B-28624, SEPTEMBER 28, 1942, 22 COMP. GEN. 277

B-28624: Sep 28, 1942

Additional Materials:

Contact:

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

 

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

CONTRACTS - COST-PLUS - APPLICABILITY OF FAIR LABOR STANDARDS ACT IF IT BE ADMINISTRATIVELY DETERMINED THAT THE INTERESTS OF THE GOVERNMENT WILL BE BEST SERVED BY ACQUIESCING IN THE VIEW OF A REPRESENTATIVE OF THE ADMINISTRATOR. THAT GUARDS EMPLOYED BY A COST-PLUS-A-FIXED-FEE CONTRACTOR ENGAGED IN THE OPERATION OF AN ORDNANCE PLANT ARE ENTITLED TO OVERTIME PAY UNDER THE FAIR LABOR STANDARDS ACT OF 1938. OTHERWISE PROPER REIMBURSEMENTS UNDER THE CONTRACT FOR OVERTIME PAYMENTS MADE TO THE GUARDS IN ACCORDANCE WITH SUCH INTERPRETATION OF SAID ACT WILL NOT BE QUESTIONED. THE DECISION SETS FORTH THE EVIDENCE WHICH WILL BE ACCEPTED IN SUPPORT OF THE REIMBURSEMENT VOUCHERS. 1942: I HAVE YOUR LETTER OF AUGUST 25.

B-28624, SEPTEMBER 28, 1942, 22 COMP. GEN. 277

CONTRACTS - COST-PLUS - APPLICABILITY OF FAIR LABOR STANDARDS ACT IF IT BE ADMINISTRATIVELY DETERMINED THAT THE INTERESTS OF THE GOVERNMENT WILL BE BEST SERVED BY ACQUIESCING IN THE VIEW OF A REPRESENTATIVE OF THE ADMINISTRATOR, WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR, THAT GUARDS EMPLOYED BY A COST-PLUS-A-FIXED-FEE CONTRACTOR ENGAGED IN THE OPERATION OF AN ORDNANCE PLANT ARE ENTITLED TO OVERTIME PAY UNDER THE FAIR LABOR STANDARDS ACT OF 1938, OTHERWISE PROPER REIMBURSEMENTS UNDER THE CONTRACT FOR OVERTIME PAYMENTS MADE TO THE GUARDS IN ACCORDANCE WITH SUCH INTERPRETATION OF SAID ACT WILL NOT BE QUESTIONED. THE DECISION SETS FORTH THE EVIDENCE WHICH WILL BE ACCEPTED IN SUPPORT OF THE REIMBURSEMENT VOUCHERS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, SEPTEMBER 28, 1942:

I HAVE YOUR LETTER OF AUGUST 25, 1942, AS FOLLOWS:

THERE HAS BEEN REFERRED TO THE OFFICE OF THE CHIEF OF ORDNANCE BY THE COMMANDING OFFICER OF THE RADFORD ORDNANCE WORKS A REQUEST FOR ADVICE AND INSTRUCTIONS AS TO THE DISPOSITION OF CERTAIN CLAIMS (AND POTENTIAL CLAIMS) FOR OVERTIME WORKED BY GUARDS OF THE HERCULES POWDER COMPANY, PRIME CONTRACTOR WITH ORDNANCE UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. W- ORD-462, WHICH REQUEST, AFTER REVIEW BY THE ORDNANCE DEPARTMENT, IS FORWARDED FOR YOUR CONSIDERATION AND DECISION.

THE FACTUAL BACKGROUND AS TO THE DERIVATION OF SUCH CLAIMS IS PRESENTED IN DETAIL IN LETTERS, HERCULES POWDER COMPANY, DATED MAY 11, 1942, WAR DEPARTMENT, RADFORD ORDNANCE WORKS, DATED JUNE 8, 1942, AND THE INDORSEMENTS AND INCLOSURES THERETO, ALL FORMING PART OF THE FILE HEREWITH.

THE CLAIMS ARISE UNDER AN INTERPRETATION OF THE FAIR LABOR STANDARDS ACT, 1938 (29 U.S.C. 201-219) AS GIVEN BY INVESTIGATORS OF THE WAGE AND HOUR DIVISION OF THE DEPARTMENT OF LABOR TO THE CONTRACTOR, WHICH INVESTIGATORS STATED IT TO BE THEIR OPINION THAT THE GUARDS IN QUESTION WERE COVERED BY THE ACT. THE EMPLOYER, HERCULES POWDER COMPANY, HAD ASSUMED IN GOOD FAITH THAT THEY WERE NOT SO COVERED, AND, THEREFORE, HAD NOT PAID OVERTIME FOR THE PERIODS OF TIME THAT THE GUARDS WERE ENGAGED IN WORK TRAIN DUTY, WERE HAVING UNIFORMS INSPECTED, AND WERE GETTING TO THEIR RESPECTIVE GUARD POSTS.

IF THE PLANT IN QUESTION IS ENGAGED IN PRODUCTION OF GOODS FOR INTERSTATE COMMERCE, AND THE INSPECTORS OF THE WAGE AND HOUR DIVISION OF THE DEPARTMENT OF LABOR SO CONTEND, THEN THESE GUARDS EMPLOYED BY THE OPERATING CONTRACTOR APPARENTLY ARE COVERED BY THE FAIR LABOR STANDARDS ACT, AND THERE ARISES AGAINST THE CONTRACTORS A CONTINGENT LIABILITY IN THE APPROXIMATE AMOUNT OF $57,000 IN THE INSTANT CASE, FOR THOSE WAGES ACCRUED DURING THE PERIOD WHEN OVERTIME WAS NOT PAID SUCH EMPLOYEES.

IN ITS CONSIDERATION OF DECISIONS ON THE MATTER, THE ORDNANCE DEPARTMENT COULD FIND NOTHING BY THE COURTS ON THE SPECIFIC QUESTION OF WHETHER COST- PLUS-A-FIXED-FEE CONTRACTORS WORKING ON ORDNANCE PHASES OF A GOVERNMENT CONTRACT AND PRODUCING MATERIALS THEREUNDER ARE ENGAGED IN INTERSTATE COMMERCE. THE SUPREME COURT OF THE UNITED STATES IN KIRSCHBAUM V. WALLING, ADMR., AND ARSENAL BUILDING CORPORATION V. WALLING, ADMR., 86 ADV. OP. 1054; 62 SUP. CT. REP. 1116, BOTH DECIDED JUNE 1, 1942, DID, HOWEVER, BROADLY CONSTRUE THE FAIR LABOR STANDARDS ACT AND HELD IT APPLICABLE TO EMPLOYEES ENGAGED IN THE OPERATION AND MAINTENANCE OF A BUILDING IN WHICH GOODS FOR INTERSTATE COMMERCE WERE PRODUCED BY THE OCCUPANTS OF THE BUILDING. THE COURT DID NOT AGREE WITH THE OWNER OF SUCH BUILDING IN HIS CONTENTION THAT HIS OWNERSHIP WAS PURELY LOCAL IN CHARACTER, AND THAT THE ACT DID NOT APPLY WHEN AN OWNER-EMPLOYER LIKE HIMSELF WAS NOT ENGAGED IN AN INDUSTRY PARTAKING OF INTERSTATE COMMERCE.

IT SEEMS TO BE GENERALLY CONCEDED BY THE ORDNANCE DEPARTMENT, IN ITS MANUAL OF INSTRUCTIONS FOR THE ADMINISTRATION OF CONTRACTS, SECTION XI-G- 1, 2, AND 3, AND SECTION XI-I-4, THAT THE ACT IS APPLICABLE. (HOWEVER, THE EXPRESSION WAS IN SEPTEMBER, 1941, AND AFTER THE FACT UPON WHICH PART OF THE CLAIM AROSE IN THE INSTANT CASE.) THIS SAME VIEW IS EXPRESSED BY THE OFFICE OF THE UNDER SECRETARY OF WAR AS MAY BE SEEN FROM THE FOLLOWING EXCERPT FROM A MEMORANDUM DATED SEPTEMBER 30, 1941, DIRECTOR OF PURCHASES AND CONTRACTS, TO THE QUARTERMASTER GENERAL:

"* * * FURTHERMORE, IT IS THE EXPRESSED POLICY OF THE WAR DEPARTMENT, THAT ALL ITS CONTRACTORS SHOULD COMPLY WITH THE STATEMENT OF LABOR POLICY ADOPTED BY THE ADVISORY COMMISSION ON AUGUST 21, 1940. THIS STATEMENT OF POLICY PROVIDES IN PART AS FOLLOWS:

" "ALL WORK CARRIED ON AS PART OF THE DEFENSE PROGRAM SHOULD COMPLY WITH FEDERAL STATUTORY PROVISIONS AFFECTING LABOR WHEREVER SUCH PROVISIONS ARE APPLICABLE. THIS APPLIES TO THE WALSH-HEALEY ACT, FAIR LABOR STANDARDS ACT, THE NATIONAL LABOR RELATIONS ACT, ETC.'

"IT IS THE OPINION OF THIS OFFICE THAT THIS POLICY WAS INTENDED TO APPLY TO EMPLOYEES OF COST-PLUS-A-FIXED-FEE CONTRACTORS WHENEVER APPLICABLE TO EMPLOYEES OF SIMILAR LUMP SUM TRACTORS.'

THE GENERAL ACCOUNTING OFFICE, THROUGH THE ASSISTANT CHIEF, AUDIT DIVISION, EXPRESSED A VIEW AS TO THE APPLICABILITY OF THE FAIR LABOR STANDARDS ACT IN A LETTER, DATED JUNE 30, 1942, SENT THROUGH THE CHIEF OF ORDNANCE TO THE COMMANDING OFFICER, WOLF CREEK ORDNANCE PLANT. THE LETTER STATED THAT THE FAIR LABOR STANDARDS ACT WAS APPLICABLE TO CUSTODIAL AND ADMINISTRATIVE EMPLOYEES OF PROCTOR AND GAMBLE, OPERATORS OF THE ORDNANCE PLANT AT MILAN, TENNESSEE UNDER A COST-PLUS A-FIXED-FEE CONTRACT, W-ORD- 494. WHILE NOT SO STATED IN THE LETTER, THE LOGICAL IMPLICATION APPEARS TO BE THAT OTHER CONTRACTORS OPERATING UNDER SIMILAR CONTRACTS ARE ALSO COVERED BY THE ACT.

THE ORDNANCE DEPARTMENT IS AWARE, OF COURSE, OF THE FACT THAT THE UNITED STATES IS NOT AN EMPLOYER AS THAT TERM IS DEFINED IN SECTION 3 (D) OF THE FAIR LABOR STANDARDS ACT, AND IS, THEREFORE, SPECIFICALLY EXCLUDED FROM ITS REQUIREMENTS. SEE ALSO 20 COMP. GEN. 24. THIS EXCLUSION WOULD NOT, HOWEVER, COVER ORDNANCE COST-PLUS-A-FIXED-FEE CONTRACTORS AS OPERATING EMPLOYERS SINCE SUCH ORDNANCE CONTRACTORS HAVE BEEN DESIGNATED IN TITLE VIII, ARTICLE VIII-A-6 OF THE INSTANT CONTRACT, AND GENERALLY IN OTHER ORDNANCE CONTRACTS, TO BE INDEPENDENT CONTRACTORS. THE SUPREME COURT, IN THE CASE OF ALABAMA V. KING AND BOOZER, ET AL, DECIDED NOVEMBER 10, 1941, 314 U.S.---, AND THE COMPTROLLER GENERAL IN HIS DECISIONS B-19726, B- 19052, 21 COMP. GEN. 682, AND B-23012, DATED FEBRUARY 9, 1942, EXPRESSED THE SAME OPINION. AS INDEPENDENT CONTRACTORS, THEY WOULD BE EMPLOYERS, AS THAT TERM IS DEFINED IN THE FAIR LABOR STANDARDS ACT, AND, IF ENGAGED IN INTERSTATE COMMERCE, AS THEY APPEAR TO BE, THEN THEIR EMPLOYEES ARE ENTITLED TO THE OVERTIME PROVIDED FOR IN THE ACT.

ASSUMING THAT THESE EMPLOYEES ARE ENTITLED TO SUCH OVERTIME, THEN THERE EXISTS THE APPROXIMATE CONTINGENT LIABILITY BEFORE MENTIONED. IT IS APPROXIMATED FOR THE REASON THAT RECORDS OF THE TIME ACTUALLY CONSUMED BY THE EMPLOYEES INVOLVED WERE NOT MAINTAINED SINCE THE EMPLOYER- CONTRACTOR DID NOT, UNTIL THE WAGE AND HOURS INSPECTOR'S VISIT, REGARD SUCH EMPLOYEES AS BEING COVERED BY THE ACT. THE QUESTION OF WHAT EVIDENCE WILL BE REQUIRED TO SUPPORT REIMBURSEMENT TO THE CONTRACTOR, IN THE EVENT IT IS DECIDED SUCH PAYMENT MAY BE APPROVED, MUST, THEREFORE, BE DECIDED. THE CONTRACTOR PROPOSES TO PREPARE SUITABLE TIME AND OTHER RECORDS, FOLLOWING A PROCEDURE AS DISCUSSED IN DETAIL IN HIS LETTER DATED MAY 11, WHICH IS PART OF THE FILE HEREWITH, AND WHICH PROCEDURE, IF SATISFACTORY TO YOUR OFFICE, WILL BE APPROVED FOR USE BY THE ORDNANCE DEPARTMENT.

ATTENTION IS CALLED TO THE FACT THAT BY LETTER DATED JUNE 17, 1942, COPY HEREWITH, THE REGIONAL DIRECTOR OF THE WAGE AND HOUR DIVISION OF THE UNITED STATES DEPARTMENT OF LABOR STATED, WITH RESPECT TO THE ACCRUED WAGES OF THE EMPLOYEES REPRESENTING THE ABOVE-MENTIONED CONTINGENT LIABILITY OF THE CONTRACTOR, THAT NO ADMINISTRATIVE OR OTHER ACTION FORCING THE CONTRACTOR TO PAY WILL BE TAKEN BY THE DIVISION, BUT STRESSED THE FACT THAT INDEPENDENT ACTION BY THE CONTRACTOR'S EMPLOYEES INVOLVED MIGHT BE TAKEN UNDER 16 (B) OF THE ACT. SUCH SECTION READS AS FOLLOWS:

"/B) ANY EMPLOYER WHO VIOLATES THE PROVISIONS OF SECTION 6 OR SECTION 7 OF THIS ACT SHALL BE LIABLE TO THE EMPLOYEE OR EMPLOYEES AFFECTED IN THE AMOUNT OF THEIR UNPAID MINIMUM WAGES, OR THEIR UNPAID OVERTIME COMPENSATION, AS THE CASE MAY BE, AND IN AN ADDITIONAL EQUAL AMOUNT AS LIQUIDATED DAMAGES. ACTION TO RECOVER SUCH LIABILITY MAY BE MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION BY ANY ONE OR MORE EMPLOYEES FOR AND IN BEHALF OF HIMSELF OR THEMSELVES AND OTHER EMPLOYEES SIMILARLY SITUATED, OR SUCH EMPLOYEE OR EMPLOYEES MAY DESIGNATE AN AGENT OR REPRESENTATIVE TO MAINTAIN SUCH ACTION FOR AND IN BEHALF OF ALL EMPLOYEES SIMILARLY SITUATED. THE COURT IN SUCH ACTION SHALL, IN ADDITION TO ANY JUDGMENT AWARDED TO THE PLAINTIFF OR PLAINTIFFS, ALLOW A REASONABLE ATTORNEY'S FEE TO BE PAID BY THE DEFENDANT, AND COSTS OF THE ACTION.'

IT IS ALSO EVIDENT, FROM THE COPIES OF THE TWO LETTERS ADDRESSED TO THE CONTRACTOR WRITTEN BY GUARDS AT THE PLANT, DATED FEBRUARY 24, 1941 (1942), AND MARCH 7, 1942, FORMING PART OF THE FILE HEREWITH, THAT SUCH INDEPENDENT ACTION WILL BE TAKEN, AND IF SUCCESSFUL, WOULD REPRESENT A LEGAL LIABILITY FOR THE OVERTIME IN QUESTION, PLUS A FURTHER AMOUNT FOR LIQUIDATED DAMAGES, FOR REASONABLE ATTORNEY'S FEES, AND COSTS OF THE ACTION.'

IN VIEW OF THE FACT THAT A SUBSTANTIAL SUM OF MONEY IS INVOLVED IN THE INSTANT CASE, AND OF THE FURTHER FACT THAT THERE ARE OTHER CASES WHERE THE SAME QUESTION IS INVOLVED AND A CONTINGENT LIABILITY EXISTS IN THE CONTRACTOR, THE ORDNANCE DEPARTMENT HESITATES TO ADVISE THE CONTRACTOR TO PAY THE AMOUNT INVOLVED IN ADVANCE OF A DECISION BY THE GENERAL ACCOUNTING OFFICE AS TO THE REIMBURSABILITY OF SUCH AMOUNT.

THE QUESTIONS THEREFORE PRESENTED FOR YOUR DETERMINATION, UNDER THE FOREGOING FACTS, ARE:

A. IS THE ORDNANCE DEPARTMENT RIGHT IN CONSIDERING THE FAIR LABOR STANDARDS ACT APPLICABLE TO COST-PLUS-A-FIXED-FEE CONTRACTORS ENGAGED IN OPERATION AND OTHER ORDNANCE PHASES OF COST-PLUS-A-FIXED-FEE CONTRACTS?

B. IF A IS IN THE AFFIRMATIVE, MAY ADMINISTRATIVE APPROVAL OF THE CONTRACTING OFFICER'S REPRESENTATIVE BE PROPERLY GIVEN THE CONTRACTOR FOR PAYMENT TO HIS EMPLOYEES FOR ACCRUED OVERTIME?

C. IF SUCH ADMINISTRATIVE APPROVAL MAY BE GIVEN, AND CONSIDERING THE FACT THAT NO TIME RECORDS ARE AVAILABLE, SINCE NONE WERE MAINTAINED, WHAT EVIDENCE WILL BE REQUIRED OF THE CONTRACTOR IN ORDER TO BE REIMBURSED FOR THE PAYMENT SO MADE?

YOUR EXPEDITIOUS CONSIDERATION OF THESE QUESTIONS AND DECISION THEREON WOULD BE GREATLY APPRECIATED.

THE PERTINENT REIMBURSEMENT PROVISIONS OF COST-PLUS-A-FIXED-FEE CONTRACT NO. W-ORD-462, DATED AUGUST 16, 1940, WITH THE HERCULES POWDER COMPANY, WILMINGTON, DELAWARE, COVERING THE CONSTRUCTION, EQUIPMENT AND OPERATION OF AN AMMUNITION PLANT AT OR NEAR RADFORD, VIRGINIA, ARE AS FOLLOWS:

ARTICLE VI-A, REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES.

1. THE GOVERNMENT SHALL BEAR ALL COST AND EXPENSES OF EVERY CHARACTER AND DESCRIPTION INCURRED BY THE CONTRACTOR, WHEN APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, IN CONNECTION WITH THE ACQUISITION OF SITE, DESIGN, CONSTRUCTION, EQUIPPING AND OPERATING OF SAID PLANT, OR ANY PART THEREOF (INCLUDING EQUIPMENT, ALTERATIONS, MAINTENANCE AND CLOSING DOWN), WHICH COSTS AND EXPENSES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE FOLLOWING ITEMS, TO WIT:

(B) ALL LABOR (INCLUDING GUARDS AND FIRE PROTECTION FORCES) * * *.

UNDER ARTICLE V-D OF THE CONTRACT IT IS PROVIDED THAT IN THE OPERATION OF THE PLANT AND THE PURCHASE OF SUPPLIES AND MATERIALS REQUIRED FOR THE PRODUCTION OF POWDER IN THE OPERATION OF THE PLANT, AND NOT OTHERWISE, THE CONTRACTOR SHALL COMPLY WITH THE REQUIREMENTS OF THE WALSH-HEALEY ACT, 49 STAT. 2036, ONE OF WHICH IS PAYMENT OF OVERTIME TO THE CONTRACTOR'S EMPLOYEES. THE WALSH-HEALEY ACT EXPRESSLY AUTHORIZES THE SECRETARY OF LABOR TO MAKE, AMEND, AND RESCIND SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO CARRY OUT THE PROVISIONS OF THE ACT. PURSUANT TO SUCH AUTHORITY THE SECRETARY OF LABOR UNDER REGULATIONS NO. 504 (AMENDED AS OF APRIL, 1939) HAS RULED THAT:

ART. 102 ( EMPLOYEES AFFECTED).--- THE STIPULATIONS SHALL BE DEEMED APPLICABLE ONLY TO EMPLOYEES ENGAGED IN OR CONNECTED WITH THE MANUFACTURE, FABRICATION, ASSEMBLING, HANDLING, SUPERVISION, OR SHIPMENT OF MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT AND SHALL NOT BE DEEMED APPLICABLE TO OFFICE OR CUSTODIAL EMPLOYEES. ( ITALICS SUPPLIED.) AND, BY WAY OF AMPLIFICATION, CUSTODIAL EMPLOYEES HAVE BEEN SPECIFICALLY DESIGNATED BY THE SECRETARY OF LABOR TO BE THOSE WHOSE DUTIES ARE DIRECTED TO THE MAINTENANCE OF THE PLANT AND WHO DO NOT PERFORM WORK ON THE COMMODITIES REQUIRED BY THE GOVERNMENT, SUCH AS WATCHMEN, ET CETERA. SEE SECTION III, PARAGRAPH B (4), RULINGS AND INTERPRETATIONS NO. 2, SEPTEMBER 29, 1939, UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT.

SINCE, THEREFORE, GUARDS EMPLOYED BY THE CONTRACTOR DURING THE OPERATION AND PRODUCTION PHASES OF THE CONTRACT OBVIOUSLY ARE EXCLUDED FROM THE OPERATION OF THE WALSH-HEALEY ACT, YOU HAVE PRESENTED THE QUESTION AS TO WHETHER SUCH GUARDS ARE ENTITLED TO THE OVERTIME BENEFITS OF THE FAIR LABOR STANDARDS ACT OF 1938, 52 STAT. 1060, AND, IF SO, WHETHER REIMBURSEMENT THEREFOR IS AUTHORIZED UNDER THE TERMS OF THE CONTRACT.

THE APPLICABILITY OF THE FAIR LABOR STANDARDS ACT TO GUARDS EMPLOYED BY COST-PLUS-A-FIXED-FEE CONTRACTORS ENGAGED IN OPERATION AND OTHER ORDNANCE PHASES OF SUCH CONTRACTS DOES NOT APPEAR TO HAVE BEEN THE SUBJECT OF JUDICIAL DETERMINATION; HOWEVER, IT IS TO BE OBSERVED THAT THE SAID ACT, BY ITS TERMS, IS ONE OF GENERAL APPLICATION DESIGNED FOR THE DECLARED PURPOSE OF CORRECTING AND ELIMINATING CERTAIN DETRIMENTAL LABOR CONDITIONS "IN INDUSTRIES ENGAGED IN COMMERCE OR IN THE PRODUCTION OF GOODS FOR COMMERCE.' MOREOVER, IT APPEARS FROM SECTION XI, PARAGRAPH G, OF THE ORDNANCE MANUAL OF INSTRUCTIONS FOR THE ADMINISTRATION OF CONTRACTS THAT THE ADMINISTRATOR, WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR, HAS ADVISED THE CHIEF OF ORDNANCE WITH RESPECT TO THE STATUS OF EMPLOYEES OF COST-PLUS-A-FIXED-FEE CONTRACTORS AS FOLLOWS: IT IS OUR OPINION THAT THE EMPLOYEES OF THE PRIVATE MANUFACTURER ARE WITHIN THE GENERAL COVERAGE OF THE FAIR LABOR STANDARDS ACT IF THE MANUFACTURER, AT THE TIME OF PRODUCTION, HAD REASON TO BELIEVE THE WAR DEPARTMENT AFTER RECEIVING THE PRODUCTS WOULD TRANSPORT THEM INTO INTERSTATE COMMERCE. IT IS ALSO OUR OPINION THAT THE PROVISION CONTAINED IN SECTION 3 (D) OF THE ACT, EXCLUDING THE UNITED STATES FROM THE COVERAGE OF THE ACT AS AN EMPLOYER, DOES NOT EXCLUDE FROM THE PROVISIONS OF THE STATUTE A PRIVATE CONTRACTOR WITH THE WAR DEPARTMENT OF THE CHARACTER DESCRIBED ABOVE. FROM COPY OF LETTER OF JUNE 17, 1942, FORWARDED WITH YOUR SUBMISSION, IT APPEARS, ALSO, THAT THE REGIONAL DIRECTOR OF THE SAID DIVISION, AFTER INVESTIGATING THE MATTER, HAS TAKEN THE POSITION THAT THE GUARDS IN QUESTION ARE COVERED BY THE ACT AND ARE ENTITLED TO PAYMENT FOR OVERTIME IN ACCORDANCE THEREWITH. WHILE THE FAIR LABOR STANDARDS ACT DOES NOT SPECIFICALLY CONFER UPON THE ADMINISTRATOR, WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR, OR HIS REPRESENTATIVES, ANY GENERAL AUTHORITY TO ISSUE RULINGS INCLUDING INDUSTRIES OR EMPLOYEES WITHIN THE COVERAGE OF THE ACT AND SUCH RULINGS ARE NOT NECESSARILY BINDING ON THE COURTS, THEIR INTERPRETATIONS OF THE ACT ARE ENTITLED TO BE GIVEN GREAT WEIGHT AND, IF REASONABLE, WILL BE FOLLOWED BY THE COURTS. THOMPSON V. DAUGHERTY, 40 F.1SUPP. 279.

THEREFORE, IF IT BE ADMINISTRATIVELY DETERMINED THAT THE INTERESTS OF THE GOVERNMENT WILL BE BEST SERVED BY CONCEDING THAT THE GUARDS HERE INVOLVED ARE ENTITLED TO OVERTIME PAY UNDER THE FAIR LABOR STANDARDS ACT, THIS OFFICE WILL NOT BE REQUIRED TO TAKE ISSUE WITH THAT VIEW. SEE WOOD V. CENTRAL SAND AND GRAVEL CO., ET AL., 33 F.1SUPP. 40; REEVES V. HOWARD COUNTY REFINING CO., 33 F.1SUPP. 90; A. B. KIRSCHBAUM, PETITIONER V. L. METCALFE WALLING, ADMR., DECIDED JUNE 1, 1942, BY THE SUPREME COURT OF THE UNITED STATES.

ACCORDINGLY, THIS OFFICE WILL NOT QUESTION OTHERWISE PROPER REIMBURSEMENTS UNDER THE CONTRACT FOR SUCH OVERTIME PAYMENTS AS THE CONTRACTOR MAY MAKE TO THE GUARDS INVOLVED IN ACCORDANCE WITH SUCH INTERPRETATION OF THE FAIR LABOR STANDARDS ACT. THE REIMBURSEMENT VOUCHERS EVIDENCING THE OVERTIME PAYMENTS SHOULD SHOW THE CONTRACTING OFFICER'S APPROVAL THEREOF, AND SHOULD BE SUPPORTED BY SUCH APPLICABLE TIME OR OTHER APPROPRIATE RECORDS AS WILL SHOW WITH REASONABLE ACCURACY THE ACTUAL OVERTIME WORKED BY EACH GUARD, TOGETHER WITH A REPORT OF THE GOVERNMENT FIELD AUDITOR SHOWING THAT HE HAS VERIFIED THE CORRECTNESS OF THE METHODS USED IN COMPUTING THE SAID PAYMENTS.