Page images

area, since, prior to the invitation to bid, the Secretary of Labor had made a higher determination and the contracting officer could have ascertained that fact. Respondent, the court held, was entitled to rely on the schedule "as the Secretary's latest determination--as a representation of the wages it would have to pay when the work was to be done." We granted review because of the obvious importance of the decision in the administration of the Davis-Bacon Act.


The Act itself confers no litigable rights on a bidder for a Government construction contract. The language of the Act and its legislative history plainly show that it was not enacted to benefit contractors, but rather to protect their employees from substandard earnings by fixing a floor under wages on Government projects. Congress sought to accomplish this result by directing the Secretary of Labor to determine, on the basis of prevailing rates in the locality, the appropriate minimum wages for each project. The correctness of the Secretary's determination is not open to attack on judicial review.

The Court of Claims nevertheless awarded respondent damages on the ground that the Government, through the Corps of Engineers, had falsely represented the prevailing rates in the Elmira area. short answer to this is that the Government made no such representation. Neither the contract nor the specifications refers to "prevailing' rates. The contract speaks only of "wage rates not less than those stated in the specifications." The specifications in turn speak only of 'minimum wage rates applicable in the locality." The only reference to "prevailing rates appears in the statute itself, which provides that the minimum wage rates are to be "based upon *** the wages determined by the Secretary of Labor to be prevailing." But this provision in the Act cannot convert the contractor's obligation to pay not less than the minimum into a Government representation that the contractor will not have to pay more. On its face, the Act is a minimum wage law designed for the benefit of construction workers. The Act does not authorize or contemplate any assurance to a successful bidder that the specified minima will in fact be the prevailing rates. Indeed, its requirement that the contractor pay "not less" than the specified minima presupposes the possibility that the contractor may have to pay higher rates. Under these circumstances, even assuming a representation by the Government as to the prevailing rate, respondent's reliance on the representation in computing its bid cannot be said to have been justified.

* * *

The Government further contends that the Secretary of Labor was justified in fixing different minimum rates for the housing and flood control projects according to the degree of skill required by each project, and that respondent is estopped to claim misrepresentation because of its failure to make an investigation of labor costs before submitting its bid. Because of our disposition of the case, we find it unnecessary to reach these issues. The portion of the judgment on which the Government sought review is Reversed.

Section 3. Anti-Kickback Acts


320 U.S. 543 (1944)

MR. JUSTICE BLACK delivered the opinion of the Court.

Indictments returned in a United States District Court in New Jersey charged that the respondent Laudani, while acting as a company foreman with authority to employ and discharge workers on a public works project financed in part by the United States, had contrary to § 1 of an Act of June 13, 1934 [commonly known as the "Kickback Act") forced certain of his subordinates to give him part of their wages in order to keep their jobs. Laudani moved to quash, assigning as one ground that the indictments failed to charge conduct prohibited by this Act since they did not contain allegations that he was the employer of the coerced men or that he had acted as agent of the employer in forcing the payments. The gist of his contention was that the prohibition of the Act extends only to employers and persons who act in concert with them. The District Court concluded that the Act applied to a foreman such as Laudani, overruled his motion, and a jury convicted him. The Circuit Court of Appeals accepted Laudani's contention, reversed the judgment, and directed that the indictments be quashed. 134 F. 2d 847. The public importance of the question presented prompted us to grant certiorari.


[ocr errors]

The purpose of the Act under consideration is to extend protection not merely to the legal form of employment contracts but to the substantive rights of workers actually to receive the benefit of the wage schedules which Congress has provided for them. The evil aimed at was the wrongful deprivation of full work payments. The Act was adopted near the bottom of a great business depression as one part of a broad Congressional program the goal of which was to strengthen the domestic economy by increasing the purchasing power of the nation's consumers. To this end, Congress enacted legislation designed to relieve widespread unemployment and enable working people to earn just and reasonable wages. A large program for federal financing of public works was established, and legislation was passed requiring government contractors to pay certain minimum wage rates. It was the purpose of the Kickback Act to assure that the federal funds thus provided for workers should actually be received by them for their own use except where diverted under authority of law or a worker's voluntary agreement.

In view of this background, we cannot hold that Congress intended to exclude from the Act's proscription a foreman with the authority Laudani is alleged to have possessed. Foremen vested with full power to employ and discharge subordinates could frustrate the objective of the Act just as effectively as could their employers, and foremen not


given such broad powers might nevertheless be able to use their authority to accomplish the same result. That foremen not only could but might do this very thing was testified at Senate hearings when the problem of "kickbacks" was under study. And the members of the Senate Committee on the Judiciary reporting the bill used language broad enough to include foremen among others when they said that hearings had revealed, "that large sums of money have been extracted from the pockets of American labor, to enrich contractors, subcontractors, and their officials."

To hold that a company foreman vested with sufficient power substantially to affect his subordinates' contracts of employment is within the Act's proscription is not to hold that the Act applies to every extortioner, blackmailer, or other person who extracts money from one who has previously received it for labor on a federally financed project. We need

We need not, at this time, attempt to delineate the outside scope of the Act's application. But the purpose of the legislation, no less than its language, shows that the power to employ and discharge brings an employing company's foreman within its prohibition.

The judgment of the Circuit Court of Appeals is reversed, and the cause is remanded to that court for consideration and disposition of other questions not here involved.


Section 4. Work-Hours Standards Act


ASBCA No. 10405



In connection with a prior hearing of the captioned appeal the parties, with the concurrence of the Board, agreed that the dispute concerning labor standards violations be severed and heard separately as it was considered unrelated to appellant's excess costs appeal which was then before the Board. Our present decision concludes this appeal. Previously, the contracting officer had assessed the appellant $1,150.00 as liquidated damages for 115 alleged violations of the Work Hours Act of 1962 and withheld the sums of $1,803,18 for underpayment of contract wage rates and $640.75 for unpaid overtime due employees. This aspect of the appeal concerns the propriety of the liquidated damages assessment and the accuracy of the amounts withheld.

At the hearing the parties stipulated that underpayments pursuant to the Davis-Bacon Act due appellant's employees were in the aggregate sum of $1,352.85 and overtime due them under the Work Hours Act of 1962

amounted to $450.38 for a total withholding of $1,803.23. (Tr. 3) It was also established by stipulation of the parties that appellant was responsible for 70 violations of the Work Hours Act of 1962 and that an assessment of $10 for each violation be levied thereon. (Tr. 4)



The Board has reviewed the determination of liquidated damages assessed against appellant and affirms such assessment in the reduced amount of $700.00. We also find that the sum of $1,803.23 is due appellant's former employees for underpaid wages pursuant to the labor standards provisions of appellant's contract and that such sum may properly be withheld by the contracting officer for the benefit of these employees.

Appellant has admitted to 70 violations pursuant to the Work Hours Act of 1962. He stated that he was not aware of their seriousness and that in the future such violations will not recur. He also admitted to some experience with the administration of Government contracts as an inspector prior to becoming an contractor and there is evidence of his failure to cooperate with investigators during investigation of employee complaints of inderpayment. In view of the excessive number of violations incurred by appellant on a relatively small construction contract with a contract price of $119,884.50, together with other evidence before us, we are unable to find that these violations of appellant's contractual responsibilities to employees were inadvertent within the purview of Section 104c of the Work Hours Act of 1962, P.L. 87-581, August 13, 1962, 76 Stat. 359. This conclusion goes to the imposition of liquidated damages. From the record, however, we do note that the procuring activity has agreed nevertheless to recommend to the Secretary of Labor that appellant not be debarred as a contractor. (Tr. 3, 4)

The record indicates the possibility of rival rights to contract payment proceeds on the part of the surety on appellant's bond. This is a matter beyond the Board's function and authority and should be resolved at the procuring activity level. Under the present appeal we have but determined the rights of the parties before us, pursuant to their contract. Meco, Inc., ASBCA No. 9849, 66-2 BCA par. 5801. Under the circumstances, we cannot be concerned here with who may become the ultimate beneficiary of any award that we might make. Frances Van Wagner, Successor to American Construction and Supply Co., Inc. and Conrad Hanson and Co., Inc., a Joint Venture, ASBCA No. 11880, 67-1 BCA par. 6286.

Accordingly, this appeal is sustained as to all amounts withheld by the contracting officer in excess of $700 as liquidated damages and in excess of $1,803.23 for wages. Otherwise the appeal is denied.

Section 5. Buy-American Act

46 Comp. Gen. 784


To S. F. Durst & Company, Inc., May 9, 1967:

Under your proposal the sulfadiazine tablets were to be manufactured in the United States from foreign sulfadiazine costing more than all the other ingredients used in the manufacture of the tablets. Thereafter, the manufactured tablets were to be forwarded to Chase where the bottling and packaging operation described above would be performed using domestic cartons, glassware, cotton, etc. Thus, the principal question for resolution is whether, as you contend, the end article being obtained for use by the United States would be bottles of sulfadiazine tablets 'manufactured" by Chase (in which event, its components having been likewise manufactured in the U.S., it would be an American article under the act), or whether the end article being purchased would be the sulfadiazine tablets (in which event the act would be for application since the foreign made sulfadiazine constitutes the main cost of its components).

The purpose of the Congress in enacting the Buy American Act was to afford some protection to the American industry and economy against foreign competition with respect to such unmanufactured and manufactured articles as were to be acquired for ''use by the United States." The act does not define the term 'manufactured" and is silent as to the stages in the production production processes at which an end article may be regarded as having been manufactured. A review of the legislative history of the act, however, affords no basis for a conclusion that in the procurement of a manufactured article the term was intended to extend beyond the completion of that article in the form required for its use by the United States, or that the act was intended to protect any industry or materials not theretofore involved in the production of that article or its components. In its report on your protest, the Defense Supply Agency made the following observations:

In the actuality of Government procurement, there are a number of identifiable articles delivered to the Government under almost every contract.

In the nature of things, detailed packaging and packing requirements, a common part of specifications, undoubtedly contribute a significant number of the items. In the area of drug procurement, identifiable articles would be cartons of various sizes, bottles, and closures, cotton, Sulfadiazine Tablets (as an example), etc. Each article is readily serverable from the others, they do not function together, nor do they have a common purpose. The outer carton protects the contents during shipping and will probably be discarded at the first destination. The intermediate container will be distributed to larger using units, such as hospitals,


« PreviousContinue »