Board of Contract Appeals General Services Administration Washington, D.C. 20405 RESPONDENT'S MOTION TO DISMISS DENIED: June 23, 1998 GSBCA 14388 TWIGG CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Maurice J. Mountain of Barton, Mountain & Tolle, McLean, VA, counsel for Appellant. Kathleen M. McCartney, Office of Regional Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), VERGILIO, and DeGRAFF. DANIELS, Board Judge. Respondent, the General Services Administration (GSA), moves to dismiss, for failure to state a claim upon which relief can be granted, an appeal filed by Twigg Corporation. The appeal challenges a contracting officer's deemed denial of a claim relating to wages paid by one of Twigg's subcontractors, Jenkins Electrical Contracting, on a project involving Twigg's renovation of a building under a contract with GSA. We deny the motion. The contract The contract contains a clause entitled FAR 52.222-6 -- Davis-Bacon Act (Feb 1988), which provides in part: "All laborers and mechanics employed or working upon the site of the work will be paid . . . the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof." Appeal File, GSBCA 13901,[foot #] 1 Exhibit 1, GSA Form 3505 at 1. The wage determination which is a part of the contract, General Decision Number DC940001, sets forth wage rates for the various trades that would be involved in the project. One portion of this decision reads as follows: Rates Fringes ELECTRICIANS 21.45 4.26 + 3% Appeal File, Exhibit 1. The contract also contains two clauses relevant to the resolution of disputes concerning wage rates. One of them states: In the event the Contractor, the laborers or mechanics to be employed in the classification, or their representatives, and the Contracting Officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the Contracting Officer shall refer the questions, including the views of all interested parties and the recommendation of the Contracting Officer, to the Administrator of the Wage and Hour Division [of the Department of Labor] for determination. Appeal File, GSBCA 13901, Exhibit 1, GSA Form 3505 at 2. The other clause is FAR 52.222-14, Disputes Concerning Labor Standards (Feb 1988), which states: The United States Department of Labor has set forth in 29 CFR Parts 5, 6, and 7 procedures for resolving disputes concerning labor standards requirements. Such disputes shall be resolved in accordance with those procedures and not the Disputes clause of this contract.[[foot #] 2] Disputes within the meaning of this clause include disputes between the ----------- FOOTNOTE BEGINS --------- [foot #] 1 Twigg has filed many appeals of contracting officer decisions relating to this contract. Documents referenced by the parties with regard to this motion, and in this opinion, are contained in the appeal files for the cases cited. Where no case is noted, the appeal file is for the instant case, GSBCA 14388. [foot #] 2 The Disputes clause of the contract provides that all claims by the contractor shall be submitted to the contracting officer and decided by that individual. Appeal File, GSBCA 13901, Exhibit 1, Construction Contract Clauses (Fixed Price) at 95-96. ----------- FOOTNOTE ENDS ----------- Contractor (or any of its subcontractors) and the contracting agency, the U. S. Department of Labor, or the employees or their representatives. Id., GSA Form 3505 at 4. The complaint The complaint filed by Twigg in this case includes the following assertions of fact. The bidding package issued by GSA for this project included a copy of the wage determination discussed above. Complaint 7. Jenkins's president, Charles Jenkins, in preparing his firm's bid to Twigg, assumed that the determination established a wage rate for electricians of $25.84 per hour -- a base rate of $21.45, plus fringe benefits of $4.26, plus three percent of the fringe benefit rate (thirteen cents). Id. 8. Jenkins initially paid its employees at this rate for work under the contract. Id. 9. Twigg, upon receipt of Jenkins's certified payrolls, routinely provided a copy to CRSS Constructors, Inc., GSA's construction manager for the project. A CRSS employee, Michael Johnson, questioned the rate at which Jenkins was paying its electricians. Mr. Johnson believed that the wage rate decision should be interpreted as requiring payment at a rate of $26.48 per hour -- a base rate of $21.45, plus fringe benefits of $4.26, plus three percent of the total of the two preceding numbers (seventy-seven cents). Complaint 10. This rate was sixty-four cents per hour more than Jenkins had been paying. Mr. Johnson told Mr. Jenkins that if his firm did not adjust its wage rate to $26.48 per hour, "CRSS would have no choice but to hold up approval of all of Jenkins' payment requests until the matter was resolved." Id. Jenkins complied, but noted on its payrolls that it was paying the additional sixty-four cents per hour under protest. Id. 11. Jenkins later asked Twigg to request a contracting officer's decision on this matter. Complaint 12; Appeal File, Exhibit 2. On March 11, 1997, Twigg submitted a claim for the amount Jenkins said it had expended under protest (sixty-four cents per hour times 32,891 hours of electricians' time, plus markups) and markups applied to this amount by Twigg itself. The total amount of the claim was $38,139. Complaint 13; Appeal File, Exhibits 3, 4. The contracting officer did not respond, and on November 4, 1997, Twigg appealed from her deemed denial of its claim. Complaint 14; Appeal File, Exhibit 5. Ten days later, the contracting officer asked the Wage and Hour Division of the Department of Labor for a written clarification of the wage determination at issue in this case. She noted that the correct interpretation of the information listed for electricians "is not explained in the actual wage decision." Complaint 15; Appeal File, Exhibit 6. The Wage and Hour Division responded: Any time a fringe benefit is listed as a percent, the rate is calculated by multiplying the percent by the basic hourly rate which is then added to whatever other fringe benefits are listed in the fringe benefits column. For example the electrician rate of $21.45 plus fringe benefits of $4.26 + 3% would total $26.35. Complaint 16; Appeal File, Exhibit 7. According to the Labor Department, then, the total hourly rate should have been fifty- one cents more than Jenkins assumed in constructing its bid and thirteen cents less than Jenkins paid under protest. The complaint contains two counts. In count I, Twigg maintains that the interpretation of the wage determination on which Jenkins relied in constructing its bid was reasonable; that any ambiguity in the determination must be construed against the Government as the author of the document; and that CRSS's instruction to Jenkins to increase the wages by sixty-four cents per hour over what Jenkins planned to pay represented a change to the contract, for which GSA must compensate the contractor in the amount claimed, $38,139. Complaint 18-20. In count II, Twigg contends that even if Jenkins is not entitled to rely on its interpretation of the wage determination, because the direction as to the wage rate was to pay thirteen cents per hour more than the Labor Department says is correct, GSA is liable for increased costs which, with markups, come to $7,747. Id. 21-23. Discussion GSA's motion is predicated on the theory that because the contractor is responsible for paying its employees proper wages, and the complaint does not assert that Jenkins's decision to pay its electricians $26.48 was directed by either the contracting officer or any other GSA employee with authority to give such a direction, the selection of this wage rate was Jenkins's alone. GSA points out that Jenkins was free to seek advice from the Department of Labor as to the meaning of the wage determination before making this decision. GSA has also included in its motion declarations by the contracting officer and the contracting officer's authorized representative (COR), stating that these two individuals were not informed of a dispute involving electricians' wages prior to receipt of Twigg's claim. According to the agency, since it played no part in the selection of the wage rate, it cannot be liable for any part of wage payments resulting from that choice. GSA also notes the existence in the contract of the two provisions pertaining to resolution of wage rate disputes by the Department of Labor, rather than the contracting officer. In response to the motion, Twigg observes that GSA informed the contractor that CRSS was responsible for review of certified payrolls, and that, per agreement among GSA, Twigg, and CRSS, the GSA COR and project manager were to be informed about each issue that would require an expenditure of more than $25,000. Appeal File, GSBCA 14386, Exhibit 5 at 9; id., GSBCA 13901, Exhibit 61 at 3. Twigg has also supplied an affidavit of CRSS's Mr. Johnson which contains the following statements: While working on this project, he, at GSA's direction, reviewed contractor compliance with Department of Labor wage determinations. He gave Mr. Jenkins his interpretation of the determination as to electricians' wages, and Jenkins agreed to pay its electricians "as we had insisted," though under protest. "Key individuals at . . . GSA," including GSA's project manager, were aware of this dispute and others involving craftsmen's wages, and "GSA agreed to submit the matter to the [Labor Department] for its formal review since it[s] representatives had already been consulted on this issue informally." Mr. Jenkins informed him "on at least one occasion that he planned to submit a claim for the increased wages he was being required to pay if it later turned out that [Labor] supported his interpretation of the wage rate table, and not the interpretation of the higher rates that we had required." If all facts pertinent to this case are as Twigg presents them, the contractor may well demonstrate that Jenkins paid its electricians $26.48 per hour only because GSA required it to do so. Twigg may thus be able to fulfill a factual predicate underlying both counts of its complaint. We consequently cannot dismiss the case simply because neither the contracting officer nor the COR learned of the dispute until after Jenkins's electricians had worked tens of thousands of hours on this project. The two contract clauses regarding authority to resolve wage rate disputes may well have an impact on whether relief can be granted under count I or count II. Although the Board may not hear a challenge to a Labor Department wage determination, it can consider the ramifications such a determination has on a contractor's contract rights. P. M. Hagel & Associates, Inc. v. General Services Administration, GSBCA 10742, 94-1 BCA 26,568, at 132,204-05 (discussing Emerald Maintenance, Inc. v. United States, 925 F.2d 1425 (Fed. Cir. 1991), and Burnside-Ott Aviation Training Center, Inc. v. United States, 985 F.2d 1574 (Fed. Cir. 1993)). The inclusion of these clauses in the contract thus does not mandate a dismissal of the case for failure to state a claim upon which relief can be granted. Decision GSA's motion is DENIED. Within two weeks of the date of this decision, the parties shall jointly propose a schedule for further proceedings in the case. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ JOSEPH A. VERGILIO MARTHA H. DeGRAFF Board Judge Board Judge