Court Opinion

ID: 4344855
Source: CourtListenerOpinion
Date Created: 2018-11-27 19:00:05.485567+00
Date Added: 2024-06-11T14:49:16.446353
License: Public Domain

.ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
Centerra Group, LLC f/k/a The Wackenhut )             ASBCA No. 61267
 Services, Inc.                         )
                                        )
Under Contract No. NNA06CD65C           )

APPEARANCES FOR THE APPELLANT:                        Karen L. Manos, Esq.
                                                      Melinda R. Biancuzzo, Esq.
                                                       Gibson, Dunn & Crutcher LLP
                                                       Washington, DC

APPEARANCES FOR THE GOVERNMENT:                       Scott W. Barber, Esq.
                                                       NASA Chief Trial Attorney
                                                      Brian Stanford, Esq.
                                                       Senior Trial Attorney
                                                       NASA Headquarters
                                                       Washington, DC
                                                      Paul H. Kim, Esq.
                                                       Trial Attorney
                                                       NASA Ames Research Center
                                                       Moffett Field, CA

         OPINION BY ADMINISTRATIVE JUDGE WOODROW ON THE
                  GOVERNMENT'S MOTION TO DISMISS

       Appellant Centerra Group, LLC f/k/a The Wackenhut Services, Inc. (Centerra),
appeals from a contracting officer's final decision denying its claim for reimbursement
of back pay and related costs arising out of a contract for fire protection services at the
National Aeronautics and Space Administration (NASA or government) Ames
Research Center in Moffett Field, California.

       NASA moves to dismiss the appeal for lack of jurisdiction, alleging that
Centerra' s claim is foreclosed by the labor standards requirements of Centerra' s
contract, which vest the U.S. Department of Labor (DOL) with exclusive jurisdiction
to entertain disputes concerning labor standards requirements. Centerra opposes. We
deny the government's motion.
       STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. Centerra and the government are parties to Contract No. NNA06CD65C (the
contract) (R4, tab 1).

       2. The contract was awarded on June 28, 2006, for fire protection and related
services at NASA Ames Research Center in Moffett Field, California (R4, tab 1).

       3. The contract incorporates the standard Federal Acquisition Regulation
(FAR) clauses applicable to a cost-reimbursement service contract, including among
others: FAR 52.216-7, ALLOWABLE COST AND PAYMENT (DEC 2002); and·
FAR 52.222-41, SERVICE CONTRACT ACT OF 1965, AS AMENDED (JUL 2005) (R4, tab
1 at 29-30).

       4. FAR 52.222-4l(t) provides:

             Disputes Concerning Labor Standards. The U.S.
             Department of Labor has set forth in 29 CFR Parts 4, 6,
             and 8 procedures for resolving disputes concerning labor
             standards requirements. Such 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.

       5. The contract incorporates by reference FAR 52.233-1, DISPUTES (JUL 2002)
(R4, tab 1 at 30).

       6. The contract, as initially awarded, incorporated a Collective Bargaining
Agreement (CBA) between SecTek, Inc. and the Moffett Field Firefighters
Association Local 1-79 (MFFA or union), dated June 3, 2005. As the successor
contractor to SecTek, Centerra was obligated by both the DOL Wage Determination
incorporated in the contract and FAR 52.222-4l(f) to pay its employees the wages and
fringe benefits as set forth in the SecTek CBA. (R4, tab 2 at 3)

      7. The CBA entitles the union to arbitrate grievances (R4, tabs 1-6), and
provides that binding arbitration is the exclusive mechanism for resolving disputes
concerning wages and benefits under the agreement (R4, tab 2 at 9-13, tab 3 at 9-12).

        8. The relevant CBA was incorporated in the contract by Modification No. 8.
dated July 27, 2007 (R4, tab 2); Modification No. 9, dated September 5, 2007 (R4,
tab 3); Modification No. 44, dated August 19, 2010 (R4, tab 4); Modification No. 48,

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dated November 24, 2010 (R4, tab 5); and Modification No. 92, dated December 16,
2013 (R4, tab 6).

       9. On June 14, 2014, the MFF A presented a written grievance alleging that
Centerra violated the Fair Labor Standards Act (FLSA) by failing to pay overtime
compensation for work performed by MFF A members employed to provide fire
protection and related services at the NASA Ames Research Center (R4, tab 7 at 1).

        10. The parties met, but were unable to resolve the grievance, and on June 19.
2015, the MFF A submitted the grievance to arbitration pursuant to the CBA. The
arbitrator concluded that the CBA's overtime provisions are contrary to the FLSA.
(R4, tab 7 at 1, 65)

        11. On February 27, 2016, the arbitrator awarded the MFFA members
$2,702,254 in back pay from June 19, 2010 through July 20, 2015 (the maximum
statutory period), $2,182,732 in liquidated damages for the same period, and $238,199
in interest (R4, tab 8 at 61 ).

        12. Centerra appealed the arbitration decision to the U.S. District Court for the
Northern District of California. On March 31, 2017, the district court upheld the
arbitrator's decision and awarded the MFFA members $2,702,254 in back pay;
$2,182,732 in liquidated damages for the same period, and $238,199 in interest;
$254,655 in attorneys' fees; and $24,271.46 in costs. The court remanded to the
arbitrator the MFFA's request for additional attorneys' fees in an amount of
$155,189.93 and post-award interest of $56,211.49. The total for the award, plus the
MFFA's asserted post-award costs, is $5,613,514.88. (R4, tab 12)

        13. On April 7, 2017, Centerra submitted to the NASA contracting officer
(CO) a certified claim forreimbursement under the contract in the amount of
$6,184,910.13 in back pay and related costs that Centerra incurred as the result of the
arbitrated grievance filed by the unionized firefighters working on the contract (R4,
tab 13 ). This amount included:

             Arbitration award                      $5,402, 111.46
             Interest from date of award until         $56,211.49
             date of district court judgment
             Attorneys' fees and costs from           $155,189.93
             award until district court judgment
             Additional attorneys' fees and           $364,674.82
             costs since district court judgment
             Payroll taxes upon payment of            $206,722.43
             back pay
             Total Amount of Claim                  $6,184,910.13

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      14. By letter dated May 22, 2017, the CO issued a written determination
denying Centerra' s certified claim. The letter stated, in part:

               It is my Determination, as the Contracting Officer, that it is
               premature for Centerra to seek reimbursement from the
               United States Government for any such costs and penalties
               prior to Centerra obtaining a final determination from the
               U.S. Department of Labor, and, concomitantly, it would be
               premature for me to evaluate and determine the underlying
               merits of this claims, or lack thereof. Consequently, this
               claim is denied.

(R4, tab 14)

       15. On August 2, 2017, appellant timely filed a notice of appeal.

      16. DOL has not been asked to render a final determination in connection with
the Union's grievance.

                                        DECISION

       The government moves for dismissal of appellant's claim for reimbursement of
back pay on the grounds that it falls within the exclusive jurisdiction of the DOL.
Pursuant to FAR 52.222-41 (t), DOL, not the Board, possesses jurisdiction to entertain
"disputes concerning labor standards requirements." According to the government,
labor standards for federal service contracts include matters involving overtime
compensation for service employees (gov't br. at 2 (citing 29 C.F.R. § 4.180)).
Therefore, pursuant to FAR 52.222-4 l(t), appellant's claim falls within DOL's
exclusive jurisdiction and this Board is without jurisdiction to entertain appellant's
claim under the contract's Disputes clause.

        In response, Centerra contends that the dispute before the Board is not over the labor
standards requirements applicable to the contract, but over the government's obligation to
reimburse appellant for costs -incurred pursuant to an arbitration award under a CBA with
its unionized employees. According to appellant, any dispute involving "labor standards
requirements" already has been resolved in favor of the unionized employees, and the only
remaining question is whether NASA must reimburse appellant for the costs it has incurred
pursuant to the arbitration award (app. opp'n at 5). In a sur-reply brief filed after briefing
closed, appellant offers an alternative argument, contending that the dispute concerning
overtime pay is not a "dispute[] concerning labor standards requirements" within the scope
of FAR 52.222-4l(t).

       We hold that we possess jurisdiction to entertain the appeal.

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                             STANDARD OF REVIEW

        We review the government's motion to dismiss for lack of jurisdiction pursuant
to the standards of FED. R. CIV. P. 12(b)(l). L-3 Communications Integrated Sys., l.P.,
ASBCA Nos. 60713, 60716, 17-1 BCA 136,865 at 179,624 (applying Rule 12(b)(l)
because Board may look to Federal Rules of Civil Procedure for guidance where
Board's rules are silent).

        When a motion to dismiss pursuant to FED. R. CIV. P. l 2(b )(1) denies or
controverts allegations of jurisdiction, only uncontroverted factual allegations are
accepted as true for purposes of the motion, and other facts underlying the
jurisdictional allegations are subject to fact-finding based on the Board's review of the
record. Cedars-Sinai Medical Center v. Watkins, 11 F.3d 1573, 1583-84 (Fed. Cir.
 1993); CCIE & Co., ASBCA Nos. 58355, 59008, 14-1BCA135,700 at 174,816.

       Centerra, as the proponent of the Board's jurisdiction, bears the burden of
proving the Board's subject matter jurisdiction by a preponderance of the evidence.
Reynolds v. Army & Air Force Exchange Service, 846 F.2d 746, 748 (Fed. Cir. 1988);
United Healthcare Partners, Inc., ASBCA No. 58123, 13 BCA 135,277 at 173,156.
For the Board to possess jurisdiction under the Contract Disputes Act (CDA)
41 U.S.C. §§ 7101-7109, Centerra must establish that: (1) it has submitted in writing
a valid claim to the CO; and, (2) the CO has issued a final decision or deemed denial.
K-Con Bldg. Sys., Inc., 778 F.3d 1000, 1005 (Fed. Cir. 2015); 41 U.S.C. § 7103; ECC
CENTCOMConstructors, LLC, ASBCA No. 60647, 18-1BCA137,133.

                                    DISCUSSION

        This appeal does not involve a "dispute[] concerning labor standards
requirements" as that term is used in FAR 52.222-4l(t). That is because the
underlying labor dispute - which concerns entitlement to overtime pay under the CBA
- is not subject to the procedures set forth at 29 C.F .R. parts 4, 6, and 8 and is outside
the scope of FAR 52.222-4l(t). Moreover, even ifFAR 52.222-4l(t) did apply, there
is no basis to conclude that the Board's jurisdiction is premature, because the
underlying labor dispute already has been resolved pursuant to the terms of the CBA.
In the absence of an underlying labor dispute, FAR 52.222-41 (t) is not implicated and
any remaining dispute (including entitlement to reimbursement for allowable costs
pursuant to FAR 52.216-7) is subject to the contract's Disputes clause.

        I. FAR 52.222-4 l(t) Does Not Apply to this Appeal

       The contract in this appeal contains various clauses that required Centerra to
comply with the Service Contract Act (SCA), 41 U.S.C. §§ 6701-6707 including in
particular FAR 52.222-41, which is at the center of the government's motion. Pursuant
to the SCA, DOL sets the prevailing wages and fringe benefits that must be paid

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non-exempt service workers on U.S. Government service contracts such as the contract at
issue in these appeals. 41 U.S.C. § 6702(a) (defining contracts subject to the SCA).
CBAs negotiated by a contractor and accepted by DOL take the place of any prevailing
wage determination issued by DOL. See 41 U.S.C. § 6703(a)(l) (wages are set by CBA
in covered contracts). Thus, the economic terms and conditions of the CB As, including
those provisions that regulate wages and fringe benefits, become the wage determination
under the SCA. See 41 U.S.C. §§ 6703(a)(l), (a)(2), 6707(c); also 29 C.F.R. § 4.163(a).

       NASA contends that overtime pay falls within the definition of "wages and
fringe benefits" in the SCA and is, therefore, within the scope off AR 52.222-4l(t)
(gov't br. at 2 (citing 29 C.F.R. § 4.180))*. Centerra, in its sur-reply, disputes this
conclusion, arguing that the full text of 29 C.F .R. § 4.180 makes clear that overtime
pay is not covered by the SCA. According to Centerra, the union's grievance
involving the failure to pay overtime hours is based on an alleged violation of the
FLSA and is not subject to the procedures of the rules implementing the SCA at
29 C.F.R. parts 4, 6, or 8. Thus, Centerra reasons, FAR 52.222-4I(t) is not applicable.
(App. sur-reply br. at 2)

       We agree with Centerra's interpretation of 29 C.F.R. § 4.180. The opening
sentence of§ 4.180 states that the "[SCA] does not provide for compensation of
covered employees at premium rates for overtime hours of work." The remainder of
§ 4.180 addresses how fringe benefits are to be treated in calculating overtime pay
pursuant to the Fair Labor Standards Act (FLSA). This comports with the language of
the SCA itself, which focuses on the minimum wages and fringe benefits afforded
service workers under federal contracts. The sole mention of overtime pay in the SCA
addresses the exclusion of fringe benefits from the calculation of overtime pay, not the
entitlement to overtime pay. 41 U.S.C. § 6707(e).

       It is telling that the specific regulatory provisions referenced in FAR 52.222-41 (t)
do not address overtime wages. Part 4 of 29 C.F .R. addresses labor standards for federal
service contracts, while parts 6 and 8 set forth the rules of practice for administrative
proceedings and administrative review boards. Nothing in parts 4, 6, and 8 of 29 C.F .R.
addresses entitlement to overtime pay, nor do they create a remedy to enforce a claim for
overtime pay. Instead, as set forth in 29 C.F.R. § 4.180, "other Federal laws may require
such compensation to be paid to employees working on or in connection with contracts
subject to the [SCA]."

       Therefore, because the unionized employees have no administrative remedy to
enforce their claim for overtime pay under the SCA, and FAR 52.222-41 (t) only

* Note that 29 C.F .R. part 4 is explicitly made applicable to labor disputes in the
      contract under the terms of FAR 52.222-4l(t).

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precludes us from considering disputes that are under the ambit of the SCA, this
provision has no applicability to the underlying labor dispute in this appeal.

        II. Even if FAR 52.222-4l(t) Applied, this Appeal is Not Premature

       Because the employees' overtime pay dispute has been fully and finally
resolved pursuant to the arbitration provisions of the CBA, there is no need for a final
DOL ruling on overtime pay. The CBA between NASA and the MFF A is
incorporated into the contract at issue in this appeal (SOF ~ 8). The CBA provides that
binding arbitration is the exclusive mechanism for resolving disputes concerning
wages and benefits under the agreement (SOF ,i 7). Here, the binding arbitration has
concluded and the district court upheld the arbitrator's decision and awarded the
MFFA members back pay (SOF ,i 12).

       The union employees' overtime dispute has been finally resolved pursuant to the
terms of the CBA and there is no remaining role for DOL. In the absence of an
underlying labor dispute, FAR 52.222-4l(t) is not implicated and any remaining dispute
(including entitlement to reimbursement for allowable costs pursuant to FAR 52.216-7)
is subject to the contract's Disputes clause.

        Burnside-Ott Aviation Training Center, Inc. v. United States, 985 F.2d 1574
(Fed. Cir. 1993 ), supports this conclusion. There the Federal Circuit held that CDA
jurisdiction exists when "a dispute centers on the parties' mutual contract rights and
obligations, ... even though matters reserved to and decided exclusively by the [DOL]
are part of the factual predicate." 985 F.2d at 1580 (quoting Emerald Maintenance
Inc., ASBCA Nos. 36628, 36632, 88-3 BCA ,i 21,103 at 106,532); see also Aleman
Food Servs. v. United States, 25 Cl. Ct. 201,208 (1992) (stating that the claims court
has jurisdiction where resolution of dispute requires examination of contract
provisions and the DOL's determinations form only part of the factual predicate).

       In Burnside-Ott, the contractor challenged the DOL' s wage rate determination
and received a final determination from the Secretary of Labor. After accepting the
determination and paying its workers the higher wages, the contractor sought
reimbursement for those wages as an equitable adjustment to its contract. The court
held that the DOL's ruling formed only part of the factual predicate of the contractor's
claims and that the claims court possessed jurisdiction to determine whether the
contractor was entitled to reimbursement pursuant to the contract. 985 F .2d at 1580.

       This appeal is factually similar. Here, Centerra challenged the arbitrator's
award and received a final ruling in federal district court enforcing the award. As in
Burnside-Ott, there is nothing left for DOL to resolve. Indeed, as in Burnside-Ott, the
underlying labor dispute forms only part of the factual predicate for Centerra's claim -
the remaining factual issues concern whether Centerra' s costs can be recovered as
allowable costs under the terms of the contract.

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       NASA attempts to distinguish Burnside-Ott on the grounds that this case lacks
the factual predicate of a final DOL ruling (gov't reply br. at 2-3). However, as we
previously explained, the final arbitration ruling on overtime compensation is
equivalent to a final ruling from DOL, because DOL has approved the CBA and the
dispute resolution mechanism incorporated into the CBA.

       For the same reason, NASA's reliance on MMC Construction, Inc./Rocliford Corp ..
JV. & Aleutian Constrs. JV., and Hunt Building, Co. fails. MMC Construction stands for
the uncontroversial proposition that the Board possesses jurisdiction only after DOL ·s
wage determination administrative process has been completed. ASBCA No. 50863 et al ..
99-1 BCA 130,322 at 149,954. Hunt Building, like MMC Construction, holds that there
must be a final DOL ruling on labor standards before the Board possesses jurisdiction.
Hunt Bldg., ASBCA No. 55157, 06-1BCA133,213 at 164,598.

        In this appeal, because Centerra does not seek a wage determination or other
ruling on labor standards, there is no relevant DOL administrative process to complete
and, tellingly, NASA has identified nothing that it is waiting for.

                                   CONCLUSION

      For these reasons, NASA's motion to dismiss is denied.

      Dated: November 16, 2018

                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur                                         I concur

RICHARD SHACKLEFORD                              J. REID PROUTY
Administrative Judge                             Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

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      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 61267, Appeal of Centerra
Group, LLC f/k/a The Wackenhut Services, Inc., rendered in conformance with the
Board's Charter.

      Dated:

                                                JEFFREYD. GARDIN
                                                Recorder, Armed Services
                                                Board of Contract Appeals

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