B-218853, OCT 29, 1985, OFFICE OF GENERAL COUNSEL

B-218853, OCT 29, 1985, OFFICE OF GENERAL COUNSEL

BIDDERS - DEBARMENT - LABOR STIPULATION VIOLATIONS - DAVIS-BACON ACT DEBARMENT UNWARRANTED DIGEST: THE DEPARTMENT OF LABOR STATES THAT, IN VIEW OF THE CIRCUMSTANCES, IT DID NOT CONSIDER FURTHER ADMINISTRATIVE ACTION (I.E., DEBARMENT) NECESSARY AGAINST A SUBCONTRACTOR FOR VIOLATIONS OF THE DAVIS-BACON ACT. BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THE SUBCONTRACTOR UNDERPAID EMPLOYEES, BUT THE RECORD DOES NOT CONTAIN SUFFICIENT EVIDENCE OF INTENTIONAL VIOLATION OF THE LABOR STANDARDS PROVISIONS OF THE ACT TO WARRANT DEBARMENT, AS OPPOSED TO LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION. THEREFORE, THE SUBCONTRACTOR WILL NOT BE DEBARRED UNDER THE ACT.

SYLVESTER L. GREEN, DIRECTOR:

CONTRACT STANDARDS OPERATIONS

U.S. DEPARTMENT OF LABOR

ROOM S3518

200 CONSTITUTION AVENUE, N.W.

WASHINGTON, D.C. 20210

SUBJECT: ARTHUR C. HARPRING, INC.

LOUISVILLE, KENTUCKY

CONTRACT NO. DACA45-77-C-0136

YOUR FILE NO. IND-79-292

BY A LETTER DATED SEPTEMBER 21, 1984, YOU REQUESTED THAT WE DISTRIBUTE TO TWO WAGE CLAIMANTS FUNDS WITHHELD FOR VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. SECS. 276A TO 276A-5 (1982), BY ARTHUR C. HARPRING, INC. (HARPRING), A LOWER TIER SUBCONTRACTOR. AS TO WHETHER HARPRING SHOULD BE PLACED ON THE INELIGIBLE BIDDERS LIST FOR THESE VIOLATIONS, IN VIEW OF THE CIRCUMSTANCES, YOU DID NOT CONSIDER FURTHER ADMINISTRATIVE ACTION NECESSARY.

THESE VIOLATIONS AROSE IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NUMBER DACA45-77-C-0136 BETWEEN BATTEAST CONSTRUCTION COMPANY (BATTEAST) AND THE UNITED STATES DEPARTMENT OF THE ARMY (ARMY). GIBSON LEWIS, INC. (GIBSON-LEWIS), WAS A SUBCONTRACTOR TO BATTEAST; AND HARPRING WAS A SUBCONTRACTOR TO GIBSON-LEWIS. THE CONTRACT INVOLVED SHEET METAL ROOFING AND SIDING WORK AND WAS SUBJECT TO THE DAVIS-BACON ACT REQUIREMENTS THAT CERTAIN MINIMUM WAGES BE PAID. FURTHER, PURSUANT TO 29 C.F.R. SEC. 5.5(A) (1984), THESE WAGES WERE REQUIRED TO BE PAID BASED UPON THE CLASSIFICATION OF WORK ACTUALLY PERFORMED-- EXCEPT FOR APPRENTICES AND TRAINEES ENROLLED IN AN APPRENTICESHIP OR TRAINING PROGRAM APPROVED IN ACCORDANCE WITH THIS REGULATION.

THE DOL FOUND AS A RESULT OF AN INVESTIGATION THAT HARPRING MISCLASSIFIED EMPLOYEES PERFORMING WORK UNDER THIS CONTRACT, RESULTING IN DAVIS-BACON ACT UNDERPAYMENT OF WAGES. THESE EMPLOYEES WERE CLASSIFIED AS "RESIDENTIAL PRE-APPRENTICES," RATHER THAN THE APPROPRIATE CLASSIFICATION: "SHEET METAL WORKERS." THE DOL HAS INFORMED US THAT IT NOTIFIED HARPRING BY A CERTIFIED LETTER DATED SEPTEMBER 7, 1979, OF THE FINDINGS. ALSO, HARPRING WAS GIVEN AN OPPORTUNITY FOR A HEARING ON THE PAYMENT ISSUE BEFORE AN ADMINISTRATIVE LAW JUDGE UNDER 29 C.F.R. SEC. 5.11 (1979). SUCH A HEARING WAS REQUESTED.

THE HEARING WAS HELD ON JANUARY 17, 1983. IT RESULTED IN A DECISION (BATTEAST CONSTRUCTION CO., INC., ET AL., CASE NO. 81-DB-275, OFFICE OF ADMINISTRATIVE LAW JUDGES, UNITED STATES DEPARTMENT OF LABOR (AUGUST 31, 1983) (WHITE, A.L.J.)) FINDING THAT THE EMPLOYEES WERE NOT PAID THE REQUIRED DAVIS-BACON ACT MINIMUM WAGES AND ORDERING PAYMENT OF THE AMOUNTS DUE. THIS DECISION WAS APPEALED BY HARPRING TO THE DOL WAGES APPEALS BOARD. THE WAGE APPEALS BOARD ISSUED A DECISION (BATTEAST CONSTRUCTION COMPANY, ET AL., CASE NO. 83-12, WAGE APPEALS BOARD, UNITED STATES DEPARTMENT OF LABOR (JUNE 22, 1984) (BRAMOW, CHAIR; DUNN AND ROTHMAN, MEMBERS)) AFFIRMING THE DECISION APPEALED FROM. THE WAGE APPEALS BOARD'S OPINION SUMMARIZED ITS FINDINGS AND CONCLUSIONS AS FOLLOWS:

"CERTAINLY, THESE WORKERS CANNOT BE CONSIDERED APPRENTICES OR TRAINEES. THEY WERE NOT ENROLLED IN AN APPROVED APPRENTICESHIP OR TRAINING PROGRAM IN ACCORDANCE WITH THE DEPARTMENT OF LABOR REGULATIONS ***

"*** BY PETITIONER'S OWN ADMISSION, WITH THE CONCURRENCE OF THE LOCAL UNION, IT WORKED OUT A METHOD TO CUT LABOR COSTS BY EMPLOYING WORKERS IN A CATEGORY KNOWN IN THE AREA AS RESIDENTIAL INSTALLERS. EVEN THOUGH THE LOCAL UNION SANCTIONED THE USE OF WORKERS CLASSIFIED AND PAID BELOW THAT OF JOURNEYMEN, IT DOES NOT EXCUSE A CONTRACTOR OR SUBCONTRACTOR FOR VIOLATING THE LABOR STANDARD PROVISIONS OF THE DAVIS-BACON ACT AND THE REGULATIONS PROMULGATED THEREUNDER CONTAINED IN THE CONTRACT. ***

"THE BOARD REJECTS PETITIONER'S CONTENTION THAT IT SHOULD BE EXCUSED FROM LIABILITY BECAUSE THE WAGE AND HOUR DIVISION OR EVEN THE CONTRACTING AGENCY DID NOT MAKE AN EARLY INVESTIGATION, DETECT THE VIOLATIONS, AND NOTIFY THE FIRM. IT IS THE RESPONSIBILITY OF THE CONTRACTORS AND SUBCONTRACTORS PERFORMING ON THE PROJECT TO ABIDE BY THE LABOR STANDARDS PROVISIONS OF THE CONTRACT. THE DAVIS-BACON AND RELATED ACTS WERE INTENDED TO PROTECT THE RIGHTS OF LABORERS AND MECHANICS EMPLOYED ON FEDERAL AND FEDERALLY ASSISTED PROJECTS, NOT TO PROTECT CONTRACTORS WHO HAVE VIOLATED THE LAW AND THEN ATTEMPT TO MITIGATE THE VIOLATIONS THROUGH ALLEGED DERELICTION OF ENFORCEMENT BY EITHER THE WAGE AND HOUR DIVISION OR THE CONTRACTING AGENCY."

THE DAVIS-BACON ACT PROVIDES THAT THE COMPTROLLER GENERAL IS TO DEBAR PERSONS OR FIRMS WHOM HE HAS FOUND TO HAVE DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES UNDER THE ACT. 40 U.S.C. SEC. 276A-2. IN CIRCULAR LETTER B-3368, MARCH 19, 1957, WE DISTINGUISHED BETWEEN "TECHNICAL VIOLATIONS" WHICH RESULT FROM INADVERTENCE OR LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION, AND "SUBSTANTIAL VIOLATIONS" WHICH ARE INTENTIONAL AS DEMONSTRATED BY BAD FAITH OR GROSS CARELESSNESS IN OBSERVING OBLIGATIONS TO EMPLOYEES WITH RESPECT TO THE MINIMUM WAGE PROVISIONS OF THE DAVIS- BACON ACT. SUBSTANTIAL VIOLATIONS WARRANT DEBARMENT; TECHNICAL VIOLATIONS DO NOT. LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION IS A BASIS FOR DECIDING NOT TO DEBAR UNDER THE DAVIS-BACON ACT. PRIME ROOFING, INC., B-217725, AUGUST 12, 1985.

BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THERE WERE VIOLATIONS OF THE DAVIS-BACON ACT IN THAT THE WAGE CLAIMANTS WERE UNDERPAID-- NOT PAID THE REQUIRED MINIMUM WAGES. HOWEVER, WE ALSO CONCLUDE THAT THESE VIOLATIONS WERE THE RESULT OF LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION. THESE WAGE CLAIMANTS WERE CLASSIFIED, AND PAID, BY HARPRING AS "RESIDENTIAL PRE-APPRENTICES," EVEN THOUGH THEY WERE NOT ENROLLED IN AN APPRENTICESHIP OF TRAINING PROGRAM APPROVED IN ACCORDANCE WITH DOL REGULATIONS AS REQUIRED BY THE DOL REGULATIONS DISCUSSED ABOVE. THUS, UNDER 29 C.F.R. SEC. 5.5(A), THESE WAGE CLAIMANTS ARE ENTITLED TO PAYMENT BASED UPON THE CLASSIFICATION OF WORK ACTUALLY PERFORMED: "SHEET METAL WORKER." IT IS PLAUSIBLE THAT CONFUSION OVER THE VALIDITY OF A LOCAL UNION EXEMPTION GAVE RISE TO LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION RESULTING IN THE VIOLATIONS. THE ARMY HAS NOT MADE A RECOMMENDATION REGARDING THE DEBARMENT OF HARPRING. THE DOL HAS NOT RAISED THE ISSUE OF DEBARMENT, EITHER. THIS WOULD HAVE BEEN REQUIRED UNDER 29 C.F.R. SEC. 5.6(C)(1) (1979), IF IT HAD BEEN DETERMINED THAT THERE WAS REASONABLE CAUSE TO BELIEVE THAT THE CONTRACTOR OR SUBCONTRACTOR SHOULD BE SUBJECT TO DEBARMENT UNDER THE ACT. WE DO NOT BELIEVE THAT THE RECORD CONTAINS SUFFICIENT EVIDENCE OF WILLFUL VIOLATION OF THE LABOR STANDARDS PROVISIONS TO WARRANT DEBARMENT. THEREFORE, WE DECLINE TO DEBAR HARPRING.

FURTHER, WE FIND NO REASON TO OBJECT TO THE PAYMENT OF THE WAGE CLAIMANTS. ACCORDINGLY, THE FUNDS ON DEPOSIT WITH OUR OFFICE-- $6,989.61- - ARE ORDERED TO BE DISBURSED TO THE WAGE CLAIMANTS IN ACCORDANCE WITH ESTABLISHED PROCEDURES.