Fordice Construction Co., Inc., WAB No. 75-01 and 75-02 (WAB Aug. 14, 1975)
CCASE:
SWEET STONE V. JACK, CONTRACTOR
DDATE:
19750814
TTEXT:
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[1] UNITED STATES OF AMERICA
DEPARTMENT OF LABOR
DECISIONS AND ORDERS OF THE WAGE APPEALS BOARD
In the Matter of
The applicability of the WAB 75-01
Davis-Bacon Act to the quarrying WAB 75-02
and hauling operations of Sweet WAGE APPEALS BOARD
Home Stone Company in furnishing CONSOLIDATED CASES
quarry-run stone to Fordice DECISION AND ORDER
Construction Company for Contract DATED: August 14, 1975
Nos. DACW56-73-C0235 and
DACW56-74-C-0227, W.D. Mayo Lock
and Dam, Arkansas River, Oklahoma.
Fordice Construction Company, Inc.
P. O. Box 1101
Vicksburg, Mississippi 39180
Petitioner, WAB Case No. 75-01
Jack Durrett, Contractor
Box N
Keota, Oklahoma 74941
Petitioner, WAB Case No. 75-02
Appearances:
Alexander W. Dann, Jr.
Dann, Blackburn & Smith
2337-100 North Main Building
Memphis, Tennessee 38103
For Petitioners [1]
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[2] Appearances -- continued
George E. Rivers
Counsel for Contract Labor Standards
Office of the Solicitor
Room N2458
Department of Labor
Washington, D.C. 20210
For Employment Standards Administration
U.S. Department of Labor
Thomas X. Dunn, Esquire
Sherman, Dunn, Cohen and L[ei]fer
1125 15th Street, N.W., Suite 801
Washington, D.C. 20005
For Building and Construction Trades
Department, AFL-CIO
DECISION AND ORDER
These consolidated cases are before the Board pursuant to Order
No. 24-70, as amended, of the Secretary of Labor and the Rules of
Procedure of the Wage Appeals Board (29 CFR Part 7). Fordice
Construction Company, Inc., (herein Fordice), the petitioner in
Case No. WAB 75-01, and Jack Durrett, (herein Durrett), petitioner
in Case No. 75-02, held Corps of Engineer, United States Department
of the Army, contracts for aid to navigation and related river
improvement projects at the W. D. Mayo [2]
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[3] Lock and Dam on the Arkansas River in the two counties of
Sequoyah and Le Flore, Oklahoma. /FN1/
To fulfill their contractual obligation to provide quarry
stone to these Corps of Engineer projects, petitioners contracted
with Sweet Home Stone Company (herein Sweet Home) to supply the
necessary stone to the job sites. For this purpose Sweet Home
opened three new or defunct quarries in the vicinity of the three
projects. When the work of supplying the needs of the three
projects was completed, Sweet Home closed each quarry. Sweet Home
is a long established commercial quarry operator with its original
quarry at Little Rock, Arkansas. It is still based [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Fordice: DACW56-73-C-0235, awarded June 18, 1973. "Bank
Stabilization Structure 387.9L to 381.3L. Structure Repair 375.6R;
stone fill dikes and toe trench revetment, left bank Arkansas
River, repair of stone structure or right bank of river. Wage
determination 73-OK-40 for Sequoyah County; 73-OK-271; superseding
73-OK-242 for work in Le Flore County.
Jack Durrett: DACW 56-73-C-0227. Guide Wall Extension,
construction of three sheet pile cells, excavated to rock filled
with quarry run stone and filled with concrete; wage determination
73-OK-216, superseding 73-OK-151.
Fordice: DACW-74-C-G096. Bank Stabilization Structure.
379.OL-376.9L and Repair Structure 375.4L, awarded January 16,
1974. Wage determination 73-OK-603 [3]
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[4] there, but it takes work far from its home base, such as the
instant case. Sweet Home did not supply the needs of any other
projects, or make general commercial sales from these quarries.
Petitioners challenge the propriety of a November 26, 1974,
decision of the Assistant Administrator, ESA, United States
Department of Labor, (herein ESA) that the employees of Sweet Home
Stone Company who were engaged in quarrying, loading, and
transporting quarry-run stone from the several quarries to the
three Corps of Engineers river improvement projects were covered by
the Davis-Bacon Act and were entitled to be paid pursuant to the
prevailing wage predeterminations in each of the three construction
contracts for their job classification.
In T. L. James and Company, /FN2/ Case No. WAB 69-02 (Aug. 13,
1969) the Board ruled on the question whether the supplier of
granular fill from borrow pits to be used in the construction of a
segment of the Interstate Highway system [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ In T. L. James and Company, Inc., the Board said:
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 [4][FN2
CONTINUED ON PAGE 5][5] 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
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. [5]
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[5] was subject to the Davis-Bacon Act. Although the Board has had
other cases as well involving the performance of work outside of
normal contract limit lines, for example, outside a highway right
of way, Big Six, Inc. (bituminous batching plant) decided July 21,
1975, WAB 75-05; or a ditch, waterway or water conduit, Ameron,
Inc. (17 ft. in diameter, 20 ft. long prestressed concrete pipe
sections) Case No. WAB, 73-07 decided September 13, 1975, these
consolidated petitions present a case of first impression in which
the same or different noncommercial quarries located in more than
one county simultaneously supply quarry run stone under several
Davis-Bacon Act contracts.
In its brief, the Department of Labor states:
. . . The Department [of Labor] has held that w[h]ere
several covered contracts collectively serve the interest
of a major project and are so interrelated in time and
geography as to constitute an inseparable [5]
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[6] 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. (See Solicitor of Labor opinions
DB-34 (March 19, 1963) and DB-38 (July 8, 1963)).
It follows, the ESA concludes and we are told by ESA that this
is the way it does it. That when a quarry is opened and it then
serves a number of separately awarded contracts simultaneously, the
quarry operator is required to pay the same employee for doing the
same work in the same classification different wage rates (and
presumably different fringes) determined in some way by the
relative amount of stone delivered to each project.
The Board has not been apprised concerning the frequency with
which the instant kind of situation arises; that is, a situation in
which an off-site noncommercial quarry supplies materials to the
same project with different wage rates (such as a project where
both "building" and "heavy" wage rates are paid) or to different
overlapping projects, or to a sequence of coordinated projects each
of which bear different Davis-Bacon wage determinations. These
projects may be located in a political subdivision with wage
predeterminations different from the political subdivision in which
the supplying quarry is located. [6]
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[7] To better understand the instant situation, the several
contracts and other data concerning the quarries is set out in the
following tabulation:
A. 1. Contract No. DACW56-73-C-0235.
2. Sequoyah County (left bank of the Arkansas River) and
Le Flore County (right bank).
3. "Bank Stabilization, Structure 387.9L to 381.3L and
Structure Repair 375.6R, W.D. Mayo Lock and Dam,
Arkansas River, Oklahoma" -- for construction of stone
fill dikes and toe trench revetments along the left bank
of the Arkansas River, and repair of a stone structure
located on the right bank of the river slightly less than
one mile downstream from W.D. Mayo Lock and Dam as
advertised consist[ing] of approximately 83,000 cubic
yards of excavation and approximately 180,000 tons of
quarry run stone.
4. Contractor - Fordice Construction Company
B. 1. Paul Mainard quarry (Le Flore County, right side of
the river), approximately 5 miles south and 1 mile west
of structure 375.6R (the contract work on the right
bank). [7]
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[8] 2. Exact opening date not known, deliveries commenced
September 1, 1973 (term of lease entered into on or
before July 23, 1975, time for performance of this
contract).
3. Exact closing date not known, last deliveries October
8, 1973 (quarry vacated by November 13, 1973, date of
contracting officer report).
4. September 26 - October 8, 1973, 10,878.5 tons
delivered directly on structure 375.6R of this project --
applicable wage determination No. 73-OK-271 (Le Flore
County) September 1 - 18, 1973, 12,732.65 tons delivered
to project DACW56-73-C-0227 (Jack Durrett) -- applicable
wage determination No. 73-OK-216.
5. Sales were made to no non-covered projects
C. 1. Stephens Projection Company quarry (Sequoyah County,
left side of the river), approximately midway between
structures 387.9L and 381.3L and less than 1/4 mile from
the left bank of the river.
2. Production began September 1, 1973. [8]
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[9] 3. Production ended March 7, 1974 -- all equipment was
then removed.
4. September 1, 1973 - March 7, 1974, 246,898.7 tons
delivered directly on structures 387.9L to 381.3L (the
contract work on the left bank of the river) -- temporary
haul roads also constructed -- applicable wage
determination No. 73-OK-140 (Sequoyah County).
5. Sales were made to no non-covered projects.
II. A. 1. Contract No. DACW56-73-C-0227.
2. Most of the work located in Le Flore County (right
bank).
3. "Guide Wall Extension, W.D. Mayo Lock and Dam,
Arkansas River, Oklahoma" -- for construction of three
sheet pile cells, excavated to rock, filled with
quarry-run stone and capped with concrete, and related
work -- as advertised called for 12,400 tons of
quarry-run stone to be placed in cells located a[t]
specified intervals upstream from the guide wall of W.D.
Mayo Lock and Dam. [9]
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[10] 4. Contractor - Jack Durrett.
B. 1. Paul Mainard quarry (Le Flore County, right side of
the river), approximately six miles south of stock pile
from which Durrett loaded onto barges.
2. Exact opening date not known, deliveries commenced
September 1, 1973 (term of lease entered into on or
before July 23, 1975, time for performance of Fordice's
contract No. DACW56-73-C-0235).
3. Exact closing date not known, last deliveries October
8, 1973 (quarry vacated November 13, 1973).
4. September 1 - 18, 12,732.65 tons delivered to
stockpiles for this project -- applicable wage
determination No. 73-OK-216 [;] September 26 - October 8,
1973, 10,878.5 tons delivered to project DACW56-73-C-0235
(Fordice) -- applicable wage determination No. 73-OK-271
(Le Flore County).
5. Sales were made to no non-covered projects.
III. A. 1. Contract No. DACW56-74-C-9096.
2. Sequoyah County (left bank). [10]
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[11] 3. "Bank Stabilization Structure 379.0L - 376.9L and
Repair Structure 375.4L, W.D. Mayo Lock and Dam, Arkansas
River, Oklahoma" -- as advertised called for
approximately 42,000 tons of quarry-run stone.
4. Contractor - Fordice Construction Company.
B. 1. Brandt quarry (Sequoyah County, left side of the
river), approximately 1/2 mile northwest of job-site.
2. Production began March 14, 1974.
3. All equipment removed by May 18, 1974 (9 days after
completion of prime contract).
4. Stone supplied to this project March 14 to about May
9, 1974 (completion date of prime contract) -- applicable
wage determination No. 73-OK-603.
5. No sales were made during the term of the project to
non-covered work -- the quarry had been idle since its
use on a Government contract two years earlier, with the
exception of small amounts of stone for the Brandts'
personal use and for nearby county roadwork. [11]
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[12] The Board views the consolidated cases as a grouping of
three contracts devoted to a coordinated Corps of Engineers
undertaking to improve navigation on the Arkansas River at the
W. L. Lock and Dam. The quarries were opened to serve the three
contracts and when the job was done, the quarries were shut. No
wide ranging consequences should be drawn from this decision to
factual circumstances not closely akin.
Petitioners contended that a quarry several miles from the
river where the Corp of Engineers work is to be done, is not
"on-site" but "off-site" work; hence, quarry employees who do no
more than produce the stone, deliver and dump it on the project
site are not employed "directly upon the site of the project."
It is also the contention of the petitioners that the
noncommercial quarry, that is, a quarry initially opened near a
project to serve its needs should not be covered at all because of
the complexities and the myriad of potentially confusing
administrative problems that could arise, and which to a degree
this case illustrates.
It is also contended that Sweet Home as a long-established
commercial gravel supplier only moved its commercial operations
closer to the project location for economic [12]
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[13] and similar business reasons; hence, the commercial aspect of
the company applies here.
The Board can not agree with these contentions. The Board is
not satisfied that petitioners have established, as far as the
disposition of these two cases are concerned, that employees of
non-commercial quarries opened near sites to serve them should not
be entitled to the basic wage protections of the Davis-Bacon Act.
The ESA concluded that when an operation is opened for the
exclusive purpose of fulfilling a contract's materiel requirements,
the supplier is considered to have undertaken a part of the
construction work of the contract itself and is a subcontractor for
purposes of the Davis-Bacon Act. We agree.
The basic question whether Sweet Home employees are entitled to
labor standards protections under the Davis-Bacon Act gives the
Board little pause. Although these are not d[e]barment cases as
the petitioners, perhaps only rhetorically, feared, quarry
operators with the Corps of Engineers on river and navigation
improvement projects are, and must be held to be, conversant with
the history and application of Davis-Bacon Act principles to the
crushed stone segment of the industry. They must [13]
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[14] therefore, at least be held responsible for including in their bids
labor costs based upon the predetermined Davis-Bacon wage schedules
appearing in first contract documents for which the quarry operator
opened the quarry and took the work. To hold otherwise would give
Sweet Home a respite from a requirement long established and well
understood for at least a score of years in the crushed stone
industry.
Though Sweet Home is a commercial supplier of quarry products,
these quarries were not commercial in nature. The Board can see no
justification to distinguish the instant situation from one in
which the Corps of Engineers gives to a contractor the option to
dredge required material from the adjacent river bed or to get it
from a nearby pit which the contractor can open for the same
purpose.
The Board, however sees problems in the application of the
basic principle of coverage under the facts of these consolidated
cases. What is the appropriate rate that should be paid by a
covered quarry employer supplying materiel simultan[e]ously to
different projects or parts of the same project with different
Davis-Bacon wage predeterminations? [14]
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[15] The gravel pit rule derived, the Board believes, from the
same principle as cut and fill work where a contractor had to
either remove earth to a distant location or bring earth within the
contract limit lines from outside. No problem similar to the one
presented here arose in the simpler cases in which a borrow pit is
opened in the same locality to serve the one and, hence, the same
project. The instant case, however, demonstrates both existing and
potentially more complex problems where the gravel pit or pits are
subjected under present ESA enforcement policies to several
different wage rates depending upon the wage rates applicable to
several projects simultaneously served.
It is neither practical or realistic to require the same gravel
pit simultaneously delivering gravel to different Davis-Bacon jobs
to allocate the time of one employee doing precisely the same work
at one workplace and in one work classification to several
different project at different prevailing wage rates. Nor does
such a requirement foster and promote the objectives of the
Davis-Bacon Act of protecting an employee against the denigration
of his wages in consequence of governmental construction programs.
He has Davis-Bacon Act wage protection to start with on [15]
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[16] the initial project and can make no claim to a higher rate, or to
second and third Davis-Bacon Act protective clauses because some of
the gravel goes to a project in another location or to one which
overlaps with the initial one.
The ESA tells us that when confronted with situations where an
employee works out of his classification or on several projects, it
has required the employer to allocate the employee's time to the
several projects and to pay different wage rates and fringes
according to the wage rates for the proper classification.
Although such an allocation has justification when an employee is
required to work out a classification during different times of the
day, or to go from one project to another project under contracts
with different Davis-Bacon wage predeterminations, the Board fails
to see any justification for the principle here.
To state the problem in a realistic way -- in what way does it
effectuate the purposes of the Davis-Bacon Act in terms of
protecting the prevailing wage rates against deterioration by the
hypothetical "unethical employer" to have to pay an employee three
different wage [16]
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[17] rates at the same time for working in his one and only
classification under unchanged working conditions. The initial
Davis-Bacon predetermination itself came into being because of
ESA enforcement practice.
The Board instructs the ESA to direct its attention to this
problem and to devise a sensible and prudent rule that can meet
with the acceptance of reasonable persons and organizations in the
construction industry.
To illustrate why the Board believes the present ESA practice
unless applied in a more realistic fashion can yield unreasonable
results, let us take the case of a non-commercial supplier who
extracts gravel for a highway project and stockpiles some of it.
Employees are paid not less than the prevailing highway rate.
Sometime after the employees are terminated, gravel from the
stockpile is delivered to a building construction site. As ESA
explains the situation to the Board, in an enforcement proceeding
the employee is entitled to a recomputation of his wages based
on what part of the pile later went to the building project. The
same type of problem would arise where gravel is supplied to
overlapping projects. [17]
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[18] The Board does not know how many cases of this kind arise
or their variety and therefore limits this decision to the facts at
hand.
For the foregoing reasons that the Board concludes as follows:
(1) The employees of Sweet Home engaged in quarry
operations and hauling the aggregate to the Fordice and
Durrett contracts from the three quarries are entitled to
the basic protections of the Davis-Bacon Act.
(2) In these three cases only the wage predeterminations
applicable when each quarry was opened shall be applied
by ESA in determining whether the provisions of the Act
have been violated as to employees employed at the quarry
or hauling stone from it.
(3) The ESA shall take a no enforcement position with
respect to the application of wage predeterminations
other than the initial predeterminations for each quarry.
(4) The appropriate wage predetermination for a
non-commercial quarry operation is the appropriate
prevailing wage determination for the county or other
political subdivision where the quarry is located. [18]
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[19] (5) The Board is in agreement with the ESA's application
of its "in conformance with" rule as applied in these
cases of omitted classifications. The established
practice under long standing Department of Labor rules,
and accepted in the industry is that when a
classification of work to be performed is omitted from a
predetermination it is incumbent upon the employer to
seek out with the contracting agency the appropriate wage
rates for the classification of work and to pay it.
SO ORDERED:
(s) Oscar S. Smith, Chairman
(s) Stuart Rothman, Member
(s) Clarence D. Barker, Member [19]
