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Emerald Maintenance Inc. v. United States

Decided: February 12, 1991.


Appealed from: Armed Services Board of Contract Appeals.

Nies, Chief Judge, Newman and Lourie, Circuit Judges. Newman, Circuit Judge, dissenting.


LOURIE, Circuit Judge

This is an appeal from the August 3, 1988, decision of the Armed Services Board of Contract Appeals, ASBCA No. 36628 and 36632, 88-3 B.C.A. (CCH) para. 21,103, dismissing certain of appellant's claims involving two roofing contracts with the United States Army, and the September 26, 1989, decision of the Board, ASBCA No. 36628, 36632 and 37026, 90-2 B.C.A. (CCH) para. 22,719, denying appellant's claims for compensation under the contracts. We affirm.


On September 16, 1985, the United States Army awarded Contract No. DACA83-85-C-0131, entitled "Reroofing of a Hokulani Housing Area, Pearl Harbor, Oahu, Hawaii," to Emerald Maintenance, Inc. with a contract price of $474,322.02. On September 23, the Army also awarded to Emerald Contract No. DACA83-85-C-0143, entitled "Reroofing of Catlin Park Housing Areas, Pearl Harbor, Oahu, Hawaii," with a contract price of $913,949.10. These contracts required Emerald to, inter alia, remove, replace, and repair existing roofs on military housing.

Each of these contracts contained a provision that incorporated the Davis-Bacon Act wage rate clause, codified as 40 U.S.C. ยง 276a(a) (1988), which stated that:

all laborers and mechanics . . . will be paid unconditionally . . . the full amount of wages and bona fide fringe benefits (or cash equivalent) thereof due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part [of the contract]. . . .

(Emphasis added). The above-mentioned Wage Determination, i.e., schedule of job titles, job descriptions, wages, and fringe benefits, was prepared by the Department of Labor and was part of the contract. It stated hourly rates and fringe benefits for ninety separate categories of workers including, inter alia, the following:


Hourly Fringe

Rates Benefits

ROOFERS $16.95 $5.05


Group 1 13.75 4.50

Group 2 12.75 4.50

Group 3 14.75 4.50

Group 4 14.25 4.50

Group 5 13.25 4.50

Group 6 7.00 2.75

The Wage Determination did not describe the job responsibilities of roofers, but classified laborers according to their responsibilities. At the time these contracts were executed, an area practice governing the performance of the contracts required that all employees who worked on roofs as part of a roofing contract be classified as Roofers. See Building & Construction Trades Dept., AFL-CIO v. Donovan, 229 U.S. App. D.C. 297, 712 F.2d 611, 614 (D.C. Cir. 1983) (in order to comply with the Davis-Bacon provisions of a contract, workers must be classified according to the classifications use in the locality in which the contract is performed). Both parties have stipulated that neither was aware of this area practice at the time the contracts were executed.

Prior to the time of contracting, Emerald's project manager, Billie J. Noles, had estimated the labor and materials for the bids. In doing so, Noles referred to the 1984 Means Repair and Remodeling Guide. The "Forward" of this text described local union restrictions as factors which affect cost. However, Noles did not consult any area unions with regard to their practices.

On May 19, 1986, Labor began an investigation of alleged Davis-Bacon Act violations by an Emerald subcontractor under an unrelated contract. Labor also began an investigation for similar violations under the subject contracts. By a letter dated September 10, 1986, the contracting officer notified Emerald of the area practice of classifying and paying all employees who worked on roofs as Roofers and requested that it make restitution payments for underpaid employees within thirty days, provide evidence of such payments, and properly classify each employee for the remainder of the contracts. The requested corrective action was never taken. Subsequently, the contracting officer withheld a total of $110,104 under the "Withholding of Funds" provision of the contracts,*fn1 and paid this money directly to workers who had been incorrectly paid according to the various rates for laborers.

Emerald then submitted a claim to the contracting officer for payment of the withheld money. The contracting officer denied the claim. Emerald appealed to the Board, its complaint containing four claims (or counts). Count I alleged that the Wage Determination amounted to a defective specification; count II, that the government had misrepresented the rate at which "laborers" performing roofing work could be paid; count III, that the government had superior knowledge as to the proper classification of workers; and count IV, that a mutual mistake was made with regard to the existence of the area practice.

On motion by the government, the Board, on August 3, 1988, dismissed counts I and II for lack of subject matter jurisdiction. It denied that part of the government's motion to dismiss counts III and IV because it concluded that they focused on the contracting officer's role in the contracts and pleaded matters which went to the rights and obligations of the parties. In its later decision of September 26, 1989, it determined that the superior knowledge count (III) had been abandoned because both parties had stipulated that neither of them was aware of the area practice at the time of ...

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