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<![CDATA[
CCASE:
DEPARTMENT OF ENERGY V. DOL
DDATE:
19870828
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: August 28, 1987
CASE NO. 86-SCA-WD-1
IN THE MATTER OF
UNITED STATES DEPARTMENT OF ENERGY,
PETITIONER,
and
ADMINISTRATOR, WAGE AND HOUR
DIVISION, EMPLOYMENT STANDARDS
ADMINISTRATION, U.S. DEPARTMENT
OF LABOR,
RESPONDENT.
BEFORE: THE DEPUTY SECRETARY OF LABOR
DECISION OF THE DEPUTY SECRETARY
This matter is before me pursuant to the McNamara-O'Hara
Service Contract Act of 1965, as amended (SCA), 41 U.S.C. [secs]
351-358 (19823, and the rules and regulations thereunder, 29 C.F.R.
4.55 and Part 8 (1985). /FN1/
The Petitioner, United States Department of Energy (DOE),
filed a petition for review of Wage Determination WD 85-680, dated
July 31, 1985, and its subsequent revisions issued by the [1]
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/FN1/ Section 8.0 of 29 C.F.R. (1985) provides that the Secretary's
designee shall perform the functions of the Board of Service
Contract Appeals during the interim period prior to the appointment
of a duly constituted Board. On February 24, 1984, the Secretary
assigned this responsibility to the Under Secretary, now Deputy
Secretary. Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [1]
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[2] Administrator of the Wage and Hour Division applicable to DOE
contracts and subcontracts for the demolition of the Shippingport
Atomic Power Station (SAPS) located in Shippingport, Beaver County,
Pennsylvania.
Pursuant to 29 C.F.R. [sec] 4.55, Petitioner requested review
and reconsideration of WD 85-680 by the Administrator arguing that
the $13.51 per hour base rate for laborer on demolition projects
was significantly higher than the actual prevailing wage rate for
that area. In support of its argument, Petitioner submitted the
results of a wage survey which it had commissioned showing a
weighted average rate for laborers of $10.12 per hour, excluding
fringe benefits, with a standard deviation of $3.45.
General Electric, the prime DOE contractor of SAPS, had a
second demolition industry wage survey conducted by Hay Management
Consultants. The median rate for laborers involved in demolition
work was $12.75 per hour exclusive of fringe benefits.
Petitioner's central argument is that rates paid to laborers
on construction projects should not be included in determining the
prevailing wage rates for laborers working on demolition projects.
Coverage under the Davis-Bacon Act, which requires prevailing wages
to be paid on construction projects, includes employees engaged in
dismantling or demolition only where it is preliminary to the
construction of a public building or work. If the project consists
of dismantling or demolition without the construction of a building
or public work, such contract is covered by the SCA and not the
Davis-Bacon Act. 29 C.F.R. [sec] 4.116(b). [2]
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[3] The Deputy Administrator responded to Petitioner's request
for reconsideration and review on January 3, 1986. In that
response, the Deputy Administrator stated that a new survey had
been conducted by the Wage and Hour Division which resulted in the
following two conclusions:
1. Wage rates negotiated by building trades
unions are being paid on work of character
similar in that area, and,
2. Wage rates negotiated by building trades
unions are being paid on routine demolition
work in the area.
The Deputy Administrator reaffirmed the appropriateness of the
wage determination (WD) in question and enclosed a copy of WD
85-680 (Rev. 2) dated October 30, 1985. That WD retained the
$13.51 per hour base rate for laborer and added six classifications
commonly used in the construction industry including plumber,
boilermaker, and sheetmetal worker.
Petitioner then filed a petition for review pursuant to 29
C.F.R [sec] 8.3 on February 4, 1986, asking that the matter be
remanded to the Administrator with instructions to conduct a new
survey excluding the construction industry and limiting the survey
to the demolition industry. The petition also requested that the
new WD exclude such construction classifications as plumber,
boilermaker, sheetmetal worker, etc.
The Laborer's International Union of North America, AFL-CIO
(LIUNA), the Building and Construction Trades Department, AFL-CIO,
and the Beaver County Building and Construction Trades Council
AFL-CIO, filed responses in opposition to DOE's petition. The
National Association of Demolition Contractors filed a response [3]
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[4] in support of DOE's position. DOE filed a response on June
5, 1986.
This appeal was initiated because Petitioner believed that the
$13.51 per hour base rate for laborers contained in WD 85-680 was
higher than actual prevailing rates. This position was posed to
the Administrator on September 6, 1985, via the request for
reconsideration and review. In response to this request, a wage
survey was conducted in December 1985, which used a sample pay
period ending July 12, 1985. The $13.51 rate, which was the
negotiated wage rate for unionized laborers, was reduced by
agreement between the Laborers' District Council of Western
Pennsylvania and the Master Builders' Association of Western
Pennsylvania to $12.75 per hour effective June 1, 1985. A copy of
this notification, dated August 19, 1985, is contained in the
record submitted by the Associate Solicitor and bears a hand
written notation that it was received on September 26, 1985. (p.
25 of unnumbered record submitted by the Associate Solicitor).
Exhibit 6 of LIUNA's submission to me is a copy of the same
agreement and contains a hand-written notation that it was sent to
DOL on September 4, 1985, and that an extra copy was sent on
September 24, 1985, "per request." Thus it is established that the
Wage and Hour Division was aware in September 1985, that the
laborers' rate was no longer $13.51, but $12.75.
Despite the availability of this information, the Deputy
Administrator, on January 3, 1986, responded to DOE's request for
reconsideration by reaffirming the appropriateness of the [4]
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[5] $13.51 per hour laborers' rate and attached a copy of WD 85-680
(Rev. 2) dated October 30, 1985, which retained the $13.51 rate for
laborers and added six skilled construction classifications
consisting of electrician, plumber, carpenter, boilermaker,
ironworker, and sheetmetal worker. On February 11, 1986, WD 85-680
(Rev. 3) was issued which contained a lowered laborers' rate of
$12.75 per hour and added the classification of
millwright. /FN2/
At issue are whether to remand the case to the Administrator
for a new survey or to accept the $12.75 rate and whether the
Administrator should retain the classifications for skilled
construction tradesmen which Petitioner claims are unnecessary for
the demolition project.
The record indicates that laborers performing demolition
projects in the Pittsburgh area are predominantly unionized and
paid a base wage of $12.75 per hour pursuant to the terms of the
current collective bargaining agreement. The Laborers
union [5]
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/FN2/ It is noted that the survey pay period ending July 12, 1985,
did show that laborers employed by one of the firms were paid
$13.51 per hour even though the effective date for the reduction
was June 1, 1985. However, as Petitioner points out, the Laborers'
business manager was interviewed by the Wage and Hour
representative conducting the survey in December 1985, prior to
sending his findings to the National Office. The change in the
collective bargaining agreement was very important in this survey.
Why this information did not come to light prior to the Deputy
Administrator's reaffirmation of the $13.51 rate on January 3,
1986, is not explained in the record. Indeed, it appears to be
inexplicable in that the Wage and Hour Division's National Office
had received information supporting a downward revision of the WD
in September, 1985, and a further opportunity to confirm this in
December, 1985. The Wage and Hour Division's failure to recognize
that $13.51 was not a prevailing rate after June 1, 1985, and its
failure to correct this until February 11, 1986, resulted in
greater costs than necessary on this project. [5]
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[6] represents both construction and demolition employees, a fact
documented by both the Wage and Hour Division and also by the
survey conducted by Hay Management Consultants which was
commissioned by the prime contractor, General Electric Company.
Accordingly, and pursuant to the authority of 29 C.F.R. [sec]
8.6(e), I find that WD 85-680 (Rev. 3) dated February 11, 1986,
represents the prevailing wage rate for laborers. This rate is
$12.75 per hour exclusive of fringe benefits. In view of this
finding, it is not necessary to remand to the Administrator to
revise the wage determination.
Petitioner requests that "the classification in the Wage
Determination be restricted to those extant in the demolition
industry, supplemented only by those classifications requested by
DOE and/or its contractors as those to be utilized by SAPS. n The
Administrator's approach to this request has been to treat
demolition and construction projects synonymously. The Deputy
Administrator's January 3, 1986, decision states that:
In this case, the subject wage determination was based
upon a longstanding policy to issue the governing
construction wage rates for demolition work, since
available information over the years has indicated that
major demolition work is usually carried-out by the
workers responsible for local construction, and at local
construction rates.
Although the work of unskilled laborers in the SAPS project
may be similar in both the demolition and construction phases, this
is not evident in the case of the more highly skilled trades.
Dismantling and demolishing a nuclear power plant requires less [6]
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[7] skill than constructing it. The Deputy Administrator
unilaterally added skilled construction craft classifications to WD
85-680 (Rev. 2) even though the original WD 85-680 did not contain
such classifications. Nor did the contractor request these
classifications in its "listing of those classes of service
employees expected to be employed under the contract." 29 C.F.R.
[sec] 4.4(b)(2). The rationale for adding the classifications was
that "some of the wage data submitted as a result of Wage-Hour's
survey suggests the challenged building trades classifications
should be included (i.e. data was submitted for boilermakers on
demolition work), and unneeded classifications need not be used."
Statement of the Deputy Administrator at 13. The record indicates
that none of the firms in SIC Code 1795 (demolition) included
boilermakers as workers. Only a firm engaged in retrofit work
(construction) engaged boilermakers.
Petitioner argues that the presence of unnecessary
classifications on WDs might cause bidders to assume that such
crafts are required on the project. I agree with Petitioner and
find no valid reason for skilled construction classifications to be
present on this WD unless the contracting agency advises the Wage
and Hour Division that such crafts are needed. Therefore, the
following classifications shall be dropped from the WD under review
/FN3/: electrician, plumber, carpenter, ironworker, boilermaker
and sheetmetal worker. [7]
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/FN3/ Revision 3 of WD 86-680 is not before me on this petition.
However the record here shows that an additional craft
classification - millwright - was added when Revision 3 was issued.
In view of my ruling in this case the Administrator may wish to
reconsider the skilled craft listings in Revision 3. [7]
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[8] Accordingly, Wage Determination 86-680 (Rev. 2) is modified
to reflect a laborer's wage rate of $12.75 per hour, exclusive of
fringe benefits and to delete the enumerated skilled construction
classifications.
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D.C. [8]
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