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The Davis-Bacon Act (DBA) was enacted in 1931 and amended in 1935 and 1964. The DBA requires the payment of locally prevailing wages and fringe benefits to laborers and mechanics as determined by the Department of Labor. The DBA applies to direct Federal contracts and District of Columbia contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. Congress has included DBA prevailing wage requirements in numerous statutes (referred to as Related Acts) under which Federal agencies assist construction projects through grants, loans, guarantees, insurance, and other methods. Covered contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wage rates and fringe benefits as required by the applicable wage determination. The Department proposes to update and modernize the regulations implementing the Davis-Bacon and Related Acts to provide greater clarity and enhance their usefulness in the modern economy.

Statement of Need:

The Department proposed to update and modernize the regulations implementing the Davis-Bacon and Related Acts to provide greater clarity and enhance their usefulness in the modern economy.

Summary of the Legal Basis:

These regulations are authorized by Title 40, sections 3141-3148. Minimum wages are defined as those determined by the Secretary to be (a) prevailing; (b) in the locality of the project; (c) for similar craft and skills; (d) on comparable construction work. See section 3142.

Alternatives:

Alternatives were developed in considering proposed revisions to the current regulations.  As part of the NPRM, one alternative the Department considered was requiring all contracting agencies --not just Federal agencies--that use wage determinations under the DBRA to submit an annual report to the Department outlining proposed construction programs for the coming year.  But in the proposed rule, the Department noted that this requirement would be unnecessarily onerous for non-Federal contracting agencies, particularly as major construction projects such as those related to road and water quality infrastructure projects may be dependent upon approved funding or financial assistance from a Federal partner.  The Department's proposal to require only Federal agencies to submit these annual reports would be simpler and less burdensome for the regulated community as some Federal agencies have already been submitting these reports pursuant to AAM (Dec. 27, 1985) and AAM 224 (Jan.17, 2017).

Another alternative that was considered was the use of a different index instead on the Employment Cost index (ECI) for updating out-of-date non-collectively bargained wage rates.  The Department considered proposing to use the Consumer Price Index (CPI) but considers the data source to be a less appropriate index to use because the CPI measures movement of consumer prices as experienced by day-to-day living expenses, unlike the ECI, which measures changes in the costs of labor in particular.  The CPI does not track changes in wages or benefits, nor does it reflect the costs of construction workers nationwide.

The Department welcomed comments on these and other alternatives to the proposed rule.

Anticipated Costs and Benefits:

The Department prepared estimates of the anticipated costs and benefits associated with the proposed rule.  The Department considered employer costs associated with both (a) the return to the "three-step" method for determining the prevailing wage (i.e. the change from a 50 percent threshold to a 30 percent threshold) and (b) the incorporation of a mechanism to periodically update certain non-collectively bargained prevailing wage rates.  Costs presented are combined for both provisions.  However, the Department believes most of the costs will be associated with the second provision.  The Department estimated both regulatory familiarization costs and implementation costs.  Year 1 costs are estimated to total $12.6 million.  Average annualized costs across the first 10 years of implementation are estimated to be $3.9 million (using a 7 percent discount rate).

Risks:

This action does not affect public health, safety, or the environment.