Thomas & Sons entered into two federally-funded contracts with the U. S. Air Force for the construction and repair of concrete sidewalks, pads, and curbs at McGuire AFB in New Jersey. Both contracts incorporated by reference the labor standard provisions of the Davis Bacon Act, the U.S. Department of Labor Regulations at 29 C.F.R. Part 5, and the Contract Work Hours and Safety Standards Act. The first contract, in the approximate amount of $341,865, was awarded to Thomas & Sons in July of 1990. Attached to the contract was Wage Determination NJ 89-2 (Aug. 31, 1989), which specified a prevailing hourly rate of $21.01 for heavy and highway laborers (including a basic hourly wage of $16.15 and fringe benefits of $4.86). The second contract, in the approximate amount of $452,456, was awarded in September of 1993. It was subject to Wage Determination NJ 93-2 (Sept. 29, 1993), which specified a prevailing $26.70 hourly rate for heavy and highway laborers (basic hourly wage of $19.65 plus fringe benefits of $7.05). Thomas & Sons subcontracted most of the work performed under the two contracts to Zagari. D&O at 2-3.

   The ALJ concluded that Zagari had disregarded its obligations to its employees under the McGuire AFB contracts by failing to pay prevailing wages, fringe benefits and required overtime over a three-year period. D&O at 12. He also concluded that Zagari had knowingly falsified the certified payroll records submitted to the Air Force. Id. The ALJ reached these conclusions based upon the results of the investigation described above, the credible and corroborating testimony of former Zagari employees, and the failure of Zagari to offer any verifiable explanation of the discrepancies between the certified and home payroll records.

   In reaching his conclusions, the ALJ found that the evidence upon which the investigator relied in reconstructing the hours worked and computing the back wages and fringe benefits owed under the DBA and CWHSSA had "an indicia of reliability and accuracy," D&O at 9, and that Zagari's employees' testimony at hearing that they were not paid the prevailing wage "was fully consistent" with the investigator's findings and reconstructed payroll. Id. Accordingly, the ALJ held that the employees met their burden under Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), "by producing sufficient evidence to show they performed work for which they were improperly compensated." D&O at 9. By contrast, the ALJ found that Zagari had failed to meet its burden of proof under Mt. Clemens Pottery Co. "of demonstrating the precise number of hours worked or of presenting evidence to negate the reasonableness of the inference to be drawn from the employee's evidence." Id.

   In reviewing the ALJ's decision, the Board (as the designee of the Secretary) acts, pursuant to the Administrative Procedure Act, with "all the powers [the Secretary] would have in making the initial decision . . . ." 5 U.S.C. §557(b) (1994). See also 29 C.F.R. §7.1(d). Thus, the Board reviews the ALJ's findings of fact and conclusions of law de novo. Star Brite Construction Co., ARB No. 98-113, ALJ No. 97-DBA-12, slip op. at 4-5 (ARB June 30, 2000); Sundex, Ltd., ARB No. 98-130, ALJ No. 94-DBA-58, slip op. at 4 (ARB Dec. 30, 1999).

I. Zagari's Debarment

   The Davis-Bacon Act, which applies specifically to construction contracts entered into directly by the United States or the District of Columbia, mandates a three-year debarment for "persons or firms . . . found to have disregarded their obligations to employees and subcontractors." 40 U.S.C. §276-2(a) (emphasis added). The debarment procedures for violations of the DBA are found at 29 C.F.R. §5.12(a)(2). "Disregard for obligations" under the Act has been interpreted to mean a level of culpability beyond mere negligence, involving some element of intent. Structural Concepts, Inc., WAB No. 95-02 (Nov. 30, 1995). However, once a violation is established, the standard for debarment is a "bright line" test, i.e., a three-year debarment period is mandatory, without consideration of mitigating factors or extraordinary circumstances. G & O General Contractors, Inc., WAB No. 90-35 (Feb. 19, 1991).

   In addition to the statutory debarment requirement of the Davis-Bacon Act, the Labor Department's regulations include a separate regulatory debarment provision for violations of the Davis-Bacon Related Acts (listed at 29 C.F.R. §5.1) including CWHSSA. The regulatory debarment mechanism for violations of the Related Acts provides that:

Whenever any contractor or subcontractor is found . . . to be in aggravated or willful violation of the labor standards provisions of any of the applicable statutes listed in section 5.1 other than the Davis-Bacon Act, such contractor or subcontractor or any firm, corporation, partnership, or association in which such contractor or subcontractor has a substantial interest shall be ineligible for a period not to exceed 3 years . . . to receive any contracts or subcontracts subject to the Davis-Bacon or Related Acts.

were improperly compensated. The Administrator has carried his burden if he proves that the employees have

in fact performed work for which [they were] improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

328 U.S. at 687-688. Accord Joseph Morton Co., WAB No. 80-15 (July 23, 1984). As the Third Circuit (in which the instant case arises) has explained:

In the absence of adequate employer records of employees' wages and hours . . . the solution is not to penalize the employees by denying recovery based on an inability to prove the extent of undercompensated work, but rather to allow the employee or the Secretary to submit sufficient evidence from which violations of the Act and the amount of an award may be reasonably inferred.

Martin v. Selker Bros., Inc., 949 F.2d 1286, 1297 (3d Cir. 1991).

   Although the Administrator thus has the burden of establishing that the employees performed work for which they were improperly compensated, where the employer has not maintained adequate records as required by law or is otherwise unable to establish the precise amount of work performed, the Administrator must only "show the amount and extent of that work as a matter of just and reasonable inference." Mt. Clemens Pottery, 328 U.S. at 687.

   The evidence introduced by the Administrator establishes that Zagari's employees performed work on the McGuire AFB project for which they were not paid the prevailing wage rate, fringe benefits or overtime compensation to which they were entitled. The Administrator provided this evidence through the detailed testimony of the investigator about the methodology used in reconstructing the number of hours worked and the actual rate of pay received by the employees, which was corroborated by the testimony and written statements of several of Zagari's former employees. The ALJ found the testimony of the investigator and the employees to be credible. This evidence clearly establishes that Zagari, in the performance of the McGuire AFB contracts, failed to pay its employees the prevailing wage, fringe benefits and overtime pay required under the Davis-Bacon Act and the CWHSSA. Thus, we conclude that

the Administrator satisfied his initial burden of establishing, by just and reasonable inference per Mt. Clemens Pottery, that Zagari's employees had performed work for which they were not properly compensated.

   On the other hand, Zagari and Thomas & Sons failed to carry their burden of negating the inferences properly drawn from the Administrator's evidence. Despite Thomas & Sons' arguments on appeal, before the ALJ neither Zagari nor Thomas & Sons produced any records or other evidence as to the actual number of hours Zagari's employees worked on the McGuire AFB project. Thomas & Sons argues that the two sets of payroll records -- the certified payrolls and the "home" payroll -- reflect the fact that Zagari performed work for various contractors during the time period in question with the certified payrolls maintained for the McGuire AFB contracts, and the home payroll maintained for non-Davis-Bacon work. The argument fails because Zagari did not introduce any documentary evidence of specific non-Davis-Bacon contracts or of specific workweeks and hours worked on the other contracts. Notwithstanding the fact that Joseph Zagari personally recorded the number of hours worked by the employees at the McGuire AFB projects, Zagari failed to produce any records of the hours worked on the projects other than the certified payroll records. See D&O at 9. Joseph Zagari admitted at the hearing that he had no records for the non-Davis-Bacon work, and asserted that the records of hours worked by his employees on the alleged non-Davis-Bacon work got mixed up with the McGuire AFB records, T. 3/3/99 at 305, 307, 318, 326 and 350, while the underlying records of the hours his employees worked on the various contracts (namely Joseph Zagari's daily notes) were either destroyed or discarded. Id. at 271; 317-319. See D&O at 9. Joseph Zagari's credibility, the ALJ found, was undermined with regard to the foregoing by his assertion that the instant case was the first time he had ever had a problem with a government contract. That statement was contradicted by the testimony of another Wage and Hour investigator that Zagari had falsified payrolls and failed to pay the prevailing wage on another federally-assisted contract. D&O at 8, 11; T. at 248-50. At the same time, evidence Zagari did produce -- namely the certified payroll records showing that Zagari paid their employees $19.00 per hour throughout the project -- merely lends further support to the Administrator's case, because the prevailing rates on the two contracts required minimum hourly payments of $21.01 and $26.70, respectively.

   Thus, we agree with the ALJ that Zagari, and Thomas & Sons, failed to meet their burden under Mt. Clemens Pottery of demonstrating the "precise amount of work performed or [of providing] evidence to negative the reasonableness of the inference to be drawn" from the Administrator's evidence. 328 U.S. at 688. In the absence of such evidence, the ALJ was correct in concluding, as does this Board, that Zagari failed to pay its employees the proper prevailing wage rates, fringe benefits and overtime pay under the McGuire AFB contracts in the amount as determined by the Administrator to be due and owing.

   The Davis-Bacon Act provides, in relevant part:

[T]here may be withheld from the contractor so much of accrued payments as may be considered necessary by the contracting officer to pay to laborers and mechanics employed by the contractor or any subcontractor on the work the difference between the rates of wages required by the contract to be paid laborers and mechanics on the work and the rates of wages received by such laborers and mechanics and not refunded to the contractor, subcontractors, or their agents.

40 U.S.C. §276a(a). Thomas & Sons, as the prime contractor on the McGuire AFB projects, is properly held responsible for compliance by Zagari, its subcontractor, with the Davis-Bacon Act and CWHSSA contract requirements, and thus is responsible in the instant case for the payment of the back wages determined to be due and owing Zagari's employees. Silverton Construction Co., WAB No. 92-09 (Sept. 30, 1992); All Phase Electric Co., WAB No. 85-18 (June 18, 1986); Tap Electrical Contracting, WAB No. 84-1 (Mar. 4, 1985). See 29 C.F.R. §5.5(a)(6).

   Accordingly, it is ORDERED that:

   1. The contracting agency, McGuire AFB, shall turn over to the Administrator, to the extent of its liability, the sums withheld under both contracts with Thomas & Sons;

   2. The Administrator shall pay, out of monies withheld by the contracting agency from Thomas & Sons under the contracts herein at issue, back wages due all former Zagari employees it has identified;

   3. Any sums specified for payment to an identified employee which are not paid to said employee or his or her legal representative within a reasonable time not to exceed one year from this Final Decision because of inability, after reasonable diligence and with the full cooperation and assistance of Thomas & Sons and Zagari, to locate the employee or his or her legal representative, shall be deposited in the Treasury of the United States; and