LEWIS AND MICHAEL, INC., 1987-SCA-OM-1 (Dep. Sec'y Feb. 17, 1988)
CCASE:
LEWIS AND MICHAEL, INC.
DDATE:
19880217
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: February 17, 1988
CASE NO. 87-SCA-OM-1
LEWIS AND MICHAEL, INC.
and
ADMINISTRATOR, WAGE AND HOUR DIVISION,
EMPLOYMENT STANDARDS ADMINISTRATION
U.S. DEPARTMENT OF LABOR
BEFORE: THE DEPUTY SECRETARY OF LABOR
DECISION AND ORDER
This matter is before me /FN1/ pursuant to the McNamara-O'Hara
Service Contract Act of 1965, as amended (SCA), 41 U.S.C. [secs]
351-358 (1982), and the rules and regulations thereunder, 29 C.F.R.
[sec] 4.55 and Part 8 (1987).
Petitioner, Lewis and Michael, Inc., seeks review /FN2/ of the
December 16, 1986, decision by Robert V. Setera, Chief, Branch of
Service Contract Wage Determinations, the authorized representative
of the Administrator, that Petitioner's request for review of a
wage determination (WD) was untimely and that affirmed that Wage
Determination 78-385 (Rev. 10) was the appropriate wage
determination for Contract No. F33601-85-C-0363 (hereafter referred
to as the Administrator's decision). Petitioner specifically seeks
reversal of [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 (1987); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986).
/FN2/ Because I find the parties' briefs and the record sufficient
for review of this case, petitioner's request for oral argument
will not be granted. [1]
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[2] the Administrator's refusal to review the WD on the basis of
timeliness and that the issue of the correct WD be decided on the
merits. In response to the petition, counsel for the Administrator
submitted a Motion to Dismiss and in the Alternative
Administrator's Response to the Petition for Review (Admin.
Response). Petitioner filed a Reply Statement.
On June 3, 1985, the U.S. Air Force made a request to the Wage
and Hour Division, U.S. Department of Labor, for a wage
determination for relocating office furniture and laboratory
equipment at Wright Patterson Air Force Base (WPAT) located in
Montgomery County, Ohio. in response to this request, Wage
Determination 78-385 (Rev. 10) dated April 30, 1985, was issued on
July 16, 1985, specifying the minimum hourly wages and fringe
benefits payable in the locality to employees in twelve
classifications, including forklift operator and laborer.
Solicitation packages were sent to six bidders, including
Petitioner. The package contained the SCA clauses and WD 78-385
(Rev. 10). Petitioner submitted a bid but it was deemed untimely.
Admin. Response at 2. Only one bidder, Industrial Millwright
Services, Inc., submitted a timely bid.
On September 27, 1985, Industrial Millwright was awarded the
contract for packing, moving and unpacking office furniture and
laboratory equipment at WPAT. Industrial Millwright then
subcontracted part of the contract to Petitioner. Although
Petitioner claims that its subcontract with Industrial Millwright
did not contain any reference to the wage rates specified in WD
78-385 (Rev. 10), it appears that Petit[i]oner must have been aware
of the WD during the [2]
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[3] solicitation process since it is established that Petitioner
received the solicitation package containing the SCA clauses and the
applicable WD.
On or about November 30, 1985, Petitioner completed
performance of the contract work at WPAT. At about the same time,
the Wage and Hour Division commenced an investigation of Petitioner
which resulted in the assessment of alleged violations of
$18,791.00 owed to sixty-two workers for Petitioner's failure to
comply with the required wage rates in WD 78-385 (Rev. 10). It
appears that the investigation was initiated by Industrial
Millwright's complaint that Petitioner was not paying the WD rates
which bound the prime contractor.
On February 26, 1986, Petitioner wrote to the Wage and Hour
Compliance Officer who conducted the investigation, claiming that
WD 78-385 (Rev. 10) was not the appropriate WD. Record, Tab. B.
On Hay 1, 1986, Petitioner wrote to Robert Setera, Branch of
Service Contract Wage Determinations, seeking to reduce the wage
rates applicable to the contract through the conformance procedure.
It was this letter to Mr. Setera that initiated this administrative
proceeding.
The record indicates that counsel for Petitioner met with the
Air Force contracting officer on April 30, 1986, and requested that
the WD be changed. General manager for Industrial Millwright, Mike
Reed, was also present at the meeting. In a letter dated June 2,
1986, from the contracting officer, Judith V. Brainard, to Mr.
Reed, with a copy to [3]
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[4] counsel for Petitioner, the position of the contracting officer was
set forth as follows:
a. If the wage determination in the solicitation was
improper, it should have been brought to the attention of
the Contracting Officer before bid opening.
b. The conformance procedure applies to job descriptions
that are not covered by the wage determination in the
contract. They must be consistent with the overall
pattern of wages shown on the wage determination. They
must be requested immediately upon establishment of a
non-conforming position - not during or after
performance.
Record, Tab E.
On October 27, 1986, Mr. Setera replied to Petitioner's letter
of May 1, 1986, stating that questions about the appropriateness of
the WD were untimely and that any changes at this time would
violate competitive principles fundamental to the procurement
process. Record, Tab F. A second letter from Mr. Setera on
December 16, 1986, reiterated Wage and Hour's position that the
request for review and reconsideration of the WD was untimely in
accordance with section 4.55 of 29 C.F.R. Part 4 and that "insofar
as any request for conformance would be concerned, such request
would have to be in accordance with WD 78-385 (Rev. 10), the WD
contained in the contract." Record, Tab G.
Petitioner argues that its request for review should not be
barred on the basis of timeliness because (1) no one would be
prejudiced by post-performance review; (2) Petitioner was
unfamiliar with and unaware prior to contract performance of the
procedure for contesting wage determinations; (3) the Occupational
Safety and Health Review Commission has excused untimeliness in the
filing of certain [4]
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[5] petitions; and (4) that by issuing an incorrect WD, the
Administrator is attempting to avoid responding to its mistake by
relying on procedural technicalities.
Having received the bid solicitation and having bid on the
prime contract, albeit late, Petitioner cannot deny that it was
aware of WD 78-785 (Rev. 10) during the period when a timely
protest could have been entertained. It was at that time that
Petitioner should have made known its dissatisfaction about the WD.
Instead Petitioner subcontracted with the prime contractor and
ignored WD 78-785 (Rev. 10). Petitioner may not come forward
months later, after being charged with paying less than the
required wages and expect that a claim of being unaware of or
unfamiliar with the regulatory procedures demonstrates that good
cause has been shown to justify waiving the time limitations set
forth in the regulations.
The regulations at 29 C.F.R. [sec] 4.55 provide that, "[i]n no
event shall the Administrator review a wage determination or its
applicability after opening of bids in the case of a competitively
advertised procurement. . . . This limitation is necessary in
order to ensure competitive equality and an orderly procurement
process."/FN3/ In arguing that no one would be prejudiced by
post-performance review, Petitioner notes that Industrial
Millwright was the sole bidder and asserts that, therefore,
competitive equality would not be compromised [5]
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/FN3/ Decisions of the Occupational Safety and Health Review
Commission which may waive the Commission's regulatory time frames
afford no basis for a waiver of SCA procedures in the face of the
explicit language of the implementing regulations. [5]
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[6] in this case. However, the language of the regulation -- "in
no event" -- makes quite clear that exceptions are not allowed.
Petitioner asserts that the Administrator is attempting to
avoid responding to its mistake (i.e. - allegedly issuing the wrong
WD) by relying on procedural technicalities, and cites Midwest
Maintenance & Construction Co.. Inc. v. Vela, 621 F. 2d 1046, (10th
Cir. 1980). In that case, the court found that the WD issued for
the contract at issue was not applicable to work performed outside
the localities specified in the WD. The situation here is
distinguishable for several reasons. As noted in the
Administrator's motion to dismiss, locality is not disputed in the
instant case. There really is no question as to what WD was
applicable to the work under the contract. The contract solicited
and awarded by the Air Force clearly identified WD 78-385 (Rev. 10)
and there is no need to speculate about that as the parties in
Midwest Maintenance did concerning the applicable locality
determination. Furthermore, while the court in Midwest Maintenance
found no "obligation" in Midwest to challenge the locality issue
before the work, there are now specific regulations, e.g. 29 C.F.R
[sec] 4.55 (a), which provide an express opportunity to challenge
the correctness of a WD, but require that such review be sought
before the contract to assure competitive fairness. (These
regulations had not been promulgated in 1973 when the Midwest
contract was let.) In addition, unlike the record before the court
in Midwest Maintenance which provided no information concerning the
bidding process, the participation and knowledge of other bidders,
this record shows that solicitations -- with the WD 78-385 (Rev.
10) -- were sent to a number [6]
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[7] of potential bidders but only Industrial Millwright submitted a
timely bid. As the Administrator notes, "other prospective bidders may
have been dissuaded from bidding by the higher wage rates" in WD 78-385
(Rev. 10) and "[i]n failing to comply with the wage determination issued
by Wage and Hour and paying lower rates it set for itself, Lewis and
Michael, Inc., also gained a competitive advantage over other
prospective firms which may have sought to perform as the subcontractor
...." Admin. Response at 6. It is precisely this sort of competitive
inequity which compels rejection of Petitioner's suggestion that no one
would be prejudiced by "post-performance review." Petition for review
at 5. As the regulation which requires that any wage determination
review occur before bid opening soundly states, "[t]his limitation is
necessary in order to ensure competitive equality and an orderly
procurement process." 29 C.F.R. [sec] 4.55(a).
In summary, Petitioner was aware of the WD at the time of bid
solicitation and entered a bid, deemed by the Air Force to be
untimely, knowing that the employees must be paid in accordance
with the WD. Having been awarded a subcontract by the prime
contractor, Petitioner paid its employees less than the rates
required by the WD. Upon investigation and after being charged by
the Wage and Hour Division with violating the wage provisions of
the SCA, Petitioner sought to have the WD changed by claiming that
it did not apply to the work being performed under the contract.
It is clear that Petitioner [7]
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[8] missed its opportunity to contest the validity of the WD within the
time limitations provided in the regulations./FN4/
Accordingly, the decision of the Administrator is affirmed and
this petition is DISMISSED.
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D. C. []
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/FN4/ Having affirmed the Administrator's determination that the
review Petitioner seeks here was not timely sought, it is not
necessary to decide the appropriateness of the wage determination.
Similarly, I need not rule on the admissibility of Petitioner's
proffer of new evidence dealing with that issue. [8]
