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[Page 8]PROCEDURAL HISTORY
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Dept. of the Army, ARB Nos., 98-120, 98-121 and 98-122 (ARB Dec. 22, 1999)
| U.S. Department of Labor | Administrative Review Board 200 Constitution Avenue, N.W. Washington, D.C. 20210 |  |
DATE: December 22, 1999
In the Matter of:
ARB Case No. 98-120
DEPARTMENT OF THE ARMY
In re request for review of wage
determinations based on the November, 1996
Bureau of Labor Statistics Survey of the
Seattle-Tacoma-Bremerton, WA Consolidated
Metropolitan Statistical Area
and
ARB Case No. 98-121
DEPARTMENT OF THE AIR FORCE
In re request for review and reconsideration
and
ARB Case No. 98-122
DEPARTMENT OF THE NAVY
In re request for review and reconsideration
of Wage Determination Nos. 95-2567 (Revision 10)
and 94-2568 (Revision 8), with prospective
application to U.S. Air Force contracts performed
at McChord Air Force Base in Pierce County, WA
of Wage Determination Nos. 94-2559 (Revision 9)
and 94-2560 (Revision 7) for Clallam, Gray's
Harbor, Jefferson, Kitsap and Mason Counties, WA
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For the Petitioners:
-
Clarence D. Long, III, Esq., Department of the Air Force, Washington, D.C.;
James E. Evans, Department of Air Force Vandenberg AFB, California
Alfred E. Moreau, Esq., Department of the Army, Washington, D.C.
Lis B. Young, Esq., C. Diane Truman, Department of the Navy, Alexandria,
Virginia
For the Respondent:
-
Carol Arnold, Esq., Douglas J. Davidson, Esq., Steven J. Mandel, Esq.,
U.S. Department of Labor, Washington, D.C.
For Intervenor Contract Services Association of America:
- Gary Engebretson, Andrew Fortin, Washington, D.C.
For Intervenor Johnson Controls World Services, Inc.:
- R. Donald Burns, Gilbert L. Patton, Silverdale, Washington
The central issue addressed in these consolidated appeals is whether the Administrator of the Department of Labor's Wage and Hour Division (Administrator) misused his discretion when deciding that the Service Contract Act wage determinations for the Puget Sound region of Washington State should be based on wage data reflecting the entire Seattle Consolidated etropolitan Statistical Area (CMSA), or whether the Administrator instead is obligated to continue an earlier practice of using wage data from three smaller subdivisions of the region the Bremerton- Shelton, Tacoma and Seattle areas.
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These cases are before the Administrative Review Board on petitions for review filed by the Departments of the Army (Army), the Air Force (Air Force), and the Navy (Navy) collectively, the Armed Forces. The Armed Forces seek review of a series of rulings in which the Administrator denied the Armed Forces' requests for reconsideration of several wage determinations issued under this new policy of relying on CMSA data. We have jurisdiction over the appeals pursuant to 29 C.F.R. §§4.56(b) and 8.1(b) (1999).
For the reasons discussed below, we conclude that the Administrator's decision to rely on the metropolitan-wide CMSA data when issuing wage determinations in the Puget Sound area is within the range of discretion accorded the Administrator under the statute and regulations. We therefore deny the Armed Forces' petitions.
To assess the issues raised by the Armed Forces in this case, it is necessary to understand the interplay of several processes that ordinarily function independently. Therefore, before turning to the specific facts that underlie the Armed Forces' challenge to the Puget Sound wage determinations, we review (a) the Administrator's wage determination process and the concept of "locality" under the Service Contract Act, and (b) the Office of Management and Budget's rules for defining various categories of metropolitan statistical areas. We then review changes in the Bureau of Labor Statistics' wage survey methodology, and the impact of these changes on the Labor Department's wage determination process.
A. Regulatory framework - SCA wage determinations
The Service Contract Act, as amended (41 U.S.C. §351, et seq. (1994)) (SCA or Act), requires the Secretary of Labor to determine minimum wage and fringe benefit rates for service workers employed on Federal service contracts. Responsibility for implementing the Act is delegated to the Labor Department's Wage and Hour Administrator. 29 C.F.R. §4.3(a).
Under the Act and its implementing regulations, the Administrator issues wage determinations that are incorporated into the contract specifications for each Federal service contract. Two different types of wage determinations are issued. For service contracts at worksites where an existing collective bargaining agreement governs employee wage and fringe benefit rates, the Administrator issues wage determination rates based on the rates in the labor agreement. 41 U.S.C. §351(a)(1),(2); 29 C.F.R. §4.53. For sites where there is no collective bargaining agreement in effect, the Administrator issues a wage determination that reflects wages and fringe benefits "prevailing . . . for such [service] employees in the locality." 41 U.S.C. §351(a)(1)(2); 20 C.F.R. §4.52. The Administrator's "prevailing in the locality" wage determinations are based on wage data, most frequently surveys compiled by the Bureau of Labor Statistics (BLS). 29 C.F.R. §4.52(a).
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The Service Contract Act requires that the "prevailing rate"-type wage determinations reflect wages paid in the "locality." In contrast to the SCA's companion prevailing wage law, the Davis-Bacon Act which requires that the prevailing wage rates be based on wages paid "in the city, town, village, or other civil subdivision of the State in which the work is to be performed" (40 U.S.C. §276a(a)) the term "locality" is not defined within the Service Contract Act. The regulations implementing the Act provide the following explanation of the factors considered by the Administrator when determining the correct "locality" for purposes of SCA wage determinations:
- Under section 2(a) of the Act, the Secretary or his authorized representative is given the authority to determine the minimum monetary wages and fringe benefits prevailing for various classes of service employees "in the locality". Although the term locality has reference to a geographic area, it has an elastic and variable meaning and contemplates consideration of the existing wage structures which are pertinent to the employment of particular classes of service employees on the varied kinds of service contracts. Because wage structures are extremely varied, there can be no precise single formula which would define the geographic limits of a "locality" that would be relevant or appropriate for the determination of prevailing wage rates and prevailing fringe benefits in all situations under the Act. The locality within which a wage or fringe benefit determination is applicable is, therefore, defined in each such determination upon the basis of all the facts and circumstances pertaining to that determination. Locality is ordinarily limited geographically to a particular county or cluster of counties comprising a metropolitan area. For example, a survey by the Bureau of Labor Statistics of the Baltimore, Maryland Standard Metropolitan Statistical Area includes the counties of Baltimore, Harford, Howard, Anne Arundel, and the City of Baltimore. A wage determination based on such information would define locality as the same geographic area included within the scope of the survey. Locality may also be defined as, for example, a city, a State, or, under rare circumstances, a region, depending on the actual place or places of contract performance, the geographical scope of the data on which the determination was based, the nature of the services being contracted for, and the procurement method used. In addition, in Southern Packaging & Storage Co. v. United States, 618 F.2d 1088 (4th Cir. 1980), the court held that a nationwide wage determination normally is not permissible under the Act, but postulated that "there may be the rare and unforeseen service contract which might be performed at locations throughout the country and which would generate truly nationwide competition".
29 C.F.R. §4.54(a).1 Thus, there is significant flexibility in determining an appropriate "locality" for wage determination purposes, and neither the statute nor the regulations prescribe any specific geographic area to be used. The regulations indicate that wage determinations in urbanized areas ordinarily are issued on a metropolitan area basis, and that the geographical area covered by the wage determination coincides with the area from which the wage data were compiled.
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B. Regulatory framework OMB classification of metropolitan areas
The Federal Office of Management and Budget (OMB) has responsibility for developing a variety of statistical programs. See generally 44 U.S.C. §3504 (1994). Pursuant to this statutory directive, OMB devises standards for categorizing urban areas throughout the United States. The OMB criteria for designating metropolitan areas are re-evaluated on a continuing basis and were revised in 1958, 1971, 1975, 1980, and 1990, and are being reviewed now in anticipation of the 2000 census. See Notices, OMB, 63 Fed. Reg. 70526, 70528 (1998). The criteria currently in effect, "Revised Standards for Defining Metropolitan Areas in the 1990's," were published in 1990. 55 Fed. Reg. 12154 (1990).
OMB's standards for categorizing metropolitan areas are complex. The general concept of a "metropolitan area," as defined by OMB, is that it includes a core area containing a large population nucleus, together with adjacent communities having a high degree of economic and social integration with the core. Thus a metropolitan area typically includes central cities and their outlying but integrated counties. Id.
Under OMB's 1990 standards, the basic urban unit is the "metropolitan statistical area" (MSA), which typically includes a city or urbanized area of at least 50,000 in population joined by surrounding counties where a sizeable portion of the population commutes to the center. Id., §§1-3. MSAs are classified by population size, from the smallest Level D MSA (generally having a population of 50,000 - 100,000) to the largest Level A MSA (a metropolitan statistical area with population over 1,000,000). Id., §6. If there are two or more adjacent urban areas that independently would qualify as metropolitan statistical areas, they are combined into a single, larger MSA if a substantial percentage of workers commute between the adjacent urban areas. Id., §5. With regard to the Puget Sound region, there are four areas that independently would qualify as MSAs based on their population size and urban core areas: Bremerton, WA (Level C); Olympia, WA (Level C); Tacoma, WA (Level B); and Seattle-Bellevue- Everett, WA (Level A). See, e.g., OMB Bulletin 99-04, "Revised Statistical Definitions of Metropolitan Areas (MAs) and Guidance on Uses of MA Definitions," June 30, 1999, at List II p.23. Under the OMB standards, however, these four urbanized areas are merged into a single Level A metropolitan statistical area.
OMB's rules recognize that within the large, Level A metropolitan statistical area there may be several of these smaller, identifiable cities or urban areas. If these smaller urban areas have a population of at least 100,000 and meet several other criteria, they are denominated by OMB as Primary Metropolitan Statistical Areas (PMSAs). Some of the urban centers now classified as PMSAs formerly had been designated as "Standard Metropolitan Statistical Areas" (SMSAs) under OMB's pre-1990 guidelines. 55 Fed. Reg. at 12156, §8. Under this aspect of the OMB standard for defining metropolitan areas, the four urban centers in the Puget Sound region Bremerton, Olympia, Tacoma, and Seattle-Bellevue-Everett all are classified as PMSAs. See OMB Bulletin 90-44, supra. That is, each of the four urban centers independently qualifies as a metropolitan area based on its size and economic factors, but they are part
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of a larger Level A MSA covering the entire Puget Sound region.2 (Note: A map of the state of Washington showing the state's counties is found as an Appendix to this decision.)
Many of the largest Level A metropolitan statistical areas include two or more PMSAs. Under the OMB classification structure, a metropolitan statistical area that includes two or more PMSAs (like the Puget Sound region) is designated a Consolidated Metropolitan Statistical Area (CMSA). However, the CMSA designation does not change the underlying classification of the urban region: it remains a Level A metropolitan statistical area, i.e., an urban center with economically and socially integrated outlying counties; or, in some cases, a metropolitan area consisting of multiple urban centers and outlying counties with substantial economic and social integration. 55 Fed. Reg. at 12156, §10. Under the OMB standards, the entire Puget Sound region constitutes the single Seattle-Tacoma-Bremerton, WA Consolidated Metropolitan Statistical Area (Seattle CMSA). This large Seattle CMSA, covering six counties and more than 20,000 square miles, encompasses the four smaller PMSAs. See OMB Bulletin 90-44, supra.
C. Changes in the BLS wage survey program
As noted above, the primary data sources for the Wage and Hour Division's SCA wage determinations are wage surveys conducted by the Bureau of Labor Statistics. The design of these surveys is not static, however, but instead changes over time in methodology and geographical coverage.
When compiling the SCA wage determinations in the Puget Sound region prior to the challenged 1997 wage determinations, the Wage and Hour Administrator relied on a series of wage surveys conducted by BLS. The BLS surveys that were available at that time covered subcomponents of the Puget Sound region; specifically, there were separate wage surveys that covered (respectively) the Seattle, Tacoma and Bremerton-Shelton areas.3 Admin. Brief at 6.4 Beginning in 1996, BLS discontinued this practice of surveying separately each of the Puget Sound urban centers, and instead shifted to a survey covering the entire Seattle CMSA.
The BLS survey currently used by the Wage and Hour Division is called the Occupational Compensation Survey Program, or OCSP. BLS developed the OCSP survey in 1992 by combining two earlier wage surveys: the Area Wage Survey Program and the National White- Collar Pay Survey. Notices, Dept. of Labor, BLS, 57 Fed. Reg. 30982, 30983 (1992). The OCSP was intended to be multi-purpose, with the data being used for developing Service Contract Act wage determinations, and also for administering the Federal Employees Pay Comparability Act of 1990 (FEPCA), 5 U.S.C. §§5301-07 (1994). Id. Under FEPCA, the pay rates for Federal white-collar employees (e.g., employees paid on the "GS" schedule) are
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adjusted upward in many metropolitan areas to reflect higher wage rates and living costs in urban locations. 5 U.S.C. §§5301-07; see AR, Tabs Y, Z. By 1996, BLS's OCSP survey of the six-county Seattle CMSA had replaced the earlier BLS surveys restricted to the smaller areas in the Puget Sound region, including the separate wage surveys for the Seattle, Tacoma and Bremerton-Shelton areas. AR, Tabs A-C, W.
D. Impact of the changed BLS survey program on the Wage and Hour Division's Puget Sound wage determinations
Before 1996 (i.e., when BLS still conducted separate wage surveys for Seattle, Tacoma and Bremerton-Shelton), the Administrator viewed each of these three areas as a "locality" under the Act, and routinely issued separate wage determinations for each location. Because the wage determination rates in each location were based on distinctly separate surveys, the Administrator's wage determination rates varied in each location among the various classes of occupations. AR, Tabs M, N, P, Q.
The shift to the regional CMSA data after 1996 created transitional problems for the Administrator, because of the large concentration of workers employed in the immediate Seattle area,5 and Seattle's history of higher wage rates than those in the Tacoma and Bremerton-Shelton areas. AR, Tabs E, F. The change to the merged CMSA wage data meant that new wage determinations for Federal service contracts in the Tacoma and Bremerton-Shelton areas would be based on survey data reflecting higher wage levels often much higher.
In June and July, 1997, the Administrator issued the first SCA wage determinations based on the new Seattle CMSA data. If applied without modification, the 1996 Seattle CMSA survey data would have supported a substantial increase in the wage rates for many of the occupations in the Tacoma and Bremerton-Shelton areas, compared with earlier wage determination rates. Indeed, the SCA regulations concerning "locality" plainly suggest that the geographic area of a wage determination should coincide with the geographic area included in a wage survey, in which case the Administrator easily could have issued a single set of wage determinations covering the entire Seattle CMSA region. See 29 C.F.R. §4.55 ("For example, a survey by the Bureau of Labor Statistics of the Baltimore, Maryland Standard Metropolitan Statistical Area includes the counties of Baltimore, Harford, Howard, Anne Arundel, and the City of Baltimore. A wage determination based on such information would define locality as the same geographic area included within the scope of the survey."(emphasis added)). However, rather than shifting immediately to a single set of wage determinations for the entire Puget Sound region tied to the Seattle CMSA-based wage survey, the Administrator devised a methodology providing for a transition to the new data reflecting higher wage rates.
The Administrator decided to continue issuing wage determinations for each of the three areas in the Puget Sound region (Seattle, Tacoma, Bremerton-Shelton). Wage
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determinations WD 94-2567 (Rev. 10) and WD 94-2568 (Rev. 9) were issued for the Tacoma area ("the 1997 Tacoma CMSA-based wage determinations"), and wage determinations WD 94-2559 (Rev. 9) and WD 94-2560 (Rev. 7) were issued for the Bremerton-Shelton area ("the 1997 Bremerton-Shelton CMSA-based wage determinations").6 AR, Tabs A-C. In instances where the new CMSA wage survey data resulted in only a small increase over the wage rate in the predecessor Tacoma and Bremerton-Shelton wage determinations, the Administrator simply applied the CMSA data to the wage determination. See id. However, where the CMSA data would have resulted in a large increase in wage determination rates when compared to the predecessor wage determinations, the Administrator generally applied a 15% "cap" to the increase over the wage rate in the earlier wage determination. See id., 4/20/98 rulings at unnumbered p.1.
A notable exception to this approach involved wage rates for employees in protective service occupations (police, fire protection, marshalls, etc.), which were not subjected to the 15% cap. The Administrator noted that the BLS wage surveys formerly conducted for the Tacoma and Bremerton-Shelton areas did not include wage data from state and local governments, the usual source for wage rate information for protective service occupations, and that, historically, the Wage and Hour Division's practice in instances where there was no local wage data on protective service occupations was to rely on BLS regional wage data for these job classifications. AR, Tabs A-C, 4/20/98 rulings at 2.7 Accordingly, the Administrator concluded that it was unnecessary to cap increases in wage rates for protective service occupations included in the 1997 Tacoma and Bremerton-Shelton wage determinations because the predecessor wage rates had not been based on wage survey data specific to the Tacoma and Bremerton-Shelton areas. Id. at 2, 4.
After developing the new, higher-wage 1997 CMSA-based wage determinations for the Tacoma and Bremerton-Shelton areas, the Administrator issued the wage determinations to the Army, Navy and Air Force, to be applied to Federal service contracts at military installations in the Puget Sound area. The wage determinations promptly were challenged by the Armed Forces, using the "review and reconsideration" procedures found at 29 C.F.R. §4.56.
On August 20, 1997, the Air Force Labor Advisor requested that the Administrator review and reconsider the 1997 CMSA-based Bremerton-Shelton wage determinations (WD 94-2567 (Rev. 10) and 94-2568 (Rev. 9)). AR, Tab F; 29 C.F.R. §4.56. On September 15, 1997, the Navy Labor Advisor requested that the Administrator review and reconsider the 1997 Tacoma wage determinations (WD 94-2559 (Rev. 9) and WD 94-2560 (Rev. 7)). AR, Tab E. On September 18, 1997, the Army Labor Advisor joined the Navy and the Air Force by challenging all four of the wage determinations. AR, Tab D.
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The Administrator issued three letter rulings on April 20, 1998 (addressed to the Army, Navy and Air Force, respectively), denying each of the requests for review and reconsideration. AR, Tabs A-C. The substance of the three rulings is identical.8 (The substantive arguments advanced by the parties below, and the Administrator's response, are summarized in the next section of this decision.)
Each of the Armed Forces filed petitions for review, appealing the Administrator's ruling, in early May 1998. On June 8, 1998, the Board issued an order consolidating the cases.9
The Armed Forces filed a joint supplemental petition on June 22, 1998, accompanied by individual briefs and supporting documentation. In response, the Administrator moved for an opportunity to review the Armed Forces' additional documents and issue a supplemental ruling. The Board granted the Administrator's motion by order of July 16, 1998.
The Administrator issued his supplemental ruling on July 20, 1998. That ruling, in toto, stated that the supplemental documentation that had been submitted by the Armed Forces to the Board had been reviewed and that the information provided did not alter the Administrator's conclusion that the survey data and methodology that had been used to develop the challenged wage determinations were appropriate.
By order issued on July 9, 1998, the Board granted the request of Johnson Controls World Services, Inc. (Johnson Controls) to intervene in this proceeding. On September 2, 1998, the Board granted the similar request of Contract Services Association of America (CSA). See 29 C.F.R. §8.12.
Oral argument before the Board was held in Washington, D.C., on November 5,
1998, with all parties and Intervenors participating.10
As discussed above, the Administrator's 1997 Tacoma and Bremerton-Shelton
wage determinations that are at issue here represented a new approach to determining prevailing wage
rates in the Puget Sound region, differing from earlier wage determinations in significant ways:
In seeking review and reconsideration by the Administrator, the Armed Forces
argued that the Seattle CMSA survey data did not provide an adequate basis for determining the wages
prevailing in the Tacoma and Bremerton-Shelton localities, for two basic reasons: 1) the Tacoma and
Kitsap localities constitute entities that are economically distinct from the Seattle/King County area; and
2) wage data from King County (in which Seattle is located) dominated the CMSA survey, resulting in
inflated wage rates on the Tacoma and Bremerton-Shelton wage determinations. AR, Tabs D-F.11
The Navy and the Air Force submitted documentation in support of their claim
that the wage determinations were improper, including:
AR, Tabs E, F, BB, DD. As relief, the Petitioners requested that the Administrator revise the
challenged wage determinations and that the Wage and Hour Division return to the individual locality
survey method formerly used for developing SCA wage determinations. AR, Tabs D-F.
On April 20, 1998, the Administrator issued three final ruling letters, responding
to the review requests. AR, Tabs A-C.
The Administrator defended the decision to shift to the CMSA-based
"locality" by arguing that using the CMSA data was consistent with applicable guidelines
under the SCA regulations. Id., 4/20/98 rulings at 2. The Administrator explained that the
Wage and Hour Division had begun relying on the BLS survey of the Seattle CMSA because the
CMSA survey had replaced the three separate wage surveys previously conducted for the Seattle,
Bremerton-Shelton and Tacoma areas. The Administrator also noted that even though the Seattle
CMSA survey data was the primary basis for the challenged 1997 Tacoma and Bremerton-Shelton
wage determinations, the wage determination rates for these areas had been tailored "to
recognize historical differences between the three prior survey areas and to minimize the impact of the
changed survey area." Id., at unnumbered p.1. The Administrator also
explained the application of the "15% cap" methodology to the job classifications in the
1997 wage determinations (other than the protective service occupations) as a means of limiting the
immediate impact of the higher Seattle CMSA wage data on wage rates in the Tacoma and Bremerton-
Shelton areas.12 Id. at 1-2.
The Administrator also tied the shift to the CMSA wage survey to the statutory
mandate of the Service Contract Act that "due consideration" be given to the pay rates of
Federal employees in the development of SCA wage rates, noting that Federal employee locality pay
adjustments under the Federal Employees Pay Comparability Act are awarded on a CMSA basis, and
the pay adjustments are calculated by referring to BLS's CMSA wage survey data. Id. at 3;
see also 41 U.S.C. §351(a)(5); 29 C.F.R. §§4.54(a), 4.51(d). The
Administrator observed that BLS's reliance on the CMSA unit for conducting wage surveys was likely
to continue, and to be expanded into other geographic areas. AR, Tabs A-C, 4/20/98 ruling letters at
3.
The Administrator's ruling also addressed specifically the documentation that had
been submitted by the Navy.13 With regard
to the data generated by the Navy's survey of seven major employers in Kitsap County, the
Administrator concluded that the data did not provide an adequate statistical basis for revising the
Bremerton-Shelton wage determination because certain types of employment information were not
included. The Administrator also noted that according to the Navy's survey, the wage rates reported
by the Kitsap employers were higher than the rates in the 1997 CMSA-based Bremerton-
Shelton wage determination for "nearly thirty percent of the surveyed classifications,"
thereby undercutting the Navy's claim that the rates in the Administrator's challenged wage
determination were excessive. Id.
With regard to the challenge to the wage rates for protective service occupations
(fire, police), the Administrator considered and rejected the wage data generated by the Navy's survey
of Kitsap County fire and police departments. The Administrator concluded that the Navy's survey
data could not form the basis for a challenge to the rates in the wage determination because the Navy's
documentation did not indicate whether the survey results represented average rates, or wages paid to
entry level or experienced employees. Id. The Administrator acknowledged that the 1997
CMSA-based Bremerton-Shelton wage determinations represented a "significant increase in the
wage rates for the protective service occupations," and therefore reviewed additional BLS data
to confirm that the 1997 CMSA-based wage determination figures were reasonable. Specifically, the
Administrator looked to regional BLS wage surveys of protective service workers. In this case, the
Administrator found that the BLS average weekly pay rates for Level I Firefighters and Police Officers
in metropolitan areas in the western United States region ($882 and $854, respectively) were
"remarkably consistent" with the corresponding Seattle CMSA pay rates of $918 and
$854. Thus, BLS occupational wage data for protective service employees in the western portion of
the United States also confirmed generally the appropriateness of the Seattle CMSA wage data for
these occupations. Id. at 4.
The Administrator discounted the data from the Washington State surveys of
Kitsap, Clallam and Jefferson Counties because no information about the surveys' methodology had
been provided and because it was unknown exactly what the data represented (e.g., mean
versus median rates, whether rates were entry level, scope of the universe of employers surveyed, etc.).
The Administrator nonetheless noted that even if the State survey were used, a comparison of the State
survey wage rates with the Seattle CMSA wage rates did not support completely the Navy's challenge
to the Bremerton-Shelton area wage determination, because the State survey wage rates were higher
for some occupations than the CMSA data. Id.
The Administrator ultimately concluded in the April 20, 1998 rulings that the
arguments and documentation submitted by the Armed Forces did not provide a basis upon which to
revise the 1997 CMSA-based wage determinations. The Administrator also emphasized that the
capping methodology was properly utilized to limit the increases in wage rates for most occupations to
no more than 15% as a means of easing the transition "to full integration of the CMSA
data." Id. These appeals followed.
A. Introduction
The Armed Forces offer a series of arguments challenging the Administrator's
ruling upholding the 1997 CMSA-based Tacoma and Bremerton-Shelton wage determinations. In
their petitions, the Armed Forces allege that the Administrator erred with regard to issues of law, fact,
and policy when issuing the new wage determinations based on the Seattle CMSA data.
Errors of Law The Petitioners assert that the wage determinations
are incorrect legally on several grounds. First, the Armed Forces assert that the wage determinations
are incorrect because they are based on a "locality" that is inconsistent with the statute,
regulations, case law and the Wage and Hour Division's internal procedures. Second, the Armed
Forces argue that the 1997 wage determinations are defective because the 15% "capping"
mechanism used by the Administrator is not explicitly authorized by statute or regulation. Third, the
Petitioners contend that the Administrator's linking of the "due consideration" clause of the
Service Contract Act with the locality pay adjustment provisions of the Federal Employees Pay
Comparability Act when justifying his reliance on the Seattle CMSA wage survey data is not supported
by law.
Errors of Fact The Armed Forces also assert, based on various
evidentiary submissions, that the wage rates in the 1997 CMSA-based Tacoma and Bremerton-
Shelton wage determinations do not reflect accurately the lower level of wages actually paid in these
communities when compared with the higher wage rates paid in Seattle itself (i.e., King
County). Stated differently, the Armed Forces contend that the Administrator's published wage
determination rates for the Tacoma and Bremerton-Shelton areas simply are out of line with wage rates
actually being paid in the vicinity of the Armed Forces' installations.
Errors of Policy In addition to raising challenges based on the law
and facts, the Armed Forces cite the practical effects of the Administrator's decision to rely on CMSA
wage survey data, arguing that Federal contracting agencies with service contracts in the Tacoma and
Bremerton-Shelton areas (and beyond) will be adversely affected by the Administrator's change in
policy. In this connection, the Petitioners argue that the Wage and Hour Division's decision to use the
BLS's CMSA data, rather than to commission separate wage surveys for the smaller Tacoma and
Bremerton-Shelton areas, is driven primarily by budgetary considerations at the Department of Labor,
and that the Seattle CMSA wage survey does not truly reflect "local" wage rates.
We consider each of the Armed Forces' arguments in our discussion below using
this framework. In each instance, we review first the arguments raised by the Petitioners and
Intervenors in challenging the April 20, 1998 rulings, then review the Administrator's defense of the
rulings, and finally offer our analysis on each point. We review the Administrator's rulings to determine
whether they are consistent with the statute and regulations, and are a reasonable exercise of the
discretion delegated to the Administrator. See generally ITT Federal Services Corp. (II),
ARB Case No. 95-042A (July 25, 1996), slip op. at 4-5 (according Administrator's reasonable
interpretation of Section 4(c) of the SCA "great weight"); Service Employees Int'l
Union (I), BSCA Case No. 92-01 (Aug. 28, 1992), slip op. at 7-14 (upholding Administrator's
methodology for calculating nationally-prevailing fringe benefit rates as reasonable and within his
discretion, while remanding on other grounds).
Based on the record before us, we conclude that the Administrator acted within
the limitations set by the SCA and its regulations when issuing the 1997 CMSA-based wage
determinations for the Tacoma and Bremerton-Shelton areas and denying the Armed Forces' requests
for review and reconsideration.
B. Whether the challenged wage determinations for the Tacoma and Bremerton-
Shelton areas are incorrect as a matter of law because 1) the Administrator
relied on wage survey data encompassing the entire Seattle CMSA; 2) the
Administrator adopted a 15% "capping" methodology; and 3) the
Administrator relied on the "due consideration" clause of the Act to
justify using CMSA-based wage survey data.
Armed Forces/Intervenors The Armed Forces contend that the
Administrator's reliance on the Seattle CMSA data to develop the Tacoma and Bremerton-Shelton
wage determinations that are at issue here is inconsistent with the statutory and regulatory provisions
relating to "locality." Under the Service Contract Act, the Labor Department is
responsible for issuing wage determinations that reflect the prevailing wage and fringe benefit rates paid
to various classifications of service employees "in the locality." 41 U.S.C.
§351(a)(1),(2). The regulatory guidelines for identifying a "locality" under the SCA
are found at 29 C.F.R. §4.54(a).
In the Armed Forces' view, the Administrator is responsible for determining
wage rates under the Service Contract Act that "reflect, and not interfere with, local labor market
conditions." Joint Pet. for Rev. at 2. Considering the large geographical area of the Seattle
CMSA, the Armed Forces criticize the Administrator's use of the BLS survey because "[a]s a
result, large areas of disparate communities, lumped together in CMSA surveys for purposes unrelated
to SCA, now provide a database for average wages to be applied locally. The effect of this
consolidation is contrary to the intent of SCA." Id. The Navy characterizes reliance on
CMSA wage survey data as the improper use of "large portions of the United States as survey
areas for specific localities." Navy Brief at 7-8. The Armed Forces cite Southern
Packaging and Storage v. United States, 618 F.2d 1088 (4th Cir. 1980), and Descomp v.
Sampson, 377 F. Supp. 254 (D. Del. 1974) as support for their contention that SCA wage
determinations must provide wage rates that are tied to comparative economic conditions. Reply Brief
at 8-9.
The Armed Forces contend that the Tacoma and Bremerton-Shelton areas are
economically distinct from the Seattle urban center, with generally lower wage rates.14 As part of their claim that the Seattle
CMSA consists of economically distinct districts, the Armed Forces assert that Puget Sound is a
significant geographic barrier that continues to isolate the Tacoma and Bremerton-Shelton areas from
the Seattle urban core. In challenging the Administrator's rulings, the Navy specifically questions why
the Administrator did not address the guidelines for defining a locality in the Division's SCA Wage
Determinations Manual of Operations, which include "home-to-work commuting patterns"
as a pertinent factor. Navy Brief at 8, Encl. 5. The Armed Forces assert that commuting patterns in
and around the Kitsap peninsula (including Bremerton) support their claim that the Seattle CMSA is not
an appropriate "locality" for purposes of assembling wage data under the SCA, because
Puget Sound separates Kitsap and King Counties, adding additional time and expense to the commute
between the two counties. Reply Brief at 17-18.
Intervenors Johnson Controls and CSA advance similar arguments in support of
the Armed Forces' challenge to the 1997 CMSA-based wage determinations. For example, Johnson
Controls states that 97% of its workforce employed at the Navy's Bangor facility reside on the Kitsap
Peninsula in Kitsap, Mason, Jefferson and Pierce Counties, with only 1% residing in the Seattle area
(King and Snohomish Counties). Johnson Controls Ltr. Brief at 1. CSA contends that, unlike Federal
employees, SCA contract employees are concentrated near the site of performance of current
contracts and are not spread out over the Seattle CMSA. CSA Brief at unnumbered pp. 7, 9-10.
Administrator The Administrator contests the arguments advanced
by the Armed Forces and the Intervenors. With regard to the Southern Packaging and
Descomp decisions cited by the Armed Forces, the Administrator observes that those cases
are factually distinguishable from the three cases at issue here, and urges particularly that contrary to
the Petitioners' position the opinion of the Court of Appeals in Southern Packaging
actually supports the Administrator's position that the Seattle CMSA is an appropriate locality
under the Service Contract Act. Admin. Brief at 19-22. Specifically, the Administrator relies on the
appellate court's discussion of "locality" in its Southern Packaging opinion, 618
F.2d at 1092, as support for the proposition that "locality" must not be
interpreted in a restrictive manner. Admin. Brief at 19-20, 21-22.
As further support for his contention that "locality" must not be
narrowly construed, the Administrator cites statements from the SCA legislative history on this issue.
The Administrator notes that the undefined term "locality" in the SCA, which had been
interpreted flexibly under the Walsh-Healey Act, 41 U.S.C. §35 et seq., was chosen by
Congress in lieu of the more rigid definition of the Davis-Bacon Act (40 U.S.C. §276a) requiring
that prevailing wage rates be determined based on wages paid in the "city, town, village or any
other civil subdivision of the State in which the contract work is to be performed." Admin. Brief
at 21 (citing Hearings, Subcommittee on Labor, Committee on Labor and Public Welfare, 89th Cong.,
1st Sess., on H.R. 10238, Sept. 23, 1965, pp.12-14). The Administrator also cites the regulatory
guidelines for identifying a locality under the SCA, which are found at 29 C.F.R. §4.54. The
Administrator asserts that the 1997 CMSA-based wage determinations "define locality the same
as the geographic area included within the scope of the BLS survey" and are thus in compliance
with Section 4.54. Admin. Brief at 22.
In response to the Armed Forces' contention that use of the Seattle CMSA wage
survey data disregards the commuting distances of employees who work on SCA contracts, the
Administrator notes that "the criteria for qualification as a PMSA[15 ] specifically include commuting
distances." Admin. Brief at 23. The Administrator also argues that if employee commuting
distances from government facilities were determinative of what geographic area constitutes an SCA
locality, it would be necessary to develop wage determinations for each site where an SCA-covered
contract would be performed. Admin. Brief at 23.
In addition, the Administrator argues that the Armed Forces effectively are
requesting that the Wage and Hour Division abandon its established practice of relying on wage data
compiled under the BLS Occupational Compensation Survey Program (OCSP) for localities not
otherwise surveyed by BLS. Admin. Brief at 16-17. If the Wage and Hour Division is not permitted to
use CMSA data, argues the Administrator, the Division will encounter tremendous difficulty in finding
reliable sources of wage data for use in developing SCA wage determinations. Id. at 18. In
addition, the Administrator argues that the Wage and Hour Division is in "the best position"
to determine which survey most effectively serves the Division's needs. Id. In support of the
conclusion that the OCSP provides a reliable source of wage data, the Administrator cites the cross-
industry nature of the survey. Id. at 17-18.
Analysis We begin by reviewing the authority under which the
Administrator issues SCA wage determinations. As noted previously, Part 4 of Title 29 of the Code of
Federal Regulations implements the Section 2(a)(1) requirement that the Secretary determine the
minimum wage to be paid to employees working on Federal service contracts "in accordance
with prevailing rates for such employees in the locality . . . ." 41 U.S.C. §351(a)(1). The
wage determinations issued by the Administrator under the procedures at Subpart B of Part 4, Sections
4.50 et seq., are central to this process. The regulations describe a process in which
the Administrator and the Wage and Hour Division staff examine several factors, according to job
classification and geographic area, and then determine a prevailing wage rate for each job classification
based on one of the available methodologies for calculating the prevailing rate.
For example, Section 4.51 provides that prevailing wage rate determinations are
to be "based on all available pertinent information," and cites area surveys generated by
BLS or "other Labor Department personnel" as the most frequently used sources of wage
rate information. 29 C.F.R. §4.51(a). In addition, the regulation provides that information may
be obtained from contracting officers "and from other available sources, including employees and
their representatives and employers and their associations," as well as from collective bargaining
agreements where such agreements set the wage that prevails for particular employee classifications in
the locality. Id.
Section 4.54 provides guidelines for designating "localities" for which
wage determinations are to be issued by the Administrator. Similar to the flexible regulatory guidelines
for calculating wage rates, Section 4.54(a) describes the term "locality" as having "an
elastic and variable meaning," to accommodate different wage structures under the various types
of service contracts that are subject to SCA coverage. 29 C.F.R. §4.54(a), quoted
supra. We share the Administrator's view that the guidelines provided by Section 4.54(a) are
consistent with the SCA's legislative history, which indicates that the undefined term
"locality" intentionally was chosen instead of the more rigid "city, town, village"
language contained in the Davis-Bacon Act. See Hearings, Subcommittee on Labor,
Committee on Labor and Public Welfare, 89th Cong., 1st Sess., on H.R. 10238, Sept. 23, 1965, p.11
(Statement of Charles Donahue, Solicitor of Labor); see also Descomp, 377 F. Supp. at 265.
On the following basis, we also agree with the Administrator that the Descomp and
Southern Packaging decisions do not support the Petitioners' claim that designating the
Seattle CMSA as a "locality" is inconsistent with the statute.
The Descomp and Southern Packaging courts, respectively,
rejected the application of wage determination rates issued for the Washington, D.C., area to
prospective contractors who intended to perform their service contracts in other locations. In
Descomp, the place of contract performance was Wilmington, Delaware; the contract under
consideration in Southern Packaging designated the place of performance as the entire
continental United States (i.e., the services could be performed in any one of various locations
around the country). The common thread running through those decisions is that the wage
determination applicable to a contract must represent wages prevailing in the locality where the
contract is to be performed, and could not simply be based on Washington, D.C., wage rates if
the place of performance was outside the Washington area. Southern Packaging, 618 F.2d
at 1091-92, 458 F. Supp. at 732-35; Descomp, 377 F. Supp. at 266.
However, both the Descomp and Southern Packaging
decisions clearly provide support for the proposition that "locality" must be given a
flexible construction under the SCA. See Southern Packaging, 618 F.2d at 1091-92, 458
F. Supp. at 732-35; Descomp, 377 F. Supp. at 264-66. For example, the District Court in
Southern Packaging stated that "the term 'locality' is indefinite and lends itself to varied
interpretations . . . ." 458 F. Supp. at 733. That court also noted that the Senate Report that
accompanied the 1965 bill that was enacted into law stated that "[t]he Secretary in determining
the locality . . . would take a realistic view of the type of service contract intended to be covered by the
determination." 458 F. Supp. at 735 (quoting from S. Rep. No. 798, 89th Cong., 1st Sess. 2
(1965), reprinted in 1965 U.S.C.C.A.N. 3737, 3738).
It is noteworthy that the district court in Southern Packaging endorsed
the Administrator's use of the Standard Metropolitan Statistical Area (SMSA) as the preferred
"locality" unit for issuing wage determinations under the SCA, based on the testimony of
the Director of the Department's SCA wage determination office regarding the practice of that office at
that time. 458 F. Supp. at 730, 733-34. When Southern Packaging was before the district
court in 1978, the SMSA was, like the CMSA is in the instant case, a multi-jurisdictional unit consisting
of an urban core surrounded by adjacent, economically integrated areas,
established by OMB for collecting and evaluating data by various Federal agencies. See
Notices, OMB, 55 Fed. Reg. 12154 (1990).
In 1978, OMB standards for defining statistical areas already were being revised
to reflect the increasing size of metropolitan areas and changing commuting patterns. By the time new
OMB standards were promulgated in connection with the 1980 decennial census, OMB had
abandoned the SMSA in favor of the general formulation that is in effect today, i.e.,
recognition of different classes of Metropolitan Statistical Areas (Levels A - D), with Level A MSAs
(over 1 million population) eligible to be designated as Consolidated MSAs if they include two or more
subareas that independently would qualify for MSA status (PMSAs). See discussion
supra at pp. 4-6. See generally 45 Fed. Reg. 956 (1980) (1980's MSA
standards); 55 Fed. Reg. 12154 (1990) (1990's MSA standards). And the notion of
"metropolitan area" continues to evolve. In a recent notice announcing further
modifications to the definitions of metropolitan and non-metropolitan areas issued in anticipation of the
2000 decennial census, OMB noted that commuting patterns continue to be "the most reliable
and broadly available measure of functional integration" of communities, but observed that
Notices, OMB, 63 Fed. Reg. 70526, 70534 (1998).
In asserting that the Administrator is prohibited from relying on the BLS CMSA
survey data, the Petitioners and Intervenors would have this Board direct the Administrator to develop
wage survey data based only on subareas of the Puget Sound region.16 But there is nothing in the Act or the
regulations that compels such a result. The term "locality" intentionally was left undefined
by Congress when enacting the SCA, thereby giving the Secretary (and the Administrator) broad
discretion to define "locality" on a case-by-case basis. As work practices continue to
change in light of new developments in transportation, technology and telecommunications, it is likely
that the concept of "locality" also will continue to evolve.
The Administrator has noted that commuting patterns play a role in the CMSA
definition developed by OMB. Admin. Brief at 5, 23; AR, Tabs CC, HH. In its recent review of the
current standards for defining metropolitan areas, OMB observed that "[s]ubstantial agreement
exists that population density (or possibly housing unit density) and daily commuting continue to be the
best means of defining areas consistently nationwide," and that "[b]y establishing place-to-
place links between workers' homes and places of employment, commuting has provided a measure of
the economic interactions within an area." 63 Fed. Reg. at 70532, 70533. Review of the OMB
criteria under which the Seattle CMSA was designated shows clearly that commuting patterns play a
major role in the designation, and refutes the Armed Forces' view that reliance on the CMSA unit is at
odds with the SCA locality concept.
The Armed Forces have submitted two types of non-wage data in support of
their position that the Tacoma and Bremerton-Shelton areas are economic environments distinct from
the Seattle/King County core of the Seattle CMSA. First, the Navy asserts that of the more than
13,000 Federal civilian and contractor employees working at Navy installations in Kitsap County, very
few only 2% commute from King County (Seattle). AR, Tab E, Exh. D. However, the number of
workers commuting from King County to the Kitsap peninsula is only a partial measure of the economic
integration of the Puget Sound region, failing to consider the number of Kitsap County residents who
commute in the other direction i.e., out of the county to find employment. A more
complete picture of the region is provided by data compiled by the Census Bureau from the 1990
census, and we take notice of this data. See United States v. United Bhd. of Carpenters &
Joiners of America, Local 169, 457 F.2d 210, 214 n.7 (7th Cir. 1972). Whatever the
geographic barriers of the Puget Sound region, the Census Bureau's home-to-work commuting data
demonstrate that there is a high level of economic interaction among the counties, with large numbers of
workers moving across county lines as part of their daily commute:
Source: U.S. Bureau of the Census, "Commuting Flows of American Workers Charted by New 1990 Census
Computer File." Press Release No. CB92-267, December 22, 1992, Table 14, derived from computer file STF-
S-5, Census of Population 1990: Number of Workers by County of Residence by County of Work.
Although the Census Bureau data confirm generally the Navy's claim that only 2% of the workers
employed in Kitsap County commute across (or around) Puget Sound from King County, fully 9,053 of Kitsap's 83,826
workers (11.3% of the total) commute into Kitsap County from the other counties in the region. Perhaps more important
as a measure of the economic integration of the region is the commute in the opposite direction, with 9.2% of the King
County (Seattle) workforce traveling into the urban core from Kitsap County 8,459 workers.
The second type of non-wage data submitted by the Armed Forces are statistics comparing the
sales prices of residential real estate in King County (Seattle) with prices in surrounding counties, including Pierce County
(Tacoma) and Kitsap County (Bremerton-Shelton). Air Force Brief, Encl. 4; Navy Brief at 12, Encl. 8; AR, Tab FF.
The Armed Forces cite the lower real estate selling prices in the Tacoma and Bremerton-Shelton areas in support of their
argument that these outlying areas are economically distinct from the Seattle/King County core of the CMSA. Navy Brief
at 12; Reply Brief at 5.
Similar to the commuting data submitted by the Navy, we do not find these real estate statistics
persuasive in view of the degree of economic integration that is demonstrated by OMB's designation of the Seattle-
Tacoma-Bremerton CMSA. As already discussed, the criteria for determining whether a Metropolitan Statistical Area
qualifies as a CMSA cover a range of factors relevant to population density and housing and work patterns. 55 Fed. Reg.
at 12154-56. The CMSA designation provides a comprehensive gauge of the economic integration of the Seattle-
Tacoma-Bremerton area that is not overcome by the real estate statistics submitted by the Armed Forces.
We therefore find the Administrator's reliance on BLS wage survey data from the Seattle CMSA
when developing the challenged Tacoma and Bremerton-Shelton wage determinations to be a reasonable exercise of his
discretion under the Act and its implementing regulations. It is supported by government data documenting the work-
home relationships within the Puget Sound labor market, and also by OMB's criteria for designating CMSA units. The
wage data provided by the Armed Forces, which the Administrator dismissed as anecdotal or flawed (and which we
discuss below), does not persuade us to the contrary.
Armed Forces/Intervenors The Armed Forces challenge the Wage and Hour Division's
use of the capping methodology on various grounds.
As discussed previously (at pp. 8-10), when shifting from the earlier BLS survey data based on the
separate smaller communities (i.e., Seattle, Tacoma, Bremerton) to the BLS's Seattle CMSA wage data, the
Administrator did not simply issue a single new set of wage determinations that would apply to the entire region.
Recognizing that immediate adoption of the CMSA data would produce dramatic increases in the wage determination
rates for some service occupations in certain areas, the Administrator instead adopted a transitional strategy, continuing to
issue separate wage determinations for the Seattle, Tacoma and Bremerton-Shelton subregions. For occupations where
the new CMSA data resulted in only a modest wage increase in wage rates when compared with the predecessor wage
determinations, the CMSA data was incorporated directly into the new wage determinations. However, for occupations
(other than protective service classifications) where the CMSA data would have resulted in a substantial increase in wage
rates, the increase was capped at 15% over the wage rates in the predecessor wage schedules.
The Armed Forces note that there is no provision for the 15% capping mechanism in the Service
Contract Act or its implementing regulations, and that the capping methodology allows for increases above the 15% cap to
be phased in through additional 15% increments in future wage determination revisions. Reply Brief at 16-17. In
view of the anticipated phase-in of higher wage rates in future wage determination revisions, the Navy and the Air Force
object to the Administrator's reliance on capped wage rates when comparing the wage rates of the challenged Bremerton-
Shelton and Tacoma wage determinations with other data. Navy Brief at 6-7; Air Force Brief at 3-6. In support of their
objections, the Navy and the Air Force, respectively, analyzed the number and extent of increased wage rates that would
have resulted on the Bremerton-Shelton and Tacoma wage determinations had the 15% cap not been applied. Navy
Brief, Encl. 4; Air Force Brief, Encl. 2; AR, Tabs F, BB. The Armed Forces also urge that use of the capping
methodology by the Wage and Hour Division is a tacit admission by the Division that the CMSA wage data did not
provide a sound foundation for the challenged wage determinations. Reply Brief at 17.
Administrator The Administrator denies that the capping mechanism constitutes any
acknowledgment that using the Seattle CMSA survey data was inappropriate. The Administrator counters instead that
using the new CMSA wage data, while simultaneously applying the 15% cap to any increases over the predecessor
Tacoma and Bremerton-Shelton wage determinations, was an appropriate transitional mechanism that recognized the
validity of both the new CMSA data and the older subregional data that formerly was used for issuing wage
determinations. Admin. Brief at 25-26; see AR, Tab E.
Analysis The Wage and Hour Division's capping methodology is not explicitly authorized
by the SCA or its implementing regulations, and neither the Administrator's determination letters to the Armed Forces nor
the Administrator's Statement to the Board offers an extended discussion of the origin of the 15% cap and its basis.
Cf. Admin. Brief at 25-26; AR, Tabs A-C. Nonetheless, we find that the Administrator's general application of a
15% cap on wage rate increases in the 1997 CMSA-based wage determinations was a reasonable exercise of the
Administrator's broad discretion to issue wage determinations under the Act, and we uphold this practice on the facts
before us in this case.
The Administrator's discretion under the Service Contract Act is perhaps at its broadest when the
Administrator is issuing prevailing wage schedules. The statute requires, in relevant part, that all Federal service contracts
include "[a] provision specifying the minimum monetary wages to be paid various classes of service employees . . .
as determined by the Secretary [of Labor] . . . in accordance with prevailing rates for such employees in the
locality[.]" 41 U.S.C. §351(a)(1). Like its sister statute, the Davis-Bacon Act, nowhere does the SCA
prescribe a specific methodology to be used by the Secretary or her designee, the Administrator, when
determining the prevailing wage. Perhaps the clearest indicator of the very great deference owed to the Secretary and the
Administrator when determining prevailing wage rates is the clear body of case law holding that the substantive correctness
of wage determinations is not subject to judicial review. United States v. Binghamton Construction Co., 347
U.S. 171, 177 (1954) (under the Davis-Bacon Act); Commonwealth of Virginia v. Marshall, 599 F.2d 588,
592 (4th Cir. 1979) (under the Davis-Bacon Act); AFGE v. Donovan, 25 Wage & Hour Cas. (BNA)
500, 1982 WL 2167 at *2 (D.D.C. 1982), aff'd 694 F.2d 280 (D.C. Cir. 1982) (table) (under the Service
Contract Act). Judicial review "is limited to due process claims and claims of noncompliance with statutory
directives or applicable regulations." Commonwealth of Virginia at 592 (citing Califano v.
Sanders, 430 U.S. 99, 109 (1977)).
Although the 15% cap may not be explicitly authorized under the Act, neither is it prohibited. The
Board previously considered the Administrator's similar application of a 15% cap on a wage rate increase in the D.B.
Clark III case, ARB Case No. 98-106 (Sept. 8, 1998). While noting in Clark that the 15% cap policy
apparently was not memorialized either in the SCA regulations or the Wage and Hour Division's internal
operating procedures, we nevertheless approved the capping methodology based on the record that was before us in the
case, finding that the approach was reasonable and within the Administrator's broad discretion to devise
"program guidelines that are administrable and produce consistent results." Clark, slip op. at 8.
We reach the same conclusion in this case. Once the Administrator decided to shift to the BLS's
Seattle CMSA wage survey as the data source for wage determinations in the Puget Sound region, the Administrator
concluded that an abrupt shift from the "old" subregional data to the "new" CMSA data would
produce comparatively dramatic shifts in wage rates for some occupations. Instead of implementing the change to the
Seattle CMSA data cold turkey, the Administrator chose to temper the impact that would be caused by the change to the
new survey instrument by limiting the maximum 1-year change in wage rates to 15%. Recognizing that both the lower
"old" and the higher "new" survey results are valid if different expressions of the wage rates
prevailing "in the locality," it is our conclusion in this case that the Administrator's 15% cap methodology is a
reasonable transitional tool that is consistent with the Administrator's discretion under the Act, and also promotes a useful
predictability in the procurement process.
Armed Forces/Intervenors In the determination letters to each of the Armed Forces,
the Administrator noted that the BLS's Seattle CMSA wage data also is used for computing the locality pay adjustments
for Federal employees under the Federal Employees Pay Comparability Act. In the Administrator's view, the fact that the
BLS data is used for Federal comparability pay purposes provides further justification for using the same data as the basis
for SCA wage determination rates, because of the Service Contract Act's Section 2(a)(5) requirement that "[t]he
Secretary shall give due consideration to" the wages paid to Federal employees in comparable job classifications
when issuing SCA wage determinations. 41 U.S.C. §351(a)(5).
The Armed Forces contest the Administrator's reliance on the "due consideration"
clause of Section 2(a)(5) to justify using the Seattle CMSA wage survey data, asserting that the goals of the SCA and of
Federal employee pay legislation are different. Reply Brief at 10-12. The Petitioners point out that the wage
standards for white collar Federal employees (i.e., the "GS" wage schedule) establish uniform pay
rates for work at similar grade levels, and that these pay levels are largely uniform throughout the country. In contrast, the
Service Contract Act requires that SCA wage rates reflect locally prevailing wages. Id. The Petitioners
acknowledge, however, that locality pay adjustments for Federal employees, which have been extended since their
inception to cover a significant number of metropolitan areas, have diluted the effect of the Federal pay schedules that
apply nationally. Id.
Administrator Before the Board, the Administrator reiterates his argument that reliance
on the CMSA data is justified under the "due consideration" provision of Section 2(a)(5) of the SCA,
because the same BLS survey is used for computing locality pay adjustments for Federal employees in the Seattle area.
See Notices, Dept. of Labor, BLS, 57 Fed. Reg. 30982, 30983 (1992). See generally 59 Fed. Reg.
62549 (1994) (Presidential memorandum for the Secretary of Labor, the Director of OMB and the Director of the Office
of Personnel Management regarding their joint report containing locality pay recommendations); 5 U.S.C.
§§5301-07 (1994). In addition, the Administrator points to the observation found in the SCA regulations at
29 C.F.R. §4.51(d) that the purpose of the "due consideration" provision is to narrow the gap between
the wage rates paid to Federal employees and those paid to service employees. Admin. Brief at 16-17.
Analysis Section 2(a)(5) provides that "[t]he Secretary shall give due
consideration" to the rates "that would be paid by the Federal agency to the various classes of service
employees if section 5341 or section 5332 of title 5, United States Code, were applicable" in setting the minimum
wage rates payable to employees covered by the Act. 41 U.S.C. §351(a)(5). The plain language of Section
2(a)(5) thus indicates that Congress intended that SCA wage rates be linked in some way to Federal employee pay rates;
that intention is also reflected in the legislative history of the 1972 SCA amendments, which demonstrates concern that the
gap between Federal employee salaries and those paid to SCA-covered employees be narrowed. See 118
Cong. Rec. 27136 (Statement of Rep. Thompson), 31282 (Statement of Sen. Gurney) (1972); see also AFGE v.
Donovan, supra (examining Section 2(a)(5) legislative history in rejecting argument that "due
consideration" provision required SCA wage rates to be no less than Federal Wage Board prevailing rates).
Section 4.51(d) of the Title 29 regulations implements the Section 2(a)(5) due consideration provision by requiring the
Wage and Hour Division to consider "those wage rates and fringe benefits which would be paid under Federal pay
systems" when calculating the SCA wage rates. 29 C.F.R. §4.51(d).
In these cases, the Administrator does not claim that the wage rates in the challenged SCA wage
determinations reflect a direct comparison with wage rates paid to specific comparable classifications of Federal
employees. Instead, the Administrator argues that because the geographic area used for computing Federal employee
"comparability pay" i.e., the Seattle CMSA is the same geographic area used for the BLS survey
that is the basis of the challenged wage determinations, the Section 2(a)(5) "due consideration" clause of the
Service Contract Act lends legal validity to the Administrator's conclusion that the Seattle CMSA is an appropriate locality
under the SCA.
On its face, Section 2(a)(5) does not address the use of local pay areas established under Federal
employee pay systems as the localities for which prevailing wages will be set under the SCA. To determine whether the
Administrator's argument holds, we turn to the Act's legislative history for guidance. See Fort Hood Barbers Assoc.
v. Herman, 137 F.3d 302, 307-08 (5th Cir. 1998). See generally AFL-CIO v. Donovan, 757 F.2d 330,
344 (D.C. Cir. 1985) (holding that arguments regarding general congressional intent "cannot overturn the clear
language of a specific provision"). An examination of the intention of the lawmakers who incorporated the
references to Sections 5332 and 5341 into Section 2(a)(5) must focus on the substance and application of those
provisions at the time of the 1972 and 1976 amendments. See Merrill Lynch, Pierce, Fenner & Smith v. Curran,
456 U.S. 353, 378-79 (1982), and cases there cited. Our examination reveals that the pertinent SCA legislative
history and the antecedent Federal pay systems that are referenced by Section 2(a)(5) do not support the Administrator's
contention.
Section 2(a)(5) was added to the Act in 1972 and amended in 1976. Pub. L. No. 92-473,
§2, 86 Stat. 789 (1972); Pub. L. No. 94-489, §2, 90 Stat. 2358 (1976). The 1972 amendment directed
that, when issuing prevailing wage determinations under the SCA, the Secretary must consider the wage rates that would
be paid to service employees were they hired directly by the Federal government under Section 5341 of Title 5 of the
United States Code, which addresses pay rates for Federal Wage Board, or prevailing rate system, employees. Pub. L.
No. 92-473, §2. The 1976 amendments added to Section 2(a)(5) the reference to Section 5332 of Title 5, which
addresses pay rates for Federal General Schedule employees, the counterpart to white collar workers in the private
sector. Pub. L. No. 94-489, §2.17
The legislative history of the 1976 SCA amendments does not suggest that Congress anticipated
that local areas established under the Federal General Schedule would be relied on as localities under the SCA. See
S. Rep. No. 1131, 92d Cong., 2d Sess. (1972), reprinted in 1972 U.S.C.C.A.N. 3534; H.R.
Rep. No. 1571, 94th Cong., 2d Sess. (1976), reprinted in 1976 U.S.C.C.A.N. 5211; 118 Cong. Rec. 27136-
42, 31281-82, 32530 (1972); 122 Cong. Rec. 31575-78, 33842-43 (1976). Indeed, the concept of locality-
based pay for Federal employees under the General Schedule was not enacted into law until passage of the Federal
Employees Pay Comparability Act of 1990. See Pub. L. 101-509, 104 Stat. 1427 (1990); H.R. Rep. No. 730,
101st Cong., 2d Sess. 68-84 (1990); General Services Admin., Reg. 6, Case No. 86-SCA-WD-12,
Dep. Sec. Dec. (Jan. 27, 1988), slip op. at 5-6 (statement of the Administrator distinguishing between General Schedule
"national pay scales" and SCA locality rates). Although the legislative history of the 1972 amendments
suggests that Congress possibly contemplated a link between the system for setting SCA wage rates and the Federal
prevailing wage rate system,18 the legislative history of the
1976 amendments provides no similar indication concerning the concept of locality pay for Federal General Schedule
employees. See H.R. Rep. No. 1571, supra; 122 Cong. Rec. 31575-78, 33842-43, supra.
On the foregoing basis, we conclude that any link between the "due consideration" language of Section
2(a)(5) of the Act and use of the CMSA unit as an SCA locality is too attenuated to support the Administrator's position
in this regard. Although we disagree with the Administrator on this one point, we nonetheless conclude that the
Administrator's other arguments in support of using the BLS Seattle CMSA wage data are sufficient justification to affirm
the Administrator's decision.
C. Whether the wage rates issued by the Administrator in the 1997 Tacoma and Bremerton-Shelton
wage determinations are incorrect in fact because they are inconsistent with wage rates
paid in these communities.
Armed Forces/Intervenors In addition to arguing that the Seattle CMSA is an
inappropriate "locality" as a matter of law, the Armed Forces and Intervenors assert that factual evidence in
the record documenting wage rates paid in the Tacoma and Bremerton-Shelton areas demonstrates that the 1997 CMSA-
based wage determination rates do not reflect actual pay practices in these outlying areas. In support of this argument, the
Petitioners cite various submissions:
In addition, the Air Force notes the failure of the Administrator to specifically address the evidence
and argument that the Air Force presented to the Administrator in its initial challenge to the 1997 CMSA-based Tacoma
wage determination. Air Force Brief at 2. The Air Force also questions the Administrator's rationale for rejecting the data
submitted below by the Navy, particularly the Washington State wage survey data. Id. at 2-4.
In sum, the Armed Forces argue that the 1997 CMSA-based wage determinations do not reflect
the wage rates in the communities where the Petitioners' SCA contracts will be performed, i.e., the Tacoma and
Bremerton-Shelton areas, but instead more closely reflect wages prevailing in Seattle/King County. Joint Pet. for Rev. at
2.
Administrator The Administrator discounts the wage rate data submitted by the
Petitioners, arguing that the Armed Force's statistics either are of questionable reliability or are misleading.
The Administrator criticizes the Washington State Employment Security Department wage survey
data as lacking reliability because, unlike the BLS survey data (which is gathered through on-site visits by BLS field
economists), the State survey depends on employers to classify their employees and then submit their responses by mail.
The Administrator also notes the relatively high non-response rate among employers participating in the Washington State
surveys, i.e., 48% on the Kitsap County survey and 43% on the Jefferson/Clallam Counties survey; and that this
high non-response rate contrasts with the 16% non-response rate for the BLS-conducted Seattle CMSA survey. Admin.
Brief at 23-24; see AR, Tabs GG, W. The Administrator also notes that because the Washington State survey
data does not distinguish between rates paid to different levels within employee classifications, it is "impossible to
make valid comparisons between the State and BLS data." Admin. Brief at 24.
Similarly, the Administrator questions the usefulness of the Navy's survey of police and fire
departments, because the documentation (a) does not specify whether the wage rates represent an average wage
rate or an entry level wage rate for each profession, (b) does not indicate how many employees are actually employed
under the collective bargaining agreements covering Kitsap area protective service personnel, and (c) does not provide job
descriptions for the classifications listed in the agreements. Id.; see AR, Tab E, Exhs. B - C-2; Tab DD.
The Administrator further contends that even if the Navy's data were complete and reliable, this evidence does not
demonstrate that rates based on the Seattle CMSA data are excessive because some of the Navy's survey wage rates are
higher than corresponding wage rates in the challenged wage determinations. Admin. Brief at 24; see
AR, Tab DD.
The Administrator also disputes the Armed Forces' reliance on a comparison of predecessor wage
determination rates with the rates in the 1997 CMSA-based wage determinations. The wage rates in the predecessor
wage determinations although issued within a matter of weeks prior to the issuance of the CMSA-based wage
determinations were based on BLS data from surveys conducted in 1993-94. Admin. Brief at 25; see AR,
Tab E, Exhs. B-C-2; Tab F, Attachments 1, 2. The Administrator urges that because there had been no interim increases
in the wage determinations issued between 1994 and 1997, it is not possible to draw any useful conclusions about the
relative economic conditions in different parts of the Puget Sound region by comparing these wage rates based on
"old" data with the rates in the 1997 Tacoma and Bremerton-Shelton wage determinations that are based on
the Seattle CMSA data. Admin. Brief at 25; see AR, Tabs N-Q.
The Administrator also takes issue with the comparative data submitted by the Armed Forces that
relies on "uncapped" wage rates, i.e., wage rates taken directly from the 1997 Seattle CMSA-based
wage determination which, in many cases, were not fully implemented in the 1997 CMSA-based wage determinations for
Tacoma and Bremerton-Shelton because of the capping methodology. Admin. Brief at 25. The Administrator urges that
the Armed Forces' use of the uncapped Seattle wage rates distorts the effect of the Administrator's reliance on the CMSA
wage data for the challenged Tacoma and Bremerton-Shelton wage determinations. Id.
Analysis At the outset of our consideration of the Armed Forces' wage data, it is useful
to acknowledge first the overriding significance of our earlier discussion of "locality." Having found that the
sprawling Seattle CMSA is an acceptable "locality" for developing SCA prevailing wage rates, based on
OMB's criteria for designating metropolitan areas (supra), it follows that a comparison of wage rates between
different subareas of the Puget Sound region adds little to the discussion. Stated differently, once we conclude
that a geographic area manifests sufficient economic integration that the Administrator reasonably may deem it a
"locality" under the Act, it is largely irrelevant that wage rates may be higher in some parts of the community
than in others. For example, wages for clerical employees working at downtown offices in some cities may be higher than
the rates paid for comparable positions in outlying suburban areas, but by itself the disparity in wage rates would not mean
that the downtown and suburban locations are different "localities" for SCA purposes. Labor market and
commuting patterns are far more meaningful in this regard.
The regulatory scheme under which SCA wage determinations are developed directs the
Administrator to exercise discretion when determining the specific methodology to be employed in calculating particular
wage rates. The Board "will upset a decision of the Administrator only when the Administrator fails to
articulate a reasonable basis for the decision, taking into account the applicable law and the facts of the case."
Court Security Officers [of Austin, Texas], ARB Case No. 98-001 (Sept. 23, 1998), slip op. at 4, aff'd
sub nom. Richison v. Herman, No. W-97-CA-385 (W.D. Tex. Feb. 1, 1999); see also D. B. Clark
III, slip op. at 6. Thus, the central question on appeal in these consolidated cases is not whether a different
methodology from the one chosen by the Administrator might have been more reasonable, but simply whether the
Administrator's chosen methodology is consistent with the law and the facts before us. See COBRO Corp., ARB
Case No. 97-104 (July 30, 1999), slip op. at 23. The quality of the evidence in the record can be a significant
consideration in determining whether to uphold the Administrator; as the Deputy Secretary noted in Tri-States
Service Co., an analogous case involving a challenge to SCA wage determination rates, "the basic issue to be
decided is whether the wage information supplied by Petitioner represents more accurate and probative evidence of the
prevailing wages in the locality than the data and methods utilized by the Wage and Hour Division." Case No. 85-
SCA-WD-12, Dep. Sec. Dec. (Sept. 18, 1990), slip op. at 5.
Although we recognize the substantial effort expended by the Armed Forces in developing their
documentary exhibits, we agree with the Administrator's conclusion that none of the exhibits demonstrates that the
Administrator erred in relying on the BLS's Seattle Occupational Compensation Survey, and thereby using data from the
entire Seattle Consolidated Metropolitan Statistical Area. Based on OMB's regulatory criteria for designation of statistical
areas, reinforced with commuting statistics developed by the Census Bureau, we found above that the CMSA is an
acceptable "locality" under the Service Contract Act.
Neither the Armed Forces nor the Intervenors have challenged the underlying methodology or
accuracy of the BLS's Occupational Compensation Survey, which is an extensive cross-industry survey of employers using
sophisticated statistical techniques. See AR, Tab W Appendix. For all the reasons cited by the Administrator,
supra, we are persuaded that the wage data submitted by the Armed Forces is less complete and less reliable
than the BLS-conducted Seattle CMSA survey, and that the Administrator's decision not to reconsider the wage rates in
the 1997 Tacoma and Bremerton-Shelton wage determinations therefore was reasonable.
D. Whether the Administrator's shift to the Seattle CMSA survey data as the basis for the
challenged 1997 wage determinations reflects an error in policy.
In addition to challenging the Administrator's conclusion that the CMSA is an appropriate
"locality" under the SCA, and submitting evidence in support of their claim that the 1997 Tacoma and
Bremerton-Shelton wage determination rates are inconsistent with wages actually paid in these communities, the Armed
Forces and the Intervenors also criticize the Administrator's decision to use the BLS Seattle CMSA data as a poor policy
choice. This criticism is approached from several directions.
Citing the tremendous volume of SCA contracts that are entered into by the Department of Defense
(DOD), the Armed Forces point out that they are a major constituent of the SCA wage determination process. They note
various cooperative efforts between the Wage and Hour Division and the DOD in recent years that resulted in a
streamlined process by which blanket requests for wage determinations are submitted to the Department; additional
progress has been made in developing computerized access to wage determinations. Reply Brief at 20. The
Armed Forces complain that DOD had expected that the cost savings achieved by the Wage and Hour Division through
these streamlined procedures would be invested "in developing appropriate SCA WDs." Id.
In addition, the Armed Forces disparage the Administrator's shift to the regional BLS data by
arguing that the decision is more motivated by Department of Labor fiscal concerns than by concerns regarding effective
implementation of the Service Contract Act. They characterize the shift to Seattle CMSA data as "budget-
friendly" from the standpoint of the Wage and Hour Division, but inadequate for developing the
"locality"-based wage determinations required under the Act. Air Force Brief at 11; see Joint Pet.
for Rev. at 2, 6; Reply Brief at 10. Intervenor CSA cites the significant fiscal impact that an increase in SCA contract
wages will have on Federal procurement costs, and urges that "concern with creating an efficient survey process
should be balanced with its resulting impact on the Federal government as a whole." CSA Brief at unnumbered p.
9.
The Armed Forces contend further that the shift to using a new BLS survey instrument as the
foundation for the wage determination program makes the resulting wage schedules legally suspect. In their view, the
Administrator has chosen to use the CMSA survey data simply because that data is readily available; they posit that the
use of "perpetually changing methodologies" by the Wage and Hour Division has resulted in a wage
determination process that is "so arbitrary and inconsistent as to be without any credible foundation." Reply
Brief at 13, 15, 21.
The Armed Forces also suggest that the shift to the CMSA-based data may lead to undesirable
swings in SCA wage rates, both higher and lower. Although the Armed Forces specifically challenge the 1997 CMSA-
based Seattle wage determinations in this case because, in their view, wage rates have increased too much, they
also warn that the shift to the CMSA-based data could result in future decreases in wage rates. They observe
that "the extensive combination of large, disparate communities into one single wage survey effort" could result
in a significant decline in wages, which would have an equally disruptive effect on the SCA labor market. Joint Pet. for
Rev. at 2; see Air Force Brief at 9.
Analysis In Service Contract Act cases, the Administrative Review Board's role is to
provide appellate review of the Administrator's decisions, having "jurisdiction to hear and decide . . . appeals
concerning questions of law and fact from final decisions of the Administrator of the Wage and Hour Division or authorized
representative . . . ." 29 C.F.R. §8.1(b). Although the Board is "delegated authority and assigned
responsibility to act for the Secretary of Labor in issuing final agency decisions" in matters arising under the Service
Contract Act (Secretary's Order 2-96, 61 Fed. Reg. 19982 (1996)), it is the Administrator, not the Board, who has
primary responsibility for implementing and enforcing the SCA. To that end, the Board and its predecessor agencies
extend broad deference to the Administrator's interpretations of the Act and its implementing regulations, so long as the
Administrator's policies and determinations are legally sound and otherwise reasonable. For example, in a 1996 case
involving conflicting interpretations of Section 4(c) of the Act, we observed that:
ITT Federal Services Corp (II), ARB Case No. 95-042A (July 25, 1996), 1996 WL 415926 at *3, 4.
Thus, our inquiry on review is focused simply on whether the Administrator's decision reflects a reasonable
interpretation of the statute and regulations, not whether we believe it to be the best policy choice.
Although the basic concept behind the Service Contract Act i.e., that employees on
Federal service contracts should not be paid less than the locally-prevailing wage and fringe benefit rates is
straightforward, the implementation of the statute is complex and raises many difficult questions. Fundamental concepts of
"locality" and "prevailing" are critical threshold issues in wage determination matters, but they are
followed by a host of equally challenging problems such as competing methodologies for collecting and analyzing wage
data. In many of these situations requiring interpretation of the statute or its regulations, there is no single
"right" or "obvious" answer to these questions. Instead, the Administrator must choose from a
variety of options while trying to reconcile several interests: the statutory mandate that local labor standards be protected;
the need to establish predictable and enforceable policies; the goal of promoting stability in the Federal procurement
system; and the obligation to be an effective steward of the resources provided by Congress for implementing the statute,
using them as efficiently as possible. It is not an easy job.
The Armed Forces and Intervenors raise important concerns in challenging the Administrator's
CMSA-based wage determinations. The Administrator's shift to wage determinations based on CMSA data results in
significant pay increases for workers in the outlying counties of the Seattle metropolitan area. Furthermore, as the Armed
Forces point out, the geographical area encompassed within the Seattle CMSA is very large and the "old"
urban centers that formed the basis for the predecessor wage determinations continue to be urban focal points that could
be used to support a series of wage determinations based on the smaller PMSAs, rather than the sprawling CMSA if
such subregional wage data were available. Indeed, we acknowledge that the very same analysis of OMB's standards for
determining metropolitan areas that we adopted earlier in finding the Seattle CMSA to be an acceptable
"locality" under the SCA (supra at 17-24) could be used to support a finding that the smaller PMSA
units also would be acceptable "localities" under the Act. The Armed Forces' policy argument that these
smaller geographical units are preferable "localities" for SCA purposes is not without substance.
The Board's limited mandate, however, is to determine whether the Administrator's determination is
consistent with the law and reasonable, and not to weigh whether the Administrator's approach is "better" than
the one advocated by the Petitioners. Almost any change in wage data methodologies will advantage some groups and
disadvantage others, but this is precisely the kind of judgment call that is uniquely within the Administrator's power. In this
instance, merging all the regional wage data into a single survey tends to increase SCA wage rates in the Tacoma and
Bremerton-Shelton areas (where wage rates historically have been lower than in King County); as a corollary, it would
appear that this same process ultimately will result in lower SCA wage rates in the Seattle urban core, compared
with the rates in the predecessor Seattle wage determinations. Today, the Army, Navy and Air Force assert that the new
wage rates in Tacoma and Bremerton-Shelton are too high, from the perspective of the contracting agencies and
contractors performing work at facilities in these outlying areas; tomorrow, service employees working in downtown
Seattle may assert that the CMSA wage data has produced SCA wage rates that are too low, from the workers'
perspective, when compared with wage rates paid to workers performing similar work in the Seattle urban core,
which presumably is their preferred "locality." But once the Wage and Hour Administrator has selected an
appropriate "locality" for SCA purposes, the statute does not require the wage determination process to be
balkanized to suit the unique perspectives of specific constituencies.
In this decision, we have found that the Administrator's shift to using CMSA-based data represents
a reasonable interpretation of "locality" under the Act because government statistical data show that the Puget
Sound region is economically integrated. In addition, we have found that the wage and economic data supplied by the
Armed Forces does not make a compelling case that the Administrator's CMSA-based wage determinations for the
Tacoma and Bremerton-Shelton areas must be reconsidered. We also have found that the Administrator's 15% capping
methodology is a reasonable transitional device, based on the record before us. To the extent the Armed Forces argue to
this Board that an alternative approach would be preferable to the methodology chosen by the Administrator,
they have raised a question of policy that does not properly belong before us.
Accordingly, the petitions for review submitted by the Armed Forces are DENIED, and
the Administrator's April 20 and July 20, 1998 rulings are AFFIRMED.
SO ORDERED.
PAUL GREENBERG
CYNTHIA L.
ATTWOOD
APPENDIX - MAP OF WASHINGTON STATE COUNTIES
1 The text of this regulation was first promulgated in 1983.
48 Fed. Reg. 49762 (1983). By that time, the Office of Management and Budget had abandoned the Standard
etropolitan Statistical Area as the sole OMB-recognized metropolitan unit in favor of multiple metropolitan units.
See Notices, OMB, 63 Fed. Reg. 70526, 70529 (1998).
2 The four Primary Metropolitan Statistical Areas in
the Puget Sound region include the following counties, respectively:
OMB Bulletin 99-04, List II at 23; see also Admin. Brief at 6.
3 The three areas in which BLS had formerly
conducted individual wage surveys are comprised of the following counties: the Seattle area, Snohomish and King
Counties; the Bremerton-Shelton area, Kitsap and Mason Counties; and the Tacoma area, Pierce County. AR, Tabs A-
C. Data for the CMSA survey were collected from Island, King, Kitsap, Pierce, Snohomish and Thurston Counties. AR,
Tab W.
4 References to the parties' pleadings are
abbreviated as follows:
[Page 10]
[Page 11]
[Page 12]
[Page 13]
[Page 14]
[Page 15]
[Page 16]
[Page 17]
[Page 18]
[Page 19]
______________________________________________________________________________________________________
| Total | COUNTY OF WORK |
Seattle-Tacoma, WA CMSA | living in | ____________________________________________ |
Bremerton MSA | county of | King Snohomish Pierce Kitsap Thurston | Worked
Olympia MSA | residence | County County County County County | elsewhere
______________________________________________________________________________________________________
Total Working in county of . . . . 912.610 179,864 233,197 83,826 68,923 . . . .
work
COUNTY OF RESIDENCE
King County 805,782 750,970 28,328 14,452 1,673 1,304 9,055
Snohomish County 231,967 84,722 141,802 368 339 108 4,628
Pierce County 270,589 53,657 2,526 203,626 3,626 3,750 3,404
Kitsap County 88,144 8,459 530 2,960 74,323 109 1,763
Thurston County 75,364 2,064 172 8,526 108 59,069 5,353
Living elsewhere . . . . 12,738 6,506 3,265 3,685 4,583 . . . .
[Page 20]
[Page 21]
[Page 22]
[Page 23]
[Page 24]
[Page 25]
[Page 26]
[Page 27]
[Page 28]
[Page 29]
[Page 30]
[Page 31]
Chair
Member
Primary Metropolitan Statistical Area
Counties Included
Bremerton PMSA
Kitsap County
Olympia PMSA
Thurston County
Seattle-Bellevue-Everett PMSA
Island County
King County
Snohomish County
Tacoma PMSA
Pierce County
| Army May 6, 1998 letter requesting Board review of Apr. 20, 1998 ruling | Army 5/6/98 Pet. for Rev. | |
| Air Force May 8, 1998 letter requesting Board review of Apr. 20, 1998 ruling | Air Force 5/8/98 Pet. for Rev. | |
| Navy May 8, 1998 letter requesting Board review of Apr. 20, 1998 ruling | Navy 5/8/98 Pet. for Rev. | |
| Jointly filed June 22, 1998 letter accompanying briefs and supplemental documentation filed by each petitioner | Joint Pet. for Rev. | |
| Air Force June 22, 1998 letter brief in support of petition for review | Air Force Brief | |
| Navy June 22, 1998 brief in support of petition for review | Navy Brief | |
| Statement of the Acting Administrator in Response to Petition for Review | Admin. Brief | |
| Petitioners['] Response to Statement of the Acting Administrator in Response to Petitioners['] Request for Review | Reply Brief | |
| Johnson Controls Sept. 9, 1998 letter brief | Johnson Controls Ltr. Brief | |
| CSA Sept. 8, 1998 brief | CSA Brief |
5 Although both the Navy and the Air Force focus on the relatively large concentration of workers in Seattle, their specific contentions differ somewhat. The Navy stated that "79% of DOL's CMSA survey used as the basis for WD 94-2559 (Rev. 9) reflects data derived from sources located in King County . . ." AR, Tab E, 9/15/97 ltr. at 4. The Air Force stated that "79% of the wage data comprising the Seattle CMSA survey is derived from the Seattle PMSA" (i.e., King, Island and Snohomish counties). AR, Tab F, 8/20/97 ltr. at unnumbered p.3. We do not need to resolve this inconsistency, because Census Bureau statistics covering King and Snohomish Counties provide support for the general contention that the greatest concentration of workers is in the area immediately surrounding Seattle, with the following figures recorded in 1990: of a total 1,471,846 workers living in King, Snohomish, Pierce, Kitsap, and Thurston Counties, 1,073,230 workers, or 72.9%, work in King and Snohomish Counties. U.S. Bureau of the Census, "Commuting Flows of American Workers Charted by New 1990 Census Computer File," Press release No. CB92-267, Dec. 22, 1992, Table 14, derived from computer file STF-S-5, Census of Population 1990: Number of Workers by County of Residence by County of Work; see Table reproduced infra at p. 23.
6 Although not an issue raised by the parties, we note that the geographic areas covered by the 1997 CMSA-based wage determinations include rural counties that are located beyond the Seattle CMSA. The Tacoma wage determination applies to contracts in Lewis, Pierce and Thurston counties. The Bremerton-Shelton wage determination applies to contracts in Kitsap, Mason, Grays Harbor, Jefferson and Clallam counties. AR, Tabs M, N, P, Q.
7 Although the Administrator's rulings are unclear whether BLS regional data were actually relied on previously in setting the protective service occupations wage rates for the predecessor Tacoma and Bremerton-Shelton wage determinations, it is evident that the protective service wage rates for the Tacoma and Bremerton-Shelton areas whether derived from the old Seattle-Bellevue-Everett wage survey or from BLS regional statistics were not generated from actual wage surveys of the Tacoma and Bremerton-Shelton areas. See AR, Tabs A-C, 4/20/98 rulings at 2, 4.
8 Although the arguments advanced by each of the Armed Forces shared common themes, their briefs to the Administrator were distinctive and included differing exhibits. However, the Administrator's letters rulings to the respective agencies generally address only the arguments and materials submitted by the Navy, largely ignoring the materials submitted by the Army and Air Force. See AR, Tabs A-C.
The Administrator ordinarily should consider all major arguments raised by each of the parties in a request for review and reconsideration, and address specifically the evidence presented. This is particularly true when it is evident (as in this case) that each of the Petitioners had invested significant time and effort to develop and articulate its own position.
9 A fourth case, Department of the Air Force, ARB Case No. 98-125 (dealing with wage determinations in North Carolina and South Carolina), also was consolidated with these three cases. On July 15, 1999, the Board issued an order severing Case No. 98-125 from these three Puget Sound cases.
10 By letter dated May 13, 1999, Johnson Controls requested that the Board accept a newspaper article concerning economic data from the Seattle metropolitan area and Kitsap County. We decline to do so. Our review of the Administrator's ruling is in the nature of an appellate proceeding and we generally focus our attention on the formal administrative record in the case, i.e., the materials that were before the Administrator. See 29 C.F.R. §8.1(d); Harbert International, Inc., Case No. 91- SCA-OM-5, Sec. Dec., May 5, 1992, slip op. at 6. No argument has been advanced in support of a remand to the Administrator for review of the proferred evidence, and the record does not indicate a basis for such action. See COBRO Corp., ARB Case No. 97-104, July 30, 1999, slip op. at 12 n.10 and cases cited therein. We therefore deny Johnson Controls' request to admit the new evidence.
11 The Navy's arguments and documentation relevant to the Bremerton-Shelton wage determinations focus on Kitsap County. AR, Tab E; Navy 5/8/98 Pet. for Rev.; Navy Brief. Kitsap and Mason Counties comprised the Bremerton-Shelton wage survey area under the former SCA wage survey scheme. AR, Tabs A-C, 4/20/98 ruling letters at unnumbered p.1.
12 The Administrator thus used the "locality" concept in two ways, viz., both to refer to the Seattle CMSA wage survey area and to refer to the areas for which the Tacoma and Bremerton-Shelton wage determinations were issued.
13 As noted above at n.8, the Administrator's ruling letters did not address the Army and Air Force materials.
14 The factual evidence offered by the Armed Forces in support of this contention is discussed below at pp. 29 - 33.
15 The Administrator's observation that commuting distances are a factor in OMB's determining the existence of a PMSA does not advance the Administrator's position. After all, the primary issue in this case is whether the Seattle-Tacoma-Bremerton CMSA is a "locality." On this question, it is far more significant that, by definition, a CMSA is a Level A Metropolitan Statistical Area (i.e., an MSA with a population over 1,000,000) that includes two or more PMSAs. 55 Fed. Reg. 12154, 12156, §10 (1990). MSAs that include both urban areas and outlying counties are determined only after examining commuting patterns. Id. at 12155, §§2, 3.
16 The Petitioners jointly request that wage determinations based on "appropriate survey data" be issued, Joint Pet. for Rev. at unnumbered p.3, with the Petitioners respectively identifying the following wage survey areas: the Air Force requests that the Board order the Administrator to issue a wage determination based on a survey of the Tacoma PMSA, Air Force 5/8/98 Pet. for Rev. at 2; Air Force Brief at 4; the Army requests issuance of a wage determination based on wage data derived from the "localities where the contracts are to be performed," Army 5/6/98 Pet. for Rev. at 2; and the Navy requests issuance of a wage determination based on wage data derived from "Kitsap and surrounding counties" Navy 5/8/98 Pet. for Rev. at 4; Navy Brief at 4.
17 The 1976 SCA amendments also legislatively overruled court decisions that had construed the statute as not providing coverage for white collar workers. H.R. Rep. No. 1571, 94th Cong., 2d Sess. 1-2 (1976), reprinted in 1976 U.S.C.C.A.N. 5211-14; Pub. L. No. 94-489, §1.
18 Only weeks before passage of the 1972 SCA amendments, which added the reference to Section 5341 regarding the Federal prevailing wage rate system, Congress had passed the Prevailing Rate Systems Act, Pub. L. 93-392, §1(a), 86 Stat. 564 (1972) (codified as amended at 5 U.S.C. §5341 et seq.). That enactment continued the Civil Service Commission practice of conducting local area wage surveys as a basis for regularly adjusting Federal prevailing wage rate system pay rates. See id.; S. Rep. No. 791, 92d Cong., 2d Sess. 2-3 (1972), reprinted in 1972 U.S.C.C.A.N. 2980, 2981-82; U.S. Information Agency v. FLRA, 895 F.2d 1449, 1451 (D.C. Cir. 1990).
