BURLINGTON NORTHERN RAILROAD, WAB No. 86-07 (WAB June 30, 1986)
CCASE:
BURLINGTON NORTHERN RAILROAD
DDATE:
19860630
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
BURLINGTON NORTHERN RAILROAD WAB Case No. 86-07
Bridge over the Willamette River Dated: June 30, 1986
Portland, Oregon
APPEARANCES: Terry R. Yellig, Esquire, for the Building and
Construction Trades Department, AFL-CIO
Donald Elisburg, Esquire, for the National Joint
Heavy and Highway Construction Committee
Tom Mason, Esquire, for the United States Coast
Guard
Leif Jorgenson, Esquire and Douglas Davidson,
Esquire, for the Wage and Hour Division, U.S.
Department of Labor
BEFORE: Alvin Bramow, Chairman, Gresham C. Smith, Alternate
Member /FN1/, Thomas X. Dunn, Member, Dissenting
DECISION OF THE WAGE APPEALS BOARD
This appeal is before the Wage Appeals Board on the petition
of the Building and Construction Trades Department, AFL-CIO, and
the National Joint Heavy and Highway Construction Committee
seeking review of a final decision by the Deputy Administrator,
Wage and Hour Division, dated February 28, 1986. This decision
held that the Davis-Bacon Act does not apply to proposed major
alterations of the Burlington Northern Railroad bridge over the
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/FN 1/ Member Stuart Rothman withdrew from consideration of
this appeal and did not participate in the decision of the case.[1]
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[2] Willamette River in Portland, Oregon.
Burlington Northern Inc., (hereinafter Burlington Northern)
is the owner of the railroad bridge which is the subject of this
appeal. Pursuant to provisions of the Truman-Hobbs Act, the
U.S. Coast Guard ordered Burlington Northern to alter the bridge
because the existing bridge was judged to be an unreasonable
obstacle to navigation on the Willamette River. The alteration
order called upon the railroad to construct a movable span on
the same general alignment as the existing bridge.
After Burlington Northern submitted plans and specifications
for approval by the Coast Guard, which approval was duly granted,
the Coast Guard authorized Burlington Northern to invite bids
for the construction phase of the bridge project.
The Coast Guard has delayed opening the bids for the bridge
construction in order to give the Department of Labor an
opportunity to issue a ruling concerning the application of the
Davis-Bacon Act to the project. After the Deputy Administrator of
the Wage and Hour Division ruled that the Davis-Bacon Act would not
apply to the Burlington Northern bridge, the petitioners filed
their petition with the Wage Appeals Board for review of the
Deputy Administrator's ruling.[2]
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[3] The petitioners have argued to the Board that the agreement
between Burlington Northern and the U.S. Coast Guard to alter the
bridge is a contract for the construction of a public work of the
United States within the meaning of the Davis-Bacon Act.
The Deputy Administrator's position is that the Truman-Hobbs
Act does not contain labor standards provisions. Therefore, for
labor standards to apply to the project, Wage and Hour maintains
that the labor standards must apply by direct Davis-Bacon coverage.
Since the Act by its own language applies to "every contract in
excess of $2000, to which the United States . . . is a party", the
Deputy Administrator asserts that Davis-Bacon Act coverage fails
because there is no "contract" to which the United States is a
party.
The Wage Appeals Board considered this appeal on the basis
of the Petition for Review filed by the petitioners, the Statement
on behalf of the Deputy Administrator and the record of the case
before the Wage and Hour Division filed by the Solicitor of Labor.
On May 22, 1986, the Wage Appeals Board held an oral hearing at
which all interested persons were present and participated.
* * * [3]
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[4] The majority of the Board does not agree with the
contention of the petitioners that the alteration of the Burlington
Northern Railroad bridge over the Willamette River in Portland,
Oregon, is subject to the labor standards provisions of the
Davis-Bacon Act, as amended, 40 U.S.C. 276a, et seq. That Act
applies to "advertised specifications for every contract in excess
of $2000, to which the United States . . . is a party, for the
construction . . . of public works of the United States."
The bridge is to be altered pursuant to an order issued by
the Coast Guard under the provisions of the Truman-Hobbs Act
of 1940, 33 U.S.C. 511 et seq., which provides in pertinent part
as follows:
No bridge shall at any time unreasonably obstruct
the free navigation of any navigable waters of
the United States. 33 U.S.C. 512
Whenever any bridge shall, in the opinion of the
Secretary, at any time unreasonably obstruct such
navigation, . . . hold a hearing . . . as to
whether any alteration of such bridge is needed.
. . . If upon such hearing, the Secretary determines
that any alterations of such bridge are
necessary . . ., he shall so find and shall issue
and cause to be served upon interested parties
an order requiring such alterations of such
bridge as he finds to be reasonably necessary for
the purposes of navigation. 33 U.S.C. 513
. . . it shall be the duty of the bridge owner to
prepare and submit to the Secretary . . . general
plans and specifications to provide for the alteration
of such bridge in accordance with such order
. . . . The Secretary may approve or reject such
general plans and specifications in whole or in
part, and may require the submission of new or
additional plans and specifications, they shall be
final and binding upon all parties unless changes
therein [4]
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[5] be afterward approved by the Secretary and the
bridge owner. 33 U.S.C. 514
After approval of such general plans and specifications
the bridge owner shall . . . take bids for the
alteration of such bridge in accordance with such
general plans and specifications. . . . The Secretary
may direct the bridge owner to reject all bids and
to take new bids, or may authorize the bridge owner
to proceed with the project, by contract, or partly
by contract and partly by the bridge owner, or wholly
by the bridge owner. 33 U.S.C. 515
. . . the Secretary shall determine and issue an
order specifying the proportionate shares of the
total cost of the project to be borne by the United
States and by the bridge owner. 33 U.S.C. 516
This Act does not contain any labor standards itself. Therefore,
labor standards apply only by direct coverage of the Davis-Bacon
Act.
It is clear to the majority that Congress never intended
bridge alteration work performed pursuant to the Truman-Hobbs
Act to be subject to the labor standards provisions of the
Davis-Bacon Act for the following reasons.
1. This is not a new statute, but one that has been in
existence for some forty-six years. In all this time the
agency responsible for administering the Act has never applied
labor standards to the alteration work order to be performed
under the statute.
2. In an opinion letter dated April 6, 1951 former Secretary
of Labor Tobin held that a contractor reconstructing a bridge at
Savannah, Georgia under a contract with the Seaboard Railroad
ordered pursuant to the Truman-Hobbs Act was not [5]
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[6] required to pay prevailing wage rates. The Secretary stated that
"(i)nasmuch as the Truman-Hobbs Act does not require the payment of
prevailing wage rates for work done pursuant to it there would seem to
be a hiatus in the law in this respect."
3. During 1962 there were extensive oversight hearings
held by the Special Subcommittee on Labor, of the Committee on
Education and Labor, House of Representatives, into the
administration of the Davis-Bacon Act. The failure of the
Department of Transportation and the Department of Labor to apply
coverage of the Davis-Bacon Act to bridge work authorized by the
Truman-Hobbs Act was never considered at these hearings.
4. On July 2, 1964 the Davis-Bacon Act was amended to
include certain fringe benefits within the meaning of the terms
"wages", "scale of wages", "wage rates", "minimum wages" and
~prevailing wages", as used in the Davis-Bacon Act. This same
Act of Congress amended the Federal Airport Act and the National
Housing Act to assure that labor standards provisions were
applicable in accordance with the Davis-Bacon Act. While amendments
were being made to the Davis-Bacon Act and above-mentioned Acts,
no attempt was made to amend the Truman-Hobbs Act to make bridge
alteration authorized by it subject to prevailing wage rates even
though the Congress and the construction industry must have known
that the Davis-Bacon Act prevailing wage provisions were not
being extended to that Act.
5. Senator Bob Packwood of Oregon, learning that Davis-[6]
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[7] Bacon labor standards requirements would not be applicable to
the Burlington Northern Railroad bridge alterations expressed
concern that such standards were not being applied. Shortly
thereafter, Congress passed H.R. 2466 (1986) which included,
among other things, a requirement that any funds expended under
the Truman-Hobbs Act by the Coast Guard to alter the Burlington
Northern Railroad bridge be subject to the requirements of the
Davis-Bacon Act. President Reagan vetoed this bill on February 14,
1986. The President expressed concern that this particular
amendment would add approximately $l.5 million to the cost of the
project.
After looking at all of the above factors coupled together,
the majority is persuaded that the Congress had no intent to
include alteration work ordered and funded under the Truman-
Hobbs Act within the scope of the Davis-Bacon Act. This conclusion
is further supported by the fact that when the Congress undertook
to include labor standards in H.R. 2466 it could have applied the
Davis-Bacon labor standards to all bridge alteration work under the
Truman-Hobbs Act. Instead, Congress only attempted to apply such
standards to the expenditure of funds by the Coast Guard related to
the alteration of the Burlington Northern Railroad bridge over the
Willamette River, in Portland, Oregon.
Notwithstanding the fact that there was no intent of the
Congress to cover this work under the Davis-Bacon Act, there is [7]
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[8] no contract for construction to which the United States is a
party. At most, the statutory scheme is a mandate to the bridge
owner to enter into a construction contract to alter the bridge
and does not create a contractual relationship between the
bridge owner and the United States. To hold Davis-Bacon labor
standards applicable a specific provision would need to be
included in the statute similar to the various other Davis-
Bacon related Acts listed in 29 CFR [sec.] 5.1.
In view of the foregoing, the decision of the Deputy
Administrator is affirmed and the petition herein is dismissed.
* * *
Member Dunn, dissenting
The majority concludes that "Congress never intended bridge
alteration work performed pursuant to the Truman-Hobbs Act to be
subject to the labor standards provisions of the Davis-Bacon Act.
. ." This conclusion is based on an analysis of certain events in
the legislative history of the Davis-Bacon Act. However, the fact
that Congress never expressed an intention to apply the Davis-Bacon
Act to bridge alteration work covered by the Truman-Hobbs Act
proves nothing.
The Davis-Bacon Act applies to ". . . every contract in
excess of $2000, to which the United States or the District of
Columbia is a party, for construction, alteration, and/or repair,
including painting and decorating, of public buildings or public [8]
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[9] works of the United States or the District of Columbia
. . ." Thus, if the statutory scheme of the Truman-Hobbs Act
contemplates the award of contracts which meet these other
criteria, there is no need to look for express Congressional intent
to apply the Davis-Bacon Act to bridge alteration work.
The majority also concludes, almost as an afterthought,
that there is no contract for construction to which the United
States is a party for the construction of the new Burlington
Northern bridge over the Willamette River in Portland, Oregon.
It is submitted however, that the agreement to which Burlington
Northern Inc. and the U.S. Coast Guard became parties is a
"contract" within the meaning of the word in the Davis-Bacon Act.
Contracts are normally created as the result of a
manifestation of assent by the parties to the terms of a promise
and to the consideration for it. The fact that an agreement to
alter the Burlington Northern bridge is reached pursuant to a
statutory process prescribed in the Truman-Hobbs Act does not mean,
however, that there is an absence of mutual assent. It must be
remembered that the Truman-Hobbs Act was passed by Congress in
response to a ruling by the U.S. Supreme Court that, under the
General Bridge Act, the Secretary of War was authorized to require
alteration of a bridge which he determined to be an unreasonable
obstruction to navigation without compensating the bridge owner
for the cost of the alteration work. Union Bridge Co. v. United [9]
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[10] States, 204 U.S. 364 (1907). In response, Congress passed the
Truman-Hobbs Act which imposes on the Government the total cost
incurred in the interest of navigation, with suitable apportionment
of cost to the bridge owner covering special improvements to the
benefit of the railroad, the remaining useful life of the facility,
and the like.
The process prescribed in the Truman-Hobbs Act results in
an agreement between the Government and the bridge owner to
remove an obstruction to navigation under terms which are mutually
agreeable. Hence, compliance with the statutory procedure does not
preclude the parties from manifesting their assent, but rather
facilitates it.
The fact that Burlington Northern has a pre-existing duty
under the Truman-Hobbs Act to alter its bridge does not mean
that a promise to alter the bridge is not sufficient consideration
to create a contract to which the Davis-Bacon Act can be applied.
In re Lloyd Carr & Co., 617 F.2d 882 (1st Cir. 1980).
Professor Corbin, the well respected authority on contract
law commented on the doctrine of pre-existing duty, as follows:
Most acts and forbearances, or promises of future
performance, are a sufficient consideration
for a promise if they are bargained for by the
maker of that promise and are given in exchange
for it. One of the most important exceptions consists
to those performances that are required of the
performer, exactly as rendered by him, by a pre-
existing legal duty. The same is true of a promise
to render such a performance. The very frequently
stated rule is that neither the performance of duty [10]
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[11] nor the promise to render a performance already
required by duty is a sufficient consideration
for a return promise.
There has been a growing doubt as to the soundness
of this doctrine as a matter of social policy.
This has been evidenced in ways that will hereafter
appear. In certain classes of cases, this doubt
has influenced courts to refuse to apply the rule,
or to ignore it, in their actual decisions. Like
other legal rules, this rule is in process of
growth and change, the process being more active
here than in most instances. The result of this
is that a court should no longer accept this rule
as fully established. It should never use it as the
major premise of a decision, at least without giving
careful thought to the circumstances of the particular
case, to the moral deserts of the parties, and to
the social feelings and interests that are involved.
It is certain that the rule, stated in general and
all-inclusive terms, is no longer so well-settled
that a court must apply it though the heavens fall.
The present writer does not know the origin of this
rule or the reasons that led courts to adopt it in
the first place. Doubtless, some part has been
played by the notion that "duty" should be performed
without reward. Doubtless, also, there have been
tough cases in which the promisor has been subjected
to a holdup game, so that he made his new promise
under some degree of economic duress. It is
certainly possible that a contractor may purposely
bid low in order to get the contract, and then to
refuse to perform, after it is too late to obtain
another contractor without loss and inconvenience,
in order to induce a promise of more pay.
The strict enforcement of the supposed general rule
would tend to remove this temptation from bidders,
since they would know that a promise so induced would
not be legally enforceable. But the application of
the rule has not been so strict and uniform as to
make the non-enforcement of the new promise certain.
It has become clear that the moral and economic
elements in any case that involves the rule should
be weighed by the court, and that the fact of pre-
existing legal duty should not be in itself decisive
It would be foolish to say this, in the light of
the frequent repetition and application of the [11]
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[12] rule, but for the fact that the statement finds
support in many actual decisions, in critical
articles and law treatises, and in the Restatement
of Contract law by the American Law Institute.
When general rules have never been applied with
uniformity and appear to be breaking down into a
number of other rules that take new factors into
consideration, it behooves both writers and courts
to weigh the matter anew and to be ready to reach
new results.
1 A Corbin on Contracts [sec.] 171, pp. 105-06.
I find that the pre-existing duty to alter the bridge over
the river created by operation of the Truman-Hobbs Act does not
prevent a promise to alter the bridge from constituting
"consideration" sufficient to support a "contract".
Even assuming the validity of the pre-existing duty doctrine,
in the event that the party subject to the pre-existing obligation
does more than his duty requires he creates consideration
sufficient to support the return promise. /FN1/ 1 Williston on
Contracts [sec] 132, pp. 558-59; 1 A Corbin on Contracts [sec] 192,
p. 180.
It is true that a bridge owner is, upon receipt of an order
requiring alteration of his bridge issued pursuant to Section 3 of
the Act, 22 U.S.C. [sec] 513, obligated to take certain
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/FN1/ Restatement (Second) Contracts [sec] 73, p. 179 states:
Performance of a legal duty owed to a promisor
which is neither doubtful nor the subject of honest
dispute is not consideration; [*] but a similar
performance is consideration if it differs from what
was required by the duty in a way which reflects
more than a pretense of bargain [*] ([*] emphasis added
[*]). [12]
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[13] actions described in the Act. There is, however, substantial
opportunity created by the statutory process for negotiation
between the bridge owner and the Coast Guard concerning the
general plans and specifications to provide for the alteration
work, and for such additional alteration work as the bridge
owner may desire to meet the necessities of railroad or highway
traffic, or both. The statutory process also provides the
parties an opportunity to negotiate concerning the selection
of the contractor who will perform the alteration work as well
as the total cost of the project. Finally, the Act provides
an opportunity for negotiation between the parties concerning
apportionment of their respective shares of the total cost of
the project.
Thus, the Truman-Hobbs Act may impose a duty upon a bridge
owner to alter this bridge; however, the specific terms and
conditions as to how such work will be accomplished is left to the
parties to resolve within the framework of a statutory process.
The promise by a bridge owner to alter his bridge in a manner
consistent with the agreement reached with the Coast Guard
creates consideration sufficiently different from the bare
obligation to alter the bridge to support the Coast Guard's return
promise to pay for its agreed upon portion of the cost.
Finally, I believe that government contracts are different
from contracts between ordinary parties. United States v. New [13]
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[14] Orleans Public Service, Inc., 553 F.2d 459, 469 (5th Cir.
1977), vacated on other grounds, 436 U.S. 942 (1978). In the New
Orleans Public Service case, the Government brought action to
compel a public utility to comply with Executive Order 11246, which
prohibits employment discrimination by government contractors. The
utility company argued, inter alia, that enforcement of the non-
discrimination clause in the Executive Order against it would be
contrary to the principle of contractual consent inasmuch as it
never agreed to be bound by such clause. The court dismissed
the utility's argument stating:
Government has the unrestricted power to determine
those with whom it will deal, and to fix the terms
and conditions upon which it will make needed
purchases. Perkins v. Lukens Steel Co., 310 U.S. 113,
127, 60 S.Ct. 869, 876, 84 L.Ed. 1108 (1940);
Southern Ill. Bldrs. Ass'n v. Ogilvie, S.D. Ill. 1971,
327 F. Supp. 1154, aff'd, 471 F.2d 680 (7th Cir.
1972); cf. King v. Smith, 392 U.S. 309, 88 S.Ct.
2128, 20 L.Ed.2d 1118 (1968); Vacketta & Wheeler,
supra. Agreement to such conditions is unnecessary:
where regulations apply and require the inclusion
of a contract clause in every contract, the
clause is incorporated into the contract, even if it
has not been expressly included in a written contract
or agreed to by the parties. M. Steinthal, supra,
at 1304; J.W Bateson Co. v. United States, 1963
162 Ct. Cl. 566, 569; G.L. Christian, supra, 312
F.2d at 424; see Russell Motor Car Co. v. United
States, 261 U.S. 514, 43 S.Ct. 428, 67 L.Ed.
778 (1923). See also De Laval Steam Turbine Co. v.
United States, 284 U.S. 61, 52 S.Ct. 78, 76 L.Ed.
168 (1931); College Point Boat Corp. v. United
States, 267 U.S. 12, 45 S.Ct. 199, 69 L.Ed. 490
(1925) (footnote omitted).
533 F.2d at 469.[14]
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[15] We should not permit the construction of a $30 million
public work of the United States /FN 2/ without payment of Davis-
Bacon prevailing wage rates simply because the agreement between
Burlington Northern and the Coast Guard may not satisfy all the
principles of general contract law. /FN3/ The Davis-Bacon Act is
to be liberally construed in order to effectuate its remedial
purposes. Gillioz v. Webb, 99 F.2d 585 (5th Cir. 1938). The
principles expressed in New Orleans Public Service dictate
application of the Davis-Bacon Act to the contract between the
Coast Guard and Burlington Northern, Inc. to alter is railroad
bridge over the Willamette River in Portland, Oregon regardless
of whether it satisfies the principles of general contract law.
The majority also relies upon the fact that Congress passed
a labor standards provision applicable solely to alteration of
the Burlington Northern Railroad bridge indicating that it does
not believe the Davis-Bacon Act otherwise applies.
Congressional intent regarding application of the Davis-
Bacon Act to alteration of the Burlington Northern Railroad
bridge is best reflected in a November 15, 1985 letter from
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/FN2/ It is important to note that the Deputy Administrator agrees
with petitioners that the Burlington Northern Railroad bridge is
a "public work" as defined in 29 CFR [sec] 5.2(k) of the Department
of Labor's Davis-Bacon regulations.
/FN3/ This argument should not be construed as an acknowledgement
that the Burlington Northern-Coast Guard agreement does not satisfy
all the principles of general contract law. Rather, it is intended
as an argument in the alternative. [15]
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[16] Senator Bob Packwood to Admiral James S. Gracey of the U.S.
Coast Guard, which is attached to the Petition for Review as
Exhibit D. In that letter, Senator Packwood indicated he was aware
that the Coast Guard did not intend to apply Davis-Bacon labor
standards to the alteration of the Burlington Northern Railroad
bridge and that award of a contract to perform the work was
imminent.
Senator Packwood, receiving no satisfaction from the Coast
Guard, then proposed an amendment to H.R. 2466, a bill "To make
miscellaneous changes in laws affecting the United States Coast
Guard, and for other purposes." The amendment, which was
incorporated in H.R. 2466, provided that:
Any use or expenditure of funds by the Coast Guard
related to the alteration of the Burlington-Northern
Railroad Bridge at mile 6.9 on the Willamette River,
Portland, Oregon shall be subject to the first six
sections of the Act of March 3, 1931 (40 U.S.C. 276a
through 276a-5).
Passage of a bill under the circumstances in this case can
hardly be regarded as an indication that Congress believed the
Davis-Bacon Act is otherwise inapplicable to alteration of the
Burlington Northern Railroad bridge. At most, passage of H.R. 2466,
with the above-referenced language incorporated in it, reflects an
effort to deal with a situation in which members of Congress
recognized an agency of the U.S. Government intended to misapply
the law and that there was little time in which to take any
effective action except by legislation. [16]
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[17] In fact it can be argued that Congress' quick action is
evidence that it believes the Davis-Bacon Act is applicable to
bridge alteration work performed pursuant to the Truman-Hobbs Act.
Lastly, the majority relies on an April 6, 1951 letter
signed by then Secretary Tobin which indicates the Labor Department
has not considered Truman-Hobbs Act bridge alteration work
covered by the Davis-Bacon Act since at least that time. However,
that letter simply states that contractors jointly engaged in
reconstruction of a bridge pursuant to the Truman-Hobbs Act were
not required to pay Davis-Bacon prevailing wages because the
Department of the Army failed to request a prevailing wage
determination from the Labor Department before contract award. The
1951 opinion letter does not state, as the Deputy Administrator
implies, that the Administrator would not have issued a wage
determination applicable to the bridge alteration work if requested
by the Army. It must be remembered that prior to June 28, 1983,
when 29 CFR [sec] 1.6(f) became effective, there was no authority
for issuing a Davis-Bacon wage determination after contract award
for application to a project which should have been covered but was
not. As such, the April 6, 1951 letter merely states that the
contractors already performing work on that railroad bridge were
not obligated to pay Davis-Bacon prevailing wages to their
employees. [17]
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[18] For all of these reasons, I respectfully dissent from the
majority.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [18]
