B-283, JANUARY 19, 1939, 18 COMP. GEN. 616

B-283: Jan 19, 1939

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IS AS FOLLOWS: THE BACON-DAVIS ACT OF AUGUST 30. 000 "TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY. IS APPLICABLE TO THE DISTRICT OF COLUMBIA TO CONTRACTS IN EXCESS OF $5. THERE IS SOME DOUBT AS TO WHETHER THE SO-CALLED "KICK-BACK" ACT OF JUNE 13. IS APPLICABLE TO THE DISTRICT OF COLUMBIA. ALTHOUGH IT IS INDICATED THAT THIS ACT IS TO EFFECTUATE THE PURPOSE OF CERTAIN STATUTES CONCERNING RATES OF PAY FOR LABOR. WERE REQUIRED TO MAKE REASONABLE REGULATIONS TO ENFORCE ITS PROVISIONS. IN THE FIRST PART OF THE "KICK-BACK" ACT YOU WILL FIND THAT IT WAS MADE TO COVER WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES. THAT THE DISTRICT OF COLUMBIA IS NOT SPECIFICALLY MENTIONED ANYWHERE IN THE ACT.

B-283, JANUARY 19, 1939, 18 COMP. GEN. 616

CONTRACTS - WAGE STIPULATIONS - DISTRICT OF COLUMBIA PUBLIC BUILDINGS AND WORKS CONSTRUCTION, ETC. - APPLICABILITY OF COMPENSATION "KICK BACK" LAW IN THE ABSENCE OF A JUDICIAL DETERMINATION THAT SECTION 1 OF THE SO CALLED COMPENSATION ,KICK-BACK" ACT OF JUNE 13, 1934, 48 STAT. 948, DOES NOT APPLY TO THE CONSTRUCTION, ETC., OF BUILDINGS AND WORKS UNDER DISTRICT OF COLUMBIA APPROPRIATED FUNDS AS DISTINGUISHED FROM SUCH WORK ,FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES," AND IN VIEW OF THE TERMINOLOGY OF THE ACT AND ITS AVOWED PURPOSE, ETC., CONTRACTS FOR THE CONSTRUCTION OF BUILDINGS AND WORKS UNDER DISTRICT OF COLUMBIA APPROPRIATED FUNDS SHOULD INCLUDE THE REASONABLE REGULATIONS ISSUED, PURSUANT TO THE AUTHORITY CONTAINED IN SECTION 2 OF THE SAID ACT, BY THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR FOR INCLUSION IN SUCH CONTRACTS IN ACCOMPLISHMENT OF THE PURPOSES OF SECTION 1 OF THE ACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, JANUARY 19, 1939:

YOUR LETTER OF DECEMBER 22, 1938, IS AS FOLLOWS:

THE BACON-DAVIS ACT OF AUGUST 30, 1935 (49 STAT. 1011), PLAINLY REQUIRES THAT EVERY CONTRACT IN EXCESS OF $2,000 "TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY," FOR THE CONSTRUCTION, ALTERATION, OR REPAIR OF PUBLIC BUILDINGS OR PUBLIC WORKS, SHALL CONTAIN, AMONG OTHER STIPULATIONS, A STIPULATION THAT THE CONTRACTOR, OR HIS SUBCONTRACTORS, SHALL PAY ALL MECHANICS AND LABORERS EMPLOYED DIRECTLY UPON THE SITE OF THE WORK, AT WAGE RATES AT NOT LESS THAN THOSE STATED IN THE ADVERTISED SPECIFICATIONS, BASED UPON PREVAILING WAGES IN THE PARTICULAR LOCALITY, AS DETERMINED BY THE SECRETARY OF LABOR. WITH LIKE FORCE AND EFFECT, THE EARLIER ACT OF MARCH 3, 1931 (46 STAT. 1494), IS APPLICABLE TO THE DISTRICT OF COLUMBIA TO CONTRACTS IN EXCESS OF $5,000. HOWEVER, THERE IS SOME DOUBT AS TO WHETHER THE SO-CALLED "KICK-BACK" ACT OF JUNE 13, 1934 (48 STAT. 948), IS APPLICABLE TO THE DISTRICT OF COLUMBIA, ALTHOUGH IT IS INDICATED THAT THIS ACT IS TO EFFECTUATE THE PURPOSE OF CERTAIN STATUTES CONCERNING RATES OF PAY FOR LABOR, BY MAKING IT UNLAWFUL TO PREVENT ANYONE FROM RECEIVING COMPENSATION CONTRACTED FOR THEREUNDER, AND FOR OTHER PURPOSES, AND THAT TO AID IN THE ENFORCEMENT OF THE ACT, THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR, JOINTLY, WERE REQUIRED TO MAKE REASONABLE REGULATIONS TO ENFORCE ITS PROVISIONS. HOWEVER, THE ACT DOES NOT REQUIRE ITS PROVISIONS TO BE INCLUDED IN GOVERNMENT CONTRACTS ALTHOUGH THE REGULATIONS REQUIRE THAT SUCH PROVISIONS BE INCLUDED IN PUBLIC CONTRACTS OF A NATURE PROVIDED IN THE ACT. IN THE FIRST PART OF THE "KICK-BACK" ACT YOU WILL FIND THAT IT WAS MADE TO COVER WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES, AND THAT THE DISTRICT OF COLUMBIA IS NOT SPECIFICALLY MENTIONED ANYWHERE IN THE ACT. LITTLE DOUBT IS EXPRESSED, THEREFORE, AS TO WHETHER THIS ACT WOULD BE APPLICABLE TO DISTRICT OF COLUMBIA CONTRACTS INVOLVING THE EXPENDITURE, IN WHOLE OR IN PART, OF FUNDS RECEIVED FROM THE UNITED STATES THROUGH THE PUBLIC WORKS ADMINISTRATION, THE SOCIAL SECURITY BOARD, OR OTHER SOURCES, BUT THERE IS SOME DOUBT AS TO WHETHER CONTRACTS FINANCED SOLELY FROM DISTRICT OF COLUMBIA APPROPRIATED FUNDS WOULD BE SUBJECT TO ITS PROVISIONS. THERE IS ENCLOSED A COPY OF REGULATIONS ISSUED BY THE SECRETARIES OF TREASURY AND INTERIOR UNDER DATE OF JANUARY 8, 1935.

THE COMMISSIONERS OF THE DISTRICT OF COLUMBIA WOULD APPRECIATE EARLY ADVICE FROM YOU AS TO WHETHER THE ACT OF JUNE 13, 1934, IS APPLICABLE TO DISTRICT OF COLUMBIA CONTRACTS INVOLVING THE EXPENDITURE OF FEDERAL AND/OR PURELY LOCAL AND TRUST FUNDS.

THE SO-CALLED "KICK-BACK" ACT OF JUNE 13, 1934, 48 STAT. 948, INCLUDING THE PREAMBLE STATING THE PURPOSE OF THE LEGISLATION, IS AS FOLLOWS:

TO EFFECTUATE THE PURPOSE OF CERTAIN STATUTES CONCERNING RATES OF PAY FOR LABOR, BY MAKING IT UNLAWFUL TO PREVENT ANYONE FROM RECEIVING THE COMPENSATION CONTRACTED FOR THEREUNDER, AND FOR OTHER PURPOSES.

BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED, THAT WHOEVER SHALL INDUCE ANY PERSON EMPLOYED IN THE CONSTRUCTION, PROSECUTION, OR COMPLETION OF ANY PUBLIC BUILDING, PUBLIC WORK, OR BUILDING OR WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES, OR IN THE REPAIR THEREOF TO GIVE UP ANY PART OF THE COMPENSATION TO WHICH HE IS ENTITLED UNDER HIS CONTRACT OF EMPLOYMENT, BY FORCE, INTIMIDATION, THREAT, OR PROCURING DISMISSAL FROM SUCH EMPLOYMENT, OR BY ANY OTHER MANNER WHATSOEVER, SHALL BE FINED NOT MORE THAN $5,000, OR IMPRISONED NOT MORE THAN FIVE YEARS, OR BOTH.

SEC. 2. TO AID IN THE ENFORCEMENT OF THE ABOVE SECTION, THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR JOINTLY SHALL MAKE REASONABLE REGULATIONS FOR CONTRACTORS OR SUBCONTRACTORS ON ANY SUCH BUILDING OR WORK, INCLUDING A PROVISION THAT EACH CONTRACTOR AND SUBCONTRACTOR SHALL FURNISH WEEKLY A SWORN AFFIDAVIT WITH RESPECT TO THE WAGES PAID EACH EMPLOYEE DURING THE PRECEDING WEEK.

THE REGULATIONS OF JANUARY 8, 1935, A COPY OF WHICH WAS INCLOSED WITH YOUR LETTER, ARE IN PERTINENT PART AS FOLLOWS:

PURSUANT TO THE PROVISIONS OF PUBLIC ACT NO. 324, 73RD CONGRESS, APPROVED JUNE 13, 1934 (48 STAT. 948), CONCERNING RATES OF PAY FOR LABOR, THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR HEREBY JOINTLY PROMULGATE THE FOLLOWING REGULATIONS:

SECTION 2. EACH CONTRACTOR AND SUBCONTRACTOR ENGAGED IN THE CONSTRUCTION, PROSECUTION, OR COMPLETION OF ANY BUILDING OR WORK OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA OR OF ANY BUILDING OR WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES, OR IN THE REPAIR THEREOF, SHALL FURNISH EACH WEEK AN AFFIDAVIT WITH RESPECT TO THE WAGES PAID EACH EMPLOYEE DURING THE PRECEDING WEEK. SAID AFFIDAVIT SHALL BE IN THE FOLLOWING FORM:

SECTION 5. THESE REGULATIONS SHALL BE MADE A PART OF EACH CONTRACT EXECUTED AFTER THE EFFECTIVE DATE HEREOF BY THE DISTRICT OF COLUMBIA FORANY OF THE PURPOSES ENUMERATED IN SECTION 2 HEREOF.

WHILE THE ACT IN QUESTION IS A CRIMINAL STATUTE AND DOES NOT EXPRESSLY NAME THE DISTRICT OF COLUMBIA, IT DOES SPECIFY "ANY PUBLIC BUILDING, PUBLIC WORK," WHICH TERMINOLOGY MIGHT BE VIEWED JUDICIALLY AS SUFFICIENT TO INCLUDE BUILDINGS AND WORKS OF THE DISTRICT OF COLUMBIA, PARTICULARLY AS THE PREAMBLE STATES THE PURPOSE OF THE LEGISLATION TO BE "TO EFFECTUATE THE PURPOSE OF CERTAIN STATUTES CONCERNING RATES OF PAY FOR LABOR," AND AS THE PRIOR STATUTE OF MARCH 3, 1931, 46 STAT. 1494, IN THAT REGARD, EXPRESSLY INCLUDED CONTRACTS OF THE DISTRICT OF COLUMBIA. MOREOVER, IT MIGHT BE VIEWED THAT THE ANNUAL FEDERAL CONTRIBUTION TO DISTRICT OF COLUMBIA FUNDS GENERALLY WOULD BRING DISTRICT OF COLUMBIA CONSTRUCTION WORK WITHIN THAT PART OF THE ACT SPECIFYING "BUILDING OR WORK FINANCED IN WHOLE OR IN PART BY * * * GRANTS FROM THE UNITED STATES.' IT DOES NOT APPEAR THAT THE COURTS HAVE DECIDED EITHER OF THESE QUESTIONS, AND SUCH QUESTIONS IN RELATION TO CRIMINAL PROSECUTIONS ARE NOT, OF COURSE, FOR DETERMINATION BY THIS OFFICE. SEE 17 COMP. GEN. 83; 18 ID. 337.

SECTION TWO OF THE ACT PROVIDES THAT "TO AID IN THE ENFORCEMENT OF THE ABOVE SECTION," THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR JOINTLY SHALL MAKE REASONABLE REGULATIONS FOR CONTRACTORS OR SUBCONTRACTORS "ON ANY SUCH BUILDING OR WORK," INCLUDING A REQUIREMENT OF WEEKLY AFFIDAVITS AS TO WAGES PAID. SUCH REGULATIONS, IF WITHIN THE AUTHORITY OF THE ACT, HAVE THE FORCE AND EFFECT OF LAW. THE ACT PROVIDES A PENALTY FOR VIOLATION OF THE ,KICK-BACK" PROVISIONS, BUT PROVIDES NO PENALTY FOR VIOLATION OF THE REGULATIONS MADE TO AID IN THE ENFORCEMENT OF THE "KICK-BACK" PROVISIONS. THE ACT DOES NOT DIRECT OR EXPRESSLY AUTHORIZE THE INCLUSION OF THE REGULATIONS IN CONTRACTS FOR WORK SUBJECT TO THE STATUTE, BUT AS THERE APPEARS NO OTHER METHOD FOR ENFORCING THE REGULATIONS AS TO FURNISHING AFFIDAVITS, ETC., THE REQUIREMENT THAT SUCH REGULATIONS BE MADE A PART OF EACH CONTRACT FOR WORK SUBJECT TO THE ACT WOULD APPEAR TO BE A "REASONABLE" REGULATION, WITHIN THE PURVIEW OF SECTION 2, TO AID IN THE ENFORCEMENT OF THE PROVISIONS OF SECTION 1.

THE GENERAL RULE IS THAT CONTRACT STIPULATIONS TENDING TO RESTRICT COMPETITION AND TO INCREASE THE COST OF PERFORMANCE ARE UNAUTHORIZED UNLESS REASONABLY REQUISITE TO THE ACCOMPLISHMENT OF THE LEGISLATIVE PURPOSES OF THE CONTRACT APPROPRIATION INVOLVED OR UNLESS SUCH STIPULATIONS ARE AUTHORIZED BY LAW, AND WHERE THE CONGRESS HAS LEGISLATED ON THE SUBJECT IT IS NOT OPEN TO ADMINISTRATIVE DISCRETION TO OMIT CONTRACT STIPULATIONS REQUIRED BY LAW OR TO STIPULATE CONTRACT CONDITIONS AT VARIANCE WITH THOSE REQUIRED BY LAW--- "ALL ON THE FUNDAMENTAL BASIS THAT IT IS FOR THE CONGRESS TO SAY HOW AND ON WHAT CONDITIONS PUBLIC MONEY SHALL BE SPENT.' 18 COMP. GEN. 285, AND CASES CITED THEREIN. CONTRACT STIPULATIONS REQUIRED BY VALID STATUTORY REGULATIONS ARE WITHIN THE RULE THE SAME AS THOUGH EXPRESSLY REQUIRED BY STATUTE.

IN THE PRESENT MATTER, IN THE ABSENCE OF A JUDICIAL DETERMINATION THAT SECTION 1 OF THE ACT DOES NOT APPLY TO THE CONSTRUCTION, ETC., OF BUILDINGS AND WORKS UNDER APPROPRIATIONS FOR THE DISTRICT OF COLUMBIA, THE CONCLUSION DOES NOT APPEAR WARRANTED THAT THE SAID REGULATIONS JOINTLY PROMULGATED JANUARY 8, 1935, BY THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE INTERIOR, AS APPLICABLE TO DISTRICT OF COLUMBIA PROJECTS, WERE BEYOND THE AUTHORITY EXPRESSLY CONFERRED ON THEM BY SECTION 2 OF THE ACT.

ACCORDINGLY, YOU ARE ADVISED THAT UNLESS AND UNTIL THE COURTS SHALL DECIDE THAT CONTRACTORS OR SUBCONTRACTORS ON BUILDINGS AND WORKS OF THE DISTRICT OF COLUMBIA ARE NOT SUBJECT TO THE PROVISIONS OF SECTION 1 OF THE ACT, CONTRACTS FOR THE CONSTRUCTION, ETC., OF SUCH BUILDINGS AND WORKS SHOULD INCLUDE THE STIPULATIONS DIRECTED BY THE SAID REGULATIONS.