the Union argued
that the $17.57/hr. rate in the area wage determination (WD 94-2103 (Rev. 17)) should be applied
to the AKAL procurement contract because "if a new Wage Deter-mination is issued by the
Department of Labor that is greater than the CBA, the higher rate must be incorporated . . . . When
the CBA was put back in place the current wage of $17.57 should have [superseded] the
CBA." AR Tab C.
[Page 3]
Helm responded to the Union's letter, reaffirming the application of the
collectively-bargained $16.65/hr. wage rate to the AKAL contract:
Pursuant to 29 CFR 4.165(c) "if an applicable wage
determination contains a wage or fringe benefit provision for a class
of service employees which is higher than that specified in an existing
union agreement, the determination's provision must be observed for
any work performed on a contract subject to that
determination". . . . The "applicable wage
determination" in this section refers to the wage determination
properly incorporated in a contract. Based on the information
provided with your letter, it appears that the wage determination
applicable to AKAL was issued in accordance with section 4(c) of the
SCA to reflect the wage rates and fringe benefits set forth in AKAL's
collective bargaining agreement (CBA) with the United Government
Security Officers of America. Thus, the section 4(c) wage
determination would be the "applicable wage deter-
mination" in this instance.
AR Tab B (emphasis in original).
The Union appealed the Helm letter in a petition for review dated October 24,
1999. This appeal, which was docketed as ARB Case No. 00-007, was dismissed as premature in
response to a motion filed by the Administrator, who noted that the Helm letter did not represent a
"final decision[ ] of the Administrator." See 29 C.F.R. §8.1(a).
The Administrator's designee subsequently issued a "final
decision" letter on November 30, 1999, repeating verbatim the explanation offered
in the earlier Helm letter and commenting that he had "nothing further to add on this
matter." This second appeal followed.
DISCUSSION
The Administrative Review Board's consideration of the Administrator's
decisions under the Service Contract Act is in the nature of an appellate proceeding. 29 C.F.R.
§8.1(d). We review the Administrator's rulings to determine whether they are consistent with
the statute and regulations, and are a reasonable exercise of the discretion delegated to the
Administrator. Dep't of the Army , ARB Case Nos. 98-120 through 98-122 (Dec. 22, 1999),
slip op. at 16 (citing ITT Federal Services Corp. (II) , ARB Case No. 95-042A (July 25,
1996) and Service Employees Int'l Union (I) , BSCA Case No. 92-01 (Aug. 28, 1992).
[Page 4]
The issue presented in this case is whether the Administrator has correctly
interpreted the regulation at 29 C.F.R. §4.165(c) as it applies to the wage rates issued for the
FY99 procurement contract between the Marshals Service and AKAL Security.
As originally enacted in 1965, the Service Contract Act required only that the
Secretary of Labor (or his authorized representative, i.e. , the Administrator) establish
minimum SCA wage and fringe benefit rates consistent with locally-prevailing rates. Pub. L. 89-
286, §2, 79 Stat. 1034 (1965). However, this requirement was modified significantly
in 1972, with Congress adding a second and different wage determination mechanism for situations
in which service workers were unionized and employed under the terms of collective bargaining
agreements. Pub. L. 92-473, §1, 86 Stat. 789 (1972).
Under the amended Service Contract Act, the Secretary is charged with
establishing the minimum wage and fringe benefit rates to be paid "the various classes of
service employees" who work on federal service procurements. 41 U.S.C. §351 (a)(1),
(2). The amended statute provides two different mechanisms for setting SCA wage and fringe
benefit rates. At worksites "where a collective-bargaining agreement covers any such service
employees," the SCA rates for the succeeding contract period are determined "in
accordance with the rates . . . provided in such [collective bargaining] agreement." At
worksites where there is no collective bargaining agreement covering the service workers, the SCA
rates reflect the "prevailing rates for such employees in the locality." Id. ;
see also 41 U.S.C. §353(c). The "prevailing in the locality" wage
determinations commonly are known as "area wage determinations." Procedures for
issuing the two different types of wage determinations are found at 29 C.F.R. §§4.51-
4.53.
As noted above, during the FY98 contract period AKAL and the Union had
negotiated a collective bargaining agreement covering the security officers on the Marshals Service
contract. It therefore is clear, under both the statute and the regulations, that the correct wage
determination rate for the FY99 contract period was the collectively-bargained wage rate of
$16.65/hr. In this particular instance, the collectively-bargained wage rate was lower than
the Administrator's $17.57/hr. area wage determination rate for court security officers.
The Union argues that the area wage determination (WD 94-2103 (Rev. 17))
is an "applicable" wage determination within the language of 29 C.F.R. §4.165(c)
("if an applicable wage determination contains a wage or fringe benefit provision for a class
of service employees which is higher than that specified in an existing union agreement, the [wage]
determination's provision must be observed"), and that the lower hourly rate in the collective
bargaining agreement therefore cannot be applied to the Marshals Service contract. The
Administrator rejects this argument in his final decision letter. We affirm the Administrator's
decision, because the Administrator's interpretation of 29 C.F.R. §4.165(c) is consistent with
the plain language of the regulation.
[Page 5]
Section 4.165 provides general guidelines for complying with the wage and
fringe benefit requirements of the Act and its implementing regulations. The thrust of Subsection
4.165(c) is made clear from its opening sentences:
The prevailing rate established by a wage determination under the Act
is a minimum rate. A contractor is not precluded from paying wage
rates in excess of those determined to be prevailing in the particular
locality.
29 C.F.R. §4.165(c). This language essentially restates the overall purpose of the Act
to establish minimum wage rates for employees on federal service procurements, and not to
establish a fixed or mandatory wage rate.
The balance of the subsection addresses the interplay between the Labor
Department's SCA wage determination rates and collective bargaining agreements that may have
different wage or fringe benefit requirements (either higher or lower):
Nor does the Act affect or require the changing of any provisions of
union contracts specifying higher monetary wages or fringe benefits
than those contained in an applicable determination. However, if an
applicable wage determination contains a wage or fringe benefit
provision for a class of service employees which is higher than that
specified in an existing union agreement, the determination's
provision must be observed for any work performed on a contract
subject to that determination.
Id. This language merely reinforces the message of the opening sentences, i.e. ,
that (1) if a collective bargaining agreement has higher wage rates than the applicable SCA
wage determination, the Act does not require a reduction of those higher rates, and (2) that
a collective bargaining agreement containing lower rates does not trump the minimum wage
and fringe benefit requirements of a duly-issued SCA wage determination.
The Union's assertion that the area wage determination's $17.57/hr. wage rate
must be paid to the employees on AKAL's FY99 contract with the Marshals Service contract
assumes that the Washington, D.C., area wage determination is "applicable" to the
procurement, apparently under the theory that the area wage determination has some general
applicability to all federal service contracts in the locality. However, in order to reach this result we
would need to ignore entirely the language of both the statute and the SCA regulations. The Service
Contract Act directs the Secretary to issue "the minimum monetary wages [and fringe
benefits] to be paid the various classes of service employees" who will work on a service
procurement. 41 U.S.C. §351(a)(1). Ordinarily, for any particular class of service employees
on a given contract there is a single minimum wage rate, not multiple minima. Although the
amended statute has two different mechanisms for determining the minimum monetary wages, it is
[Page 6]
clear that these mechanisms are provided as mutually exclusive alternatives: either the
"prevailing in the locality" wage rate applies to a procurement , or the
collectively-bargained wage rate applies, depending on the facts applicable to the procurement.
Id. ; see also 29 C.F.R. §§4.3, 4.4, 4.50. In the case before us, it is
undisputed that a collective bargaining agreement existed between the Union and AKAL during the
FY98 contract period; thus, we concur with the Administrator's finding that the only wage
determination "applicable" to AKAL's FY99 follow-on contract would be a wage
determination based on the collectively-bargained wage rates.
This view of the 29 C.F.R. §4.165(c) regulation (i.e. , that there
is only one wage determination rate "applicable" to a procurement contract for any given
job classification) is supported by its legislative history. The regulation was first promulgated in
1967, in a form only slightly different from that which exists today. See 32 Fed. Reg. 10132,
10143 (July 8, 1967). Because the 1967 regulation pre-dates the 1972 amendments that added the
special wage determination mechanism applicable to unionized work sites, it was developed
at a time when only one type of wage determination was being issued by the Administrator: the
"prevailing in the locality" wage determinations. Because there was only one type of
wage determination in existence, the last sentence of the 1967 regulation warned generally of
situations in which collectively-bargained rates might be lower than the rates found in
"a [wage] determination" issued by the Administrator, using this
language:
However, if a [wage] determination for a class of
service employees contains a wage or fringe benefit provision which
is higher than that specified in an existing union agreement, the
determinations's provision will prevail for any work performed on a
contract subject to the determination.
Id. ; 29 C.F.R. §4.165(c) (1968) (emphasis added).
When the text of the §4.165 regulation was updated in 1981, several
years after the successorship provisions had been added to the Act, the 1967 reference to
"a [wage] determination" was modified in a manner that specifically
addresses the problem raised in this case: that multiple wage rates for a given job classification
would be issued by the Wage and Hour Division within a locality on different procurement contracts,
depending upon whether the "prevailing in the locality" approach or the collectively-
bargained approach was used. The 1981 modifications produced the regulation in its current form:
However, if an applicable wage determination
contains a wage or fringe benefit provision for a class of service
employees which is higher than that specified in an existing union
agreement, the determination's provision must be observed for any
work performed on a contract subject to that determination.
46 Fed. Reg. 4320, 4334, 4363 (Jan. 16, 1981); 29 C.F.R. §4.165(c) (1999) (emphasis
added).
[Page 7]
Thus the key question under the modified §4.165 is not whether a wage
determination exists that has wage rates higher than are found in a collectively bargaining agreement,
but specifically whether the applicable wage determination has higher wage
rates.
In light the plain language of the regulation and its legislative history, the
Administrator's interpretation of the regulation is clearly correct: the only wage determination
"applicable" to the Marshals Service procurement was the wage determination based on
the collectively-bargained rate of $16.65/hr. Accordingly, the Administrator's decision is
AFFIRMED and the Union's petition for review is DENIED.
SO ORDERED.
PAUL
GREENBERG
Chair
CYNTHIA L.
ATTWOOD
Member
[ENDNOTES]
1 This appeal has been assigned to a panel
of two Board members, as authorized by Secretary's Order 2-96. 61 Fed. Reg. 19,978 §5 (May
3, 1996).
2
The facts in this case do not appear to be in dispute, and we therefore rely liberally on the representations
found in the Union's correspondence with the Wage and Hour Division's staff. We note with concern,
however, that the Administrative Record in this case is missing key materials that apparently were
considered by the Administrator when issuing the wage determinations, such as the SF (Standard Form)-
98, "Notice of Intention to Make a Service Contract," that presumably was submitted to the
Division by the Marshals Service. See 29 C.F.R. §4.4. Moreover, although it is clear that
the Wage and Hour Division was aware of the collectively-bargained wage rate, there is nothing in the
case record indicating when the labor agreement was negotiated, or when or how it came to the attention
of the Division's staff. Similarly, the wage determination based on the collective bargaining agreement
that ultimately was issued by the Division is missing from the record.
Because the undisputed key facts in this case can be gleaned from the sparse materials provided by the
Administrator, in this instance we are able to decide this case without ordering the Administrator to
supplement the record. We note, however, that it is difficult for the Board to perform its review when
the record forwarded by the Administrator is deficient.
3
This regulation provides:
(c) The prevailing rate established by a wage determination under the Act is a minimum rate. A
contractor is not precluded from paying wage rates in excess of those determined to be prevailing in the
particular locality. Nor does the Act affect or require the changing of any provisions of union contracts
specifying higher monetary wages or fringe benefits than those contained in an applicable determination.
However, if an applicable wage determination contains a wage or fringe benefit provision for a class of
service employees which is higher than that specified in an existing union agreement, the determination's
provision must be observed for any work performed on a contract subject to that determination.
29 C.F.R. §4.165(c).