B-151261, MAY 13, 1975

B-151261: May 13, 1975

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PRECIS - UNAVAILABLE THE SECRETARY OF LABOR: THIS IS IN REFERENCE TO THE PROPOSED AMENDMENTS AND REVISIONS TO YOUR RULES RELATING TO LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS. IT IS STATED THAT THE PURPOSE OF THE PROPOSED RULE CHANGES IS TO RECOGNIZE CERTAIN PROBLEMS WHICH HAVE ARISEN IN CONNECTION WITH THE ADMINISTRATION OF THE SERVICE CONTRACT ACT OF 1965. THE EMPLOYER UNDER THE SUCCESSOR CONTRACT MUST PAY HIS EMPLOYEES NOT LESS THAN THE WAGES AND FRINGE BENEFITS OF HIS PREDECESSOR WHERE THOSE WAGES AND FRINGE BENEFITS WERE REFLECTED IN A COLLECTIVE BARGAINING AGREEMENT. IT HAS BEEN CONCLUDED THAT THE 'SUCCESSOR' OBLIGATIONS SHOULD APPLY ONLY WHERE SUBSTANTIALLY THE SAME SERVICES WILL BE PERFORMED AT THE SAME PLACE AS THE PREVIOUS CONTRACT.

B-151261, MAY 13, 1975

PRECIS - UNAVAILABLE

THE SECRETARY OF LABOR:

THIS IS IN REFERENCE TO THE PROPOSED AMENDMENTS AND REVISIONS TO YOUR RULES RELATING TO LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS, 29 C.F.R. PART 4, AS PUBLISHED BY YOUR ACTING ADMINISTRATOR, WAGE AND HOUR DIVISION (40 FED. REG. 16082, APRIL 9, 1975).

IT IS STATED THAT THE PURPOSE OF THE PROPOSED RULE CHANGES IS TO RECOGNIZE CERTAIN PROBLEMS WHICH HAVE ARISEN IN CONNECTION WITH THE ADMINISTRATION OF THE SERVICE CONTRACT ACT OF 1965, AS AMENDED, 41 U.S.C. SEC. 351, ET SEQ. (1970 ED. AND SUPP. II, 1972). THE INTRODUCTORY STATEMENT GIVES THE FOLLOWING DESCRIPTION OF THESE PROBLEMS AND OF THE RATIONALE OF THE PROPOSED REVISIONS TO THE RULES:

"THE 'SUCCESSOR' PROVISIONS OF THE ACT REQUIRE, INTER ALIA, THAT WHERE THE GOVERNMENT AWARDS A 'SUCCESSOR' CONTRACT FOR WORK PREVIOUSLY UNDER CONTRACT, THE EMPLOYER UNDER THE SUCCESSOR CONTRACT MUST PAY HIS EMPLOYEES NOT LESS THAN THE WAGES AND FRINGE BENEFITS OF HIS PREDECESSOR WHERE THOSE WAGES AND FRINGE BENEFITS WERE REFLECTED IN A COLLECTIVE BARGAINING AGREEMENT. IT HAS BEEN CONCLUDED THAT THE 'SUCCESSOR' OBLIGATIONS SHOULD APPLY ONLY WHERE SUBSTANTIALLY THE SAME SERVICES WILL BE PERFORMED AT THE SAME PLACE AS THE PREVIOUS CONTRACT. CONTRACTS PERFORMED IN DIFFERENT LOCALITIES WILL BE TREATED AS NEW PROCUREMENTS, UNDER SECTION 2(A) OF THE ACT.

"PROBLEMS ARISING FROM THE TIMING OF COLLECTIVE BARGAINING AGREEMENTS WHICH CREATE THE 'SUCCESSORSHIP' OBLIGATION; AND FROM THE TIMING OF REQUESTS FOR HEARINGS TO DETERMINE WHETHER SUCH AGREEMENTS ARE SUBSTANTIALLY AT VARIANCE WITH WAGES PREVAILING IN THE LOCALITY OF THE PLACE OF PERFORMANCE HAVE BEEN ARISING FREQUENTLY. IN ORDER NOT TO DELAY THE PROCUREMENT PROCESS, A CUT-OFF DATE IS PROPOSED. THIS ACTION WILL AVOID SERIOUS DISRUPTION OF THE GOVERNMENT'S BUSINESS AND DISRUPTION OF COLLECTIVE BARGAINING.

"WHERE THE PLACE OF PERFORMANCE IS UNKNOWN AT THE TIME BIDS ARE SOLICITED, A PROBLEM ARISES AS TO THE LOCALITY TO BE USED FOR WAGE DETERMINATION PURPOSES. IN THESE CASES, THE WAGE AND FRINGE BENEFIT DETERMINATIONS SHOULD REFLECT RATES APPLICABLE TO THE ULTIMATE PLACE OF CONTRACT PERFORMANCE. ACCORDINGLY, THE REGULATIONS ARE BEING AMENDED TO CONFORM TO SUCH PROCEDURES.

"THE NATIONAL LABOR POLICY CLEARLY FAVORS THE PROCESS OF COLLECTIVE BARGAINING. A PROSPECTIVE BIDDER WHO HAS A COLLECTIVE BARGAINING AGREEMENT SHOULD BE ALLOWED TO BID SOLELY ON THE BASIS OF THAT AGREEMENT UNDER SECTION 2(A) OF THE ACT. THIS WOULD ALLEVIATE THE NECESSITY FOR A CONTRACTOR TO ESTABLISH ONE SET OF RATES FOR COMMERCIAL BUSINESS AND ANOTHER SET FOR GOVERNMENT BUSINESS."

WE NOTE THAT SEVERAL OF THESE PROBLEM AREAS HAVE PREVIOUSLY BEEN BROUGHT TO YOUR ATTENTION BY OUR OFFICE IN CONNECTION WITH BID PROTEST DECISIONS. SPECIFICALLY, WE HAVE EXPRESSED THE VIEW THAT THE CONGRESSIONAL INTENT UNDERLYING THE ACT INDICATES THAT THE "LOCALITY" FOR WAGE DETERMINATION PURPOSES IS THE PLACE WHERE SERVICES ARE PERFORMED AND SHOULD NOT BE TAKEN AS REFERRING SOLELY TO THE LOCALITY OF THE GOVERNMENT FACILITY PROCURING THE SERVICES IN A PROCUREMENT WHERE THE SERVICES ARE TO BE PERFORMED AT THE LOCATION OF THE CONTRACTOR'S PLANT. SEE 53 COMP. GEN. 370 (1973). SIMILARLY, WE HAVE STATED THAT THE INTENT OF THE CONGRESS IN ESTABLISHING THE "SUCCESSOR EMPLOYER" DOCTRINE (41 U.S.C. SEC. 353(C) (SUPP. II, 1972)) APPEARS TO HAVE BEEN THAT THE DOCTRINE WOULD HAVE APPLICATION ONLY WITH REFERENCE TO SUCCESSOR CONTRACTORS WHICH ARE TO PERFORM AT THE SAME GOVERNMENT INSTALLATION, AND NOT WITH REFERENCE TO SUCCESSOR CONTRACTORS WHICH ARE TO PERFORM AT THEIR OWN PLANT, WHEREVER THAT MAY BE, IN CONNECTION WITH A PROCUREMENT OF SERVICES WHICH ARE TO BE PERFORMED AT THE CONTRACTOR'S LOCATION. MATTER OF A-V CORPORATION, 53 COMP. GEN. 646 (1974). IN THESE DECISIONS, WE EXPRESSED THE VIEW THAT YOUR EXISTING INTERPRETATION AND APPLICATION OF THE ACT IN THESE AREAS COULD HAVE AN ADVERSE EFFECT ON COMPETITION AND INCREASE THE GOVERNMENT'S COSTS IN SERVICE CONTRACTING.

FROM THE ABOVE-QUOTED INTRODUCTORY STATEMENT, IT APPEARS THAT FOR THE MOST PART THE CHANGES IN THE RULES ARE BEING PROPOSED WITH THE BASIC INTENT AND PURPOSE OF DEALING WITH THE PROBLEMS BROUGHT TO LIGHT IN OUR DECISIONS. WHILE WE DO NOT AT THIS TIME COMMENT UPON THE SPECIFIC MERITS OF EACH AND EVERY PROVISION OF THE PROPOSED RULES, WE BELIEVE THAT THE ADOPTION OF REVISED RULES TO FURTHER THIS INTENT AND PURPOSE IS AN ENTIRELY SOUND AND DESIRABLE OBJECTIVE. SUCH ACTION WOULD, WE BELIEVE, BRING YOUR PROCEDURES INTO CLOSER CONFORMITY WITH THE CONGRESSIONAL INTENT UNDERLYING THE ACT; WOULD ENHANCE FAIR AND OPEN COMPETITION AMONG BIDDERS FOR SERVICE CONTRACTS; AND WOULD RESULT IN COST SAVINGS TO THE GOVERNMENT IN CONTRACTING FOR SERVICES.

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