B-154427, SEPTEMBER 5, 1969, 49 COMP. GEN. 162

B-154427, SEPTEMBER 5, 1969, 49 COMP. GEN. 162

CONTRACTS -- LABOR STIPULATIONS -- FEDERALLY FINANCED PROJECTS -- JURISDICTION THE FUNDS WITHHELD FROM FEDERALLY AIDED OR FINANCED CONSTRUCTION CONTRACTS TO WHICH THE UNITED STATES IS NOT A PARTY FOR WAGE UNDERPAYMENTS THAT NORMALLY WOULD BE DISTRIBUTED BY STATES OR OTHER RECIPIENTS WHO ARE PARTIES TO THE CONTRACTS AND HAVE THE PRIMARY RESPONSIBILITY FOR THE ADMINISTRATION OF THE LABOR STIPULATIONS OF THE CONTRACTS, BUT FOR THE FACT THAT THE WORKERS CANNOT BE LOCATED, SHOULD NOT BE TRANSMITTED TO THE UNITED STATES GENERAL ACCOUNTING OFFICE (GAO) AS THE FEDERAL-AID LABOR STANDARD STATUTES DO NOT CONFER ON GAO AUTHORITY SIMILAR TO THAT CONTAINED IN THE DAVIS-BACON ACT AND THE WORK HOURS ACT OF 1962, TO MAKE DIRECT PAYMENTS TO LABORERS AND MECHANICS FROM WITHHELD CONTRACT EARNINGS AS RESTITUTION FOR WAGE UNDERPAYMENTS. HOWEVER, THOSE UNDISTRIBUTED HOLDINGS WHICH CANNOT BE SETTLED ADMINISTRATIVELY MAY BE SUBMITTED TO THE GAO CLAIMS DIVISION. 44 COMP. GEN. 561, MODIFIED.

TO THE SECRETARY OF TRANSPORTATION, SEPTEMBER 5, 1969:

REFERENCE IS MADE TO THE LETTER DATED MAY 23, 1969 (REFERENCE 26-50), FROM THE CHIEF COUNSEL, FEDERAL HIGHWAY ADMINISTRATION, REQUESTING OUR DECISION ON A MATTER INVOLVING THE DISTRIBUTION OF UNDERPAYMENTS OF WAGES TO AGGRIEVED WORKERS UNDER FEDERAL-AID LABOR STANDARDS STATUTES WHICH DO NOT CONFER UPON THE GENERAL ACCOUNTING OFFICE SPECIFIC DISTRIBUTION AUTHORITY.

AS POINTED OUT IN THE SUBMISSION, THE DAVIS-BACON ACT, 40 U.S.C. 276A, AND THE WORK HOURS ACT OF 1962 (CONTRACT WORK HOURS STANDARDS ACT), 40 U.S.C. 327, ET SEQ., PROVIDE AUTHORITY FOR THE GENERAL ACCOUNTING OFFICE TO MAKE DIRECT PAYMENTS TO LABORERS AND MECHANICS FROM AMOUNTS WITHHELD FROM CONTRACT EARNINGS OF WAGES DUE THEM UNDER GOVERNMENT CONTRACTS, BUT OUR OFFICE DOES NOT HAVE SIMILAR AUTHORITY WITH RESPECT TO FEDERALLY ASSISTED CONSTRUCTION CONTRACTS.

THE CHIEF COUNSEL STATES THAT SINCE 1962, IN CONNECTION WITH THE FEDERAL AID HIGHWAY PROGRAM, AMOUNTS WITHHELD UNDER THE CONTRACT WORK HOURS STANDARDS ACT, AND 23 U.S.C. 113, HAVE BEEN SEPARATED BY THE FEDERAL HIGHWAY ADMINISTRATION AS FOLLOWS:

(A) AMOUNTS DUE FOR STRAIGHT TIME PAY FOR ALL HOURS WORKED (23 U.S.C. 113); AND

(B) AMOUNTS DUE FOR THE OVERTIME INCREMENT FOR OVERTIME HOURS WORKED (40 U.S.C. 327-332).

HE FURTHER STATES THAT ONLY THE OVERTIME INCREMENTS WHICH COULD BE DISBURSED BY OUR OFFICE UNDER ITS STATUTORY AUTHORITY HAVE BEEN FORWARDED HERE.

HE SAYS THAT, AS THE ADMINISTRATION UNDERSTANDS THE DECISION REPORTED AT 44 COMP. GEN. 561, MARCH 16, 1965, OUR OFFICE WILL UNDERTAKE DISTRIBUTION OF RESTITUTION WAGES FOR STRAIGHT TIME HOURS WORKED UNDER FEDERAL-AID LABOR STANDARDS STATUTES WHICH DO NOT CONFER UPON US SPECIFIC DISTRIBUTION AUTHORITY, WHEN THE WITHHOLDINGS FORWARDED TO THE GENERAL ACCOUNTING OFFICE ARE ACCOMPANIED BY A DOCUMENT EVIDENCING THE EMPLOYER'S ACQUIESCENCE IN THE WITHHOLDING AND CONSENT TO THE SUBJECT DISTRIBUTION. THE CHIEF COUNSEL SAYS THAT HE WOULD APPRECIATE BEING ADVISED IF THIS UNDERSTANDING IS CORRECT, IN WHICH EVENT THE FEDERAL HIGHWAY ADMINISTRATION WOULD PROCEED FORTHWITH TO INSTITUTE APPROPRIATE PROCEDURES.

THE PERTINENT LANGUAGE CONTAINED IN THE 1965 DECISION, REFERRED TO ABOVE, READS AS FOLLOWS IN PART ON PAGES 563 AND 564:

IN REGARD TO THE INSTRUCTIONS CONTAINED IN OUR CIRCULAR LETTER OF MARCH 19, 1957 (B-3368), WE WISH TO POINT OUT THAT THE "WITHHELD FUNDS" WHICH THAT LETTER ADVISES SHOULD BE TRANSMITTED TO OUR OFFICE ARE THOSE FUNDS WHICH ARE WITHHELD UNDER CONTRACTS SPECIFICALLY COVERED BY THE DAVIS-BACON ACT. ALTHOUGH OUR OFFICE HAS DISBURSED WAGE UNDERPAYMENTS UNDER THE EIGHT HOUR LAW AS WELL AS UNDER LABOR STANDARDS PROVISIONS OF OTHER LAWS GOVERNING FEDERALLY-AIDED OR FINANCED PROGRAMS, SUCH DISBURSEMENTS HAVE BEEN SPECIFICALLY LIMITED TO CASES WHERE THE FUNDS TO COVER WAGE UNDERPAYMENTS WERE REMITTED VOLUNTARILY BY THE OFFENDING CONTRACTOR OR WERE WITHHELD WITH HIS FULL ACQUIESCENCE AND CONSENT TO THEIR DISTRIBUTION. DISBURSEMENTS BY OUR OFFICE IN SUCH CASES IS BASED UPON CONSIDERATIONS OF COURTESY AND COOPERATION WITH THE WAGE LAW ENFORCEMENT AGENCIES IN THE MATTER OF DISBURSING FUNDS TURNED OVER TO THE GOVERNMENT FOR A SPECIFIC USE, AND NOT UPON LEGAL JURISDICTION TO ADJUDICATE DISPUTED CLAIMS.

WHILE THE ABOVE DECISION DOES REFER TO UNDERPAYMENTS UNDER LABOR STANDARDS PROVISIONS OF "OTHER LAWS GOVERNING FEDERALLY AIDED OR FINANCED PROGRAMS," IN ACTUAL PRACTICE THERE HAVE BEEN FEW, IF ANY, INSTANCES IN WHICH WE HAVE IN THE PAST DISTRIBUTED FUNDS WITHHELD OR REMITTED ON ACCOUNT OF WAGE UNDERPAYMENTS UNDER LABOR STANDARDS LAWS WHICH DO NOT GIVE US SPECIFIC DISTRIBUTION AUTHORITY OTHER THAN THE EIGHT-HOUR LAW. SINCE THE PASSAGE OF THE CONTRACT WORK HOURS STANDARDS ACT THIS PRACTICE HAS BEEN VIRTUALLY DISCONTINUED.

AS WE UNDERSTAND THE MATTER, THE STATES OR OTHER RECIPIENTS OF FEDERAL ASSISTANCE, WHO ARE PARTIES TO THE CONTRACTS INVOLVED, ARE PRIMARILY RESPONSIBLE FOR THE ADMINISTRATION OF THE LABOR STIPULATIONS OF THE CONTRACTS, INCLUDING THE WITHHOLDING AND DISTRIBUTION OF WAGE UNDERPAYMENTS, AND THE HIGHWAY ADMINISTRATION'S CONCERN IS ONLY WITH RESPECT TO BALANCES DUE WORKERS WHO CANNOT BE LOCATED, THE AMOUNTS OF WHICH ARE DEDUCTED FROM THE FEDERAL-AID PAYMENTS. WE ASSUME THAT REASONABLE EFFORTS ARE MADE IN THE FIRST INSTANCE TO LOCATE THESE WORKERS THROUGH THEIR LAST-KNOWN ADDRESSES, AND THAT ANY EFFORTS WHICH MIGHT BE MADE BY OUR OFFICE WOULD MERELY DUPLICATE THOSE ALREADY MADE.

IN THESE CIRCUMSTANCES WE BELIEVE THAT THERE IS NO SUBSTANTIAL REASON FOR OUR INTERVENTION IN THE DISTRIBUTION OF AMOUNTS WITHHELD TO COVER WAGE UNDERPAYMENTS OF EMPLOYEES OF CONTRACTORS ON FEDERALLY AIDED OR FINANCED CONTRACTS, TO WHICH THE UNITED STATES IS NOT A PARTY, AND WE THEREFORE DO NOT FAVOR THE INSTITUTION OF PROCEDURES BY THE HIGHWAY ADMINISTRATION FOR TRANSMITTAL OF SUCH FUNDS TO THIS OFFICE. ANY CLAIMS AGAINST BALANCES REMAINING IN THE HANDS OF THE GOVERNMENT BY REASON OF SUCH UNDISTRIBUTED WITHHOLDINGS MAY BE SUBMITTED TO OUR CLAIMS DIVISION IF THEY ARE NOT CAPABLE OF ADMINISTRATIVE SETTLEMENT.