In re: request for review and reconsideration
of wage determinations for six job classifications
employed on Contract No. DAKF 40-96-D-0009
at Fort Bragg, North Carolina
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For the Petitioner: Gilbert J. Ginsburg, Esq., Washington, D.C. Daniel B. Abrahams, Esq., Epstein Becker & Green, P.C., Washington, D.C.
For the Respondent: Joan Brenner, Esq., Douglas J. Davidson, Esq., Steven J. Mandel, Esq., U.S. Department of Labor, Washington, D.C.
For Intervenor Department of the Army: Alfred E. Moreau, Esq., Department of the Army, Rosslyn, Virginia
FINAL DECISION AND ORDER
This matter is before the Administrative Review Board (Board) on the Petition for Review filed by Russian and East European Partnerships, Inc. (Partnerships), pursuant to the McNamara-O'Hara Service Contract Act of 1965, as amended, 41 U.S.C. §351 et seq. (1994) (SCA or the Act). See 29 C.F.R. §§8.1(b)(6), 8.7(b)(2000).
In 1996, the Army awarded service contracts to Partnerships to operate ten learning, training and testing centers at Ft. Bragg, North Carolina. The SCA wage determinations applicable to the contracts did not include wage rates for various job classifications needed to perform the learning center work; thus, it was necessary to add the missing classifications and wage rates after the contracts were awarded.
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In a final ruling issued on October 20, 1998, the Wage and Hour Administrator's designee (Administrator) concluded that a specialized procedure known as "indexing" of wage rates (29 C.F.R. §4.6(b)(iv)(B) (2001)) was not available to Partnerships under the facts of this case. In addition, the Administrator issued conformed wage rates for the job classifications working on Partnerships' contracts, but at levels higher than had been proposed by the Army and Partnerships. This appeal followed.
Two major questions are before the Board for decision in this case. The first is whether the indexing methodology can be used by Partnerships to determine the SCA wage rates to pay its employees on the Ft. Bragg contracts. Second, if indexing is unavailable, we must decide whether the Administrator properly set the wage rates for the employees under the general SCA "conformance" procedure used to establish classifications and wage rates for service employee classifications not listed in a wage determination. See 29 C.F.R. §4.6(b).
In this decision, we first present an overview of the methodology for determining SCA prevailing wage and fringe benefit rates, including the conformance and indexing procedures. Next, we review the relevant facts and procedural history of this dispute. We conclude with our analysis of the legal issues presented by the parties.
Having reviewed the arguments of the parties and the administrative record in this matter, we conclude that the Administrator's October 20, 1998 final ruling is correct. Partnerships' Petition for Review therefore is denied.
BACKGROUND
I. Overview of the SCA wage determination, conformance and indexing procedures.
The SCA requires that every service procurement contract in excess of $2,500 entered into by the United States, the principal purpose of which is to provide services through the use of service employees in the United States, contain a provision specifying the minimum hourly wage and fringe benefit rates payable to the various classifications of service employees working on the service contract. See 41 U.S.C. §351(a)(1), (a)(2). The Wage and Hour Division publishes "area wage determinations" setting these minimum wage and fringe benefit rates based on the rates prevailing in the locality where the service contract will be performed.1
Although the labor standards problems on Partnerships' Fort Bragg contracts began in 1996 when the Army awarded the first learning center operations contract to Partnerships, the genesis of this matter goes back several years to earlier procurement periods.
Contract Period October 1, 1996 to September 30, 1997:
Classification
FGE
Hourly Rate
Learning Center Operator
GS-4
$ 9.55
Learning Center Monitor
GS-4
9.55
Test Administrator
Not Applicable
Language Librarian
GS-4
9.55
Language Coordinator
GS-6
12.65
Language Lab Technician
GS-3
8.77
In evaluating the reasonableness of the Administrator's conformed wage rates in this case, the primary question before us is whether the FGEs chosen by the Wage and Hour Division were appropriate to the levels of skills and duties performed by the affected classifications. In addition, we must consider whether the wage rates ultimately established by the Administrator "provide a reasonable relationship . . . between such unlisted classifications and the classifications listed in the wage determination." 29 C.F.R. §4.6(b)(2)(i).
The record on the skill level question is thorough and the Administrator's analysis reasonable. The October 20, 1998 final ruling demonstrates that the Administrator carefully considered each classification and arrived at an appropriate and well-reasoned understanding of the duties performed and the skills possessed by each of the service employee classifications working on the Fort Bragg contract. See AR Tab A at 3-5. The Wage and Hour Division examined the job
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descriptions which Partnerships had submitted (see AR Tab B at 10-36) but granted no credence to the job descriptions (or to Partnerships' recommended FGE levels), noting that:
All of the classifications that were submitted were determined by [Partnerships] to have lower FGE's than were determined by the Department. . . . [A] classification specialist reviewed the April 3 job descriptions on the conformance request and stated that it would be difficult to give true FGE's for the classifications based on the brief descriptions provided by [Partnerships]. The brief job descriptions or duty statements do not fully provide the nature of assignment or the level of responsibility. Further, because of the brevity of the job descriptions, background materials that were used in the December 17, 1997 conformance had to be used in this reevaluation because that was the only way in which assigning new FGE's for these classifications would be feasible.
AR Tab A at 3 (emphasis added). Instead of relying on Partnerships' cursory job descriptions, the Administrator looked to the description of the work to be performed found in the Army's contract documents. In addition, the Administrator relied on employee interview statements that had been collected by the Wage and Hour Division's investigator. The Administrator found that:
[T]he employees' job descriptions and the Army's statement of work for this contract, for each classification, are similar to each other; however, they are inconsistent with the job descriptions that were submitted by [Partnerships] in the April 3, 1998 conformance request. Moreover, the Language Coordinator occupational classification was omitted completely and should have been submitted for conformance in the April 3 request.
Id. These latter data sources - the Army's contract specification and the employee interviews - are more detailed than Partnerships' job descriptions, and have an underlying consistency. Comparing this data with Partnerships' presentation, the Administrator found that "[t]he wage rates that were proposed by [Partnerships] in the April 3 conformance request do not provide a reasonable relationship between the conformed classifications and those in the WD." AR Tab A at 2. The Administrator's decision to rely on the contract documents and the employee interviews was a reasonable exercise of his discretion in administering the Act, and this data adequately supports the resulting FGE levels established by the Division's classification specialist.15
1 A second type of wage determination - not at issue in this case - is based on the wage rates in collective bargaining agreements that govern the pay for the service employees at the particular contract site of performance. See 41 U.S.C. §353(c).
2 Prior to July 1992, final agency decisions under the SCA generally were issued by the Deputy Secretary of Labor, although some decisions were issued by the Secretary. See 29 C.F.R §8.0 (1991). From July 1992 until May 1996, final agency decisions under the SCA were issued by the Board of Service Contract Appeals. In May 1996, this function was delegated to this Board.
3 In its briefs, Partnerships asserts that the Labor Department in the past has not required prior notice to the contracting agency before using the indexing methodology. This issue is discussed below at pp. 11-13.
4 In this Final Decision and Order, citation to additional documents in the record before the Board are abbreviated as follows:
Amended Statement in Support of Petition for Review
Pet.
Statement of the Deputy Administrator in Response to Petition for Review
Am. Stmt.
Petitioner's Response to the Statement of the Administrator in Response to Petition for Review
Pet'r Resp.
Administrative Record
AR
5 There is no evidence suggesting that the Administrator was aware that the contractors at Ft. Bragg were engaged in this ad hoc "self-administered" conformance process, modeled on the slotting procedures sometimes used by the Administrator when developing wage determinations. See 29 C.F.R. §4.51(c). As the Administrator correctly notes (Am. Stmt. at 10-11), Partnerships, its predecessors and perhaps even the contracting agency repeatedly confuse "slotting" and "indexing," even though they are distinctly different methodologies. Although the Administrator often assigns conformed wage rates using a process analogous to slotting, the term "slotting" is never mentioned in the conformance regulation and therefore does not apply directly either to conformance actions or indexing. See 29 C.F.R. §4.6. (Curiously, even the Administrator is not immune from confusion on this issue, observing at one point that "Slotting is a procedure whereby wage rates may be established for use in issuing a wage determination or responding to a conformance request ...." Am. Stmt. at 10-11).
Although "indexing" can be implemented without the Wage and Hour Division's involvement under the very limited circumstances discussed above, nowhere do the SCA regulations allow contractors or contracting agencies to invent their own conformed wage rates.
6 Although the contract solicitation referenced a seventh service employee classification of Language Lab Technician (see AR Tab S at 123), the Army did not list this classification in the SF 98A.
7 The wage determination applicable to Partnerships' second contract period (WD 94-2393 (Rev. 4)) similarly did not include the File Clerk I or II classifications. See AR Tab O at 111; AR Tab S at 122-123 and 132-140.
8 The affiants included Cortez C. "Doc" Sembly, who worked as a project manager for A/S/K, ORC and Partnerships, and Kelly Kraft, who had supervised the work performed by A/S/K, ORC and Partnerships on the learning center contracts as the Army's contract administrator. These affidavits were submitted very late in the briefing process as attachments to Partnerships' rebuttal brief.
9 Apparently recognizing this fundamental problem, Partnerships argues that the Learning Center Operator classification actually was the General Clerk II, thereby claiming that one of the job classifications used on the Ft. Bragg contract actually was found in the wage determinations. See Pet'r Resp. at 11-12. This claim rests on a convoluted analysis of Partnerships' extra-record materials, working backward from Partnerships' 1999 procurement contract with the Army ( i.e., a period after the contract periods in dispute in the proceeding) to equate various job classifications named in the 1999 contract with job titles in earlier procurements. While Partnerships' argument is inventive, we decline to go outside the record in this case to reach this question.
10 It appears that the question of indexing had at least been broached by the Army, which offered inconsistent and inaccurate information about wage rates to Partnerships and other offerors.
During the Ft. Bragg contract solicitation process (on October 19, 1995), the Army had informed Partnerships that "indexing" was being used by the then-current contractor at Ft. Bragg, based on the Wage and Hour Division's 1990 conformance action and relying on the SCA wage determination rates for the General Clerk I and General Clerk II classifications. AR Tab O at 111. The Army further informed Partnerships that the indexing of wage rates for the missing service employee classifications was being based on wage determination "increases given to File Clerk I and II." Id. By 1995, the File Clerk classifications were no longer listed in the Ft. Bragg wage determinations; moreover, as noted supra, the predecessor contractors never had used a correct indexing methodology, but apparently had invented their own ad hoc self-administered conformance procedure.
On the other hand, the Army did provide to bidders two other items of information suggesting that indexing might not be available. First, in the same October 19, 1995 notice, the Army referred prospective contractors to the conformance procedures for setting wage rates for job classifications that were missing from wage determinations. Id. Second, the Army's November 8, 1995 information to bidders noted that the File Clerk classifications were not listed in the wage determination (WD 94-2393 (Rev. 3)) applicable to the 1995 Ft. Bragg procurement, plainly putting the parties on notice that one of the threshold requirements for indexing was missing. AR Tab M at 105. On the whole, we view the Army's contradictory information to bidders during the solicitation process as unhelpful at best, and misleading at worst.
11 Partnerships also argues that it was not required to provide advance notice to the Army that it planned to use indexing because "indexing was not required for the initial contract period, since the same wage rates were in [Partnerships'] WD that had been in ORC's WD. Thus, there were no wage rates to be 'adjusted' or 'indexed' for the initial contract period." Pet'r Resp. at 6-7. No citation to the Act or its regulations is offered to support this proposition, and we can find none.
In addition, Partnerships argues that advance notice was not necessary because "the Army already knew that indexing would be used. Indeed, the Army itself advised offerors that indexing had been used consistently since the original conformance action had been approved by DOL." Id. at 7. But as noted supra at n. 10, the Army's advice to bidders was inconsistent on this issue, and it appears that the so-called "indexing" that had been used by predecessor contractors was wholly outside the letter of the indexing regulation. Moreover, a contracting agency's or officer's advice cannot in any event supplant the requirements of the Secretary's regulations and interpretations, which are authoritative. See 29 C.F.R. §4.187(e)(5) ("Reliance on advice from contracting agency officials (or Department of Labor officials without the authority to issue rulings under the Act) is not a defense against a contractor's liability for back wages under the Act."). See also Le-Gals, Inc., No. 86-SCA-30 (Dep. Sec'y Aug. 7, 1987); Dick Enterprises, Inc., Wage Appeals Board Case No. 95-046A (Dec. 4, 1996) (contracting agency advice not binding on Administrator in Davis-Bacon and Related Act matters).
12 The WAB issued final agency decisions of the Department of Labor under the Davis-Bacon Act, 40 U.S.C. §276a (1994), and the so-called Davis-Bacon Related Acts (see 29 C.F.R. §5.1(2000)) from 1964 until 1996. The Davis-Bacon and Related Acts mandate payment of prevailing wage and fringe benefit rates on Federal and Federally-assisted construction contracts and is considered a "sister statute" of the SCA.
13 Partnerships did not submit a request for conformance of this classification.
14 In its April 3 conformance request, Partnerships requested a wage rate for a "Test Examiner" - a job title that had been used under the earlier A/S/K procurement - rather than the "Test Administrator" job position identified by the Army in its 1995 solicitation.
15 In support of their claim that the Administrator's FGE determination is excessive, Partnerships also relies on the affidavits of the Army's Fort Bragg contract administrator and Partnerships' project manager. However, as discussed supra, these documents were never presented to the Administrator for consideration during the administrative conformance process before the Wage and Hour Division and are not part of the administrative record in this case, and we therefore decline to rely on them at this stage of the proceeding.
16 Of course, Partnerships' argument with respect to the Instructor classification and its associated wage rate - claiming that the "education and training" job cluster in the wage determination is the occupational grouping most akin to the work performed by the learning center workers - is flatly inconsistent with Partnerships' broader argument that the learning center workers are the equivalent of file clerks.
