When Does a Service Contract Act ("SCA") Dispute Get Appealed to a BCA rather than DOL?

“Two roads diverged in a yellow wood….

--Robert Frost 

In some disputes under the Service Contract Act (“SCA”), the contractor has to take his claims first to the US Department of Labor (“DOL”). In other circumstances, a final determination by the DOL is not required to bring a direct claim for reimbursement against the Government.

In a recent Armed Service Board Court of Appeals (“ASBCA”) case, the Centerra Group appealed a National Atmospheric and Space Administration (“NASA”) contracting officer’s (“CO’s”) rejection of their request for reimbursement of a Fair Labor Standards Act (“FLSA”)  arbitration award made to a firefighters’ union.  Centerra Group, ASBCA No. 61267. The arbitrator had awarded back overtime pay, liquidated (i.e., double) damages, and other relief. The NASA CO claimed that reimbursement demand was premature because the arbitration agreement was subject to the SCA, and thus only DOL could determine back wages for the harmed firefighters’ workers.

The ASBCA, however, found in favor of the Centerra Group holding that the SCA did not apply to this dispute, and that if it had applied, the DOL did not need to issue a wage determination because it approved the collective bargaining agreement when it had been formed and therefore approved the possible arbitration that would have resulted out of it. When an appeals court found in favor of the firefighter’s union that the arbitration agreement and determination was binding, it resolved any dispute over the back pay due to the workers.

Since there was no underlying labor dispute, there was no need for a final determination by the DOL and therefore no reason to reject the reimbursement request. According to FAR 52.222-41(t), any underlying dispute concerning labor standards requirements are governed by 29 CFR parts 4, 6, and 8. But, since the court determined that the right to overtime pay isn’t included in 29 CFR 4, 6, or 8, FAR 52.222-41(t) does not apply and the Disputes clause is determinative of the wage dispute.

But the Board’s didn’t consider the impact of the Contract Work Hours and Safety Standards Act  (“CWHWSSA”) on the issue.  CWHSSA does give rise to an overtime claim and it is enforceable by DOL. Nonetheless, the outcome of the Board’s decision is certainly correct, even if all the logic is not always so solid.

Furthermore, the court revisited an old opinion from the Court of Federal Claims which stated that when a DOL ruling is only part of a claim, the federal courts have jurisdiction if “a dispute centers on the parties' mutual contract rights and obligations…” Burnside-Ott Aviation Training Center, Inc. v. United States, 985 F.2d 1574 (Fed. Cir. 1993). Since there was an arbitration ruling that contributed to the Centerra Group’s claim for reimbursement, the ASBCA and the court had jurisdiction to decide that the arbitration was valid and that the costs were reimbursable. So even if there was an underlying dispute governed by 29 CFR 4, 6, or 8, the ASBCA still would have had jurisdiction and determined that the Centerra Group had a right to reimbursement.  

This case shows the powerful impact of the circumstances and facts on the issue of the Board’s deferral to DOL. Unlike the SecTek, Inc. case decided in the summer of 2018, Centerra was not required to exhaust the DOL administrative procedures. The Board took jurisdiction over the cost claim, as it should have. That was the right outcome because there is essentially no administrative procedure left at DOL to exhaust after the issuance of the FLSA arbitral award.  

Thus, score one for common sense at the ASBCA! Let’s hope they exercise as much good sense when they get to the merits of the allowability of the FLSA back wage claims. Stay turn.