HB Zachry Company v. United States

• Citation: 170 Ct. Cl. 115,344 F.2d 352
• Decision Date: 16 April 1965
• Docket Number: No. 332-61.,332-61.
• Parties: H. B. ZACHRY COMPANY v. The UNITED STATES.
• Court: Court of Federal Claims

170 Ct. Cl. 115, 344 F.2d 352 (1965)

H. B. ZACHRY COMPANY v. The UNITED STATES.

No. 332-61.

United States Court of Claims.

April 16, 1965.

Chester H. Johnson and O. D. Hite, San Antonio, Tex., for plaintiff. Robert J. Bird, Washington, D. C., and George W. Krog, San Antonio, Tex., of counsel.

Edwin J. Reis, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant. Jay C. Cox, Swainsboro, Ga., was on the briefs.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS and COLLINS, Judges.

COWEN, Chief Judge.

This is a suit to recover amounts withheld from final payment due plaintiff under two government contracts. The withholding was predicated upon alleged violations of the Davis-Bacon Act, 40 U.S.C. §§ 276a to 276a-7 and the Eight-Hour Laws, 40 U.S.C. §§ 324-326. We are required to resolve basic disagreements as to matters of fact and questions of law.

Plaintiff is a corporation whose principal business is that of a general construction contractor. In early 1957, plaintiff submitted bids on two projects at Holloman Air Force Base, New Mexico, and being the low bidder was awarded contracts DA 29-005-ENG-1900, hereinafter referred to as "1900" (awarded in March 1957), and DA 29-005-ENG-1955, hereinafter referred to as "1955" (awarded in June 1957).

Contract 1900 was the major contract, being in the amount of $1,700,000, and calling for the construction of the principal runways and adjacent aprons. Contract 1955 was in the amount of $380,000 and provided for the construction of certain aircraft parking areas, also denominated "aprons". Both contracts contained the usual commercial construction contract provisions requiring plaintiff to supply all the labor and materials for the projects according to detailed technical specifications.

The contracts, which incorporated the provisions of the invitation for bids, also contained the standard federal construction contract clauses, including those repetitive of and designed to implement the labor statutes at issue in this litigation. The latter are set forth in our finding 2.

In order to perform its contract, plaintiff, the prime contractor, had to acquire certain materials, including base material, concrete aggregate, hot mix, and sand. They are standard commercial materials and were not specially designed for this project. An initial attempt was made to purchase these supplies at a price which included delivery to the site of the work, i. e., f. o. b. site. This proved to be impossible, since the local suppliers were unable to provide the requisite transport for the large volume of materials needed. Plaintiff therefore contracted with H. B. Llewellyn Sand & Gravel Co., located in Alamogordo, New Mexico, about 12 miles (one way) from the base, and with Las Cruces Redi-Mix Company of Las Cruces, New Mexico, located about 70 miles (one way) from the base, for the needed supplies, at a price f. o. b. the suppliers' plants. The materialmen were established commercial suppliers selling to the general public at all times relevant to this action.

In order to provide for the transportation of the materials to Holloman Air Force Base, plaintiff contracted with the Glover Distributing Company, hereinafter referred to as "Glover". The contract with Glover (which is quoted in finding 7) provided that plaintiff would pay a specified amount per cubic yard (or per cubic yard per mile) for materials delivered by Glover to the project. The agreement, which was denominated a "Subcontract", contained a requirement that Glover comply with all "applicable Federal and State Labor Laws and Regulations". The contract also contained provisions that are generally found in agreements made with a trucking subcontractor (or independent contractor).

At and prior to the date of its contract with plaintiff, Glover was principally engaged in the transportation of petroleum products. In addition, Glover had an established business of transporting building materials to contractors working on federal, state, and municipal construction projects in the area where Holloman Air Force Base is located.

To perform its contract with plaintiff, Glover had available only two trucks. In order to provide most of the necessary transportation on this and other jobs, Glover contracted with individual truck owners who would usually drive their own trucks and are referred to as owner-drivers. A few of the owner-drivers owned more than one truck, and for these trucks as well as for the Glover trucks, drivers were employed by the truck owners, although all were presumably paid by Glover. Such drivers are referred to herein as non-owner-drivers.

The owner-drivers were paid an amount based on the volume of material delivered. The non-owner-drivers were paid at an hourly rate.

The truck drivers hauled materials for Glover from spring 1957 until early in 1958. At times, up to 100 drivers were employed upon the projects. The work performed by these drivers consisted entirely of driving dump trucks. They would proceed to the suppliers, pick up a load of material, drive to Holloman Air Force Base, where the load was dumped in stockpiles located within the air base. Access to the stockpiles was gained over a one-mile road, located partially on the base and partially on private property. The road was specially constructed to provide such access. After the truck drivers dumped the materials in the stockpiles, all further handling, processing, and transportation of the materials were performed by plaintiff's construction employees. About 90 percent of the truck drivers' time was spent at the source of supply and enroute between the suppliers and the point of delivery.

In June 1957, defendant received a complaint that an individual truck driver was not being paid in accordance with the labor provisions of the contract. The complaint led to a complete investigation of plaintiff's and Glover's labor practices. As a result of the investigation, conducted primarily by the Corps of Engineers' resident labor advisor at Holloman Air Force Base, the defendant withheld the amounts shown in finding 20 from the final payment due plaintiff under the contracts. Following an adverse decision by the Solicitor of the Department of Labor, plaintiff brought this action.

Defendant found (and it is not now disputed) that Glover had paid the owner-drivers gross compensation determined by the number of cubic yards of material hauled as indicated on the suppliers' haul tickets. The compensation was paid in two checks. The first check was computed by calculating the number of hours worked per week from the time cards maintained by the employees and multiplying this total by the wage rate prescribed in the contracts. The second check, denominated "truck earnings", represented the balance due after subtracting the amount of the first check from the gross compensation. The amounts paid as truck earnings varied and were not necessarily related to the size of the truck or the number of hours it was used. The non-owner-drivers were paid wages at the rates specified in the contracts; their hours of work were taken from time cards which they themselves prepared. At the behest of defendant, Glover maintained and submitted payrolls for both owner and non-owner-drivers. Glover never conceded that the labor statutes were applicable to either category of driver.

Defendant's investigator took exception to two facets of Glover's procedures: (1) The records of the hours worked, and (2) the amounts paid for the use of the trucks provided by the owner-drivers.

Since defendant questioned whether the time cards maintained by the truck drivers were accurate, the investigator made timings of truck runs and computed average round trip times for each run. In order to protect the integrity of the basic contract labor rates, defendant felt it necessary to establish a fair truck rental in the combined labor-truck compensation arrangement provided for by Glover. The investigator tried to ascertain the prevailing rental rates for dump trucks in the Alamogordo area but found that Glover had virtually every such truck under contract. Consequently, defendant substantially adopted the rental rates for dump trucks with drivers as set forth in the Estimator's Master Data Sheet, a document prepared by the Southwestern Division, Corps of Engineers, and the Association of General Contractors, for use in estimating the cost of area construction projects.

Having thus fixed the basis for his computations, the investigator recomputed the hours worked by the truck drivers. The suppliers' haul tickets indicated the origin of all supplies and cumulatively showed the total number of hauls made by each driver from that source The time worked per day was determined by multiplying the number of hauls by the average time that the defendant's investigator had calculated as necessary for a round trip between the supplier and the air base. The daily hours were totaled to produce a weekly figure. The hours worked for the week were multiplied by the combined truck-labor rate obtained from the Estimator's Master Data Sheet for the size of truck involved. To this sum was added the overtime premium (one-half of the contract labor rate) for all daily hours worked in excess of eight hours. The grand total was compared with Glover's records to determine the underpayments of wages.

Defendant determined the wages due non-owner-drivers by multiplying the number of hauls made by each driver by the average time required per haul as calculated by defendant's investigator. The weekly total of hours as thus determined was then multiplied by the contract hourly wage rates to arrive at the weekly straight time wages.

When defendant, using the methods described above, determined that there was a violation of the Eight-Hour Laws, a penalty of $5 was assessed.

Glover's records were accepted by defendant to the extent that they showed the amount of compensation actually paid to...