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Municipality of Bethel Park v. Pennsylvania Prevailing Wage Appeals Board

November 18, 2009

MUNICIPALITY OF BETHEL PARK, PETITIONER
v.
PENNSYLVANIA PREVAILING WAGE APPEALS BOARD, RESPONDENT



The opinion of the court was delivered by: Judge Pellegrini

Argued: October 14, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE DAN PELLEGRINI, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JOHNNY J. BUTLER, Judge.

OPINION

Section 5 of the Pennsylvania Prevailing Wage Act (Prevailing Wage Act),*fn1 43 P.S. §165-5, requires that "[n]ot less than the prevailing minimum wages... be paid to all workmen employed on a public work." This appeal involves whether a contract entered into by the Municipality of Bethel Park (Bethel Park) involving certain work on its sewer system was "public work" requiring payment of prevailing wages subject to the Prevailing Wage Act.

The term "public work" is defined in Section 2(5) of the Prevailing Wage Act, 43 P.S. §165-2(5), as:

Construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body where the estimated cost of the total project is in excess of twenty-five thousand dollars ($25,000), but shall not include work performed under a rehabilitation or manpower training program.

Under this definition, prevailing wages do not apply where the total project is not in excess of $25,000 or is "maintenance work," which does not have a dollar limitation. The Prevailing Wage Act defines "maintenance work" as "the repair of existing facilities when the size, type or extent of such facilities is not, thereby, changed or increased." Section 2(3) of the Prevailing Wage Act, 43 P.S. §165-2(3). Our Supreme Court in Borough of Youngwood v. Pennsylvania Prevailing Wage Appeals Board, 596 Pa. 603, 617, 947 A.2d 724, 732-733 (2008), stated that what work was excluded from coverage of prevailing wages must be narrowly construed:

[B]ecause the Act provides that "public work" includes "repair" and that the exception to "public work" (i.e., "maintenance work") includes "repair" of a specific type, it logically follows that the General Assembly intended that "maintenance work" be considered a lesser or minor form of "repair." Therefore, we hold that in construing the Act, the focus must fall principally on the Act's clear mandate that prevailing wages are to be paid to workers on public works projects that meet the criteria of 43 P.S. § 165-2(5), taking into consideration that "maintenance work" is an exception to this mandate and must be narrowly construed. The linguistic construction of "maintenance work," in turn, must recognize that the Act defines "maintenance work" as a subset of "repair," and must be accordingly viewed in this narrow manner.

We have explained that "maintenance work" is "the repair of existing facilities, that is, facilities that at some point were operating properly but have now failed to do so." Butler Balancing Co. v. Prevailing Wage Appeals Board, 780 A.2d 840, 843. Bethel Park contends that all the work performed under its contract was maintenance work and not subject to prevailing wages.

The work that is the subject of this dispute involves a contract bid by Bethel Park in early 2007 for what is known in the industry as a "fix and find" contract. The proposal for bids described the proposed scope of the work as follows:

The Municipality of Bethel Park (Municipality) finds that many times a need arises for small construction or associated service, to address damaged sewer lines, manhole deficiencies or problems associated with sewer systems, in general, whereby the intent of this Proposal is to award a Blanket Contract.

The purpose of the contract was to provide Bethel Park with a single contractor to work on the municipality's sanitary and storm sewer systems on an "as-needed" basis. The contractor was required to respond to the request for services within 24 hours. The amount paid on each job was based on labor and materials used on each job. The solicitation stated that the contract was not subject to the Prevailing Wage Act. The proposed contract did not guarantee any work because it was on an "as-needed" basis, but the total estimated contract value for work to be performed under the one-year contract was $300,000.

On March 1, 2007, the contract was awarded to the lowest bidder, B. Pepenella Company (Pepenella). Pepenella and Bethel Park executed the contract on May 1, 2007, and Bethel Park had the option to renew the contract for two additional one-year terms.*fn2 Pepenella began providing maintenance services under the contract in July 2007, which primarily consisted of spot repairs at various locations on the sanitary and storm systems in Bethel Park.

In August 2007, the Department of Labor and Industry's Bureau of Labor Law Compliance (Bureau) requested that Bethel Park provide it with a copy of the contract as well as a description of the work and locations where the work was to be performed. Bethel Park sent the Bureau a copy of the contract along with information about current work orders and explained that based on repair and maintenance work performed at 90 sites in 2006 and 2007 under the previous contract, the average cost of ...


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