Court Opinion

ID: 9483124
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:11:50.9705+00
Date Added: 2024-06-11T17:49:26.331904
License: Public Domain

TORRUELLA, Circuit Judge
(concurring' in part and dissenting in part).
This case involves two related, but ultimately independent issues: (1) the performance of appellant Vigilantes under one contract — the 1977 contract — and (2) its overall performance under ten contracts, including the 1977 contract. I agree with the majority that Vigilantes’ overall performance under the ten contracts supports the Secretary’s decision to debar Vigilantes. Nevertheless, I believe that in concluding that Vigilantes was compelled to pay a $3.60 wage rate under the 1977 contract, the majority overlooks crucial facts. According to the majority, 29 C.F.R. § 4.6(d)(2) & § 4.165(c) would support the following holding; if a sub-contractor takes over a service contract and it is informed by the agency in charge of administering the Service Contract Act (“SCA”) — the Department of Labor (“DOL”) — that $2.45 is the proper wage rate to pay under that service contract, the sub-contractor should nevertheless disregard DOL’s determination and pay another rate.13 I cannot agree.
I respectfully suggest that the majority has ignored two crucial facts in the administrative record. First, in the 1977 contract, Vigilantes was the sub-contractor and the Federal Aviation Administration (“FAA”) was the contractor. This is important because Vigilantes played a secondary role in the negotiating process and both the FAA and DOL informed Vigilantes to pay the $2.45 wage rate. Second, and most important, DOL investigated Vigilantes in 1978 for Fair Labor Standards Act and SCA violations. At the time, DOL found that Vigilantes was in full compliance with the SCA, including the provisions dealing with the payment of a proper wage rate. This investigation raises an issue of basic fairness; how can we say that the Secretary’s decision is supported by a preponderance of the evidence when Vigilantes was informed by DOL in 1978 — after a full investigation — that by virtue of its payment of the wage rate determined by DOL— $2.45 — it was fully complying with the provisions of the SCA?14
With all due respect, I believe the majority’s analysis reads out of the regulation the following plain language of Section 4.6(d)(2):
If this contract succeeds a contract, subject to the Service Contract Act of 1965 as amended, under which substantially the same services were furnished and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, then in the absence of a minimum wage attachment for this contract neither the contractor nor any subcontractor under this contract shall pay any service employee performing any of the contract work less than the wages and fringe benefits Id. (emphasis added).
*1420The majority attributes no significance to this clear language. Regardless of how we characterize the underlined language, it seems to me that it is unambiguous and we should apply it.15 The dispositive issue here is whether in light of Section 4.6(d)(2) there are sufficient facts to show that DOL’s grossly negligent administration of the SCA — unless we choose to ignore that DOL gave Vigilantes the wage rate for the 1977 contract and informed Vigilantes that it was the proper wage more than once— led Vigilantes to pay a lower wage rate.
The majority’s finds 29 C.F.R. § 4.165(c) conclusive. Section 4.165(c) provides:
The prevailing wage rate established by a wage determination under the Act is a minimum rate. A contractor is not precluded from paying wage rates in excess of those determined to be prevailing in the particular locality. Nor does the Act affect or require the changing of any provisions of union contracts specifying higher monetary wages or fringe benefits than those contained in an applicable determination....
(emphasis added). The majority relies on Section 4.165(c) to conclude that a subcontractor is compelled to second-guess the directives provided by DOL relative to wages. The language of Section 4.165(c), however, merely restates the basic principle that the minimum wage determination does not preclude the payment of higher wages by means of a post-wage determination union contract. More importantly, at the time the 1977 contract was negotiated, other regulations then in effect showed that an inexperienced sub-contractor like Vigilantes was entitled to rely on the wage determinations provided by DOL. 29 C.F.R. § 4.164(a) & (c) (1977), which preceded Section 4.165, provided:
§ 4.164 Making the determinations and informing contractors
(a) Information considered. The minimum monetary wages and fringe benefits set forth in determinations of the Secretary are based on information as to wage rates and fringe benefits in effect at the time the determination was made. The Department considers all pertinent information_ The determinations may be based on the wage rates and fringe benefits contained in union agreements where such have been determined to prevail in a locality for a specified occupational group.
* * * * * *
(c) Informing contractors of applicable determinations. Contractors and subcontractors on contracts subject to the Act are apprised of the Secretary’s determinations applicable at the time of the award by specification in the contract of the determined wage rates and fringe benefits.... Prospective contractors are advised, in the invitations for bids or negotiation papers issued by the contracting agency, of the minimum monetary wages and fringe benefits required under the most recent applicable determinations of the Secretary for service employees who will perform the contract work,
(emphasis added). Sections 4.164(a) & (c) conclusively show that the Secretary’s decision is not supported by a preponderance of the evidence. As the AU concluded: “[Vigilantes] received contradictory, incorrect, or no information in many instances; and that must be taken into account in evaluating [Vigilantes’] performance.” A provision of the SCA further supports Vigilantes’ argument that DOL misled it by providing an erroneous wage determination. Section 2(a) provides that every contract for services entered into by the United States shall contain:
(1) A provision specifying the minimum monetary wages to be paid the various classes of service employees in the performance of the contract or any subcontract thereunder, as determined by the Secretary, or his authorized representative, in accordance with prevailing rates for such employees in the locality, or, where a collective-bargaining agreement covers any such service em*1421ployees, in accordance with the rates for such employees provided for in such agreement, including prospective wage increases provided for in such agreement as a result of arm’s-length negotiations.
41 U.S.C. § 351(a) (emphasis added). Neither the district court nor the majority mention Section 2(a), although this Section — together with the other regulations discussed previously — conclusively show that the wage determination attached to the 1977 contract would have led a reasonable contractor to believe that he or she was obliged to pay the wage rate as established by DOL.16
The goal of SCA is to protect labor. But that goal has no relevance in this case; the question here is who should bear the responsibility for the mistakes made by DOL? It seems axiomatic under basic principles of administrative law that a SCA contractor should be penalized only for not following DOL’s determinations. If DOL — the agency responsible for the administration of the SCA — informs a subcontractor that it is complying with the statute, should the sub-contractor go out of its way to question the agency’s determination?
I respectfully dissent.

. In this sense, the majority’s conclusion that ”[i]t should not be open to a successor contractor to take it on its own to decide that his predecessor's agreement was not properly negotiated and leave all in suspense until there has been a complaint and a trial before an ALJ,” Op. at 1416-17, is a sound one. Yet it has no bearing on the facts of this case because Vigilantes was informed by both the DOL and the FAA that it should pay the wage determined in the attachment. As the majority later recognizes, instead of receiving a copy of the collective bargaining agreement, Vigilantes was given "an erroneous minimum wage attachment.” Op. at 1417.

. Contrary to the majority’s implicit characterization of my views, I do not claim that DOL was estopped from bringing forth claims under the 1977 contract. Op. at 1418. Rather, the fact that DOL’s investigation in 1978 concluded that Vigilantes was paying the proper wage rate is another fact supporting Vigilantes' claim that the Secretary’s decision is not supported by a preponderance of the evidence.

. In fact, the presence of a wage determination attachment here renders the issue of whether the agreement was negotiated at arm's length or not of little, if any, significance.

. At oral argument the government conceded that it had an obligation to include a wage determination attachment to the 1977 contract, and that in this case, they included an erroneous wage rate determination.