ARMED SERVICES BOARD OF CONTRACTAPPEALS Appeal of

-- Parsons Evergreene, LLC Under Contract No. FA8903-04-D-8703 APPEARANCES FORTHE APPELLANT: ) ) ) ) )

APPEARANCES FOR THE GOVERNMENT: ASBCA No. 61784

Douglas S. Oles, Esq. James F. Nagle, Esq. Adam K. Lasky, Esq. Howard W. Roth III, Esq.

Oles Morrison Rinker & Baker LLP Seattle, WA Jeffrey P. Hildebrant, Esq.

Air Force Deputy ChiefTrial Attorney Michelle D. Coleman, Esq.

Trial Attorney OPINION BYADMINISTRATIVE JUDGE PROUTY REGARDING ALLEGEDLY TARDYREQUESTS FORPAYROLL RECORDS As stated in footnote 1ofthe majority opinion for ASBCA No. 58634 and in our order issued today on the matter, for reasons ofclarity andjudicial efficiency, we*issue this separate opinion under a new appeal number upon the subject of appellant, Parsons Evergreene, LLC's (PE's), demand for compensation ofcosts associated with the Air Force's (AF's) allegedly tardy requests for payroll records. Judge Clarke, who presided overthe hearing in this matter, believes, for those reasons set forth in his dissent, thatthe AF's failure to engage in a "prompt" investigation ofthe payroll matter should entitle PE to compensationpursuant to Federal Acquisition Regulation (FAR) 22.406-1. As we explain below, although we adopt the material findings offact made by Judge Clarke's majority opinion in ASBCANo. 58634, concurrently filed today, PE's appeal based upon FAR22.406-1 is denied.

*Because the twojudges who reviewed Judge Clarke's original opinion in ASBCA No. 58634 (Judges Shackleford and Prouty) came to a different conclusion than Judge Clarke on the payroll review issue, the remaining twojudges from Judge Clarke's division were asked to consider it, consistent with Board practice and procedure. As reflected below, they concurred with Judges Shackleford and Prouty.

### We deny this appeal because FAR 22.406-1 does not provide aremedy to a contractor for the government's untimely investigation ofcomplaints relating to labor standards. Under longstanding law: In order for aprivate contractorto bring suit against the Government for violation ofa regulation, that regulation must exist for the benefit ofthe private contractor. Freightliner Corp. v. Caldera, 

### 225 F.3d 1361, 1365 (Fed. Cir. 2000) (citing Cessna Aircraft Co. v. Dalton, 

### 126 F.3d 1442, 1451 (Fed. Cir. 1997); and Rough Diamond Co. v. UnitedStates, 

### 351 F.2d 636, 640-42 (Ct. Cl. 1965)). Cessna 

### was particularly clear: The primary intent ofa statute orregulation must be to protect orbenefit a class ofpersons in order for that class to be able to bring suit against the government for violating the statue or regulation. 126 F.3d at 1451 (citing Rough Diamond, 

### 351 F.2d at 640, 642). To be sure, aregulation may be intended to benefit more than one class ofpersons, see, e.g., Todd Constr., L.P. v. UnitedStates, 

### 656 F.3d 1306, 1314 (Fed. Cir. 2011) (performance evaluation regulation meant to benefit both government and contractor), but Freightliner 

### and Cessna 

### make clear that the operative test is not that application ofthe regulation merely be to the benefit ofthe contractor in the particular controversy for which it is bringing suit, but that the contractorhas been an intended beneficiary all along. With this in mind, we tum to the text ofFAR 22.406-1. That FARprovision is entitled, "Policy," which underscores, to us, that the section is meant as a broad explanation oflaterFARprovisions as well as an instruction for contracting agencies about the goals of their labor standards programs. Subsection (a) ofFAR 22.406-1 provides, in full: General. 

### Contracting agencies are responsible for ensuring the full and impartial enforcement oflabor standards in the administration ofconstruction contracts. Contracting agencies shall maintain an effective program that shall include

- (I) Ensuring that contractors and subcontractors are informed, before commencement ofwork, oftheir obligations under the labor standards clauses ofthe contract;

2(2) Adequate payroll reviews, on-site inspections, and employee interviews to determine compliance by the contractor and the subcontractors, and prompt initiation of corrective action when required; (3) Prompt investigation and disposition of complaints; and (4) Prompt submission ofall reports required by this subpart. The remainder ofFAR22.406-1, subsection (b), directs the issuance ofpreconstruction letters and the arrangement ofpreconstruction conferences with contractors. Reviewing the full text confirms ourview that the FAR's requiring "prompt investigation and disposition ofcomplaints," 

### see FAR 22.406-1( a)(3), was, at most, for the benefit oflabor, for whose advantage labor standards are required to be enforced, not for the benefit ofthe contractor. 

### See Freightliner, 225 F.3d at 1365. Moreover, nothing in the language ofthe FARprovision comes close to suggesting that its "primary intent" was to "protect or benefit"the contractor class. 

### See Cessna, 126 F.3d at 1451. Alternatively, we could conclude that FAR22.406-1, in setting out general policies for contracting agencies to follow, but not specifics, was meant merely for the benefit of the government as a "housekeepingregulation," providing guidance to government employees about howto establish their labor standards programs, and thus its violation gives no class any enforceable rights. 

### See, e.g., Hartman v. Nicholson, 483 F.3d 1311, 1315-16 (Fed. Cir. 2007). Ultimately, we need not decide between whether labor orthe government was the intended beneficiary to determine that the subject provision was not intended for the benefit ofthe contractor. Creation ofa cause ofaction against the government does not occurby happenstance, and there is not enough here to create one anew. Thus, werespectfully disagree with our colleague and deny the portion ofPE's appeal seeking compensation for the allegedly tardy AF request for payrolls. Dated: September 5, 2018

(Signatures continued)
3 J.'REID PROUTY Administrative Judge Vice Chairman Armed Services Board ofContract AppealsI concur

RICHARD SHACKLEFORD Administrative Judge Acting Chairman Armed Services Board ofContractAppeals

I concur

ALEXANDER Administrative Judge Armed Services Board ofContract Appeals

4 I concur

DAYID D'ALESSANDRIS Administrative Judge Armed Services Board ofContract Appeals

I dissent (see separate opinion)

Administrative Judge Armed Services Board ofContractAppealsDISSENTING OPINION BY ADMINISTRATIVE JUDGE CLARKE REGARDING ALLEGEDLYTARDY REQUESTS FORPAYROLL I respectfully disagree with my colleagues. PE claims $762,130 for the government's violation ofFAR22.406-1 Policy, dealing with enforcement oflabor standards, in particularpayroll reviews. In order for a contractorto have a cause ofaction against the government for violation ofa regulation, it must provethat the regulation exists for the benefit ofthe contractor. 

### Freightliner Corp. v. Caldera, 225 F.3d 1361, 1365 (Fed. Cir. 2000). FAR22.406-1 requires that ifa problem is found during payroll reviews, on-site inspections and employee interviews there will be "prompt initiation ofcorrective action," "Prompt investigation and disposition ofcomplaints," and "Prompt submission ofall reports required by this subpart" (finding 201).* I infer from this that the payroll reviews themselves must also be prompt or the entire regulatory scheme becomes meaningless. PE and its subcontractors submittedpayrolls commencing in 2005 (finding 203). The AirForce (AF) "sampled" payrolls and found no problems until the first labor interview on 6 December2007 (id.). The interview caused the AF to look closer at the payrolls. This started the lengthy process ofthe AF requiring PE to resubmit pastpayrolls and respond to AF questions between 2008 and as late as 2012 (findings 203-07). The AF tookbeneficial occupancy on 11 September 2008 (finding 197). I accept PE's position thatthe AF's waiting to commence interviews and detailed payroll reviews until 2008, whenthe contract was almost over, made it much more difficult and expensive for PE to comply. PE has proven that the government failed to conductpayroll reviews promptly and as a result it was much more difficult and expensive for PE to respond. I conclude that proofofsuch direct and predictable harm to a contractor is prima facie evidence that a regulation, in this case FAR22.406-1, exists for the benefit ofthe contractor. The government is then required to come forward with evidence to contest the prima facie case. Ifthe government fails to do so, the prima facie case stands uncontroverted and the party with the burden ofproofwill have established its case by a preponderance ofthe evidence. 

### Environmental Safety Consultants, Inc., ASBCA No. 53485, 05-1 BCA**~** 32.903 at 163,019. In this case. the government presented no evidence or argument on the benefit issue. I agree with my colleagues that FAR 22.406-1 also benefits workers,

* References to findings are to the companion decision issued simultaneously with this decision.



### 5

### but it is unlikely workers will ever avail themselves ofthe cause ofaction so my colleagues concession is academic. I sustained this claim and awarded PE $571,598 for the government's violation ofFAR 22.406-1. Dated: September 5, 2018

CRAIG CLJ\E Administrative Judge Armed Services Board ofContract Appeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 61784, Appeal ofParsons Evergreene, LLC, rendered in conformance with the Board's Charter. Dated:

6 

### JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals



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