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CCASE:
MILITARY HOUSING FT. DRUM, New York
DDATE:
19850823
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
MILITARY HOUSING WAB Case No. 85-16
FT. DRUM, New York Dated: August 23, 1985
APPEARANCES: Terry R. Yellig, Esquire for the Building and
Construction Trades Department, AFL-CIO and
St. Lawrence Valley Building and Construction
Trades Council, AFL-CIO
George R. Schlossberg, Esquire for the U.S.
Department of Defense
T. Timothy Ryan, Jr., Esquire, Diane E. Burkley,
Esquire for the Associated Builders and Contractors,
Inc.
Leif Jorgenson, Esquire, Gail V. Coleman, Esquire
for the Wage and Hour Division, U.S. Department of
Labor
BEFORE: Alvin Bramow, Chairman, Thomas X. Dunn, Member and
Stuart Rothman, Member, concurring
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of the Building and Construction Trades Department, AFL-CIO, and
the St. Lawrence Valley Building and Construction Trades Council,
AFL-CIO, which seek review of the June 12, 1985 ruling of the
Deputy Administrator of the Wage and Hour Division /FN1/.
Petitioners [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The Deputy Administrator's decision also affected military
housing projects authorized under Sec. 801 at the Ft. Hood, Tex.,
Ft. Polk, La., Ft. Wainwright, Alaska and Hanscom Air Force Base,
Mass. One other project on the premises of Eielson Air Force Base,
Alaska has already been started apparently without application of
the Davis-Bacon Act; See U.S. Dept. of Labor Press Release USDL
85-243, June 12, 1985. [1]
~2
[2] challenged that portion of the Deputy Administrator's ruling
that concluded that the Davis-Bacon Act does not apply to the
construction of family housing units authorized and to be leased
under the provisions of Section 801 of the Military Construction
Authorization Act of 1984, 10 U.S.C. [sec] 2828(g), when such
housing will be constructed on private land off the bases.
Section 801 of the Military Construction Authorization Act
of 1984, pursuant to which the housing is to be constructed,
provides:
(g)(1) Notwithstanding any other provision of
law, the Secretary of a military department may
enter into a contract for the lease of family
housing units to be constructed on or near a
military installation within the United States
under the Secretary's jurisdiction at which
there is a validated deficit in family housing.
Housing units leased under this subsection shall
be assigned, without rental charge, as family
housing to members of the armed forces who are
eligible for assignment to military family
housing. A contract under this section shall
include a provision that the obligation of the
United States to make payments under the contract
in any fiscal year is subject to the availability
of appropriations for that purpose.
(2) Each contract under paragraph (1) shall be
awarded through the use of publicly advertised
competitively bid or competitively negotiated
contracting procedures. Such a contract may
provide for the contractor of the housing facilities
to operate and maintain such housing facilities
during the term or the lease.
(3) Each contract under this subsection shall
require that housing units constructed pursuant
to the contract shall be constructed to the
Department of Defense specifications. [2]
~3
[3] (4) A contract under this subsection may be for
any period not in excess of 20 years (excluding the
period required for construction of the housing
facilities).
(5) A contract under this subsection shall provide
that, upon the termination of the lease period, the
United States shall have the right of first refusal
to acquire all right, title, and interest to the
housing facilities constructed and leased under the
contract.
(6) A contract may not be entered into for the
lease of housing facilities under this subsection
until -
(A) The Secretary of Defense submits to the
appropriate committees of Congress, in writing,
an economic analysis (based upon accepted life
cycle costing procedures) which demonstrates that
the proposed contract is cost effective when
compared with alternative means of furnishing the
same housing facilities; and
(B) a period of 21 calendar days has expired
following the date on which the economic analysis
is received by those committees.
(7) This subsection may be implemented only by a
pilot program. In carrying out such pilot program -
(A) The Secretary of each military department
may not enter into more than two contracts under
this subsection; and
(B) any such contact may not be for more than
300 family housing units.
(8) In addition to the contracts authorized by
paragraph (7), the Secretary of the Army may enter
into one contract under this subsection for not
more than 600 family housing units at one location
if the contract is necessary in order to provide
sufficient family housing to accommodate a major
restationing action by the Army The Secretary
of the Army may not enter into a contract under
this paragraph and an agreement under section
802(g) of the Military Construction Authorization
Act, 1984 (Public Law 98-115; 97 Stat. 783). [3]
~4
[4] (9) A contact may not be entered into under this
subsection after October 1, 1985.
The Fort Drum contracts are part of an initial pilot program
by the Department of Defense to test the feasibility of long-
term domestic leasing as an alternative to the traditional method
of building military family housing with appropriated funds.
Housing units made available through contracts executed under
sec. 801 will be made available to eligible military families.
These families will forfeit their entire Base Allowance for
Quarters (BAQ) and Variable Housing Allowance (VHA) in exchange
for the housing. The military housing authority could make
assignment of this housing mandatory; i.e. service member must
accept the housing and forfeit his BAQ and VHA just as is now
the case with respect to on-base military-owned housing.
H.R. Rep. No. 359, 98th Cong., 1st Sess. 44-45 (1983) (hereinafter
H.R. Rep. 359).
Section 801(g)(1) provides that the Secretary of a military
department "may enter into a contract for a lease of family
housing units to be constructed on or near a military
installation...at which there is a validated deficit in family
housing." 10 U.S.C. [sec] 2828(g)(1). Such contracts for lease
"may be for any period not in excess of 20 years (excluding the
period required for construction of the housing facilities)." Id
at [sec] 2828(g)(2), (4). The housing units constructed pursuant
to a sec. 801 contract must be built to Department of Defense
specifications [4]
~5
[5] and the United States shall have the right of first refusal to
acquire the housing facilities upon the termination of the lease period.
Id at [sec] 2828 (g)(3), (5).
The military may not enter into a sec. 801 lease until the
Secretary of Defense submits to the appropriate committees of
Congress an economic analysis which "demonstrates that the
proposed contract is cost effective when compared with alternative
means of furnishing the same housing facilities." Id. at [sec]
2828(g)(6)(A). The contract for lease cannot be entered into until
21 calendar days thereafter. Id at [sec] 2828(g)(6)(B).
In accordance with the statute the U.S. Army developed
Requests for Proposals (RFPs) for contracts to lease family units
to be constructed near Ft. Drum. /FN2/
The RFPs indicated that the Army desires to enter into 20
year leases of 600 and 800 new family housing units, respectively,
constructed to Defense Department specifications. The RFPs
stipulate that the "(p)roposals shall be based upon the provision
of facilities cited on non-Federally owned land." /FN3/
On February 27, 1985, the Building Trades asked the Deputy
Under Secretary of Labor for a ruling concerning the interpretation
and application of the Davis-Bacon Act to housing constructed
pursuant to sec. 801 of the Military Construction Authorization Act
of 1984. Thereafter, on March 26, 1985, the Building Trades [5]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Counsel for the Department of Defense submitted one of the
RFPs to the Board at the conclusion of the hearing on this matter
and advised it that both the RFPs are identical in material
respects. However, our references will be to RFP No. DACA
65-85-9-001 applicable to the proposal to construct, lease,
maintain and operate 600 new family housing units near Ft. Drum.
/FN3/ RFP at 1. [5]
~6
[6] advised the Deputy Under Secretary that the Department of the
Army intended to award three Sec. 801 housing contracts near
Ft. Drum.
On May 6, 1985, the Secretary of Defense submitted an
economic analysis to the appropriate committees of Congress
concerning the proposed award of two contracts to build military
housing near Ft. Drum which the Army will lease for a term of 20
years.
The Secretary's economic analysis was apparently based, in
part, on the assumption that laborers and mechanics employed by
the contractors need not be paid wages in accordance with the
Davis-Bacon Act. This is because the Secretary was advised that
structures constructed for lease by the Federal government are not
"public buildings or public works of the United States" /FN4/.
This advice was given by both the Chief Counsel of the Army Corps
of Engineers and the Office of General Counsel of the Department of
Defense who concluded that the Davis-Bacon Act would not be
applicable to sec. 801 contracts. The rationale of these opinions
is that housing units constructed under sec. 801 are exempt from
the Davis-Bacon Act because the Federal government acquires no
more than a leasehold interest in the housing units and, therefore,
are not "public buildings or public works of the United States"
as provided in the Act. [6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ See Davis-Bacon Act, 40 U.S.C. 276a.
~7
[7] On-June 12, 1985, the Deputy Administrator of the Wage and
Hour Division issued a ruling concerning application and
interpretation of the Davis-Bacon Act to housing constructed
pursuant to sec. 801. The Deputy Administrator stated, in relevant
part, as follows:
Based on our view of the standardized DOD contract
for all of the section 801 contracts, it is our
conclusion that the Davis-Bacon Act applies to the
family housing units to be constructed on military
bases, but does not apply to those units which will
be constructed on private land off the bases.
The Deputy Administrator also stated that military housing
units constructed pursuant to sec. 801 are not "public buildings"
within the meaning of the Davis-Bacon Act and the Labor
Department's regulation 29 CFR [sec] 5.2(k), because they would not
serve the interest of the general public.
This conclusion is based on the following reasoning:
Under the terms of the contracts, the housing, which
probably has a useful life of well in excess of twenty
years, will remain under private ownership after
expiration of the leases. Since the off-base housing
will be privately owned and will be built on private land,
it is reasonable to conclude that upon expiration
of the lease, it will be privately used and will
never revert to public use.
The majority of the Board considered this appeal on the basis
of the petition for review and an accompanying statement of points
and authorities submitted by counsel for the Building and
Construction Trades Department, AFL-CIO, the record of the appeal
before the Wage and Hour Division and a statement on behalf of
the Deputy Administrator filed by the Solicitor of Labor, [7]
~8
[8] amicus curiae briefs filed by the Associated Builders and
Contractors, Inc., and the Associated General Contractors of
America and a statement of points and authorities in support of the
Deputy Administrator submitted by counsel for the Department of
Defense, and information submitted by all interested parties at an
oral presentation before the Board on July 24, 1985.
On July 29, 1985 the Board issued a telegraphic decision
that the Davis-Bacon Act applies to these projects. In that
decision the Board indicated that a more comprehensive opinion
would be forthcoming to support the conclusion set forth therein.
* * *
The majority of the Board has reviewed the relevant
legislative history of sec. 801 of the Military Construction
Authorization Act of 1984, and finds nothing in the legislative
reports or the Congressional debates which preceded passage of the
Act that reflects any intention to exempt such contracts from
coverage of the Davis-Bacon Act. However, this conclusion, does
not answer the question whether sec. 801 contracts are "contracts
for construction" within the meaning of the Davis-Bacon Act.
Obviously, sec. 801 contracts are subject to the Davis-Bacon
Act only if they are "contracts for construction". [8]
~9
[9] The Deputy Administrator in his decision conceded that sec.
801 contracts are "contracts for construction". The Department of
Defense and the Associated Builders and Contractors vigorously
argued, however, that contracts to lease housing built to DOD
specifications at the expense of private developers are not
"contracts for construction" under the Davis-Bacon Act.
This argument assumes that, in order for the construction of
sec. 801 housing to be covered by the Davis-Bacon Act, the
principal purpose of the contract to lease must be to construct a
public building of the United States. That is an incorrect
assumption. It has been the traditional position of the Department
of Labor that if more than an incidental amount of construction-
type activity is involved in the performance of a government
contract, the Davis-Bacon Act is applicable to that work. [C]f.
Secretary of Labor Op. No. DB-24 (May 8, 1962); Department of
Labor, Rulings and Interpretations No. 3 issued under the
Walsh-Healey Public Contracts Act. (Where more than an incidental
amount of construction-type activity is involved in a supply-type
contract, the Davis-Bacon Act is applicable to the former work).
A review of the RFP clearly indicates that the Department
of the Army's contract to lease contemplates construction activity.
Not only is the developer required to submit a detailed
construction design of the housing units to be built that conforms
to detailed specifications described in the RFP, but he is also
subject to cancellation or termination of the contract or
assessment [9]
~10
[10] of liquidated damages, if the units are not constructed or
completed on time. Moreover, the RFP expressly provides that the
developer must permit government representatives, agents, and employees
access to the right of entry onto the premises of the housing units
before, during and after construction for the purpose of monitoring,
observing, making inquiries and taking samples of materials for testing
necessary in order for the gover[n]ment to evaluate the units.
Furthermore, a thorough review of the Act itself indicates
that the contracts entered into by the military departments are in
reality not only for the leasing of family units, but for the
construction of such units. Section 801(g)(3) states "(e)ach
contract under this subsection shall require that [*] housing units
constructed Pursuant to the contract [*] ..." [*] (Emphasis added)
[*]. And sec. 801(g)(5) is even clearer when it states "(a)
contract under this subsection shall provide that, ..., the United
States shall have the right of first refusal to acquire all right,
title, and interest to the housing facilities [*] constructed and
leased under the contract [*] ". [*] (Emphasis added) [*].
The majority has also examined the Comptroller General's 1962
decision, 42 Comp. Gen. 47, which held that the Davis-Bacon Act
does not apply to contracts for lease, and finds that it is not
applicable to the facts of the case in question. [10]
~11
[11] Thus, while the principal purpose of sec. 801 contracts to
lease may be to rent military housing, construction of these units
is more than an incidental element. Accordingly, sec. 801
contracts are "contracts for construction" within the meaning of
the Davis-Bacon Act.
II.
Having concluded that sec. 801 contracts are "contracts for
construction", the majority of the Board now turns to the Deputy
Administrator's conclusion that sec. 801 military family units
are not public buildings of the United States covered by the
Davis-Bacon Act.
In 1947, the Department of Labor promulgated a definition
of "public building" in the regulations implementing the Davis-
Bacon and related acts. The definition remains the same today
and it states:
The term "public building" or "public work"
includes building or work, the construction,
prosecution, completion, or repair of which,
as defined above, is carried on directly by
authority of or with funds of a Federal agency
to serve the interest of the general public
regardless of whether title thereof is in a
Federal agency. 29 CFR [sec] 5.2(k)
This definition appears to paraphrase the holding in Peterson
v. U.S., 119 F.2d 145 (6th Cir. 1941). The Peterson case held that
relocation of privately-owned railroad trackage in connection with
a flood control project was a "public work" and the following
general principles were set out: [11]
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[12] The term "public work" as used in the act is without
technical meaning and is to be understood in its plain,
obvious and rational sense. The Congress was not
dealing with mere technicalities in the passage of the
Act in question. "Public Work" as used in the act includes
any work in which the United States is interested and
which is done for the public and for which the United
States is authorized to expend funds. 119 F.2d at 147.
The Supreme Court in United States ex rel. Noland Co. v. Irwin, 316
U.S. 23,24 (1942) broadly defined "public work" to include "any
project of the character heretofore constructed or carried on
either directly by the public authority or with public aid, to
serve the public interest," and held that the Miller Act applied to
a library built with federal funds for a private college, Howard
University. In Irvin, the court abandoned its earlier proposition
that similar bonding requirements in the Heard Act were applicable
only when title passed to the government upon partial payment but
not when title remained in the contractor until after completion.
/FN[5]/ Title Guarantee & Trust Co. v. Crane Co., 219 U.S. 24
(1910); United States v. Ansonia Brass & Copper Co., 218 U.S. 452
(1910). (These cases concerned chattels that the [12]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN[5]/ The court, in abandoning its earlier emphasis upon title
to the building or project, rejected a 1935 opinion by the Court of
Appeals for the District of Columbia which held in construing the
Heard Act that a "public building" or "public work" is confined to
those buildings and projects owned by the Federal government.
Accordingly, in Maiatico Construction Co., v. U.S., 79 F.2d 418
(D.C. Cir.), cert. denied, 296 U.S. 649, (1935), the Court decided
that the plaintiffs, who supplied labor and materials in the
construction of three dormitory buildings at Howard University
could not recover on the contractor's bond required by the Heard
Act since Howard University is a private institution and since it
held title to the dormitories. [12]
~13
[13] government could easily accept or reject and so could be
distinguished from Irwin in which the project involved was a
permanent building.) /FN[6]/ The Irwin decision relied upon the
Peterson case.
The Department's definition of "public buildings" and "public
works" in 29 CFR [sec] 5.2(k) which the Board must follow, states:
(1) Whether the project is "carried on directly
by authority of or with funds of a Federal agency..."
and,
(2) Does the project "serve the interest of the
general public regardless of whether title thereof
is in a Federal agency". [13]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN[6]/ More recently, the U.S. Court of Appeals for the Fifth
Circuit considered whether the provisions of the Miller Act applied
to a suit brought on a bond furnished by a contractor in connection
with a military project under the Capehart Act . 42 U.S.C. [sec]
1594. The Capehart Act amended Title VIII of the National Housing
Act. The statutory plan of the Capehart Act provided for
construction of military housing units by private parties with
private funds advanced on the security of mortgages covering the
housing to be constructed. The Federal Housing Administrator
insured the payment of the mortgage. Each housing unit, upon
completion was placed under the control of the Secretary of Defense
who used appropriations for quarters allowances to pay the
mortgages.
In Autrey v. Williams and Dunlop, 343 F.2d 730 (5th Cir.
1965), the Court stated:
Although title to Capehart housing does not pass
immediately to the United States, due to the novel
financing plan demanded by the exigencies of budgetary
consideration, we believe that Capehart projects are
patently public in nature. Therefore, we rej[e]ct the view
that Capehart projects are not "public works". (Footnote
omitted)
343 F.2d at 734. But see U.S. v. Harrison and Grimshaw
Construction Co. 305 F.2d 363 (10th Cir. 1962); and U.S. v.
Centerline Gardens Inc. 253 F.2d 133 (6th Cir. 1958). [END
FN[6]][13]
~14
[14] The Deputy Administrator held that projects such as the
housing units near Fort Drum are not subject to the Davis-Bacon
Act when considered over their entire useful life. They will
not serve the interest of the general public and, therefore, are
not "public buildings" within the meaning of the Act and the
Department's regulation. /FN[7]/
The Deputy Administrator reasoned that it is necessary to
consider sec. 801 housing in the context of its entire useful
life rather than just over the term of the lease. The Deputy
Administrator concluded that, because the Fort Drum housing will
be privately owned and financed on private land, when the
government's twenty-year lease terminates, the public character of
the housing units will likely cease. The Deputy Administrator
reasoned that the developer will be free to rent the sec. 801
housing to anybody in the general market. Accordingly, he decided
that, over their entire useful life, the structures will not serve
the public interest. [14]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN[7]/ On the other hand, the Deputy Administrator concluded that
sec. 801 housing units built on a military base are subject
to the Act because the developer is required, under the terms
of DOD prototype lease, to remove the housing units and any
other improvement within 30 days of the expiration of the
lease. The Department of Defense has asked for reconsideration
of this aspect of the Deputy Administrator's ruling, arguing
that the documents relied upon by the Wage and Hour Division
do not in fact conform to the prototype RFP to be used for
on-base housing contracts. The majority makes no ruling on
this part of the Administrator's decision. [14]
~15
[15] It does not appear that the Deputy Administrator considered
whether the Ft. Drum sec. 801 housing is being "carried on directly
by authority of or with the funds of a Federal agency..."
Nonetheless, the majority's view of the statutory scheme created in
sec. 801 of the Military Construction Authorization Act of 1984
clearly indicates that the Ft. Drum housing is being carried on
directly by the Department of the Army and the Department of
Defense. First, sec. 801 expressly requires that contracts entered
into under that provision "shall be entered into competitively
bringing into play the full force of the open marketplace." The
military departments are expected to announce publicly, through the
Commerce Business Daily and through the other established forums,
their intention to enter into such a contract and what the criteria
will be for selecting a contractor[.] H.R. Rep. No. 359 at 45.
Second, the conference report indicates that the conferees expected
the developer to operate and maintain the housing units, but the
military departments are permitted to operate and maintain them if
that option is more cost effective. Id. Third, sec. 801 housing
must be built to DOD specifications. And, although the developers
are given the flexibility to select the design, the materials, and
equipment for the project, that information must be submitted in
response to the RFP so the military department can evaluate these
factors as well as a myriad of others specified in the RFP.
Finally, sec. 801 specifies that the Secretary of Defense
must submit each proposed contract to the appropriate Congressional
committees before any contract to lease is entered into. The
purpose of this requirement is to provide the Congress with
sufficient [15]
~16
[16] time to review the proposed contract and to object if the contract
does not appear to be more cost effective than the traditional method of
constructing military family housing. Id. at 46.
These factors are strong indications that the Ft. Drum
as well as all other off-base housing to be contracted pursuant
to sec. 801, is being carried on directly by authority of the
Department of the Army or some other military department with
the Department of Defense. /FN[8]/
III
This brings the majority to the question of whether the use
of the privately-owned and financed property for a term of 20
years serves the public interest enough to satisfy the second
criterion of the Department of Labor's definition of "public
buildings". Sec. 801 housing is built at the request of
the military departments for exclusive occupancy of military
families on or near military installations which have a validated
need for such housing. Clearly, construction of this housing
serves the public interest in providing decent, cost efficient
housing for our enlisted military personnel. The legislative
history of sec. 801 clearly demonstrates this. [16]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN[8]/ Under its rationale the majority need not address the
alternative question of whether the Ft. Drum housing is "carried on
directly ... with the funds of a Federal agency ...". However,
given the terms of the lease, including the right of first option
or right of first refusal to acquire the units at the expiration of
the lease term, it is not unreasonable to conclude that the Federal
government will eventually pay for this housing. DOD's activities
and commitments before the developer does anything on the
project site underwrites its feasibility because it assures its
financial backing. In that way, sec. 801 contracts are not
dissimilar from private housing development financed with federally
guaranteed loans under a variety of Federal laws. [16]
~17
[17] That sec. 801 housing may not retain its public character
upon expiration of the lease in 20 years does not change the
fact that it is being constructed expressly for the public
benefit and use and will be used for that purpose for at least
20 years. It is no more likely that the Ft. Drum housing will
be placed in the private rental market in 20 years than it is
that the Army will acquire the properties through its right of
first refusal.
All that the majority holds is that any structures constructed
pursuant to the direct authority of a Federal agency, or with
Federal funds, for the public benefit, may well be converted
to a private use at some time in the future. The fact that the
Department of the Army is only assured of the use and benefit
of the Ft. Drum housing for 20 years does not diminish the
"public" nature of these structures.
Accordingly, the majority of the Board holds that the
contracts to be awarded pursuant to the provisions of sec. 801 of
the Military Construction Authorization Act of 1984 are "contracts
for construction" and that the housing to be constructed off-base
are "public buildings" within the meaning of the Davis-Bacon Act
and, therefore, construction of such housing must be accomplished
in accordance with the requirements of that law. For this reason,
the decision of the Deputy Administrator is hereby reversed and
the majority of the Board directs the Deputy Administrator to
issue an appropriate wage determination applicable to the Ft. Drum [17]
~18
[18] housing contracts and other such housing projects.
* * *
Stuart Rothman, Member, concurring
I concur in the result reached by the majority. I believe
further, that the decision here should be limited to the Fort
Drum project or projects before the Board.
The question whether a structure or project is a public
building or a public work of the United States is essentially
a factual question to be determined under the circumstances of
each case. The parties have assiduously stayed away from telling
the Board much about the facts at Fort Drum. There was a
successful bidder whose development plan was accepted by the
Department of Defense. The financial undertakings between the DOD
and the successful bidder have been completed. The project
justification was sent to Congress for the required period of 21
days without disapproval by the appropriate Committee. /FN1/ 10
U.S.C. [sec] 2828(g)(6). But the Board has been largely left in
the dark concerning the details of the project, the financial
undertaking, and the Congressional submittal. The Board is
required to resolve this dispute between the Building Trades and
the [18]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ This is a rather unique situation in which a committee of
Congress takes a part in each pilot DOD undertaking. The Board
was not told, however, in any meaningful or exact way just what
project facts and factors were laid before the Congressional
committee and in what detail. If the decision reached by the
Board is not in line with what the Congress intended, it will
not take much on the part of the appropriate committee under
10 U.S C. [sec] 2828(g)(6) to straighten the matter out in its
reasons for approval or disapproval of the next pilot project. [18]
~19
[19] Wage and Hour Deputy Administrator at Fort Drum on the basis
of the statute and the implementing DOD requirements as set forth
in the Request for Proposals.
Wage and Hour's counsel made clear to the Board that Wage
and Hour's position is that if this project is determined to be
a public building or public work of the United States, then the
Davis-Bacon Act will be applicable. The Wage and Hour Deputy
Administrator had concluded, however, that it was not a public
building or public work of the United States.
I am unable to conclude on the basis of the facts we have
to go on that the plan of the statute and the devices adopted
in the Request for Proposals which emphasize the use of private
forces and private enterprise does not still yield a military
housing project which is a public building or public work of
the United States.
In some other particular section 801 housing project which
may be submitted to the Wage and Hour Division the facts may
show that the private aspects of the development truly predominate
over the public initiative, construction arrangements and potential
uses. In such a case the resulting buildings may not be public
buildings or public works of the United States. The Wage and Hour
Division should not be precluded by this decision from making such
a factual showing in another case.
So long as the DOD cannot show when bringing one of these
projects into existence that the physical nature of the project [19]
~20
[20] and the government's financial undertaking of guaranteed
payments over a 20 year period is nothing more than an arrangement
by which the gover[n]ment will pay for the development costs of
these projects plus the developer's entrepreneurial entitlements,
the Board should adopt the rule (for the Wage and Hour Division to
follow) that presumptively these projects are public buildings
or public works of the United States. /FN2/
The Wage and Hour Deputy Administrator's prehearing brief
makes quite clear that the reason he concluded that these projects
upon completion will not be public buildings or public works of the
United States is that the real life expectancy of the buildings
will be much longer than 20 years. This is a question of fact.
There is no reason to infer on the basis of the record that these
structures have a life expectancy of more than 20 years. The Wage
and Hour Deputy Administrator did not consider as a matter of fact
whether the Fort Drum Project or projects were anything more than
the development of 20 year housing to be occupied by the government
for military purposes during the 20 years.
Since all that has been presented to the Board is the "plan"
of the Act and the DOD implementing Request For Proposals, [20]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Counsel for DOD in response to a direct question by a member
of the Board indicated that it might be possible for a developer
to construct the project on land leased by the developer or land
not owned outright by the developer but leased by him for the
20 year period. [20]
~21
[21] the Board majority is correct in reaching the conclusion that
the purpose of these particular projects is to produce 20 year
housing at the order of DOD for DOD use as a Federal undertaking
for a Federal public purpose. Proof may be different in a
different case, but such proof and a financial plan showing cost
effectiveness by reason of such proof, was not shown in this case.
The DOD becomes the sole and exclusive user of the Fort Drum
project or projects for the first 20 years of the property's life.
There is no showing that the statute requires or the DOD's Request
for Proposals for the Fort Drum project contemplated that the
project or projects were to have a life of more than 20 years
and that the government in determining the amount it will pay over
the 20 year period had discounted its rental payments by taking
into account that the owner-developer was going to continue to
reap an entrepreneurial benefit for his risk after the 20 years.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [21]
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