On September 6, 1993 the Air Force exercised
its option with contract performance to begin on October 1, 1993. Performance on the contract's new
option year began without the Wage and Hour Division issuing a new wage determination. After
consulting with representatives of the parties, on December 21, 1993 the Wage and Hour Division
issued Wage Determination 78-0389 (Rev. 21) which was to govern the contract. The wage
determination incorporated the wage and benefit rates contained in the new CBAs submitted to the Air
Force on September 18, 1993.
[Page 3]
Counsel for the Unions raised the question with the Administrator whether the
new CBAs were submitted too late under DOL's regulations to serve as the basis for the wage
determination. Under 29 C.F.R. § 4.1b(b), in order for a new CBA to serve as the basis for a
wage determination under Section 4(c) of the Act, the parties must notify the contracting agency of the
terms of the new agreement prior to the exercise of the renewal option. This limitation does not apply
unless the contracting agency has given the parties at least thirty days notice of the anticipated
procurement date. The Administrator, by letter of November 4, 1994, withdrew the wage
determination finding that it was issued based on the mistaken belief that the Air Force had given
insufficient notice to ITT of the anticipated procurement date, and therefore she found that the new
CBA could not serve as a basis for a new wage determination. The Administrator then issued a new
wage determination based on the previous CBA which she determined "had expired but had not
terminated."
On December 16, 1994, ITT filed with the Board of Service Contract Appeals a
petition seeking review of the Administrator's November 4, 1994 ruling. While this petition was
pending, counsel for ITT filed additional information with the Administrator which raised questions
regarding the correctness of her ruling. Counsel for the Administrator requested that the Board remand
the matter to the Administrator for reconsideration in light of this new information. By order of January
27, 1995, the Board granted the Administrator's request and remanded the matter to the Administrator
for reconsideration to be completed by March 28, 1995. Upon the Administrator's request the Board
subsequently extended this date to April 7, 1995.
After providing the Unions an opportunity to respond to the information
submitted by ITT, the Administrator issued a final ruling in this matter on April 7, 1995. Based on her
understanding of the requirements of the National Labor Relations Act, 29 U.S.C.§ 151 et seq.,
the Administrator ruled that once bargaining had reached an impasse the employer was no longer
bound by the terms and conditions of an expired collective bargaining agreement and therefore she
reversed her earlier ruling that the CBA had expired, but had not "terminated." Because the
expired agreement did not cover the employees during the term of the predecessor contract, the
Administrator ruled it could not serve as a basis for a wage determination under Section 4(c) of the
SCA. Section 4(c) not being applicable, the Administrator proceeded to issue an area wage
determination to govern the contract. The Unions then petitioned the Board for a review of that ruling.
DISCUSSION
The issue for the Board is whether the Administrator acted contrary to law or
regulation in failing to issue a Section 4(c) wage determination for the contract in question. The SCA
provides for two types of wage determinations. Both types are authorized under Section 2(a) of the
SCA: wage determinations are to contain the rates as determined by the Department of Labor "in
accordance with prevailing rates for such employees in the locality, or, where a collective
bargaining agreement covers any such employees, in accordance with
[Page 4]
the rates for such employees provided for in such agreement, including prospective wage
increases provided for in such agreement . . . " 41 U.S.C. § 353(c). (Emphasis
added). The first type of wage determination referred to in the first clause of the statute quoted above is
commonly known as an area wage determination. The second wage determination referred to (as
emphasized above) is commonly known as a Section 4(c) determination.
Section 4(c) determinations were authorized by the 1972 amendments to the
SCA which provided in relevant part:
No contractor or subcontractor under a contract, which succeeds a contract
subject to [the SCA], and under which substantially the same services are furnished, shall pay
any service employee under such contract less the wages and fringe benefits including accrued
wages and fringe benefits, and any prospective increases in wages and fringe benefits provide
for in a collective-bargaining agreement as a result of arm's length negotiations, to which such
service employees would have been entitled if they were employed under the predecessor
contract.
41 U.S.C. § 353(c)
Petitioners do not contest that each exercise of an option year by the Air Force
constitutes a new contract for the purposes of this provision. This Board has previously held that the
express language of Section 4(c) requires that a successor contractor be liable for the CBA wages of a
predecessor contractor for a period of one successor contract only. International Union of
Operating Engineers Local 387 , BSCA Case No. 92-23, Jan. 27, 1993. The Administrator's
ruling that a CBA that terminates prior to the completion of a predecessor contract cannot serve as the
basis for a Section 4(c) wage determination is not on its face inconsistent with the statute.
Petitioners contend that there are good policy reasons for interpreting the statute
differently. Allowing a terminated collective bargaining agreement to continue to serve as the basis for
Section 4(c) wage determinations, Petitioners contend, serves the important legislative purpose of
insulating the collective bargaining process from undue interference by the government through DOL.
Counsel for the Administrator responds that requiring the terms of a terminated collective bargaining
agreement to be carried forward indefinitely tips the negotiating balance in favor of one side and
consequently, poses the exact danger of undue interference by the Department of which Petitioners
warn.
The Board of Service Contract Appeals has previously recognized on
numerous occasions that the Administrator is granted broad discretion in interpreting the SCA.
Service Employees International Union, AFL-CIO, CLC , BSCA Case No. 92-01, Aug.
28, 1992. The express language of Section 4(c) certainly does not dictate an interpretation different
[Page 5]
from the Administrator's. The Administrator's reading of this provision is reasonable and not a
departure from accepted canons of construction. Therefore, the Administrator's interpretation is
accorded great weight. The Board should not substitute its own policy preferences for those of the
official in whom primary responsibility for enforcing the statute is vested. See A. Vento
Construction , WAB Case No. 87-51, Oct. 17, 1990 and Titan IV Mobile Service
Tower , WAB Case No. 89-14, May 10, 1991.
Petitioners' reliance on general statements of Congressional intent found in the
legislative history is misplaced. These statements are of little utility in giving meaning to the very specific
statutory language employed in Section 4(c). Read in the most favorable light to the Petitioners, these
statements merely suggest the possibility that these particular legislators might have attempted to
address this issue in a manner favorable to Petitioners if they had foreseen the issue at the time that the
statute was drafted. The Administrator is governed by express words of the statute actually enacted
and if the meaning she gives the statute is reasonable and consistent with the implementing regulations, it
is to be upheld. That is the case in this matter and therefore, the Board is compelled to affirm her ruling.
Additionally, Petitioners contend that a contractor's sole remedy for seeking a
change in the wages and benefits paid under a terminated CBA is through a "substantial
variance" proceeding under 29 C.F.R. § 4.10(b)(3)(ii). Petitioners' position finds no
support in the regulations or past practice of the Wage and Hour Division. To compel an employer to
resort to a substantial variance proceeding, rather than the collective bargaining process, to determine
wages and benefits undermines the preference for collective bargaining that Section 4(c) embodies.
ITT, by withdrawing its substantial variance request under Section 4(c) at the Unions' urging during
negotiations, reflected this preference. If the Board were to find substantial variance proceedings to be
the exclusive remedy available to successor contractors, then the Board would indeed be undermining
the collective bargaining process and interjecting the Department into labor-management negotiations.
For the forgoing reasons, the Administrator's April 7, 1995 decision is affirmed.
SO ORDERED.
DAVID A. O'BRIEN
Chair
KARL J. SANDSTROM
Member
JOYCE D. MILLER
Alternate Member
[ENDNOTES]
1 Petitioners filed this matter with the
Board of Service Contract Appeals. On April 17, 1996, the Secretary of Labor redelegated authority
to issue final agency decisions under, inter alia , the Service Contract Act and its implementing
regulations to the newly created Administrative Review Board.
Secretary's Order 2-96 (Apr. 17, 1996), 61 Fed. Reg. 19978, May 3, 1996
(copy attached). Secretary's Order 2-96 contains a comprehensive list of the statutes, executive order,
and regulations under which the Administrative Review Board now issues final agency decisions. A
copy of the final procedural revisions to the regulations (61 Fed. Reg. 19982), implementing this
reorganization is also attached.
2 See , discussion
infra at p. 5.