UNITED CONSTRUCTION CO., INC., WAB No. 82-10 (WAB Jan. 14, 1983)
CCASE:
UNITED CONSTRUCTION COMPANY
DDATE:
19830114
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
UNITED CONSTRUCTION COMPANY, INC. WAB Case No. 82-10
Truman Dam & Reservoir Project,
Missouri Dated: January 14, 1983
APPEARANCES: John W. Ellinger, Esquire for United Construction
Co., Inc.
Terry R. Yellig, Esquire for Building and
Construction Trades Department, AFL-CIO
Leif Jorgenson, Esquire, Douglas J. Davidson,
Esquire, Gail V. Coleman, Esquire (on brief)
for the Wage and Hour Division, U.S. Department of
Labor
BEFORE: Thomas X. Dunn, Acting Chairman, Stuart Rothman,
Member, Gresham C. Smith, Alternate Member /FN1/
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of United Construction Company, Inc., (hereinafter United) which
seeks review of a decision of the Assistant Administrator, Wage
and Hour Division, dated October 22, 1981. The Assistant
Administrator's decision denied reconsideration of her earlier
decision applying Davis-Bacon Act coverage to employees of United
operating an asphalt batch plant and to truck drivers hauling
the asphalt from the batch plant to various jobsites. [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Board Chairman Alvin Bramow withdrew from consideration of
this appeal prior to the hearing and did not participate in the
decision. [1]
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[2] The overall project under consideration in this appeal is
the Harry S. Truman dam and reservoir being built on the Osage
River in western Missouri. The earthfill dam will be 5000 feet in
length, 126 feet high and create a reservoir of over 209,000 acres
covering parts of seven counties.
Petitioner, United, was the successful bidder on five Corps of
Engineers projects to build roads and parking areas in conjunction
with the Truman dam and reservoir project. These contracts were
performed between 1977 and 1980. An asphalt batch plant owned by
United had been located in Clinton, Missouri, to service an earlier
government contract. In late 1978, United moved the plant to
Warsaw, Missouri, which is in the heart of the Truman project and
began producing asphalt in February, 1979. The distance from the
plant to the construction sites varied from 1.8 miles to 55 miles.
The batch plant produced nearly 55,000 tons of asphalt between
February, 1979 and November, 1980. Of the total amount produced
93.7% was used on either United's contracts or other contractor's
contracts on the Truman project. When United's asphalt
requirements ended in fall of 1980, the plant was removed and there
were no further retail sales.
Pursuant to an employee's complaint, the Corps of Engineers
requested a ruling from the Wage and Hour Division concerning the
applicability of the Davis-Bacon Act to petitioner's batch plant
employees and to drivers hauling asphalt to the construction sites.
The Assistant Administrator ruled that the batch plant [2]
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[3] had been set up in the vicinity of a covered construction site and
had been dedicated exclusively or nearly so to fulfilling the material
requirements of the Truman project. Therefore, the Assistant
Administrator concluded that the employees of the plant and the truck
drivers hauling the asphalt to the job sites were covered by the
Davis-Bacon Act. On June 11, 1982, petitioner appealed this ruling of
the Assistant Administrator to the Wage Appeals Board.
United Construction Co., Inc., argues to the Board that it
moved its batch plant to Warsaw, Missouri, in anticipation of a
burgeoning commercial development in the area, thereby being able
to supply asphalt to many contractors and builders who would have
need of their product, and also it would be able to supply its own
asphalt needs for the five contracts it had been awarded by the
Corps of Engineers around the Truman dam and reservoir site. The
petitioner installed the plant on concrete foundations because,
says the petitioner, it intended to establish a permanent,
commercial business in Warsaw. Petitioner further contends that
the plant was capable of producing far more asphalt than it would
require for its own contracts for the dam and reservoir.
Petitioner provided data to show that over 34% of its asphalt
output was sold to other contractors although conceding almost all
of it was used at the Truman project sites. As further indication
of its intention to operate a business separate from its
construction activities, petitioner [3]
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[4] stated it had bid on 17 other projects in the area of the Warsaw
batch plant, but without success. The petitioner contends that the
evidence will prove to the Board that its batch plant operations were
not dedicated entirely or nearly so to petitioner's construction
contract requirements at Truman dam and reservoir sites, that the work
performed by it was not performed directly on the site, that the
projects are so disparate in nature and location that they cannot
constitute one site, and that therefore the batch plant activities
cannot be considered to be covered by the Davis-Bacon Act as an
extension of their construction contracts at Truman in conformity with
past decisions issued by the Department of Labor and the Comptroller
General.
Counsel for the Assistant Administrator, Wage and Hour
Division, argues that the statutory language of the Davis-Bacon Act
requiring payment of predetermined wage rates to laborers and
mechanics employed "directly upon the site of the work" does not
require a narrow geographical test of coverage.
To clarify the terms "site of work", Wage and Hour relies on
All Agency Memorandum No. 86 of February 11, 1970, subsequently
made a part of the Armed Services Procurement Regulations (32 CFR
18.701(b)(2)-(4)) which was applicable to the contract and provides
in part:
*** In the case of larger contracts, ***, the "site
of work" is necessarily more extensive and includes
the whole area in which the contract construction
activity will take place. Fabrication plants,
"mobile factories", batch plants, borrow pits, job
headquarters, tool yards, etc. are part of the "site [4]
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[5] of work" provided, they are dedicated exclusively
or nearly so the performance on the contract and
are so located in proximity to the actual construction
location that it would be reasonable to include them. ***
Wage and Hour also cites several decisions of this Board, see T.L.
James and Company, WAB No. 69-02 (August 13, 1969), Sweet Home
Stone Company, WAB No. 75-01 (August 14, 1975), Big Six, Inc. WAB
No. 75-03 (July 21, 1975) and Comptroller General decision Granite
Construction Co., No. B-201636 (July 17, 1981), which have found
rock quarries, borrow pits and batch plants could be included in
the site of work although they were physically separate from the
place of construction if certain other conditions are met. It is
Wage and Hour's argument that Davis-Bacon coverage is not defeated
because of the varying distances between the batch plant and
petitioner's road and parking lot construction, if the plant is
dedicated exclusively or nearly so to the construction contracts.
Stating that potential commercial prospects of the asphalt
batch plant are not determinative of Davis-Bacon coverage, counsel
for Wage and Hour contends that petitioner's intentions for
development of the asphalt business was completely speculative and
should not be considered by the Board to show that the plant was
not exclusively dedicated or nearly so to the Truman project. It is
pointed out that 93.7% of the asphalt produced was used either by
petitioner on its contracts at Truman dam site, or by other
contractors who had contracts on the dam and reservoir site also.[5]
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[6] Wage and Hour asserts that if the batch plant is considered
to be on the site of the work, then the employees delivering the
asphalt to the various sites would have to be covered by the Act,
and also argues that if the batch plant is not found to be on the
site of work, the truck drivers, even if employed by a separate
corporation, are still covered by the Davis-Bacon Act since the
Corps of Engineers found that there was a common ownership,
integrated operation and interchange of employees between the two
corporations.
Counsel for the Building and Construction Trades Department
supported the position of the Assistant Administrator in her ruling
that the batch plant was located on the site of the work and that
the truck drivers were engaged in employment covered by the
Davis-Bacon Act.
* * *
After considering the briefs and oral arguments herein the
Board sees that the Department of Labor and the Office of the
Comptroller General have not always been in accord on the question
of which of the two has the final authority for setting wage rates.
It is clear to the Board, however, which operates within the
context of the Davis-Bacon Act and the Act's 50 years of
administrative and regulatory experience that it is the Secretary
of Labor, pursuant to the Act itself and Reorganization Plan No. 14
of 1950, who has the sole authority to determine wage rates, to
coordinate labor standards among the contracting agencies, and to
provide for uniform enforcement of the Davis-Bacon and related acts. [6]
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[7] In the past the Board has found in appeals before it which
question whether a certain activity is or is not on the site of
work, that there is a prima facie presumption that supporting
activities associated with the primary project are covered by the
labor standards provisions of the various acts. The Board then
looked at the evidence associated with the support activities to
judge on a case by case basis whether the activities are
sufficiently independent of the primary project to determine that
the function of the support activities may be viewed as similar to
that of a materialman and therefore not subject to the coverage of
the Davis-Bacon Act or related acts. See T. L. James and Company
supra, Sweet Home Stone Company, supra. Here the petitioner has
not proven its case under well recognized tests established under
the Secretary's regulations, interpretative materials and earlier
decisions of this Board.
Considering the physical layout of the Truman project as
described at the hearing, with the reservoir covering parts of
seven counties in western Missouri and with a recreation area of
over 3000 square miles, the Board does not have difficulty finding
that the various distances (ranging from 1.8 miles to 55 miles)
between the batch plant and the locations of the individual
construction sites constitute a single site of work for Davis-Bacon
Act coverage purposes on this project. In other cases with
different factual situations, distances of the magnitude shown here
might lead the Board to a totally different conclusion. [7]
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[8] The Board finds that out of the total of approximately
55,000 tons of asphalt produced at the batch plant by United at the
Warsaw location, all but approximately 3,300 tons were not utilized
on the Truman project, either by United itself or by other
contractors working on the Truman project. United's contention
that it moved the batch plant from Clinton, to Warsaw, Missouri, to
take advantage of a prospective demand for asphalt as a result of
the expected development in the vicinity of Truman dam and
reservoir was a speculative hope for increased commercial sales.
It was put there for future projects the petitioner could and may
have bid on but did not get. United, with its batch plant located
in the very center of this area, unfortunately did not receive any
of the 17 additional contracts on which it bid, above and beyond
the five original Corps of Engineers' contracts actually at the dam
and reservoir site. The fact that others bid (and received Truman
projects) based on the expectation that they would use this batch
plant does not help the petitioner, or make the plant a general
commercial undertaking where the general public, using asphalt for
all projects other than Truman, could purchase asphalt.
The Board is asked here to conclude that United's batch plant
operations were not covered by the Davis-Bacon Act provisions
because petitioner intended to sell considerably more asphalt to
many more customers. We cannot so conclude[] because that is not
what happened. The contention based on "future business plans
and concrete foundations" has been considered by the Board before [8]
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[9] and has been rejected. United's last project at Truman dam
site was completed in the fall of 1980. United moved the batch
plant to Kansas in November, 1980 to service an Interstate project
it had been awarded at that location. There was no showing that
the plant's capacity did not exceed the needs of petitioner's
Interstate project. The conclusion is required that the plant
would not have been moved so promptly upon completion of the Truman
work if it had been put there as an independent commercial plant.
The decision of the Comptroller General, Granite Construction
Co. supra, which petitioner attempts to distinguish in its reply
brief, appears to accept the Department's view that a narrow
geographical test for "site of work" is not correct. In Granite,
the Comptroller General held that employees working in a rock
quarry several miles away from the job site were covered because
the quarry was a part of the site of the work.
The various construction sites in this appeal constituted
a single site of work for the purposes of processing the asphalt
and hauling from the batch plant to the place where the asphalt
would be spread. The truck drivers delivering the asphalt to the
various construction sites were covered for the same
considerations.
Accordingly, the petition herein is hereby dismissed for the
reasons stated.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [9]
