Centerra Group, LLC f/k/a The Wackenhut Services, Inc. ( 2018 )


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  •                .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,
    2
    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
    3
    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.
    4
    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
    5
    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).
    6
    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.
    7
    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
    8
    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
    9
    

Document Info

Docket Number: ASBCA No. 61267

Judges: Woodrow

Filed Date: 11/16/2018

Precedential Status: Precedential

Modified Date: 11/27/2018