FACCHIANO CONSTRUCTION CO., INC., WAB No. 91-06 (WAB Aug. 29, 1991)
CCASE:
DECISION OF THE WAGE APPEALS BOARD
DDATE:
19910829
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of:
FACCHIANO CONSTRUCTION
COMPANY, INC., a/k/a
MICHAEL FACCHIANO CONCRETE WAB Case No. 91-06
CONSTRUCTION COMPANY,
Contractor
MICHAEL FACCHIANO, SR.,
Owner
MICHAEL FACCHIANO, JR.,
Owner
JOHN FACCHIANO,
Owner
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Stuart Rothman, Senior Member
DATED: August 29, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petitions of
the Acting Administrator of the Wage and Hour Division and of
Facchiano Construction Company, Inc. ("Facchiano Construction") for
review of the September 27, 1990 decision and order (Attachment) of
Administrative Law Judge ("ALJ") George [1]
~
[2]
P. Morin on debarment issues. The Acting Administrator petitions
for review of the ALJ's determination that the Facchiano firm should
be debarred for 18 months rather than for the full three-year debarment
period provided for in 29 C.F.R. 5.12(a)(1); the Acting Administrator
also seeks review of the ALJ's determination that corporate officers
Michael Facchiano, Sr., Michael Facchiano, Jr. and John Facchiano
(collectively, "the Facchianos") should not be debarred. The
Facchiano firm requests review of the ALJ's rulings on Facchiano
Construction's claim preclusion defenses, and requests reversal of
the ALJ's order debarring the firm. For the reasons stated below,
the Board denies Facchiano Construction's petition for review,
grants the Acting Administrator's petition, and orders that
Facchiano Construction and the Facchianos be debarred for three
years.
I. BACKGROUND
Facchiano Construction is a Pennsylvania corporation,
primarily engaged in operation of a concrete contracting business
in Pittsburgh, Pennsylvania. The corporate officers of Facchiano
Construction are Michael Facchiano, Sr., president; and his two
sons Michael Facchiano, Jr., secretary, and John Facchiano,
treasurer.
At the time that Michael Facchiano, Jr. joined the family
business on a fulltime basis after completing his education, the
annual gross revenue was $400,000 to $500,000, all but about 20% of
which came from residential concrete work. Michael Facchiano, Jr.
embarked on an effort to increase the amount of the business'
commercial work. A principal element of this effort was bidding on
federally funded or assisted projects. From 1982 to 1984, 70 to
75% of the annual revenues of from $1 million to $1.5 million came
from federal projects. (ALJ's Decision ("ALJD") at 8).
In the period prior to 1984, the business was the subject of
three investigations for Davis-Bacon violations involving travel
time, failure to pay overtime and misclassification of workers; the
investigation results required restitution of approximately $2,800,
$400 and $45, respectively (ALJD at 9). Despite these
investigations, the ALJ stated (Id.), Michael Facchiano, Jr.
embarked on a scheme to increase the company's
revenue and thereby enhance his business
stature in the eyes of his father. This
involved the deliberate misclassification of
employees, payment of less than prevailing
wages required in the federally funded
contracts and the failure to pay overtime....
The witness testified that other contractors
were doing the same thing and he felt it was
necessary for his father's company to follow
suit in order to [2]
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[3] occasionally be the
low bidder on the numerous contracts they bid
on, and to grow as a company.
Several contracts were awarded to Facchiano Construction
between January 1, 1982, and September 30, 1984. All the contracts
were funded in whole or in part through community development block
grants administered by the Department of Housing and Urban
Development ("HUD"). The contracts were subject to the labor
standards provisions of the Housing and Community Development Act
of 1974, as amended (42 U.S.C. [secs] 5310, 1440(g)) ("HCDA") (a
Davis-Bacon Related Act).
In 1984 the Inspector General's Office of the Department of
Labor, in conjunction with the Federal Bureau of Investigation,
investigated Facchiano Construction's performance under the
contracts. The investigation disclosed that, in some instances,
Facchiano Construction had failed to pay the applicable prevailing
wage rates. The investigation also disclosed that the firm had
submitted falsified certified payroll records, which showed higher
wage rates than the rates that were actually paid. The payrolls
were certified as correct and complete by Michael Facchiano, Jr.,
or John Facchiano. As a result of the investigation, Facchiano
Construction paid $128,298.27 to 20 employees -- the amount due to
the employees as prevailing wages and fringe benefits.
As a further result of the investigation, a two-count criminal
information was filed against the firm and Michael Facchiano, Jr.,
the corporation's secretary, charging them with mail fraud in
violation of 18 U.S.C. [sec] 1341, for sending falsified certified
payrolls through the mail. Both defendants pleaded guilty to the
charges. On February 22, 1985, Michael Facchiano was sentenced to
six months in prison, fined $2,000 and placed on probation for five
years. Facchiano Construction also was fined $2,000. The fines
were paid, and Michael Facchiano, Jr. served the six-month prison
sentence.
On May 15, 1985, HUD notified Michael Facchiano, Jr. and
Facchiano Construction that it was considering debarring them from
further participation in HUD programs for a three-year period
pursuant to 24 C.F.R. 24.6(a)(9), and that they were temporarily
suspended from participation in HUD programs pending a final
decision on debarment. Briefs and documentary evidence were
submitted by the parties to the HUD proceeding. On March 5, 1986,
HUD's Board of Contract Appeals debarred Facchiano Construction and
Michael Facchiano, Jr. from participation in HUD programs for 18
months. With credit given for the period of suspension while the
debarment proceedings were pending, they were debarred until
November 15, 1986.
When the suspension took effect, Michael Facchiano, Jr.
resigned his position as an officer of the corporation and ceased
all managerial duties. He [3]
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[4] went to work for his father's business (Michael Facchiano Contracting),
essentially as a foreman. (ALJD at 9). At the time of the hearing before
the Department of Labor ALJ, Facchiano Construction was still in existence
but was inactive, and had not taken on any work since the investigation
began and Michael Facchiano, Jr. resigned his position in the
corporation (Id. at 10). The only active business is the sole
proprietorship, Michael Facchiano Contracting. Michael Facchiano,
Sr. owns the business and equipment; he also owned the equipment
from 1982 to 1984, when the corporation was the active business
entity. Generally, the same employees who worked for the
corporation are employed by the sole proprietorship. Michael
Facchiano, Jr. testified that he was employed as a superintendent
by the proprietorship, and is also involved in the bidding process,
purchase of equipment, employee relations and general office
procedures. John Facchiano is also involved in bidding. Michael
Facchiano, Jr. further testified that the gross volume of the
business was about $4 million 1987, $5.5 million in 1988, and $5 to
$5.5 million in 1989. (Id.).
On December 13, 1985, while the HUD matter was pending, the
Acting Administrator of the Wage and Hour Division notified
Facchiano Construction; Michael Facchiano, Sr.; Michael Facchiano,
Jr.; and John Facchiano of the Department of Labor's intention to
seek their debarment from all contracting with the Federal
government for three years, pursuant to 29 C.F.R. 5.12(a)(1), for
aggravated and willful Related Acts violations. On October 27,
1986, the matter was referred to the Office of Administrative Law
Judges for a hearing. The Order of Reference alleged that
Facchiano Construction and the Facchianos had committed aggravated
and willful violations of the HCDA and the Contract Work Hours and
Safety Standards Act, as amended (40 U.S.C. [sec] 327 et seq.)
("CWHSSA").
On February 12, 1987 Facchiano Construction and the Facchianos
(with the exception of Michael Facchiano, Sr.) filed an injunctive
action in the United States District Court for the Western District
of Pennsylvania, seeking to stay the administrative proceedings on
the ground that the debarment action was barred by the doctrines of
res judicata and collateral estoppel. The parties entered into a
stipulation of facts and filed cross-motions for summary judgment.
A U.S. magistrate made findings in favor of the Department of Labor
on the res judicata and collateral estoppel issues, and those
findings were affirmed by a district court judge, who entered an
order granting the Department's summary judgment motion. Facchiano
v. United States Dep't of Labor, 108 Lab. Cas. (CCH) [par] 35,071
(W.D. Pa. 1987). On appeal, the Third Circuit affirmed the
district court's denial of the request of the Facchianos and
Facchiano Construction for injunctive relief, but remanded the
claim preclusion issue for determination in the administrative
proceedings. Facchiano v. United States Dep't of Labor, 859 F.2d
1163 (3d Cir. 1988), cert. denied, 490 U.S. 1097 (1989). [4]
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[5]
II. THE ALJ'S DECISION AND ORDER
A. Claim Preclusion
On the res judicata and collateral estoppel question, the ALJ
noted that the magistrate and district court had found
determinative (1) the fact that the debarment by HUD extended to
HUD projects only, while debarment by the Department of Labor would
have government-wide effect; and (2) that the HUD debarment was
based on the criminal conviction, while debarment by the Department
of Labor would be based on the Davis-Bacon violations themselves
(ALJD at 13). The ALJ stated that he agreed with the magistrate
and the district court that these factors "sufficiently distinguish
the proceedings to defeat the res judicata and collateral estoppel
defences." (Id.).
B. Debarment of the Facchianos
The ALJ stated that the Facchianos "appear resigned to entry
of an order debarring Facchiano Construction Company, Inc., as well
they might, in view of the fact that such an order would have
little if any effect on the family's operation, given the inactive
status of the corporation and the robust growth of Michael
Facchiano Contracting since the era of the criminal proceedings and
the HUD debarment action" (ALJD at 13). The ALJ acknowledged that
"to be of any real effect in insuring future compliance with the
requirements of the Acts and regulations governing their federal
contract work, a debarment would have to be directed against
Michael Facchiano and his two sons" (Id.). However, the ALJ
accepted the Facchianos' argument that 29 C.F.R. 5.12(a)(1), which
provides for debarment for "aggravated or willful" Related Acts
violations, provides only for debarment of a "contractor or
subcontractor" and not for debarment of individual corporate
officers. Accordingly, the ALJ determined that a debarment order
should be directed against only the corporation -- Facchiano
Construction (ALJD at 15).
C. Debarment of Facchiano Construction
The ALJ found the conclusion "inescapable" that Facchiano
Construction, by failing to pay the prevailing wage and overtime
compensation and by falsifying payroll records to make it appear as
if the prevailing wage and overtime rates had been paid, had
committed aggravated and willful violations of the HCDA and the
CWHSSA (ALJD at 15). However, the ALJ further stated that
Facchiano Construction had already been debarred for 18 months from
participating in HUD [5]
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[6]
contracts. "Since the corporation has not been shown to have bid on
any projects other than those administered by HUD," the ALJ stated, "a
further 18-month debarment would appear to be appropriate in the
circumstances . . . ." Accordingly, the ALJ ordered that Facchiano
Construction be debarred for 18 months, rather than the full three-year
debarment period requested by the Acting Administrator.
III. DISCUSSION
A. Claim Preclusion
Facchiano Construction contends that the doctrine of res
judicata operates to bar the Department of Labor from undertaking
this debarment proceeding. /FN1/ Like both the district court and
the ALJ, however, the Board rejects that contention.
Under the res judicata doctrine, a final judgment on the
merits bars further claims by parties or their privies on the same
cause of action. As noted by the Solicitor (Response, at pp. 5-7),
the critical issue to be examined concerning the application of res
judicata to governmental parties is the authority delegated to an
agency by Congress to bind the government in a final adjudication.
Accordingly, the starting point of our analysis is the authority
granted to the Department of Labor by the President and Congress to
administer the labor standards applicable to federally funded or
assisted construction projects. That authority is clear, for as
the Board recently noted, "In the interests of government-wide
consistency and the guidance of contracting officers throughout the
United States, Congress and the Truman Administration enacted
Reorganization Plan No. 14 of 1950 (5 U.S.C. App.), wherein the
Secretary of Labor was given the authority and responsibility to
achieve uniformity and consistency in Davis-Bacon administration."
AT&T Communications, WAB Case No. 91-09 (Aug. 21, 1991). Indeed,
the two Related Acts that are involved in this case -- the HCDA (at
42 U.S.C. [secs] 5310, 1440(g)) and the CWHSSA (at 40 U.S.C. [sec]
330(d)) -- make explicit reference to the authority of the
Secretary of Labor under Reorganization Plan No. 14. [6]
/FOOTNOTE1/ As noted by the Solicitor (Acting Administrator's Response to
Petition for Review, at p. 4 n.2), Facchiano Construction's
arguments before the Board appear to be confined to the res
judicata issue, and do not appear to address the application of the
collateral estoppel doctrine to this matter. To the extent that
application of collateral estoppel remains at issue, the Board's
discussion of Facchiano Construction's res judicata affirmative
defense at pp. 6-8, infra, also applies to the collateral estoppel
issue. [6]
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[7] The Reorganization Plan explicitly vests the Secretary with
the authority to "prescribe appropriate standards, regulations, and
procedures" to be observed by federal agencies, and to "cause to be
made by the Department of Labor, such investigations, with respect
to compliance and enforcement of such labor standards, as he deems
desirable." In carrying out this responsibility for administration
and enforcement of the labor standards requirements of the
Davis-Bacon and Related Acts, the Department of Labor has
promulgated 29 C.F.R. 5.12, which provides for government-wide
debarment for "aggravated or willful" violations of the Related
Acts. See Janik Paving & Construction, Inc. v. Brock, 828 F.2d 84
(2d Cir. 1987) (upholding Secretary of Labor's debarment authority
for Related Acts violations); Copper Plumbing & Heating Co. v.
Campbell, 290 F.2d 368 (D.C. Cir. 1961) (same). Under the
statutory and regulatory scheme for Davis-Bacon administration,
then, it is the Secretary of Labor, and not HUD, who has primary
responsibility for enforcing the labor standards requirements of
Related Acts such as the HCDA and the CWHSSA and for determining
whether government-wide debarment is warranted for violations of
those requirements. The authority delegated to the Secretary of
Labor by Congress and the President to resolve such matters would
seem to defeat Facchiano Construction's contention that res
judicata principles preclude the Department of Labor's debarment
proceeding.
In addition, we take note of the same two points that were
relied upon by the district court and the ALJ in turning aside
Facchiano Construction's res judicata and collateral estoppel
arguments. Namely, the district court and the ALJ determined that
the following two points sufficiently differentiated the HUD and
Department of Labor proceedings: (1) the HUD debarment applied to
HUD projects only, whereas debarment by the Department of Labor
would have government-wide effect; and (2) the focal point of the
HUD debarment was the criminal conviction of Facchiano Construction
and Michael Facchiano, Jr., whereas debarment by the Department of
Labor would be based on the labor standards violations themselves.
We agree that these are critical distinctions. First, these
distinctions illustrate what we have discussed above -- that is,
that the Secretary of Labor has the primary responsibility for
administering and enforcing the labor standards requirements of the
Davis-Bacon and Related Acts. Second, these distinctions
demonstrate that the HUD and Department of Labor proceedings simply
do not display the identity of cause of action that is required for
application of the res judicata doctrine.
Finally, we agree with the Solicitor (Acting Administrator's
Response to Petition for Review, at pp. 19-20) that Facchiano
Construction's argument that a government-wide debarment imposed by
the Department of Labor would subject the firm to a second period
of ineligibility from participation in HUD contracts is not germane
to the res judicata issue. Indeed, the Facchiano family business
simply switched its active operations to a sole proprietorship,
continued to seek [7]
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[8] and obtain HUD contracts, and was not effectively debarred at all.
Thus, neither the firm nor its principals have any basis whatsoever for
making an equitable argument that they would be "harmed" by undergoing a
second period of ineligibility from HUD contracts.
B. Debarment of the Facchianos
As noted above, debarment for violation of the Davis-Bacon
Related Acts is governed by 29 C.F.R. 5.12, which provides in
Section 5.12(a)(1):
Whenever any contractor or subcontractor is
found by the Secretary of Labor to be in
aggravated or willful violation of the labor
standards provisions of any of the applicable
statutes . . . other than the Davis-Bacon Act,
such contractor or subcontractor or any firm,
corporation, partnership, or association in
which such contractor or subcontractor has a
substantial interest shall be ineligible for a
period not to exceed 3 years (from the date of
publication by the Comptroller General of the
name or names of said contractor or subcontractor
on the ineligible list . . .) to receive any
contracts or subcontracts subject to [the
Davis-Bacon Act or Related Acts].
In his decision and order, the ALJ recognized that "to be of
any real effect in insuring future compliance with the requirements
of the Acts and regulations governing their federal contract work,
a debarment would have to be directed against Michael Facchiano and
his two sons" (ALJD at 13). Nevertheless, the ALJ accepted the
Facchianos' contention that Section 5.12(a)(1) authorizes only
debarment of a "contractor or subcontractor" and not of individual
corporate officers. The Board concludes that the ALJ's reading of
29 C.F.R. 5.12 is erroneous, and must be reversed.
The gist of the Facchianos' argument is that 29 C.F.R.
5.12(a)(2), regarding debarment for Davis-Bacon Act violations,
specifically refers to placement of the "names of contractors or
subcontractors or their responsible officers" (emphasis supplied)
on the ineligibility list, whereas 29 C.F.R. 5.12(a)(1) does not
expressly mention debarment of corporate officers for Related Acts
violations. /FOOTNOTE2/ In our view, Facchiano Construction's argument
that the "plain [8]
/FOOTNOTE2/ 29 C.F.R. 5.12(a)(2) states:
In cases arising under contracts covered by the Davis-
Bacon Act, the Administrator shall transmit to the
Comptroller General the names of [8] [FOOTNOTE 2 CONTINUED
ON PAGE 9]
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[9] the contractors or subcontractors and their responsible
officers, if any (and any firms in which the contractors or
subcontractors are known to have an interest), who have been
found to have disregarded their obligations to employees, and
the recommendation of the Secretary of Labor or authorized
representative regarding debarment. The Comptroller
General will distribute a list to all Federal agencies
giving the names of such ineligible person or firms, who
shall be ineligible to be awarded any contract or
subcontract of the United States or the District of
Columbia and any contract or subcontract subject to the
labor standards provisions [of the Davis-Bacon and
Related Acts]. [END FOOTNOTE 2] [9]
[9] language" of the regulation demonstrates that the Department of
Labor lacks authority to debar corporate officers under Section
5.12(a)(1) is defective for several reasons. The plain terms of
that section, referring to debarment of "any contractor or
subcontractor" found to have committed "aggravated or willful"
violations of the Related Acts, do not begin to suggest to us that
the debarment of corporate officers of contractors or
subcontractors is precluded by the regulation. This conclusion is
supported by an examination of other sections of 29 C.F.R. 5.12 --
including 29 C.F.R. 5.12(b)(1), which describes the parties to be
afforded hearings on debarment issues, and which applies to both
Sections 5.12(a)(1) and (a)(2). The regulation provides, in
Section 5.12(b)(1):
[W]henever as a result of an investigation . . .
the Administrator finds reasonable cause to
believe that a contractor or subcontractor has
committed willful or aggravated violations of
the labor standards provisions of [the Related
Acts], or has committed violations of the
Davis-Bacon Act which constitute a disregard
of the obligations to employees or
subcontractors under section 3(a) thereof, the
Administrator shall notify . . . [*] the
contractor or subcontractor and its
responsible officers [*], if any (and any firms in
which the contractor or subcontractor are
known to have a substantial interest), of the
finding. The Administrator shall afford such
[*] contractor or subcontractor and any other
parties notified [*] an opportunity for a hearing
as to whether debarment action should be taken
under paragraph (a)(1) of this section or
section 3(a) of the Davis-Bacon Act.
[*] (Emphasis supplied.) [*]
See also 29 C.F.R. 6.2(d) (setting forth the definition of
"respondent" in administrative proceedings enforcing the labor
standards provisions of the Davis-Bacon and Related Acts and the
Service Contract Act). In addition, we note that 29 C.F.R.
5.12(c), which applies only to Related Acts debarments and which
sets forth a procedure for removal from the ineligibility list
after serving at least six months on the list, provides that "[a]ny
[*] person or firm [*] debarred under [sec] 5.12(a)(1) may in
writing request removal from the debarment list after six months
from the date of publication by the Comptroller General of such [*]
person [9]
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[10] or firm's name [*] on the ineligible list."
(Emphasis supplied.) In short, the terms used in these other
sections of the regulation support the interpretation offered by
the Acting Administrator of the language used in 29 C.F.R.
5.12(a)(1).
It is also important to keep in mind the purpose underlying
the Department of Labor's Related Acts debarment regulation -- that
is, to "effectuat[e] compliance, and further[] the public policy
represented by the labor acts." A. Vento Construction, WAB Case
No. 87-51, (Oct. 17, 1990) (29 WH 1685), at p. 6, quoting Copper
Plumbing and Heating Co. v. Campbell, supra, 290 F.2d at 372. See
also Brite Maintenance Corp., WAB Case No. 87-07 (May 12, 1989), at
p. 5. As the ALJ acknowledged in the instant case, a debarment
that is not directed against the principals of an ineligible firm
may well be ineffective as a tool for achieving compliance with
labor standards requirements. Absent any indication that the
Department of Labor drafted the Related Acts debarment mechanism
with the absurd intention of robbing that mechanism of its
effectiveness, and absent any express language in the regulation
which would preclude debarment of responsible officials, the Board
adheres to its consistent precedent which permits debarment of
responsible officials for aggravated or willful Related Acts
violations. See, e.g., Brite Maintenance, supra; Marc S. Harris,
Inc., WAB Case No. 88-40 (Mar. 28, 1991); Coastal Energy, Inc., WAB
Case No. 89-07 (June 26, 1991). /FN3/
C. The Length of the Debarment Period
As noted above, 29 C.F.R. 5.12(a)(1) provides for a debarment
period "not to exceed three years" for "aggravated or willful"
violations of the Related Acts. The investigation of Facchiano
Construction's performance on the contracts that were subject to
the labor standards requirements of the HCDA and the CWHSSA
disclosed that the firm submitted falsified certified payrolls;
furthermore, as a result of that investigation the firm paid
$126,298.27 in back wages to 20 employees. It is established under
Board precedent that falsification of certified payrolls is
"aggravated or willful" conduct warranting debarment [10]
/FOOTNOTE3/ Facchiano Construction also argues that the Davis-Bacon Act
expressly refers in section 3(a) to placement of "persons or firms"
(emphasis supplied) on the ineligibility list, whereas Related Acts
such as the HCDA and the CWHSSA are somehow limited to contractors
and subcontractors. However, the authority of the Department of
Labor to establish a regulatory debarment mechanism for Related
Acts violations has been upheld (see A. Vento Construction, supra,
at pp. 5-6 and authority cited therein), and the Related Acts
simply do not contain any reference precluding the debarment of
responsible officials. See also, Marc S. Harris, Inc., supra, at
p. 2 (noting the entry of a guilty plea by the individual owner of
a corporate contractor to a violation of 40 U.S.C. [sec] 328, which
sets forth CWHSSA's overtime compensation requirements, and [sec]
332, which provides that "any contractor or subcontractor" who
commits an intentional violation of CWHSSA shall be guilty of a
misdemeanor). [10]
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[11] under Section 5.12(a)(1). See, e.g., Marc S. Harris, supra;
A. Vento Construction, supra, at p. 15, and cases cited therein at
p. 7 n.4. The Board has explained that "[f]alsification of
certified payrolls is itself deliberate conduct that violates law
and regulation; furthermore, submission of falsified payrolls
raises a prima facie case that any accompanying underpayment of
wages or overtime compensation was deliberately undertaken."
Gaines Electric Service Company, Inc., WAB Case No. 87-48 (Feb. 12,
1991), at p. 4.
The ALJ in this case failed to debar the three principals of
the Facchiano firm at all, and ordered that Facchiano Construction
be debarred for 18 months rather than the full three-year debarment
period permitted by 29 C.F.R. 5.12(a)(1). However, the Board held
in A. Vento Construction (at p. 14) that "aggravated or willful"
violations of the labor standards provisions of the Related Acts
warrant an order imposing a three-year debarment period absent
extraordinary circumstances. See also A. Vento Construction, at p.
18 (Member Rothman, concurring) (falsification of payrolls warrants
a three-year debarment period). The Board finds no extraordinary
circumstances present here.
The basis stated by the ALJ for shortening the debarment
period to 18 months was the firm's previous debarment for
participation in HUD contracts. The obvious infirmity in the ALJ's
approach, however, is the fact that there simply was no effective
debarment of the Facchiano family business and its principals from
seeking or receiving contracts on HUD projects. See pp. 7-8, supra,
and ALJD at 9-10, 13; see also, A. Vento Construction, at p. 16.
Finally, we disagree with the contention that this matter
should be remanded to the ALJ for findings on defenses and
mitigating factors applicable to Michael Facchiano, Sr. For the
reasons discussed above, a three-year debarment period is warranted
for Facchiano Construction and its corporate officers (Michael
Facchiano, Sr. is president of Facchiano Construction).
Furthermore, Board precedent does not allow a responsible company
official to avoid debarment by claiming that the labor standards
violations were committed by agents or employees of the firm. See,
e.g., Marc S. Harris, Inc., supra, at p. 4, and cases cited
therein.
IV. ORDER
It is ordered that Facchiano Construction Company, Inc.; and
corporate officers Michael Facchiano, Sr., president; Michael
Facchiano, Jr., secretary; and John Facchiano, treasurer; shall be
ineligible, pursuant to 29 C.F.R. 5.12(a)(1), [11]
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[12]
to receive any contracts or subcontracts subject to any of the statutes
listed in 29 C.F.R. 5.1 for a period of three years. /FN4/
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
____________________________
Gerald F. Krizan, Esq.
Executive Secretary
DISSENTING OPINION OF SENIOR MEMBER ROTHMAN
I dissent from the part of the majority decision which changes
the Administrative Law Judge's 18-month debarment decision to three
years.
The ALJ concluded, "Since the corporation has not been shown
to have been on any projects other than those administered by HUD,
a further 18-month debarment would appear to be appropriate in the
circumstances."
HUD debarred Facchiano Construction and Michael Facchiano,
Jr., from participating in HUD programs for 18 months. During that
18-month period it appears that the Facchiano enterprise continued
to secure HUD contracts. However, I would not turn back the clock
to pick up what may be a breakdown in HUD enforcement. In this
case that matter would best be left to HUD to straighten out
internally.
Nor would I start the clock running again with a new full
three-year debarment, thus making the total debarment period with
respect to HUD work four and a half years, not three years.
The 18-month period should apply to all three Facchiano
principals, the father and two sons. I do not see the possibility
of their being relieved of debarment during the 18-month period.
[12]
/FN4/ Persons and firms placed on the ineligible list pursuant to
29 C.F.R. 5.12(a)(1) are permitted to request removal from the
ineligible list after completing six months of the debarment
period, pursuant to the procedure set forth at 29 C.F.R. 5.12(c).
[12]
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[13] I would affirm the decision of the Administrative Law Judge
imposing an 18-month debarment. If after that time any of the
principals should secure additional work and continue the practices
that led to this debarment, he could be quickly debarred for an
additional three years and other consequences could be considered.
[13]
