Does your organization use federal funds for construction of any type, including school renovations, bridges, roads, hospitals, government buildings, solar panels, broadband installations, electrical infrastructure, and other federally funded projects? Then you are in the right place. The Davis-Bacon Act (DBA) may be applicable to your construction projects funded by a federal grant. This article will dive into the practical details of the DBA. Organizations apply for federal funds to help facilitate their construction projects. These grantees may then hire contractors or subcontractors to complete the construction work. The DBA helps ensure that government funds elevate labor standards, such as paying a prevailing wage, for construction workers across the country. The DBA safeguards fair wages for workers on federally funded construction projects, while also ensuring compliance with federal laws.
What Is the DBA?
The DBA is a federal law in the U.S. that requires contractors and subcontractors working on a federally funded construction project to pay their employees prevailing wages. The DBA applies to workers on contracts greater than $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Compliance with the DBA requires laborers employed on federally funded projects to be paid at least the locally prevailing wage and fringe benefits (2 CFR Appendix II to Part 200).
What Is Defined as “Public Building” or “Public Works”?
A “public building” or “public works” includes “a building or work, the construction, prosecution, completion, or repair of which is carried on directly by authority of or with funds of a federal agency to serve the interest of the general public regardless of whether title thereof is in a federal agency” (29 CFR 5.2). These can include projects such as schools, hospitals, libraries, courthouses, government office buildings, roads, bridges, and other infrastructure projects that serve the public. Examples include solar panels, green energy, electrical car infrastructure, and wind turbines.
Why Is It Important to Know About the DBA?
The DBA is important for various reasons. The DBA’s intent is to promote 1) fair wages for workers on federal construction projects, 2) economic growth in communities by supporting higher wages, and 3) quality workmanship because workers must keep the correct credentials. This helps reduce the risk of poor-quality construction. The DBA’s guiding principle is that a society benefits more from competition when it fosters a desire for citizens to learn new skills, increases productivity, pays well, and cares for their well-being as workers get older. On August 23, 2023, the U.S. Department of Labor (DOL) published the final rule, “Updating the Davis-Bacon and Related Acts Regulations,” in the Federal Register. The final rule took effect on October 23, 2023. Violations of the Davis-Bacon labor standards may be grounds for contract termination, contractor liability for any resulting costs to the government, and debarment from future contracts for a period of three years.
Federal Programs That May Require the DBA
Listed below are a few federal grant programs that require grant awardees to follow the DBA to be compliant, but there are many more federal programs that require Davis-Bacon compliance. Programs funded under the Inflation Reduction Act and Infrastructure Investment and Jobs Act also are subject to DBA compliance.
- Department of Education School Construction
- Highway Infrastructure Program
- Community Development Block Grants
- FEMA Disaster Assistance Programs
- Water Infrastructure Funding
- Rural Development Programs
- Federal Transit Administration Grants
- Energy Efficiency & Conservation Block Grants
- Environmental Protection Agency Grants
- Department of Defense Construction Projects
Who Is the DBA Applicable to?
The DBA applies to federal grantees and subrecipients, as well as the contractors and subcontractors who are hired to work on federally funded construction projects.
How Can You Be Compliant With the DBA?
To follow the DBA, contractors and subcontractors must typically keep certain documentation. This may include certified payroll records that detail the hours worked on the project. In addition, contractors and subcontractors may need to keep records of fringe benefits provided to the workers. These records serve as proof of compliance with the prevailing wage requirements and may be subject to audit by the DOL. Proper documentation is important for transparency and accountability in the payment of wages on federally funded construction projects. The following items must be compliant with the DBA:
- Pay the prevailing wage rate on a weekly basis.
- Compensate for the fringe rate or the cash value of the fringe rate listed in the wage determination.
- Fill out, sign, and submit certified payroll forms on a weekly basis (Form 347 or a similar form). Keep payroll and related records for at least three years.
Additional guidance on the DBA documentation can be found on the DOL’s website.
Noncompliance With the DBA
Not following the DBA can result in different penalties, such as:
- Paying back wages owed to workers.
- Elimination from future federal contracts.
- Fines and penalties imposed by the DOL.
- Negative impact on worker morale and productivity.
In summary, the DBA documentation specifies requirements that federal grantees and their subrecipients need to follow on federally funded construction projects. This article highlights a few. Other requirements can be found on the DOL’s website. The implications of not following the DOL’s grant compliance and reporting requirements could subject grantees or subgrantees to repay federal grant funds and penalties. Recipients of federal funding for a federally funded construction project should consider how relevant data from subrecipients and subcontractors will be collected prior to making awards and signing contracts. Understanding compliance and reporting requirements at the front end can save major headaches later.
How Can FORVIS Help?
At FORVIS, we understand keeping track of all these requirements can be a serious task. Our national Grants Management team, combined with our public sector advisory, can help your organization with streamlined compliance, training, and transparency. If you have questions or need more information, reach out to a professional at FORVIS.