SYSTEMS ENGINEERING ASSOCIATES CORP., 1986-SCA-OM-2 (Dep. Sec'y Jan. 12, 1988)
CCASE:
SYSTEMS ENGINEERING ASSOCIATES
DDATE:
19880112
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: January 12, 1988
CASE NO. 86-SCA-OM-2
IN THE MATTER OF
SYSTEMS ENGINEERING ASSOCIATES
CORPORATION
AND
ADMINISTRATOR, WAGE AND HOUR
DIVISION, EMPLOYMENT STANDARDS
ADMINISTRATION, UNITED STATES
DEPARTMENT OF LABOR
BEFORE: THE DEPUTY SECRETARY OF LABOR
DECISION AND ORDER OF THE DEPUTY SECRETARY
This matter is before me /FN1/ pursuant to the McNamara-O'Hara
Service Contract Act of 1965, as amended (SCA or the Act), 41
U.S.C. [secs] 351-358 (1982), and the rules and regulations
thereunder, 29 C.F.R. [sec] 8.1(b)(6) and [sec] 8.7(b) (1985).
On June 23, 1986, the Administrator of the Wage and Hour
Division issued a final ruling that an additional classification
for material coordinator could not be conformed for two Navy
contracts involving the "Intrafleet Supply Support Operations
Program ("ISSOP"). Systems Engineering Associates Corporation [1]
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/FN1/ The Deputy Secretary has been designated by the Secretary to
perform the functions of the Board of Service Contract Appeals
pending the appointment of a duly constituted board. 29 C.F.R.
[sec] 8.0 (1986); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-169 (November 6, 1986). [1]
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[2] (SEACOR) filed a petition for review of the Administrator's
final decision pursuant to 29 C.F.R. S 8.7(b) (1985).
Petitioner specifically requests that, upon review of the
Administrator's decision, I:
1) conform the requested classification; /FN2/
2) approve Petitioner's proposed wage rates for material
coordinators; and
3) give retroactive effect to the approval of SEACOR's
training program to the commencement of the training with
the award of the East Coast contract.
The jurisdiction of the Deputy Secretary, acting in lieu of the
Board of Service Contract Appeals, is limited to hearing and
deciding "in [his] discretion appeals concerning questions of law
and fact from final decisions of the Administrator of the Wage and
Hour Division. . . ." 29 C.F.R. [sec] 8.1(b). The
decision Petitioner is appealing dealt only with whether or not the
additional classification of "material coordinator" should be
conformed. Therefore my review is limited to this issue and does
not address two additional issues raised by Petitioner. /FN3/ [2]
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/FN2/ The conformance procedure is the method by which a
classification of employee not listed on the wage determination can
be added. This is a regulatory procedure and is not specifically
mentioned in the statute. These procedures and guidelines are
found at 29 C.F.R. [sec] 4.6 and [sec] 4.152 (1987).
/FN3/ A ruling in favor of Petitioner's request for conformance
would require that the case be remanded to the Administrator for a
determination of the appropriate wage rate. This is necessary
since the Administrator has not ruled on Petitioner's proposed wage
rates, and that question is not ripe for review. 29 C.F.R. [secs]
4.6(b)(2)(i), 4.6(b)(2)(iii). [2][FN3 CONTINUED ON PAGE 3]
Regarding the third issue, I note that SEACOR first sought an
approved apprentice program for the existing classifications of
supply clerk, material handler laborer, inventory clerk, and supply
technician. Record before the Administrator (Record), Tab O. This
request was turned down by the Bureau of App[r]enticeship and
Training (BAT) because these were not apprenticeable positions.
SEACOR then sought to obtain approval from BAT for an apprentice
program for the position of material coordinator, knowing that it
was a classification not approved by the contracting agency or Wage
and Hour Division. SEACOR should have obtained approval from Wage
and Hour before proceeding with BAT. The Administrator made her
decision on the basis of the facts before her and BAT approved a
program submitted by SEACOR. It was the action of SEACOR which
caused the apparent conflict between the Wage and Hour Division and
BAT. By prematurely seeking an apprenticeship program for a
classification which did not exist in the Wage Determinations,
SEACOR is in the unusual situation, as counsel for the
Administrator points out, of having an apprenticeship program that
is not applicable to its contracts. [3][END FN3]
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[3] Concerning the issue of conformance, Local 387,
International Union of Operating Engineers (Union), is an
interested party and has submitted statements in opposition to
Petitioner's position. The AFL[-]CIO also has submitted a letter
opposing Petitioner's position.
On May 11, 1984, the Navy issued Invitation for Bids (IFB No.
N00600-84-B-3626) for support services under the Intra-fleet Supply
Support Operations Program ("ISSOP") for the Atlantic Region. The
IFB invited bids for material support services in and around naval
ships such as off-loading, on-loading and inventory control, and
contemplated an award for a base contract year and two options with
an estimated dollar value of the three contract years o
approximately $24 million. The Navy awarded SEACOR contract No.
N00600-84-B-3626 which commenced on October 1, 1984. [3]
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[4] On September 27, 1985, the Navy awarded SEACOR a similar contract,
No. N9924-85-R-2370, for ISSOP services for four ports on the West
Coast.
The Wage Determinations (WD) issued by the Wage and Hour
Division varied from location to location but generally included
the classifications of supply clerk, inventory clerk, supply
technician, and material handler. Cities in which collective
bargaining agreements (CBA) were in effect during the preceding
contract contained "Section 4(c)" /FN4/ determinations which
reflect union classifications and wage rates.
When a wage determination does not include a class of service
employee which is to be employed under the contract (i.e. the work
to be performed is not performed by any classification listed in
the wage determination), the contracting officer shall require that
such an employee be classified by the contractor so as to provide
a reasonable relationship (i.e. appropriate level of skill
comparison) between such unlisted classifications and the
classifications listed in the wage determination. 29 C.F.R. [sec]
4.6(b)(2)(i). In addition, section 4.152(c) of 29 C.F.R. provides
that "conformance [4]
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/FN4/ Section 4(c) provides that no such contractor or
subcontractor shall pay any service employee employed on the
contract less than the wages and fringe benefits provided for in a
collective bargaining agreement as a result of arms-length
negotiations, to which such service employees would have been
entitled if they were employed under the predecessor contract,
including accrued wages and fringe benefits, and any prospective
increases in wages and fringe benefits provided for in such
collective bargaining agreement. 41 U.S.C. [sec] 353(c). [4]
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[5] may not be used to artificially split or subdivide
classifications listed in the wage determination. However,
conforming procedures may be used if the work which an employee
performs is not within the scope of any classification listed on
the wage determination, regardless of job title."
It is the Administrator's position that the work to be
performed was already being performed by employees in one or more
classifications in the wage determinations. The Navy, also, did
not consider the creation of the "material coordinator~
classification to be necessary for the successful completion of its
contracts. The Union claims that SEACOR merely changed titles from
material handlers to material coordinators and that the duties have
remained essentially the same regardless of title. In support of
this argument, the Union submitted for the record before the
Administrator transcript from a National Labor Relations Board
(N.L.R.B.) /FN5/ hearing held December 5, 1985, prior to the union
representation election for SEACOR employees in the
Norfolk-Portsmouth, Virginia, area. At that hearing SEACOR's
project manager for the Norfolk-Portsmouth area, Leroy Mowbray,
testified that material handlers and material [5]
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/FN5/ In the Matter of Systems Engineering Associates Corporation
(SEACORP), Employer, and Local 387, International Union of
Operating Engineers, AFL-CIO, Petitioner. N.L.R.B. Case No.
5-RC-12568, December 5, 1985. I take administrative notice of the
proceeding as portions of it constitute part of the record in this
case and provided part of the basis for the Union's and
Administrator's arguments. [5]
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[6] coordinators were performing the same duties. Record, Tab GG.
The following testimony took place between the Hearing Officer and
the witness, Mr. Mowbray:
HEARING OFFICER RANDALL: Okay. Now, that's what I
want to make certain we understand. We're talking about
-- I don't really care what the employer calls them or
what the union calls them or what the Department of the
Navy or the Department of Labor calls it. We're
concerned about these individuals and what they do, okay,
because if the Board has to make a determination we'll
say the unit will consist of all employees.
We won't get into naming material handlers or
material coordinators, but we do want to know are we
talking about the same individuals doing the same work
when we say materials handler or material coordinator.
Now, is that correct?
MR. DAVIS: Mr. Mowbray?
THE WITNESS: Yes.
N.L.R.B. Transcript, at 172; Record, Tab GG. The Administrator
also refers to this N.L.R.B. testimony to support her position.
SEACOR's reply to the Administrator's statement claims that
Mr. Mowbray's testimony was taken out of context and that it does
not qualify as an admission that a material coordinator and
material handler are the same. However, I consider it significant
that a project manager considered the scope of duties for a
material coordinator to be essentially the same as that of a
material handler. That seems to be the clear meaning of the
transcript and SEACOR's counsel at the hearing made no attempt to
alter [6]
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[7] or clarify Mr. Mowbray's statement. While the jobs may not be
identical, at the very least, Mr. Mowbray's assessment lends credence to
the Administrator's rationale that the functions of the material
coordinator are within the scope of existing classifications such as
material handler.
Section 4.6(b)(2)(ii) of the regulations provides that the
contractor provide information to the contracting officer regarding
the employees' agreement or disagreement of the proposed
conformance. The evidence in the record concerning this
requirement consists of approximately 117 copies of form letters
signed by SEACOR employees working in the Norfolk and Oakland
areas. In Norfolk, the wage determination for material handler was
$6.56 per hour. The letter specifies that the employee is being
classified as a material coordinator at a wage rate of $6.05 per
hour. There are two added sentences for those employees who
apparently had worked for the predecessor contractor and were paid
the $6.56 material handler rate. These added sentences state that
the employee's current salary of $6.56 will not be changed and that
the new hourly rate will apply only to apprentices upon completion
of the program.
The letter also contains language which is incorrect and
raises some doubt as to the extent to which the agreement was
totally voluntary. The letter states: "Please be aware that the
Department of Labor may reduce the rate, in which case there is no
further appeal." Having itself exercised its appeal rights [7]
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[8] and being familiar with the regulatory provisions governing
petitions for review, SEACOR surely was aware that "any aggrieved
party" may seek review. 29 C.F.R. [sec] 8.7(b). The statement
that the Department of Labor may reduce the rate might very well
leave an impression with an employee that his wages might be
reduced by the Department of Labor if he or she does not sign the
document. I find this approach misleading and bordering on
coercive.
The cover letter of SEACOR's petition for review emphasizes
the benefits which assertedly would derive from granting this
conformance as follows:
Instead of perpetuating the treatment of ISSOP employees
in terms of their traditional manual or semi-skilled
labor categories with no motivation and little
opportunity for advancement, we believed it was possible
to develop a cadre of multi-functional skilled workers
who could perform not only the "traditional" ISSOP tasks,
but who could also handle the more technical tasks
inherent in modern material management.
* * * *
SEACOR has been innovative in its approach to bettering
the lot of service oriented workers ....
The inconsistency which is inescapable here is that SEACOR, as
established in the letters given to employees in Norfolk, proposes
to pay these purportedly higher skilled, trained employees 40 cents
per hour less than incumbent material handlers. Petitioner's claim
that it is bettering the lot of service oriented workers cannot be
sustained. There is no creditable demonstration by the employees
that they favor SEACOR's proposal [8]
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[9] over the existing system. Moreover, Navy has been unwilling to
approve the conformance and has stated various reservations about the
proposal /FN6/, the Union is adamantly opposed to Petitioner's program,
and the Administrator has declined to grant the conformance.
I find that the preponderance of the evidence supports the
Administrator's decision to deny Petitioner's request for
conformance. The restructuring or reorganizing of jobs by
combining or modifying duties with resultant changes in wage rates
must be balanced against achieving the remedial purpose of the SCA,
i.e. to protect prevailing labor standards. The Administrator's
decision that the work performed by the employees on these
contracts is within the scope of currently listed classifications,
therefore obviating the need for conformance, reflects a reasonable
interpretation of the regulations regarding the conformance
process, and is supported by the record. [9]
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/FN6/ William S. Barker, Navy contracting officer, wrote to Thomas
M. Madden, Jr., Executive Vice-President, Corporate Management,
SEACOR, stating:
The labor categories in the ISSOP contract adequately
describe current Navy needs. Any requirement for ISSOP
services can be satisfied by the existing labor
categories; consequently, I do not see any benefit to the
Navy in creating a "new" labor category which is no more
than an average of the "old" labor categories.
Record, Tab BB. [9]
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[10] Accordingly, the Administrator's decision IS AFFIRMED and
the petition IS DISMISSED.
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D. C. [10]
