B-174413, APR 25, 1972

B-174413, APR 25, 1972

CONTRACTS - SEVERABILITY OF ROAD CONSTRUCTION AND TIMBER SALES - DAVIS BACON ACT - INTENTION OF PARTIES DECISION ALLOWING THE CLAIM OF MINNIS & WRIGHT, EXCAVATING AND GRADING CONTRACTORS, FOR AMOUNTS DUE INCIDENT TO THE APPLICATION OF THE WAGE RATE PROVISIONS OF THE DAVIS-BACON ACT TO A ROAD CONSTRUCTION AND TIMBER SALES CONTRACT IN CONNECTION WITH THE CONSTRUCTION OF A SECTION OF THE COTTONWOOD ROAD IN THE STANISLAUS NATIONAL FOREST. ALTHOUGH A SALE OF TIMBER WOULD NOT ORDINARILY FALL WITHIN THE SCOPE OF THE DAVIS-BACON ACT, ITS WAGE RATE REQUIREMENTS WOULD BE APPLICABLE TO A ROAD CONSTRUCTION CONTRACT AWARDED IN CONJUNCTION WITH A TIMBER SALE TO THE SAME PERSON OF FIRM. HOWEVER, IN THE INSTANT CASE, THE SPECIFICATIONS WERE AMBIGUOUS AND IT APPEARS THAT THE PARTIES CLEARLY INTENDED THE TWO CONTRACTS TO BE SEVERABLE FOR PURPOSES OF STATUTORY WAGE RATES. ACCORDINGLY, INCLUSION OF THE WORK WITHIN THE DAVIS-BACON COVERAGE CONSTITUTED A "CHANGE" UNDER THE "CHANGES" PROVISION OF THE CONSTRUCTION CONTRACT AND THE COMP. GEN. WOULD HAVE NO OBJECTION TO PAYMENT BY THE FOREST SERVICE OF THE NEGOTIATED AMOUNT.

TO MR. BLAINE BOWEN:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 22, 1971, WITH ENCLOSURES (6320 CONTRACTING), RELATIVE TO THE CLAIM OF MINNIS & WRIGHT, EXCAVATING AND GRADING CONTRACTORS, MILPITAS, CALIFORNIA, IN THE AMOUNT OF $8,385.80, ONE OF FOUR CLAIMS EXCEPTED FROM THE TERMS OF A RELEASE FURNISHED IN CONNECTION WITH THE CONSTRUCTION OF A SECTION OF THE COTTONWOOD ROAD IN THE STANISLAUS NATIONAL FOREST, UNDER CONTRACT NO. 39-2708, DATED APRIL 2, 1968.

MINNIS & WRIGHT AND GARN L. MOODY, A JOINT VENTURE, SUBMITTED THE SUCCESSFUL BID ON THE ROAD CONSTRUCTION PROJECT AT $426,723.60. THE ADVERTISED SPECIFICATIONS FOR THE CONTRACT INCLUDED, AS REQUIRED UNDER THE DAVIS-BACON ACT, AS AMENDED (40 U.S.C. 276A ET SEQ.), A PROVISION FOR THE PAYMENT OF WAGE RATES NOT LESS THAN THOSE SPECIFIED IN A WAGE DETERMINATION DECISION OF THE SECRETARY OF LABOR, DECISION NO. AH 6,145, DATED DECEMBER 3, 1967. THE SPECIFICATIONS FOR THE PROJECT INCLUDED AN ITEM FOR THE PERFORMANCE OF NECESSARY CLEARING AND GRUBBING WORK. SPECIFICATION ITEM 40, AS SUPPLEMENTED, CONTAINED A PROVISION THAT, WHERE CLEARING WAS BEING PERFORMED THROUGH NATIONAL FOREST LANDS, ALL PORTIONS OF LIVE AND DEAD PINE, CEDAR AND FIR TREES THAT ARE MERCHANTABLE SHALL BE DISPOSED OF BY THE CONTRACTOR; AND THAT, PRIOR TO CUTTING, THE CONTRACTOR SHALL ENTER INTO A CONTRACT WITH THE FOREST SUPERVISOR FOR THE PURCHASE OF THE TIMBER AT STUMPAGE RATES SET BY THE FOREST SERVICE. THE CONTRACTOR EXECUTED A TIMBER SALE CONTRACT ON APRIL 15, 1968.

THE CLAIM FOR $8,385.80 IS BASED UPON A CONTENTION THAT SOMETIME AFTER APRIL 15, 1968, THE CONTRACTOR WAS INFORMED BY THE FOREST SERVICE THAT THE TIMBER SALE CONTRACT WAS A PART OF THE ROAD CONSTRUCTION CONTRACT AND THAT THE CONTRACTOR, IN PERFORMING TIMBER SALE OPERATIONS, WOULD HAVE TO PAY NOT LESS THAN THE MINIMUM WAGE RATES SET FORTH IN THE DECISION OF THE SECRETARY OF LABOR, DATED DECEMBER 3, 1967. AS A RESULT OF RECEIVING SUCH ADVICE, THE CONTRACTOR EMPLOYED REGULAR UNION MEMBERS RATHER THAN THE PROFESSIONAL LOGGERS THE CONTRACTOR HAD ALLEGEDLY PLANNED TO USE. THE CONTRACTOR ORIGINALLY CLAIMED $16,492, CONTENDING THAT THE PURCHASE AND REMOVAL OF TIMBER WAS AN INDEPENDENT OPERATION WHICH DID NOT REQUIRE THE PAYMENT OF WAGE RATES CALLED FOR UNDER THE DAVIS-BACON ACT, AS AMENDED. THE CLAIM FOR $16,492 WAS REDUCED TO $8,385.80 THROUGH NEGOTIATION.

THE CONTRACTOR INTERPRETED THE SUPPLEMENTAL SPECIFICATIONS FOR ITEM 40 CLEARING AND GRUBBING-TO CALL FOR TWO SEPARATE CONTRACTS, ONE FOR ROAD CONSTRUCTION AND ANOTHER FOR REMOVAL OF THE MERCHANTABLE TIMBER. THE FOREST SERVICE CONSIDERS THE CONTRACTOR'S INTERPRETATION TO BE REASONABLE AND IN ACCORDANCE WITH THE ADMINISTRATIVE UNDERSTANDING AT THE TIME OF NEGOTIATING THE REDUCTION OF THE CONTRACTOR'S CLAIM FROM $16,492 TO $8,385.80. IN THAT CONNECTION IT WAS STATED, IN A PROPOSED CONTRACT CHANGE ORDER WHICH WOULD HAVE APPROVED PAYMENT OF THE AMOUNT OF $8,385.80 TO THE CONTRACTOR, THAT A FOREST SERVICE REPRESENTATIVE ERRONEOUSLY INFORMED THE CONTRACTOR THAT ALL WORK AT THE PROJECT SITE WAS UNDER ONE CONSTRUCTION CONTRACT.

IT IS ALSO STATED THAT THE FOREST SERVICE HAS SINCE RECOGNIZED THAT THE SPECIFICATIONS, AS WRITTEN FOR THE ROAD CONSTRUCTION CONTRACT, WERE AMBIGUOUS, AND IT HAS CLARIFIED SUBSEQUENT CONTRACTS AND SPECIFICATIONS. THE LATER CONTRACTS AND SPECIFICATIONS PROVIDE THAT ALL LABORERS AND MECHANICS INVOLVED IN FELLING, BUCKING AND SKIDDING OF MERCHANTABLE TIMBER TO THE LOG DECKS OR LOADING AREAS ARE TO BE PAID AT RATES NOT LESS THAN THOSE SET FORTH IN THE WAGE RATE DECISION OF THE SECRETARY OF LABOR WHICH IS MADE A PART OF THE CONTRACT. IT IS FURTHER PROVIDED THAT THE LABOR STANDARDS PROVISIONS SHALL NOT APPLY TO LABORERS, MECHANICS AND EQUIPMENT OPERATORS EMPLOYED IN REMOVING LOGS AS DECKED AND TO TRUCK DRIVERS TRANSPORTING LOGS TO MILLS.

HOWEVER, THE CONTRACTING OFFICER SUBSEQUENTLY QUESTIONED THE LEGALITY OF A SETTLEMENT ON THIS CLAIM. REFERENCE IS MADE TO OUR DECISION, B 171131, MARCH 17, 1971, WHERE WE HELD THAT A CONTRACT FOR THE SALE OF TIMBER UNDER SIMILAR CIRCUMSTANCES WAS MERELY AN ADJUNCT TO THE ROAD CONSTRUCTION CONTRACT AND THAT A CLAIM UNDER THE SALES CONTRACT PROPERLY COULD BE CONSIDERED IN ACCORDANCE WITH THE DISPUTES CLAUSE OF THE CONSTRUCTION CONTRACT. OUR OPINION ON THE PROPRIETY OF SETTLING THE PRESENT CLAIM IS THEREFORE REQUESTED.

THE DAVIS-BACON ACT APPLIES TO CONTRACTS IN EXCESS OF $2,000 "FOR CONSTRUCTION, ALTERATION, AND/OR REPAIR, INCLUDING PAINTING AND DECORATING, OF PUBLIC BUILDINGS OR PUBLIC WORKS OF THE UNITED STATES *** ." IT HAS BEEN OUR POSITION THAT THE MINIMUM WAGE RATES DETERMINED BY THE SECRETARY OF LABOR IN THE PARTICULAR CASE MUST BE INCORPORATED IN A CONTRACT IN THE MANNER 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 (1961); 42 ID. 410 (1963).

A SALE OF TIMBER WOULD NOT ORDINARILY FALL WITHIN THE SCOPE OF THE ACT. HOWEVER, A ROAD CONSTRUCTION CONTRACT AWARDED IN CONJUNCTION WITH A TIMBER SALE TO THE SAME PERSON OR FIRM MAY SUBJECT REASONABLE PORTIONS OF THE OPERATIONS UNDER THE TIMBER SALE, WHICH ALSO REPRESENT CLEARING AND GRUBBING OPERATIONS, TO THE REQUIREMENTS OF THE DAVIS BACON ACT, AS AMENDED. THE SPECIFICATIONS CURRENTLY IN USE RECOGNIZE THE NECESSITY FOR SUCH AN APPORTIONMENT.

IN THE INSTANT CASE, HOWEVER, THE SPECIFICATIONS CONTAINED NO SUCH CLARIFYING PROVISION. THEREFORE, IT IS NOT CLEAR FROM THE CONTRACT TERMS WHETHER THE DAVIS-BACON ACT COVERAGE EXTENDS TO THE PORTION OF THE WORK INVOLVED IN THE CLAIM. IN SUCH CIRCUMSTANCES, CONSIDERATION MAY PROPERLY BE GIVEN TO THE INTENTION OF THE PARTIES. THE ADMINISTRATIVE REPORT INDICATES THAT, AS EVIDENCED BY THE PROPOSED CHANGE ORDER, THE PARTIES TO THE CONTRACT DID NOT ORIGINALLY CONTEMPLATE THAT THE PORTION OF THE WORK UPON WHICH THE CLAIM IS MADE WOULD BE SUBJECT TO THE DAVIS-BACON ACT PROVISIONS OF THE CONSTRUCTION CONTRACT. IT THEREFORE APPEARS THAT THE SUBSEQUENT INCLUSION OF THE WORK WITHIN THE DAVIS-BACON COVERAGE CONSTITUTED A "CHANGE" UNDER THE "CHANGES" PROVISION OF THE CONSTRUCTION CONTRACT. IN OUR PRIOR DECISION, B-171131, SUPRA, THE INTENT OF THE PARTIES WAS NOT SHOWN TO BE CONTRARY TO THE CONCLUSION REACHED BY OUR OFFICE AS TO THE COVERAGE OF THE DISPUTES CLAUSE OF THE CONSTRUCTION CONTRACT. THE INSTANT CASE IS DISTINGUISHABLE FROM B-171131 IN THIS RESPECT.

ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT BY THE FOREST SERVICE OF THE NEGOTIATED AMOUNT OF $8,385.80 ON THE CONTRACTOR'S CLAIM AS A COMPLETE SETTLEMENT THEREOF IS AUTHORIZED, IF OTHERWISE CORRECT.