Collective Bargaining Agreement Supersedes Prevailing Wage Determination; ASBCA No. 61267, Appeal of Centerra Group LLC f/k/a The Wackenhut Services Inc.

Government’s motion to dismiss as premature an appeal seeking reimbursement of back overtime pay and related arbitration costs is denied, where the collective bargaining agreement between the appellant and the workers’ union was accepted by the Department of Labor and therefore superseded any prevailing wage determination. The board found the dispute had been resolved according to the CBA’s arbitration clause and therefore there was no matter pending before DOL that would deprive it of jurisdiction to consider whether the costs were due the appellant.

Centerra Group LLC f/k/a The Wackenhut Services Inc. appealed the NASA 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 NAS Ames Research Center. NASA moved to dismiss for lack of jurisdiction, arguing that Centerra’ s claim is foreclosed by the labor standards requirements of its contract, which vest the Department of Labor with exclusive jurisdiction to entertain disputes concerning labor standards requirements.

As initially awarded, the contract incorporated a collective bargaining agreement between SecTek Inc. and the Moffett Field Firefighters Association Local 1-79. 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.

On June 14, 2014, the MFFA presented a written grievance alleging that Centerra violated the Fair Labor Standards Act by failing to pay overtime compensation for work performed by union members. When the parties were unable to resolve the dispute, the union submitted the grievance to arbitration. The arbitrator concluded that the CBA’s overtime provisions are contrary to the FLSA and awarded the union members $2,702,254 in back pay from June 19, 2010 through July 20, 2015, $2,182,732 in liquidated damages for the same period, and $238,199 in interest. Centerra appealed, but the district court upheld the arbitrator’s decision and awarded the union the same amount, plus its attorneys’ fees and costs, and additional interest.

Subsequently, Centerra submitted a certified claim for reimbursement under the contract in the amount of $6,184,910.13 for the back pay, as well as related costs Centerra incurred as the result of the arbitrated grievance. The CO denied the claim, explaining that it was premature for Centerra to seek reimbursement prior to obtaining a final determination from DOL. This appeal followed, and NASA moved to dismiss.

NASA argued that the claim falls within DOL’s exclusive jurisdiction, because it involves a dispute concerning labor standards requirements. In response, Centerra argued that the dispute did not involve labor standards requirements but the government’s obligation to reimburse it for costs incurred pursuant to an arbitration award under a CBA with its unionized employees. According to Centerra, the dispute over labor standards requirements had 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.

The board agreed with Centerra, finding that the underlying labor dispute 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). CBAs negotiated by a contractor and accepted by DOL take the place of any prevailing wage determination issued by DOL. Thus, the economic terms and conditions of the CBAs, including those provisions that regulate wages and fringe benefits, become the wage determination under the SCA. The board also agreed with Centerra that overtime pay is not covered by the SCA. The board noted that the SCA focused on the minimum wage and fringe benefits afforded service workers under federal contacts and mentions overtime pay only to exclude fringe benefits from its calculation.

Moreover, even if FAR 52.222-4l(t) did apply, the board found no basis to conclude that its jurisdiction is premature, because the underlying labor dispute already has been resolved and there is no need for a determination by DOL. 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. Accordingly, ASBCA denied the agency’s motion to dismiss.

Centerra Group LLC is represented by Karen L. Manos and Melinda R. Biancuzzo of Gibson, Dunn & Crutcher LLP. The government is represented by Scott W. Barber, NASA Chief Trial Attorney, Brian Stanford, Senior Trial Attorney, and Paul H. Kim, Trial Attorney.