International U. of Operating Eng., Local 627 v. Arthurs

• Decision Date: 24 January 1973
• Docket Number: Civ. No. 72-851.
• Parties: INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 627, Plaintiff, v. Harold ARTHURS, Field Director, Bureau of Reclamation, Denver, Colorado, et al., Defendants.
• Court: U.S. District Court — Western District of Oklahoma

355 F. Supp. 7

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 627, Plaintiff, v. Harold ARTHURS, Field Director, Bureau of Reclamation, Denver, Colorado, et al., Defendants.

Civ. No. 72-851.

United States District Court, W. D. Oklahoma.

January 24, 1973.

Gerald B. Ellis, Stan P. Doyle, Tulsa, Okl., for plaintiff.

James M. Peters, Asst. U. S. Atty., Oklahoma City, Okl., John R. Little, U. S. Dept. of Interior, Denver, Colo., for defendants.

CHANDLER, District Judge.

MEMORANDUM OPINION

This matter comes on for decision after trial on the merits on December 19, 1972. The plaintiff claims that the Bureau of Reclamation, a United States Government agency, violated the Davis-Bacon Act 40 U.S.C. § 276a by refusing to incorporate the proper wage scale in the advertised specifications for a contract covering construction of public works. I have heretofore entered Findings of Fact and Conclusions of Law, but feel it is necessary to file this Memorandum in Support of my judgment because of the public interest involved.

Davis-Bacon Act

Central in this litigation is the Davis-Bacon Act, which provides in pertinent part that:

"The advertised specifications for every contract in excess of $2,000, to which the United States . . . is a party, for construction . . . of public buildings or public works of the United States . . ., and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State, in which the work is to be performed . . ." 40 U.S. C. § 276a.

The purpose of the Davis-Bacon Act is to provide protection to local craftsmen who were losing work to contractors who recruited labor from distant cheap-labor areas. S.Rept. 963, Mar. 17, 1964 (to accompany H.R. 6041), 1964 U.S. Code Congressional and Administrative News, pp. 2339, 2340. Some contractors pay wages according to collective bargaining agreements. But even though these contractors usually are required to pay higher wage scales, they can still compete with nonunion contractors for public contract work because of the Davis-Bacon Act prevailing wage scale provision. Noncompliance with the Davis-Bacon Act makes it impossible for all contractors to compete. There is thus injury to the laborers and mechanics, as well as injury to contractors and labor organizations.

The Secretary of Labor administers the Davis-Bacon Act. One of the rules promulgated by this agency and pertinent to this case involves the modification of wage rates. 29 C.F.R. 1.7(b)(1), as amended, 37 Fed.Reg. 21140 (Oct. 5, 1972).

"All actions modifying an original project wage determination prior to the award of the contract or contracts for which the determination was sought shall be applicable thereto, but modifications received by the Federal agency . . . later than 10 days before the opening of bids shall not be effective except when the Federal agency . . . finds that there is a reasonable time in which to notify bidders of the modification."

Two basic questions that this Court must consider are:

1. Did the Bureau of Reclamation receive the wage modification later than ten days before the opening of bids?

2. Even if the modification was received by the agency less than ten days before the opening of bids, did the agency have a reasonable time in which to notify bidders and if it did was it its duty to do so?

This Court answers these questions in the affirmative for the reasons hereinafter stated.

The Court is aware that the role of a reviewing court is limited in the administrative process. Nevertheless, it is conscious of its obligation to insure that the agency has interpreted and applied the Davis-Bacon Act and the regulations in a rational manner. This means that the statute and rules must be examined in light of the legislative purpose. Frankfurter, Some Reflections On The Reading Of Statutes, 47 Colum. L.Rev. 527 (1947); N. L. R. B. v. Hearst Publications, Inc., 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 (1944). Where an agency completely ignores the purpose of the controlling statute, as the defendants did in this case, there cannot be any rational basis in law to support its decision. A reviewing court would be doing less than its duty if it failed to set aside the agency action. By holding an agency accountable to its lawful duties, the administrative process will be vindicated.

Facts of the Case

On October 10, 1972, the Bureau of Reclamation advertised for bids and issued specifications to prospective bidders on its Mountain Park Dam Project located in Kiowa County, Oklahoma, an area within the jurisdiction of this Court. This project involves the construction of a concrete arch dam across Otter Creek. The estimated cost of this project is $2.8 million. Originally the bid opening date was scheduled for November 16, 1972, which was a Thursday. It became necessary, however, for the agency to postpone the bid opening date to a Tuesday, December 12, 1972.

The reason for this delay in opening bids was due to action of the Bureau of Reclamation (to be referred to hereafter as the Bureau). When specifications for the project were being prepared, the Bureau did not make a request to the Secretary of Labor for the proper wage determination. Instead it erroneously elected to use highway construction rates, which turned out to be substantially lower than rates applied to construction work on dams. This was admitted by the Bureau to be an error when it was called to the Bureau's attention by a contractor on October 16, 1972.

Subsequently, the Bureau, on October 18, 1972, made a request to the Secretary of Labor for a wage determination. Bidders were notified that a new wage schedule would be published and the bid opening date was postponed until December 12, 1972. The wage determination was prepared by the Wage Determination Branch, Employment Standards Administration, United States Department of Labor, on November 27, 1972, which on the same date was mailed to the Denver office of the Bureau. On November 30, 1972, this same office prepared a wage modification for one class of workers—operating engineers. This modification was also mailed to the Denver office of the Bureau on the same date it was prepared.

There is some disagreement as to when the Bureau received the wage determination and the modification. By the testimony of Donald Duck, Deputy Director of the Office of Design and Construction, Bureau of Reclamation, the November 27 wage determination was received in Denver on December 1 and the November 30 wage modification was received on December 4, 1972. Leslie Burnett, Wage Specialist for the Wage Determination Branch of the Department of Labor, testified that the wage determination and modification had been separately mailed from his Dallas, Texas, office. However, Mr. Burnett stated that he had also mailed both the wage determination and the modification in the same envelope and by air mail on December 1, 1972.

This second mailing was necessitated by a call on December 1, from the Bureau's Denver office to the Washington office of the Department of Labor, to the effect that the Bureau had not received the wage determination. Phillip Gloss, in the Washington office, then called Burnett in Dallas and directed him to mail the wage determination to Denver. According to directions, Burnett mailed both the wage determination and the modification by air mail on the same day, December 1, 1972. The Bureau in Denver was then called by Gloss and informed that the wage modification had been mailed along with the wage determination. Based on this testimony, the Court finds that the Bureau had knowledge of the wage modification on December 1, 1972, more than ten days before the scheduled bid opening.

The Bureau rejected the wage modification on the ground that it was not received by that agency until December 4, 1972, which was eight days before the bid opening date. It was determined that there was not sufficient time to notify the prospective bidders and for them to act upon that modification. Rule 1.7(b)(1) provides that:

"Modifications received by the Federal Agency later than 10 days before the opening of bids shall not be effective except when the Federal agency finds that there is a reasonable time in which to notify bidders of the modification." (Emphasis added).

Testimony of Mr. Duck disclosed that the Bureau interpreted this rule to mean that any wage rate received by the agency with less than ten days remaining to bid opening was not effective; that the Bureau considered it within its absolute discretion to accept or reject the wage modification in this case. There was testimony from the Bureau that an additional extension of bid opening time might jeopardize a portion of the work that needed to be done prior to flood season. But the Bureau also testified that in rejecting the wage modification, no consideration was given to the effects on the workers involved and no finding was made that there was not a reasonable time in which to notify bidders of the modification.

It was conceded that a supplemental notice to prospective bidders could have been prepared within 24 hours. One contractor who had prepared a bid on this project but who failed to get it filed because of icy road conditions testified that a bid on this project could have been adjusted by a bidder in a single day to take into consideration the wage modification. There were 160 prospective bidders on the list, which included material supply firms as well as prime contractors and subcontractors. Of the 160 prospective bidders, there were 40 prime contractors, and of these, eleven submitted bids.

Litigat...