B-131962, AUG. 14, 1957

B-131962, AUG. 14, 1957

TO LIEUTENANT COLONEL F. J. BEGLEY, FINANCE OFFICER, UNITED STATES AIR FORCE:

THERE HAS BEEN RECEIVED BY REFERENCE FROM THE COMMANDER, HEADQUARTERS, AIR FORCE FINANCE CENTER, YOUR LETTER OF APRIL 16, 1957, REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON BUREAU VOUCHER NO. 1591 IN THE AMOUNT OF $3,076.27, COVERING A CLAIM OF THE BOEING AIRPLANE COMPANY FOR REIMBURSEMENT UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. AF33-/038/- 21096 DATED NOVEMBER 7, 1952, OF ALLOCATED PORTIONS OF BACK WAGES, F.I.C.A. AND UNEMPLOYMENT COMPENSATION TAXES PAID AS A RESULT OF A DECISION RENDERED BY THE UNITED STATES COURT OF APPEALS, NINTH CIRCUIT, IN THE CASE OF BOEING AIRPLANE COMPANY V. NATIONAL LABOR RELATIONS BOARD, 217 F.2D 369.

CONTRACT NO. AF33/038/-21096 WAS WRITTEN UNDER BASIC AGREEMENT AF33/038/- 4045 DATED SEPTEMBER 7, 1949, AND SUPERSEDED LETTER CONTRACTS AF33/038/- 21096 DATED FEBRUARY 14, 1951, AND AF33/038/-22706 DATED MARCH 19, 1951.

THE BOEING AIRPLANE COMPANY WAS INVOLVED IN A STRIKE WHICH BEGAN ON APRIL 22, 1948, AND ENDED SEPTEMBER 13, 1948. BOEING CLAIMED THAT THE STRIKE WAS ILLEGAL AND WITHDREW RECOGNITION OF AERONAUTICAL INDUSTRIAL DISTRICT LODGE NO. 751, WHICH HAD BEEN CERTIFIED IN 1938 AS THE BARGAINING AGENT OF BOEING'S PRODUCTION AND MAINTENANCE EMPLOYEES. THE COMPANY'S CONTENTION WAS UPHELD BY THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA WHICH REFUSED TO ENFORCE AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD TO COMPEL BOEING TO BARGAIN COLLECTIVELY WITH 751.

WHILE THE STRIKE WAS IN PROGRESS, A GROUP OF EMPLOYEES ORGANIZED ANOTHER UNION AND VIGOROUSLY ATTEMPTED TO ORGANIZE NEW EMPLOYEES AND RETURNING STRIKERS. THE STRIKE WAS MARKED BY VIOLENCE AND INTIMIDATION AND, ALTHOUGH MOST OF THE EMPLOYEES REPRESENTED BY 751 RETURNED TO WORK UNCONDITIONALLY, THEY CONTINUED A BELLIGERENT ATTITUDE TOWARD THE NEW UNION. FOLLOWING AN ELECTION ON NOVEMBER 1, 1949, 751 WAS AGAIN CERTIFIED AS THE BARGAINING AGENT OF BOEING'S EMPLOYEES. SINCE THEN 751 AND BOEING ENTERED INTO SEVERAL AGREEMENTS AND THE LABOR RELATIONS SEEM TO HAVE BEEN QUITE AMICABLE.

THE NATIONAL LABOR RELATIONS BOARD ISSUED A DECISION AND ORDER ON MARCH 26, 1953, DISMISSING THE MAJOR PORTION OF AN AMENDED COMPLAINT AGAINST BOEING AIRPLANE COMPANY BUT FINDING VIOLATION OF THE ACT, 29 U.S.C. 151 ET SEQ., IN CERTAIN PARTICULARS AND ORDERING THE COMPANY TO CEASE AND DESIST FROM CERTAIN ACTION AND REQUIRING REINSTATEMENT AND RESTORATION OF BACK PAY LOST BY CERTAIN EMPLOYEES. THE UNITED STATES COURT OF APPEALS, NINTH CIRCUIT, SUSTAINED THE ACTION OF THE BOARD IN CERTAIN RESPECTS, INCLUDING THE ORDER FOR RESTORATION OF THREE EMPLOYEES, TWO OF WHOM WERE SUSPENDED ON COMMITTEEMAN BADGES. THE OTHER EMPLOYEE WAS SUBSEQUENTLY SUSPENDED UPON THE RECOMMENDATION OF AN ASSISTANT FOREMAN, AND THE GENERAL FOREMAN TURNED THIS INTO A DISCHARGE BECAUSE THE EMPLOYEE "WAS AT THAT TIME VERY CLOSELY CONNECTED WITH THE UNION ACTIVITIES GOING ON AT THE PLANT THERE.'

THE COURT FOUND NO GROUNDS FOR QUESTIONING THE ACTION OF THE BOARD AND THE EXAMINER IN ORDERING THE REINSTATEMENT OF TWO OF THE THREE EMPLOYEES BUT ACCEPTED WITH RELUCTANCE THE AGREEMENT OF THE BOARD AND THE TRIAL EXAMINER AS TO THE REINSTATEMENT OF STANLEY BURRELL. IT WAS POINTED OUT THAT THE FOREMAN OF THE COMPANY ASKED BURRELL TO REMOVE HIS SHOP COMMITTEEMAN'S BADGE ON TWO OCCASIONS, THAT HE REFUSED EACH TIME AND WAS SUSPENDED ON THAT ACCOUNT, THAT HE DID NOT SEEK REEMPLOYMENT OF THE COMPANY THEREAFTER, NOR WAS IT OFFERED.

IN A MEMORANDUM ATTACHED TO BUREAU VOUCHER NO. 1591 THERE WAS FOUND NO BASIS TO DISTINGUISH THE SITUATION IN THE CASE OF TWO OF THE THREE INDIVIDUALS HERE INVOLVED FROM THE CASE REPORTED IN 22 COMP. GEN. 349. WAS HELD IN THAT DECISION THAT A GOVERNMENT CONTRACTOR, WHO DISCHARGED CERTAIN OF ITS EMPLOYEES AND SUBSEQUENTLY REINSTATED THEM WITH BACK PAY IN ORDER TO AVOID POSSIBLE PENALTIES UNDER THE PROVISIONS OF THE NATIONAL LABOR RELATIONS ACT, WAS NOT ENTITLED TO REIMBURSEMENT FOR THE BACK WAGES PAID TO SUCH EMPLOYEES. HOWEVER, THE MEMORANDUM SUGGESTS THE POSSIBILITY THAT THE BOEING AIRPLANE COMPANY MIGHT BE CONSIDERED TO BE ENTITLED TO SOME ADJUSTMENT IN THE CASE OF THE SUSPENSION OF STANLEY BURRELL, IN VIEW OF THE FACT THAT THE UNITED STATES COURT OF APPEALS, NINTH CIRCUIT, HAD STATED ITS RELUCTANCE TO ACCEPT THE AGREEMENT OF THE BOARD AND THE TRIAL EXAMINER AS TO THE SUSPENSION OF BURRELL.

A DOUBT IS EXPRESSED IN YOUR LETTER AS TO THE PROPRIETY OF MAKING REIMBURSEMENT OF ANY AMOUNT TO THE BOEING AIRPLANE COMPANY, INASMUCH AS THE VOUCHER COVERS PAYMENT OF WAGES FOR SERVICES NOT PERFORMED AND BECAUSE CONTRACT NO. AF33/038/-21096 WAS NOT ENTERED INTO BEFORE FEBRUARY 14, 1951, WHEREAS THE STRIKE STARTED IN 1948.

THE COMPANY HAS APPARENTLY ATTEMPTED TO SHOW THAT IT EXERCISED REASONABLE JUDGMENT IN THE HANDLING OF THE PROBLEMS ARISING OUT OF THE STRIKE BY REFERENCE TO THE FACT THAT BACK-PAY AWARDS WERE ORDERED IN ONLY THREE OF THE 269 CASES FILED IN PROTEST OF THE ACTIONS TAKEN BY THE COMPANY.

THE FACTS OF THE PRESENT CASE SEEM TO BE SUBSTANTIALLY DIFFERENT FROM THOSE CONSIDERED IN 22 COMP. GEN. 349. IN THAT CASE, THE NATIONAL LABOR RELATIONS BOARD HAD DEVELOPED EVIDENCE STRONGLY SUPPORTING THE CHARGES MADE IN A COMPLAINT FILED BY THE UNION, AND THE CONTRACTOR WAS CONFRONTED WITH A PROBABLE DECISION IN FAVOR OF THE UNION AND THE EMPLOYEES. IN VIEW OF SUCH PROBABLE ADVERSE DECISION, A CONFERENCE WITH UNION OFFICIALS WAS HELD AND A SETTLEMENT LESS ONEROUS THAN THE DECISION OF THE LABOR BOARD WOULD HAVE BEEN WAS AGREED UPON. THERE WAS NO STRIKE AND THE CONTRACTOR WAS NO IN A POSITION TO CONTEST THE RIGHT OF THE UNION TO REPRESENT THE CONTRACTOR'S EMPLOYEES.

IN THE PRESENT CASE ABOUT 15,000 EMPLOYEES OF THE BOEING AIRPLANE COMPANY WENT OUT ON STRIKE AND BOEING'S CONTENTION THAT THE STRIKE WAS ILLEGAL WAS EVENTUALLY SUSTAINED BY THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA. APPARENTLY, THE COMPANY'S JUSTIFIED REFUSAL TO RECOGNIZE DISTRICT LODGE NO. 751 CAUSED MOST OF THE DIFFICULTIES ENCOUNTERED BY THE COMPANY AFTER THE STRIKE WAS ENDED. IT IS TO BE NOTED THAT IN DISCUSSING THE SUSPENSION OF STANLEY BURRELL THE UNITED STATES COURT OF APPEALS, NINTH CIRCUIT, STATED THAT:

"* * * MORE WEIGHT MIGHT HAVE BEEN GIVEN HERE TO THE HIGHLY EXPLOSIVE SITUATION WHERE THE UNION, THE INSIGNIA OF WHICH WAS BEING FLAUNTED, HAD JUST COME OFF A VIOLENT STRIKE SUBSEQUENTLY DECLARED ILLEGAL, HAD BEEN DECLARED BY THE COMPANY NO LONGER THE BARGAINING AGENT, AND WAS FACED WITH A RIVAL UNION FOR THE FIRST TIME. * * * THE MERE FACT THAT 751 WON AN ELECTION EVENTUALLY SHOULD NOT CONVICT THE COMPANY OF AN ILLEGAL ACTIVITY AT THIS TRANSITION STAGE. * * *"

THE QUESTION ARISES AS TO WHETHER A RELATIVELY FEW ERRORS IN JUDGMENT ON THE PART OF A GOVERNMENT CONTRACTOR INVOLVED IN SUCH SERIOUS LABOR DIFFICULTIES WOULD PRECLUDE REIMBURSEMENT UNDER A GOVERNMENT CONTRACT FOR AMOUNTS REQUIRED TO BE PAID IN CONNECTION WITH BACK-PAY AWARDS ORDERED BY THE NATIONAL LABOR RELATIONS BOARD. THE BOEING AIRPLANE COMPANY WAS FOUND TO HAVE VIOLATED THE PROVISIONS OF THE NATIONAL LABOR RELATIONS BOARD IN THE THREE INSTANCES HERE INVOLVED BUT IT IS OUR OPINION THAT SUCH VIOLATIONS MAY BE EXCUSABLE FROM THE STANDPOINT OF REIMBURSING ITS LABOR COSTS IN PERFORMING A GOVERNMENT COST-PLUS-A-FIXED-FEE CONTRACT.

HOWEVER, WE FAIL TO PERCEIVE ANY REASONABLE RELATIONSHIP BETWEEN THE BACK -PAY AWARDS AND THE COST OF PERFORMING CONTRACT AF33/038/ 21096. THE BASIC AGREEMENT UNDER WHICH THIS CONTRACT WAS WRITTEN WAS ENTERED INTO SEVERAL MONTHS AFTER THE STRIKE WAS ENDED AND CONTRACT AF33/038/-21096 PROVIDES AT PAGE 26 THAT:

"3. PURSUANT TO PARAGRAPH (B) (2) OF ARTICLE 3 OF BASIC AGREEMENT AF33/038/-4045, INCORPORATED HEREIN BY REFERENCE BY CLAUSE 1 ABOVE, ALL PROPER COSTS INCURRED BY THE CONTRACTOR ON AND AFTER 15 AUGUST 1950 SHALL BE ALLOWABLE ITEMS OF COST HEREUNDER.'

THUS, IT IS APPARENT THAT THE GOVERNMENT DID NOT UNDERTAKE UNDER THE BASIC AGREEMENT (AF33/038/-4045) OR CONTRACT AF33/038/-21096 TO REIMBURSE THE CONTRACTOR FOR ANY LABOR COSTS RESULTING FROM ILLEGAL OR OTHER IMPROPER ACTIONS OF THE CONTRACTOR PRIOR TO AUGUST 15, 1950, THE DATE ON WHICH PERFORMANCE OF WORK FOR THE GOVERNMENT APPEARS TO HAVE BEEN SCHEDULED FOR COMMENCEMENT.

ACCORDINGLY, YOU ARE ADVISED THAT ON THE PRESENT RECORD PAYMENT OF BUREAU VOUCHER NO. 1591 IS NOT AUTHORIZED. THE VOUCHER AND ITS ACCOMPANYING PAPERS ARE RETURNED HEREWITH.