Applicability of the Service Contract Act to Volunteer Workers at the National Oceanic and Atmospheric Administration, 89-31

• Court: Opinions of the Office of Legal Counsel of the Department of Justice
• Citation: 13 Op. O.L.C. 264
• Decision Date: 31 July 1989
• Docket Number: 89-31
• Parties: Applicability of the Service Contract Act to Volunteer Workers at the National Oceanic and Atmospheric Administration

13 Op. O.L.C. 264

Applicability of the Service Contract Act to Volunteer Workers at the National Oceanic and Atmospheric Administration

No. 89-31

United States Department of Justice

July 31, 1989

WILLIAM P. BARR Assistant Attorney General Office of Legal Counsel

Applicability of the Service Contract Act to Volunteer Workers at the National Oceanic and Atmospheric Administration

Pursuant to 28 U.S.C. § 512, the Office of Legal Counsel has jurisdiction to resolve a legal dispute between the Departments of Commerce and Labor where the request for the opinion was made by the General Counsel of Commerce under authority delegated from the Secretary of Commerce.

The Service Contract Act prohibits contractors operating the National Oceanic and Atmospheric Administration library from using voluntary, uncompensated employees. Commerce may petition the Secretary of Labor for an exemption to permit the use of volunteer employees under the NOAA contract

MEMORANDUM OPINION FOR THE GENERAL COUNSEL DEPARTMENT OF COMMERCE

This letter responds to Robert H. Brumley's request of June 10, 1988 for the opinion of this Office as to the applicability of the Service Contract Act ("SCA" or "Act") to a contract to operate the National Oceanic and Atmospheric Administration ("NOAA") library in part by using voluntary, uncompensated help to perform tasks that fall within the type of services otherwise covered by the Act. For the reasons set forth below, we conclude that the Act applies to such contracts and that the contractor or subcontractor may not use volunteer employees to perform tasks associated with operating the library.

I. Background

Congress enacted the Service Contract Act in 1965 "to provide labor standards for the protection of employees of contractors and subconr-tactors [sic] furnishing services to or performing maintenance service for Federal agencies." S. Rep. No. 798, 89th Cong., 1st Sess. 1 (1965). The Act, as codified at 41 U.S.C. §§ 351-358, implements this goal by requiring contractors and subcontractors on contracts greater than $2, 500 to pay workers at least the minimum wage. Section 351(a)(1) provides:

(a) Every contract (and any bid specification therefor) entered into by the United States or the District of Columbia [ 265] in excess of $2, 500, except as provided in section 356 of this title, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States through the use of service employees, shall contain the following

(1) A provision specifying the minimum monetary wages to be paid the various classes of service employees in the performance of the contract or any subcontract thereunder, as determined by the Secretary, or his authorized representative, in accordance with prevailing rates for such employees in the locality .... In no case shall such wages be lower than the minimum specified in subsection [351](b) of this section

41 U.S.C. § 351(a)(1).

Section 351(b) mandates that in no circumstances shall wage levels fall below the national statutory minimum wage:

No contractor who enters into any contract with the Federal Government the principal purpose of which is to furnish services through the use of service employees and no subcontractor thereunder shall pay any of his employees engaged in performing work on such contracts less than the minimum wage specified under section 206(a)(1) of title 29.

Id. § 351(b)(1) (emphasis added). "Service employee" is defined in the Act as "any person engaged in the performance of a contract entered into by the United States and not exempted under section 356 of this title, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States ... and ... include[s] all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons." Id. § 357(b) (emphasis added).^[1] The Act prescribes penalties for noncompliance ranging from payment of compensation due underpaid employees to cancellation of the contract. 41 U.S.C. § 352(a).

The rationale for this unqualified approach to fair labor standards under the SCA was that service contracts represented "the only remaining category of Federal contracts to which no labor standards protections [ 266] appl[ied]." H.R. Rep. No. 948, 89th Cong., 1st Sess. 1 (1965). Congress was concerned with preventing contractors from undercutting their competitors for government service contracts by reducing labor costs. As the House Report explained:

The Federal Government has added responsibility in this area because of the legal requirement that contracts be awarded to the lowest responsible bidder. Since labor costs are the predominant factor in most service contracts, the odds on making a successful low bid for a contract are heavily stacked in favor of the contractor paying the lowest wage. Contractors who wish to maintain an enlightened wage policy may find it almost impossible to compete for Government service contracts with those who pay wages to their employees at or below the subsistence level. When a Government contract is awarded to a service contractor with low wage standards, the Government is in effect subsidizing subminimum wages.

Id. at 2-3.

The current disagreement between the Department of Commerce ("Commerce") and the Department of Labor ("Labor") arose when Commerce received a contractor's proposal to use voluntary, uncompensated employees to perform tasks covered by the Service Contract Act in operating the NOAA library. Commerce initially determined that the Act did not apply to such a contract.^[2] Labor then advised Commerce by letter that the Act covered such contracts.^[3] In reply, Commerce advised Labor that it had complied with Labor's interpretation of the SCA in awarding the NOAA contract. Commerce added, however, that its compliance required it to pay an additional $140, 164 in the contract price, and that it intended to raise the issue with the Department of Justice.^[4] On June 10, 1988, Commerce requested an opinion from this Office, stating that it believes Labor's position on this issue to be in error and that "it is likely that this question will arise on other procurements or in the course of recompetition of [the NOAA library contract]."^[5] [ 267]

II. Discussion

A. Jurisdiction

The authority of the Attorney General to...