIFIES THE MEANS BY WHICH AND MANNER IN WHICH IT IS TO BE ADMINISTERED AND ENFORCED AND PRESCRIBES THE PUNISHMENT TO BE IMPOSED UPON CONVICTION FOR ITS VIOLATION. BUT THE STATUTE DOES NOT PROVIDE FOR, OR AUTHORIZE, THE INCLUSION IN CONTRACTS OF THE UNITED STATES OF ANY REQUIREMENT THAT A CONTRACTOR OTHERWISE AMENABLE TO ITS PROVISIONS SHALL PLEDGE COMPLIANCE WITH THE LAW AS A MATTER OF CONTRACT UNDERTAKING.

ACCORDINGLY, YOU ARE INFORMED THAT, ASIDE FROM ANY CONSIDERATION AS TO WHETHER EMPLOYEES ENGAGED, WHOLLY WITHIN A STATE, IN THE CONSTRUCTION, ALTERATION, OR REPAIR OF A ROAD ARE COVERED BY THE FAIR LABOR STANDARDS ACT, AS TO WHICH I EXPRESS NO OPINION, AND WHICH APPEARS FROM THE CORRESPONDENCE TO BE SOMEWHAT OF AN OPEN QUESTION WITH THE WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR, THERE WOULD APPEAR TO BE NO LEGAL AUTHORITY --- AS THERE WOULD APPEAR TO BE NO NEED -- FOR THE INCLUSION IN GOVERNMENT CONTRACTS OF A REQUIREMENT FOR COMPLIANCE WITH THE FAIR LABOR STANDARDS ACT OF 1938, OR OF ANY OTHER REFERENCE TO THE STATUTE. IF A CONTRACTOR WITH THE GOVERNMENT IS AMENABLE TO THE LAW IN ANY INSTANCE, WHICH QUESTION WOULD NECESSARILY AWAIT JUDICIAL DETERMINATION IN CASE OF DOUBT OR UNCERTAINTY, THE RECOURSE--- AND THE ONLY RECOURSE--- OF THE UNITED STATES, ACTING IN ITS SOVEREIGN CAPACITY AND NOT IN ITS CAPACITY AS A CONTRACTOR, WOULD BE AS SET FORTH AND PROVIDED IN THE STATUTE. SEE 19 COMP. GEN. 748, 750; CF. 17 COMP. GEN. 37; 18 ID. 285; AND B-10675, JULY 8, 1940, 20 COMP. GEN. 14.

IN OTHER WORDS, IT IS NOT ONE OF THE FUNCTIONS OF THIS OFFICE TO DETERMINE WHETHER, UNDER THE FACTS OF A PARTICULAR CASE, A GOVERNMENT CONTRACTOR IS OR IS NOT SUBJECT TO THE PROVISIONS OF THE FAIR LABOR STANDARDS ACT, OR IS OR IS NOT REQUIRED TO COMPLY WITH WAGE ORDERS ISSUED PURSUANT THERETO. SEE, HOWEVER, MAGANN V. LONG'S BAGGAGE TRANSFER CO., 39 FED. SUPP. 742, AND RULINGS OF THE INTERSTATE COMMERCE COMMISSION AND OF THE WAGE AND HOUR DIVISION CITED AND DISCUSSED THEREIN; ALSO, THOMPSON V. DAUGHERTY, 40 FED. SUPP. 279. THEREFORE, AS TO YOUR FIRST QUESTION, IT MAY BE SAID THAT IT IS NOT FOR ANSWERING BY THIS OFFICE.

A NOTE APPENDED TO SECTION 1816 OF THE POSTAL LAWS AND REGULATIONS, 1940, READS, IN PERTINENT PART, AS FOLLOWS:

* * * A CONTRACTOR MAY, WITH THE CONSENT OF THE POSTMASTER GENERAL, MAKE A SUBCONTRACT WITH ANOTHER FOR THE PERFORMANCE OF THE SERVICE UNDERTAKEN BY HIM, BUT HE CONTINUES AS CONTRACTOR AND IS RESPONSIBLE FOR THE DUE FULFILLMENT OF HIS CONTRACT. * * * ( ITALICS SUPPLIED.) IN VIEW OF THIS PROVISION, AND IF IT BE ASSUMED TO HAVE BEEN DETERMINED BY PROPER AUTHORITY THAT THE SUBCONTRACTOR ON THIS ROUTE IS REQUIRED BY LAW TO COMPLY WITH THE WAGE ORDER ISSUED BY THE WAGE AND HOUR DIVISION, IT MAY BE SAID, IN ANSWER TO QUESTION 2 IN YOUR LETTER, THAT RELIEF OF THE SUBCONTRACTOR COULD BE ACCOMPLISHED ONLY BY CANCELLATION OF THE ORIGINAL CONTRACT, THUS INDIRECTLY RELIEVING THE SUBCONTRACTOR OF HIS OBLIGATION UNDER THE SUBCONTRACT.

THE CONTRACT IN THE INSTANT CASE CONTAINED NO PROVISION REQUIRING COMPLIANCE WITH THE FAIR LABOR STANDARDS ACT, BUT, AS POINTED OUT IN THE ABOVE-QUOTED PORTION OF THE DECISION REPORTED IN 20 COMP. GEN. 24, NONE WAS NEEDED. PRESUMABLY THIS CONTRACT RESULTED FROM AN INVITATION TO BID CIRCULARIZED IN THE USUAL MANNER AND THE ACCEPTANCE OF THE LOWEST RESPONDING BID THERETO. IT WOULD APPEAR FURTHER THAT THE FAIR LABOR STANDARDS ACT WAS IN EXISTENCE AT THE TIME BIDS WERE INVITED FOR THIS SERVICE. UNDER SUCH CIRCUMSTANCES THE APPLICABILITY OF THIS LAW WAS A MATTER TO BE CONSIDERED, AND THE RISK OF INCREASED COST OF PERFORMANCE BY REASON OF ENFORCED COMPLIANCE WITH WAGE ORDERS TO BE ISSUED THEREUNDER GUARDED AGAINST BY ALL PERSONS SUBMITTING BIDS.

IT IS NO MORE INCUMBENT ON THE GOVERNMENT TO INFORM A PROSPECTIVE CONTRACTOR OF HIS LEGAL OBLIGATIONS UNDER THE FAIR LABOR STANDARDS ACT THAN OF HIS OBLIGATIONS UNDER ANY OTHER LAW THE PROVISIONS OF WHICH MAY AFFECT IN SOME WAY THE COST OR MANNER OF PERFORMING HIS CONTRACT. WHEN THERE IS IN EXISTENCE A LAW WHICH MAY INCREASE THE COST OR ADD TO THE ONUS OF CERTAIN WORK, IT MUST BE PRESUMED THAT ALL BIDS SUBMITTED WERE PREPARED IN CONTEMPLATION OF AND SUBJECT TO THAT LAW.

THE FACT THAT THE WAGE ORDER WAS ISSUED BY THE GOVERNMENT AS SOVEREIGN HAS NO MATERIAL BEARING IN THE MATTER, THE GOVERNMENT AS A CONTRACTOR BEING A SEPARATE AND DISTINCT CHARACTER. COMPARE 8 COMP. GEN. 25; 13 ID. 46; 18 ID. 160; 19 ID. 903.

THE ACT OF MAY 31, 1940, 54 STAT. 227, AMENDING SECTION 3951, REVISED STATUTES, AS AMENDED, PROVIDES IN PART:

THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND IN THE INTEREST OF THE POSTAL SERVICE, READVERTISE AND AWARD NEW CONTRACTS FOR THE PURPOSE OF RELEASING CONTRACTORS AND THEIR SURETIES UNDER THE FOLLOWING CONDITIONS: * * * (D) WHERE IT IS FOUND AFTER FULL INVESTIGATION THAT THE COMPENSATION OF SUCH CONTRACTORS IS WHOLLY INADEQUATE AND THAT THE CONTINUATION OF THE CONTRACT WOULD IMPOSE UNDUE HARDSHIP UPON THE CONTRACTOR: PROVIDED, THAT PROVISION (D) SHALL BE EFFECTIVE ONLY UPON THE GIVING BY THE CONTRACTOR OF NINETY DAYS' ADVANCE NOTICE OF HIS DESIRE TO BE RELEASED: PROVIDED FURTHER, THAT SUCH CONTRACTOR SHALL WAIVE THE ONE MONTH'S EXTRA PAY AUTHORIZED BY LAW WHERE CONTRACTS ARE CANCELED UNDER SECTION (D).

IN VIEW OF THE STATEMENT IN YOUR LETTER THAT THE REQUEST OF THE ORIGINAL CONTRACTOR TO BE RELIEVED OF HIS CONTRACT BY REASON OF THE INCREASED COST OF THE SERVICE AND HIS PHYSICAL DISABILITY HAS ALREADY BEEN DENIED, PRESUMABLY THERE DOES NOT EXIST THAT EXTRAORDINARILY UNFAVORABLE FINANCIAL ARRANGEMENT FROM THE CONTRACTOR'S STANDPOINT REQUISITE FOR RELIEF UNDER THE ABOVE-QUOTED STATUTE. UNDER SUCH CIRCUMSTANCES THERE IS NO AUTHORITY TO WAIVE OR OTHERWISE DISSIPATE THE CONTRACTUAL RIGHT OF THE UNITED STATES TO HAVE THE SERVICES EMBODIED IN THE ORIGINAL CONTRACT PERFORMED AT THE PRICE STATED THEREIN. SEE GENERALLY 20 COMP. GEN. 448, AND COURT CASES CITED THEREIN.

SINCE THE ANSWER TO YOUR SECOND QUESTION MUST BE IN THE NEGATIVE, CONSIDERATION OF THE THIRD QUESTION APPEARS UNNECESSARY.