B-122382, JUNE 27, 1955, 34 COMP. GEN. 697

B-122382, JUNE 27, 1955, 34 COMP. GEN. 697

POST OFFICE DEPARTMENT PROPERTY ACT OF 1954 - LEASE-PURCHASE AGREEMENTS APPLICABILITY OF DAVIS-BACON, EIGHT-HOUR, ETC., LAWS BUILDINGS CONSTRUCTED UNDER LEASE-PURCHASE AGREEMENTS EXECUTED PURSUANT TO THE POST OFFICE DEPARTMENT PROPERTY ACT OF 1954 ARE CONSTRUCTED FOR A PUBLIC USE AT THE EXPENSE OF THE UNITED STATES EVEN THOUGH NOT PUBLICLY OWNED OR FEDERALLY FINANCED AT THE TIME OF CONSTRUCTION, AND, THEREFORE, ARE PUBLIC BUILDINGS WITHIN THE APPLICABLE PROVISIONS OF THE DAVIS-BACON ACT, EIGHT-HOUR LAW, ANTI KICKBACK AND MILLER ACTS.

COMPTROLLER GENERAL CAMPBELL TO THE POSTMASTER GENERAL, JUNE 27, 1955:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 21, 1954, WHICH REQUESTED OUR COMMENTS REGARDING THE PROPRIETY OF A PROCEDURE PROPOSED TO BE FOLLOWED BY THE POST OFFICE DEPARTMENT IN CONNECTION WITH ITS LEASE- PURCHASE AGREEMENTS UNDER TITLE II, PUBLIC LAW 519, APPROVED JULY 22, 1954, 68 STAT. 521, KNOWN AS THE " POST OFFICE DEPARTMENT PROPERTY ACT OF 1954.'

YOUR LETTER OF DECEMBER 21 WAS SUPPLEMENTED BY LETTER OF MAY 3, 1955, FROM THE SOLICITOR OF YOUR DEPARTMENT, WHICH TRANSMITTED COPIES OF LETTERS FROM THE SOLICITOR, DEPARTMENT OF LABOR, TO YOUR DEPARTMENT, ADVISING THAT THE PROVISIONS CONCERNING THE DAVIS-BACON ACT (40 U.S.C. 276A, ET SEQ.): THE EIGHT-HOUR LAW (40 U.S.C. 321, ET SEQ.); AND THE COPELAND ANTI- KICKBACK ACT (18 U.S.C. 874 AND 40 U.S.C. 276C) ARE APPLICABLE TO LEASE- PURCHASE AGREEMENTS. THE SOLICITOR OF YOUR DEPARTMENT STATES THAT, IF THESE LABOR LAWS ARE APPLICABLE TO SUCH AGREEMENTS, IT WOULD FOLLOW THAT THE PAYMENT BOND REQUIREMENTS OF THE MILLER ACT, 40 U.S.C. 270A, ET SEQ., WOULD ALSO APPLY. HE EXPRESSES THE OPINION, HOWEVER, THAT THESE LAWS ARE NOT APPLICABLE TO LEASE PURCHASE AGREEMENTS FOR THE FOLLOWING REASONS.

BASICALLY, THE POST OFFICE DEPARTMENT REGARDS LEASE-PURCHASE AS THE OUTGROWTH AND FURTHER REFINEMENT OF THE DEPARTMENT'S LONG-TERM LEASING PROGRAM UNDER WHICH AGREEMENTS ARE MADE FOR THE LEASING TO THE DEPARTMENT OF BUILDINGS TO BE BUILT TO THE DEPARTMENT'S NEEDS AND SPECIFICATIONS. LEASE-PURCHASE AGREEMENTS DIFFER ESSENTIALLY FROM TERM LEASES ONLY IN THAT AT THE END OF THE LEASE TERM THE SUBJECT OF THE LEASE-PURCHASE AGREEMENT BECOMES GOVERNMENT PROPERTY. THE SOLICITOR STATES THAT CONGRESS HAD A SIMILAR UNDERSTANDING OF THE LEGISLATION AS EVIDENCED BY ITS DECLARATION OF POLICY (SECTION 201), 68 STAT. 521, AND BY THE FACT THAT IT EXPRESSLY MADE RENTAL APPROPRIATIONS, RATHER THAN CONSTRUCTION APPROPRIATIONS, AVAILABLE FOR LEASE-PURCHASE AGREEMENTS. ( SECTION 202 (F), 68 STAT. 522.) HE ALSO STATES THAT SECTION 207 (C), 68 STAT. 525, DOES NOT EVIDENCE ANY CONTRARY INTENT; THAT THE PARENTHETICAL CLAUSE IN THAT SECTION "EXCEPT APPLICABLE LABOR STANDARD PROVISIONS" IS NOT A DECLARATION THAT ANY SUCH LAWS ARE APPLICABLE, BUT RATHER SHOWS A PURPOSE THAT THEY SHALL BE HELD APPLICABLE ONLY IF BY THEIR OWN TERMS THEY ARE OTHERWISE APPLICABLE TO THIS TYPE OF AGREEMENT. IN THAT CONNECTION, THE SOLICITOR STATES THAT THE DAVIS BACON ACT, THE EIGHT-HOUR LAW, AND THE LABOR DEPARTMENT REGULATIONS, PART 5, TITLE 29 CFR, APPEAR TO BE DESIGNED SOLELY FOR APPLICATION TO FEDERALLY FINANCED AND ASSISTED CONSTRUCTION. STATES FURTHER THAT THE LEASE-PURCHASE AGREEMENTS COVER NEITHER FEDERALLY FINANCED NOR FEDERALLY ASSISTED CONSTRUCTION. IN THAT CONNECTION, HE POINTS TO THE FACT THAT THE SUCCESSFUL BIDDER OBTAINS HIS FINANCING FROM PRIVATE LENDERS AND STATES THAT, THIS BEING THE CASE, THE DEPARTMENT WILL NOT BE IN A POSITION TO WITHHOLD PAYMENT OF FUNDS FOR NONCOMPLIANCE WITH THE LABOR LAWS AND REGULATIONS. IN ADDITION, THE SOLICITOR STATES THAT, SINCE TITLE TO THE BUILDING DURING CONSTRUCTION AND UPON COMPLETION IS IN THE CONTRACTOR, THE BUILDING MAY NOT BE CONSIDERED AS A "PUBLIC BUILDING" OR "PUBLIC WORK" IN VIEW OF THE HOLDING IN THE CASE OF MAIATICO CONSTRUCTION COMPANY V. UNITED STATES, 79 F.2D 418.

SECTION 207 (C), 68 STAT. 525, OF PUBLIC LAW 519 PROVIDES AS FOLLOWS:

EXCEPT AS PROVIDED BY SUBSECTIONS (A) AND (B) OF THIS SECTION, SECTIONS 3733, 3734, AND 3736 OF THE REVISED STATUTES, AS AMENDED (40 U.S.C. 259, 41 U.S.C. 12, 14); SECTION 1 OF THE ACT OF MARCH 3, 1877 (19 STAT. 370; 40 U.S.C. 34); AND ANY OTHER PROVISION OF LAW (EXCEPT APPLICABLE LABOR STANDARDS PROVISIONS) RELATING TO THE ACQUISITION OR DISPOSAL OF REAL PROPERTY, CONSTRUCTION OF BUILDING, OR LEASING OF SPACE, SHALL NOT APPLY TO ANY OF THE FUNCTIONS PERFORMED BY THE POSTMASTER GENERAL IN EFFECTUATING THE PURPOSES OF THIS TITLE. ( ITALICS SUPPLIED.)

THE SEVERAL BILLS FROM WHICH PUBLIC LAW 519 EVOLVED GENERALLY CONTAINED SIMILAR LANGUAGE TO THAT ENACTED AS SECTION 217 (C) EXCEPT THAT THE ITALICIZED WORDS "EXCEPT APPLICABLE LABOR STANDARDS PROVISIONS" WERE NOT INCLUDED. DURING THE DEBATES ON THE FLOOR OF THE HOUSE OF REPRESENTATIVES ON ONE OF SUCH BILLS H.R. 6839, 82D CONGRESS, 2D SESSION) CONGRESSMAN SHELLEY OFFERED AN AMENDMENT TO INCLUDE THE WORDS "EXCEPT APPLICABLE LABOR STANDARDS PROVISION.' HE EXPLAINED THE PURPOSE OF THE AMENDMENT AS FOLLOWS:

MR. CHAIRMAN, THIS AMENDMENT HAS BEEN DISCUSSED WITH THE MEMBERS OF THE COMMITTEE WHICH HANDLED THIS BILL AND ALSO THE COMMITTEES WHICH WILL HANDLE THE FOLLOWING BILL HAVING TO DO WITH THIS GENERAL PRINCIPLE AFFECTING GENERAL SERVICES ADMINISTRATION. I THINK I CAN SAFELY SAY, AND I HAVE BEEN INFORMED, THAT IS WAS NOT THE INTENT OF EITHER OF THE DEPARTMENTS, THE PROPONENTS OF THE LEGISLATION, OR THE COMMITTEES TO MAKE THE EXCEPTION THAT THE LANGUAGE NOW PROVIDES AND IT WAS WITH THE AGREEMENT OF ALL PARTIES CONCERNED THAT THIS AMENDMENT WAS FINALLY ARRIVED AT AND THE LANGUAGE DRAFTED. IT SIMPLY APPLIES THE PROVISIONS OF LABOR STANDARDS LEGISLATION TO ANY CONSTRUCTION THAT MAY BE MADE UNDER THESE PURCHASE AGREEMENTS JUST AS IT WOULD APPLY AT THE PRESENT TIME. IT IN NO WAY EXTENDS THE LABOR-STANDARDS PROVISIONS, BUT IT DOES CLOSE THE DOOR TO A POSSIBLE TAKING AWAY OF THE APPLICATION OF LABOR STANDARDS PROVISIONS. CONGRESSIONAL RECORD, APRIL 28, 1952, PAGE 4526).

THE CHAIRMAN OF THE COMMITTEE WHICH HANDLED THAT BILL, CONGRESSMAN MURRAY OF TENNESSEE, EXPLAINED THE PURPOSE OF THE AMENDMENT AS FOLLOWS:

THE PURPOSE OF THIS AMENDMENT IS TO CLARIFY THE INTENT OF THE LAW WITH RESPECT TO CONTINUING THE APPLICABLE PROVISIONS OF LABOR-STANDARDS LAWS.

THE AMENDMENT DOES NOT IN ANY WAY EXTEND THE EFFECT OF LABOR STANDARDS LAWS BUT MERELY ASSURES THAT AS FAR AS CONTRACTS TO WHICH THE FEDERAL GOVERNMENT IS A PARTY FOR CONSTRUCTION ARE CONCERNED, APPLICABLE LABOR- STANDARDS LAWS WILL BE APPLIED.

THIS BILL EXTENDS THE LEASING AUTHORITY OF THE POSTMASTER GENERAL SO THAT THE CONTRACT FOR LEASE MAY CONTAIN A PROVISION FOR ACQUIRING THE PROPERTY AT THE END OF THE LEASE PERIOD, AND THE CONTRACTS WILL BE PURCHASE CONTRACTS OR CONTRACTS FOR LEASE OF EXISTING BUILDINGS AND DO NOT COME WITHIN THE PURVIEW OF THE BACON-DAVIS ACT.

THE BACON-DAVIS ACT CONCERNS CONSTRUCTION CONTRACTS TO WHICH THE UNITED STATES OR THE DISTRICT OF COLUMBIA IS A PARTY AND REQUIRES THAT ADVERTISED SPECIFICATIONS FOR SUCH CONTRACTS IN EXCESS OF $2,000 MUST CONTAIN A PROVISION REQUIRING THE CONTRACTOR TO PAY PREVAILING WAGE RATES AS DETERMINED BY THE SECRETARY OF LABOR.

IT IS POINTED OUT, HOWEVER, THAT AUTHORITY IS GIVEN FOR LEASE PURCHASE AGREEMENTS TO BE MADE FOR BUILDINGS TO BE CONSTRUCTED ON FEDERAL PROPERTY. IN SUCH CASES, DEPENDING UPON THE AGREEMENT, THERE MAY BE CONTRACTS FOR CONSTRUCTION TO WHICH THE UNITED STATES IS A PARTY, AND IT IS NOT INTENDED BY THIS LEGISLATION TO CIRCUMVENT THE REQUIREMENTS OF ANY OF THE FAIR LABOR-STANDARDS LAWS, SUCH AS THE BACON-DAVIS ACT, THE COPELAND ACT, PROHIBITING KICKBACKS AND THE 8 HOUR LAW.

THE AMENDMENT CLARIFIES THE INTENTION OF OUR COMMITTEE IN THIS RESPECT AND SERVES AS AN ASSURANCE TO THOSE WHO HAVE EXPRESSED CONCERN ABOUT THESE LABOR-STANDARDS LAWS THAT THEY MUST BE OBSERVED IN THOSE CASES WHERE THEY ARE APPLICABLE; THAT IS, IN THOSE CASES WHERE THE UNITED STATES GOVERNMENT IS A PARTY FOR CONSTRUCTION, ALTERATION, OR REPAIR OF PUBLIC BUILDINGS OR PUBLIC WORKS. ( CONGRESSIONAL RECORD, APRIL 28, 1952, PAGE 4526).

ON THE SAME DATE THE HOUSE OF REPRESENTATIVES CONSIDERED H.R. 4323 TO AUTHORIZE THE GENERAL SERVICES ADMINISTRATION TO ENTER INTO LEASE PURCHASE AGREEMENTS. THE LANGUAGE OF THAT BILL, WITH RESPECT TO GRANTING EXCEPTIONS TO LAWS RELATING TO THE CONSTRUCTION OF BUILDING, LEASING OF SPACE, ETC., WAS SUBSTANTIALLY IDENTICAL TO THAT CONTAINED IN H.R. 6839, MENTIONED ABOVE. CONGRESSMAN HOLIFIELD OFFERED AN AMENDMENT ON THE FLOOR OF THE HOUSE TO INSERT THE WORDS "EXCEPT APPLICABLE LABOR STANDARDS PROVISIONS," WITH THIS EXPLANATION:

MR. CHAIRMAN, THIS IS THE SAME AMENDMENT THAT WAS OFFERED BY THE GENTLEMAN FROM CALIFORNIA ( MR. SHELLEY) TO THE POST-OFFICE BILL, AND WAS ACCEPTED BY THE HOUSE UNANIMOUSLY.

THE AMENDMENT PROVIDES THAT APPLICABLE LABOR STANDARDS BE USED IN THE PURCHASE OF BUILDINGS.

MR. CHAIRMAN, AS PART OF MY REMARKS I WISH TO INCLUDE THE FOLLOWING LETTER FROM THE ACTING SECRETARY OF LABOR:

" DEAR CONGRESSMAN HOLIFIELD: IT HAS COME TO MY ATTENTION THAT H.R. 4323, AS REPORTED BY THE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENT, UNION CALENDAR NO. 460, A BILL TO BE KNOWN AS THE FEDERAL LEASE-PURCHASE ACT OF 1951, MAY HAVE THE EFFECT OF PREVENTING THE APPLICATION OF THE SO- CALLED DAVIS-BACON ACT, AS AMENDED (ACT OF MARCH 3, 1931, AS AMENDED), THE COPELAND ANTI-KICKBACK ACT (ACT OF JUNE 13, 1934, AS AMENDED) AND THE SO- CALLED 8-HOUR LAW (ACT OF AUGUST 1, 1892, AS AMENDED) TO THE CONSTRUCTION OF BUILDINGS FOR THE UNITED STATES UNDER LEASE-PURCHASE AGREEMENTS WHICH WOULD BE AUTHORIZED BY THE BILL.

"AS YOU KNOW, THE DAVIS-BACON ACT REQUIRES THE PAYMENT OF PREVAILING WAGES TO LABORERS AND MECHANICS PERFORMING GOVERNMENT CONSTRUCTION UNDER CONTRACTS IN EXCESS OF $2,000, THE COPELAND ACTMAKES IT UNLAWFUL TO REQUIRE KICK-BACKS FROM WAGES PAID TO WORKERS PERFORMING GOVERNMENT CONSTRUCTION CONTRACTS, AND THE 8-HOUR LAW PROVIDES, AMONG OTHER THINGS, FOR THE 8-HOUR DAY FOR LABORERS AND MECHANICS WORKING ON GOVERNMENT CONSTRUCTION CONTRACTS. I AM SURE IT WAS NOT THE INTENTION OF THE COMMITTEE TO PREVENT THESE LAWS FROM APPLYING TO CONSTRUCTION AUTHORIZED BY THE BILL AND, I THINK, NO ONE CAN PROPERLY QUESTION THE APPROPRIATENESS OF APPLYING THESE LAWS TO THE SAME EXTENT AS THEY WOULD ORDINARILY APPLY TO SUCH CONSTRUCTION. IT WOULD NOT BE MY INTENTION TO EXPAND OR CHANGE THE SCOPE AND EFFECT OF THESE LAWS IN ANY WAY. INSTEAD, I BELIEVE IT WOULD BE DESIRABLE MERELY TO PERMIT THESE LAWS TO APPLY TO THE SAME EXTENT THAT THEY WOULD BE OTHERWISE APPLICABLE.

"THE ABOVE-DESCRIBED PURPOSE MAY BE ASSURED BY A MINOR CLARIFYING AMENDMENT TO THE BILL, INSERTING ON PAGE 6 AT LINE 1, AFTER THE WORD "LAW," AND BEFORE THE WORD "RELATING," THE FOLLOWING LANGUAGE: (EXCEPT APPLICABLE LABOR STANDARDS PROVISIONS).

"THIS AMENDMENT HAS THE COMPLETE APPROVAL AND SUPPORT OF THE GENERAL SERVICES ADMINISTRATION AND I HOPE THAT YOU WILL FIND IT POSSIBLE TO MAKE THIS CLARIFYING CHANGE WHEN H.R. 4323 COMES UP FOR CONSIDERATION ON THE FLOOR OF THE HOUSE.'

THE FOREGOING WOULD SEEM TO LEAVE NO ROOM FOR DOUBT AS TO THE INTENTION OF THE CONGRESS IN ENACTING THE LANGUAGE HERE UNDER CONSIDERATION. WHILE IT MIGHT BE ARGUED, AS IT IS, THAT LABOR STANDARDS LAWS APPLY TO THESE LEASE-PURCHASE CONTRACTS ONLY WHERE OTHERWISE APPLICABLE, AND THAT THEY ARE NOT APPLICABLE HERE, WE THINK ANY SUCH CONSTRUCTION OF THE LAW WOULD COMPLETELY NULLIFY THE AMENDMENT AND DEFEAT THE CONGRESSIONAL PURPOSE. OTHER THAN THE LABOR STANDARDS LAWS UNDER DISCUSSION WE KNOW OF NONE OTHERWISE APPLICABLE TO THESE CONTRACTS AND NONE HAVE BEEN SUGGESTED. CERTAINLY THE WORDS "EXCEPT APPLICABLE LABOR STANDARDS PROVISIONS," HAVING BEEN CAREFULLY CONSIDERED BY THE CONGRESS AND INCLUDED IN THE BILLS AS FLOOR AMENDMENTS, CANNOT BE SAID TO BE MEANINGLESS AND SERVE NO PURPOSE.

FURTHERMORE, THE DAVIS-BACON ACT IS APPLICABLE TO CONTRACTS IN EXCESS OF $2,000 TO WHICH THE UNITED STATES IS A PARTY FOR THE CONSTRUCTION, ALTERATION, AND/OR REPAIR OF PUBLIC BUILDINGS OR PUBLIC WORKS OF THE UNITED STATES, WHICH REQUIRE OR INVOLVE THE EMPLOYMENT OF MECHANICS AND LABORERS. UNDER THE PROPOSED AGREEMENT TO BUILD, LEASE AND CONVEY, A BIDDER AGREES TO EXECUTE A GROUND LEASE AS LESSEE OF GOVERNMENT-OWNED LAND, ERECT CERTAIN BUILDINGS ON THE LAND FOR THE USE OF THE POST OFFICE DEPARTMENT AND, UPON COMPLETION OF THE BUILDINGS, EXECUTE A LEASE-PURCHASE AGREEMENT WHICH WILL PROVIDE FOR THE VESTING OF TITLE IN THE GOVERNMENT AT OR BEFORE THE EXPIRATION OF THE LEASEHOLD TERM. CONSIDERING THESE AGREEMENTS TOGETHER, IT REASONABLY MAY BE ASSUMED THAT THE CONTRACTS ARE AGREEMENTS FOR CONSTRUCTION OF BUILDINGS TO WHICH THE UNITED STATES IS A PARTY AND THAT THE LEASING OF THE BUILDINGS IS ONLY INCIDENTAL TO THE CONSTRUCTION. IN THIS VIEW, THE DETERMINATION AS TO THE APPLICABILITY OF THE DAVIS-BACON ACT IS DEPENDENT UPON WHETHER THE WORK TO BE PERFORMED CONSISTS OF PUBLIC BUILDINGS OR PUBLIC WORKS OF THE UNITED STATES.

YOUR SOLICITOR POINTS OUT THAT THE COURT IN CONSTRUING THE HEARD ACT OF AUGUST 13, 1894, 28 STAT. 278, HELD, IN THE CASE OF MAIATICO CONSTRUCTION COMPANY V. UNITED STATES, SUPRA, THAT A ,PUBLIC BUILDING" OR "PUBLIC WORK" IS CONFINED TO THOSE CONTRACTS INVOLVING PUBLIC BUILDINGS OR PUBLIC WORKS OF WHICH THE OWNERSHIP IS IN THE FEDERAL GOVERNMENT. SUBSEQUENT TO THAT DECISION, HOWEVER, THE SUPREME COURT HAD FOR CONSIDERATION THE APPLICABILITY OF THE MILLER ACT, WHICH STRENGTHENED AND MODIFIED THE HEARD ACT, TO THE CONSTRUCTION OF A LIBRARY AT HOWARD UNIVERSITY, UNITED STATES TO THE USE OF THE NOLAND COMPANY V. IRWIN, 316 U.S. 23. IN HOLDING THAT THE LIBRARY WAS A PUBLIC WORK, THE COURT SAID: WHATEVER MAY HAVE BEEN THE VALIDITY OF THIS NARROW FORMULA (THAT LAID DOWN IN THE MAIATICO CASE) WHEN APPLIED TO THE HEARD ACT, WE CANNOT APPROVE ITS APPLICATION TO THIS SUIT UNDER THE MILLER ACT. IN THE FIRST PLACE, THE WHOLE CONCEPT OF "PUBLIC WORKS" HAS BEEN CONSIDERABLY ALTERED SINCE THE ENACTMENT OF THE HEARD ACT IN 1894, AND PARTICULARLY WITHIN THE LAST DOZEN YEARS, AND THE QUESTION OF TITLE TO THE BUILDINGS OR IMPROVEMENTS OR TO THE LAND ON WHICH THEY ARE SITUATED IS NO LONGER OF PRIMARY SIGNIFICANCE. * * *

IN THIS CASE THE SUPREME COURT CITED WITH APPROVAL THE DECISION IN PETERSON V. UNITED STATES, 119 F.2D 145. IN THE PETERSON CASE THE COURT HELD THAT THE HEARD ACT WAS APPLICABLE TO A CONTRACT ENTERED INTO BY THE ARMY ENGINEERS FOR CONSTRUCTION OF A NEW RAILROAD ROADBED AND TUNNEL WHICH WOULD BECOME THE PROPERTY OF THE MUSKINGUM WATERSHED CONSERVANCY DISTRICT, A POLITICAL SUBDIVISION OF THE STATE OF OHIO. IN ITS OPINION THE COURT SAID:

* * * " PUBLIC WORK" AS USED IN THE ACT INCLUDES ANY WORK IN WHICH THE UNITED STATES IS INTERESTED AND WHICH IS DONE FOR THE PUBLIC AND FOR WHICH THE UNITED STATES IS AUTHORIZED TO EXPEND FUNDS. * * *

AS WE VIEW THE ACT HERE IN QUESTION, IT INCLUDES (A) WORK DONE ON PROPERTY BELONGING TO THE UNITED STATES, (B) ALL FIXED WORK CONSTRUCTED FOR PUBLIC USE AT THE EXPENSE OF THE UNITED STATES.

IT SEEMS CLEAR FROM THESE DECISIONS THAT THE OWNERSHIP OF THE BUILDING IS NOT THE SOLE CRITERION FOR DETERMINING WHETHER THE CONTRACTS INVOLVE THE CONSTRUCTION OF A "PUBLIC BUILDING" OR "PUBLIC WORK.' AS THESE DECISIONS INDICATE, THERE IS FOR CONSIDERATION THE FURTHER QUESTION AS TO WHETHER THE WORK IS BEING CONSTRUCTED FOR PUBLIC USE AT THE EXPENSE OF THE UNITED STATES. THERE CAN BE LITTLE DOUBT THAT THE CONSTRUCTION OF A POST OFFICE PROMOTES A PUBLIC OBJECT AND IS FOR THE BENEFIT OF THE PUBLIC AT LARGE. ALSO, WHILE THE BUILDING MAY BE CONSTRUCTED WITH PRIVATE FUNDS, THE COST OF CONSTRUCTION IS EVENTUALLY PAID FOR FROM APPROPRIATED FUNDS. IT IS OUR OPINION, THEREFORE, THAT THE PROVISIONS OF THE DAVIS-BACON ACT ARE APPLICABLE TO THE CONTRACTS.

THE EIGHT-HOUR LAW APPLIES TO EVERY CONTRACT MADE BY, OR ON BEHALF OF THE UNITED STATES, WHICH INVOLVES THE EMPLOYMENT OF LABORERS OR MECHANICS. THE ANTI-KICKBACK ACT APPLIES WHERE ANY PERSON IS EMPLOYED IN THE CONSTRUCTION, PROSECUTION, COMPLETION OR REPAIR OF ANY PUBLIC BUILDING, PUBLIC WORK, OR BUILDING OR WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES. SINCE THE CONTRACTS INVOLVE THE EMPLOYMENT OF LABORERS AND MECHANICS ON A PUBLIC WORK OF THE UNITED STATES THESE LAWS ARE LIKEWISE APPLICABLE TO THE LEASE-PURCHASE AGREEMENTS. ALSO, AS STATED BY YOUR SOLICITOR, IT FOLLOWS THAT THE BOND REQUIREMENTS OF THE MILLER ACT ARE APPLICABLE.

TURNING NOW TO THE PROPOSED PROCEDURES GENERALLY, IN PART II OF THE GROUND LEASE, PARAGRAPH 6, IT IS PROVIDED THAT THE GOVERNMENT MAY TAKE OVER THE WORK AND CHARGE THE CONTRACTOR OR HIS SURETIES WITH ANY EXCESS COST INCURRED SHOULD THE CONTRACTOR DELAY OR DEFAULT IN PROSECUTING THE WORK. THIS RAISES A QUESTION, NOT ONLY AS TO HOW THE REMAINING WORK WOULD BE ACCOMPLISHED AND PAID FOR, BUT ALSO AS TO HOW THE DEFAULTING CONTRACTOR COULD BE PAID FOR THE WORK PERFORMED PRIOR TO HIS DEFAULT, SINCE THE ONLY BASIS FOR REIMBURSING THE CONTRACTOR WOULD BE THROUGH THE ANNUAL RENTAL PAYMENT UNDER THE LEASE-PURCHASE AGREEMENT.

IT IS SUGGESTED THAT LINE 11 OF PARAGRAPH 7 BE AMENDED BY INSERTING AFTER THE WORD "FAITH" THE WORDS "OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' THIS WOULD CONFORM TO PUBLIC LAW 356, APPROVED MAY 11, 1954, 68 STAT. 81.

OTHER THAN THE ABOVE WE HAVE NO FURTHER COMMENTS TO MAKE AT THIS TIME REGARDING THE PROPOSED PROCEDURE. IT MUST BE UNDERSTOOD, HOWEVER, THAT THE FACT THAT THIS PROCEDURE WAS SUBMITTED HERE FOR COMMENT MAY NOT BE VIEWED AS PRECLUDING OUR OFFICE FROM TAKING SUCH ACTION WITH REGARD TO LEASE-PURCHASE TRANSACTIONS AS MIGHT BE NECESSARY TO THE PROPER PERFORMANCE OF ITS DUTIES UNDER THE LAW.