B-152524, MAY 8, 1964

B-152524, MAY 8, 1964

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO REPORT DATED JANUARY 17, 1964, FROM THE OFFICE OF THE CHIEF OF ENGINEERS, REFERENCE ENGGC-L, CONCERNING THE PROTEST OF MARTIN K. EBY CONSTRUCTION COMPANY, INC., AND ASSOCIATES, UNDER CONTRACT DA-04-548-ENG-48, FOR CONSTRUCTION OF MISSILE LAUNCH FACILITIES, TITAN II, PHASE II, AT MCCONNEL AIR FORCE BASE, KANSAS, THAT $31,777.25 IMPROPERLY HAS BEEN WITHHELD FROM IT AS MINIMUM WAGE ADJUSTMENTS DUE EMPLOYEES OF A SUPPLIER, WALT KEELER COMPANY, INC., IN ACCORDANCE WITH DAVIS-BACON ACT, 40 U.S.C. 276A, PROVISIONS.

THE REPORT ADVISED THAT EBY AND ASSOCIATES SUBCONTRACTED WITH THE KEELER COMPANY, A READY-MIX CONCRETE FIRM OF WICHITA, KANSAS, TO MIX AND DELIVER TO VARIOUS CONSTRUCTION SITES SOME 65,000 CUBIC YARDS OF CONCRETE WITH THE UNDERSTANDING THAT THEY WOULD PURCHASE AND PAY FOR ALL CONCRETE MATERIALS INCLUDING FREIGHT. THE SUBCONTRACTOR, TO FULFILL ITS COMMITMENT WITH THE CONTRACTOR AND A PRIOR COMMITMENT FOR PHASE I WORK WITH A DIFFERENT CONTRACTOR, ESTABLISHED SIX PORTABLE BATCHING PLANTS, SERVING EIGHTEEN MISSILE COMPLEX SITES,"SO LOCATED IN A 3,100 SQUARE MILE AREA OF SIX COUNTIES THAT EACH PLANT GENERALLY WOULD SERVE THREE COMPLEXES.' THE BATCHING PLANTS WERE SITUATED SO THAT NONE WAS MORE THAN 20 MILES FROM THE FARTHEST MISSILE INSTALLATION IT SERVED AND SOME PLANTS WERE LESS THAN ONE MILE FROM AN INSTALLATION.

IT ALSO WAS REPORTED THAT THE CONTRACTING OFFICER'S FINDING THAT THE KEELER COMPANY'S "WORK WAS THAT OF A SUBCONTRACT AND SUBJECT TO THE CONTRACT DAVIS-BACON ACT REQUIREMENT" WAS PROTESTED. THEREAFTER, AN OPINION WAS OBTAINED FROM THE REGIONAL ATTORNEY OF THE DEPARTMENT OF LABOR AT KANSAS CITY, MISSOURI, WHICH WAS APPROVED BY THE SOLICITOR OF LABOR IN A RULING DATED NOVEMBER 27, 1961, SIMILARLY HOLDING THAT THE KEELER COMPANY'S PERFORMANCE WAS AS A "SUBCONTRACTOR" AND THEREFORE SUBJECT TO THE REQUIREMENTS OF THE ACT INCORPORATED IN THE CONTRACT WITH EBY AND ASSOCIATES. IN VIEW OF UNSUCCESSFUL EFFORTS TO OBTAIN COMPLIANCE, $11,252.04 WAS WITHHELD TO COVER UNDERPAYMENTS UNDER THE ACT AND $20,525.21 WAS WITHHELD FOR CONCOMITANT EIGHT HOUR LAW UNDERPAYMENTS AND PENALTIES.

IT IS STATED THAT WITHHOLDINGS, IN THE AGGREGATE SUM OF $31,777.25, ARE BEING RETAINED IN THE ACCOUNTS OF THE CONTRACTING OFFICER "PENDING ACTION BY THE DEPARTMENT OF LABOR AND IN ANTICIPATION OF RESULTS OF MEETINGS * * * BEING HELD BY MEMBERS OF YOUR STAFF AND THAT OF THE SOLICITOR OF LABOR ON THE RESOLUTION OF ISSUES" INDICATED TO EXIST AS A RESULT OF THE HOLDING IN B-148076, DATED JULY 26, 1963, 43 COMP. GEN. - .

EXAMINATION OF THE REGIONAL ATTORNEY'S OPINION, DATED APRIL 28, 1961, WHICH WAS ADOPTED BY THE CITED RULING OF THE SOLICITOR OF LABOR, DISCLOSES THAT DAVIS-BACON ACT COVERAGE OF THE WORK PERFORMED AT AND IN THE BATCH PLANTS FROM WHICH THE CONTRACT WAS SERVICED, AND IN THE DELIVERY OF CONCRETE BETWEEN THEM AND THE COMPLEXES, WAS DETERMINED TO BE REQUIRED FOR REASONS EXPLAINED AS FOLLOWS:

"SUBSTANTIVELY, THE DAVIS-BACON ACT PROVIDES THAT A "CONTRACTOR OR HIS SUBCONTRACTOR" MUST PAY PREDETERMINED HOURLY RATES TO "LABORERS OR MECHANICS" WHO ARE EMPLOYED "DIRECTLY UPON THE SITE OF THE WORK.' * * *

"AUTHORITIES HAVE DEFINED A "SUBCONTRACTOR" AS ONE WHO PERFORMS PART OF THE JOB CALLED FOR BY THE PRIME CONTRACT, WHEREAS A MATERIALMAN IS ONE WHO CUSTOMARILY FURNISHES MATERIALS TO THE GENERAL PUBLIC. * * *

"THE WALT KEELER COMPANY, INC., MOVED FOUR PORTABLE BATCH PLANTS IN NEAR PROXIMITY TO THE SITES. THEIR SOLE PURPOSE IS TO SUPPLY CONCRETE TO THE MISSILE COMPLEXES. IT IS THE POSITION OF THE DEPARTMENT OF LABOR THAT WHERE BATCH PLANTS ARE SET UP EXCLUSIVELY FOR SUPPLYING MATERIALS TO A COVERED CONSTRUCTION PROJECT, THE PRODUCTION OF CONCRETE AT THE FOUR PLANTS AND SUBSEQUENT DELIVERY TO THE SITES IS IDENTIFIED AS THE WORK OF A "SUBCONTRACTOR" WITHIN THE MEANING OF THE ACT. THEREFORE, EMPLOYEES AT THE FOUR PLANTS AND TRUCK DRIVERS WHO DELIVER FROM THE FOUR PLANTS TO THE COMPLEXES ARE COVERED.

"WITH RESPECT TO THE QUESTION OF EMPLOYMENT "DIRECTLY UPON THE SITE OF THE WORK," EMPLOYEES AT THE FOUR BATCH PLANTS DO NOT GO ONTO THE COMPLEXES PROPER. TRUCK DRIVERS DO, BUT ONLY TO DELIVER THE CONCRETE FROM THE FOUR BATCH PLANTS. IN ORDER TO ASCERTAIN WHETHER THE ACTIVITIES ARE BEING PERFORMED UPON THE SITE OF THE WORK, FUNCTIONAL AS WELL AS GEOGRAPHICAL ASPECTS MUST BE CONSIDERED. THIS PHASE NEED NOT BE CONSTRUCTED TO THE NATURAL GEOGRAPHIC BOUNDARIES OF EACH PARTICULAR TITAN COMPLEX. CONSIDERING THE VARIANCE IN TYPE AND MAGNITUDE OF THE CONSTRUCTION, THE "SITE OF THE WORK" IS CAPABLE OF CONSISTING OF A LARGER AREA THAN THAT PHYSICALLY OCCUPIED BY THE FACILITY ITSELF. IT IS TRUE THAT THE FOUR BATCH PLANTS ARE NOT DIRECTLY UPON OR IMMEDIATELY CONTIGUOUS TO THE COMPLEX AREAS. NEVERTHELESS, THE PLANTS ARE CONVENIENTLY LOCATED TO THE AREA OF CONSTRUCTION, ARE THERE FOR THE SPECIFIC PURPOSE OF SUPPLYING A PORTION OF THE PRIME CONTRACT, AND ARE SO EXPLICITLY IDENTIFIED WITH THE PROJECT AREAS AS TO BE INTEGRAL PARTS OF THEM IN PRACTICAL EFFECT.'

FOR REASONS EXPLAINED IN B-148076, CITED ABOVE, IT IS OUR OPINION THAT THE DAVIS-BACON ACT DOES NOT UNDERTAKE TO PROVIDE MINIMUM WAGE COVERAGE FOR WORK OFF THE SITE, WHETHER BY CONTRACTORS, SUBCONTRACTORS, OR MATERIALMEN.

HOWEVER, WE HAVE RECEIVED A COPY OF A LETTER ADDRESSED BY THE SOLICITOR OF LABOR TO THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, DATED MARCH 23, 1964, STATING THAT THE DECISION OF THE DEPARTMENT OF LABOR HAS BEEN RECONSIDERED "WITH RESPECT TO THE NEED FOR CLASSIFICATIONS FOR THE EMPLOYEES OF THE WALT KEELER COMPANY, INC. * * *.' THE LETTER CONCLUDES WITH THE STATEMENT THAT THE LABOR DEPARTMENT WOULD HAVE NO OBJECTION TO THE RELEASE OF ANY WITHHELD FUNDS WHICH ARE NOT NECESSARY TO COVER ANY ADDITIONAL WAGES WHICH MAY OTHERWISE BE DUE AND ANY PENALTIES WHICH MAY OTHERWISE BE ASSESSED UNDER THE EIGHT HOUR LAWS.

WE AGREE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE GOVERNMENT WAS NOT LEGALLY ENTITLED TO WITHHOLD FROM EBY AND ASSOCIATES FUNDS TO ADJUST WAGE DIFFERENCES AS FOR COMPLIANCE WITH THE STATUTORY MINIMUM WAGE PROVISIONS OF THE PRIME CONTRACT, AND THE AMOUNT WITHHELD FOR THAT PURPOSE SHOULD BE RELEASED TO IT AT THIS TIME.

COPIES OF THIS DECISION ARE BEING FURNISHED TO THE CONTRACTOR AND TO THE SECRETARY OF LABOR FOR ..END :