B-152313, JUN. 7, 1965, 44 COMP. GEN. 776

B-152313, JUN. 7, 1965, 44 COMP. GEN. 776

CONTRACTS - LABOR STIPULATIONS - DAVIS-BACON ACT - MINIMUM WAGE DETERMINATIONS - EXPIRATION DATE EXCEPTIONS IN VIEW OF THE REVISED DEPARTMENT OF LABOR REGULATIONS (29 CFR 5.4 (A), 29 F.R. 100, DATED JANUARY 4, 1964) INCREASING THE EFFECTIVE LIFE OF A WAGE DETERMINATION FROM 90 TO 120 DAYS AND PROVIDING FOR THE EXTENTION OF A WAGE DETERMINATION WHEN DUE TO UNAVOIDABLE CIRCUMSTANCES THE DETERMINATION EXPIRES AFTER BID OPENING, BUT PRIOR TO AWARD, INSERTION OF EXCEPTION CLAUSES IN AN INVITATION FOR BIDS TO THE GENERAL RULE THAT A CONTRACT AWARD ON THE BASIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED IN THE BID INVITATION IS NOT IN ACCORDANCE WITH THE DAVIS-BACON ACT, 40 U.S.C. 276A, AND SHOULD BE DISCONTINUED, THE DIFFICULTIES IMPOSED UPON CONTRACTING AGENCIES BY THE 90-DAY RULE ON THE EFFECTIVE LIFE OF WAGE DETERMINATIONS WHICH PROMPTED THE EXCEPTIONS TAKEN TO THE LIMITATION HAVING BEEN SUFFICIENTLY AMELIORATED BY THE REVISED REGULATION TO ELIMINATE THE NEED FOR THE QUESTIONABLE EXCEPTION. 41 COMP. GEN. 593 AND 43 ID. 238, MODIFIED.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, JUNE 7, 1965:

WE REFER TO YOUR LETTER OF APRIL 21, 1965, WHICH REQUESTS OUR OPINION ON WHETHER THE DECISION REPORTED AT 43 COMP. GEN. 238 IS STILL VALID IN VIEW OF THE REVISED LABOR DEPARTMENT REGULATION SET FORTH IN 29 CFR 5.4 (A). AN OPINION IS ALSO REQUESTED AS TO WHETHER CLAUSE 18 (C) OF THE GENERAL PROVISIONS INCORPORATED INTO VETERANS ADMINISTRATION CONSTRUCTION CONTRACTS IS STILL PROPER FOR USE.

THE DECISION REFERRED TO INVOLVED AN INVITATION FOR BIDS WHICH WAS ISSUED BY YOUR AGENCY ON JUNE 21, 1963, SOLICITING BIDS FOR THE PERFORMANCE OF CERTAIN CONSTRUCTION WORK. THE BID OPENING DATE WAS FIXED AS JULY 30, 1963, AND THE SPECIFICATIONS CONTAINED DAVIS-BACON ACT MINIMUM WAGE RATES BASED UPON A LABOR DEPARTMENT PREVAILING WAGE DETERMINATION DECISION DATED APRIL 11, 1963. UNDER THE REGULATIONS OF THE SECRETARY OF LABOR THE WAGE RATES EXPIRED ON JULY 9, 1963, BUT THE EXPIRATION DATE WAS NOT INCLUDED IN THE SPECIFICATIONS. CLAUSE 18 (C) OF THE GENERAL CONDITIONS OF THE INVITATION FOR BIDS, WHICH WAS EXACTLY THE SAME AS THE PRESENT CLAUSE 18 (C) OF THE GENERAL PROVISIONS, PROVIDED THAT:

"EXPIRATION OF THE ABOVE MENTIONED WAGE DETERMINATION AFTER THE OPENING OF BIDS BUT PRIOR TO AWARD SHALL NOT REQUIRE REJECTION OF ALL BIDS AND READVERTISING. AN ADVISORY OPINION REFLECTING WAGE RATES PREVAILING AS OF THE DATE OF AWARD WILL BE OBTAINED FROM THE SECRETARY OF LABOR WHICH SHALL BE INCORPORATED INTO THE CONTRACT PURSUANT TO CLAUSE 3 (SF 23A) THEREOF.'

ONE OF THE TWO QUESTIONS PRESENTED IN THE CASE WAS WHETHER AWARD COULD BE MADE TO THE LOW BIDDER IN VIEW OF THE FACT THAT NO BIDDER WAS FURNISHED ANY INFORMATION REGARDING THE EXPIRATION DATE OF THE WAGE RATE DECISION AND THE WAGE DECISION HAD EXPIRED BEFORE THE OPENING OF BIDS. WE HELD THAT WHILE EVERY EFFORT SHOULD BE MADE TO ASSURE THAT CONTRACTS ARE AWARDED ON THE BASIS OF CURRENT WAGE RATE DETERMINATIONS WE COULD SEE NO LEGAL OBJECTION TO AN AWARD OF A CONTRACT UNDER THE INVITATION FOR BIDS. THIS DECISION WAS PREDICATED UPON THE FACT THAT CLAUSE 18 (C) OF THE GENERAL CONDITIONS PROVIDED FOR AN EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE IN THOSE CASES WHERE A PARTICULAR WAGE RATE DETERMINATION EXPIRED AFTER THE DATE OF OPENING OF BIDS AND PRIOR TO AWARD, AND IT WAS ASSUMED THAT INSERTION OF THE CLAUSE IN THE INVITATION WAS FOR THE PURPOSE OF COMPLYING WITH AN EXCEPTION IMPLIED IN A QUOTED STATEMENT APPEARING IN 41 COMP. GEN. 593.

IN 41 COMP. GEN. 593 THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE PROPOSED TO MAKE AN AWARD TO A LOW BIDDER AFTER A WAGE RATE DETERMINATION HAD EXPIRED. THE PROPOSED AWARD WOULD HAVE BEEN MADE TO THE BIDDER EITHER AT HIS BID PRICE OR AT A PRICE TO BE NEGOTIATED ON THE BASIS OF A NEW PREVAILING WAGE DETERMINATION. IN REJECTING THIS PROPOSAL WE NOT ONLY POINTED OUT THAT AWARD OF A CONTRACT ON A BASIS DIFFERENT FROM THE PROVISIONS OF THE ADVERTISED SPECIFICATIONS WOULD BE IN VIOLATION OF SETTLED RULES OF COMPETITIVE BIDDING, BUT STATED FURTHER: "IN SITUATIONS INVOLVING A CHANGE IN WAGE RATES, THE GOVERNMENT PROPERLY COULD NOT REQUIRE OR PERMIT AN OTHERWISE SUCCESSFUL BIDDER TO PERFORM AT HIS ORIGINAL PRICE OR A DIFFERENT PRICE IN THE ABSENCE OF A PROVISION IN THE INVITATION FOR BIDS SPECIFICALLY PROVIDING FOR SUCH PROCEDURE.'

YOUR LETTER NOTES THAT AT THE TIME OUR DECISION IN 43 COMP. GEN. 238 (SEPTEMBER 9, 1963) WAS RENDERED THE DEPARTMENT OF LABOR REGULATION (29 CFR 5.4 (A) ( PROVIDED THAT IF A CONTRACT WAS NOT AWARDED WITHIN 90 DAYS FROM THE EFFECTIVE DATE OF A WAGE DETERMINATION THE DETERMINATION WOULD NO LONGER BE EFFECTIVE AND A NEW DETERMINATION SHOULD BE REQUESTED. YOU NOTE ALSO THAT NO PROVISIONS WERE MADE IN THIS REGULATION FOR AN EXTENSION OF THE EFFECTIVENESS OF THE DETERMINATION. ON THE OTHER HAND, YOU POINT OUT THAT THE REVISED DEPARTMENT OF LABOR REGULATION (29 CFR 5.4 (A), 29 F.R. 100, JANUARY 4, 1964) INCREASES THE EFFECTIVE LIFE OF A WAGE DETERMINATION FROM 90 TO 120 DAYS, AND DOES CONTAIN A PROVISION WHEREBY A WAGE DETERMINATION MAY BE EXTENDED WHEN DUE TO UNAVOIDABLE CIRCUMSTANCES THE DETERMINATION EXPIRES AFTER BID OPENING BUT PRIOR TO AWARD, AND IT IS NECESSARY AND PROPER IN THE PUBLIC INTEREST TO PREVENT INJUSTICE OR UNDUE HARDSHIP OR TO AVOID SERIOUS IMPAIRMENT IN THE CONDUCT OF GOVERNMENT BUSINESS. YOUR LETTER CONCLUDES THAT IN VIEW OF THESE REVISED PROVISIONS OF THE REGULATION SOME DOUBT EXISTS AS TO WHETHER THE CONTINUED USE OF CLAUSE 18 (C) OF THE GENERAL PROVISIONS WOULD BE PROPER.

THE DAVIS-BACON ACT, 40 U.S.C. 276A REQUIRES THAT "THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2000 * * * FOR CONSTRUCTION * * * SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING * * *.' IN CONSTRUING THIS STATUTORY LANGUAGE, WE HAVE HELD THAT, AS A GENERAL RULE, THE MINIMUM WAGE RATES SO REQUIRED CANNOT BE INCORPORATED IN A CONTRACT IN ANY WAY OTHER THAN AS STIPULATED IN THE STATUTE--- THAT IS, BY INCLUSION IN THE SPECIFICATIONS UPON WHICH BIDS OR PROPOSALS LEADING TO THE CONTRACT WERE INVITED. SEE 40 COMP. GEN. 565; 42 ID. 410. WE HAVE ALSO HELD THAT A SPECIFICATION PROVISION THAT CONTRACTORS SHALL PAY MINIMUM WAGE RATES AS DETERMINED BY THE SECRETARY OF LABOR, WHETHER SUCH DETERMINATIONS ARE RECEIVED BEFORE OR AFTER BID OPENING, WOULD NOT BE IN ACCORDANCE WITH THE STATUTE. 40 COMP. GEN. 48.

PRIOR TO THE JANUARY 1964 REVISION OF THE DEPARTMENT OF LABOR REGULATION THE CONSTRUCTION CONTRACTING ACTIVITIES OF FEDERAL AGENCIES WERE SERIOUSLY BURDENED BY THE EFFECT OF THE 90 DAY AWARD RESTRICTION ON THE EFFECTIVENESS OF THE SECRETARY OF LABOR'S WAGE DETERMINATIONS. THE CLOSE SCHEDULING NECESSITATED BY THE 90 DAY LIMITATION AFFORDED LITTLE IF ANY LEEWAY FOR NORMAL HANDLING OF ANY OF THE FREQUENTLY ENCOUNTERED DELAYS IN THE BIDDING AND AWARD PROCESS, SUCH AS MODIFICATIONS OF PLANS OR SPECIFICATIONS, OR FOR RESOLUTION OF ANY QUESTIONS WHICH MIGHT BE PRESENTED UPON BID OPENING SUCH AS EXCUSES FOR LATE BIDS, ALLEGATIONS OF MISTAKE IN ONE OR MORE BIDS, OR PROTESTS BY ONE OR MORE BIDDERS AGAINST ADMINISTRATIVE DETERMINATIONS OF RESPONSIVENESS OF BIDS OR RESPONSIBILITY OF BIDDERS. THE RESOLUTION OF MANY OF THESE QUESTIONS REQUIRES THEIR SUBMISSION TO HIGHER LEVELS WITHIN THE CONTRACTING AGENCY OR TO THE COMPTROLLER GENERAL.

THE DIFFICULTIES IMPOSED UPON CONTRACTING AGENCIES BY THE 90 DAY RULE WERE THE SUBJECT OF A MEETING HELD ON NOVEMBER 8, 1962, WHICH WAS ATTENDED BY REPRESENTATIVES OF THE CORPS OF ENGINEERS OF THE ARMY, THE BUREAU OF YARDS AND DOCKS OF THE NAVY, THE DEPARTMENT OF LABOR, THE GENERAL SERVICES ADMINISTRATION, THE GENERAL ACCOUNTING OFFICE AND THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. THIS MEETING WAS PROMPTED BY A COMPLAINT TO OUR OFFICE FROM THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC., CONCERNING THE PROPRIETY OF A PROVISION REQUIRED TO BE INCLUDED IN ALL INVITATIONS FOR BIDS ON CORPS OF ENGINEERS' CONSTRUCTION PROJECTS SUBJECT TO THE DAVIS-BACON ACT. THE PROVISION IN QUESTION STATED THAT:

"THE GOVERNMENT RESERVES THE RIGHT TO AWARD A CONTRACT UNDER THIS INVITATION NOTWITHSTANDING THE EXPIRATION OF WAGE RATE DETERMINATIONS OF THE SECRETARY OF LABOR SET FORTH IN SC - . IF THE WAGE RATE DETERMINATION HAS EXPIRED (29 CFR 5.4 (A) ( A NEW WAGE RATE DETERMINATION MAY BE SUBSTITUTED FOR THE EXPIRED DETERMINATION AND AWARD MADE ON THE BASIS OF THE BID AS SUBMITTED WITHOUT A CHANGE IN THE BID PRICE.'

THE PURPOSE OF THIS PROVISION WAS TO AVOID THE NECESSITY OF READVERTISING IN EVERY CASE IN WHICH AWARD WITHIN 90 DAYS AFTER THE DATE OF THE WAGE DETERMINATION WAS NOT FEASIBLE. IT WAS ALSO RECOGNIZED THAT PROMULGATION OF THIS PROVISION WAS THE RESULT OF THE ABOVE QUOTED STATEMENT IN 41 COMP. GEN. 593 WHICH IMPLIEDLY SANCTIONED AN AWARD OF A CONTRACT ON THE BASIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED WHERE THE INVITATION CONTAINS A PROVISION SPECIFICALLY PROVIDING FOR SUCH A PROCEDURE.

AT THE MEETING OF NOVEMBER 8, 1962, THERE WAS A GENERAL CONCURRENCE OF ALL (WITH THE EXCEPTION OF THE DEPARTMENT OF LABOR REPRESENTATIVE WHO TOOK NO POSITION AT THAT TIME) THAT WAGE DETERMINATIONS INCLUDED IN ADVERTISED SPECIFICATIONS SHOULD BE VALID FOR 120 DAYS AFTER THE BID OPENING, AND THAT IF SUCH PROPOSAL WERE ADOPTED IT WOULD BE A SOLUTION TO THE PROBLEMS DIRECTLY ATTRIBUTABLE TO THE 90 DAY RULE.

BY LETTER OF APRIL 3, 1963 (B-148284), WE INFORMED THE EXECUTIVE DIRECTOR OF THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC., CONCERNING ITS COMPLAINT ON THE CORPS OF ENGINEERS' BID INVITATION PROVISION AS FOLLOWS:

"BY LETTER DATED DECEMBER 3, 1962, TO THE SECRETARY OF LABOR, WHICH LETTER FURNISHED COMMENTS ON A DRAFT OF PROPOSED NEW REGULATIONS DEALING WITH THE ESTABLISHMENT AND ENFORCEMENT OF MINIMUM WAGES UNDER FEDERAL AND FEDERAL INTEREST CONTRACTS, WE URGED THAT THE PROPOSED REGULATIONS BE AMENDED TO PROVIDE THAT WAGE DETERMINATIONS BE VALID FOR 120 DAYS AFTER BID OPENING. HOWEVER, THE REVISED REGULATIONS HAVE NOT BEEN ISSUED TO DATE.

"WHILE THE PROVISION PRESENTLY BEING USED BY THE CORPS OF ENGINEERS IS NOT FREE FROM QUESTION IN THAT IT COULD BE ARGUED THAT SUCH A PROVISION TENDS TO LESSEN COMPETITION OR TO INCREASE CONTRACT PRICES, IN VIEW OF THE ADMINISTRATIVE DIFFICULTIES IN PROVIDING AN ALTERNATE SOLUTION TO THE CONTRACTING PROBLEM, WE DO NOT BELIEVE THAT WE WOULD BE JUSTIFIED IN DISTURBING THE PRESENT PRACTICE OF THE CORPS PENDING A FINAL POSITION BY THE DEPARTMENT OF LABOR ON REVISION OF THEIR REGULATIONS.'

AS INDICATED IN 41 COMP. GEN. 593, WE BELIEVE THE CORRECT GENERAL RULE IS THAT A CONTRACT AWARD ON THE BASIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED IN THE BID INVITATION IS NOT IN ACCORDANCE WITH THE DAVIS- BACON ACT. THE IMPLIED SUGGESTION IN THAT DECISION THAT AN EXCEPTION MIGHT BE MADE IF SPECIFIC PROVISION WERE MADE THEREFOR IN THE INVITATION WAS AN ATTEMPT TO LEAVE THE WAY OPEN FOR ANY FEASIBLE OR PRACTICABLE METHOD BY WHICH THE PROBLEM CREATED BY THE EARLIER DEPARTMENT OF LABOR REGULATION, THE HISTORY OF WHICH IS OUTLINED ABOVE, MIGHT BE AVOIDED OR AMELIORATED, WITHOUT VIOLATION OF FUNDAMENTAL PRINCIPLES OF LAW APPLICABLE TO THE MAKING OF PUBLIC CONTRACTS. AS INDICATED IN OUR LETTER OF APRIL 3, 1963 (B-148284), BID INVITATION PROVISIONS WHICH WOULD PERMIT OR REQUIRE A LOW BIDDER TO ACCEPT AWARD ON THE BASIS OF CHANGED WAGE RATES AT HIS ORIGINAL OR AN ADJUSTED PRICE ARE LEGALLY QUESTIONABLE. IN VIEW OF THE FACT THAT THE REVISED DEPARTMENT OF LABOR REGULATION HAS INCREASED THE PERIOD OF EFFECTIVENESS OF WAGE DETERMINATIONS FROM 90 TO 120 DAYS AND ALSO NOW PROVIDES A PROCEDURE FOR EXTENDING THE PERIOD OF EFFECTIVENESS IN APPROPRIATE CIRCUMSTANCES, WE FEEL THAT THE UNDERLYING DIFFICULTIES WHICH PROMPTED THE CARVING OUT OF AN EXCEPTION TO THE GENERAL RULE TO PERMIT PROVISIONS IN BID INVITATIONS OF THE TYPE CONTAINED IN THE CORPS OF ENGINEERS CLAUSE AND IN CLAUSE 18 (C) OF THE GENERAL PROVISIONS CURRENTLY EMPLOYED BY YOUR ADMINISTRATION, HAVE BEEN AMELIORATED SUFFICIENTLY TO ELIMINATE THE NEED FOR SUCH QUESTIONABLE EXCEPTION. YOU ARE THEREFORE ADVISED THAT TO THE EXTENT 41 COMP. GEN. 593 AND 43 ID. 238 ARE INCONSISTENT WITH THIS VIEW THEY WILL NO LONGER BE FOLLOWED. ACCORDINGLY, THE USE OF CLAUSE 18 (C) OF THE GENERAL PROVISIONS WHICH ARE INCORPORATED IN VETERANS ADMINISTRATION CONSTRUCTION CONTRACTS, AND CLAUSES OF SIMILAR EFFECT, SHOULD BE DISCONTINUED.