OFCCP v. Coldwell, Banker & Co., 78-OFC-12 (Sec'y Aug. 14, 1987)
DATE: August 14, 1987
CASE NO. 78-OFCCP-12
U.S. DEPARTMENT OF LABOR, OFFICE OF FEDERAL CONTRACT COMPLIANCE
PROGRAMS,
PLAINTIFF,
v.
COLDWELL, BANKER AND COMPANY,
DEFENDANT.
BEFORE: THE SECRETARY OF LABOR
DECISION AND FINAL ADMINISTRATIVE ORDER
BACKGROUND
This matter arises under Executive Order No. 11,246, as
amended (the Order), and the regulations issued by the Secretary
of Labor under the Order, 41 C.F.R. Chapter 60 (1986) (the
Regulations). Plaintiff, the Office of Federal Contract
Compliance Programs, United States Department of Labor (OFCCP),
and the General Services Administration (GSA),[1] filed a
complaint on August 29, 1973, alleging that Defendant, Coldwell,
Banker and Company, failed to develop, maintain, and submit an
acceptable affirmative action program at each of its
establishments in accordance with the requirements of the Order
and the Regulations. 41 C.F.R. § 60-1.40 and 41 C.F.R. Part
60-2.
After a formal hearing, a recommended decision was issued by
the Administrative Law Judge (ALJ) on June 3, 1979 (R.D.). The
ALJ found that Defendant is a government subcontractor because it
has performed, undertaken or assumed a portion of the
contractors, that is the lessor's, obligation under the lease,
and that Defendant has violated the Executive Order and
regulations by failing to submit an acceptable affirmative action
program upon request. The ALJ also held that the regulations
must be interpreted in a reasonable manner so that they only
require Defendant to submit one national or several regional
affirmative action programs covering each of its establishments
rather than a separate affirmative action program for each
establishment. In addition, the ALJ held that a Title VII
consent decree entered into by Defendant did not constitute an
acceptable affirmative action program under the executive Order.
The ALJ also held that the Executive Order and regulations
[PAGE 2]
do not constitute an unconstitutional impairment of contract, and
that the obligations imposed by the Executive Order and
regulations do not impose an unreasonable burden on Defendant in
violation of the Due Process clause of the Fifth Amendment. The
ALJ rejected Defendant's other constitutional arguments as being
without merit and he recommended that Defendant be debarred from
future government contracts and subcontracts immediately.
Preliminarily, Coldwell, Banker excepts to the ALJ's finding
that Coldwell, Banker Property Management Company is a division
of Coldwell Banker and Company. That finding is fully supported
by the testimony and documents in the record, and defendant has
not cited any part of the record inconsistent with the ALJ's
finding. That exception, therefore, is denied.
Coldwell, Banker excepts to the ALJ's finding that it is
covered by the requirements of the Order and the Regulations that
certain government subcontractors develop and maintain written
affirmative action programs and submit them upon request for
review by OFCCP. Coldwell, Banker, and some of its subsidiaries
and divisions, have entered into agreements with owners of
commercial property for the general management of that
property.[2] Where such property is leased to Federal government
agencies as tenants, the owners of the property are government
"prime contractors" subject to the requirements of the Order and
Regulations.[3]
Coldwell, Banker argues that it is not a "government
subcontractor"[4] by virtue of the property management
agreements with owner/contractors who lease real property to the
Federal government because it acts only as the agent of the owner
in providing the services of others to ensure that the owner's
building is maintained in a manner consistent with the
requirements of the government lease/contract, and has neither
furnished supplies or services necessary to the performance of a
government contract nor "performed, undertaken, or assumed" any
of the owner's obligations.
Coldwell, Banker also excepts to the finding of the ALJ that
it meets the criteria for coverage under the written affirmative
action program requirement, that is, having 50 or more employees
and a contract of $50,000 or more. 41 C.F.R. § 60-1.40;
§ 60-2.1.
If Coldwell, Banker is found to be a government
subcontractor covered by the written affirmative action program
requirement, defendant concedes its efforts do not meet all of
the specific requirements of the Regulations, but asserts as
affirmative defenses that it is in "substantial" compliance, and,
in the alternative, that it is an entity to which the regulations
should not be applied. The defendant would in any event have me
postpone application of the Order and the Regulations, and thus
any finding of actual violation, until the expiration date of a
[PAGE 3]
Title VII consent order, which it entered into in 1976. If all
these arguments are rejected, as the ALJ recommended, Defendant
urges me to interpret the regulations so as not to require it to
develop a separate affirmative action program for each and every
one of its 136 locations regardless of size. The ALJ recommended
that Coldwell, Banker be permitted to develop AAPs covering a
number of locations on a regional basis, or a nationwide AAP.
OFCCP excepts to this recommendation.
OFCCP also excepts to the ALJ's recommendation that I only
order Defendant debarred from future contracts or subcontracts.
OFCCP asks that all of Defendant's existing Government contracts
and subcontracts be cancelled when the Secretary's order is
issued.
DISCUSSION
Coverage of Coldwell, Banker As a Subcontractor.
Coldwell, Banker is the managing agent for, among other
locations, "Park Place" in Seattle, Washington, of which the
Environmental Protection Agency (EPA) is a tenant.[5] Pursuant
to the lease with EPA, the owners (prime government contractors)
of Park Place agreed to provide the agency with heat,
electricity, water, janitorial services and supplies, and related
services and supplies. Coldwell, Banker contends that in acting
solely as an agent of the owner, it did not assume any of the
owner's duties toward the tenant, but merely acted in the name of
the owner to engage subcontractors for the performance of those
obligations.[6]
If all defendant did was hire employees for the owner and
contract for services on behalf of the owner, it would be covered
by the definition of "subcontractor." 41 C.F.R. § 60-1.3.
The management agreement between the owner and Coldwell, Banker
is a contract under which a portion of the contractor's (owner's)
obligation to the Federal government tenant is performed
(subparagraph (2) of the definition) and that performance is a
service necessary to the performance of the prime contract
(subparagraph (1) of the definition). In order to perform
repairs, render services and arrange for the provision of
services by others, employees must be hired, and service and
utility contracts must be entered into. If the owner managed the
building itself, it would have to have a general manager and
other office and clerical personnel to carry out its contract
obligations. Instead, it has contracted with Coldwell, Banker to
carry out those functions, or in other words it has subcontracted
with them under its government prime contract. Moreover,
Coldwell, Banker directly supervises the manner in which services
are provided. The lease for the EPA's space in Park Place
specifically provides that the owner is to provide "labor,
material and supervision" (emphasis added) with respect to
a
[PAGE 4]
number of the services to be provided. Clearly, Coldwell, Banker
has assumed a central obligation of the government contractor,
and meets the definition of a government subcontractor.
Defendant's exceptions to the ALJ's conclusions on the grounds
they are not supported by the evidence, are denied.
Coldwell, Banker stipulated that it had over 50 employees
and had received over $50,000 for services under the Park Place
management agreement related to the Federal lease on that
property. Coldwell, Banker excepted to the ALJ's conclusion that
it met the conditions for coverage under the written affirmative
action program requirement as not being supported by the record
but did not cite any portions of the record which would
contradict these conclusions drawn from the stimulation.
I therefore find that Defendant is a government
subcontractor subject to the Order and the Regulations, and is
required to develop written affirmative action programs under 41
C.F.R. § 60-1.40 and 41 C.F.R. Part 60-2. Defendant's
exceptions to the ALJ's finding of fact and conclusions of law to
this effect, on the grounds they are not supported by the
evidence, are denied.
Compliance With Revised Order No. 4 (41 C.F.R. Part 60-2)
Coldwell, Banker does not contend that it has developed
affirmative action programs in the detail set forth in Revised
Order No. 4. Defendant asserts as an affirmative defense in the
nature of a justification, however, that it is complying in good
faith with a consent decree, monitored by a Federal court, which
requires an affirmative action effort Defendant alleges is in
"substantial" compliance with the Regulations.
Assuming compliance with a consent decree entered under
other laws could meet the requirements of the Order and
regulations, the decree would have to cover all aspects of
affirmative action dealt with in Revised Order No. 4 and require
at least as much of Defendant in terms of self-analysis, goals,
and good faith effort. The decree Defendant would have me rely
upon here, Conley v. Coldwell, Banker, Inc., Civ. No. 74-
3759 MML (C.D. Cal. 1976), is limited in scope, however, and
defendant has not established that supplemental efforts for its
employees not covered by the decree are as effective as are the
actions required by the regulations in fulfilling the goals of
the Order.
For example, the decree does not require affirmative action
with respect to certain management employees. Defendant argues
that the consent decree binds all officers of the company to
comply with it. However, it is clear that this provision of the
decree does not require Coldwell, Banker to consider the makeup
of its management ranks for affirmative action goals and
timetables purposes; it requires only that management comply with
[PAGE 5]
the court order.
The consent decree does not apply to any employees of
companies acquired by Defendant after 1975, as opposed to
employees hired for internal expansion. The decree has no goals
for minorities in the sales group and no goals at all for women
except in sales training programs. The decree does not provide
for goals for minorities other than Blacks and Spanish-surnamed
Americans. Native Americans and Asian and Pacific Islanders are
major groups in Defendant's areas of operation but they are not
covered by the decree.
With respect to women, Defendant asserts there is no need
for further efforts in the involved subsidiaries and positions
because the overall percentage of women is very high.[7] This
does not assure that women are represented appropriately in each
type of available job (e.g., loan counselor and file clerk are
lumped together). Under an AAP, Defendant would complete the
required workforce and underutilization analyses which quickly
would reveal if there were any deficiencies in female utilization
overlooked as a result of the overall impression of adequate
representation of women in Defendant's workforce as a whole.
Similarly, the decree lumps all sales positions together, and
provides for no goals and timetables at all for this group,
except for sales training positions.
The decree's hiring goals are another major deficiency of
the decree. For support personnel, the decree establishes one
set of goals for a group of facilities located within five
California counties, and another set of goals for all other
facilities. The decree further provides that, for either group,
when the goals are exceeded for the group as whole, the goals
automatically expire. Thus, in the case of the California group,
for example, the entire goal could be met through hiring in one
labor area for one set of Defendant's facilities, without regard
to the extent to which Defendant's workforce in other areas
reflects full utilization of available minorities. Obviously,
this defect is even more dramatic for the other group, which
covers the rest of the country.
Coldwell, Banker suggests that the Department of Labor
should voluntarily abstain from enforcing the Executive Order
against it until the Title VII Consent Decree discussed above has
terminates. It is clear that the consent decree here is
inadequate as compliance with the Order and Regulations. Thus,
even assuming abstention is an appropriate policy under the
Executive Order in certain cases, it is inappropriate here.
Meaning of the Term "Establishment" in 41 C.F.R. §§ 60-
1.40(a) and 60-2.1(a)
Contractors required to develop written affirmative action
[PAGE 6]
programs are required to develop a program for each of their
establishments, 41 C.F.R. § 60-1.40(a), 41 C.F.R. § 60-
2.1(a), and to maintain a copy of the separate affirmative action
program for each establishment at the appropriate local personnel
office, 41 C.F.R. § 60.-1.40(c). The ALJ recommended that I
find literal interpretation of the Regulations too burdensome in
this case, and that I interpret the Regulations to allow
defendant to submit a single national AAP, or several regional
AAPs covering all its establishments, but not to require
defendant to develop and submit an individual AAP for each and
every establishment. R.D. at 11-12. This recommended
interpretation is excepted to by each party, for different
reasons.
Defendant argues that the Regulations should be construed
literally. This would result in a very substantial burden upon
Defendant, as suggested by the ALJ -- so much so that Defendant
argues that the Regulations should not be applied to it at all.
Plaintiff argues that it is incorrect to interpret this very
basic requirement in a manner which would allow any company to
operate with only a single affirmative action program. Plaintiff
also argues that there are opportunities under the Order and
Regulations for Defendant to develop a flexible affirmative
action format, such as a national or regional approach, under
which small related facilities could be grouped as one
"establishment." Since defendant did not avail itself of the
opportunity to seek OFCCP approval of such an alternative, OFCCP
argues that a separate AAP for each establishment should be
required now.
The Regulations require an affirmative action program "for
each of [a contractor's] establishments," 41 C.F.R. § 60-
1.40(a), and provide that the contractor "shall maintain a copy
of separate affirmative action compliance programs for each
establishment...at each local office responsible for the
personnel matters of such establishment." 41 C.F.R. § 60-
1.40(c). It seems clear that, under the Regulations, contractors
must have a separate AAP for each establishment, but the term
"establishment" is not defined. It would be helpful, therefore,
to look to the definition and interpretation of "establishment"
in other related areas of labor law for guidance.
Under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
20OOe-2000(e)(17) (1982), any employer with 100 or more employees
must file an Equal Employment Opportunity-l (EEO-1) report
annually for the business as a whole and for each establishment.
29 C.F.R. § 1602.7 (1986). "Establishment" is defined in
the Instruction Booklet for the EEO-1 form (reprinted in 8 Fair
Employment Practices Manual at page 441:275) as "an economic unit
which produces goods or services, such as factory, office, store,
or mine. In most instances, the establishment is at a single
[PAGE 7]
physical location and is engaged in one, or predominantly one,
type of economic activity.... Units at different physical
locations, even though engaged in the same kind of business
operation should be reported as separate establishments."
Establishment is also an important term used in several
sections of the Fair Labor Standards Act, 29 U.S.C. §§
201-217, (e.g., §§ 3(r), 3(s), 6(d), 7(i), 13(a) and
(b), and 14) which, although not defined in the statute, is
defined in Wage and Hour Administration regulations as a
"distinct physical place of business." 29 C.F.R. § 779.23
(1986). That definition is taken from a Supreme Court decision
interpreting the minimum wage and overtime exemption in section
13(a)(2) for any "retail or service establishment." Phillips
v. Walling, 324 U.S. 490 (1945). There, the Court said that
"Congress used the word 'establishment' as it is normally used in
business and in government as meaning a distinct physical place
of business...", id. at 496, and noted that this was its
common usage in census reports, business analyses, regulations
and tax and regulatory statutes.
However, some recent cases have held that "there may be
situations in which a single establishment could include
operations at more than one physical location." Brenman v.
Goose Creek Consol. Ind. Sch. Dist., 519 F.2d 53, 58 (5th
Cir. 1975). The standard suggested by the United States Court of
Appeals for the Fifth Circuit in Goose Creek for deciding
when physically separate facilities should be treated as one
establishment is the existence of a central authority for
employment and personnel decisions, including the power to set
wages and assign personnel to different locations. See also
Foster v. Arcata Associates, 772 F.2d 1453, 1464-65 (9th Cir.
1985) (two offices did not constitute one "establishment" where
they are hundreds of miles apart, operationally distinct and
independently managed); Marshall v. Dallas Independent School
District, 605 F.2d 191, 194 (5th Cir. 1979) (following and
applying Goose Creek); Alexander v. University of
Michigan-Flint, 509 F.Supp. 627 (E.D. Mich. 1980).
A principle that can be distilled from these analogous areas
of law is that each physically separate facility is prima
facie an "establishment" for purposes of 41 C.F.R.
§§ 60-1.40 and 2.1, but that, in appropriate
circumstances, several facilities may be grouped and treated as
one establishment. Since there is not enough information in the
record to determine whether any of Coldwell, Banker's locations
should be grouped as an establishment or establishments, my order
will afford Coldwell, Banker an opportunity to propose grouping
of facilities and to submit an AAP for each group of facilities
as "establishments." In addition to the guidelines for such
grouping derived from the
[PAGE 8]
FLSA cases discussed above, there are some additional guidelines
specifically relevant to the process of developing affirmative
action goals and timetables which should be considered in
developing AAPs for grouped facilities. One factor which may be
considered in favor of grouping facilities under one AAP is
whether the facilities are in the same labor market or recruiting
area, but facilities in different labor market areas should not
be grouped together. Also, affirmative action efforts in each
AAP must be relevant to remedying the underutilization and other
problems identified for each specific facility covered by one
plan, and care must be taken that minorities and women are not
concentrated in some facilities and excluded from others. Small
facilities might be combined for goals-setting purposes where a
small number of employees would result in meaningless goals of a
fraction of a person.
Lack of Coverage Based on Absence of Choice By Defendant to
Become a Subcontractor and Unconstitutionality of Coverage
Coldwell, Banker argues that it is an entity to which the
requirements of the regulations should not be applied, but it
points to no provision of either the Order or the regulations
which would exempt it from their requirements. Rather, Defendant
argues that as a property manager, it has no opportunity to
choose whether or not to deal with the Federal government, since
the owner chooses the tenants. Defendant also asserts that to
develop and maintain the required affirmative action programs
would be a denial of due process by placing an unconstitutional
burden on Defendant because the limited income it receives as a
result of its dealings with the Government does little more than
cover its expenses of compliance. Defendant also argues that the
Executive Order violates Article I, Section 10, Clause 1, of the
Constitution ("No State shall...pass any...Law impairing the
Obligation of Contracts...") and that the application of the
order to Coldwell, Banker denies it equal protection.
Similar arguments that the contractor had no choice but to
provide service to the government were made by public utilities
and rejected in U.S. v. New Orleans Public Service, Inc.,
553 F.2d 459, 469-70 (5th Cir. 1977), vacated and remanded on
other grounds, 436 U.S. 307 (1973) (subsequent history
omitted). By entering into its agency agreements to manage
properties for building owners, Defendant has become a
subcontractor of the government for the services it provides, and
has agreed to become a subcontractor when and if space is leased
to the government in other properties it manages. As the court
of appeals said in New Orleans Public Service, "where
regulations apply and require the inclusion of a contract clause
in every contract, the clause is incorporated in the contract,
even if it has not been expressly
[PAGE 9]
included in a written contract or agreed to by the parties." 553
F.2d at 469 (citations omitted).
I would note, as pointed out elsewhere, see OFCCP v.
Priester Construction Company, 78-OFCCP-11, Secretary's
decision issued February 22, 1983, slip op. at 36-38, that
administrative agencies are not competent to decide the
constitutionality or statutory validity of laws they administer,
although they may determine whether the application of these laws
in any particular case is constitutional. Therefore, I will
consider only defendant's constitutional claims as challenges to
the constitutionality of the application of the Executive Order
in this case.
The ALJ found that a reasonable estimate of the cost would
be about $25-30 thousand to develop an affirmative action plan
with an annual cost of compliance with the data gathering and
reporting requirements of $60-70 thousand a year. At the same
time, it appears that the income received as a result of Federal
tenancies more than covers the costs required to develop the
required affirmative action plans for all of Defendants
operations. In any event, the constitutionality of the
applicability of the Executive Order does not turn on whether, as
applied to a particular contractor, the contractor's government
derived revenues exceed costs associated with compliance. Cost
alone does not make application of a law unconstitutional.
Day Brite Lighting Inc. v. Missouri, 342 U.S. 421, 424-25
(1952).
No authority has been cited for the proposition that Article
I, Section 10 of the Constitution applies to laws of the United
States, or to the Order and Regulations, which have the force and
effect of law. It is well established that it does not. Ames
v. Merrill, Lynch, Pierce, Fenner, and Smith, Inc., 567 F.2d
1174, 1179 (2nd Cir. 1977); Norfolk, Baltimore & Carolina
Lines, Inc. v. Department of Labor, 539 F.2d 373, 381 (4th
Cir. 1976). Furthermore, Article I, Section 10, clause 1 applies
only to laws enacted after the making of a contract whose
obligation is arguably impaired. Von Hoffman v. City of
Quincy, 4 Wall. 535, 550-55 (1866); Local Division 539,
Amalgamated Transit Union v. Massachusetts, 666 F.2d 613, 637
(1st Cir. 1981); Reding v. Texaco, Inc., 598 F.2d 513,
519 (9th Cir. 1979). At least since 1968, incorporation of the
equal opportunity clause by operation of law in every contract
and subcontract required to include it has been provided for in
the Regulations. 41 C.F.R. § 60-1.4(e).
I therefore find that Defendant has violated the Order and
the Regulations by failing to develop written affirmative action
programs and to submit them for review upon request.
OFCCP's exception to the recommended sanction of the ALJ is
granted and, as set out below, any failure by Defendant to submit
AAPs as required and within the time frames specified will result
[PAGE 10]
in the immediate imposition of not only the debarment sanction,
but also cancellation and termination of all existing government
contracts.
ORDER
Therefore, it is ORDERED, that Defendant Coldwell, Banker
and Company submit its affirmative action programs as well as a
notice of its intent to propose grouping designated facilities as
provided below, for review within 30 days of the date of this
order. If Coldwell, Banker fails to submit its affirmative
action programs and notice as ordered herein, all of Coldwell,
Banker's current government contracts and subcontracts shall be
cancelled and terminated and Coldwell, Banker, its officers,
subsidiaries and successors shall be ineligible for further
government contracts and subcontracts (including modifications
and renewals) until Coldwell, Banker satisfies the Secretary of
Labor that it is in compliance with the provisions of Executive
Order No. 11,246 and the Regulations which have been found to
have been violated in this case.
Within 60 days of the date of this Order, Coldwell, Banker
may submit a proposal to OFCCP on the grouping of designated
facilities for treatment as establishments for purposes of 41
C.F.R. §§ 60.-l.40 and 2.1. With respect to those
facilities covered by such a proposal, Coldwell, Banker shall
submit its AAPs within 60 days of a response from OFCCP. If
Coldwell, Banker fails to submit such AAPs within 60 days of such
a response from OFCCP, all of the sanctions set forth above in
the first paragraph of this Order shall be imposed.
SO ORDERED.
WILLIAM E. BROCK
Secretary of Labor
[ENDNOTES]
[1] Prior to the reorganization of civil rights functions in the
Federal government in 1978, Executive Order No. 11,246 was
enforced by 11 compliance agencies under the supervision of
OFCCP. GSA had responsibility, among other things, for contracts
for leases of real property. Pursuant to Executive Order No.
12,086, signed on October 5, 1978, contract compliance activities
under Executive Order 11,246 were consolidated in the Department
of Labor. On November 13, 1978, the Department of Labor was
substituted as the plaintiff in this case in the course of the
pre-trial conference.
[2] There are at least three agreements which were entered in the
record: one in Seattle, Washington, with respect to "Park Place,"
Plaintiff's Exhibit No. 17; one in Denver, Colorado, with respect
to "Diamond Hill," Plaintiff's Exhibit No. 19; and one for El
Segundo, California, and other places, Plaintiff's Exhibit No.
32.
[3] The term "contractor" means a prime contractor or
subcontractor; "prime contractor" means any person holding a
contract; "contract" means any government contract; "government
contract" means any agreement or modification between any
contracting agency and any person for the furnishing of supplies
or services or for the use of real or personal property including
lease agreements. 41 C.F.R. § 60-1.3.
[4] 41 C.F.R. 9 60-1.3 defines "subcontract" as:
[A]ny agreement or arrangement between a contractor and any
person (in which the parties do not stand in the
relationship of an employer and an employee):
(1) For the furnishing of supplies or services or
for the use of real or personal property, including
lease arrangements, which, in whole or in part, is
necessary to the performance of any one or more
contracts; or
(2) Under which any portion of the contractor's
obligation under any one or more contracts is performed,
undertaken, or assumed.
[5] The Federal government leases office space in the Park Place
building under lease numbered GS-10B-04063 (also referred to as
lease number TWA 04068) pursuant to which the Environmental
Protection Agency uses the space. This lease, which was for a
term of five years, was effective on December 6, 1971. Pursuant
to the option, the federal government renewed the lease for an
additional five years, through January 30, 1981. The renewal was
accomplished pursuant to supplemental lease agreement 8, dated
June 3, 1976. The record does not reflect whether there have
been additional renewals or extensions of the lease.
[6] The Management Agreement for Park Place provides that the
agent's duties are:
3(c) To make or cause to be made and supervise all repairs,
alterations and decorating of the premises; to supervise the
rendering of services called for by the various leases; to
purchase supplies; and to pay all bills therefor. The agent
agrees to secure the prior approval of the owner on all
expenditures in excess of $5,000.00 for any one item, except
monthly or recurring operating charges and/or emergency repairs
in excess of the maximum, if in the opinion of the agent such
repairs are necessary to protect the property from damage or to
maintain services to the tenants as called for in their leases.
(d) To hire, pay discharge and supervise all labor and
employees required for the operation and maintenance of the
premises; it being agreed that all employees, except the building
manager and other employees of agent shall be deemed employees of
the owner and not the agent, and that the agent may perform any
of its duties (except the duties of the building manager and
other employees of agent) through owner's attorneys, agents, or
employees and shall not be responsible for their acts, defaults
or negligence if reasonable care has been exercised in their
appointment and retention.
(e) To make necessary contracts for electricity, gas, fuel,
water and telephone, and contracts, not to exceed one year, for
window cleaning, rubbish hauling and other services. All such
contracts shall be consistent with the budget of expenses
approved by owner. Contracts for services shall be awarded on
the basis of competitive bidding to the lowest bidder unless
owner agrees to the contrary. Owner shall assume the obligation
of any contract so entered into at the termination of this
agreement.
[7] Transcript, testimony of Rudolf D. Martinez, Vice-President
and Director of Personnel, at 309, 370-71.
