Gananda Development Corp., WAB Nos. 73-13 and 74-01 (WAB Jan. 18, 1974)
CCASE:
GANANDA DEVELOPMENT CORPORATION
DDATE:
19740514
TTEXT:
~1
[1] UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF LABOR
WAGE APPEALS BOARD
WASHINGTON, D. C.
IN THE MATTER OF
Prevailing Wage Rates Applicable to the WAGE APPEALS BOARD
Construction of Sewage Treatment Plants,
Water Facilities, Highways, Heavy Case Nos. 73-13
Construction and Utilities, Wayne County,
New York; Federal Agency Involved, and 74-01
Department of Housing and Urban
Development; Wage Determination in Issue Dated: January 18, 1974
73 N.Y. 272 of August 23, 1973.
Gananda Development Corporation
Petitioner (WAB Case No. 74-13)
Allied Building Trades Council,
Rochester, New York
Petitioner (WAB Case No. 74-01)
APPEARANCES:
John Titus, Esquire
Johnson, Reif and Mullan, P.C.
Rochester, New York
for Gananda Development Corporation
Bernard T. King, Esquire
Blitman and King
Attorneys for Allied Building Trades Council, Rochester, New York [1]
~2
[2] Thomas X. Dunn, Esquire
Associate General Counsel for the
Building & Construction Trades
Department, AFL-CIO and for the
International Brotherhood of
Electrical Workers,
Washington, D. C.
George E. Rivers, Esquire
Counsel for Construction Wage Standards
Office of the Solicitor and Counsel for
the Assistant Administrator, W&H
United States Department of Labor
BEFORE: Oscar S. Smith, Chairman,
Wage Appeals Board; and
Stuart Rothman, and
Clarence D. Barker, Members
DECISION AND ORDER
This matter is before the Wage Appeals Board on a petition by
Gananda Development Corporation, WAB Case No. 73-13 and a cross
petition by Allied Building Trades Council, Rochester, New York,
WAB Case No. 74-01, which have been consolidated. This case may be
cited as Gananda Development Corporation, Wayne County, New York,
WAB 73-13 and 74-01.
Petitioner Gananda seeks the cancellation of Employment
Standards Administration (ESA) Wage Schedule No. 73-NY-272 (dated
August 23, 1973) on the ground that the determination [2]
~3
[3] was faulty in that it was predicated upon a special Department of
Labor (ESA) survey that did not take into account a sufficient range of
representative projects spread over an appropriate time span.
The cross-petitioner Allied Building Trades Council,
Rochester, New York, supports the scope of the projects and time
span utilized in the ESA survey, but contends ESA only took into
account payroll evidence. In doing so it neglected to include
certain escrowed wage payments pending reconsideration by the
Construction Industry Stabilization Committee of a part of a
negotiated wage increase under then existing wage stabilization
law. These wage payments were ultimately restored to the
employees. The Allied Building Trades Council also raised
questions concerning the accuracy of some individual craft rates.
While this briefly is the object of the petition and the
cross-petition, the events leading to their filing are more complex
and will be discussed herein.
Gananda Development Corporation is engaged under the Urban
Growth and New Community Development Act of 1970 /FN1/ in [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ See P.L. 91-609, 42 U.S.C.A. 4529. [3]
~4
[4] the construction of a new planned community ("Gananda Project")
in Wayne County, New York, consisting of sewage treatment plants,
water facilities, highways, heavy construction and utilities
including a community center. Wayne County, a heretofore
relatively rural area, is adjacent to the City of Rochester, New
York. This planned community development is a large one,
consisting of several thousand acres.
Up to this time Gananda has utilized two contractors, Empire
Pipeline Corporation of Liverpool, New York and Eddy Development
Corporation of Pittsford, New York. /FN2/ To meet Davis-Bacon Act
requirements for these two contracts, Gananda adopted a set of wage
rates from a project in Onandaga County near Syracuse called the
"Lysander Project."
When, how, why, and with whose permission or authority,
Gananda adopted these Lysander rates and whether it was justified
in doing so, is what this case is about. /FN3/ [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ The Eddy Development Corporation apparently suspended
operations approximately 2 months after starting work.
/FN3/ This appeal involves a request to review a wage
determination issued pursuant to the Urban Growth and New Community
Development Act of 1970, the prevailing wage provisions of which
require such determination to be made by [4][FN3 CONTINUED ON PAGE
5][5] the Secretary of Labor in accordance with the Davis-Bacon
Act. The pertinent provisions of these statutes read as follows:
Sec. 727(f). Labor Standards
All laborers and mechanics employed by contractors or
subcontractors in land development assisted under this
part shall be paid wages at rates not less than those
prevailing on similar construction in the locality as
determined by Secretary of Labor in accordance with the
Davis-Bacon Act, as amended (40 U.S.C. 276a-5). No
assistance shall be extended under this part for any land
development without first obtaining adequate assurance
that these labor standards will be maintained upon the
construction work involved in such program. The
Secretary of Labor shall have, with respect to the labor
standards specified in this section, the authority and
functions set forth in Reorganization Plan Numbered 14 of
1950 (64 Stat. 1267), and section 2 of the Act of June
13, 1934 (40 U.S.C. 276c). (42 U.S.C.A. 4529).
The wage determination provisions of the Davis-Bacon Act
provide for [5][FN3 CONTINUED ON PAGE 6][6]
. . .minimum wages to be paid various classes of laborers
and mechanics which shall be based upon the wages that
will be determined by the Secretary of Labor to be
prevailing for the corresponding classes of laborers and
mechanics employed on projects of a character similar to
the contract work in the city, town, village or other
civil subdivision of the State in which the work is
performed. . . . (Section 1 of the Davis-Bacon Act. 40
U.S.C. 276a).
The pertinent provisions of the Department's Regulations (See
29 CFR, Part 1 and Part 7) as they related to this matter read as
follow:
Sec. 1.2 Definitions
(b) The term "area" in determining wage rates under the
Davis-Bacon Act and the prevailing wage provisions of the
other statutes listed in Appendix A shall mean the city,
town, village, or other civil subdivision of the State in
which the work is to be performed. . . .
* * *[6]
[FN3 CONTINUED ON PAGE 7][7]
Sec. 1.8 Scope of consideration
(a) In making a wage rate determination, projects
completed more than one year prior to the date of request
for the determination may, [*] but [*] need not be
considered. [*](Emphasis added.)[*]
(b) If there has been no similar construction within the
area in the past year, wage rates paid on the nearest
similar construction may be considered.
Sec. 1.16 Review by Wage Appeals Board
Any interested person may appeal to the Wage Appeals Board for a
review of a determination of wage rates made under this part, or
any findings and conclusions made on the record of any hearings
held under [sec] 1.3(c). Any such appeal may, in the discretion of
the Wage Appeals Board be received, accepted, and decided in
accordance with the provisions of 29 CFR Part 7 and such other
procedures as the Board may establish. [END FN3] [7]
~5
[5] The Board was advised at the oral hearing that Empire
Pipeline commenced construction by September 1, 1973, Gananda's
prehearing statement fixes the date as August 27th, Eddy
Development Corporation, commenced construction on or about
September 1st. [5]
~6
[6] The immediate responsibility for the administration and
enforcement of Federal labor protective standards for this project
is under the jurisdiction of the Department of Housing [6]
~7
[7] and Urban Development through its Buffalo, New York Area Office.
As far back as February 1973 Petitioner Gananda asked HUD for a
prevailing wage determination for the Gananda development
recognizing that the project was in a non-urban county and was
"highway and heavy" non-residential work. In turn, but not until
May 24, 1973, HUD requested the Department of Labor to conduct a
survey and to issue a predetermination for this project. The
Employment Standards Administration issued its decision 73-NY-272,
dated August 23, 1973. This document, [7]
~8
[8] according to an exhibit attached to Gananda's prehearing statement,
came into the hands of the director of the Buffalo Area Office of HUD by
August 27, 1973. This was the piece of paper Gananda had requested in
February 1973. What did the Buffalo area director do with it when
he received it? Accepting his August 27, 1973 letter on its face,
he sent it to the Assistant Secretary of Labor Relations of HUD in
Washington. It was not received by Gananda until September 10th.
Although all parties knew that this wage predetermination,
73-NY-272, not some other, was a prerequisite to going ahead
with construction work under the Urban Growth and New Community
Development Act of 1970, /FN4/ Gananda went ahead before it was
received. In June 1973, Gananda had invited bids on certain of the
work and on August 7, 1973, "initial bids were let," i.e.,
accepted. In the absence of the requested schedule, Petitioner [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ The Urban Growth and New Community Development Act of 1970
does not contain an exception found in certain other housing acts
that permits a developer to proceed notwithstanding failure to
incorporate in the bid documents the appropriate wage
predeterminations as issued by the ESA for the project. See for
example the National Housing Act, Section 212(a) and 29 CFR 1.7.
The record contains no explanation of why the August 23rd wage
determination did not reach Petitioner Gananda until September 10th
since the HUD Buffalo Area Office, [8][FN4 CONTINUED ON PAGE 9]
based on general experience with the Davis-Bacon Act, would know
that the appropriate wage schedule of August 23, 1973, must be
applied to the project from the commencement of construction and
could not be modified thereafter. It is clear that this schedule
was in the hands of the Buffalo Area Office on August 27th the date
upon which Gananda's petition states that construction was
commenced. [END FN4] [9]
~9
[9] Gananda states that it secured a wage scale from "other
projects similar to this project and in particular a project known
as the "Lysander Project" near Syracuse, New York, also in a rural
county of upstate New York. This project is a new community
project under the auspices of the Department of Housing and Urban
Development." Petitioner was vague as to what other Davis-Bacon
wage schedules it examined before selecting Lysander, although
administrative notice is taken that there were Davis-Bacon
schedules previously issued for Wayne County.
According to Petitioner's explanation which the Board accepts,
an understanding then developed after September 10, 1973 between
the appropriate office of HUD and Petitioner Gananda that it would
be permissible for Gananda to continue to use the set of wage rates
it had adopted when soliciting bids and to substitute these for the
Wayne County determination expressly made by the Secretary of Labor
by reason of [9]
~10
[10] Petitioner's request. Gananda agreed with
HUD, we are told, that it would challenge the determination of the
Department of Labor and if the challenge should go for naught, it
would pay the prevailing rate of wages as determined by the
Secretary of Labor to the employees affected. Petitioner Gananda
said that it had "escrowed" the funds, but no accounts were set up
for individual employees and the necessary funds have not been
duly sequestered. In the meantime mechanics and employees entitled
to the protection of the Davis-Bacon and related Acts have not been
paid as the Copeland Act requires. /FN5/
Although Petitioner states that no one told it to use the
rates from an Onandago County project near Syracuse instead of the
specific rates found by the Labor Department to prevail for a Wayne
County project near Rochester, the Board concludes that
Petitioner's gambit on its own could not have started or continued
without the knowledge and consent of the appropriate office of
HUD.[10]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ 40 U.S.C. 276c. [10]
~11
[11] Petitioner Gananda initially requested this Board to review
Wage Schedule No. 73-NY-272 on November 21, 1973. This Board
referred the matter to the Employment Standards Administration for
reconsideration. The ESA on February 11, 1974 denied Petitioner's
reconsideration as untimely, i.e., after the "award and/or the
beginning of construction". Gananda has argued that its petition
is timely because it was made within a reasonable time after
receipt of the predetermination. This argument could have merit
only if bids had not been awarded and construction commenced in
advance of the predetermination. Gananda also seeks by
continuation of its petition, guidance as to the adequacy of ESA
methods and procedures for arriving at wage determinations for
future contracts on the Gananda project. But as Petitioner has
also rejected out of hand the wage schedule ESA said must be paid
on the two contracts awarded on August 7, 1973, the Board's more
immediate and demanding concern is what to do about the blithe
adoption of, and HUD's concurrence in, a bogus set of wage
rates.[11]
~12
[12] The Department of Housing and Urban Development which
could have enlightened the Board made no appearance and has offered
no explanation of how the mismanagement in this case arose. For
purposes of what it has to say in this decision, the Board will
assume that the administering agency failed to act out of some kind
of error or misunderstanding, notwithstanding the fact that any
area office of HUD would be familiar with the operation of the
Davis-Bacon Act and related acts under other housing acts.
* * *
Among other purposes, the Wage Appeals Board was established
more than ten years ago to meet a need for an impartial review
board as Secretary of Labor Wirtz said, to be "as independent as it
can be made by the Secretary", to consider and grant relief where
justified in a case of alleged misfunction of administration or
error of interpretation under the Davis-Bacon Act. In this
capacity, the Board on a case-by-case basis, has protected many
parties -- labor organizations, individuals, sponsoring agencies
and contractors, -- from misfunction or misinterpretation of the
Act by administering agencies. [12]
~13
[13] The Board on a case-by-case basis has "adjudicated"
respective claims of contracting agencies, employers, labor
organizations and individuals and has sought through clarification
and guiding principles to bring about an harmonious and coordinated
administration of the Davis-Bacon Act and related Acts. Seldom
have we had a case that has called more for some guiding statement
of administration than the facts underlying this petition as we are
told those facts to be.
29 CFR 1.7(a) and 1.7(b) provide:
[Sec] 1.7 Use and effectiveness of wage determinations
(a)(1) Project wage determinations initially issued shall
be effective for 120 calendar days from the date of such
determinations. If such a wage determination is not used
in the period of its effectiveness it is void. If it
appears that a wage determination may expire between bid
opening and award, the agency should request a new wage
determination sufficiently in advance of the bid opening
to assure receipt prior thereto. However, when due to
unavoidable circumstances a determination expires before
award and after bid opening, the Administrator upon a
written finding to that effect by the head of the Federal
agency in individual cases may extend the expiration date
of a determination whenever he finds it necessary and
proper in the public interest to prevent injustice or
undue hardship or to avoid serious impairment in the
conduct of Government business. /FN6/
* * *[13]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN6/ 29 CFR 1.7(a). [13]
~14
[14] (b)(l) All actions modifying an original project wage
determination prior to the award of the contract or
contracts for which the determination was sought shall be
applicable thereto, but modifications received by the
Federal agency (in the case of the Federal-Aid Highway
Acts as codified in 23 U.S.C. 113, the State Highway
department of each State) later than 10 days before the
opening of bids shall not be effective except when the
Federal agency (in the case of the Federal-Aid Highway
Acts as codified in 23 U.S.C. 113, the State highway
department of each State) finds that there is a
reasonable time in which to notify bidders of the
modification. Similarly, in the case of contracts
entered into pursuant to the National Housing Act,
changes or modifications in the original determination
shall be effective if made prior to the beginning of
construction, but shall not apply after the mortgage is
initially endorsed by the Federal agency. A modification
in no case will continue in effect beyond the effective
period of the wage determination to which it relates.
/FN7/
We hold that Petitioner Gananda has presented no information
of merit that would justify this Board in relieving it from
compliance with Wage Determination 73-NY-272 effective at the
commencement of work. To entertain this case on the contention
that the Department of Labor's survey was in error, after work
commenced and the contract firmly awarded would permit a
construction contractor, sponsoring agency, and a [14]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN7/ 29 CFR 1.7(b). [14]
~15
[15] like-minded governmental regional underling, sua sponte, inter
sese, and pendente lite to take it upon themselves to dismantle the
administration of the Act whenever they are unhappy with a
Department of Labor wage predetermination action. Under
Regulations, 1.7(a) requests for modifications must be received and
processed before work starts or award made in accordance with the
terms of the regulation. Under the requirements of the Copeland
Act, an employee is entitled to the amount of wages due him each
week. There is nothing in the administration of the Davis-Bacon
Act that warrants withholding of wages under circumstances such as
present in this case. With thousands of Davis-Bacon wage
predeterminations annually finding their way into bidding
documents, the administration of the Act would be reduced to
shambles if any regional administrator were to permit a contractor
to pick and choose the rates he would apply subject to payment of
the correct wages due to affected employees if at some subsequent
time the Department of Labor were to catch up with the violation.
The scheme of things, as the Copeland Act shows, is to the
contrary. The wage predetermination schedule must be successfully
challenged in a timely fashion, or it must be [15]
~16
[16] included in the bid and contract documents, and must be paid. The
fundamental requirement of the Davis-Bacon Act, that the contract
specifications will contain the wage predetermination of the
Secretary of Labor does not permit the kind of end run attempted
here. But for the participation of the regional office of HUD this
would be the kind of case that would warrant consideration for
recommended debarment.
In view of this case the Board suggests that the respective
governmental agencies directly responsible for the administration
of the Davis-Bacon and related Acts re-examine their
responsibilities. The Board suggests to the Department of Labor to
take another look at Reorganization Plan 14 of 1950 out of
precaution to avoid a recurrence of this kind of situation.
Petitioner Gananda was concerned not only with the application
of Wage Determination 73-NY-272 to the work in progress, but the
manner and means in which the Labor Department will survey wage
rates for future contracts on the Gananda project. This decision
is without prejudice to Petitioner's right to seek review of a
future Labor Department [16]
~17
[17] wage predetermination when timely brought. It is also without
prejudice to the rights of Allied Building Trades Council to seek review
in a new wage predetermination of individual craft rates or other matters.
The Board prefers to deal only with the proper application of Wage
Determination 73-NY-272 in this case.
The cross-petitioner, Allied Building Trades Council
Rochester, New York, has asked the Board to direct the ESA to add
to the wage determination 73-NY-272 a part of the negotiated wage
rate that was not in the employees' paycheck at the time the survey
was made because it was withheld in escrow pending reconsideration
by the Construction Industry Stabilization Committee of the total
amount of the negotiated increase. There are reasons in favor of
this proposition. However, considering the overall mechanics of
Davis-Bacon administration and the ephemeral nature of wage
controls when viewed in perspective, the Wage Appeals Board will
not disturb the practice of the ESA. Based upon limited
information available in this case, the establishment of such a
practice would appear to create more difficult problems in
Davis-Bacon administration than it would solve. [17]
~18
[18] ORDER:
The Petition of Gananda Development Corporation is denied.
The Petition of Allied Building Trades Council, Rochester, New
York, is denied.
SO ORDERED:
(s) Oscar S. Smith, Chairman
(s) Stuart Rothman, Member
(s) Clarence D. Barker, Member [18]
