Jurisdictional issues arising from disputes about wages and benefits required by federal minimum wage statutes like the Davis-Bacon Act and the Service Contract Act can be tricky. In some cases, the Department of Labor has exclusive power to resolve such disputes. In others, the dispute must be resolved by the contracting officer, with appeal rights available under the Contract Disputes Act. The ASBCA’s recent decision in Caddell Constr. Co., ASBCA No. 57831 (May 21, 2012) [pdf] helps determine which cases fall on either side of this line.
The case arose from an Air Force contract to build a new commissary and related site work at Fort Campbell, Kentucky. The solicitation included two wage determinations—one for highway construction with low wage rates and another for building construction with much higher wage rates. Prior to bid, the agency told bidders to use the lower highway construction wage determination. During performance, the contracting officer required the contractor to pay wages according to the higher wage determination for building construction.
The contractor submitted a claim in accordance with the Contract Disputes Act. At the Board, the government moved to dismiss the appeal, arguing that such labor disputes are reserved to the Department of Labor. The Board denied the motion, holding that the Board has jurisdiction to hear disputes over wage issues “where there was an alleged mistake (mutual or unilateral) as to the applicability of the Davis-Bacon Act to appellant’s employees.” The Board concluded that it had jurisdiction to hear the contractor’s claim to recover additional wages paid to employees as a result of faulty wage rate information provided to bidders before submission of bids.
But why is this important?
It’s important because FAR 52.222-14, Disputes Concerning Labor Standards, says that disputes involving labor standards like the Davis-Bacon Act and the Service Contract Act must be resolved under procedures established by DOL, not the claims process established by the Contract Disputes Act. The clause refers to the DOL procedures for wage disputes. Under this clause, “[s]uch disputes shall be resolved in accordance with those procedures and not the Disputes clause of this contract. Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the employees or their representatives.”
Based on the language of FAR 52.222-14, it sounds like a contractor required to pay higher wages as a result of a change in wage determination must bring its claim to DOL. But the ASBCA has long held that the contracting officer and the Boards of Contract Appeals have jurisdiction to resolve claims for funds withheld for labor-standards violations when: (1) “alleged Government actions and omissions caused [the contractor] to erroneously base its bid on labor calculations premised on [a violation of the Davis-Bacon Act or the Service Contract Act];” and (2) when “the complaints focus on the contracting officer’s role in soliciting bids and awarding the contracts.” According to the decision in Caddell Construction, the Board also has jurisdiction over a claim for reimbursement of additional wages paid where there was an alleged “mistake (mutual or unilateral) as to the applicability of the Davis-Bacon Act to appellant’s employees.”
There is a simple rule of thumb to determine whether a wage dispute is reserved to the Department of Labor. DOL has the exclusive jurisdiction to decide the wage rates and benefits in a particular wage determination, but only the contracting agency can grant a contractor’s claim to recover additional costs to comply with a wage determination. DOL has jurisdiction to decide disputes as to the correct rate of pay. The contracting officer (and the Boards) have jurisdiction to resolve claims for additional compensation relating to the payment of specified wages.