B-218855, NOV 5, 1985, OFFICE OF GENERAL COUNSEL

B-218855, NOV 5, 1985, OFFICE OF GENERAL COUNSEL

BIDDERS - DEBARMENT - LABOR STIPULATION VIOLATIONS - DAVIS-BACON ACT SUBCONTRACTORS - DEBARMENT UNWARRANTED DIGEST: THE DEPARTMENT OF LABOR STATED THAT, IN VIEW OF THE CIRCUMSTANCES, IT WAS TAKING NO FURTHER ACTION (I.E., DEBARMENT) AGAINST A SUBCONTRACTOR FOR VIOLATIONS OF THE DAVIS-BACON ACT. BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THE SUBCONTRACTOR UNDERPAID THE EMPLOYEES, BUT THAT THE UNDERPAYMENTS APPEAR TO BE THE RESULT OF INADVERTENCE CAUSED BY IGNORANCE OR MISUNDERSTANDING OF THE LAW ON THE PART OF THE SUBCONTRACTOR AND MANAGERIAL DIFFICULTIES OF THE SUBCONTRACTOR DUE TO ITS PRESIDENT'S MAJOR SURGERY AND RELATED MENTAL STRAIN. THE RECORD DOES NOT CONTAIN ANY EVIDENCE OF WILLFUL VIOLATION OF THE DAVIS-BACON ACT. THEREFORE, THE SUBCONTRACTOR WILL NOT BE DEBARRED UNDER THE ACT.

SYLVESTER L. GREEN, DIRECTOR:

CONTRACT STANDARDS OPERATIONS

U.S. DEPARTMENT OF LABOR

ROOM S3518

200 CONSTITUTION AVENUE, N.W.

WASHINGTON, D.C. 20210

SUBJECT: PJR CONSTRUCTION CORP. - PRIME CONTRACTOR ALL COUNTIES SPRINKLER CO., INC. - SUBCONTRACTOR NANUET, NEW YORK CONTRACT NO. GS 02B-17230 YOUR FILE NO. NY-79-536

BY LETTER DATED AUGUST 20, 1984, YOU REQUESTED THAT WE DISTRIBUTE FUNDS IN THE AMOUNT OF $637.57 TO ONE EMPLOYEE OF ALL COUNTIES SPRINKLER CO., INC. (ALL COUNTIES), WHICH IS BEING HELD BY THIS OFFICE TO COVER UNDERPAYMENTS OF WAGES UNDER THE DAVIS-BACON ACT, 40 U.S.C. SECS. 276A TO 276A-5 (1982). AS TO WHETHER ALL COUNTIES SHOULD BE PLACED ON THE INELIGIBLE BIDDERS LIST, YOU STATED THAT THE DEPARTMENT OF LABOR (DOL) RECOMMENDED NO FURTHER ACTION. WE AGREE THAT THE EMPLOYEE SHOULD BE PAID AND THAT ALL COUNTIES SHOULD NOT BE DEBARRED.

ALL COUNTIES PERFORMED WORK AS A SUBCONTRACTOR, UNDER PRIME CONTRACT NUMBER GS-02B-17230 WITH THE GENERAL SERVICES ADMINISTRATION (GSA), INSTALLING FIRE SPRINKLERS AT THE U.S. CUSTOMS COURT HOUSE AND FEDERAL BUILDING IN NEW YORK, NEW YORK. THIS CONTRACT WAS SUBJECT TO THE DAVIS BACON ACT REQUIREMENTS THAT EMPLOYEES BE PAID CERTAIN MINIMUM WAGES, COMPOSED OF APPROPRIATE BASIC HOURLY RATES PLUS FRINGE BENEFITS. FURTHER, PURSUANT TO DOL REGULATIONS IMPLEMENTING THE ACT, 29 C.F.R. SEC. 5.5(A)(3) (1984), ALL COUNTIES WAS REQUIRED TO MAINTAIN AND SUBMIT CERTIFIED PAYROLL RECORDS CONTAINING, AMONG OTHER THINGS, EVIDENCE THAT THE REQUIRED MINIMUM WAGES WERE PAID TO EMPLOYEES.

GSA FOUND AS A RESULT OF AN INVESTIGATION, THAT FIVE EMPLOYEES OF ALL COUNTIES WERE UNDERPAID A TOTAL OF $10,388.05, IN VIOLATION OF PROVISIONS OF THE DAVIS-BACON ACT. ADDITIONALLY, GSA FOUND THAT 15 PAYROLLS SUBMITTED BY ALL COUNTIES WERE FALSIFIED.

GSA INITIATED ITS INVESTIGATION AFTER AN EMPLOYEE OF ALL COUNTIES ADVISED GSA THAT HE AND OTHER EMPLOYEES WERE ONLY BEING PAID THE BASIC RATE OF $10.07 PER HOUR (EXCEPT THE FOREMAN WHO WAS BEING PAID AT $11.07 PER HOUR) INSTEAD OF $10.07 PER HOUR PLUS $4.70 PER HOUR FOR FRINGE BENEFITS. THIS EMPLOYEE NOTIFIED GSA OF THIS INFORMATION AFTER FINDING A WAGE DETERMINATION LYING ON THE FLOOR. THE WAGE DETERMINATION HAD NOT BEEN POSTED, AS REQUIRED, AT THE WORKSITE. ALL EMPLOYEES WERE THEN INTERVIEWED AND CONFIRMED THAT, EXCEPT FOR THE FOREMAN WHO WAS BEING PAID $11.07 PER HOUR, THEY WERE BEING PAID $10.07 PER HOUR. THE RECORD ALSO SHOWS THAT ALL COUNTIES SUBMITTED CERTIFIED PAYROLLS SHOWING THAT EMPLOYEES WERE PAID AT THE PROPER RATE OF $14.77 PER HOUR INCLUDING FRINGE BENEFITS.

AFTER SPEAKING WITH THE EMPLOYEES, GSA INTERVIEWED ROY WILDENBERGER, PRESIDENT OF ALL COUNTIES. WILDENBERGER READILY ADMITTED THAT HE UNDERPAID HIS EMPLOYEES AND THAT THERE WAS A DISCREPANCY BETWEEN THE FIGURES ON THE PAYROLLS AND THE AMOUNTS PAID. HOWEVER, HE STATED, THE UNDERPAYMENTS WERE UNINTENTIONAL. WILDENBERGER STATED THAT, FROM THE INITIAL NEGOTIATION OF THE SUBCONTRACT TO THE PRESENT, HE HAD BEEN UNDER MEDICAL CARE, HOSPITALIZED AND OPERATED ON FOR BACK PROBLEMS. DURING THAT TIME, HE SUPERVISED THE WORK ON THE CONTRACT THROUGH HIS SUPERINTENDENT.

THIS WAS WILDENBERGER'S FIRST CONTRACT WITH THE GOVERNMENT AND, ALTHOUGH HE RECEIVED A COPY OF THE WAGE DETERMINATION, HE DID NOT EXAMINE IT. HE STATED THAT HE KNEW, HOWEVER, THAT HE HAD TO PAY HIS EMPLOYEE'S THE PREVAILING RATE AND THAT HE SURMISED THIS PREVAILING RATE WOULD BE APPROXIMATELY $9 OR $10 PER HOUR. HE STATED THAT HE CAME TO THE WORKSITE SHORTLY AFTER WORK STARTED AND THAT THE PRIME CONTRACTOR'S (PJR) JOB SUPERINTENDENT INFORMED HIM THAT HE WOULD HAVE TO PAY $10.07 PER HOUR TO HIS EMPLOYEES AND SUBMIT CERTIFIED PAYROLLS TO PJR. WILDENBERGER WAS ALSO INFORMED, BY THE SUPERINTENDENT, THAT UNION MEMBERS CAME TO THE WORKSITE ON THE FIRST DAY OF WORK AND THEY STATED THAT THE PREVAILING RATE WAS $10.07 PER HOUR.

DURING THE SECOND WEEK OF JOB PERFORMANCE UNDER THE CONTRACT, WILDENBERGER HAND-CARRIED TWO CERTIFIED PAYROLLS TO PJR INDICATING PAYMENT AT A RATE OF $10.07. AT THAT TIME, PJR'S SECRETARY INFORMED HIM TO LIST FRINGE BENEFITS ON THE PAYROLLS, IN ADDITION TO THE RATE OF $10.07, SHOWING A TOTAL OF $14.77 PER HOUR. WILDENBERGER REDID THE PAYROLLS AND DELIVERED THEM TO PJR.

ACCORDING TO WILDENBERGER, AT THAT TIME, HE WAS UNDERGOING A MENTAL STRAIN DUE TO IMPENDING MAJOR SURGERY AND THAT IT NEVER OCCURRED TO HIM THAT HIS EMPLOYEES WOULD HAVE TO BE PAID THE $4.70 PER HOUR IN FRINGE BENEFITS. HE STATED THAT HE FIRMLY BELIEVED HIS EMPLOYEES WERE TO BE PAID $10.07 PER HOUR AND THAT THE UNDERPAYMENTS WERE NOT INTENTIONAL. HE ALSO STATED THAT, WHEN HIS EMPLOYEES INFORMED HIM THAT THEY WERE SUPPOSED TO BE PAID $14.77 PER HOUR, HE IMMEDIATELY BEGAN DOING SO. FINALLY, HE STATED THAT HE WAS WILLING TO MAKE RESTITUTION FOR ANY UNDERPAYMENTS MADE UNDER THE DAVIS-BACON ACT.

SUBSEQUENTLY, RESTITUTION WAS MADE TO THOSE EMPLOYEES WHO COULD BE LOCATED AND A CHECK WAS FURNISHED TO THIS OFFICE IN THE AMOUNT OF $637.57 DUE ONE UNLOCATED EMPLOYEE WHO MOVED AND LEFT NO FORWARDING ADDRESS. THERE IS NO DISPUTE IN THE RECORD REGARDING THE $10,388.05 UNDERPAYMENTS TO THE EMPLOYEES. WILDENBERGER ADMITTED THAT HE UNDERPAID HIS EMPLOYEES AND RESTITUTION WAS MADE TO ALL EMPLOYEES THAT COULD BE LOCATED. THUS, THE REMAINING $637.57, ON DEPOSIT WITH OUR OFFICE, WILL BE DISTRIBUTED TO THE REMAINING EMPLOYEE IN ACCORDANCE WITH OUR ESTABLISHED PROCEDURES.

THE DAVIS-BACON ACT PROVIDES THAT THE COMPTROLLER GENERAL IS TO DEBAR PERSONS OR FIRMS WHOM HE HAS FOUND TO HAVE DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES UNDER THE ACT. 40 U.S.C. SEC. 276A-2. IN CIRCULAR LETTER B-3368, MARCH 19, 1957, WE DISTINGUISHED BETWEEN "TECHNICAL VIOLATIONS," NOT REQUIRING DEBARMENT AND "SUBSTANTIAL VIOLATIONS," REQUIRING DEBARMENT. NOTED THAT "TECHNICAL VIOLATIONS" RESULT FROM INADVERTENCE OR LEGITIMATE DISAGREEMENT CONCERNING CLASSIFICATION WHILE "SUBSTANTIAL VIOLATIONS" RESULT FROM INTENTIONAL ACTIONS EXHIBITING BAD FAITH OR GROSS CARELESSNESS IN OBSERVING THE MINIMUM WAGE OBLIGATIONS TO EMPLOYEES.

BASED ON OUR INDEPENDENT REVIEW OF THE RECORD, WE CONCLUDE THAT THE FAILURE TO PAY THE APPLICABLE MINIMUM WAGES WAS NOT SUFFICIENT TO WARRANT DEBARMENT. WE FIND NO EVIDENCE IN THE RECORD THAT ALL COUNTIES INTENTIONALLY FALSIFIED ITS PAYROLLS. RATHER, THE UNDERPAYMENTS AND ERRORS IN THE PAYROLLS APPEAR TO BE THE RESULT OF INADVERTENCE CAUSED BY IGNORANCE OR MISUNDERSTANDING OF THE LAW ON THE PART OF ALL COUNTIES AND MANAGERIAL DIFFICULTIES DUE TO WILDENBERGER'S MAJOR SURGERY AND RELATED MENTAL STRAIN. WE FIND NO EVIDENCE IN THE RECORD OF WILLFUL VIOLATION OF THE LABOR PROVISIONS OF THE DAVIS-BACON ACT. THEREFORE, WE DECLINE TO DEBAR ALL COUNTIES.