DOL Issues Guidance on Davis-Bacon Requirements for Stimulus-Funded Projects

June 12, 2009

In an All-Agency Memorandum issued on May 29, 2009, the U.S. Department of Labor (DOL) Employment Standards Administration's Wage and Hour Division (WHD) has provided guidance to contracting agencies on the applicability of Davis-Bacon labor standards to federal and federally-assisted construction work funded in whole or in part under the American Recovery and Reinvestment Act of 2009 (ARRA).  The memorandum provides a summary of the prevailing wage labor standards applicable to construction projects funded under Division A of the ARRA, highlights federal agencies' responsibilities in implementing Davis-Bacon labor standards, and provides links to online resources for additional information. 

As a result of specific language in the ARRA, all requirements of the Davis-Bacon Act apply to construction projects that receive ARRA funds, with an added provision that "projects funded directly by or assisted in whole or in part by and through the Federal Government" as a result of the ARRA must also comply.  This designation requires all ARRA projects, whether fully or partially funded or assisted, to comply with the prevailing wage requirements of the Davis-Bacon Act.  This provision was made to deter contractors from intentionally dividing ARRA projects into smaller, separate contracts in order to avoid Davis-Bacon coverage on smaller parts of a large project, according to the memorandum.  This is consistent with DOL's "longstanding view a project consists of all construction necessary to complete the building or work regardless of the number of contracts involved so long as all contracts awarded are closely related in purpose, time and place."  However, DOL explains, this does not mean that Davis-Bacon coverage on an ARRA project "lasts in perpetuity."  DOL understands that many major construction activities occur in segregable phases that are distinct in purpose, time, or place and advises federal agencies to examine every situation independently.  Furthermore, the memorandum explains, if a construction project funded under multiple statutes including ARRA funds, and one of the statutes exempts the project from Davis-Bacon compliance, then the project must meet the requirements of the Davis-Bacon Act for the entire project.  However, special exemptions and limitations apply to certain tribal contracts and to projects funded under ARRA Department of Housing and Urban Development (HUD) appropriations for Assisted Housing Stability and Energy and Green Retrofit Investments. Federal agencies are responsible for including applicable wage determinations in the construction contract and for "the correct application of Davis-Bacon wage determinations to bid solicitations, contracts, and assistance agreements," the memorandum confirms.  As for ARRA-funded ongoing construction projects that were awarded prior to ARRA, or for which construction had already started, the memorandum states that the contracting agency "should insert the applicable wage determination(s) in relevant contracts and assistance agreements effective as of the date the ARRA assistance is approved for the project."  However, no new wage determination is needed if an ongoing project already subject to Davis-Bacon standards begins to receive ARRA funding unless the assistance is for new work not covered by the existing contract.  The memorandum further confirms that it is the responsibility of all contractors and subcontractors on covered projects to pay covered employees the prevailing wages listed in the wage determination included in the contract, to pay such wages on a weekly basis, and to submit weekly certified payroll records to the contracting or administering agency.  Accordingly, while the memorandum does not directly address the issue, contractors are reminded to include appropriate clauses and wage determinations in subcontracts for ARRA-funded projects, including those awarded prior to ARRA-funding.  The memo advises that contractors and employees with questions about the application of Davis-Bacon requirements to a particular project should direct their initial inquiries to the federal agency funding the project but notes that DOL "retains final coverage authority."  The memorandum also points out online information resources, including DOL's online database of wage determinations, Prevailing Wage Resource Book, and recently created ARRA Web site.  Links to these and other Davis-Bacon resources, such as AGC's Davis-Bacon Manual on Labor Standards for Federal and Federally Assisted Construction are found on AGC's Labor & HR Topical Resources Web page.
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