CCASE:
RURAL/METRO CORPORATION
DDATE:
19930326
TTEXT:
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[1] BOARD OF SERVICE CONTRACT APPEALS
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
RURAL/METRO CORPORATION BSCA Case No. 92-27
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: March 26, 1993
DECISION OF THE BOARD OF SERVICE CONTRACT APPEALS
This case is before the Board of Service Contract Appeals on
the petition of Rural/Metro Corporation ("RMC" or "Petitioner")
pursuant to the McNamara-O'Hara Service Contract Act of 1965, as
amended (41 U.S.C. [sec] 351 et seq.; "SCA") and the Regulations at
29 C.F.R. Part 8. Petitioner seeks review of a March 8, 1990
decision issued by the Acting Administrator, affirming the
appropriateness of classifications and wage rates which had been
conformed to two SCA contracts held by RMC. The Acting
Administrator also ruled that conformed wage rates were applicable
to contract work retroactive to commencement of the contracts'
performance. For the following reasons, the final ruling of the
Acting Administrator is affirmed in part and remanded in part to
the Acting Administrator for further action consistent with this
opinion.
I. BACKGROUND
RMC is an Arizona corporation engaged for several years in the
business of providing fire protective services to the Federal and
various state governments to fight wild fires in national and state
forests. RMC ordinarily provides firefighters and fire-fighting
equipment under contract to the contracting agencies. This labor
standards dispute arises from Petitioner's performance of two such
contracts which were awarded to RMC by the United States Forest
Service ("USFS"). These are contracts for amounts in excess of
$2,500 and are [1]
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[2] principally for the provision of services; accordingly, they are
properly subject to SCA labor standards provisions and wage
determinations.
On July 14, 1987 USFS submitted a Standard Form ("SF") -98,
requesting that the Wage and Hour Division issue an SCA wage
determination ("WD") with statewide application to Arizona for
"Forestry and Land Management Services on Federal Lands, such as
campground cleanup, road maintenance, tree planting, and other
forestry related services." Administrative Record ("AR") Tab B.
The SF-98 also specified that the request was for application under
approximately 100 separate contracts to be awarded during Fiscal
Year 1988. USFS requested only three service employee
classifications for the wage determination: laborer, truck driver,
and heavy equipment operator. On August 20, 1987 Wage and Hour
issued WD 77-211 (Revision 7), which listed hourly wage rates (not
including fringe benefits) of $8.18 for laborers and $10.27 for
truck drivers and heavy equipment operators.
Included among the "land management" contracts awarded with WD
77-211 (Rev. 7) attached was one with RMC -- USFS Agreement (or
Contract) No. 56-8180-8-31 ("Contract 1") for rental of fire-
fighting and other types of emergency equipment and crews for the
period of May 1, 1988 through April 30, 1989. (AR Tab B). This
contract was negotiated and awarded by the Contracting Officer for
Tonto National Forest, Arizona. No challenge to the rates or
classifications listed in WD 77-211 (Rev. 7) was filed by RMC prior
to the award of the contract or commencement of performance. The
contract included a signed addendum which provided that USFS could
require other firefighting services on lands outside Tonto National
Forest.
A second fire-fighting agreement -- No. 56-8180-9-42
("Contract 2") --was entered between the USFS and RMC on June 30,
1989 for the period of performance between June 30, 1989 and April
30, 1990. Both parties before the Board agree that USFS apparently
attached WD 88-312 to the Contract 2.
By at least June 7, 1988 RMC notified USFS in writing that it
had "reviewed wage determination no. 77-211 and [found] that it is
not applicable to this type of work." (AR Tab D). Significant
amounts of firefighting services were soon provided under Contract
1, with USFS calling upon RMC to send equipment and crews to the
August-September 1988 Yellowstone National Park fires. The Acting
Administrator states that "it was RMC's underpayments for these
services that became the underlying basis of this dispute."
Statement, p. 6, n.2. [2]
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[3] By early January 1989 the Wage and Hour Division commenced an
investigation of RMC's SCA compliance. /FN1/ On January 19, 1989,
RMC's counsel wrote to the Wage and Hour Division's local area
office, requesting a new wage determination which would be based on
the classifications and wage rates utilized by RMC. RMC argued
that WD 77-211 (Rev. 7) was not applicable to its contract work
since "[f]irefighting services are not performed by laborers, truck
drivers or heavy equipment operators" -- the classifications in WD
77-211 (Rev. 7). RMC also suggested that USFS's failure to correct
the classification problem supported its position that no SCA
violations had been committed and proposed that Wage and Hour issue
a new, "applicable" wage determination containing the following
classifications and wage rates:
Part-Time Firefighters $5.03 per hour
Full-Time Firefighters $6.24 to $9.83 per hour
(based on length of service
and merit increases)
Captains/Lieutenants $6.50 per hour
Fire Chiefs $7.75 per hour
Wage and Hour treated this correspondence as a request for
conformance of the four classifications to WD 77-211 (Rev. 7). On
October 25, 1989, the Acting Director, Division of Wage
Determinations notified the Tonto National Forest contracting
officer of her final conformance determination, issued pursuant to
29 C.F.R. 4.6(b)(2)(vi) (AR Tab A, section 2). The Acting Director
explained that:
. . . wage rates for classifications not listed on an
existing wage determination must, when conformed, bear a
reasonable relationship to those classifications which
are listed. Basic to the establishment of any conformed
wage rate is the concept that a pay relationship should
be maintained between job classifications based on skills
required and duties performed.
The Acting Director ruled that RMC's proposed wage rates for the
classifications would not be approved since:
they are not conformable to the other wage rates
contained in the subject wage determination. A careful
review of the referenced wage determination indicates
that a minimum hourly rate of $8.18, [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Eventually, the final Wage and Hour report of the
investigation alleged wage underpayments of $89,928.61 (for SCA
minimum and Contract Work Hours and Safety Standards Act overtime
wage violations) and $1,701.44 in holiday pay. [3]
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[4] which is the laborer's rate listed in the contract wage
determination, would be appropriate for the Firefighter
class, regardless of employment status and whether a
cadet or fully trained. The Captain/Lieutenant class
should be compensated at an hourly rate of at least
$8.50, which is a 4% differential based on the per cent
difference between the proposed rates of $6.50 versus
$6.24. The Fire Chief class should be compensated at an
hourly rate of $10.13, which is a differential of 19%
based on the per cent difference of the proposed rates of
$7.75 versus [$]6.50. These rates, $8.18 for the
Firefighter, $8.50 for the Captain/Lieutenant, and $10.13
for the Fire Chief, are conformable and approved.
The Acting Director further ruled that the conformed wage rates
were payable in addition to the fringe benefits listed in WD 77-211
(Rev. 7). Finally, the Acting Director concluded that the wages
were payable to affected employees retroactive to commencement of
the contract.
After being informed of the Wage and Hour Division's
conformance ruling, RMC -- on January 25, 1990 -- requested "review
and reconsideration of the Wage Determination regarding . . .
Agreement No. 56-81980-8-31" pursuant to 29 C.F.R. 4.55. RMC
further requested that the review and reconsideration be applied to
RMC's Contract 2, to which the USFS had apparently attached WD
88-312. The January 25 request challenged the applicability of WD
77-211 (Rev. 7) and WD 88-312 to the extent that the firefighter
classification rate had been conformed to the laborer's rate. In
the January 25, 1990 request, RMC stated that it "accepts" the
$8.50 hourly rate conformed by the Wage and Hour Division for the
classification "Captains/Lieutenants." /FN2/
In brief, RMC's position was that the classifications
contained in WD 77-211 (Rev. 7) did not "relate in any way to the
classifications utilized by Rural/Metro. . . ." RMC further argued
that this dispute did not therefore involve a conformance
proceeding, but rather should be treated as a request for "a
[*] new, applicable [*] Wage Determination [*][original
emphasis][*]." Id. Given these arguments, RMC concluded that
retroactive application of the conformed rates would not be
appropriate under Contract 1 and, further, the rates included in
any new wage determination should be prospective in application
only, commencing with Contract 2. [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ In the Petition for Review, RMC similarly states its
acceptance of the rate conformed for the Captains/Lieutenants
classification. Likewise, Petitioner has not raised exceptions
concerning the conformed rate for the "Chief" classification.
Accordingly, these issues are deemed to have been waived. [4]
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[5] In the January 25, 1990 request, Petitioner raised the
contention that the correct rates for the disputed classifications
should be based on the wages paid to so-called AD-1 and AD-2
firefighters, classifications which are utilized by the federal
government when directly hiring firefighters. In this regard, RMC
argued that it would be appropriate to look to these rates because
the federal classifications bore a "reasonable relationship" to the
work performed by RMC's firefighters and that the Laborer's
classification in WD 77-211 (Rev. 7) was not reasonably related to
RMC's services under the contracts. RMC again sought approval of
its proposed firefighter rates -- ranging from $6.24 to $9.83.
On March 8, 1990, the Acting Administrator issued her ruling
on Petitioner's January 25, 1990 request, stating that the
regulations at 29 C.F.R. 4.55 do not provide for review and
reconsideration of conformance actions, since that procedure takes
place after the award of an SCA contract. The Acting Administrator
affirmed the Wage and Hour Division's conformance action with
respect to the $8.18 hourly rate for firefighters. The conformed
Firefighter rate was justified as reasonably related to the other
classifications and rates listed in WD 77-211 (Rev.7). The Acting
Administrator further stated that the skills and duties of Laborers
were comparable to those of Firefighters and that the $8.18 hourly
rate was also consistent with the wage data utilized by Wage and
Hour to issue SCA prevailing wage determinations for comparable
protective services occupations in the locality. (The $8.18 hourly
rate was characterized as consistent with the middle range of wages
-- $7.53 to $9.68 -- paid to comparable protective services
occupations.)
The Acting Administrator further affirmed the ruling that the
conformed rates were payable retroactive to the commencement of
Contract 1, citing the regulatory provisions at 29 C.F.R.
4.6(b)(2)(v). Finally, the Acting Administrator ruled that, with
respect to Contract 2, RMC's challenge was untimely under the
regulations at 29 C.F.R. 4.55. On May 3, 1990, RMC filed this
Petition for Review with the Office of the Deputy Secretary of
Labor. /FN3/
II. DISCUSSION
A. Denial of review and reconsideration for WD 77-211
(Rev. 7)
The Acting Administrator ruled, as noted above, that the
regulation at 29 C.F.R. 4.55 is applicable only to wage
determination challenges filed prior to the award or commencement
of service contracts subject to the SCA and that [5]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ Prior to the establishment of the Board of Service Contract
Appeals on July 10, 1992, SCA appeals were filed with and decided
by the Deputy Secretary of Labor pursuant to a delegation of
authority from the Secretary of Labor. [5]
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[6] regulation could therefore not be utilized to challenge the
October 25, 1989 conformance ruling. The Board agrees. 29 C.F.R.
4.55(a) provides:
Review by the Administrator. (1) Any interested party
affected by a wage determination issued under section
2(a) of the Act may request review and reconsideration by
the Administrator. A request for review and
reconsideration may be made by the contracting agency or
other interested party, including contractors or
prospective contractors and associations of contractors,
representatives of employees and other interested
Governmental agencies. Any such request must be
accompanied by supporting evidence. [*] In no event
shall the Administrator review a wage determination or
its applicability [*] after the opening of bids in the
case of a competitively advertised procurement, or,
[*] later than 10 days before commencement of a contract
in the case of a negotiated procurement, exercise of a
contract option or extension [*]. This limitation is
necessary in order to ensure competitive equality and an
orderly procurement process.
[*] Emphasis supplied[*]. The language of section 4.55 plainly
contemplates review and reconsideration of wage determinations for
negotiated procurements only where a challenge is filed in a timely
manner, i.e. 10 or more days prior to commencement of contract
performance, where -- as here -- the contract was not subject to
competitively advertised procurement.
There is no support in the regulations and Petitioner has
cited no authority for its argument that since the classifications
contained in WD 77-211 (Rev. 7) were not "applicable" to its work
that conformance procedures were not, therefore, appropriate in
this case. Section 4.6(b)(1) -- required to be included in each
SCA contract -- establishes a basic SCA compliance requirement:
Each service employee employed in the performance of this
contract by the contractor or any subcontractor shall be
paid not less than the minimum monetary wages and shall
be furnished fringe benefits in accordance with the wages
and fringe benefits determined by the Secretary of Labor
or authorized representative, [*] as specified in any
wage determination attached to this contract [*].
[*] Emphasis supplied[*]. There is no requirement that a wage
determination must be "applicable" nor is there any guarantee under
the SCA or the regulations that a wage determination will contain
all classifications required for performance of a contract. Such
a situation, rather, is to be remedied -- after contract award or
commencement of performance -- by the conformance procedures, also
found at section 4.6(b): [6]
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[7] (2)(i) [*] If there is [] a wage determination attached
to this contract, the contracting officer shall require
that any class of service employee which is not listed
therein and which is to be employed under the contract[*]
(i.e., the work to be performed is not performed by any
classification listed in the wage determination), [*] be
classified by the contractor so as to provide a
reasonable relationship (i.e., appropriate level of skill
comparison) between such unlisted classifications and the
classifications listed in the wage determination. [*]
Such conformed class of employees shall be paid the
monetary wages and furnished the fringe benefits as are
determined pursuant to the procedures in this section.
[*] Emphasis supplied. [*] Thus, the only administrative procedure
for correcting a wage determination which does not contain
necessary classifications (after contract award or commencement) is
provided by the conformance regulations. The Board concludes that
the Wage and Hour Division properly refused to consider RMC's
request for a new wage determination under section 4.55 and a
conformance proceeding was therefore appropriate.
B. The conformance rulings with respect to Contract 1
and WD 77-211 (Rev. 7)
The conformance procedures were implemented, in part, to
ensure that there would be no disruption to necessary federal
procurements in situations, where, as here, classifications of
necessary workers had been omitted from a wage determination.
Moreover, with conformance, SCA employees affected by omission of
classifications would not lose the protections assured them under
the SCA.
With respect to the levels of conformed wages, the regulations
provide, in pertinent part that affected employees "be classified
by the contractor so as [*] to provide a reasonable relationship
(i.e., appropriate level of skill comparison) [*] between such
unlisted classifications and the classifications listed in the wage
determination." 29 C.F.R. 4.6(b)(2)(ii); emphasis supplied. The
regulation at section 4.6(b)(iv)(A) outlines the procedures for
establishing the rates for omitted classifications, i.e.,
determination of the "reasonable relationship":
The process of establishing wage and fringe benefit rates
that bear a reasonable relationship to those listed in a
wage determination cannot be reduced to any single
formula. The approach used may vary from wage
determination to wage determination depending on the
circumstances. Standard wage and salary administration
practices which rank various job classifications by pay
grade pursuant to point schemes or other job factors may,
for example, be relied upon. Guidance may also be
obtained from the way [7]
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[8] different jobs are rated under Federal pay systems
(Federal Wage Board Pay System and the General Schedule) or
from other wage determinations issued in the same locality.
[*] Basic to the establishment of any conformable wage rate(s)
is the concept that a pay relationship should be maintained
between job classifications based on the skill required
and the duties performed.
Emphasis supplied. The Acting Administrator relied on the
foregoing emphasized criterion in establishing the disputed
Firefighter classification's rate in this case. The Firefighter
rate was conformed as equal to the rate for "Laborer" -- listed in
WD 77-211 (Rev. 7) -- at the hourly rate of $8.18. It was reasoned
that the skills and duties required for the actual work performed
by RMC's Firefighters were consistent with those of Laborers and
that equation to the Laborer's rate was therefore a "reasonable
relationship." RMC strongly opposes this contention, arguing that
"the duties of a fire fighter bear no rational relationship to
those of a laborer. A fire fighter does not move heavy furniture,
trim hedges or guard a building under siege." Petition for Review,
p. 6.
The Acting Administrator's conformance of Firefighter to the
Laborer's classification is justified by reliance, in part, on the
Wage and Hour Division's SCA Directory of Occupations
("Directory"), 2 Ed. (July 1986), a comprehensive listing (prepared
by the Department's Bureau of Labor Statistics and the SCA Wage
Determinations Branch of Wage and Hour) of service occupations
often employed under SCA contracts. The Directory job description
for "Laborer" defines the scope of work as:
[*] Performs tasks which require mainly physical
abilities and effort involving little or no specialized
skill or prior work experience. [*] The following tasks
are typical of this occupation: Loads and unloads trucks
and other conveyances; moves supplies and materials to
proper location by wheelbarrows or hand trucks; stacks
materials for storage or binning; collects refuse and
salvagable [sic] materials. [*] Digs, fills and tamps
earth excavations; levels ground using pick, shovel,
tamper and rake [*]; shovels concrete and snow; cleans
culverts and ditches; [*] cuts tree[s] and brush
[*]; operates power lawnmowers. Moves and arranges heavy
pieces of office and household furniture, equipment, and
appliances; moves heavy pieces of automotive, medical
engineering, and other types of machinery and equipment.
Spreads sand and salt on icy roads and walkways; [*]
picks up leaves and trash [*].
Directory, p. 47; emphasis supplied. The Board agrees with RMC to
the extent that the [*] specific [*] listed duties and skills of
Laborers are not exactly those required for its Firefighters.
[*Emphasis in original text*] However, the Board views the skills
and duties of the two [8]
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[9] classifications as clearly being [*] comparable [*]. [*Emphasis in
original text*] RMC states in its petition that the duties of its
firefighters "resemble" the duties of Federal-hire AD-1 and AD-2
Firefighters. The record contains a USFS description of the duties of
these Federal-hire firefighters. To the extent that these job listings
describe the use of tools, the Board finds that AD-1 and AD-2 duties are
also comparable to the duties of Laborers. AD-1 firefighters are
involved "in the suppression of forest fires using handtools such as
shovels, rakes, pulaskis, back pumps, and axes...." Rec. Tab F. AD-2
firefighters require "skilled use of hand and/or powered tools,
including light power tools such as trenchers, portable pump, and chain
saws. . . ." Id. RMC's employees were interviewed during the Wage and
Hour investigation and their description of actual work duties is
consistent with AD-1 and AD-2 duties: the employees cleared brush,
undergrowth and other combustible materials such as trees by the use of
hand and small hand-held power tools. They patrolled fire damaged areas
looking for "hot spots" which could reignite a forest fire. Some
operated pumps and hoses in controlling fires. See, generally, Record
Tab G.
RMC argues that the Firefighter classification and rate should
have been conformed to the rate paid the AD-1 and AD-2
firefighters, since those Federal descriptions are more closely
related to the work of its own Firefighters. However, this is
inconsistent with the applicable regulation which requires
conformance of missing classifications to classifications
[*] contained in the contract's wage determination [*].[*Emphasis
in original text*]
Thus, in our view, the Laborer and Firefighter classifications
primarily involve "duties [which] are manual or physical in nature
. . ., as distinguished from mental or managerial. . . ." See 29
C.F.R. 5.2(j). /FN4/ The suppression of wild fires by Firefighters
is patently a physical, manual-labor oriented position; it is not
"mental or managerial," and Petitioner has never supplied a
description of Firefighter duties which could lead us to conclude
other than that it is comparable to Laborer duties.
"Laborer" is the least skilled SCA classification, requiring
no experience or specialized training, given the physical, manual
nature of the job. To the extent that RMC's Firefighters require
[*] any [*] special skills, training or experience, an argument
could be made that conformance to a classification paid more than
Laborers would be reasonable. [*Emphasis in original text*] Thus,
conformance of the Firefighter classification to that of Laborer
has only enured to Petitioner's advantage. [9]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ This regulation defines the terms "laborers" and "mechanics"
with respect to the Davis-Bacon and Related Acts, prevailing wage
laws applicable to Federal and Federally-assisted construction
contracts. The Board sees no significant distinction between the
duties of laborers under the two statutory programs. [9]
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[10] Record wage data supplied by the Acting Administrator for
other comparable protective service occupations in the locality
further support the reasonableness of the Firefighter conformance.
Middle range data for the classification of Guard II shows hourly
rates between $7.53 and $9.68. Further, the calendar year wage
rate for AD-2 Firefighters in the Western Area (encompassing
Arizona) is $7.40. This information is not necessary to the
conformance procedure, but it does indicate the reasonableness of
the conformed rate at issue in this case.
The Board concludes that the Acting Administrator's
determination of a reasonable relationship between Laborer and
Firefighter duties was itself reasonable. We therefore affirm the
conformance action, including the hourly rate of $8.18.
C. Conformance retroactivity and Contract 1
Having affirmed the Acting Administrator's conformance
ruling as reasonable, we turn now to the question of whether the
Acting Administrator properly ruled that the conformed
classifications and rates should be applied retroactively to the
fire protective services contract. RMC contends that there should
be no retroactive application, based on its assertion that it:
informed the contracting officer and the Department [of
Labor] that Wage Determination No. 77-211 was not
applicable.... [T]his is not a case of "conforming" the
wage rates. Rather, Rural/Metro requested a [*] new[],
[*] applicable [*] Wage Determination.
Original emphasis. The fact that RMC "informed" USFS and the
Department of Labor (after contract performance began) of its
position regarding applicability of WD 77-211 (Rev.7) does not
address the question of whether the conformed rates must be applied
retroactively; this argument addresses RMC's untimely challenge to
the substantive correctness of WD 77-211 (Rev. 7).
The Board has recently addressed the question of retroactive
application of conformed rates and classifications in Executive
Suite Services, Inc., BSCA Case No. 92-26 (Mar. 12, 1993).
Retroactive application -- as stated by the Acting Director in the
October 25, 1989 conformance ruling -- is governed on the instant
facts by the regulation at 29 C.F.R. 4.6(b)(2)(vi): [10]
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[11] Upon discovery of failure to comply with paragraphs
(b)(2)(i) through (v) of this section /FN5/, the Wage and
Hour Division shall make a final determination of
conformed classification, wage rate, and/or fringe
benefits [*] which shall be retroactive to the date such
class of employees commenced contract work[*].
[*] Emphasis supplied [*]. This provision of the conformance
regulations is mandatory in application. After final determination
of conformed rates, they shall be retroactive to the commencement
of work under the contract. See, BDM Management Services Co., Case
No. 88-SCA-OM-1 (Dec. of the Deputy Secretary)(Aug. 1, 1988), slip
op. at 7-8; see also Executive Suite Services, Inc., supra at 9.
Petitioner has failed to offer any support -- other than the
rejected "applicable wage determination" argument -- for its
contention that the conformed rates should not be applied
retroactively and the Board affirms this portion of the ruling.
D. Contract No. 56-8180-9-42
Petitioner has raised several exceptions to the ruling with
respect to Contract 2. However, the Acting Administrator has
informed the Board that in the proceedings below:
[t]he Administrator originally treated SF-98 No. A97783
as being the appropriate request for a wage determination
for [Contract 2] .... However, it has recently been
determined that this SF-98 was not applicable to the
cited contract. There is no record of either submission
of or response to an appropriate SF-98 for [this
contract].
The Acting Administrator therefore has requested the Board to
remand this portion of the instant matter to the Wage and Hour
Division for issuance of a corrective SF-98 and a new wage
determination. It is stated that these rates will be issued for
application retroactive to the commencement of Contract 2, pursuant
to the regulation at 29 C.F.R. 4.5(c)(2), which authorizes such
action. No opposition to this request has been filed with the
Board. [11]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ The regulations [*] require [*] contractors and contracting
agencies to initiate and conclude conformance actions no later than
30 days after commencement of contract work. A report of the
action taken is then to be sent to Wage and Hour which approves or
modifies the initial conformance action. No such efforts were
undertaken by USFS and Petitioner in this case. [*Emphasis in
original text*]
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[12] Accordingly, the issues concerning Contract 2 are hereby
remanded to the Wage and Hour Division for appropriate action. It
is Ordered, that such action by the Wage and Hour Division shall be
completed within 90 days of the date of this decision.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [12]
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