CCASE:
MARTA CONTRACTS
DDATE:
19840514
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
MARTA CONTRACTS CN-710 & WAB Case No. 83-09
CN-730 and Options thereto
No. Georgia Bldg. Trades Dated: May 14, 1984
Council
APPEARANCES: Frank B. Shuster, Esquire, for North Georgia
Building Trades Council
Bruce Bromberg, Esquire, for Metropolitan Atlanta
Rapid Transit Authority
Terry R. Yellig, Esquire, for the Building and
Construction Trades Department, AFL-CIO
Douglas J. Davidson, Esquire, for the Wage and Hour
Division, U.S. Department of Labor
BEFORE: Alvin Bramow, Chairman, Stuart Rothman, Member
Thomas X. Dunn, Member, Dissenting
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of the North Georgia Building Trades Council (hereinafter BTC)
seeking review of the decision of the Administrator, Wage and
Hour Division, dated August 19, 1982. The Administrator ruled,
in response to an earlier request from a representative of
Local Union 613 of the International Brotherhood of Electrical [1]
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[2] Workers, that the Davis-Bacon labor standards provisions of the
Urban Mass Transportation Act of 1964 (49 USC 1609) were not
applicable to the Metropolitan-Atlanta Rapid Transit Authority
(hereinafter MARTA) Contract CN-710. Subsequently, MARTA
awarded CN-710 and construction began on December 30, 1982.
A second contract, CN-730, for construction of a station
was advertised and awarded while a request for reconsideration
of the Administrator's decision was pending. That contract was
awarded and construction began on CN-730 on March 1, 1983.
Following denial of the petitioner's request for reconsideration,
petitioner notified the Wage Appeals Board on May 27, 1983 of
its intention to file a petition for review by the Board.
The rapid rail system being constructed by MARTA in
Atlanta is divided into three phases, A,B & C. Phases A and
B have been partially financed by grants or commitments from
the U.S. Department of Transportation's Urban Mass Transit
Administration (hereinafter UMTA), and as a result all construction
contracts in Phases A and B contained the Davis-Bacon
prevailing wage provisions as required by the Urban Mass
Transportation Act.
The two MARTA contracts in issue are in Phase C and thus
far no federal grants have been obtained and neither contract
contains Davis-Bacon labor standards provisions. However,
extensions of two contracts being performed in Phase B for
tracks, traction power, train control and the communication [2]
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[3] system have been undertaken and will extend for 2000 feet into
Phase C on top of the track preparation encompassed in CN-710.
It is because of this that petitioner argues that federal funds
will, in fact, intrude into Contract CN-710 and, as a result,
the BTC argues that the project should be considered as a whole
and that Davis-Bacon labor standards provisions should apply
to Contract CN-710 also.
It is MARTA's position that it has, by beginning the contracts
without Davis-Bacon labor standards provisions, precluded itself
from any opportunity of receiving or using federal funds on CN-710
or CN-730, that it has no intention of applying for federal grants
for the contracts, and finally, MARTA indicates that it intends to
use solely local (non-federal) funds to finance the contracts in
question. MARTA argues that the exercise of the aforementioned
options from Phase B and the continuation of construction paying
the Davis-Bacon wage rates is merely a carryover from the contract
begun in Phase B and should not affect the financial arrangements
for Contract CN-710 since only local, non-federal funds will be
used on those portions of the options lying in the same area as
CN-710.
The Administrator in his decision indicated that he considered
the options to be a significant part of the rail construction.
Therefore he concluded that if MARTA subsequently obtained federal
funds for the options to be built over CN-710 the Davis-Bacon labor
standards provisions would be applicable [3]
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[4] to all construction work on that segment of track including CN-710.
However, the Administrator's decision was that under the facts that
existed at the time he made his decision, it was not improper for UMTA
to advertise and build the projects without Davis-Bacon wage rates and
the applicable labor standards provisions.
The Wage Appeals Board considered this appeal on the basis
of the BTC's Petition for Review and a Supplemental Brief with
exhibits, a Response and a second Response to Petitioner's
Supplemental Brief filed by MARTA, a Statement for the
Administrator and a record of the case before the Wage and Hour
Division filed by the Solicitor of Labor, and a hearing conducted
April 3, 1984, at which all interested parties were present and
participated.
* * *
This case is before the Board on the petition of the North
Georgia Building Trades Council because the Council believes
that at the time the Wage and Hour Administrator made his basic
decision that the disputed work in question need not be covered
by Davis-Bacon Act requirements, MARTA had not disclosed to the
Administrator that there were segments of contractually committed
work awarded subject to the Davis-Bacon Act which under the [4]
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[5] terms of the prior contracts overlapped with and continued on
into the area here in dispute (identified as the Phase C area).
This work would be performed under Davis-Bacon Act requirements.
This "overlap" work includes the laying of track, installation
of signals, signs, switches and other electrical equipment.
At the hearing BTC contended that despite MARTA's continued
denials that any federal funds would be used in any of this
disputed work, including that segment of the previously awarded
track work and the electrical, signal and switching equipment,
MARTA's own budgeted figures for such work, awarded subject to
the Davis-Bacon Act, projected the inclusion of federal funds
into the disputed area. It was said at the hearing that the
total value of the disputed work was around $40,000,000. The
"overlap" work was valued at around $1,000,000.
MARTA's spokesman at the hearing strongly represented that
whatever the budgeted figures purport to show, these figures are
only prospective budgeted amounts. In the actual completion of
the work, MARTA would see to it that there would be no federal
funds whatsoever in any of the disputed work, including the work
referred to herein or the "overlap" from Phase B to Phase C.
MARTA pointed out that in the administration of the track laying
and other overlap contracts, actual budgeting and the making of
payments thereunder to contractors is and will be on a segment-
by-segment basis. MARTA claimed that a segment identified as [5]
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[6] CN-490 in the Phase B area ran only to the perimeter of the
Phase C area and that a local funding arrangement would be
provided for all work in the Phase C area, including the
overlap.
There were a number of matters raised at the hearing which
the Board does not reach for the reason that the outcome of this
case does not turn upon their resolution. These other matters
include, for example, the question whether BTC, having once secured
an injunction against MARTA going ahead with all or part of the
disputed work, nonetheless entered into some kind of understanding
with MARTA that the work in question could proceed on MARTA's
terms -- that is, without the inclusion of the Davis-Bacon
provisions. There would be a subsidiary question whether BTC or
anyone else could waive the application of the Davis-Bacon Act in
any case required by law. There is another question concerning
work sequences subject to the contracts in dispute and the work
subject to the overlap contracts and the interrelation of all the
contracts considered together.
We do not reach these questions for the reason that BTC
took the position at the hearing that if, in truth, there is
and will be no federal monies, grants, aids or otherwise, in
any of the disputed work in the Phase C area -- the construction
of the road bed, the laying of the railroad tracks, the electrical
equipment including signals and switches, or any other [6]
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[7] work -- then BTC would not contend that the Davis-Bacon Act
requirements must be applied. The BTC did not contend that because the
Davis-Bacon Act was applied in the Phase A and B areas, it must
necessarily be applied in the Phase C area if in fact there were no
federal funds involved in the work there. We hold that in a subway rail
project of this type, segments can be built without the use of federal
funds and in such a case the Davis-Bacon Act does not have to be
included. The Administrator concluded that MARTA has not gerrymandered
the project to avoid Davis-Bacon on the disputed contracts. We have no
reason to question the factual accuracy of the Administrator's decision.
As already noted, MARTA made strong representations at the
hearing that there would be no federal funds whatsoever used
with respect to any of the disputed work in Phase C. We have
no reason to question either the integrity of MARTA in making
such representations or the administrative processes by which
the Wage and Hour Administrator came to the conclusion that
MARTA was not withholding any information to do otherwise.
The Wage and Hour Administrator had the facilities and
opportunities to examine more fully into the representations made
by MARTA, and we see no reason to set aside the Administrator's
conclusions.
However, at the hearing it was not made as clear as it
might have been by either party, precisely what the budgeted [7]
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[8] figures for the railroad track stand for with respect to the
areas in which the track is to be constructed. Additionally,
it may not have been made as clear as it might have been
precisely how MARTA would assure itself as well as the Wage
and Hour Administrator and the Department of Transportation
that no federal funds will be used for work already awarded
subject to the Davis-Bacon Act which may extend into Phase C.
MARTA has, of course, noted that in cases in which such contractual
arrangement presently exists, the wage standards already
provided in those contracts would not be changed even though
there may not be a statutory requirement that the Davis-Bacon
Act provisions be included in such work.
In view of the foregoing, the Board agrees with the
conclusions reached by the Wage and Hour Administrator and would
affirm the determination that he has reached in this matter subject
to the following single condition.
The case is remanded to the Administrator with instructions
to secure from the appropriate officer or officers of MARTA, by
letter or other writing, a clear and unmistakable commitment
that with respect to any and all of the disputed work in question,
including the overlap work described above, no federal funds in any
way, shape or manner which would require the inclusion of the
Davis-Bacon Act in contract awards, will be used [8]
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[9] in the area. Under the circumstances of this case, the Board
believes that this is a very simple and direct way within the
contentions of all the parties to dispose of this long lasting dispute.
* * *
Member Dunn, dissenting:
MARTA has elected to proceed with Contract CN-710 relying
solely on local funding. By so doing, MARTA will be precluded from
receiving any reimbursement from UMTA for the work performed under
Contract CN-710. /FN1/ The Administrator found in his August 19,
1982 decision that Contract CN-710 is not covered by the
Davis-Bacon provisions in the Urban Mass Transportation Act because
UMTA has not approved a grant or issued a letter of no prejudice
against subsequent funding for any of Phase C of MARTA's
system. [9]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ As stated by UMTA:
UMTA will not reimburse MARTA, for construction work performed
by MARTA, its contractors or subcontractors, where such work
is performed without prior documented approval by UMTA as the
Federal grantor agency. Without prior approval, the cost of
such work is not an allowable cost under the provisions of
Office of Management and Budget (OMB) Circular A-87, Janu[]ary
28, 1981, 46 C.F.R. 553 and UMTA Order 1000.2, External
Operating Manual, Change 4, May 23, 1974, Paragraph 5,
IIID-31. [9]
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[10] The Building Trades Council argues, however, that the
consolidated letter of no prejudice issued to MARTA on
February 9, 1981 and the subsequent announcement by Secretary
of Transportation Dole that MARTA would receive a $45.1 million
grant for the completion of its North-South line, which includes
Contract CN-710, indicates that Phase C is, in fact, partially
funded with federal money.
In addition, the Building Trades Council alleges that under
the Administrator's ruling and UMTA's letter of no prejudice,
MARTA could receive federal assistance for segments of Phase C
other than Contract CN-710. Thus, by using federal funds for
Phase C work before and after Contract CN-710, petitioner contends
that MARTA has more local funds available for Contract CN-710.
Specifically, petitioner argues that, contrary to MARTA's
representations and the Administrator's finding, federal
funds are already being used to help pay for "system-wide"
contracts to lay the rail, cable, wayside signs, and train control
system which begin in Phase B, but continue into Phase C and
certain options to complete that phase. Petitioner contends
that this is analogous to paying for the foundation of a house
with local money and, thereafter, building the structure with
federal funds.
MARTA strenuously argues that UMTA has neither provided
money for any Phase C work nor issued letters of no prejudice or [10]
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[11] grants of federal funds for any of the option work in
Phase C and that federal funds made available for the initial part
of these system wide contracts have been carefully segregated to
insure that they are used only to help pay for construction
work in Phase B2. This, MARTA contends, has been done pursuant
to UMTA's directions.
A hearing before this Board is appellate, not an evidentiary,
hearing. None of the parties have a right to cross-examine or
confront witnesses at a Wage Appeals Board hearing. Hearings
before this Board are limited to arguments on the facts as
developed in the record and the law as applied to the facts of
the case. Framlau Corp. v. Dembling, 360 F. Supp. 806 (E.D. PA
1973). Accordingly, we cannot resolve these factual
disputes. /FN2/ Instead, I would remand this case to the
Administrator pursuant to the Board's Rules of Procedure /FN3/ with
instructions to [11]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ The Board's Rules of Procedure provide:
The Board is essentially an appellate agency. It
will not hear matters de novo except upon a showing of
extraordinary circumstances. It may remand under
appropriate instructions any case for the taking of
additional evidence and the making of new or modified
findings by reason of the additional evidence.
29 C.F.R. [sec] 7.1(e).
/FN3/ It is ironic that the majority has chosen to credit the
unsupported arguments presented by MARTA that no federal money has
been used to fund any portion of Phase C inasmuch as the Board has,
in the past, found that MARTA "*** manipulate(d) wage rates to its
own satisfaction in bid documents". In Re Prevailing Wage Rates
[11] [FN3 CONTINUED PAGE 12] [12] (Continued) Applicable to
Metropolitan Atlanta Rapid Transit Authority (Brown's Mill Road Bus
Facilities) WAB Case No. 75-11 (Apr. 19, 1976) 22 Wage & Hour Cases
971, 982, (Barker concurring), (Rothman, concurring in part,
dissenting in part). In that case, MARTA disregarded a
determination by the Wage and Hour Division that the schedule of
prevailing wages for building construction in the area should be
included in 2 contract for site work on a garage facility for MARTA
buses. Instead, MARTA awarded the contract with lower prevailing
wage rates for highway construction included while the matter was
pending before the Board. In view of MARTA's flagrant action, the
Board fashioned a rather extraordinary remedy. See id. at 980-981.
[END FN3] [12]
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[12] investigate this matter and issue a new decision on the basis
of the results of such investigation. Even if such investigation
failed to support the Building Trades' position, I am impressed
by the petitioner's contention that the work performed under
Contract Cn-710 is so intermingled with the other contacts in
Phase C, in particular, and the entire MARTA system, in general,
that it cannot be treated differently for Davis-Bacon purposes
from the other contracts which have been or may be federally
financed.
The Administrator concluded in his August 19, 1982 decision
that the Davis-Bacon provisions of the Urban Mass Transportation
Act would apply to Contract CN-710 even if that contract received
no federal funds provided that other work pertaining to and
integral to that same segment of track did receive federal
assistance. However, the Administrator narrowed his original [12]
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[13] ruling in his May 4, 1983 response to petitioner's request for
reconsideration.
Petitioner presented evidence, which is not disputed, that
UMTA has issued a letter of no prejudice for construction of the
Airport Station at the southern end of Phase C. The Administrator
advised petitioner in his May 4, 1983 letter that even if federal
funding is later approved for this contract, this alone is not a
sufficient basis to require application of the Davis-Bacon
provisions to be applied to all other Phase C construction
including that for which no federal funds are used.
It is this portion of the Administrator's ruling with
which I disagree.
In North Georgia Building & Construction Trades Council
v. Goldschmidt, 621 F.2d 697 (5th Cir. 1980), the court of
appeals considered a case where the City of Atlanta had solicited
bids to perform three airport contracts. Federal funding was
anticipated, although it had not been applied for or received.
Prior to bid opening, the North Georgia Building Trades Council
sought different, higher prevailing wage determinations than
those the City had selected from the Federal Register published
by the Department of Labor. The Department notified the Federal
Aviation Administration (FAA) by telephone within 10 days from
the date of bid opening that different and higher wage
determinations should apply to all three airport contracts. A
telegram advising FAA and the City of the changes was sent the next
day. [13]
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[14] Concluding that there was not "reasonable time" in which
to notify bidders, the FAA directed that bid opening proceed
on schedule without changes in wage rate specifications. The
Building Trades Council filed an appeal to this Board as well
as an action in federal district court seeking to enjoin the City
from receiving bids or awarding contracts based on the challenged
wage determinations.
In its decision, the Board concluded that, since the City
had neither applied for nor received any financial assistance
from the FAA at the time it received bids on the disputed
contracts, the Davis-Bacon provisions in the Airport and Airway
Development Act, 49 USC [sec] 1722(b), and applicable regulations
were inapplicable to the controversy. The Prevailing Wage Rates
Applicable to the Construction of the Hartsfield International
Airport, WAB Case No. 77-04 (February 25, 1977).
The court of appeals overruled the Board's decision holding
instead that the Davis-Bacon provisions of the Airport Act applied
to the project even though federal funds had not yet been formally
applied for or authorized at the time of bid opening where the City
anticipated applying for and receiving federal assistance for its
airport project.
Here, unlike the City of Atlanta in North Georgia Building
and Construction Trades Council v. Goldschmidt, MARTA is unwilling
to comply with federal prevailing wage standards until, and unless,
UMTA commits federal money to a specific contract. I am unaware [14]
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[15] of any case, before the Board or the courts, which has
considered this question. Nevertheless, the courts have frequently
been concerned about the possibility of local agencies avoiding
federal requirements. In Named Individual Members of San Antonio
Conservation Society v. Texas Highway Department, 446 F.2d 1013
(5th Cir. 1971), the State of Texas, unable to comply with
requirements of the National Environmental Policy Act (NEPA), 42
USC [secs] 4321-4361, through[]out the length of a highway in San
Antonio, Texas, proposed to construct end segments of the road with
state and federal funds and the middle segment with state funds
only. The State argued that because the middle segment would
proceed with 100 percent state money, the NEPA requirements were
inapplicable. The Fifth Circuit rejected the State[']s argument
holding:
We are not impressed with this argument. If
we were to accept it, we would be giving
approval to the circumvention of an Act of
Congress. The North Expressway is now a
federal project, and it has been a federal
project since the Secretary of Transportation
authorized federal participation on August 13,
1970. As such the North Expressway is
subject to the laws of Congress, and the State
as a partner in the construction of the
project is bound by those laws. The supremacy
of federal law has been recognized as a
fundamental principle of our Government . . . .
The State may not subvert that principle by
a mere change in bookkeeping or by shifting
funds from one project to another.
446 F.2d at 1027. [15]
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[16] While the statutory requirement at issue in San Antonio
was not a Davis-Bacon provision, the principles expressed furnish
sound precedent for my decision. Here, too, an Act of Congress
will be subverted if MARTA builds part of Phase C with federal
assistance but fails to comply with the prevailing wage provisions
in the Urban Mass Transit Act for the entire project.
MARTA represented to this Board in 1975 in The Prevailing
Wage Rates Applicable to Three Construction Projects of the
Metropolitan Atlanta Rapid Transit Authority, Wage Decisions
Nos. 75-GA-159, 75-GA-159, 75-GA-160 and 75-GA-161, WAB Case
No. 75-05; that:
When completed the (MARTA rapid rail transit)
system will consist of 60.9 miles of rapid rail
and busway lines in Fulton and DeKalb Counties.
It will utilize 39 rapid rail stations and two
rapid busway stations. Parking will be provided
for over 30,000 vehicles.
The projected cost of the system is $2.1
billion. The Urban Mass Transportation
Administration (UMTA), a department of the United
States Department of Transportation, will provide
80 percent of the capital construction and
equipment expenditures. The remaining 20 percent
will be provided by the local governments through
a one percent sales and use tax.
MARTA's Brief, at p.3, in WAB Case No. 75-05.
Thus, MARTA's rapid rail transit system, like the expressway
in San Antonio Conservation Society and the airport in North
Georgia BTC v. Goldschmidt, is a federal project, and has been a
federal project since UMTA originally authorized federal
participation in the project. As such, the MARTA rapid rail [16]
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[17] transit system is subject to the laws of the United States,
including the Davis-Bacon provision in the Urban Mass
Transportation Act, 49 U.S.C. [sec] 1609(a).
MARTA cannot avoid the requirements of [sec] 1609(a) simply
because federal funds are limited to certain contracts or portions
of contracts. This labor standards provision was designed to
assure to the fullest extent possible that the expenditure of
federal funds will not depress locally prevailing wages. A local
public agency's avoidance of this requirement on part of the
project while receiving federal funds for other portions of the
project frustrates Congressional intent to maintain locally
prevailing wage standards.
At this time MARTA claims no federal funds have been
allocated for any of the construction work in Phase C.
Nonetheless, MARTA has included Davis-Bacon requirements in
contracts for work which it still hopes will be federally funded.
It is my position that UMTA may not make any federal funds
available to MARTA for any construction work theretofore performed
in Phase C, including the Airport Station, unless it first
determines that Davis-Bacon wage rates have been applied to
[*] every [*] contract and subcontract performed in Phase C,
including Contracts CN-710 and CN-730. This does not mean that
MARTA must amend Contracts CN-710 or CN-730 or include Davis-Bacon
requirements in any future contract in Phase C which is locally
funded. However, failure to do so will preclude receipt of federal
funds for any other contracts in Phase C. [17]
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[18] Accordingly, I would remand this case to the Administrator
for further action consistent with my dissenting opinion.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [18]
