B-162944, DEC. 8, 1967

B-162944, DEC. 8, 1967

BIDS - WAGE RATE DETERMINATION CHANGES DECISION TO VETERANS ADMINISTRATION ADVISING THAT AWARD ON BASIS OF WAGE RATE OTHER THAN ONE IN BID INVITATION WOULD NOT BE PROPER. AWARD OF CONTRACT ON BASIS OF INCREASED WAGE RATE DETERMINED AFTER BID OPENING WOULD BE CONTRARY TO THE DAVIS-BACON ACT, 40 U.S.C. 276A. ALSO, AN AWARD TO A BIDDER ON THE BASES OF AN AGREEMENT TO PAY INCREASED WAGE RATES PREVAILING AT TIME OF AWARD AS CONDITION TO EXTENSION OF WAGE RATE DETERMINATION EXPIRATION DATE WOULD BE TANTAMOUNT TO AWARD UPON TERMS NEGOTIATED AFTER BID OPENING AND WOULD VIOLATE PRINCIPLES OF COMPETITIVE BIDDING PROCEDURE. HOWEVER, EVEN THOUGH A WAGE RATE DETERMINATION ELAPSES BEFORE AWARD SUCH WAGE DETERMINATION COULD BE INCLUDED IN CONTRACT TO BE AWARDED PROVIDED THAT THE BID HAD NOT EXPIRED AND AN EXTENSION IS GRANTED.

TO MR. DRIVER:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 17, 1967, FROM MR. R. M. FARRAR, CONSTRUCTION CONTRACTING OFFICER (FILE 086D), CONCERNING THE PROPER ACTION TO BE TAKEN IN CONNECTION WITH DEPARTMENT OF LABOR WAGE RATE DETERMINATION NO. AH-77, APPLICABLE TO THE CONSTRUCTION OF VETERAN'S ADMINISTRATION PROJECT NO. 09-5240 FOR A LAUNDRY BUILDING AT THE LAKE CITY, FLORIDA, HOSPITAL.

BIDS FOR THE PROJECT WERE OPENED ON OCTOBER 3, 1967, AND THE WAGE RATES INCLUDED IN THE ADVERTISEMENT WERE SCHEDULED TO EXPIRE NOVEMBER 22, 1967. THE CONTRACTING OFFICER SAYS THAT SINCE ALL CONSTRUCTION AWARDS OTHER THAN THOSE DIRECTLY RELATED TO THE VIET NAM CONFLICT HAVE BEEN DELAYED, YOUR ADMINISTRATION REQUESTED THE DEPARTMENT OF LABOR TO EXTEND THE EXPIRATION DATE OF THE AFOREMENTIONED WAGE RATE DETERMINATION IN ACCORDANCE WITH DEPARTMENT OF LABOR REGULATIONS.

THE REGULATION INVOLVED, NAMELY 29 CFR 5.4 (A), PROVIDES THAT WAGE DETERMINATIONS INITIALLY ISSUED SHALL BE EFFECTIVE FOR 120 CALENDAR DAYS FROM THE DATE OF DETERMINATION. IF SUCH A WAGE DETERMINATION IS NOT USED IN THE PERIOD OF ITS EFFECTIVENESS, IT IS VOID. IF IT APPEARS THAT A WAGE DETERMINATION MAY EXPIRE BETWEEN BID OPENING AND AWARD, AGENCIES ARE INSTRUCTED TO REQUEST A NEW WAGE DETERMINATION SUFFICIENTLY IN ADVANCE OF THE BID OPENING TO ASSURE PRIOR RECEIPT THERETO. HOWEVER, WHEN DUE TO UNAVOIDABLE CIRCUMSTANCES A DETERMINATION EXPIRES BEFORE AWARD AND AFTER BID OPENING, THE SOLICITOR OF LABOR UPON A WRITTEN FINDING TO THAT EFFECT BY THE HEAD OF THE FEDERAL AGENCY IN INDIVIDUAL CASES MAY EXTEND THE EXPIRATION DATE OF A DETERMINATION WHENEVER HE FINDS IT NECESSARY AND PROPER IN THE PUBLIC INTEREST TO PREVENT INJUSTICE OR UNDUE HARDSHIP OR TO AVOID SERIOUS IMPAIRMENT IN THE CONDUCT OF GOVERNMENT BUSINESS.

ON NOVEMBER 14, 1967, THE DEPARTMENT OF LABOR ANSWERED YOUR REQUEST FOR AN EXTENSION AS OLLOWS: "WE HAVE REVIEWED THE WAGE DETERMINATION IN QUESTION AND FIND THAT THERE HAVE BEEN SEVERAL CHANGES IN WAGE RATES SINCE THIS DETERMINATION WAS ISSUED. THEREFORE, ON THE CONDITION THAT BEFORE THE CONTRACT IS AWARDED, YOU OBTAIN THE AGREEMENT OF THE PROSPECTIVE CONTRACTOR THAT HE WILL PAY THE WAGE RATES PREVAILING AT THE TIME OF ENTERING INTO THE CONTRACT, AND THAT THIS REQUIREMENT IS INCORPORATED IN THE CONTRACT AND IS FULLY BINDING ON THE CONTRACTOR AND SUBCONTRACTORS, THE EXPIRATION DATE OF WAGE DECISION NO. AH-77 IS EXTENDED TO DECEMBER 22, 1967.'

OUR DECISION IS REQUESTED AS TO WHETHER YOU MAY ENTER INTO A CONTRACT BASED ON THE NEGOTIATION OF INCRESED WAGE RATES AS STIPULATED BY THE SOLICITOR OF LABOR AS A CONDITION TO EXTENDING THE WAGE RATE DETERMINATION EXPIRATION DATE. WE HAVE BEEN ADVISED INFORMALLY THAT YOUR QUESTION ALSO INCLUDES THE SITUATION WHERE THE PROSPECTIVE CONTRACTOR AGREES TO PAY THE MINIMUM WAGE RATES DETERMINED TO BE PREVAILING AT THE TIME OF AWARD WITHOUT ANY COMPENSATING ADJUSTMENT IN THE BID PRICE.

THE DAVIS-BACON ACT, 40 U.S.C. 276A, REQUIRES THAT "THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2,000 * * * FOR CONSTRUCTION * * * SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING * * *.' IN CONSTRUING THIS STATUTORY LANGUAGE, WE HAVE HELD THAT, AS A GENERAL RULE, THE MINIMUM WAGE RATES SO REQUIRED CANNOT BE INCOPORATED IN A CONTRACT IN ANY WAY OTHER THAN AS STIPULATED IN THE STATUTE--THAT IS BY INCLUSION IN THE SPECIFICATIONS UPON WHICH BIDS OR PROPOSALS LEADING TO THE CONTRACT WERE INVITED. 40 COMP. GEN. 565; 42 ID. 410. WE HAVE ALSO HELD THAT A SPECIFICATION PROVISION THAT CONTRACTORS SHALL PAY MINIMUM WAGE RATES AS DETERMINED BY THE SECRETARY OF LABOR, WHETHER SUCH DETERMINATIONS ARE RECEIVED BEFORE OR AFTER BID OPENING, WOULD NOT BE IN ACCORDANCE WITH THE STATUTE. 40 COMP. GEN. 48. THEREFORE, WE CONCLUDE THAT THE AWARD OF A CONTRACT ON THE BASIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED IN THE BID INVITATION OR AMENDMENT THEREOF ISSUED PRIOR TO BID OPENING IS NOT IN ACCORDANCE WITH THE DAVIS-BACON ACT AND AS SUCH IS CONTRARY TO LAW. 44 COMP. GEN. 776. IN ADDITION, AN AWARD MADE ON THE BASIS SUGGESTED BY THE DEPARTMENT OF LABOR IN THIS INSTANCE WOULD NOT BE AN AWARD BASED UPON THE BID SUBMITTED BUT UPON TERMS NEGOTIATED AFTER BID OPENING AND WOULD THEREFORE VIOLATE THE BASIC PRINCIPLES OF THE COMPETITIVE BIDDING PROCEDURE. ACCORDINGLY, YOU MAY NOT PROPERLY AWARD THE CONTRACT IN QUESTION UNDER THE TERMS STIPULATED BY THE DEPARTMENT OF LABOR.

OF COURSE EVEN THOUGH THE STATED EFFECTIVE PERIOD OF THE SUBJECT WAGE DETERMINATION HAS ELAPSED, THERE WOULD BE NO OBJECTION TO ITS BEING INCLUDED IN A CONTRACT AWARDED UNDER THE SUBJECT INVITATION PROVIDED THE BID HAD NOT EXPIRED AND AN EXTENSION THEREOF IS PROPERLY REQUESTED AND GRANTED PURSUANT TO 29 CFR 5.4 (A). CF. 45 COMP. GEN. 325.