# Administrative Review Board

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Adol%3A7c730fdfb00a14f0

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

Administrative Review Board
200 Constitution Ave. NW
Washington, DC 20210-0001

U.S. Department of Labor

In the Matter of:
INNOVAIR LLC,

ARB CASE NO.

PETITIONER,

2020-0070

DATE: November 12, 2021

v.
ADMINISTRATOR,
WAGE AND HOUR DIVISION,
RESPONDENT.
Appearances:
For the Petitioner:
Melissa A. Hamann, Esq.; ReavesColey, PLLC; Chesapeake, Virginia
For the Respondent:
Kate S. O’Scannlain, Esq., Jennifer S. Brand, Esq., Sarah K. Marcus,
Esq., Jonathan T. Rees, Esq., Shelley E. Trautman, Esq.; Office of the
Solicitor, U.S. Department of Labor; Washington, District of
Columbia
Before: Thomas H. Burrell, Randel K. Johnson, and Stephen M. Godek,
Administrative Appeals Judges
DECISION AND ORDER
PER CURIAM. This case arises under the McNamara-O’Hara Service Contract
Act of 1965 (SCA), as amended, and its implementing regulations.1 AMVAC LLC
(AMVAC), filed a request for review and reconsideration of a wage determination
1

4 and 8.

41 U.S.C. §§ 6701-6707, and its implementing regulations at 29 C.F.R. Parts

2
issued under Section 2(a) of the SCA. After a review, the Division of Wage
Determinations (DWD) found that the wage rates and fringe benefits in a May 15,
2019 collective bargaining agreement (CBA 3 or May 2019 IAM CBA) were not the
SCA-required rates for the successor contract between INNOVAIR LLC (Innovair)
and the General Services Administration (GSA).2 The Administrator issued a final
ruling affirming the DWD’s determination. Innovair petitioned the Administrative
Review Board (ARB or the Board) for review. As discussed below, we affirm the
Administrator’s final ruling.
BACKGROUND
GSA and Innovair were parties to Contract Number GS08Q15BPC0006 (the
Contract), which obligated Innovair to provide aircraft maintenance support at
Marine Corps Air Station Miramar in San Diego, California.3 Innovair’s employees
were members of the International Association of Machinists and Aerospace
Workers, District Lodge 725 (IAM) which is the union representing the employees.4
The Contract had a one-year base performance period and four one-year
option periods. The third option period was set to expire on April 30, 2019. The GSA
Contracting Officer (CO) informed Innovair that it would not exercise the final
option period but instead would exercise its right to extend performance until
September 30, 2019, pursuant to 48 C.F.R. § 52.217-8.5
At the time GSA and Innovair entered into the Contract, there was a
collective bargaining agreement (CBA 1) between Innovair and IAM. CBA 1 was
effective from May 15, 2013, to May 14, 2016.6 Prior to CBA 1’s expiration, Innovair
and IAM negotiated a replacement collective bargaining agreement (CBA 2), which
was effective from May 15, 2016, to May 14, 2019.7
On March 26, 2019, Innovair informed the CO that it had renegotiated a
collective bargaining agreement with IAM (CBA 3), provided the new collective
bargaining agreement’s effective date, requested reimbursement for travel costs and
2

Innovair is a joint venture and its managing member is AMVAC.
Administrative Record (AR) at 109.
3
Id. at 136.
4
Id. at 60, 109.
5
Id. at 130.
6
Id. at 109.
7
Id.

3
expenses, and attached a copy of CBA 3 to the e-mail.8 CBA 3’s effective start date
was May 15, 2019.9
On April 15, 2019, the CO issued a unilateral extension of the Contract,
Modification 15. Modification 15 extended the period of performance from April 30,
2019, to September 30, 2019.10 However, Modification 15 did not include a wage
determination for the extension period.11
On May 2, 2019, Innovair requested that the CO modify the contract
extension’s rates to account for the wage adjustments that would take effect under
CBA 3 as of July 1, 2019.12 The CO denied Innovair’s request for an adjustment on
May 15, 2019.13 The CO determined that the wage rates and fringe benefits
established in the 2017 Wage Determination applied throughout the extension
period.14
On May 17, 2019, Innovair requested that the CO reconsider its request for
an adjustment.15 On June 28, 2019, the CO denied reconsideration, stating that a
price adjustment under 48 C.F.R. § 52.222-43(d) was not appropriate because the
2017 Wage Determination was the current and applicable wage determination at
the beginning of the extension period.16 As a result of the CO’s denial of the price
adjustment, Innovair asserts it incurred higher direct labor rates and fringe
expenses than those specified in the contract between Innovair and GSA.17
Specifically, Innovair claims that the price adjustment denial resulted in
$624,556.44 in additional costs.18
On July 10, 2019, AMVAC filed a request on behalf of Innovair seeking a
review of the wage determination, alleging that the wage rates and fringe benefits
8
9
10
11
12
13
14
15
16
17
18

Id. at 127-128.
Id. at 60, 110.
Id. at 120-121.
Id. at 110, 120-121.
Id. at 110.
Id. at 111.
Id.
Id.
Id.
Innovair Petition for Review at 3
Id.

4
in CBA 3 were the SCA-required rates for the extension period from May 1 to
September 30, 2019.19 The DWD reviewed the request and found that AVMAC’s
request for review and reconsideration was untimely.20 The DWD also found that
Innovair did not actually pay wages and fringe benefits in accordance with CBA 3
during the term of the predecessor SCA-covered contract, and as a result, were not
the SCA-required rates pursuant to Section 4(c).21
On November 27, 2019, Innovair requested a review and reconsideration by
the Administrator of the Wage and Hour Division (Administrator).22 On August 7,
2020, the Administrator issued a final ruling affirming the DWD’s conclusions.23
On December 4, 2020, Innovair petitioned the ARB for review of the
Administrator’s final ruling. The Administrator filed a brief in response to the
petition, and Innovair filed a reply brief. Upon review of the parties’ briefs, the
Board determined that additional briefing was necessary. The Board issued an
Order Directing Supplemental Briefing on June 22, 2021. The parties filed timely
briefs in response to the Order Directing Supplemental Briefing. For the reasons
discussed below, we affirm the Administrator’s final ruling.
JURISDICTION AND STANDARD OF REVIEW
The ARB has jurisdiction to hear and decide in its discretion questions of law
and fact arising from the Administrator’s final determination under the SCA. 24 The
ARB’s review is in the nature of an appellate proceeding.25 While the Board reviews
19

AR at 1-2.
Id. at 100-101.
21
Id. at 101.
22
Id. at 103-106.
23
Id. at 136-141.
24
Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board (Secretary’s discretionary review of
ARB decisions)), 85 Fed. Reg. 13186 (Mar. 6, 2020). See 29 C.F.R. §§ 8.1(b)(1), 8.1(c),
8.6.
25
29 C.F.R. §§ 8.1(b)(1), 8.1(d), 8.6; see ServiceStar Landmark PropertiesFort Bliss LLC, ARB No. 2017-0013, slip op. at 2 (ARB June 25, 2018); see also Ct. Sec.
Officers, ARB No. 1998-0001, slip op. at 4 (ARB Sept. 23, 1998) (stating that “[t]he Wage
and Hour Administrator is the primary interpreter of the contract labor standards and
implementing regulations, with the Board acting in an appellate capacity.”).
20

5
questions of law de novo, the Board “defers to the Administrator’s interpretation of
the SCA when it is reasonable and consistent with the law.”26
DISCUSSION
The SCA requires federal contractors to pay covered service employees
prevailing hourly wages and fringe benefits as determined by the Secretary of Labor
or his authorized representative.27 The Wage and Hour Division (WHD) primarily
issues two types of wage determinations: 1) prevailing in the locality
determinations, also known as area-wide wage determinations, and 2) collected
bargaining agreement (CBA) wage determinations.28 The WHD issues CBA wage
determinations in accordance with Section 4(c) of the SCA. Section 4(c) requires the
successor contractor to ensure service employees are paid wage and fringe benefits
that are no less than those offered by a predecessor contract for substantially the
same services when such employees were under a CBA during the predecessor
contract period.29 Specifically, Section 4(c) provides that:
Under a contract which succeeds a contract subject to this chapter, and
under which substantially the same services are furnished, a
contractor or subcontractor may not pay a service employee less than
the wages and fringe benefits the service employee would have
received under the predecessor contract, including, accrued wages and
fringe benefits and any prospective increases in wages and fringe
benefits providing for in a [CBA] as a result of arm’s-length
negotiations.30
Thus, Section 4(c) operates as a “floor” to protect employees’ wage and fringe
benefits throughout the procurement bidding and negotiation process.
When a contracting agency extends the term of an existing contract, “the
contract extension is considered to be a new contract for purposes of the application

26

In re Forfeiture Support Assocs., ARB No. 2006-0028, slip op. at 2 (May 27,

27

41 U.S.C. § 6703(1)-(2); 29 C.F.R. § 4.6.
41 U.S.C. § 6703(1)-(2); 29 C.F.R. §§ 4.50-4.55.
41 U.S.C. § 6706(c)(1).
Id.

2008).
28
29
30

6
of the Act’s provisions.”31 Therefore, a contractor may be its own successor for
purposes of Section 4(c).32
Innovair argues on appeal that the Administrator misinterprets 29 C.F.R.
§ 4.163(f), a regulation that implements Section 4(c).33 Specifically, Innovair claims
that the Administrator’s interpretation is unreasonable because it precludes the
effect of a CBA during the term of the successor contract if that CBA was not
effective during the predecessor contract term.34 In response, the Administrator
reiterates that under 29 C.F.R. § 4.163(f), a contractor must actually pay its
employees in accordance with the CBA applicable to the predecessor contract for
Section 4(c) to render that CBA’s rates the required for the successor contract
period.35 Because Innovair did not pay its employees in accordance to CBA 3 during
the course of the predecessor contract, the Administrator determined that CBA 3’s
wage rates and fringe benefits were not the SCA-required wage rates and fringe
benefits during the extension period.36
Upon consideration of the parties’ briefs on appeal,37 and having reviewed the
evidentiary record as a whole, we conclude that the Administrator acted reasonably
and within her discretion in finding that CBA 3’s wage rates and fringe benefits
were not the SCA-required wage rates and fringe benefits pursuant to Section 4(c)
for the extension period.

31

29 C.F.R. § 4.143(b); see 29 C.F.R. § 4.163(e); accord Fort Hood Barbers
Ass’n v. Herman, 137 F.3d 302, 312 (5th Cir. 1998) (“a contractor may become its own
successor.”).
32
29 C.F.R. § 4.143(e).
33
Innovair Reply Br. at 2.
34
Id. at 7-9.
35
Administrator’s Resp. Br. at 18.
36
Id. at 17-19.
37
The Administrator argues that AMVAC’s Request for Review and
Reconsideration of the wage determination was untimely pursuant to 29 C.F.R. § 4.56(a)(1)
because it was submitted more than two months after the May 1, 2019 effective date of the
contract extension. Administrator’s Resp. Br. at 15-17; AR at 1-2. Because we affirm the
Administrator’s finding that the wage rates and fringe benefits for CBA 3 were not the
SCA-required wage rates and fringe benefits for the contract extension period, we make no
determination on this issue.

7
Regulation 29 C.F.R. § 4.163(f) provides that “Section 4(c) will be operative
only if the employees who worked on the predecessor contract were actually paid in
accordance with the wage and fringe benefit provisions of a predecessor contractor’s
[CBA].”38 Innovair became its own successor when GSA extended the Contract from
May 1, 2019, to September 30, 2019. Thus, Innovair was required to not pay less
than the wages and fringe benefits its employees would have received under the
predecessor contract. CBA 3 was not applicable to the predecessor contract
scheduled to expire on April 30, 2019, because Innovair’s obligations under CBA 3
did not commence until May 15, 2019, which was approximately two weeks after the
predecessor contract expired. It is uncontested that Innovair did not actually pay its
workers in accordance with CBA 3 during the term of the predecessor contract term,
which would be required in order to be the SCA-required wage rates and fringe
benefits for the successor contract pursuant to Section 4(c). Therefore, we conclude
the Administrator acted reasonably and within her discretion finding that CBA 3’s
wage rates and fringe benefits were not the required rates for the extension period.
Accordingly, we AFFIRM the Administrator’s final ruling.
SO ORDERED.

38

29 C.F.R. § 4.163(f).

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Adol%3A7c730fdfb00a14f0. Public record. Not legal advice.