B-36819, NOVEMBER 11, 1943, 23 COMP. GEN. 362

B-36819: Nov 11, 1943

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NOTWITHSTANDING THE FACT THAT THE SUBCONTRACTORS' EMPLOYEES MAY HAVE BEEN PAID WAGES COMPUTED AT RATES IN EXCESS OF THOSE SPECIFIED IN THE PRIME CONTRACT. 22 COMP. 1943: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 2. VA-44248 AND VA-44249 WAS AWARDED TO ALLEN J. 1943 WAS PREVIOUSLY TRANSMITTED TO YOUR OFFICE. CERTAIN PORTIONS OF THE CONSTRUCTION WORK COVERED BY THE PRINCIPAL CONTRACT WERE SUBLET BY ALLEN J. HAVE MADE PAYMENTS TO THEIR SKILLED AND UNSKILLED LABOR FOR WAGES AT RATES SUBSTANTIALLY IN EXCESS OF THE WAGE RATE SCHEDULE SET FORTH IN THE PRINCIPAL CONTRACT AS AUTHORIZED BY THE SECRETARY OF LABOR UNDER THE DAVIS -BACON ACT. HAVE CONTINUOUSLY PAID BRICKLAYERS THE BASE RATE OF $1.62 1/2 PER HOUR.

B-36819, NOVEMBER 11, 1943, 23 COMP. GEN. 362

CONTRACTS - COST-PLUS - EXCESSIVE WAGE RATES PAID BY LUMP SUM SUBCONTRACTORS WHERE A COST-PLUS-A-FIXED-FEE PRIME CONTRACT PROVIDED THAT THE CONTRACTOR SHALL NOT PAY WAGE RATES IN EXCESS OF THOSE SET FORTH IN THE CONTRACT EXCEPT UPON APPROVAL IN WRITING BY THE CONTRACTING OFFICER, BUT CONTAINED NO LIMITATION WITH RESPECT TO WAGE RATES WHICH MAY BE PAID EMPLOYEES OF LUMP SUM SUBCONTRACTORS, THE PRIME CONTRACTOR MAY BE REIMBURSED AMOUNTS PAID UNDER THE SUBCONTRACTS, NOTWITHSTANDING THE FACT THAT THE SUBCONTRACTORS' EMPLOYEES MAY HAVE BEEN PAID WAGES COMPUTED AT RATES IN EXCESS OF THOSE SPECIFIED IN THE PRIME CONTRACT. 22 COMP. GEN. 367, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO MILLARD F. REEVES, NATIONAL HOUSING AGENCY, NOVEMBER 11, 1943:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 2, 1943, AS FOLLOWS:

THE PRINCIPAL CONTRACT FOR THE CONSTRUCTION OF WAR HOUSING PROJECTS, VA- 44244, VA-44248 AND VA-44249 WAS AWARDED TO ALLEN J. SAVILLE, INCORPORATED, AND AN EXECUTED COPY OF CONTRACT NO. HA/VA144244/-CPH-101 DATED JANUARY 26, 1943 WAS PREVIOUSLY TRANSMITTED TO YOUR OFFICE.

CERTAIN PORTIONS OF THE CONSTRUCTION WORK COVERED BY THE PRINCIPAL CONTRACT WERE SUBLET BY ALLEN J. SAVILLE, INCORPORATED TO SEVERAL SUBCONTRACTORS ON LUMP SUM BASIS. IT HAS BEEN OBSERVED THAT SEVERAL OF THE SUBCONTRACTORS OPERATING UNDER THOSE LUMP SUM SUBCONTRACT AGREEMENTS, HAVE MADE PAYMENTS TO THEIR SKILLED AND UNSKILLED LABOR FOR WAGES AT RATES SUBSTANTIALLY IN EXCESS OF THE WAGE RATE SCHEDULE SET FORTH IN THE PRINCIPAL CONTRACT AS AUTHORIZED BY THE SECRETARY OF LABOR UNDER THE DAVIS -BACON ACT.

FOR EXAMPLE, CROSS AND TAYLOR, BRICKWORK SUBCONTRACTOR, COPY OF WHOSE AGREEMENT HAS BEEN FURNISHED YOUR OFFICE, HAVE CONTINUOUSLY PAID BRICKLAYERS THE BASE RATE OF $1.62 1/2 PER HOUR, AND OCCASIONALLY $1.75, WHEREAS, THE WAGE RATE SCHEDULE IN THE CONTRACT INCLUDES BRICKLAY AT $1.50 PER HOUR. THIS SUBCONTRACTOR, HOWEVER, CLAIMS THAT THEY HAVE PAID THE RATE OF $1.62 1/2 PER HOUR FOR BRICKLAYERS FOR A PERIOD OF SEVERAL MONTHS PRIOR TO THE EXECUTION OF THIS PRESENT SUBCONTRACT. VARIOUS OTHERS, INCLUDING A. L. WRIGHT, JR., PLUMBING AND HEATING SUBCONTRACTOR, HAVE PAID WAGE RATES THAT ARE IN EXCESS OF THE CONTRACT RATE ESTABLISHED FOR VARIOUS SKILLED AND UNSKILLED LABOR CLASSIFICATIONS.

ATTENTION IS DIRECTED TO THE FACT THAT THE SUBCONTRACTS WERE EXECUTED ON LUMP SUM BASIS AND ALSO THE FACT THAT THERE HAVE BEEN WAGE RATES PAID BY LUMP SUM SUBCONTRACTORS WHICH ARE IN EXCESS OF THE APPROVED RATES ESTABLISHED IN FORMING A PART OF THE PRINCIPAL CONTRACT INVOLVED.

IT IS REQUESTED THAT YOU FURNISH THIS OFFICE WITH YOUR OPINION AS TO WHETHER SUSPENSION SHOULD BE MADE FROM REIMBURSEMENT TO ALLEN J. SAVILLE, INCORPORATED TO EQUAL THE AMOUNT OF WAGES PAID BY SUBCONTRACTORS WHICH ARE IN EXCESS OF THE RATES ESTABLISHED WITHIN PRINCIPAL CONTRACT. IN OTHER WORDS, INFORMATION IS DESIRED AS TO WHETHER YOUR DECISION B-25275 RENDERED ON OCTOBER 19, 1942 IS CONSIDERED TO COVER THIS SITUATION.

THERE IS STILL CONSIDERABLE SUBCONTRACT WORK TO BE PERFORMED AND THERE ARE YET CONSIDERABLE AMOUNTS FOR WHICH THE PRINCIPAL CONTRACTOR HAS NOT CLAIMED REIMBURSEMENT COVERING SUBCONTRACT WORK COMPLETED TO DATE. HOWEVER, IN ORDER THAT THE INTERESTS OF THE GOVERNMENT MAY BE PROTECTED AND AT THE SAME TIME TO AVOID DELAYS IN FUTURE REIMBURSEMENT IN SO FAR AS POSSIBLE, YOUR DECISION IN THE MATTER AT THE EARLIEST DATE WILL BE APPRECIATED.

THE RIGHT OF CERTIFYING OFFICERS OR EMPLOYEES SHALL BE ENFORCED IN THE SAME MANNER AND TO THE SAME EXTENT AS NOW PROVIDED BY LAW WITH RESPECT TO ENFORCEMENT OF THE LIABILITY OF DISBURSING AND OTHER ACCOUNTABLE OFFICERS; AND THEY SHALL HAVE THE RIGHT TO APPLY FOR AND OBTAIN A DECISION BY THE COMPTROLLER GENERAL ON ANY QUESTION OF LAW INVOLVED IN A PAYMENT ON ANY VOUCHERS PRESENTED TO THEM FOR CERTIFICATION. ( ITALICS SUPPLIED.) MAY BE NOTED THAT UNDER THE ABOVE CITED SECTION OF THE STATUTE A CERTIFYING OFFICER IS ENTITLED TO OBTAIN A DECISION BY THE COMPTROLLER GENERAL ONLY ON A QUESTION OF LAW INVOLVED IN PAYMENT ON A SPECIFIC VOUCHER PRESENTED TO HIM FOR CERTIFICATION. SEE 21 COMP. GEN. 1128. WHILE NO VOUCHER PERTINENT TO THE QUESTION RAISED ACCOMPANIED YOUR LETTER TO THIS OFFICE, THE INFERENCE IS THAT SUCH A VOUCHER HAS BEEN PRESENTED TO YOU FOR CERTIFICATION. UNDER SUCH CIRCUMSTANCES AND IN VIEW OF YOUR REQUEST FOR EARLY DISPOSITION OF THE MATTER "IN ORDER THAT THE INTERESTS OF THE GOVERNMENT MAY BE PROTECTED AND AT THE SAME TIME TO AVOID DELAYS IN FUTURE REIMBURSEMENT," THE FAILURE TO SUBMIT A VOUCHER WILL NOT BE OBJECTED TO.

UNDER THE TERMS OF CONTRACT NO. HA (VA-44244/-CPH-101, DATED JANUARY 26, 1943, ENTERED INTO ON A COST-PLUS-FIXED-FEED BASIS, THE CONTRACTOR AGREED TO PERFORM THE PROFESSIONAL ARCHITECTURAL AND ENGINEERING SERVICES; FURNISH MATERIALS NOT OTHERWISE PROVIDED, AND PERFORM THE WORK FOR THE CONSTRUCTION OF BUILDINGS, SITE IMPROVEMENTS AND UTILITIES FOR CERTAIN WAR HOUSING PROJECTS IN PORTSMOUTH, VIRGINIA.

THE GENERAL CONDITIONS OF THE CONTRACT PROVIDE, IN PERTINENT PART, AS FOLLOWS:

6. CONTRACTOR'S CONSTRUCTION COST

PRODUCTION COST

(B) * * * THE ITEMS FOR WHICH THE CONTRACTOR SHALL BE ENTITLED TO REIMBURSEMENT AS PRODUCTION COST SHALL BE AS FOLLOWS:

(2) EXPENDITURES FOR SALARIES AND WAGES PAID TO EMPLOYEES WHOSE SERVICES ARE DEVOTED EXCLUSIVELY TO THE PERFORMANCE OF THE CONTRACT * * *. WAGE RATES HIGHER THAN THOSE SET FORTH IN THE CONTRACT SHALL NOT BE PAID EXCEPT UPON APPROVAL, IN WRITING, BY THE CONTRACTING OFFICER.

(14) EXPENDITURES UNDER SUBCONTRACTS, INCLUDING FEES TO COST-PLUS A-FIXED -FEE SUBCONTRACTORS, UNLESS OTHERWISE SPECIFIED IN THIS CONTRACT.

8. CONSTRUCTION SUBCONTRACT WORK AND PAYMENTS THEREFORE

(A) SUBCONTRACTORS FOR THE PERFORMANCE OF ANY CONSTRUCTION ACTIVITY SHALL RECEIVE RECOGNITION ONLY AS EMPLOYEES OR SERVICE ORGANIZATIONS OF THE CONTRACTOR.

(B) SUBCONTRACT WORK MAY BE CONTRACTED FOR BY THE CONTRACTOR WITH THE APPROVAL OF THE CONTRACTING OFFICER UNDER ANY FORM OF AGREEMENT, EXCEPT ON A COST-PLUS-A-PERCENTAGE BASIS, DETERMINED BY THE CONTRACTOR AND THE CONTRACTING OFFICER TO BE MOST SUITABLE AND DESIRABLE FOR THE FULFILLMENT OF THE CONTRACTOR'S OBLIGATIONS TO THE GOVERNMENT, BUT SUBJECT TO THE CONDITION THAT PRIOR TO BECOMING EFFECTIVE FOR THE PURPOSES OF THE CONTRACT WITH THE GOVERNMENT THE FORM, SUBSTANCE, AND AMOUNT OF EACH SUBCONTRACT SHALL BE APPROVED IN WRITING BY THE CONTRACTING OFFICER * * *.

(F) THE CONTRACTOR SHALL NOT AWARD ANY WORK TO ANY SUBCONTRACTOR WITHOUT PRIOR WRITTEN APPROVAL OF THE CONTRACTING OFFICER, WHICH APPROVAL WILL NOT BE GIVEN UNTIL THE CONTRACTOR SUBMITS TO THE CONTRACTING OFFICER A WRITTEN STATEMENT CONCERNING THE PROPOSED AWARD TO THE SUBCONTRACTOR, WHICH STATEMENT SHALL CONTAIN SUCH INFORMATION AS THE CONTRACTING OFFICER MAY REQUIRE.

(G) ALL SUBCONTRACTS ARRANGED UPON A LUMP-SUM BASIS SHALL BE DEEMED TO INCLUDE ALL ITEMS OF COST OF THE PERFORMANCE THEREOF AND ALL ALLOWANCES FOR EQUIPMENT CHARGES, INSURANCE, OVERHEAD, ANTICIPATED PROFITS AND ALL OTHER EXPENSES OF WHATEVER SORT UNLESS AND TO SUCH EXTENT AS MAY BE ENUMERATED IN THE APPLICABLE SUBCONTRACT TO THE CONTRARY.

THE DECISION OF OCTOBER 19, 1942, B-25275, 22 COMP. GEN. 367, REFERRED TO IN YOUR LETTER, GAVE CONSIDERATION TO A COST-PLUS-A-FIXED FEE CONTRACT WHICH CONTAINED THE SPECIFIC PROVISION THAT:

SHOULD THE CONTRACTOR OR ANY SUBCONTRACTOR PAY TO ANY LABORER OR MECHANIC A WAGE BASED UPON A RATE IN EXCESS OF THE WAGE RATE FOR THE CLASSIFICATION IN WHICH SAID LABORER OR MECHANIC IS INCLUDED AS ESTABLISHED FOR THE WORK BY THE SECRETARY OF LABOR, SUCH INCREASED WAGE SHALL BE AT THE EXPENSE OF THE CONTRACTOR AND SHALL NOT BE REIMBURSED BY THE UNITED STATES. * * * THE ABOVE PROVISION WAS HELD TO BE APPLICABLE TO LUMP-SUM, AS WELL AS COST -PLUS-A-FIXED-FEE SUBCONTRACTS AND, SINCE THE GOVERNMENT HAD ACQUIRED THE RIGHT TO HAVE THE PRIME CONTRACTOR FURNISH ALL LABOR NECESSARY FOR THE PERFORMANCE OF THE WORK COVERED BY THE SUBCONTRACT AT THE WAGE RATES ESTABLISHED BY THE SECRETARY OF LABOR, THE APPROVAL OF THE SUBCONTRACT THERE INVOLVED BY THE CONTRACTING OFFICER WAS NOT RECOGNIZED AS IMPOSING ANY BINDING OBLIGATION ON THE UNITED STATES TO PAY FOR WORK PERFORMED THEREUNDER AT A CONTRACT PRICE WHICH WAS PRESUMED TO HAVE INCLUDED WAGE RATES HIGHER THAN THOSE ESTABLISHED BY THE SECRETARY OF LABOR.

SUCH A PROVISION IS NOT CONTAINED IN THE PRESENT CONTRACT AND, THEREFORE, THE DECISION OF OCTOBER 19, 1942, SUPRA, IS NOT CONTROLLING IN THE MATTER. WHILE ARTICLE 6 (B) (2) OF THE CONTRACT STIPULATES THAT THE PRIME CONTRACTOR SHALL NOT PAY WAGE RATES HIGHER THAN THOSE SET FORTH IN THE CONTRACT EXCEPT UPON APPROVAL, IN WRITING, BY THE CONTRACTING OFFICER, SO FAR AS CONCERNS THE AWARD OF SUBCONTRACT WORK ON A LUMP-SUM BASIS, THE ONLY LIMITATION UPON THE AUTHORITY OF THE PRIME CONTRACTOR IS THAT CONTAINED IN ARTICLES 8 (B) AND (F) OF THE CONTRACT, SUPRA, WHICH PROVIDE, IN SUBSTANCE, THAT SUCH WORK WILL NOT BE CONTRACTED FOR WITHOUT THE PRIOR APPROVAL OF THE CONTRACTING OFFICER AS TO THE FORM, SUBSTANCE AND AMOUNT OF THE SUBCONTRACT.

ACCORDINGLY, AND ASSUMING THAT THE SUBCONTRACTS REFERRED TO BY YOU WERE ENTERED INTO IN ACCORDANCE WITH THE TERMS OF THE PRIME CONTRACT AND APPROVED AS TO FORM, SUBSTANCE AND AMOUNT BY THE CONTRACTING OFFICER, THE PRIME CONTRACTOR MAY BE REIMBURSED THE AMOUNTS PAID THEREUNDER, NOTWITHSTANDING THE FACT THAT THE SUBCONTRACTORS MAY HAVE PAID WAGES COMPUTED AT RATES IN EXCESS OF THOSE SPECIFIED IN THE PRIME CONTRACT.