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We have taken the position, based on our reading and interpretation of the language of the Act in the light of its entire legislatiye history, that section 4(c) was intended to apply to all successor contracts for furnishing the same seryices, entered into pursuant to procurement action by the same Federal facility, and not only in those cases where the government contract work is performed at the same government installation. Neither the statutory language nor the committee reports purport to limit the applicability of section 4(c) to successor contracts for services to be performed at the same location as under the predecessor contract. In cases where the place of performance cannot be ascertained when bid specifications are supplied to potential contractors. The services, wherever performed, are of course furnished to meet the service needs of the procuring facility inviting the bids and charged with administration of the contract. The subcommittee which drafted the 1972 amend ments to the Service Contract Act was especially concerned, in the case of successor contracts for services, with establishing a wage floor for all bidders which would eliminate the competitive advantage which new bidders could otherwise gain by determinations of prevailing wages lower than the collectively bargained wages paid by an incumbent contractor, and which wage floor would prevent wage losses that might otherwise be suffered by employees as a result of selection of a new contractor paying lower wages than those agreed to by the incumbent in a collective bargaining agreement.

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In his letter of December 3, 1973 to the Secretary of the Air Force in respect to the cost-reimbursable service contract entered into with Pan American World Airways, Inc. for the operation and maintenance of the Eastern Test Range, Brevard County, Florida, the Deputy Comptroller General wrote

** * The operative words of section 4(c) refer to "contract",
not "contractor" ("no contractor or subcontractor under a con-
tract, which succeeds a contract * * *" (Emphasis added.)) Thus,
the statute is applicable by its terms to a successor contract,
without regard to whether the successor contractor was also the
predecessor contractor, and, as noted previously, the exercise
of an option, as was done here, is treated as the award of a
new contract under the SCA. Furthermore, the fact that a
successor contractor (whether or not he was also the predecessor
contractor) has its own collective bargaining agreement does not
negate the clear mandate of the statute that the rates called
for by the predecessor contract shall be the minimum rates pay-
able under the new contract unless DOL decides otherwise pur-
suant to section 4(c) (Opinion B-179871, p.5).

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THE CONTRACTORS ASSOCIATION OF EASTERN PENNSYLVANIA, ET AL.

V.

THE SECRETARY OF LABOR, ET AL.

311 F.Supp. 1002 (1970) In the United States District Court for the Eastern District of Pennsylvania.

No. 70-18. Dated March 13, 1970.

Before Weiner, Judge.

The Contractors Association of Eastern Pennsylvania consisting of a group of contractors, engaging in heavy highway and utility construction and intervening contractors have sued various Federal officials and the General State Authority of the Commonwealth of Pennsylvania in an effort to strike down a regulation issued by the Department of Labor which is entitled the "Revised Philadelphia Plan". The Plan covers six construction tradest and geographically applies to Bucks, Chester, Delaware, Montgomery and Philadelphia Counties in Pennsylvania. The Philadelphia Plan became effective on September 29, 1969. It was issued on June 27, 1969, in implementation of the authority of the Secretary under Executive Order 11246 of September 24, 1965 as amended, 30 F. R. 12319, 32 F. R. 14303, 34 F. R. 12986 which required that Federal

, contracts and federally assisted construction contracts contain specified language obligating the contractor and his subcontractors not to discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Executive Order further required the contractors and subcontractors to "take affirmative action to insure that applicants are employed, and that employes are treated during employment, without regard to their race, color, religion, sex or national origin". Executive Order 11246, § 202 (1). Failure to comply with the required contractual commitments imposes various sanctions on the contractors which include the cancellation, suspension or termination of contracts and the debarment of a contractor from further Government contracts. However, no sanction may be imposed unless efforts at voluntary resolution have failed nor without affording the contractor an opportunity for a hearing. Thus the seeds of the Philadelphia Plan were planted. rate orders were issued by the Department of Labor, the first on June 27 and the second on September 23, 1969. In substance, the Plan required that with respect to construction contracts in the Philadelphia area which are subject to Executive Order 11246 and where the estimated total cost of the construction project exceeds $500,000, each bidder must, in the affirmative action submitted with his bid, "set specific

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1 Iron workers, plumbers and pipe fitters, steamfitters, sheet metal workers, electrical workers and elevator construction workers.

goals of minority manpower utilization which meet the definite standard" included in the invitation for bids. The bidder could also meet this requirement by agreeing to participate in a multi-employer affirmative action program approved by the Office of Federal Contract Compliance.

The Department of Labor order of June 27th was based on the department's finding that although the overall minority groups representation in the construction industry in the five-county Philadelphia area was thirty (30) percent, in the six trades involved, minority representation was approximately one (1) percent. The Department of Labor concluded that the contributing factors to the small number of minority representation in these trades were due to the following:

"(a) Contractors hire a new employee complement for each construction job on the basis of referral by the construction craft unions;

"(b) The refusal of certain of these unions to admit Negroes to membership or apprenticeship programs;

"(c) A preference in work referrals to union
members and to persons who had work experience under
union contracts. This resulted in a departmental finding
that "special measures" were necessary to provide equal
employment opportunity in these six trades for federally
involved construction."

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Predicated upon public hearings held in Philadelphia on August 26, 27 and 28, 1969, the September 23rd Order issued. This order established the ranges within which the contractor's minority group employment goals should be set. It provided that in the first year, employment "ranges" vary between four (4) and nine (9) percent; in the second year between nine (9) and fifteen (15) percent; and in the third year between fourteen (14) and twenty (20) percent; and in the fourth and last year between nineteen (19) and twenty-six (26) percent. The mathematical formula was based on findings as to the availability of minority group persons for employment and the impact of the program on the existing labor force and a determination that a contractor could commit himself to the employment goals 'without adverse impact on the existing labor force" which goals may be met through the employment by the contractor of journeymen, trainees or apprentices.

Safeguards are provided by the Plan. The obligation to meet the goals is not absolute. If the contractor meets the goals he will be presumed to be in compliance with the requirements of the Executive Order. The regulation also states: "In the event of failure to meet the goals, the contractor shall be given an opportunity to demonstrate that he made every good faith effort to meet his commitment. In any proceeding in which such good faith performance is in issue, the contractor's entire compliance pos ture shall be reviewed and evaluated in the process of considering the imposition of sanctions". Executive Order 11246 §. 8(a). Under the Plan, for the purpose of determining whether the contractor is in compliance, it is "no excuse" that the union with which he has a collective bargaining agreement fails to refer minority employees.

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Since the Philadelphia Plan went into effect, we have been advised that six contracts have been let involving a total cost of approximately $37 million, with Federal assistance totaling approximately $11 million. The present action is before us in connection with a grant from the Department of Agriculture to the Commonwealth of Pennsylvania in connection with the Brandywine water conservation project, involving a cost of approximately $4 million, of which approximately $1.1 million represents Federal assistance. Invitation for bids including the requirements of the Philadelphia Plan were issued by the General State Authority of Pennsylvania. No contracts have as yet been awarded on this project.

This law suit is bottomed upon the plaintiff's allegation that the Philadelphia Plan violates the Constitution and laws of the United States and the laws of the Conmonwealth of Pennsylvania. In conjunction with its complaint the plaintiffs have filed a motion for a preliminary injunction and have moved for a summary judgment. The defendants have countered with a motion to dismiss the complaint or in the alternative, for summary judgment.

We will first consider the defendants' attack upon the standing of the plaintiffs to maintain this action. Defendants argue that the plaintiffs lack standing to attack the validity of the Philadelphia Plan. "They place their reliance upon the decision of the Supreme Court in Perkins v. Lukens Steel Co., 310 U.S. 113 (190). In Perkins, the Secretary of Labor fixed minimum wages which government contractors were required to pay their employees. The suit of the plaintiffs, iron and steel manufacturers, who bid on government contracts, for declaratory and injunctive relief was dismissed on the ground that the plaintiffs lacked standing to challenge the validity of the Secretary's directive. We, of course, do not and cannot quarrel with the edict of the Supreme Court which settled the principle that:

"Like private individuals and businesses, the Govern-
ment enjoys the wrestricted power to produce its own
supplies, to determine those with whom it will deal, and
to fix the terms and conditions upon which it will make
needed purchases.

It was not intended to be a
bestowal of litigable rights upon those desirous of
selling to the Government; it is a self-imposed restraint
for violation of which the Government. but not
private litigants. can complain." Perkins v.
Lukens Steel Co., supra at 127.

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The defendants contend that the plaintiffs are in the same class of litigants described in Perkins and therefore lack standing to attack the requirements contained in Executive Order 11246. To the contrary, the plaintiffs argue that as the impact of the governmental action is greatest on them, access to the courts is permissible.

Our examination of the record reveals that the Contractors Association is a corporation comprised of more than eighty business organizations engaged in heavy construction. Certain of its members wished to bid on the project and four of its members did bid. The plaintiff acts as spokesman for its members concerning the relationship between its members and the government.

Undoubtedly, the force of Executive Order 11246 is focused upon contractors who desire to bid on federal or federally assisted construction Of necessity, the Order will require them to make significant

changes in their every day business practices or they will be clearly exposed to the imposition of strong sanctions. In Abbott Laboratories v. Gardner, 387 U.S. 136, 153 (1967) a compendium of the most recent legal principles applicable to the kind of problem governing standing, the Supreme Court said:

"Where the legal issue presented is fit for judicial resolution, and where a regulation requires an immediate and significant change in the conduct of their affairs with serious penalties attached to noncompliance, access to the courts under the Administrative Procedure Act and the Declaratory Judgment Act must be permitted, absent a statutory bar or some other unusual circumstance, neither of which appears here."

It is apparent that the legal issue that the plaintiffs have presented is fit for judicial resolution. It is also evident that the Executive Order will require significant changes in the contractors' employment practices which, under certain circumstances, may subject them to serious penalties. There remains, however, the problem of determining the circumstances under which the plaintiffs may have the necessary standing to maintain this action. The answer depends, in part, upon the breadth of a group of cases which influenced and in large measure dominated the law on this subject. Hanson v. Denckla, 357 U.S. 235, 244 (1958) reaffirmed the principle that a person cannot invoke the jurisdiction of the court to vindicate the right of a third party. See: Liberty Warehouse Company v. Burley Tobacco Growers' Co-Operative Marketing Association, 276 U.S. 71 (1928); Dahnke-Walker Company v. Bondurant, 257 U.S. 282, 289 (1928). Flast v. Cohen, 392 U.S. 83, 98 (1968) is cited as authority for the principle that:

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· The 'gist of the question of standing' is
whether the party seeking relief has 'alleged such a
personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely
depends for illumination of difficult constitutional
questions'. Baker v. Carr, 369 U.S. 186, 204 (1962).
In other words, when standing is placed in issue in
a case, the question is whether the person whose stand-
ing is challenged is a proper party to request an
adjudication of a particular issue and not whether the
issue itself is justifiable'".

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A financial loss is not by itself a sufficient interest to sustain a judicial challenge to governmental action. Abbott Laboratories v. Gardner, 387 U.S. at 152, supra; Frothingham v. Mellon, 262 U.S. 447 (1923).

.

It is our opinion that the Contractors Association lacks standing as a proper party to request an adjudication because of its failure to establish that the association has a personal stake in the outcome of the controversy. From the averments of the complaint and supporting documents filed with us, we are complelled to recognize that the harm complained of is possible discrimination against the members of its organization. See also: Heald v. District of Columbia, 259 U.S. 114 (1922).

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