B-7794, JANUARY 23, 1940, 19 COMP. GEN. 673

B-7794: Jan 23, 1940

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- NOT ESSENTIAL TO THE ACCOMPLISHMENT OF THE PURPOSE OF THE APPROPRIATION UNDER WHICH THE CONTRACT IS MADE. - THE NECESSARY OR PROBABLE RESULT OF WHICH IS TO INCREASE PRICES WHICH THE GOVERNMENT MUST PAY. IS NOT AUTHORIZED. SHOULD NOT CONTAIN PROVISIONS THAT THE CONTRACTOR PAY THE EQUIPMENT OPERATORS NOT LESS THAN THE PREVAILING RATE OF PAY AS DETERMINED BY THE WORK PROJECTS ADMINISTRATION FOR THE PARTICULAR LOCALITY IN WHICH THE SERVICES ARE PERFORMED. 1940: I HAVE YOUR LETTER OF DECEMBER 26. PROVISIONS THAT THE CONTRACTOR WILL PAY SUCH OPERATORS NOT LESS THAN THE PREVAILING RATE OF PAY AS DETERMINED BY THE WORK PROJECTS ADMINISTRATION FOR THE PARTICULAR LOCALITY IN WHICH THE SERVICES ARE PERFORMED.

B-7794, JANUARY 23, 1940, 19 COMP. GEN. 673

CONTRACTS - NONESSENTIAL PRICE INCREASING PROVISIONS; RENT - EQUIPMENT - EMERGENCY RELIEF APPROPRIATION ACT OF 1939 - APPLICABILITY OF MINIMUM WAGE RATE PROVISIONS IN THE ABSENCE OF STATUTORY PROVISION THEREFOR, THE INSERTION IN GOVERNMENT CONTRACTS OF ANY PROVISION--- NOT ESSENTIAL TO THE ACCOMPLISHMENT OF THE PURPOSE OF THE APPROPRIATION UNDER WHICH THE CONTRACT IS MADE--- THE NECESSARY OR PROBABLE RESULT OF WHICH IS TO INCREASE PRICES WHICH THE GOVERNMENT MUST PAY, IS NOT AUTHORIZED. CONTRACTS FOR THE RENTAL OF OTHER THAN OWNER-OPERATED EQUIPMENT, MADE UNDER THE PROVISIONS OF THE EMERGENCY RELIEF APPROPRIATION ACT OF 1939, 53 STAT. 927, SHOULD NOT CONTAIN PROVISIONS THAT THE CONTRACTOR PAY THE EQUIPMENT OPERATORS NOT LESS THAN THE PREVAILING RATE OF PAY AS DETERMINED BY THE WORK PROJECTS ADMINISTRATION FOR THE PARTICULAR LOCALITY IN WHICH THE SERVICES ARE PERFORMED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, JANUARY 23, 1940:

I HAVE YOUR LETTER OF DECEMBER 26, 1939, AS FOLLOWS:

THERE HAS BEEN ADDRESSED TO THE DIRECTOR OF PROCUREMENT A LETTER FROM MR. E. W. BELL, CHIEF OF THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE, REQUESTING THAT THERE BE FURNISHED BY HIM A SHOWING AS TO THE AUTHORITY OR NECESSITY FOR INSERTING IN CONTRACTS FOR FURNISHING EQUIPMENT OPERATED BY OTHER THAN THE OWNER, MADE UNDER THE PROVISIONS OF THE EMERGENCY RELIEF APPROPRIATION ACT APPROVED JUNE 30, 1939, PROVISIONS THAT THE CONTRACTOR WILL PAY SUCH OPERATORS NOT LESS THAN THE PREVAILING RATE OF PAY AS DETERMINED BY THE WORK PROJECTS ADMINISTRATION FOR THE PARTICULAR LOCALITY IN WHICH THE SERVICES ARE PERFORMED.

THESE PROVISIONS WERE INSERTED IN CONTRACTS FOR FURNISHING EQUIPMENT OPERATED BY OTHER THAN THE OWNER AT THE REQUEST OF THE WORK PROJECTS ADMINISTRATION AND IT WAS FELT AT THE TIME OF THE INSERTION THAT AUTHORITY EXISTED FOR SUCH PROVISIONS. HOWEVER, SINCE RECEIPT OF THE ABOVE- MENTIONED LETTER THE MATTER HAS BEEN THOROUGHLY STUDIED BY THE DEPARTMENT AND THE CONCLUSION HAS BEEN REACHED THAT UNDER THE STATUTE AND THE PRINCIPLES OF LAW AS INTERPRETED BY THE DECISIONS OF THE COMPTROLLER GENERAL, THERE IS NO SUCH AUTHORITY (1931, 10 COMP. GEN. 294; 1937, 17 COMP. GEN. 37; 1937, 17 COMP. GEN. 471; 1938, 17 COMP. GEN. 585; 1938, 18 COMP. GEN. 285; 1938, 18 COMP. GEN. 446). CONSEQUENTLY, UNLESS THE COMPTROLLER GENERAL RULES OTHERWISE, THE DEPARTMENT INTENDS TO OMIT SUCH PROVISIONS FROM THESE CONTRACTS IN THE FUTURE.

THE WORK PROJECTS ADMINISTRATION DOES NOT AGREE WITH THIS CONCLUSION AND HAS SUBMITTED TO THE PROCUREMENT DIVISION LETTERS STATING ITS POSITION IN THE MATTER. COPIES OF THESE LETTERS ARE ENCLOSED SO THAT THESE ARGUMENTS MAY BE CONSIDERED BY YOU IN ARRIVING AT A DECISION.

THE TWO LETTERS FROM THE WORK PROJECTS ADMINISTRATION TO THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, DATED NOVEMBER 10 AND DECEMBER 1, 1939, ADMIT THAT THERE IS NO EXPRESS STATUTORY AUTHORITY FOR INCLUSION IN RENTAL CONTRACTS FOR OTHER THAN OWNER-OPERATED EQUIPMENT OF A PROVISION THAT THE CONTRACTOR SHALL PAY SUCH OPERATORS NOT LESS THAN THE PREVAILING RATE OF PAY AS DETERMINED BY THE WORK PROJECTS ADMINISTRATION FOR THE PARTICULAR LOCALITY IN WHICH THE SERVICES ARE PERFORMED. BUT THE ADMINISTRATION EXPRESSES THE OPINION THAT THE PROPER OPERATION OF THE WORKS PROGRAM IN MANY AREAS IS DEPENDENT, TO A GREAT EXTENT, UPON REQUIRING VENDORS TO PAY THEIR EQUIPMENT OPERATORS THE PREVAILING RATES OF PAY FOR THE REASON THAT, OTHERWISE, IT WILL BE VERY DIFFICULT TO SECURE EQUIPMENT SUITABLE TO THE NEEDS OF THE PROJECT, OR OPERATORS COMPETENT TO OPERATE THE EQUIPMENT. IS SUGGESTED THAT THE REQUIREMENTS ARE IN MANY CASES "REASONABLY REQUISITE TO THE ACCOMPLISHMENT OF THE LEGISLATIVE PURPOSES OF THE CONTRACT APPROPRIATION," AND PROPERLY MAY BE INSERTED IN EQUIPMENT RENTAL CONTRACTS WHERE SUFFICIENT NEED IS SHOWN THEREFOR,"IN ORDER TO INSURE A REASONABLE DEGREE OF EFFICIENCY IN THE RENTAL AND USE OF EQUIPMENT BY THIS ADMINISTRATION.' THE ADMINISTRATION EPITOMIZES ITS OPINIONS AS FOLLOWS:

1. UNLESS SOME MINIMUM WAGE RATE IS SPECIFIED, THE INTENSE COMPETITION BETWEEN EQUIPMENT VENDORS LEADS THEM TO REDUCE OPERATORS' WAGES IN AN EFFORT TO QUOTE LOWER RENTAL PRICES, AND THE WAGES ARE DRIVEN BELOW THE LEVEL AT WHICH COMPETENT OPERATORS ARE WILLING TO WORK. THIS CONDITION RESULTS IN THE FURNISHING OF INCOMPETENT OPERATORS OR OPERATORS WHO, THOUGH NORMALLY CAPABLE, ARE RELUCTANT TO RENDER THEIR BEST SERVICES. WHILE SUCH OPERATORS MIGHT BE REPLACED THROUGH ENFORCEMENT OF SUITABLE PERFORMANCE REQUIREMENTS, THE DELAY INCURRED WOULD GENERALLY BE PROHIBITIVE, SOMETIMES FRUITLESS, AND ALWAYS MORE EXPENSIVE IN THE END.

2. IN THE ABSENCE OF A MINIMUM-WAGE REQUIREMENT, THE WAGES PAID EQUIPMENT OPERATORS WOULD FREQUENTLY BE LESS THAN THE SECURITY WAGES PAID BY THIS ADMINISTRATION TO EMPLOYEES PERFORMING COMPARABLE DUTIES. UNDER SUCH A CONDITION, THERE WOULD BE LITTLE INDUCEMENT FOR PRESENT OR POTENTIAL EQUIPMENT OPERATORS NOW ON THE RELIEF ROLLS TO RETURN TO PRIVATE EMPLOYMENT. ON THE CONTRARY, WORKERS IN THIS CLASS WOULD BE ENCOURAGED TO REMAIN ON THE RELIEF ROLLS OR TO ENDEAVOR TO BECOME PLACED THEREON. THE VIEW IS EXPRESSED THAT IT IS DESIRABLE AND PROPER FOR THE ADMINISTRATION TO HAVE INSERTED IN EQUIPMENT RENTAL CONTRACTS "FOR THOSE LOCALITIES WHERE THE ABOVE-DESCRIBED CONDITIONS EXIST" A REQUIREMENT THAT THE CONTRACTORS PAY THEIR EQUIPMENT OPERATORS NOT LESS THAN A SPECIFIED MINIMUM WAGE, AND THAT FAILURE TO STIPULATE SUCH A REQUIREMENT "WHEN CONDITIONS SO REQUIRE" WOULD OBVIOUSLY DEFEAT THE OBJECTIVES OF THE LEGISLATION UNDER WHICH THE WORKS PROJECTS ADMINISTRATION IS OPERATING. IT APPEARS FURTHER THAT AS THE RESULT OF A CANVASS OF THE VARIOUS STATE WORK PROJECTS ADMINISTRATORS "SOME EXPRESSED NO OBJECTION TO THE ELIMINATION OF THE PRESENT PREVAILING WAGE REQUIREMENTS, OTHERS INDICATED A PREFERENCE FOR THE CONTINUATION OF THE PRESENT REQUIREMENTS OR THE SUBSTITUTION OF OTHER SIMILAR ONES," WHILE OTHER STATE ADMINISTRATORS HAD EXPRESSED NO PREFERENCE AT THE DATE OF THE LETTER, DECEMBER 1, 1939.

IT MAY BE OBSERVED THAT THE PREFERENCE OF THE STATE WORK PROJECTS ADMINISTRATORS, WHETHER FOR OR AGAINST THE INCLUSION OF THE SUBJECT CONTRACT PROVISION, COULD HAVE NO BEARING UPON THE LEGAL ASPECTS OF THE QUESTION PRESENTED.

THE OPINIONS, VIEWS, AND CONCLUSIONS EXPRESSED BY THE WORK PROJECTS ADMINISTRATION AS OUTLINED ABOVE ARE NOT PERSUASIVE. THEY ARE ADDRESSED FOR THE MOST PART TO ADDITIONAL ADMINISTRATIVE DIFFICULTIES ALLEGEDLY--- AND POSSIBLY--- ATTENDANT UPON OMISSION OF THE SUBJECT CONTRACT PROVISION, AND THE POSSIBILITY THAT CONTRACTORS MAY IN SOME INSTANCES FURNISH INFERIOR EQUIPMENT AND INCOMPETENT OPERATORS WITH RESULTING LOSS TO THE GOVERNMENT. IT IS TO BE PRESUMED THAT INVITATIONS TO BID AND THE RESULTING EQUIPMENT RENTAL CONTRACTS WILL CONTINUE TO INCLUDE STIPULATIONS TO SAFEGUARD THE GOVERNMENT AGAINST CONTRACTORS FURNISHING INFERIOR EQUIPMENT OR INCOMPETENT OPERATORS, AND TO PROVIDE ADEQUATE PENALTIES FOR VIOLATION OF SUCH STIPULATIONS. IT IS TO BE PRESUMED, ALSO, THAT SUCH CONTRACTS WILL PROVIDE THAT BOTH EQUIPMENT AND OPERATORS SHALL BE SUBJECT TO INSPECTION AND SUPERVISION BY COMPETENT GOVERNMENT REPRESENTATIVES, AND THAT, IN EVENT OF BREACH, THOSE CHARGED WITH RESPONSIBILITY THEREFOR WILL PROPERLY ENFORCE SUCH PENALTIES.

HOWEVER, ANY ADMINISTRATIVE PREFERENCE FOR THE INCLUSION OF THE MINIMUM WAGE STIPULATION IN SUCH EQUIPMENT RENTAL CONTRACTS, AND ANY POSSIBILITY THAT ITS OMISSION MAY CAUSE INCREASED DIFFICULTY IN ADMINISTERING THE STATUTE, OR EVEN RESULT, UPON OCCASION, IN LOSS TO THE GOVERNMENT--- WHICH IS NOT APPARENT--- ARE BESIDE THE POINT AND NOT FOR CONSIDERATION. THE QUESTION FOR CONSIDERATION IS NARROW AND IS PURELY THE LEGAL ONE OF STATUTORY AUTHORITY FOR THE INCLUSION OF SUCH PROVISION IN SUCH CONTRACTS. IT IS CONCEDED THAT THE EMERGENCY RELIEF ACT OF JUNE 30, 1939, 53 STAT. 927, CONFERS NO SPECIFIC AUTHORITY FOR SUCH ACTION, AND CAREFUL EXAMINATION TO THE STATUTE FAILS TO DISCOVER ANY PHRASE THAT WOULD SUGGEST A NECESSARY OR EVEN A REASONABLE IMPLICATION TO THAT EFFECT. IN SUCH A CASE, ADMINISTRATIVE AGENCIES AND ACCOUNTING OFFICERS OF THE GOVERNMENT ARE WITHOUT AUTHORITY TO READ SUCH PROVISION INTO THE LAW BY ANY PROCESS OF ADMINISTRATIVE IMPLICATION AND ARE BOUND BY THE EXPLICIT TERMS OF THE LAW.

CONCEDING FOR THE CASE THAT, AS SUGGESTED BY THE WORK PROJECTS ADMINISTRATION,"THE POLICY OF THE FEDERAL GOVERNMENT IS TO ENCOURAGE THE PAYMENT OF FAIR WAGES IN INDUSTRY," IT IS LIKEWISE THE POLICY OF THE FEDERAL GOVERNMENT, EVINCED AND ESTABLISHED BY EXTENSIVE ENACTMENTS OF THE CONGRESS TO CONSERVE PUBLIC FUNDS BY OBTAINING SUPPLIES AND SERVICES FOR GOVERNMENT NEEDS AT THE LOWEST AVAILABLE PRICES, AND IT HAS BEEN HELD CONSISTENTLY THAT IN THE ABSENCE OF STATUTORY PROVISION THEREFOR THE INSERTION IN GOVERNMENT CONTRACTS OF ANY PROVISION--- NOT ESSENTIAL TO THE ACCOMPLISHMENT OF THE PURPOSE OF THE APPROPRIATION UNDER WHICH THE CONTRACT IS MADE--- THE NECESSARY OR PROBABLE RESULT OF WHICH IS TO INCREASE PRICES WHICH THE GOVERNMENT MUST PAY IS NOT AUTHORIZED.

ACCORDINGLY, YOU ARE INFORMED THAT SUCH PROVISION SHOULD BE OMITTED FROM ALL SIMILAR CONTRACTS IN THE FUTURE, AS SUGGESTED IN THE SECOND PARAGRAPH OF YOUR LETTER, SUPRA. ..END :