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<![CDATA[
CCASE:
T. L. JAMES AND COMPANY
DDATE:
19690813
TTEXT:
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[1] UNITED STATES DEPARTMENT OF LABOR
WAGE APPEALS BOARD
In the Matter of
The applicability of the Davis-Bacon Act, as WAGE APPEALS BOARD
extended to the Federal Aid Highway Act, to CASE NO. 69-02
the furnishing of borrow materials on
Interstate Project No I-10-2(16)101,
T.L. James and Company, Contractor; Rimmer
and Garrett, Inc., Lafayette Parish, DATED: August 13, 1969
Louisiana
Joseph H, Kavanaugh, Esq,
Kavanaugh, Pierson, and Talley
for the Petitioner
Thomas X. Dunn, Esq.,
Sherman and Dunn
for the Building and Construction Trades Department, AFL-CIO
George E. Rivers, Esq.,
for the Solicitor
BEFORE: Oscar S, Smith, Chairman; Clarence D. Barker and Stuart
Rothman, Members
DECISION AND ORDER
I
This is a proceeding under Secretary of Labor's Order No.
32-63, as amended (29 F.R. 188, 761) following a petition filed on
behalf of T. L. James and Company and Rimmer and Garrett on April
16, 1969, from a decision by the Office of the Solicitor holding
that work performed by Rimmer and Garrett, Inc. and J and J
Contractors, Inc., on Federal Aid Project No, I-10-2(16)101 was
subject to the Davis-Bacon provisions of the Federal Aid Highway
Act codified in 23 U.S.C. 113 and, in turn, the Contract Work Hours
Standards Act (40 U,S.C. 327 et seq.).
An oral proceeding was held by the full Board on June 20,
1969, during which interested persons were heard.
II
Bids for the project, Federal Aid Project No, I-10-2(16)101
(State Project No, 450-05-06), were received on February 16, 1966.
The contract was awarded to T. L. James and Company, Inc. At that
time T. L. James subcontracted portions of the work between
stations 1035+00 and 1067+ 00 to Rimmer and Garrett, There is no
dispute concerning the wages in connection with the work done by
Rimmer and Garrett, Inc, as a subcontractor between stations
1035+00 and 1067+00, although the Solicitor attaches importance to
the fact that the sand operations for the subcontract were supplied
for the pits discussed below. [1]
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[2] Concerning the sand operations between stations 1067+00 and
1140+91.46 on the same project, after considering supply bids from
three other firms, T. L. James placed a "purchase order" with
Rimmer and Garrett, Inc, to supply about 300,000 cubic yards of
special borrow excavation (non-plastic), which was delivered to the
job site and spot dumped by J and J Contractors, Inc. Rimmer and
Garrett did no spreading and compacting. This was done by T. L.
James. Rimmer and Garrett, Inc. furnished about 105,130 cubic
yards of the material from its pits numbered 1 and 8 /FN1/, but the
remaining material in the pits was found to be too fine in
gradation to meet the specifications. Pits 1 and 8 had been opened
before the letting of the contract for the area in question. The
remainder of the material which was needed was furnished from a
third pit which is referred to as pit numbered 3) in the general
area of pits number 1 and 8. About 154,441 cubic yards of sand was
furnished from the pit numbered 3. Pit numbered 3 is said to have
a long-life potential.
Rimmer and Garrett is presently supplying earth fill to T. L.
James for a private construction project.
The Solicitor confirmed a decision by the Federal Highway
Administration that Rimmer and Garrett was a "subcontractor" rather
than an ordinary materialman in performing its work relating to the
sand operation between stations 1067+00 and 1140+91.46, and was
thus subject to the Davis-Bacon provisions of the Federal Aid
Highway Act and the Contract Work Hours Standards Act. This is the
Solicitor's decision challenged by the petitioner.
III
The petitioner argues in his petition that Rimmer and Garrett,
is not a "subcontractor" within the meaning of this labor standard
legislation because it is a material supplier rather than a
subcontractor regarding the work involved. The argument is based
on the following points:
1. Rimmer and Garrett had previously developed two pits,
designated as pits 1 and 8, for commercial sales of sand and for
use on construction of another Interstate project, which exposed
these pits as a commercial source, and the petitioner at all times
considered Rimmer and Garrett as a commercial supplier.
2. The yardage orders for the work done between stations
1035+00 and 1067+00 were based on embankment measure; however, the
yardage ordered for work done between stations 1067+00 and
1140+91.46 was based on vehicular measure. [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The location of these pits is indicated in Exhibit A of the
Solicitor's statement, which is [NOT] appended hereto. [2]
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[3] 3. It is standard practice that Rimmer and Garrett contact
potential contractors before the letting of contracts in order to
quote prices for the supply of materials to them; this procedure is
industry practice for most suppliers of material of this nature
4. About 240,000 cubic yards of granular material have been
supplied to various firms in the area from the pits in question,
thus rendering the pits a commercial source of granular material.
The Solicitor's main arguments in response may be summarized
as follows:
1. Rimmer and Garrett, Inc. was a "subcontractor" because it
had undertaken to perform a part of the requirements of the prime
contract.
2. Reliance is placed upon (a) section 5.2(g) of the
Secretary of Labor's Regulations, Part 5 (29 CFR 5.2(g)), which
defines the term "construction" for purposes of administering
Davis-Bacon Act and its related acts as including all types of work
done on a building or work at the site thereof, and (b) upon
judicial interpretation of the term "subcontractor" as used in the
Miller Act.
3. The Davis-Bacon Act, as remedial legislation, is entitled
to a liberal construction.
4. The Department has held in the past that where a facility,
such as a batch plant or quarry, is set up or opened in the
vicinity of a covered construction site for the purpose of serving
the needs of a particular covered construction contract, the
operator of the facility is considered a "subcontractor" under the
Davis-Bacon Act. The serving of more than one construction
contracts that are "so interrelated in time and geography" as to
constitute an "inseparable" project is treated in the same way, and
the operator of the facility is thus regarded as a "subcontractor."
IV
The prime contract awarded T. L. James covers the
construction of Interstate Highway I-10 between station 1035+00 and
ending at station 1140+91.46. T. L. James in turn awarded the
contract for the granular fill required between stations 1035+00
and 1067+00 to Rimmer and Garrett. This award included prosecution
of the work on the right of way in addition to supplying the
necessary fill material. For this work Rimmer and Garrett took the
required fill from two borrow pits, numbered 1 and 8, that had been
opened for the construction of another portion of Interstate
Highway I-10 performed by a subsidiary of to the necessary granular
fill between stations 1067+00 and 1140+91.46, the fill material was
purchased from Rimmer and Garrett under a "purchase order" which did [3]
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[4] not require the prosecution of any specified work in the
right of way by Rimmer and Garrett, other than to dump the material
at the right time and place to meet T. L. James' sequence of
construction operations.
The crux of the petitioner's petition appears to be the
following:
When T. L. James reached the second area of construction
between stations 1067+00 and 1140+91.46, it questioned whether
borrow pits numbered 1 and 8 would continue to be suitable.
Accordingly, T. L. James requested prices from alternative sources
-- from three established sand and gravel companies as well as from
Rimmer and Garrett.
In a copy of a letter, T. L. James submitted in support of its
position dated March 11, 1969, and addressed to its counsel,
Kavanaugh & Bell, the company stated:
The first three sources were located east of the project,
near the Lafayette airport, and Rimmer & Garrett were
located west of the project. We did not feel that
because of the fact that Rimmer & Garrett had
subcontracted a section of the work, they could not act
as a supplier on another separate and distinct section of
the project. We therefore felt that they would not be
required to pay truck drivers hauling this material a
higher rate of pay than any of the other commercial
sources who were interested in supplying the sand.
The Wage Appeals Board agrees with T. L. James that the fact
that Rimmer and Garrett had been a subcontractor on an earlier
portion of the work would not alone preclude Rimmer and Garrett
from acting as a materialman on another and distinct section of the
project, if acting as such a materialman was independently
justified on its own considerations. The fallacy of the
petitioner's position is that under the facts of this case, if one
of the three "sand and gravel companies" had been the successful
bidder for the second section and had done what Rimmer and Garrett
did; namely, opened pits numbered 1 and 8, and then borrow pit
numbered 3 in contemplation of supplying the necessary fill for
Federal Interstate highway construction in the locality, that
company would have been a "subcontractor" under the prime
contractor and not a materialman.
The Wage Appeals Board is not impressed with the
concentration the Solicitor and the Petitioner both put upon their
respective views of the definition of subcontractor and
materialman, taken from different environments and different
conditions. The Wage Appeals Board approaches the issue presented
by looking first at the specified work in question. /FN2/ [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ At the hearing the Bureau of Public Roads asked that the
Board in resolving the instant dispute to provide the Bureau with
guidelines which will enable it to make practical determinations of
the question of when employees who perform the work of supplying
the necessary fill for highway construction are within the
protection of the Davis-Bacon provisions of the Federal-Aid Highway
Act and when they are not. The Wage Appeals Board suggests that
the Bureau of Public Roads will find some guidance in the approach
to the problem as herein discussed. [4]
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[5] When the particular government agency invites bids for
construction of a segment of a Federal-Aid Interstate Highway, what
is it customary for the successful highway contractor to do in the
prosecution of the work with his own organization or with other
organizations usually and normally related to him in the
construction of a highway? Unless the successful bidder is
entirely a broker, he customarily will perform some of the work
with his own organization and he will have associated with him,
either regularly or in the particular case, someone else who will
do other parts of the work that he does not do with his own forces.
Specifications for highway work will require that the right-of-way
be built to certain levels. In the construction of a highway over
low land, this will require that material be brought in from borrow
pits off the right-of-way. /FN3/ In some instances it may require
that waste or excess material be removed to disposal areas. The
question is: -- what is the usual and normal practice in the
roadbuilding industry where a large amount of removal of cut
material on placing suitable fill is necessary for the completion
of the work? Is the fill normally and usually obtained from a
commercial quarry or from a sand and gravel supplier in commercial
amounts, or is the normal and usual practice for the highway
contractor to prosecute the work by either opening borrow pits for
waste areas with his own forces or assigning the work to some other
party who is in the better position to open such pits or areas than
he is in?
The Wage Appeals Board believes that the opening of the
necessary borrow pits or waste areas to fulfill the project's
requirements is considered a part of the construction activity.
The necessary "cut and fill" to obtain the specified elevation of
the job, and the employees who do that work, have normally and
traditionally been considered as engaged in the construction of the
project. /FN4/
We start therefore with the situation that, based upon
experience in the construction industry where but for the
contemplated construction of a highway project in the locality,
borrow pits or waste areas would not be opened, the opening of such
pits or areas primarily in and substantially devoted to the
prosecution of the highway work will establish a "prima facie" case
that the work performed in connection with the borrow pits or waste
areas is a part of the [5]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ It makes no difference for this determination whether the
borrow pit is on the right of way, adjacent to it, or some
distance from it.
/FN4/ The Wage Appeals Board is also in agreement with the
Solicitor ". . . where several covered (prime) contracts
collectively serve the interest of a major project and are so
interrelated in time and geography as to constitute an inseparable
part thereof, an activity set up or opened primarily to serve,
simultaneously or in succession, the needs of [*] any one or
more [*] of these contracts is deemed to constitute the work of a
subcontractor." [*EMPHASIS SUPPLIED*] [5]
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[6] construction activity of the project, and the employees who do
the work are entitled to the same protections accorded the
construction workers elsewhere on the project. In this regard, the
concept of "the site of the work" is a matter of minor or no
significance. The work performed at the borrow pit or the waste
ares is as much a part of the site of the prosecution of the work
as the right-of-way itself.
Now this "prima facie" case, based as it is upon what is the
normal practice and what is the generally understood situation in
the construction industry, is only a "prima facie" situation. It
is not conclusive. It may be explained, and it may be rebutted.
In making each wage determination or in determining whether the
standards of the Davis-Bacon and related acts are applicable, the
Department of Labor and the agency have an obligation to examine
each case on its own facts to see whether there are special
circumstances which take the situation out of the normal rule. And
if an aggrieved party believes that the Department or the agency
has not properly applied the rule in the particular case he would
have the right to explain the situation and to establish that the
usual practices in the industry did not obtain in the particular
case.
Have facts been presented in this "record" that preponderate
that Rimmer and Garrett was anything but a subcontractor? We think
not. /FN5/ With respect to the instant case, the Board concludes
that the petitioner has not sustained the burden of submitting
facts which would create substantial doubt whether Rimmer and
Garrett operated as a subcontractor or a materialman in this case.
In view of our analysis, we believe that it makes no
difference, standing alone, that the earth fill delivered to the
site was measured "on the truck" and not "on the embankment." [6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ In what ways could the "prima facie" case be rebutted? The
Wage Appeals Board thinks that the following situations, under
appropriate circumstances, standing alone or together, could raise
serious questions whether the supplier was not a true materialman:
(1) A showing that in the particular locality, in bidding a
job, prime contractors do not normally contemplate that necessary
highway cut and fill will be performed by the successful bidder or
by a similar highway construction organization.
(2) The type of fill required is of such an unusual nature or
is so restricted in the locality that the only way the prime
contractor can get it is from operators who control the sole
sources of supply and who will supply it only under their own
normal and usual methods of doing business as commercial operators.
(3) The amount purchased is truly in a commercial quantity
from an established quarry operated by a commercial operator under
his own normal and usual practices.
(4) Other differentiating circumstances.
The Wage Appeals Board does not have to evaluate under the
circumstances of this case whether any such facts alone or together
would be sufficient. We do not have such a case before us. [6]
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[7] The argument may be made that in particular cases the
supplier, an established sand and gravel pit operator, could elect
if he wished to use an existing pit from which he had been selling
to others instead of opening a new pit for the prime and
substantial purpose of supplying the contemplated highway project
in the locality. That may be so. An established commercial sand
and gravel operator might do so and that would raise questions for
another determination, but that is not what Rimmer and Garrett did
here. In the disposition of this case, we do not have to
contemplate what might have been but what did take place here.
Each case must be resolved on the basis of its own facts and
circumstances to determine whether the employees in question should
be considered laborers and mechanics engaged in construction
activities or whether they should be considered some other kind of
employees.
ORDER
The decision of the Solicitor is affirmed.
OSCAR S. SMITH, CHAIRMAN
CLARENCE D. BARKER, MEMBER
STUART ROTHMAN, MEMBER
WAGE APPEALS BOARD [7]
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