investigate errors on inaccuracies in the federal determinations.
The City and four of Its public trusts then filed an action in the
district court seel
a petition for review of the Labor Commissioner's decision that she had
no authority to review the federal agency's wage determinations. The
City moved for summary Judgment raising several theories as to how the
Act was void because it violated the Oklahoma Constitution. The trial
court granted the motion without articulating the bases upon which the
Act was constitutionally infirm.
The appeal, brought by the State of Oklahoma to this Court, is
governed by the accelerated procedures found in Rule 1 .203 of the Rules
of Appellate Procedure in Civil Cases, Okla. Stat. tit. 12, ch. 15, app. 2
(Supp. 1994). The parties were allowed to brief the issues on appeal.
in addition, the Oklahoma State Building and Construction Trades Council
was allowed to file a brief as amicus curiae.
The challenged Act was promulgated in 1965. It mirrors provisions
of the federal Davis-Bacon Act, 40 U.S.C. S§ 276a - 276a-5 (1994),
which requires the payment of prevailing wages on federally financed
construction projects. The Oklahoma Act declares the policy underlying
hs passage:
It is hereby declared to be the policy of the State of
Oklahoma that a wage of no less than the prevailing hourly
rate of wages for work of a similar character In the locality in
which the work Is performed shall be paid to all workmen
employed by or on behalf of any public body engaged in public
works exclusive of maintenance work.
26
Okla. Stat. tit. 40. S 196.1. Thus, the Act prohibits state and local
governments from driving down the amount of workers' wages through
competitive bidding.
The Act applies to the erection, construction, or Improvement of any
Structure or building constructed for public use costing over
$600.000. 00. See id. at §§ 196.2(7) & 196.2a. Since the Acts
inception, its provisions have not applied to the Department of
Transportation or the Turnpike Authority In the construction of roads. Id.
at S 196.12.
The Act originally gave Oklahoma's Labor Commissioner complete
authority to compile wage data and to determine prevailing wages. These
determinations were made Independently from any determination made
by the United States Department of Labor. The Act required Oklahoma's
Labor Commissioner to file wage determinations on July 1st of each year.
Objections to those determinations were heard by the Labor
Commissioner. Appeals from the commissioner's decisions were filed in
district court.
In 1981. the Oklahoma Legislature amended the Act to provide that
the prevailing wage, already determined by the United States Department
of Labor for federally funded projects pursuant to the Davis-Bacon Act,
be adopted by Oklahoma's Labor Commissioner. Id. at f 196.6. The
Labor Commissioner can now determine a prevailing wage only when the
United States Department of Labor has not determined the prevailing
wage In a particular category of work or In a particular geographic area.
No procedure was provided to protest or challenge a federal wage
determination before Oklahoma's Labor Commissioner or In Oklahoma
27
courts. A 198 5 amendment to the Act provides for review only of wage
rates set by the Labor Commissioner for a locality for which a federal
determination has not been made.
The City charges that the Act impermissibly delegates the authority
to make wage determinations to a federal agency while leaving
Oklahoma's Labor Commissioner with no authority to check the accuracy
of these determinations. The State of Oklahoma argues that the
delegation is permissible because the United States Department of Labor
is merely implementing the legislative policy articulated in the Act when
it makes wage determinations.
Section 1 of article IV of the Oklahoma Constitution provides:
The powers of the government of the State of Oklahoma
shall be divided into three separate departments: The
Legislative, Executive, and Judicial: and except as provided in
this Constitution, the Legislative, Executive, and Judicial
departments of government shall be separate and distinct, and
neither shall exercise the powers properly belonging to either
of the others.
Section 1 of article V requires that "(tlhe Legislative authority of the State
shall be vested in a Legislature consisting of a Senate and i-iouse of
Representatives . . . . " From these constitutional provisions comes the
prohibition against the delegation of iegislative power.
The prohibition "rests on the premise that the legislature must not
abdicate its responsibility to resolve fundamental policy making by (1)
delegating that function to others or {21 by fatllno to provide adequate
directions for the implementation of Its declared policy." Democratic
Party v. Eatep. 6B2 P.2d 271. 277 n.23 (1982). The facts of this case
concern the second aspect of the prohibition.
28
The 1965 version of the Act prescribed the manner in which
Oklahoma's Labor Commissioner determined prevailing wages. It gave
the Labor Commissioner the responsibility to "Investigate and determine
the prevailing hourly rate of wages In the localities." 1965 Okla. Sess.
Laws B80. It specifically instructed the Commissioner to "consider the
applicable wage rates established by collective bargaining agreements, if
any, and such rates as are paid generally within the locality." Id- It
instructed the Commissioner how to conduct hearings on objections to
wage determinations. It also gave the Commissioner subpoena power
and the authority to administer oaths. Id- at 581.
Since the 1981 amendments, however, the Act has provided no
definite standards or articulated safeguards for the United States
Department of Labor to follow In implementing the legislative policy
declared in the Act. The current Act leaves an Important determination
to the unrestricted and standardless discretion of unelected bureaucrats.
Worse. It delegates to an administrative arm of the federal government-
As a result, the federal agency which actually determines the prevailing
wage is less answerable to the will of the people of Oklahoma than is the
Labor Commissioner who holds elected office. It leaves public entities
with no Oklahoma forum In which to challenge the accuracy of the United
States Department of Labor's wage determinations.
When faced with a challenge to Arkansas' prevailing wage law. the
Arkansas Supreme Court declared that its Act unconstitutionally
delegated legislative authority. Sfifi Crowlv v. Thornbroug h. 294 S-W.2d
62 (Ark. 1956). That court noted:
The Act fails to establish a standard or formula by which
a wage scale may be formulated: but rather delegates to the
29
Secretary of Labor of the United States the right to fix the
minimum wage scale to be paid in a particular area of this
State. The State retains no control over the Secretary of
Labor of the United States. Therefore, the Act violates
[provisions ofl our State Constitution.
Id. at 66. After the decision. Arkansas revised its prevailing wage law to
provide that the Arkansas Department of Labor would investigate and
determine prevailing wages. Ark. Code Ann. S 22-9-313. Specific
guidelines are provided to that department. ££fi Id-
Of the thirty-one states that currently have a prevailing wage law.
only Oklahoma's version delegates authority to the United States
Department of Labor as the sole method of determining the prevailing
wage. Connecticut gives Its Labor Commissioner the option of holding a
hearing to determine the prevailing wage or adopting the federal
determination. Conn. Gen. Stat. Ann. § 31 -53(d). In Oregon, the
Commissioner of the Bureau of Labor and Industry may use the federal
wage only if local wage data are not available in a particular locality. Or.
Rev. Stat. § 279.350. These limited delegations of authority to the
federal government have not been challenged in either state.
in the other prevailing wage law states, the wage determination is
assigned to a state official, an appointed committee, or the authority
awarding the contract. Therefore, challenges to the delegation of wage
determinations in those states have involved delegation to entities other
than the federal government. Sfifl Annotation. Validity of Statute-
Ordinance, or Charter Provision Reouirino that Wor k men on Public Works
be Paid the Prevailing or Current Rate of Wage.. 18 A.L.R.3d 944, 965
(1968).
36-049 - 96
30
Oklahoma's Act suffers from the same constitutional Infirmity as did
the Arkansas Act. It Is not enough that the Legislature declared its policy
in the Act. because no standard was established to Implement the wage
determinations. As this Court has noted: "No matter how laudable a
piece of legislation may be in the minds of its sponsors, objective
guidelines or standards should appear expressly in the Act." £al£a. 652
P.2d at 277 n. 25. Otherwise, legislative authority is abdicated.
The current version of Oklahoma's Act fails to articulate the
necessary guidelines or standards for determining prevailing wages.
Thus. It impermissibly delegates legislative power. The trial court did not
err In granting the City's motion for summary Judgment.
The State of Oklahoma and amicus urge that If portions of the Act
are held unconstitutional, the remaining portions of the Act are severable
and should stand. Section 11a(2) of title 75 provides:
For acts enacted prior to July 1. 1989. whether or not
such acts were enacted with an express provision for
severability. It is the intent of the Oklahoma Legislature that
the act or any portion of the act or application of the act shall
be severable unless:
a. the construction of the provisions or application
of the act would be inconsistent with the
manifest intent of the Legislature:
b. the court finds the valid provisions of the act are
so essentially and inseparably connected with
and so dependent upon the void provisions that
the court cannot presume the Legislature would
have enacted the remaining valid provisions
without the void one: or
c. the court finds the remaining valid provisions
standing alone, are incomplete and are incapable
of being executed in accordance with the
legislative Intent.
31
The offending provision of the Prevailing Wage Act is section 196.6
which delegates the determination of prevailing wages to the United
States Department of Labor. In the absence of this section, the valid
sections of the Act, standing alone, are "incomplete and Incapable of
being exercised in accordance with the legislative intent." Jd- at §
11a(2)(c). This is because the federal wage can no longer be used and
no Oklahoma entity is authorized to malce its own determination where
the United States Department of Labor has already done so. That leaves
a legislative intent that the prevailing wage be paid but no one authorized
to mal
will be for the Legislature to decide whether the Act will be reenacted in
a form that delegates the authority to an agency of this state with proper
guidelines to implement the prevailing wage determination.
AFFIRMED.
Concur: HODGES. LAVENDER, HARGRAVE. OPALA. WATT, JJ.
Concur in Result: WILSON, C.J., KAUGER, V.C.J., SUMMERS. J.
Concur in Part. Dissent In Part: SIMMS, J.
32
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[EXHIBIT
33
CHANGES MADE TO 93-OK-008 - OKLAHOMA CITY TREATMENT PLANT
PROJECT 001-OKL
•> ata submitted by PEG local for - per call to firm
11 data correct with the exception of they did not have
.nerry pickers, laydovn machine or concrete machine
2. Data submitted by plumbers, per call to firm thev did n ot >K
employ plumbers (VERIFYING WITH UNION AT THIS TIME)
PROJECT 00 3 -LOG
1, Data submitted by piimhpr local, per call to firm th ey were ^
only a consultant (VERIFYING WITH UNICN AT THIS TIME)
PROJECT 005-OKL
This project has been omitted as it should be in building. The
structure being built was not on treatment plant site
PROJECT 010-OKL
1. Used payroll period 10/30/92 instead of 11/6/92 as more
accurate per call to firm. Also fringe benefits broken out
2. Data from Data submitted b y Mill- ^
Wrights Loca.T »
I employ millwrights or plumbers (V ERIFYING WITH UNION At THIS
j TIME)
! PROJECT 012 -OKL
' 1. Data submitted by plumber union - per call to fi rm they did :f<:
not employ plumbers (VERIFYING WITH UNION AT THIS TIME)
PROJECTS 015-OKL & 017-CAN
■• Data submitted by plumber local, per call to firm they did >f
ot work on these projects (VERIFYING WITH UNION AT THIS TIME)
J 2CT 018-OKL
1. ^ata submitted by PEO local, per call to firm they did not %.
work on project (VERIFYING WITH UNION AT THIS TIME)
PROJECT 019-OKL
This project has been omitted as it should be in water & sewer
CHANGES MADE TO 93-OK-002 - OKLAHOMA CITY - HEAVY
PROJECT 006-OK
Project omitted as building construction
PROJECT 030-OK
Data for not used as per call to contractor, they
did not work on this project (VERIFYING WITH UNION AT THIS TIME)
PROJECT 031-OK
Data for * not used as per call to contractor, they
did not work on this project (VERIFYING WITH UNION AT THIS TIME)
PROJECT 048-P
Per clarification this is a building project
•:CT 052-OK
l" project has been omitted as per clarification call it is
t ling
PROJECT 054 -OK
Data for not used as per call to contractor, they
did not work on this project (VERIFYING WITH_UNION AT THIS TIME)
U.S. Department of Labor
34
Employment Standards Administration
Wage and Hour Division
Washington. DC. 20210
June 2, 1995
Memorandum No. 95-22
MEMORANDUM FOR WAGE AND HOUR REGIONAL ADMINISTRATORS
MARIA ECHK'
Administrator
Verification of Data in Davis-Bacon Wage Surveys
Incorrect information submitted by third parties has been found
in several surveys. Therefore, strategies to deal with the
verification of data submitted by other than some one in actual
possession of project payrolls are being considered. Suggestions
about verification procedures from the Regional Office survey
staff will be welcome and we are also consulting with the various
interest groups in this regard. In the meantime, however, the
importance of at least verifying by telephone some sample of any
data presented without the signature of an official of the
employing firm is of the utmost importance.
Working for America 's Workforce
35
STATEMENT OF JIM MARSHALL, CHIEF OF STAFF, OKLAHOMA
DEPARTMENT OF LABOR
Mr. Marshall. Mr. Chairman, I am going to keep my statement
very short.
We are going to present to you in our sUde presentation facts,
documents that are of a public nature in some cases. And what we
would like to do with regard to the slide presentation is to walk
you through what we have done here in Oklahoma to expose what
we believe to be fraud against the taxpayers in Oklahoma and tax-
payers in America.
The Reneau administration stands firmly committed to protect-
ing working men and women from the abuses of fraud perpetrated
upon the people of Oklahoma and United States by self-serving
special interests.
And with that, I would defer to the Deputy Commissioner.
Chairman Ballenger. Commissioner Lester.
[The prepared statement of Mr. Marshall follows:]
Statement of Jim Marshall, Chief of Staff, State of Oklahoma Department
OF Labor
Chairman Ballenger, Chairman Hoekstra, Members of the Committee, members
of the Oklahoma delegation and other guests. My name is Jim Marshall and I am
Chief of Staff of the Oklahoma Department of Labor. I conducted the field investiga-
tion, along with Deputy Commissioner Jeff Lester, of the Federal Davis-Bacon wage
survey process at the request of Commissioner Reneau.
Commissioner Reneau, Jeff Lester and I will present documented examples of
bogus survey data submitted to the Federal Government during the Federal Davis-
Bacon wage survey process — bogus information submitted by individuEils who had
no direct knowledge of the projects for which they submitted data.
Commissioner Reneau, Jeff Lester and I will present U.S. Department of Labor
documents which confirm phantom projects and ghost workers were the basis of ac-
tual wage rates issued by the Federal Government. We will show you U.S. Depart-
ment of Labor findings which confirm that bogus data was submitted by officials
from within the hierarchy of organized labor.
We will show you examples from a growing pool of evidence — evidence that illus-
trates the depth of this serious problem and showcases the U.S. Department of La-
bor's apparent mismanagement of the wage survey process.
The Reneau administration stands firmly committed to protecting working men
and women from the abuses of fraud perpetrated by self-serving special interest.
STATEMENT OF JEFF LESTER, DEPUTY COMMISSIONER,
OKLAHOMA DEPARTMENT OF LABOR
Mr. Lester. Thank you.
Chairmen Ballenger and Hoekstra, Members of the committee,
members of the Oklahoma delegation and other guests, thank you
for taking time today to learn about a great injustice forced upon
the hard-working citizens and taxpayers of Oklahoma. I am Jeff
Lester, Deputy Commissioner of Labor for the State of Oklahoma.
I was lead investigator in the Oklahoma Department of Labor in-
vestigation into the Federal Davis-Bacon wage survey process.
Today, I will show you documented examples of bogus survey
data submitted to the Federal Government during the Federal
Davis-Bacon wage survey process — bogus information submitted by
individuals who apparently had no direct knowledge of the projects
for which they submitted data.
I will show you U.S. Department of Labor documents which con-
firm that phantom projects and ghost workers were the basis of ac-
36
tual wage rates issued by the Federal Government. I will show you
U.S. Department of Labor findings which confirm that bogus data
was submitted by officials from within the hierarchy of organized
labor.
I will show you examples from a growing pool of evidence — evi-
dence that illustrates the depth of this serious problem and show-
cases the U.S. Department of Labor's apparent mismanagement of
the survey process.
Sadly, I will show you that the Federal Government knew about
the poor quality of data prior to the time that the fraudulently in-
flated wage rates were forced upon the taxpayers of Oklahoma.
And finally, I will show you the actual financial impact on Oklaho-
ma's taxpayers — a documented impact of up to 30 percent of the
total cost of construction on a multi-million dollar project.
In the interest of time, I encourage you to ask questions at the
conclusion of the presentation. Experience tells me I will answer
most of your questions as we move through the display.
Mr. Marshall. Mr. Chairman, since the microphones are located
at this table, if we could have a few minutes to allow the media
to transport the microphones.
Chairman Ballenger. Yes, go ahead.
[Pause.]
Mr. Lester. Congressman, the first slide I am going to show you
is actually a slide that we borrowed from your committee. This is
a representation of the 12-step process used by the U.S. Depart-
ment of Labor to determine Federal wage rates. To begin, I want
to walk you through the first six steps carefully.
The regional office for us is in Dallas, Texas. They conduct the
survey. They plan an annual survey activity and the regional ad-
ministrator told us with these words, "The squeaky wheel gets the
grease." So that means that not all regions get surveyed in a timely
fashion. In fact, some Federal Government documents indicate that
the average wage survey occurs every seven years.
The regional office obtains an active project file. This is construc-
tion that has occurred or may occur in an area. They use that as
a basis for mailing lists. From that, they determine specific projects
to be surveyed. They announce an annual survey by direct mail
and through the media, then they conduct that survey using the
WD-10 wage determination form, which is the survey instrument.
That survey instrument, as you can see, is one side of one 8V2
by 11 page, something similar to the IRS 1040-EZ form. Basic
questions such as the name of the contractor who performed the
work, a description and address for the project. Among other
things, a list of the types of construction workers used, whether or
not they were paid according to a union contract. And then at the
bottom of the form, the signature of the individual who submitted
the data. This has been a particular bone of contention between us
and Secretary Reich, who has made public a number of these docu-
ments in his own verification process. However, he maintains to us
that the statistical information on the forms is apparently a public
record, but the signature of those who submitted the information
is protected by the Federal Trade Secret Act. We obviously do not
buy that argument.
37
I will turn now to the 12-step process. Once the survey instru-
ment has been distributed and collected, they conduct a follow-up,
which in their words to us means if, based on steps 8, 9 and 10,
if they feel that there are open spots on the survey, blanks that
were not filled in, if they cannot read the handwriting, if they can-
not interpret the information, they call the individual who submit-
ted it. Of course, that may or may not, according to our findings,
be someone who knew anything about the actual project. Then
through these steps they determine the adequacy of the data. Can
they read it, can they understand it well enough to type it into
their computer data base.
If so, based on those wage summary sheets, they compute the
Federal prevailing wage rates and transmit them to the public for
use to pay for public construction projects.
Mr. Marshall. Mr. Chairman, what is absent is a block 13.
Block 13 should be a verification process of the data.
Mr. Lester. Nowhere in this 12-step process, as Mr. Marshall
pointed out — and in fact, in our direct communications with the re-
gional office in Dallas, they told us directly and specifically there
has never, historically, been any practice or attempt to verify the
accuracy or the authenticity of any of the information submitted.
Now I would like to move into some actual evidence. First, I
want to point to the fax indicia at the very top of this page. This
was faxed on May 9 of 1995 from a 202 area code, which indicates
that it came from the U.S. Department of Labor Wage and Hour
Division in Washington, DC. It was faxed to a local contractor, the
Concho Company. And in a telephone conversation, they asked the
Concho Company to confirm or to verify the accuracy of this infor-
mation. It indicates that the Concho Company worked on a high
lift pump station at Oklahoma City's Lake Hefner Water Treat-
ment Plant. It indicates that 16 specific categories of workers
worked on the project, were paid according to a union collective
bargaining agreement, and you can see listed out on the right-hand
side, the wage rates and the fringe benefits.
This document was date-stamped in at the U.S. Department of
Labor March 18 of 1993. That is a critical fact for you to remember,
and we will come back to this slide.
The Concho Company, citing two of these forms that they were
faxed. Lake Hefner Treatment Plant high lift and Lake Treatment
Plant chemical building — they told us in late May, "The above-ref-
erenced attached jobs were not projects awarded to the Concho
Company." In other words, they did not work on those projects.
We wanted to find out more about the nature of their dialogue
with the U.S. Department of Labor. The bottom line is a Concho
Company employee told us the U.S. Department of Labor refused
to tell that company who signed the information and falsely attrib-
uted it to their company.
We wanted to make sure that we were not misunderstanding
anything about the nature of the facts, so we went to the City of
Oklahoma City and asked whether the Concho Company had done
any work at Lake Hefner at the treatment plant. And the city indi-
cated to us that sure, Concho is a contractor who does a lot of work
for the city, and although the project in and around that time was