Record Tab F. The Corps further noted, however, that "the USDOL is the final arbiter and determiner of the proper wage rates contained in the various construction contracts," that the "union involved has the right to submit this to the USDOL for its ultimate resolution" and that the DOL "could conceivably reverse our decision and direct us to incorporate the heavy decision into the contract," but we "have not heard that this matter has been referred to the USDOL for its adjudication." Id.
In May and June 2000, private individuals working on the Central Energy Plant contract, as well as a representative of the Kentucky State District Council of Carpenters, requested that the local Louisville Wage and Hour office apply the higher "heavy" construction wage determination to the piping work on the Central Energy Plant contract. Record Tabs C, E.
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The request for the application of the "heavy" construction wage determination to the piping work portion of the contract progressed through the WHD's local office, regional office and finally to the national office resulting in an April 12, 2001 decision by the Acting Administrator of the Wage and Hour Administration.11
1 The U.S. Army Corps of Engineers desires a decision by the entire Board, rather than by a single member, as authorized at 29 C.F.R. § 7. This appeal has been assigned to a panel of three Board members, as authorized by Secretary's Order 1-2002. 67 Fed. Reg. 64,272 § 5 (Oct. 17, 2002).
2 The Act requires prime contractors and subcontractors to pay prevailing wage rates, as determined by the Secretary of Labor, to all laborers and mechanics that perform work on federal public construction contracts in excess of $2,000. The Secretary of Labor predetermines these prevailing wages by locality. The prevailing wage rates and labor standards provisions establishing the Act's requirements are included in each covered contract and are made part of the performance requirements of federal construction contracts.
3 The applicable wage determination for the new building portion of the Central Energy Plant contract.
4 The applicable wage determination for the utility piping distribution portion of the upgrade.
5 The Department of Labor has distinguished four types of construction for purposes of making prevailing wage determinations: building, residential, heavy and highway construction.
6 Prior to the establishment of the ARB in 1996, the WAB (Wage Appeals Board) was responsible for issuing final agency decisions under the DBA and its related Acts.
8 The Corps did not refer to the WHD the question of whether to incorporate the "heavy" construction wage rate into the Central Energy Plant contract.
9 The Corps concedes that the piping work "would normally be classified" using the higher "heavy" construction wage determination, see Corps Brief at 5. The Corps estimates the current (2001) costs of the piping work under the "heavy" construction wage would have added $3 million to the cost of the contract. Corps. Pet. for Rev. at 8. Foley contends that the piping work would have amounted to $13,455,953 or 22% of the total renovation contract. See Foley Brief at 4.
10 The Corps concedes that the piping work falls under the "heavy" construction wage determination. However, the Corps used the lower "building" construction wage to calculate costs and percentages. Corps Brief at 5.
11 On November 20, 2000, the local Louisville Wage and Hour Division office forwarded the inquiries to the regional Atlanta office, stating that the matter should be forwarded to the national office for a determination and opining that "since the ‘heavy' portion of the project is almost $12 million that is substantial per the WAB ruling in the Virginia Interstate Highway project even that at 19.3% it is less than the 20% called for in AAM [Nos.] 130 and 131." Record Tab C. On February 22, 2001, the WHD's regional Atlanta office requested that the national office issue a letter pursuant to 29 C.F.R. § 1.6(f) ordering the Corps to modify the contract to include the heavy wage decision for the piping work because the Corps had refused to do so. Record Tab B.
12 The record shows that the dispute over the proper wage determination was brought to the Corps' attention in December 1999, or at least prior to January 6, 2000. Construction began in early January 2000. The Corps states in its brief that it did not know until January 20, 2000, of these concerns.
13See generally ICA Constr. Corp. and Tropical Vill., Inc., WAB No. 91-31 (Dec. 30, 1991); Dairy Dev. Ltd., WAB No. 88-35 (Aug. 24, 1990); Granite Builders, Inc., WAB No. 85-22 (Jan. 27, 1986)(specifically holding that 29 C.F.R. § 1.6(f) was not applicable to the case). The Corps also relies, in part, upon Universities Research, Inc. v. Coutu, 450 U.S. 754, 761 n.9 (1981) (wherein the Supreme Court declined to address the issue) and General Accounting Office opinions at 40 Comp. Gen. 565 (1961) and 17 Comp. Gen. 471 (1937), which predate the promulgation of 29 C.F.R. § 1.6(f) and are not on point. See Farmer's Branch, WAB No. 90-19 (May 17, 1991).
In addition, the Corps relies on a holding in A.S. McGaughan Co., Inc., WAB No. 92-17 (May 26, 1993), which involved the responsibility of contractors to timely resolve questions as to which wage rates within a particular wage determination should be applied for the work done by the contractor before the contract award. McGaughan does not address, however, the authority of the Administrator to require, even after a contract award or after the beginning of construction, that another wage determination be applied to work performed under a contract other than the wage determination specified in the contract pursuant to 29 C.F.R. § 1.6(f), applicable in this case.
The Corps' reliance on the holding in Heavy Constructor's Ass'n of the Greater Kansas City Area, ARB No. 96-128 (ARB July 2, 1996), is also misplaced as that case is relevant to the Administrator's discretionary authority to retroactively correct a clerical error in a wage determination after a contract award or construction has begun pursuant to 29 C.F.R. 1.6(d), but not to the Administrator's authority under 29 C.F.R. § 1.6(f). Finally, the Corps' reliance on the holding in Almeda-Sims Sludge Disposal Plant, WAB No. 78-13 (Jan. 5, 1979), is misplaced because that decision holds that the WAB cannot direct that the wage rates included in a contract be changed after the contract's award, but does not address the Administrator's authority under 29 C.F.R. § 1.6(f).
14 The issue of whether the criteria are met in this case is the focus of discussion under the second issue discussed herein.
15 In this regard, the Acting Administrator notes that in 1987 and 1989 published editions of "Conducting Surveys for Davis-Bacon Construction Wage Determinations: Resource Book," the Wage and Hour Division has published that, as a guideline, "a portion of a project that is incidental to the rest of the project," which may be considered "in the same category as the main type of construction," "means less than $ one million and/or less than 20% of the total value of the project." Record Tab N. Similarly, the April 1998 and November 1994 editions of the USDOL Davis-Bacon Resource Book regarding Davis-Bacon Wage Determinations states that: "[t]he application of wage schedules/determinations for more than one type of construction is appropriate if such items that fall in a separate type of construction will comprise at least 20% of the total project cost and/or $1 million dollars cost" and "if such items that in themselves would be classified as a separate type of construction will be less than 20% of the total project cost and will cost less than $1 million dollars, they are considered incidental to the primary type of construction involved on the project, and a separate wage determination is not applicable." Record Tab M.
Finally, the Acting Administrator notes that in another case, the Administrator similarly advised the Corps by letter dated September 25, 1992, that "a project is considered mixed and more than one schedule of wage rates would be applied if the construction items are substantial in relation to the project cost," i.e., "valued at more than 20 percent of the total cost or at a cost of $1,000,000 or more." Record Tab J. Thus, in that case, the Administrator advised the Corps to apply a different, higher wage schedule to separate work that amounted to $2 million, $3 million and $4 million each, respectively, in an overall project whose total cost was over $100 million. Id.
16 We note that our deference to the Administrator's final determination in this case, in light of the Administrator's experience in these matters, was reached with some reluctance, given the Administrator's cursory reference to section 1.6(f) in support of the determination, without any further explanation or rationale provided, and given the scant record developed by the Administrator, which does not even include a copy of the contract at issue. While we, nevertheless, affirm the Administrator's determination pursuant to section 1.6(f) that the wage determination for "heavy" construction applies to the piping work portion of the Central Energy Plant contract, we can anticipate that such cursory rationales and factual records provided by the Administrator in the future will not provide the Board with sufficient means to look as favorably on the Administrator's determinations.
17 Foley and the Solicitor of Labor contend that the contract amount for the piping work (using the "heavy" construction wage rate) amounts to over $13 million or approximately 22% of the total amount of the contract.
18 AAM No. 130 states, in relevant part, "generally, for wage determination purposes, a project consists of all construction necessary to complete a facility regardless of the number of contracts involved so long as all contracts awarded are closely related in purpose, time and place." Record Tab K – AAM No. 130 at 2 n.1.
19 While the Corps asserts that the total cost of the Central Energy Plant contract is over $17 million, Foley asserts that the total cost is less than $17 million. Again, as the official record WHD in this case does not contain the Central Energy Plant contract, it is not possible to verify either the Corps' allegation, which was relied on by the Administrator, or Foley's allegation. The discrepancy is of no consequence in regard to this issue, however, because the piping portion of the Central Energy Plant contract would exceed the 20% threshold guideline in AAM Nos. 130 and 131 if the Central Energy Plant contract is considered as its own independent "project" using either the Corps' or Foley's figures.
20 Hereinafter the conditions contained in 29 C.F.R. § 1.6(f) will be referred to as "condition (1), (2), or (3)."
21See Farmer's Branch, WAB No. 90-19 (May 17, 1991) (holding that, where none of the contracts and subcontracts at issue contained Davis-Bacon wage determinations, § 1.6(f) permits the Administrator to retroactively include the appropriate wage rates in the contracts).
22See Titan IV Mobile Service Tower, WAB No. 89-14, slip op. at 7 (May 10, 1991).
23See All Agency Memorandum Nos. 130 and 131 found at Tab K, L.
24See Department of Army, Corps of Engineers'Petition for Review and Memorandum of Law, para. 13.
25 "Generally, multiple schedules are issued if the construction items are substantial in relation to the project cost—more than approximately 20 percent. Only one schedule is issued if construction items are ‘incidental' in function to the over-all character of the project …." Tab L, All Agency Memorandum No. 131, at 2. See also, at Tab N, "Conducting Surveys for Davis-Bacon Construction Wage Determinations: Resource Book," at 7 ("Incidental means less that $ one million and/or less than 20% of the total value of the project." (Emphasis supplied.)).
26 "[T]he Wage and Hour Division is aware that in some circumstances the category [of the wage determination] of a project may appear to be unclear or a literal application of the guidelines may be inappropriate." Tab L, All Agency Memorandum No. 131, at 1.
27 Tab A, Final Determination Letter dated April 12, 2001, at 2-3.
