Following an investigation by DOL's Wage and Hour Division into the wages paid in connection with the Turnkey Project, the Wage and Hour Regional Administrator directed HUD in a letter dated March 21, 1991 to withhold $500,000 from payments due Phoenix-Griffin until issues concerning back wages were resolved. CX 39. The Respondents and several subcontractors they employed on the project protested the Wage and Hour Division's determination that they had failed to pay prevailing wages as required by the DBRA on the Turnkey Project, noting that the withholding had stopped work on the projects, and they requested a hearing before an administrative law judge. ALJX 4, 5. In addition, Phoenix-Griffin filed a suit in District Court seeking to prevent the enforcement of the withholding order. The Phoenix-Griffin action was joined with the earlier case brought by the tenant advocacy organization, and Judge Pettine ordered HUD to pay Phoenix-Griffin the $500,000 that had been previously withheld and later held HUD in contempt for failing to comply. Project B.A.S.I.C. v. Kemp, 768 F.Supp. 21 (D.R.I. 1991). However, the First Circuit reversed the contempt order against HUD. 947 F.2d 11 (1991). As a result, the $500,000 continued to be withheld, and the Respondents never resumed work on the Turnkey Project.

   On August 15, 1991, the matter was referred to the Office of Administrative Law Judges for a formal hearing. ALJX 6, 7. As will be discussed in greater detail below, the alleged DBRA violations arose from the Respondents' failure to pay prevailing wages to workers at the prefabrication facility (the "Veazie Street plant") where the housing panels were manufactured, "subcontractors" of LTG who worked at the sites where the housing units were erected and individuals employed by Gatsby to clean the units. The Respondents did not dispute the Regional Administrator's allegations that prevailing wages were not paid, but they averred that the Government should be equitably estopped from holding them in violation of the DBRA because they relied on statements and guidance from HUD officials that workers at an off-site prefabrication facility, subcontractors and cleaners were exempt from prevailing wage requirements.

   On July 1, 1993, Administrative Law Judge David W. DiNardi issued a decision and order in which he determined that the Respondents had failed to pay prevailing wages required by the DBRA on the Turnkey Housing Project. Specifically, Judge DiNardi found that the Veazie Street plant and all persons who worked at the housing unit site locations, whether they were subcontractors or employees of subcontractors, were covered by the prevailing wage provisions of the DBRA. Judge DiNardi also held that cleaning work performed at the housing sites constituted "construction" work and was therefore subject to prevailing wage requirements. Finally, Judge DiNardi ordered the Respondents to pay back wages due, and, finding that the Respondents had committed aggravated and willful violations of the DBRA, he ordered that the Respondents be debarred in accordance with the provisions of 29 C.F.R. §5.12 (a) (1) and be ineligible to receive any contract or subcontract subject to any of the statutes listed in 29 C.F.R. §5.1 for a period of three years. ALJX 19. On the Respondents' petition for review, the Wage Appeals Board (WAB) affirmed Judge DiNardi's decision and order. LTG Construction Co., WAB Case No. 93-15 (December 30, 1994). ALJX 20.

Richard S. Allen, Acting Assistant to the Secretary for Labor Relations from Grant E. Mitchell, Office of General Counsel, entitled "Applicability of Davis-Bacon Requirements to Work at Out-of-State Plant for Projects Under U.S. Housing Act of 1937 (Bering Straits Regional Housing Authority Projects AK 8-14, St. Michael; AK 8-15, Unalakleet; and AK 8-16, Elim)." In objecting to the admission of these documents, DOL contends that they are irrelevant and immaterial to the issues to be addressed on remand as there is no evidence in the record that the Respondents were aware of or relied on the documents. In addition, DOL argues that there is nothing in the record to establish that the documents in question represent HUD's official policies during the relevant time frame in this matter of 1988-1991. ALJX 52, 56 at 13 n. 6. In their post-hearing brief, the Respondents contend that the HUD documents are relevant to counter DOL's argument that DOL, not HUD, is responsible for administration of the DBRA and that it was not reasonable for the Respondents to rely on any information or guidance provided by HUD. ALJX 55 at 11-14. While DOL is correct in its assertion that this record does not show that the Respondents were aware of or relied upon the particular HUD memoranda in RX 124, they are corroborative of the Respondents' position that HUD has interpreted the prevailing wage provisions of the DBRA to only apply to work performed at the project site. Since the memoranda in question would tend to support testimony offered by the Respondents at the hearing on remand regarding interpretations provided by HUD officials to the Respondents concerning the applicability of the prevailing wage provisions, I find that they are relevant. Therefore, DOL's objection is overruled, and RX 124 has been admitted. The other exhibit offered by the Respondents and rejected at the hearing for lack of authentication, RX 125, remains excluded as the Respondents have offered no further evidence or argument in support of its admission.

IV. Issues Presented on Remand

   In remanding the case for further consideration, the Court held that the Respondents are entitled to a full inquiry into, and reconsideration of, all predicate facts which can form the basis for the application of equitable estoppel in regard to three issues -- (1) the work performed at the Veazie Street plant, (2) the work carried out by subcontractors, and (3) the cleaning work performed after the units were constructed. 956 F.Supp. at 109-110. Based on the Court's instructions, this inquiry will involve consideration of whether the Respondents reasonably relied on affirmative representations by HUD and whether the Respondents, in fact, complied with HUD's policies. Id. at 109. The Court also stayed the order debarring the Respondents for three years pursuant to 29 C.F.R. §5.12 (a) (1), noting that "[f]urther inquiry concerning the doctrine of equitable estoppel may influence any determination as to whether . . . [Respondents'] violations were "aggravated or willful." Id. at 110. Therefore, an additional issue is presented as to whether, upon reconsideration of the applicability of equitable estoppel in accordance with the Court's instructions, debarment is warranted.

V. Findings of Fact and Conclusions of Law on Remand

   After 24 days of hearings during which testimony was heard from 50 witnesses and more than 250 documents were admitted, Judge DiNardi made extensive findings of fact in his July 1, 1993 decision and order. ALJX 19. Judge DiNardi's findings were affirmed by the WAB and have, with the exceptions discussed above, been left intact by the Court. Therefore, the undisturbed findings represent the law of the case and will not be revisited herein.

    A. Applicability of Equitable Estoppel

       1. The Veazie Street Plant

   Evidence introduced at the first hearing and at the hearing on remand shows that Mr. Griffin created the Veazie Street plant with the intention of supplying prefabricated building panels for use in housing construction projects throughout the Providence area, including Phase I of the Turnkey Project, a second planned phase of the Turnkey Project as well as another scattered site housing project known as Barbara Jordan III. TR 2281 (Thornton); RTR 176-178 (Griffin). Indeed, Mr. Griffin's envisioned use of the plant extended beyond the efficient production of building components; he recruited and hired chronically unemployed or underemployed people, as well as individuals with societal problems, for training and work. TR 310 (Goodwin); TR 1931, 1937 (Kolaski); TR 2665 (Griffin). The Veazie Street plant has been also been used for other activities, such as the fabrication of cabinets, door frames and other materials for maintenance and repairs on Barbara Jordan I and II, completed housing projects now under Phoenix-Griffin's management; TR 2455-2456, 2496-2500 (Parent); TR 2642-2646, 2682 (Griffin); RTR 237 (Griffin); and the facility continued in operation as of the date of the hearing on remand. RTR 178 (Griffin). However, the only housing panels fabricated at the Veazie Street facility to date were those used in the Turnkey Project. RTR 239 (Griffin).

   The matter of whether DBRA prevailing wage rates would be required for laborers and mechanics who constructed the housing panels at the Veazie Street plant was the subject of multiple communications between Mr. Griffin and various officials of both the PHA and HUD. Mr. Griffin testified that he first raised the issue with Tom Moses, the head of Planning and Urban Development for the City of Providence, and Katie Hillam who was then the Turnkey Project coordinator for the PHA Community Development Department. RTR 181-182, 186, 223, 227. Ronald Torbik, who succeeded Ms. Hillam as the PHA's Director of Modernization and Development, testified that he also had discussions with Mr. Griffin prior to January 1990 and that he is sure that the subject of prevailing wage requirements came up. RTR 74. Mr. Griffin further testified that, prior to Phoenix-Griffin's selection as the developer for the Turnkey Project in July 1989, he met with several HUD officials in the Providence office, including Casimir Kolaski (Manager of the HUD Providence office), Louis Azar (Chief of Architecture and Engineering), Michael Diziok (Director of Housing Development), and Arthur Iacovelli (Architect), and asked whether DBRA prevailing wage rates would apply to the separate pre-fabrication facility which he proposed to establish in a building on Veazie Street in Providence. TR 2669-2770; RTR 226-229. According to Mr. Griffin, Mr. Azar looked in the HUD [Federal Labor Standards Compliance in Housing and Community Development Programs] Handbook (CX 38) and said, "Well, if you want to do this for Turnkey, you have to have more than one project that you are going to service from Veazie Street." TR 2670. Mr. Griffin responded that he intended to use the Veazie Street plant for a planned second phase of the Turnkey Project, for which he had a letter of commitment from the PHA, and for another project known as Barbara Jordan III, and Mr. Azar indicated that he would not have to pay prevailing wages as long as the plant was not specifically used for a single project. TR 2670, 2695 (Griffin). Mr. Griffin also testified that he took HUD officials Azar and Iacovelli on a visit to the Veazie Street plant in this same time frame. TR 2671-2674.

   After Phoenix-Griffin's proposal for Phase I of the Turnkey Project was accepted by the PHA and HUD in July of 1989 and prior to execution of the contract, Mr. Griffin had further discussions with PHA officials concerning the application of DBRA prevailing wage rates to workers employed at the Veazie Street plant to fabricate modular housing panels to be used in the Turnkey Project. TR 1520-1522 (O'Rourke); TR 2092, 2095-2100 (Ouellette); TR 2210-2215 (Iacovelli); TR 2673-2678 (Griffin); RTR 228-230 (Griffin). According to Mr. Griffin, he was willing to accept the verbal guidance he'd previously received from PHA and HUD officials regarding the applicability of DBRA prevailing wage rates to workers at the Veazie Street prefabrication facility, but Stephen J. O'Rourke, the PHA Executive Director, decided to send a letter to HUD to get an interpretation in "black and white." TR 228 (Griffin). Mr. O'Rourke similarly testified that it was PHA's recommendation that the prior discussions with HUD officials regarding applicability of DBRA prevailing wage rates to an off-site prefabrication plant be confirmed by HUD in writing:

Let me be frank and say this is how I think I remember it. They [PHA officials Prescott and Torbik] were pretty sure it wasn't applicable but they wanted it in writing because, quite frankly, we don't always trust HUD. They say one thing and do another. And that is not to cast dispersions [sic in transcript] against people in the Providence office because they are good and very hard working people, but we have learned to get things in writing.

TR 1521. Thereafter, in Mr. Griffin's presence, a PHA attorney drafted a letter for Mr. O'Rourke's signature to Mr. Kolaski under the attention of Mr. Dziok. TR 2676 (Griffin); RTR 187-188 (Griffin). The letter, which was signed by Mr. O'Rourke and which is dated September 15, 1989, states,

    It is our understanding that Davis-Bacon Wage rates do not apply to the fabrication of building components performed off-site but that they do apply to work performed at each of the sites proposed for Project No. RI43-P001-017. In anticipation of your approval of our recently submitted Proposal, please confirm our understanding and provide a final determination of the appropriate wage scales for the work.

    In response to your letter dated September 15, 1989, Davis Bacon Wage Rates do not apply to the fabrication of building components unless conducted in connection with and at the site of the project, or in a temporary plant set up elsewhere to supply the needs of the project and dedicated exclusively, or nearly so, to the performance of the contract or project.

    The installation of these components upon the sites of the work is subject to prevailing wage rates.

    Should you require any further assistance on this matter, please contact Louis R. Azar at (401) 528-5380.

CX 42. Mr. Dziok's letter to Mr. O'Rourke was prepared by Louis Azar, and a copy of this letter was provided to Mr. Griffin prior to the signing of the contract for Phase I of the Turnkey Project. TR 2687 (Griffin); RTR 136 (Dziok); RTR 189 (Griffin).

   Based on my assessment of the totality of evidence in this record, I find that HUD made affirmative representations that fabrication of building components at the Veazie Street plant for the Turnkey Project would not be subject to prevailing wage requirements. These representations were initially made by officials in the HUD Providence office during meetings with Mr. Griffin prior to Phoenix-Griffin's selection in July of 1989 as the developer for Phase I of the Turnkey Project when Mr. Azar checked the HUD Handbook (CX 38) and advised Mr. Griffin that prevailing wages would not have to be paid for work performed at Veazie Street provided that the plant was not specifically dedicated to a single project. More importantly, HUD repeated this representation when Mr. Dziok sent the September 19, 1989 letter, which was drafted by Mr. Azar, specifically responding to Mr. O'Rourke's inquiry regarding the non-applicability of prevailing wage rates to the off-site fabrication of building components for the Turnkey Project. DOL and the Intervenor both argue that HUD's representations, particularly Mr. Dziok's September 9, 1989 letter, constitute nothing more than a recitation of the requirements of section 7-12 of the HUD handbook and do not amount to specific policy guidance regarding the applicability of DBRA wage rates to prefabrication of Turnkey Project housing panels at the Veazie Street plant. I disagree. This record convincingly shows that the questions regarding prevailing wage requirements raised by Mr. Griffin, and later by Mr. O'Rourke, were not "hypothetical" or otherwise posed in a vacuum of facts. Rather, Mr. Griffin credibly testified that he specifically discussed his planned use of the Veazie Street plant repeatedly with officials from both the PHA and HUD. In addition, HUD architect Arthur Iacovelli generally corroborated Mr. Griffin's testimony concerning his discussions with officials at the HUD Providence office concerning his plans to use the Veazie Street plant to prefabricate housing panels for the Turnkey Project, and he added that he had voiced his opinion to Mr. Dziok that prevailing wage requirements would not apply to the fabrication of housing panels at Veazie Street for the Turnkey Project per HUD Handbook section 7-12 because Mr. Griffin had said that he had other contracts and wasn't solely

rates would not apply to work done at Veazie Street. Mr. Poirier also stated that he would have recommended that Phoenix-Griffin walk away from the project had they known that prevailing wages would be required for the off-site fabricating facility because they could not have turned a profit in view of PHA's planned selling price for the housing units. TR 1411-1414. Mr. Poirier's testimony was emphatically corroborated by PHA official Ronald Torbik when he was asked about the basis of his understanding that prevailing wages were not required for fabrication of housing panels at the Veazie Street plant:

I mean, the economics of the project in my mind kind of dictated that because at $80,000 a unit with the requirements that the Housing Authority had, it was extremely difficult if not impossible, I think, to construct what we had required to do unless you were using modular housing, which the other developer was doing from a factory in Pennsylvania or some kind of if everything was built on-site, it just the economics wouldn't work. So, it was my understanding that whatever determinations were necessary, they were all worked out and it was always my understanding that the off site facility was not subject to prevailing wages.

Q. Okay. And when you say that the details were worked out, would those details include these two letters? That would be the letter of September

A. Correct.

Q. 15 and September 19?

A. Correct.

TR 2129-2130. Based on this uncontradicted testimony, I find that the Respondents relied on HUD's repeated representations that manufacture of housing panels for the Turnkey Project at the Veazie Street plant would not be subject to DBRA prevailing wage requirements in deciding to enter into the Phase I contract with the PHA and to proceed with the plan to utilize disadvantaged workers at the Veazie Street plant to fabricate modular housing panels at less than prevailing wages.

   I further find that the Respondents' reliance on HUD's assurances was entirely reasonable under the particular circumstances of this case. First, HUD's advice regarding the non- applicability of prevailing wage requirements to Veazie Street work was provided by multiple officials over an extended period of time and culminated in a formal written response, the September 19, 1989 letter from Mr. Dziok, to a direct written inquiry by PHA Executive Director O'Rourke. Second, there is absolutely no evidence in this voluminous record to support DOL's contention that Mr. Griffin should have known not to rely on HUD and should have instead directed any inquiries to the Department of Labor which has sole authority to interpret and enforce the DBRA. Rather, the assurances were

provided by officials in the HUD Providence office who held themselves out as responsible for providing advice and guidance on the applicability of prevailing wage requirements, and the record establishes that it was standard practice during the relevant time period for a developer to direct prevailing wage questions to the PHA which, in turn, would refer the inquiry to the HUD Providence office. RTR 96-97 (Torbik); RTR 115-116 (Iacovelli); TR 1448-1455; ALJX 19, DiNardi Decision and Order at 18. Thus, the September 19, 1989 letter instructed that any further assistance on the matter of prevailing wage requirements should be requested from HUD Providence official Louis Azar. In short, the evidence of record in this matter convincingly shows that, prior to DOL's investigation into the Turnkey Project, it was understood by PHA, HUD and developers such as Mr. Griffin that HUD was responsible for providing guidance on prevailing wage requirements. Third, PHA officials relied on and acted in accordance with HUD's assurances that prevailing wage requirements did not apply to Veazie Street work. As set forth above, Mr. Torbik testified that it was his understanding from the September 19, 1989 letter that a determination had been made that Veazie Street was exempt from prevailing wage requirements, and Philip Prescott, the PHA official responsible for conducting wage interviews with employees on the Turnkey Project to insure compliance with DBRA prevailing wage requirements, conducted no review of wages paid to Veazie Street workers in view of HUD's advice that the facility was not subject to prevailing wage requirements. ALJX 19, DiNardi Decision and Order at 11. Indeed, it would seem incongruous to hold Mr. Griffin, a private party, to a higher standard of vigilance than was followed by the public officials entrusted with responsibility for monitoring DBRA compliance. These facts clearly distinguish the instant circumstances from the cases cited by DOL where estoppel was held not to be available against the government. Compare, for example, Heckler v. Community Health Servs. of Crawford, 467 U.S. 51, 61-65 (1984) (health care provider participating in the Government's Medicare program did not reasonably rely on erroneous advice concerning cost reimbursement provided by the Government's private fiscal agent when the provider knew that the agent was only a conduit and when the applicable statute, regulations and policy manual made it clear that the advice was in error); Falcone v. Pierce, 864 F.2d 226 (1st Cir. 1988) (developer of subsidized housing could not demonstrate reasonable reliance based on erroneous oral advice concerning use restrictions allegedly provided by a HUD loan officer and immediate supervisor since he not only had a long history of participation in the public housing program but failed to have an attorney review the loan documents which gave actual notice of the restrictions). Therefore, I conclude that the Respondents reasonably relied on HUD's assurances that DBRA prevailing wage rate would not apply to prefabrication work performed at the Veazie Street plant and that, but for these assurances, Mr. Griffin either would have abandoned the project or, at the very least, handled labor matters differently.

   The final criterion identified by the Court for application of equitable estoppel is whether the Respondents complied with HUD's policies. The Respondents argue that they have complied with the policies contained in the HUD Handbook and in HUD's communications because the housing panels for the Turnkey Project were manufactured at the Veazie Street plant, which is not at the site of the project, and because the Veazie Street plant was not a temporary plant set up to supply the needs of the project and dedicated exclusively, or nearly so, to the performance of the project as described in Handbook section 7-12. ALJX 55 at 3-5. DOL and the Intervenor counter

that the WAB and District Court have both upheld the Department of Labor's interpretation that the Veazie Street plant falls within the "site of work" as defined in the regulations implementing the DBRA; therefore, it is the law of the case that the Respondents were required to pay prevailing wages to employees engaged in fabrication of housing panels at Veazie Street. ALJX 56 at 3-15; ALJX 57 at 7-20. DOL and the Intervenor further contend that the Respondents did not comply with HUD's policy concerning off-site fabrication, as set forth in the HUD handbook, because the Veazie Street plant was used exclusively for the Turnkey Project and was clearly established as a temporary plant to serve the purposes of the project. ALJX 56 at 11; ALJX 57 at 23-24.

   DOL and the Intervenor correctly point out that the Court affirmed the WAB's holding that the language of the Housing Act concerning "the development of the project" controlled the Veazie Street issue and that work performed at the off-site facility was subject to prevailing wage requirements notwithstanding the somewhat contradictory language found in the HUD handbook. 956 F.Supp. at 105. Thus, it is unquestionably the law of this case that the prevailing wage requirements of the DBRA and implementing regulations applied to the fabrication of housing panels at the Veazie Street plant. However, as the Court instructed, the proper inquiry on remand is not whether the Respondents complied with the Department of Labor's interpretation, which they admittedly did not, but whether they "in fact, complied with HUD's policies." 956 F.Supp. at 109. HUD's policy regarding off-site work is contained in the HUD Handbook at sections 7-12 and 7-15 which respectively provide:

PRECUTTING OF PARTS AND PREFABRICATION OF ASSEMBLIES. The precutting of parts and/or the prefabrication of assemblies are not covered unless conducted in connection with and at the site of the project, or in a temporary plant set up elsewhere to supply the needs of the project and dedicated exclusively, or nearly so, to the performance of the contract or project.

* * * * *

SITE OF WORK. The "site of work" is limited to the physical place where the construction called for in the contract will remain when the work on it has been completed, and to other adjacent or nearby property used by the contractor in the "site" because of proximity. Operations of a commercial supplier or materialman established in the proximity of but not on the active site of work prior to the opening of bids are not covered by the Act even if dedicated exclusively to the Federal project for a time.