CCASE:
AMERON, INC.
DDATE:
19730914
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
Applicability of the Davis-Bacon and Related WAB
Acts to Certain Fabrication Activities of
Ameron, Inc., Subcontractor to Vinnell Case No. 73-07
Corporation, Prime Contractor on U.S.
Department of the Interior, Bureau of Dated: September 14, 1973
Reclamation Contract No. 14-06-D-7223,
Navajo Indian Irrigation Project,
New Mexico.
Vinnell Corporation and
Ameron, Inc. Albuquerque, New Mexico
APPEARANCES:
Robert R. Tinnin, Jr., Esquire
for the Petitioners,
George E. Rivers, Esquire,
Counsel for Construction Wage Standards,
Office of the Solicitor and Counsel for
the Assistant Administrator, Wage and Hour
United States Department of Labor
Thomas X. Dunn, Esquire,
Associate General Counsel for the
Building & Construction Trades
Department, AFL-CIO and for the
International Brotherhood of
Electrical Workers,
Washington, D.C. [1]
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[2] BEFORE: Oscar S. Smith, Chairman,
Wage Appeals Board,
Stuart Rothman and
Clarence D. Barker, Members
DECISION AND ORDER
This case /FN1/ is before the Wage Appeals Board on the
Petition of Vinnell Corporation and Ameron, Inc., prime contractor
and subcontractor, respectively. Vinnell Corporation was awarded
a contract in the sum of $14,753,240 by the Bureau of Reclamation
on January 19, 1972 for the construction of siphons, a tunnel, a
concrete-lined canal, and an access road. Under the contract
Vinnell is required to furnish and install some 16,000 lineal feet
of pipe having an inside diameter of approximately 17-feet in
20-feet sections, each valued at about $12,000 and weighing about
150 tons (reportedly the largest pipe ever produced in the U.S.).
The purpose of the project is to syphon, pipe channel, and cause
water from Navajo Lake to reach approximately 110,000 acres of
Navajo Indian land so that such land can be irrigated.
The specifications gave Vinnell the option to construct the
pipe in place by traditional construction processes or he could
elect to fabricate the pipe in prestressed sections. Vinnell
elected to furnish and place concrete cylinder prestressed pipe and
contracted with Ameron, Inc., to [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ This case may be cited as the Navajo Indian Irrigation
Project, New Mexico, WAB 73-07. [2]
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[3] fabricate and install the pipe. Ameron constructed the
fabrication plant about 8 miles south of Bloomfield, New Mexico.
It is located adjacent to the route of the pipe line project.
Enormous-sized equipment is necessary to handle the forms and the
pipe sections during placing and tamping the concrete, steam curing
the sections to the required strength, wrapping the core with steel
wire under high tension, coating the wrapped core with a mortar
encasement and then steam curing each to its required strength.
The adequacy of highways and the bridge, railroad, and highway
restrictions relating to size and weight of loads, resulted in a
need for the pipe manufacturer to erect the fabrication facilities
near the work-site. Special equipment is required to tilt the
upright sections onto special transportation equipment and move the
units directly to the point of installation. The fabrication
facilities of Ameron and the site construction headquarters of
Vinnell are designated by signs as construction areas, and the only
separation between them is a fence. Ameron is manufacturing the
concrete pipe exclusively for use on the irrigation project and has
not manufactured any other product at this location. Currently,
the pipe plant is about 1-1/2 to 2 miles from where the pipe is to
be laid in the ditch. As construction progresses, the distances
will vary from 1-1/2 to 12 miles.
Aside from 4 employees being paid not less than the
predetermined craft construction rates (a field mechanic, 2
laborers and an operating engineer who constitute the pipemobile
crew that transport the pipe to and install it in the ditches),
Ameron's employees are paid for fabrication of the pipe [3]
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[4] in accordance with a production agreement with Laborers Local
Union No. 16. This agreement although specifically bargained for
manufacturing activities at the Bloomfield operation. Vinnell has
agree to the Statewide construction agreements of the Operating
Engineers and the Laborers, as has also Ameron with respect to its
installation work (e.g., the pipemobile crew). The rates and
classifications in these Statewide construction agreements differ
substantially from the rates and classification negotiated between
Ameron and the Laborers Union for plant fabrication work in New
Mexico.
Petitioners question the March 9, 1973, decision of the United
States Department of the Interior, Bureau of Reclamation, directing
the contractor to require Ameron to classify and pay its employees
engaged in the fabrication of the prestressed pipe above-described
in accordance with the Davis-Bacon Act requirements of the
contract. The ESA predetermination specified prevailing wage rates
for traditional on-site construction work. The Bureau of
Reclamation's directive to Vinnell Corporation of March 9, 1973, is
based upon a ruling of January 22, 1973 by the United States
Department of Labor, Employment Standards Administration. In its
March 9, 1973 determination the Bureau reversed its prior
determination of June 12, 1972, that work performed at Ameron's
pipe fabrication facility located near Bloomfield, New Mexico, was
not subject to the Davis-Bacon Act because the facility was
considered to be an off-site manufacturing facility. [4]
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[5] Counsel for the Assistant Administrator, Employment Standards
Administration, Wage and Hour Division (ESA) has set forth the
principal issue in this matter as follows: . . . "whether under the
provisions of the Davis-Bacon Act and the applicable regulations of
the Secretary of Labor the activities of Ameron, Inc., in the
manufacture and fabrication of pipe adjacent to the installation or
project site constitute those of a subcontractor or a materialman."
It would appear that Counsel for ESA has predicated the issue on
acceptance of the idea that fabrication of prestressed concrete
pipe in 20-feet sections, 17-feet in diameter, and weighing 150
tons is a manufacturing process. On this basis he then states the
issue to be whether such manufacturing "adjacent to the
installation or project site" constitutes the work of a
subcontractor or a materialman.
The Wage Appeals Board views the issue somewhat more
basically: -- Is the disputed work covered under the Act and, if
so, what classifications and wage rate apply?
This case presents difficult questions stemming from
alternative technologies now available within the construction
industry. Such questions must be approached with caution on a
case-by-case basis. Caution also must be exerted against possible
abuse in a case in which a contractor seeks to remove traditional
and customary on-site construction work to process such work at
another location -- allegedly "off the site" -- under a
non-sustainable claim that by so doing, the work has been removed
from Davis-Bacon Act coverage.
The original Congressional purposes of the Davis-Bacon and related [5]
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[6] Acts continue unabated and undiminished, but it was
never the purpose of the Act that, by requiring payment of the
prevailing wages to laborers and mechanics for construction on the
construction project sites, all existing processes, manners and
means of effectuating construction work were to be placed in a
straitjacket barring forever fundamental technological changes with
attendant changes in the composition of the working force necessary
to prosecute such developments. A fair balance must be achieved
between what is permissible as basic fundamental changes in
technology, and what may be discerned to be actual abuse of
Davis-Bacon principles.
The way this case was structured for presentation to the Wage
Appeals Board, it appears to the Board that the parties in seeking
a decision from the Board on the question whether the disputed work
was done "on the site of the construction project" believe that
they will be a long way toward bolstering their respective
positions as to whether Ameron's assignment of the work under the
Laborers' plant fabrication contract was proper or improper, or
whether, stated another way, certain of that work should or should
not have been awarded to the Operating Engineers and possibly to
other crafts.
As we have said before, the Wage Appeals Board has not been
established and is not normally in the business of resolving
jurisdictional disputes. As a fallout of a Board decision, a
jurisdictional dispute may possibly be resolved in some
circumstances. The Wage Appeals Board cannot say that under no
circumstances would it resolve a matter which may be considered
jurisdictional, [6]
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[7] if such a dispute went to the very heart of Davis-Bacon
administration. However, the Board believes that this
is not such a case. Accordingly, it will not determine the
appropriate assignment of the work. /FN2/
Counsel for ESA cites to the Board, as he did to the Bureau of
Reclamation, the Department's All-Agency-Memorandum #86 of February
11, 1970 as reflecting "essentially" the Department's position with
regard to what constitutes the "site of the work" for Davis-Bacon
purposes:
The `site of the work' is limited to the physical place
or places where the construction called for in the
contract will remain when work on it has been completed
and to other adjacent or nearby property used by the
contractor or subcontractor in such construction which
can reasonably be said to be included in the `site'
because of proximity. For example, if a small office
building is being erected, the `site of the work' will
normally include no more than the building itself and its
grounds and other land or structures `down the block' or
`across the street' which the contractor or subcontractor
uses in the course of his performance on the particular
contract. In the case of larger contracts, such as for
an airport or a dam, the `site of the work' is
necessarily more extensive and includes the whole area in
which the contract construction activity will take place.
Fabrication plants, `mobile factories', batch plants,
borrow pits, job headquarters, tool yards, etc., are part
of the `site of work' provided they are dedicated
exclusively or nearly so to performance on the contract
and are so located in proximity to the actual
construction location that it would be reasonable to
include them. [7]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ It should be noted that this Board does not hesitate to
review the appropriate classification or misclassification of
employees but this is for wage rate purposes as distinguished from
work assignment or union representation purposes. [7]
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[8] But Counsel for ESA points out that the statutory definition
remains unchanged with respect to dams, highways, pipelines, etc.,
and meant to include the site of the work for a canal which is
extensive and could include a larger area in which the contract
construction activities will take place.
The Wage Appeals Board has no difficulty in agreeing with
Counsel for ESA that under the facts and circumstances of this case
Ameron's current Bloomfield operation is "on-site work" and the
work of fabricating the prestressed concrete pipe falls under
Davis-Bacon Act coverage. Apparently Vinnell Corporation believed
likewise as reflected in its May 17, 1972 letter to the Project
Construction Engineer, submitting the April 30, 1972 agreement
between Laborers Local 16 and Ameron covering Ameron's pipe
manufacturing facilities in New Mexico, and requesting approval by
the Bureau of special craft wage rates (not otherwise specified in
the subject construction contract) for the manufacture of concrete
prestressed pipe at the Bloomfield site. /FN3/
* * * *
Ameron advises that it is phasing out its Albuquerque
operation (where apparently there is little or no current or
project demand for 17-feet diameter and similar large pipe) and
relocating in the Bloomfield or so-called [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ It is clearly a part of the project under judicial concepts
involving the Fair Labor Standards Act. See Archer v. Brown &
Root, Inc., 241 F.2d 663, concerning prestressed concrete sections
of the Lake Pontchartrain Causeway, 25 miles long, the world's
longest bridge. [8]
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[9] Four Corners area because of this area's alleged future
potential for large pipe fabrication projects. However, Ameron has
failed to demonstrate that its current Bloomfield fabrication
operation is that of a materialman serving the general public.
Ameron is not manufacturing and stockpiling standard pipe for
general sales at Bloomfield. Rather, it set up this facility
adjacent to Vinnell's facilities after receiving its $9,000,000
subcontract from Vinnell and it currently is geared up to fabricate
only these huge prestressed concrete 20-feet long sections of pipe
weighing some 150-tons each called for by the Vinnell contract.
The entire output of the Bloomfield facility is this unusually
large pipe for the Vinnell contract on the job in question.
Ameron's contract and present total commitment is to do this
fabrication of prestressed pipe. Whatever future work may be
undertaken by Ameron, the pipe fabrication plant was located at
Bloomfield to make this pipe for this irrigation project, and any
plans beyond that remain conjectural at this time.
It appears from its position of the ESA and the Petitioner
that once the Board would conclude that the work in question is
performed on the site of construction, that's all there is, and the
Board has decided all issues in this dispute en banc. But the ESA
and Petitioner have avoided any reference to the appropriate
classification of the work and corresponding wage rates. It was
suggested at the July 27, 1973 hearing and it is indeed a serious
contention that once it is determined that the prestressed concrete
pipe sections are being fabricated on the project site, the
employer should [9]
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[10] use wage rates of, for example, iron workers for inserting reinforcing
rods, carpenters for certain form work, laborers for various types of
unskilled labor, operating engineers for handling and moving equipment
usually assigned to operating engineers, and since there is a considerable
amount of concrete and cement work, the usual assignments should also be
made to cement masons and other crafts as if the work were performed
under the conventional construction option.
The Wage Appeals Board must when presented with a case look at
the whole matter and seek to achieve a result which under the
circumstances will be in keeping with the purposes of the
Davis-Bacon Act and fair to all within the strict mandate of the
Act that government contracting shall not be used to downgrade
achieved prevailing wage rates. But the Board also believes that
the Davis-Bacon Act is not a negative act imposing the dead hand of
the past upon currently recognized and accepted fundamental changes
is construction technology. This is so particularly when it can be
plainly perceived that the purpose of prosecuting the work under
such technological changes is not to subvert or circumvent the
remedial purposes of the Act.
The Board has encountered no particular difficulty in finding
the disputed work a part of the irrigation project performed at the
site. It is equally significant to consider what are the
appropriate classifications and wage rates for this work. Wage
rates for the fabrication of this kind of pipe are reflected in the
Laborers rates negotiated April 30, 1972 at Albuquerque by Ameron,
Inc., New Mexico Operations, and Laborers Local [10]
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[11] Union No. 16, with Statewide jurisdiction, and covering Ameron's
"pipe manufacturing facilities in New Mexico". At the same time, the
same Laborers Local has construction agreements with other firms
and covering work on the site apart from pipe fabrication. With
respect to the latter, there is no indication in the record that
Laborers Local 16 ever raised any issue at Bloomfield that
construction laborers rates should supplant the pipe fabrication
schedule it had negotiated Statewide with Ameron.
The Board concludes that under the circumstances of this case
it would not effectuate the purposes of the Davis-Bacon Act to
require that the subcontractor's established work classifications
for the fabrication of 17-feet prestressed concrete pipe in 20-feet
sections must be abandoned when the subcontractor comes onto the
project site and that he must reclassify employees as though he
performed the work under the other option. We cannot conclude that
on this canal and irrigation project in the Four Corners area of
New Mexico the pipe-fabricating subcontractor is required to use
classifications and pay wage rates different from the job
classifications and wage rates which in fact have heretofore been
utilized to perform this type of fabrication work within this
geographical area.
Nor does the Wage Appeals Board see how it would effectuate
the purposes of the Davis-Bacon Act to require this subcontractor
utilizing the processes upon which the rates of pay and working
conditions have been negotiated with Laborers Local 16 in a
preexisting agreement to pay a higher set of wage rates negotiated
by the same union and reflecting rates [11]
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[12] prevailing in the locality for work when performed in a traditional
and customary way on the site of construction. /FN4/
* * * *
The Wage Appeals Board having considered the entire record
before it, including the written and oral statements of the parties
and labor organizations of interest, has reached the following
conclusions and requests the Assistant Administrator, ESA, to
observe the following procedures:
1. The work of manufacturing or fabricating the
prestressed concrete sections 17-feet diameter, 20-feet
long, and weighing 150 tons apiece, is work covered under
the provisions of the Davis-Bacon Act and the definitions
of coverage set forth in Regulations, Part 5 of the
Secretary of Labor, and as such requires the
predetermination of appropriate wage rates.
2. The work in question is performed or prosecuted "at
the site" of the project under the circumstances here
involved.
3. The contractor and his subcontractor are entitled to
use the same processes, manner and means of manufacture
or fabrication used by the subcontractor in the past and
at the wage rates prevailing in the area for work so
prosecuted. The locality under the circumstances is and
includes the Four Corners area of New Mexico (as well as
Albuquerque where the contract was initially signed).
The wage rates applicable are [12]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ Under the circumstances of this case, the wage rates
prevailing for all the plant work in question are the negotiated
rates inasmuch as these are the rates paid in the Four Corners area
of New Mexico and there is simply no evidence of record of any
other rates pertaining to this type of work. [12]
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[13] those negotiated by this subcontractor and Laborers Local
Union 16 of Albuquerque and specifically covering the
"Company's pipe manufacturing facilities in New Mexico"
(including the Four Corners area.) There are no other
wage rates for this work in this area and these rates
have in fact been paid in the past in the locality for
this type of work.
4. The Contract specifications gave this contractor and
his subcontractor the election to prosecute the work by
(a) traditional construction means using concrete form
work and pouring in place, or (b) by using a changed
technology of fabricating prestressed concrete pipe in
20-feet sections 17-feet in diameter, and weighing 150
tons per section. The contractor in electing to
prosecute the work by a process and means different in
nature from the more traditional in place construction
methods did not violate the contract provisions by paying
rates prevailing for such work done under option (b).
The bargained rates under the circumstances in this area
constitute the prevailing rates for the plant fabrication
work at this time. If in the future Ameron should get
other contracts, Davis-Bacon coverage, if any, and the
rates for these contracts must stand on the facts at that
time.
5. The ESA Administrator shall determine and establish a
schedule of wage rates for a classification of work
identified as "prestressed concrete pipe (fabrication
only.)"
The Wage Appeals Board does not in this decision make a
determination that any particular craft or class of employees is
entitled to the assignment of the disputed work; only that the work
in question shall be performed at the prevailing wage rates at
which such work has been heretofore performed in the Albuquerque
- Four Corners area of New Mexico even though it is concluded that
said work is under the circumstances work performed at the site of
project construction and is hence subject to a wage
predetermination. [13]
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[14] The Bureau of Reclamation and ESA shall process this matter under
the classification and reclassification procedures of the contract and
regulations.
SO ORDERED
Oscar S. Smith, Chairman
Stuart Rothman, Member
Clarence D. Barker, Member [14]
