A.S. McGAUGHAN CO., INC., WAB No. 92-17(WAB May 26, 1993)
CCASE:
A.S. McGAUGHAN CO., INC.
DDATE:
19930526
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
A.S. McGAUGHAN CO., INC. WAB Case No. 92-17
Prime Contractor
With respect to subcontractor Gebhardt, Inc.,
and application of Davis-Bacon labor standards
to General Wage Decision No. DC 88-1 to construction
of dual purpose sedimentation basins at Blue Plains
Wastewater Treatment Plant
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: May 26, 1993
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of prime contractor A.S. McGaughan Co., Inc. ("McGaughan"), "for
the use and benefit" of second tier subcontractor Gebhardt, Inc.
("Gebhardt"), and Gebhardt, for review of a September 29, 1992
decision of the Acting Administrator of the Wage and Hour Division.
The Board heard oral argument in this matter on May 4, 1991.
Petitioners challenge the Acting Administrator determination that
heavy construction wage rates, and not sewer and water wage rates,
apply to work performed by Gebhardt. For the reasons stated below,
the petition for review is denied. [1]
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[2] I. BACKGROUND
Pursuant to a bid solicitation advertised on August 8, 1988,
McGaughan was awarded a contract on November 16, 1988 with the
Government of the District of Columbia, Department of Public Works
("DPW") to construct dual purpose sedimentation basins at the Blue
Plains Wastewater Treatment Plant. The contract was subject to the
requirements of the Davis-Bacon Act, as amended, 40 U.S.C. 276a
et seq. McGaughan subcontracted with Parker-Kirlin Joint Venture,
which subcontracted with Gebhardt for the furnishing and
installation of a storm sewer, and related excavation and
backfilling.
The contract specifications contained the applicable wage
determination, General Wage Decision DC 88-1 (Modification Nos.
1-12), which was incorporated as an addendum to the specifications.
Wage Decision DC 88-1 provides building, heavy, highway, sewer and
water wage rates for the Washington Metropolitan Area. The wage
decision describes the four categories of construction as follows:
BUILDING CONSTRUCTION PROJECTS (does not include single
family homes and apartments up to and including four (4)
stories), EXCLUDING INDEPENDENT CITY OF ALEXANDRIA; HEAVY
CONSTRUCTION PROJECTS (does not include Sewer and Water
Lines Construction Projects); HIGHWAY CONSTRUCTION
PROJECTS in DISTRICT OF COLUMBIA ONLY; SEWER AND WATER
LINES CONSTRUCTION PROJECTS IN DISTRICT OF COLUMBIA AND
MONTGOMERY COUNTY, MARYLAND ONLY.
Prior to award of the contract, the DPW determined that heavy
construction rates should apply to all work under the contract.
Special Provision No. 27 of the contract provides that "General
Wage Decision No. 88-1 and Modifications 1-9 are bound herein and
contain the specific applicable wage rates, which are Heavy
Construction Rates." The record indicates that McGaughan was also
advised of the applicability of heavy construction wage rates at
the preconstruction conference.
In September 1991, after an investigation of Gebhardt's
performance on the contract, DPW found that $25,067.63 in back
wages were owed because of Gebhardt's underpayment of the
prevailing wage rates. Gebhardt had paid its employees the rates
listed in General Wage Decision DC 88-1 for "Sewer and Water Lines
Construction," rather than the rates listed for "Heavy
Construction." Gebhardt then objected to application of heavy
construction rates to its work under the contract, arguing that
application of sewer and water wage [2]
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[3] rates was appropriate because the work involved small equipment and
excavation to relatively shallow depths.
In a final decision issued on September 29, 1992, the Acting
Administrator agreed with DPW's determination that heavy
construction wage rates were applicable to the entire contract,
including the work done by Gebhardt. The Acting Administrator
noted that contractors had been advised of DPW's determination
regarding application of the heavy construction wage rates in the
contract documents and at the preconstruction conference. She
stated that DPW's determination was in accordance with All Agency
Memoranda ("AAM") Nos. 130 and 131, regarding determination of
"projects of a character similar" for wage determination purposes.
The Acting Administrator further stated that even if the work done
by Gebhardt could be considered to be water and sewer line
construction, that work ($886,000) represented only 1.3% of the
overall cost of the project ($66,423,000). AAM 130 and 131
explain, she stated, that "`multiple schedules are issued if the
construction items are substantial in relation to project cost --
more than approximately 20%."'
II. DISCUSSION
In her September 29, 1992 decision, the Acting Administrator
resolved the merits of this case and did not address whether
Gebhardt had timely raised its contention that the water and sewer
line rates were the appropriate rates for the work performed by
Gebhardt's employees. Before this Board, however, counsel for the
Acting Administrator leads off the argument that the Acting
Administrator's decision should be affirmed with the contention
that McGaughan has essentially made an untimely request for
modification of wage rates in the applicable wage determination.
Counsel notes that the solicitation contained the following
provision: "General Wage Decision No. 88-1 and Modifications 1-9
are bound herein and contain the specific applicable wage rates,
which are Heavy Construction Rates." With this unambiguous
statement, counsel argues, both McGaughan and other bidders were on
notice that only the heavy construction wage rates in WD No. 88-1
applied to the work performed on the project. Any questions about
the applicability of heavy construction rates, or sewer and water
line rates, should have been resolved before contract award,
counsel argues, but McGaughan did not challenge the application of
heavy rates until long after award of the contract. "Since
McGaughan's request to change or modify the wage rates contained in
the applicable wage determination was not made prior to the award
of the contract," counsel concludes, "its request was clearly
untimely under both Wage Appeals Board case law and the
Department's regulations."
Counsel's argument is similar to the argument made by the
Acting Administrator in Utility Services, Inc., WAB Case No. 90-16
(July 31, 1991). The petitioner in that case argued the water and
sewer line rates in the applicable [3]
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[4] wage determination, rather than the building construction rates in
the same wage determination, were the appropriate rates for the utility
work performed by the petitioner. Counsel for the Acting Administrator
invoked Board decisions (e.g., Granite Builders, Inc., WAB Case No.
85-22 (Jan. 27, 1986)) and Department regulations (29 C.F.R. 1.6(c)(3))
in support of the argument that the petitioner's request for sewer and
water line rates should be rejected because the request was made well
after award of the prime contract and the utility subcontract.
Upon consideration of the Acting Administrator's argument in
Utility Services, Inc., the Board observed that the case did not
involve a challenge to the substantive correctness of the wage
rates and classifications in the applicable wage determination, but
instead involved the issue of which rates in that wage
determination applied to the work done by the petitioner. The
Board added:
Regardless of whether the Board precedent and the
regulations cited by counsel for the Acting Administrator
strictly apply to such a question, we think that counsel
properly emphasized the responsibility of contractors to
resolve questions of applicable wage rates before
contract award. The exercise of that responsibility,
however, presupposes that contractors have adequate
notice that a question requiring resolution does exist.
As in Utility Services, Inc., the instant case does not
present a challenge to the rates and classifications in the
applicable wage determination, but rather involves a question of
which of the rates in that wage determination -- the heavy rates or
the water and sewer line rates -- are applicable to the work
performed by Gebhardt's employees. Unlike Utility Services, Inc.,
however, it is patent in the instant case that the contractors had
ample notice -- in the form of the above-cited provision in the
solicitation and the contract -- that only heavy construction rates
applied to the work performed on the project. Any question about
the application of those rates should have been raised prior to
award of the contract. Given the failure to raise any such issue
until well after contract award, the Board concludes that the
instant request for application of water and sewer line rates to
the work performed by Gebhardt's employees must be regarded as
untimely. To rule otherwise would be unfair to other bidders who
also received clear notice that heavy construction rates were
applicable to work performed on the project. Cf. Dairy
Development, Ltd., WAB Case No. 88-35 (Aug. 24, 1990) (discussing
the policy set forth in Board case law and Department regulations
regarding the timeliness of substantive challenges to wage
determinations, the Board explained that "[m]anifest injustice to
bidders would result if the successful bidder on a project could
challenge his contract's wage determination rates after all other
competitors were excluded from participation." [4]
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[5] Accordingly, the petition for review is denied; the Acting
Administrator's decision is affirmed.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [5]
