(a) Statutory provision. Under section 4(c) of the Act, the wages
and fringe benefits provided in the predecessor contractor's collective
bargaining agreement must be reached ``as a result of arm's-length
negotiations.'' This provision precludes arrangements by parties to a
collective bargaining agreement who, either separately or together, act
with an intent to take advantage of the wage determination scheme
provided for in sections 2(a) and 4(c) of the Act. See Trinity Services,
Inc. v. Marshall, 593 F.2d 1250 (D.C. Cir. 1978). A finding as to
whether a collective bargaining agreement or particular wages and fringe
benefits therein are reached as a result of arm's-length negotiations
may be made through investigation, hearing or otherwise pursuant to the
Secretary's authority under section 4(a) of the Act.
(b) Prerequisites for hearing. (1) A request for a determination
under this section may be made by a contracting agency or other person
affected or interested, including contractors or prospective contractors
and associations of contractors, representatives of employees, and
interested Governmental agencies. Such a request shall be submitted in
writing to the Administrator, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor, Washington, DC
20210. Although no particular form is prescribed for submission of a
request under this section, such request shall include the following
information:
(i) A statement of the applicant's case setting forth in detail the
reasons why the applicant believes that the wages and fringe benefits
contained in the collective bargaining agreement were not reached as a
result of arm's-length negotiations;
(ii) A statement regarding the status of the procurement and any
estimated procurement dates, such as bid opening, contract award,
commencement date of the contract or its follow-up option period;
(iii) Names and addresses (to the extent known) of interested
parties.
(2) Pursuant to section 4(b) of the Act, requests for a hearing
shall not be considered unless received as specified below except in
those situations where the Administrator determines that extraordinary
circumstances exist:
(i) For advertised contracts, prior to ten days before the award of
the contract;
(ii) For negotiated contracts and for contracts with provisions
extending the term by option, prior to the commencement date of the
contract or the follow-up option period, as the case may be.
(c)(1) The Administrator, on his/her own motion or after receipt of
a request for a determination, may make a finding on the issue of arm's-
length negotiations.
(2) If the Administrator determines that there may not have been
arm's-length negotiations, but finds that there is insufficient evidence
to render a final decision thereon, the Administrator may refer the
issue to the Chief Administrative Law Judge in accordance with paragraph
(d) of this section.
(3)(i) If the Administrator finds that the collective bargaining
agreement or wages and fringe benefits at issue were reached as a result
of arm's-length negotiations or that arm's-length negotiations did not
take place, the interested parties, including the parties to the
collective bargaining agreement, will be notified of the Administrator's
findings, which shall include the reasons therefor, and such parties
shall be afforded an opportunity to request that a hearing be held to
render a decision on the issue of arm's-length negotiations.
(ii) Such parties shall have 20 days from the date of the
Administrator's ruling to request a hearing. A detailed statement of the
reasons why the Administrator's ruling is in error, including facts
alleged to be in dispute, if any, shall be submitted with the request
for a hearing.
(iii) If no hearing is requested within the time mentioned in
paragraph (c)(3)(ii) of this section, the Administrator's ruling shall
be final, and, in the case of a finding that arm's-length negotiations
did not take place, a new wage determination will be issued for the
contract. If a hearing is requested, the decision of the Administrator
shall be inoperative.
(d) Referral to the Chief Administrative Law Judge. The
Administrator on his/her own motion, under paragraph (c)(2) of this
section or upon a request for a hearing under paragraph (c)(3)(ii) of
this section where the Administrator determines that material facts are
in dispute, shall by order refer the issue to the Chief Administrative
Law Judge for designation of an Administrative Law Judge, who shall
conduct such hearings as may be necessary to render a decision solely on
the issue of arm's-length negotiations. However, in situations where
there is also a question as to whether some or all of the collectively
bargained wage rates and/or fringe benefits are substantially at
variance (see Sec. 4.10), the referral shall include both issues for
resolution in one proceeding. As provided in section 4(a) of the Act,
the provisions of sections 4 and 5 of the Walsh-Healey Public Contracts
Act (41 U.S.C. 38, 39) shall be applicable to such proceeding, which
shall be conducted in accordance with the procedures set forth at 29 CFR
part 6.
(e) Referral to the Administrative Review Board. When a party
requests a hearing under paragraph (c)(3)(ii) of this section and the
Administrator determines that no material facts are in dispute, the
Administrator shall refer the issue and the record compiled thereon to
the Administrative Review Board to render a decision solely on the issue
of arm's-length negotiations. Such proceeding shall be conducted in
accordance with the procedures set forth at 29 CFR part 8.
