CCASE:
NAVAL SUPPLY SYSTEMS COMMAND
DDATE:
19790406
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
NAVAL SUPPLY SYSTEMS COMMAND WAB Case No. 78-24
Installation of Conveyor System
Naval Supply Center Dated: April 6, 1979
Decision by: Alfred L. Ganna, Chairman, William T. Evans,
Member, Thomas M. Phelan, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
the Naval Supply Systems Command of the Department of the Navy
(hereinafter Petitioner or Navy) to review a decision by the
Assistant Administrator, Wage and Hour Division, that the
furnishing, installation, and testing of an automated pallet
conveyor system at the Naval Supply Center in Oakland, California,
constituted construction and should have been subject to a
Davis-Bacon Act wage determination, and that employees engaged on
the proposed project should have been paid the minimum prevailing
wage rates contained in the wage determination. The Navy in its
petition contends that the installation of the conveyor system,
which took 3 to 4 weeks, was not construction which would have been
subject to the Davis-Bacon Act, but was in fact incidental to [1]
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[2] the purchase of the system and was properly treated as a
supply contract subject to Walsh-Healey labor standards provisions.
The contract for the manufacture and installation of the system was
awarded on March 7, 1977, and the contract was completed prior to
November 28, 1978.
It is the position of the Navy that the Contracting Officer in
charge of the project in good faith complied with the applicable
Department of Defense Regulations in determining that the assembly
and installation of the system was not subject to Davis-Bacon Act
provisions.
The installation of the conveyor system which the Navy
contends was not subject to Davis-Bacon provisions represented 13
percent of the contract price. This was the work required to
assemble, connect and install the conveyor system. The Navy argues
that this assembly work was extremely simple and that Wage and Hour
did not appear to understand the nature of the work. The Navy also
cites several Davis-Bacon Opinion letters and Comptroller General's
decisions in support of its position that the work was incidental
to the supply and installation contract.
It is the position of the Wage and Hour Division as
represented by the Solicitor of Labor that the work involved in the
installation of the system, i.e.: assembling 10 foot sections of
the conveyor, bolting on legs and conduits, laying and connecting [2]
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[3] wire in the conduits, and bolting the floor has been
traditionally considered covered construction within the meaning
of the Davis-Bacon Act by the Department of Labor. Wage and Hour
further points out that the Navy treated the modification to the
doorways as Davis-Bacon construction in this same contract when it
only amounted to 6 percent of the contract price, and therefore was
inconsistent in its determination that the installation of the
conveyor which amounts to 13 percent of the contract price was not
Davis-Bacon work because it was incidental to the manufacture and
furnishing of the system. It is Wage and Hour's position that the
Navy should have combined the installation work with the other
Davis-Bacon work which would then amount to approximately $120,000
or 19 percent of the contract price and would be a substantial
portion of the supply contract and thereby subject to the minimum
wage provisions of the Davis-Bacon Act.
The Wage Appeals Board considered this petition on the basis
of the Petition for Review and subsequent Response filed by the
Navy and the Statement for the Assistant Administrator, Wage and
Hour Division, and the record filed by the Solicitor of Labor on
behalf of Wage and Hour.
The Board finds from a review of the record that the question
before it is moot because the contract has been awarded [3]
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[4] and work completed. The Board cannot at this time issue a ruling
with reference to this contract which could affect the wage
requirements of the contract. Further, the Contracting Officer
acted in good faith and in accordance with the Department of
Defense Acquisition Regulations (which provide under certain
circumstances for labor standards provisions to apply to
construction portions of an overall contract which also includes
nonconstruction portions, as here) in determining that the
installation in question was incidental to the supply contract and
therefore did not require Davis-Bacon coverage. The Wage and Hour
Division has not refuted this claim in its statements.
It is also noted that at the time the contract was awarded
Department of Labor's All-Agency Memorandum #68 was in effect. It
was the reasoning behind this memorandum and stated therein that
the Contracting Officer was in the best position initially to
characterize a proposed project. Even though this All Agency
Memorandum does not specifically apply to this contract, the theory
with respect to the responsibility of the Contracting Officer is
applicable to it.
From the above it appears that the Navy proceeded properly and
reasonably in their approach to this problem. If the Department oœ
Labor disagrees with the process under which these determinations
are made by the contracting agencies, then the process [4]
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[5] itself should be reviewed to make it more effective. It is
imperative, however, that problems such as the one in this case be
raised at a time when the Board is in a position to make some
ruling which can have a practical effect.
In view of the above considerations the Board rules in favor
of the Petitioner.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
