Davis-Bacon Guidance

When the Head Start Act was amended to allow the use of grant funds to construct or make major renovations to Head Start facilities, the law was also changed to make the Davis-Bacon Act apply to contracts for construction or renovation of Head Start facilities. The effective date of this part of the law was October 1, 1994. Section 644(g)(3) of the Act now states:

All laborers and mechanics employed by contractors or subcontractors in the construction or renovation of facilities to be used to carry out Head Start programs shall be paid wages at not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with the ... [Davis-Bacon Act].

The purpose of this guidance is to highlight some of the basic requirements of the Davis-Bacon Act. Because the law and Department of Labor (DOL) regulations place the responsibility for enforcement of the Davis-Bacon Act on the granting agency (such as ACF), and not on the DOL, this memo will provide detailed information on the requirements. However, this guidance is not a complete discussion of all aspects, sometimes quite complex and arcane, of Davis-Bacon and other related laws. It is intended to provide an introduction to the subject and enable Regional Office staff to respond to most questions that grantees will have on the subject, and to inform you of our basic enforcement responsibilities. More information may needed in the future, and it may prove necessary to seek interpretations of the law and its implementing regulations from the DOL in particular cases.

In Part 1 of this guidance the general features and definitions of the Davis-Bacon Act are described. Part 2 discusses our role in monitoring compliance with it.

1. What is the Davis-Bacon Act?

The Davis-Bacon Act is a federal law which requires that "prevailing wages" and fringe benefits must be paid to all laborers and mechanics employed under direct federal contracts and certain other (usually federally financed) construction and renovation projects. The law requires that

The advertised specifications for every (covered) contract in excess of $2,000... shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village or other civil subdivision of the State in which the work is to be performed, or in the District of Columbia if the work is to be performed there...

Davis-Bacon requires that all covered employees be paid

unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account, the full amount accrued at the time of the payment, computed at rates not less than those in the advertised specifications, regardless of any contractual obligation which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics.

The Act imposes record keeping and filing requirements on the contractor, the grantee, and the Federal agency which funds the grantee. When the Davis-Bacon Act applies contracts of construction or renovation must include certain clauses governing minimum wages to be paid to laborers and mechanics (including the basic hourly rate of pay and the amount contributed by the contractor or subcontractor for certain fringe benefits), limitations on wage withholding, payroll and basic records which must be kept, compliance with anti-kickback provisions, subcontracts, termination of the contract for breach of Davis-Bacon requirements, and other related matters. This mandatory contract language, known as the labor standards clauses, is attached to this memorandum as Attachment 1.

Does Davis-Bacon apply to contracts to which the grantee, but not the Federal government, is a party?

Yes. The Davis-Bacon Act prevailing wage requirements were made applicable to Head Start grantees by section 644(g)(3) of the Head Start Act.

Does the construction or renovation of a facility which will be used to house a Head Start program fall under the Davis Bacon requirements even if no federal funds are used in the construction or renovation?

Yes. The Head Start Act makes Davis-Bacon applicable to "the construction or renovation of facilities to be used to carry out Head Start programs" and does not make federal funding a condition of Davis-Bacon applicability. The DOL has interpreted this to mean that Davis-Bacon applies to all construction or renovation of Head Start facilities, whether or not grant funds are used to finance the construction or renovation. Davis-Bacon applies to buildings not owned by the grantee if the facility is used or will be used to carry out Head Start programs. So, if a building which a grantee rents is to be used to carry out a Head Start program, any renovation of the building which costs more than $2,000 falls within the requirements of the Davis-Bacon Act, even if no federal funds are used to pay for the construction or renovation.

What is meant by "construction or renovation?"

The Labor Department regulations define the terms very broadly to include all types of work done on a particular building or work at the building site. Included within the meaning of the phrase "construction, prosecution, completion or repair" (the phrase in the DOL regulation): altering, remodeling and installation at the work site of items fabricated off the site (where such installation is necessary to the construction or renovation); painting and decorating; manufacturing or furnishing of materials or equipment on the site of the building or work; and transportation between the actual construction location and a facility which is dedicated to such construction and deemed a part of the work. The "site of the work" does not include the permanent home offices of the contractor or subcontractor.

What does "laborers and mechanics" mean?

According to DOL regulations, the term "includes at least those workers whose duties are manual or physical in nature (including those workers who use tools or who are performing the work of a trade), as distinguished from mental or managerial ...The term does not apply to workers whose duties are primarily administrative, executive, or clerical, rather than manual."

Does Davis-Bacon apply to state and local government grantees?

The regulation provides that a State or local government is not regarded as a contractor in situations where construction is performed by its own employees. If a State or local government grantee contracts for renovation or construction of a facility to be used to carry out a Head Start program, that contract (if in excess of $2,000) would be covered.

What are the record-keeping and reporting requirements of the Act?

Contractors and subcontractors subject to Davis-Bacon must furnish each week a statement on the wages paid each of its employees engaged in work covered by the Act during the preceding weekly payroll period. The DOL has a form for this purpose, a copy of which is attached as Attachment 2. This statement must be delivered or mailed within seven days of the payroll period to the grantee, which must submit them to the ACF. Contractors and subcontractors are required to preserve their payroll records for a period of three years from the date of completion of the contract. The regulation specifies what information must be included in payroll records.

2. What are ACF's responsibilities with respect to monitoring compliance with the Davis-Bacon Act?

When a facility to be used to carry out a Head Start program is constructed or renovated the Regional Office which administers the grant will have several responsibilities. These responsibilities are summarized below, according to the time at which the responsibility must be carried out.

a. Before the work begins Before the construction or renovation begins the Regional Office must make sure that the appropriate wage determination or determinations are incorporated in-bid solicitations and contract specifications, and for designating specifically the work to which such wage determinations will apply. Wage determinations are published annually in the Federal Register, and are updated as needed. It is our responsibility to assure that the wage determination included in the bid solicitation is up-to-date, and that modifications of wage determinations are included up to the time of the contract award (or other applicable wage determination lock-in date).

b. Enforcement ACF must make sure that the labor standards clauses (included as Attachment 1) have been inserted in the contracts subject to the Davis-Bacon Act. No grant funds for renovation or construction may be approved unless the Regional office is assured that the contract clauses and the correct wage determination are contained in the contract. In addition, grant funds for renovation or construction must be suspended unless the contractor is complying with the requirements of Davis-Bacon and has filed with ACF a current certification of its compliance. The certification of compliance is usually done on the reverse of the weekly payroll form (Attachment 2).

Payroll and certification of compliance forms submitted to ACF must be preserved for a period of 3 years from the date of completion of the contract and must be produced at the request of the Department of Labor at any time during the three-year period.

c. Investigations DOL regulations state that granting agencies are responsible to make "such investigations...as may be necessary to assure compliance with the labor standards clauses.... Investigations shall be made of all contracts with such frequency as may be necessary to assure compliance." The DOL specifies that such investigations "shall include interviews with employees, which shall be taken in confidence, and examinations of payroll data" as well as registration and certification of apprenticeship and training plans.

d. Regular reports to the Department of Labor ACF is obligated to make semi-annual reports on compliance with and enforcement of the labor standards provisions of the Davis-Bacon Act and its related acts covering the periods of October 1 through March 31 and April 1 through September 30, respectively. The reports must be furnished to the DOL by April 30 and October 31 of each year.

A list of the addresses and phone numbers of the offices of the Assistant Regional Administrators for Wage-Hour, Employment Standards Administration of the Department of Labor, is included as Attachment 3.