This matter is before the Administrative Review Board
pursuant to the McNamara-O'Hara Service Contract Act of 1965, as amended, 41 U.S.C.
§ 351 et seq. (SCA) and the regulations of the Department of Labor at 29
C.F.R. Part 8. The case is pending on the petition of the Administrator, Wage and Hour
Division (Administrator) seeking review of an Administrative Law Judge (ALJ) decision dated
September 25, 1995. The ALJ's decision denied the Administrator's request to debar Summitt
Investigative Services, Inc., and Harold Wigfall and Michael B. Holiday, individually
(collectively referred to as Summitt), for violation of the SCA. For the reasons stated below,
the decision of the ALJ is reversed.
BACKGROUND
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On February 23, 1993, the Federal Aviation Administration
(FAA) awarded Summitt contract number DTFA03-93-C-000015 in the amount of
$383,134.92 to provide security services for the FAA Technical Center and other facilities in
Atlantic County, New Jersey. The contract was subject to the prevailing wage requirements
of the SCA and the overtime payment provisions of the Contract Work Hours and Safety
Standards Act, 40 U.S.C. § 327 et seq. (CWHSSA). Summitt began
performance under the contract on March 1, 1993 and from the very beginning had problems
making payroll.2 On
November 1, 1993 Summitt's employees walked off the job because they had not been paid,
and on November 2, 1993, the FAA declared Summitt in default and canceled the contract.
1 On April 17, 1996, a Secretary's
Order was signed redelegating jurisdiction to issue final agency decisions under this statute to the
newly
created Administrative Review Board. 61 Fed. Reg. 19978 (May 3, 1996). Secretary's Order
2-96
contains a comprehensive list of the statutes, executive order, and regulations under which the
Administrative Review Board now issues final agency decisions. Final procedural revisions to
the
regulations implementing this reorganization were also promulgated on that date. 61 Fed. Reg.
19982.
2 Summitt argues in its brief that
this conclusion is not based upon record evidence. At 33. Although the ALJ sustained two of
Summitt's objections regarding checks that bounced early on in the contract and were not alleged
as
violations of the SCA, Transcript (T.) 50 and T. 310-11, the record is replete with admitted
evidence
of bounced checks throughout Summitt's performance under the contract. T. 229-231, 311-312,
530-531, 532-533 (objection overruled), 535, and 539-40.
3 We are also concerned by the
manner in which this ruling was made. In discussing what factors were considered in
recommending
debarment, counsel for the Administrator asked the investigator, "did you take the
employees'
concerns into account"? Counsel for Summitt objected, mistakenly stating that
"there is
nothing in the regulations stating that employees' concerns are part of consideration for
debarment." The ALJ asked, "[w]here does that come from, some secret
manual?"
4 The record reflects two aspects
to the misclassification issue. Only the failure to include in the wage determination lower wage
rates
for clerical workers is relevant here. The dispute involving the proper classification of certain
guards
(Guard I v. Guard II) was resolved by FAA paying the full disputed amount prior to contract
default.
A: . . . . We received calls from the contracting officer in the Department of
Labor stating that the contract says all hours worked, therefore, you have to
pay overtime on the fringe benefit, on all hours worked.
Q: . . . .[T]hey also tell you that you had to pay time and a half on those
fringe benefits that you paid?
A: I may be lumping these together, but the conversation -- there were
several conversations going back and forth. . . . [Holiday then goes on
to discuss conversations between himself and the FAA contracting
officer]. . .
Q. Now, did there come a time when someone told you had to pay time
and a half on . . .
A: Yes, and that was the discussion I said . . . we're not required to pay
that, and he directed me to the wage determination.
But, the wage determination does not require payment of the fringe benefit on overtime hours at
time
and a half. P 2.