MARTIN MARIETTA MANNED SPACE SYSTEMS, WAB No. 90-08 (WAB May 31, 1991)
CCASE:
MARTIN MARIETTA MANNED SPACE SYSTEMS
DDATE:
19910531
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
MARTIN MARIETTA WAB Case No.
MANNED SPACE SYSTEMS
Contract No. NAS8-30382(F)
Michoud Assembly Facility
New Orleans, Louisiana
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: May 31, 1991
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of Martin Marietta Manned Space Systems ("Martin Marietta" or
"Petitioner") for review of a July 13, 1989 decision by the
Administrator of the Wage and Hour Division, affirmed on
reconsideration by the Acting Administrator on December 1, 1989.
These rulings involve Martin Marietta's responsibility as a prime
contractor for back wages owed by a subcontractor. For the reasons
stated below, the Board denies the petition for review. [1]
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[2] I. BACKGROUND
Martin Marietta was awarded a National Aeronautics and Space
Administration ("NASA") contract (No. NAS8-30382(F)) on June 3,
1981, "with its primary purpose to furnish Government property to
the extent available, and acquisition such other property for use
as is hereinafter provided for, in order to facilitate the Space
Shuttle External Tank Project." The contract provided for, among
other things, construction of the NASA Michoud Assembly Facility in
New Orleans, Louisiana.
The contract also provided in Article X that "[i]n the event
that construction, alteration or repair . . . of public buildings
or public works is to be performed hereunder, the contractor
[Martin Marietta] shall, prior to commencing the work, request the
determination of the Contracting Officer as to the applicability of
the `Davis-Bacon' Act . . . ." Article X further provided that
Martin Marietta "shall in the performance of items of work so
determined to be subject to the `Davis-Bacon' Act comply with those
provisions set forth in Standard Form 19-A, attached to th[e]
contract." Those provisions regarding Davis-Bacon obligations
were set forth in Clauses 57-64 of the General Provisions, and
included the requirement that to the extent that the contract is a
prime contract with the government subject to the Davis-Bacon
Act, or a subcontract subject to a prime contract, the provisions
of the Davis-Bacon Act shall apply. The contract also stated that
the contractor agreed to insert those clauses in all subcontracts.
Martin Marietta contracted with Leonard B. Hebert, Jr., Co.,
Inc. ("Hebert") in July 1981 to construct the LH2 Horizontal Spray
Facility for the project. The contract contained Wage Decision No.
LA81-4024. Hebert in turn subcontracted with Diamond Realty &
Construction Co. ("Diamond") in December 1981 to complete
construction of the Spray Facility. An investigation by the Wage
and Hour Division disclosed that 21 Diamond employees had been had
been misclassified and underpaid.
On February 29, 1984, the Director of the Division of Contract
Standards Operations issued charging letters to Martin Marietta,
Hebert and Diamond. The letter to Petitioner stated that Martin
Marietta was the operating contractor on the project, and that in
accordance with 29 C.F.R. 5.5(a)(6) Martin Marietta as operating
contractor "is responsible `for compliance by any subcontractor ...
with all of the contract clauses in 29 CFR 5.5' which include
the requirement to pay all laborers and mechanics the applicable
prevailing wage rate for the classification of work performed and
the proper overtime compensation." Since neither Diamond or Hebert
had agreed to make restitution, the letter stated, the Wage and
Hour Division is advising those firms and Martin Marietta of the
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[3] investigation findings and of the opportunity to request a
hearing pursuant to 29 C.F.R. 5.11(b).
In response to the charging letters, both Hebert and Diamond
requested a hearing before an Administrative Law Judge ("ALJ").
However, Petitioner's response by letter dated March 26, 1984
stated that "Martin Marietta Corporation does not request a hearing
in this matter. The Corporation has withheld funds equal to the
amount of wages in controversy and will disburse them upon the
direction of the contracting agency . . . ." By letter dated
October 17, 1986, counsel for Martin Marietta stated that Martin
Marietta did not plan to call any witnesses of its own at the ALJ
hearing, but reserved the right to examine witnesses called by any
other party.
Following a hearing at which Diamond, Hebert and Martin
Marietta were represented, the ALJ issued a decision on August 28,
1987 and ordered that Diamond and Hebert pay $8,065.37 to the
Comptroller General for distribution to the affected employees. By
letter dated February 8, 1988, the Administrator of the Wage and
Hour Division requested that the Defense Logistics Agency ("DLA")
transfer $6,606.44 in withheld funds to the Comptroller General for
disbursement to the affected employees in partial satisfaction of
the back wages due. DLA responded that it was operating under a
NASA contract delegation, and that the delegation did not give them
authorization to pay back wage claims. The letter also stated that
Petitioner had informed DLA in October 1984 that Martin Marietta
had withheld $6,600 "to cover the proper disbursement of wages."
However, DLA learned on March 3, 1988 that Martin Marietta "had
inadvertently released the funds to [Hebert] some time ago."
The Administrator demanded payment from Diamond and Hebert in
1988; however, both subcontractors refused to make payment. By
letter dated July 13, 1989, the Administrator informed Martin
Marietta that $8,605.37 still remained due the employees of
lower-tier subcontractor Diamond. The Administrator also stated
that as Petitioner previously had been advised, "the prime
contractor is responsible for `compliance by any subcontractor ...
with all contract clauses in 29 CFR 5.5 . . . .'" Accordingly,
the Administrator stated, "the prime contractor is responsible for
the payment of back wages when a subcontractor fails to do so."
The Administrator requested Martin Marietta make payment of the
full $8,065.37 in unpaid wages.
By letter dated August 3, 1989, counsel for Martin Marietta
responded that "[w]e do not feel we are liable for these back
wages." Petitioner's counsel argued that the regulations and the
Wage Appeals Board cases cited by the Administrator "only deal with
liability of prime contractors in a construction setting," and are
"inapplicable to [Martin Marietta] as `operator' of a federal
facility." Counsel also argued that the ALJ found that Martin
Marietta was the [3]
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[4] "`operating contractor' not the `prime contractor,'" and that the
ALJ did not order Martin Marietta to pay back wages. Counsel requested
reconsideration of the Administrator's decision. By letter dated December
1, 1989, the Acting Administrator affirmed the Administrator's July 13, 1989
decision that Martin Marietta is liable for the back wages owed in
this matter.
II. DISCUSSION
On review, the Board concludes that Petitioner's belated
attempt to avoid liability for the back wages owed by subcontractor
Diamond is completely lacking in merit, and the petition for review
should be denied. As the Board recently observed in Phoenix
Development Company, WAB Case No. 90-09 (March 29, 1991), at p. 2,
"It is well settled that prime contractors . . . are responsible
for the Davis-Bacon compliance of their subcontractors." The
contract (FOOTNOTE 1) between NASA and Martin Marietta specifically
provided that with respect to work under the contract that was
subject to the Davis-Bacon Act, Martin Marietta was required to
comply with the Davis-Bacon requirements incorporated in Clauses
57-64 of the contract's General Provisions. Those provisions again
specifically stated that to the extent the contract is a prime
contract subject to the Davis-Bacon Act, or a subcontract subject
to a prime contract, the provisions of the Davis-Bacon Act shall
apply. It is undisputed that Martin Marietta's contract with NASA
provided, among other things, for construction of the Michoud
Assembly Facility, and that this work was subject to the
Davis-Bacon Act. Thus, it is beyond question that Martin Marietta
was responsible for unpaid wages owed by lower-tier subcontractor
Diamond in connection with work performed on the Spray Facility at
the Michoud Assembly Facility.
Martin Marietta additionally argues that it is not liable for
the back wages owed by Diamond because the ALJ's decision orders
Hebert and Diamond to pay the back wages. However, not a single
word in the ALJ's decision can be characterized as addressing the
issue of Martin Marietta's liability for the back wages owed by
Diamond -- indeed, Petitioner did not even contest its liability
for unpaid wages owed by a subcontractor until well after the ALJ's
decision was issued. Petitioner's reliance upon Goodyear Atomic
Corporation v. Miller, 108 S. Ct. 1704 (1988) for the proposition
that a contractor that operates a [4]
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(FOOTNOTE 1) The contract between Martin Marietta and NASA was not
included in the administrative record forwarded to the Board, but
was attached to Martin Marietta's petition for review. The Board
ordinarily does not accept material into the record. However,
examination of this contract is relevant to disposition of this
case and, indeed, if the contract had not been made available, the
Board would have been required to remand this matter to the Wage
and Hour Division for inclusion of the contract in the record. See
Cat Construction, Inc., WAB Case No. 88-36 (May 17, 1991).
Therefore, the Board accepts the contract into the record of this
matter. [4]
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[5] government-owned, contractor-operated ("GOCO") facility may
"share" the government's immunity from some laws is likewise
inapposite, since Goodyear dealt only with whether a federal
installation operated by a private contractor is shielded from
direct state regulation.
The petition for review is denied. The decision of the
Administrator, and the decision of the Acting Administrator upon
reconsideration, are affirmed.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
______________________________
Gerald F. Krizan, Esq.
Executive Secretary [5]
